Want to sell car for something cheaper but underwater, how would you handle?

[MaxP0wer]

So we are trying to get debt paid off and I have finally convinced my wife to sell our 2012 Honda Pilot, but it is proving to not be so easy.  The payment is $392/month.  The payoff is $23,400.  The KBB and NADA give me a retail value of around 20k, dealers are listing similar ones for 21-22k.    So if I can get 20k, I still need to come up with $3400.  Now, the plan was to replace it with a more economical car, of which there are plenty for 7-10k, but of course we don't have the cash so we have to finance.  We also don't have the cash at this moment for the $3400.

Our other car is older and paid off but we need two cars at this time.  What is the best way to go about this?

[J_Stache]

How long is the loan term and how many months are remaining on it?

[MaxP0wer]

How long is the loan term and how many months are remaining on it?

72 month term, 66 months left, 3.6% interest


yes....i know :(

[Khaetra]

I think you'll be stuck with it for a little while.  I would facepunch you for that purchase, but it won't help the current situation.  My advice would be to take a very long, hard look at your budget, cut out everything that is not a necessity, do not buy anything for the next couple months (no Xmas gifts this year at all!!) and sock away as much as you can so you can sell it and pay off the loan. 

Once that loan is paid off, take that payment and sock it away every month.  You will be down to one car and you NEED to make it work.  If you can't come up with $3400, you're hair is a blazing inferno and adding debt after paying debt off is not a good idea.

[frugaliknowit]

Any assets you can sell to raise cash?

[Debts_of_Despair]

Any assets you can sell to raise cash?

This, or get a better paying job.  Keep in mind you can sell almost anything on CL or eBay.  Start taking a look around your garage and basement.

[MaxP0wer]

Any assets you can sell to raise cash?

In the process of major lifestyle changes.  Own a rental that doesn't bring in much income, selling that and it will pay off a good chunk of debt.  Selling current house to downsize which may or may not bring in any extra cash, wait and see.  Currently paying back a 401k loan.  All other investments are in other retirement accounts.  We're on the right path, just have obsticles.

[cchrissyy]

is there a family member who would loan you the money just for a month?

approx $10k to cover the new car plus the loan difference on the Pilot

to be paid off, in full, when the Pilot sells.

that way you don't need to finance the new car, and you solve the puzzle of how to pay the extra $k or whatever the Pilot loan requires.

the hypothetical family member would be quickly and fully paid back, and you'd have the cheaper vehicle, no car payment, and the $6k or whatever the difference is in vehicle value.

If not hypothetical family member, you might just be stuck with this until you sell off some asset to raise the $3400 yourself, and that's OK too, it won't be much longer and at least the car payments go vastly more to principal than interest, so you're making some progress every month you make them.

[Axecleaver]

It's likely you have higher priority debts to pay down before you solve the car problem. You mentioned selling a rental that would cancel out some (but not all) of your current debt. It's likely some of that is at a higher interest rate than the car. Make a list of your debts with balance, payment, and interest rate. Some folks like to order the payoff by principal, paying off the lowest balances first (snowball method), which frees up cash flow. Some like to order them by interest rate, paying off the highest rates first (mathematically minimize payout method).

Consider posting a full case study. This will help you to organize your financial situation and folks here will help you define a plan that meets your needs. Good luck!

[MaxP0wer]

It's likely you have higher priority debts to pay down before you solve the car problem. You mentioned selling a rental that would cancel out some (but not all) of your current debt. It's likely some of that is at a higher interest rate than the car. Make a list of your debts with balance, payment, and interest rate. Some folks like to order the payoff by principal, paying off the lowest balances first (snowball method), which frees up cash flow. Some like to order them by interest rate, paying off the highest rates first (mathematically minimize payout method).

Consider posting a full case study. This will help you to organize your financial situation and folks here will help you define a plan that meets your needs. Good luck!

http://forum.mrmoneymustache.com/ask-a-mustachian/best-way-to-proceed-with-paying-off-debt-and-investing-(case-study)/msg1190531/#msg1190531

So I made this about a month ago.  Since then I have sold the malibu, which may or may not have been the best decision but it paid off one 401k loan.  The sale of the rental should net enough to wipe out CC debt.  Liquid savings is down to 2k currently.  The other thing that has changed is my wife has left her job (long story) and will now be working part time, so our income will go down by maybe 25%.

[dycker1978]

It's likely you have higher priority debts to pay down before you solve the car problem. You mentioned selling a rental that would cancel out some (but not all) of your current debt. It's likely some of that is at a higher interest rate than the car. Make a list of your debts with balance, payment, and interest rate. Some folks like to order the payoff by principal, paying off the lowest balances first (snowball method), which frees up cash flow. Some like to order them by interest rate, paying off the highest rates first (mathematically minimize payout method).

Consider posting a full case study. This will help you to organize your financial situation and folks here will help you define a plan that meets your needs. Good luck!

http://forum.mrmoneymustache.com/ask-a-mustachian/best-way-to-proceed-with-paying-off-debt-and-investing-(case-study)/msg1190531/#msg1190531

So I made this about a month ago.  Since then I have sold the malibu, which may or may not have been the best decision but it paid off one 401k loan.  The sale of the rental should net enough to wipe out CC debt.  Liquid savings is down to 2k currently.  The other thing that has changed is my wife has left her job (long story) and will now be working part time, so our income will go down by maybe 25%.

Was the Malibu the car that was worth about $4k according to your case study? 

I guess my concern is that your liquid savings is down to 2k, and you sold a car work aprox 4k. Where did that money go?  That 6K would have gotten you out from under the car that you are underwater on.  It seems like you may need to use mint or something to track your spending and see where the hole is in your budget.

[MaxP0wer]

It's likely you have higher priority debts to pay down before you solve the car problem. You mentioned selling a rental that would cancel out some (but not all) of your current debt. It's likely some of that is at a higher interest rate than the car. Make a list of your debts with balance, payment, and interest rate. Some folks like to order the payoff by principal, paying off the lowest balances first (snowball method), which frees up cash flow. Some like to order them by interest rate, paying off the highest rates first (mathematically minimize payout method).

Consider posting a full case study. This will help you to organize your financial situation and folks here will help you define a plan that meets your needs. Good luck!

http://forum.mrmoneymustache.com/ask-a-mustachian/best-way-to-proceed-with-paying-off-debt-and-investing-(case-study)/msg1190531/#msg1190531

So I made this about a month ago.  Since then I have sold the malibu, which may or may not have been the best decision but it paid off one 401k loan.  The sale of the rental should net enough to wipe out CC debt.  Liquid savings is down to 2k currently.  The other thing that has changed is my wife has left her job (long story) and will now be working part time, so our income will go down by maybe 25%.

Was the Malibu the car that was worth about $4k according to your case study? 

I guess my concern is that your liquid savings is down to 2k, and you sold a car work aprox 4k. Where did that money go?  That 6K would have gotten you out from under the car that you are underwater on.  It seems like you may need to use mint or something to track your spending and see where the hole is in your budget.

Correct, sold the Malibu for $3200, $4K was being optimistic apaprently.  Additional savings went to pay off 401k loan.  At the time wife was still against selling the pilot.  Now that her job situation has changed it has become more of a priority.