The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: bprmp on August 28, 2013, 01:14:33 PM
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First post! I graduated from college in May and thankfully found this blog shortly thereafter. Big financial changes are underway.
Here's my situation:
I have a truck with a current KBB value of $21k.
I still owe $13.5k
This truck is currently costing me $800 per month in note/gas/insurance. The good news is I will get a company provided vehicle/gas card within 6 months and plan to sell the truck at that time. In the meantime, what can I do cut some of the cost besides bike to work? (I live too far: 18 miles)
Should I hang tight until I get the company vehicle? Should I sell the truck now and get a more cost effective vehicle until I eventually sell that vehicle too? I really just want to avoid the estimated $5k I'll spend driving this thing 6 more months.
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question: When you get the company vehicle and sell the truck... will you also be buying a replacement personal vehicle? I don't know your situation or the policies in personal use of the company car.
If you are planning on REPLACING the truck in 6 months (with a more economical car) -- I'd just do that now.
If you are planning on using the company car exclusively... I might just wait it out. But: I tend to seriously over analyze things when I buy something big. If I started looking for a car right now, it would probably take me 3-4 months to find it.
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No replacements. The company vehicle will be mine to do as I please.
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Watch out for the tax implications of personal use of a business vehicle.
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I wouldn't buy an intermediate vehicle. You'll pay taxes and registration fees.
It's not like you'll be saving $800/month if you get something else. Part of the $800 includes insurance, which you would still pay on another vehicle. You'll still have gas expenses. Some of that $800 is going toward paying down the car, so presumably you will get some back when you sell. I think you'll be further ahead to just stay the course. At the end of the day, your savings will be nowhere near $800/month as your post suggests.
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It's not like you'll be saving $800/month if you get something else. Part of the $800 includes insurance, which you would still pay on another vehicle. You'll still have gas expenses.
But the OP would save a big chunk of that $800/month by buying an inexpensive (that is, he can pay cash for it), fuel-efficient used car instead of the truck. Of course the loan part of the payment goes away immediately. The cost of insurance is much reduced, since he will only need to carry liability rather than C&C, plus the liability on a small car is likely to be considerably less than on a larger truck. Since the new car will be cheap, taxes won't be much. Registration would probably (depending on your state) be much less than for the truck, and you might get a refund for the unused portion of the truck registration.
What you should look at here is what you would really use a vehicle for. After all, there's much more to life than commuting to work and back, at least for most of us :-) Maybe your lifestyle is such that you don't need a vehicle outside of work, maybe it isn't.
And no, 18 miles is not too far to bike to work, at least if the route's reasonably level. I used to do 16.5 miles.
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It's not like you'll be saving $800/month if you get something else. Part of the $800 includes insurance, which you would still pay on another vehicle. You'll still have gas expenses.
But the OP would save a big chunk of that $800/month by buying an inexpensive (that is, he can pay cash for it), fuel-efficient used car instead of the truck. Of course the loan part of the payment goes away immediately. The cost of insurance is much reduced, since he will only need to carry liability rather than C&C, plus the liability on a small car is likely to be considerably less than on a larger truck. Since the new car will be cheap, taxes won't be much. Registration would probably (depending on your state) be much less than for the truck, and you might get a refund for the unused portion of the truck registration.
What you should look at here is what you would really use a vehicle for. After all, there's much more to life than commuting to work and back, at least for most of us :-) Maybe your lifestyle is such that you don't need a vehicle outside of work, maybe it isn't.
And no, 18 miles is not too far to bike to work, at least if the route's reasonably level. I used to do 16.5 miles.
Read the OP - poster is getting a free vehicle from work, so the debate is what to do in the mean time.
OP - for the sake of 6 months, if you are going to sell and not have another vehicle after that, just live with it. If you're planning on buying another vehicle to use outside work then obviously, sell the truck tomorrow and buy something smaller.
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Read the OP - poster is getting a free vehicle from work, so the debate is what to do in the mean time.
Read the comments. There are likely to be consequences to personal use of a work vehicle.
Also, it is quite likely that the OP could still save money by switching vehicles today. Assuming he can sell now for blue book price, that's $7.5K in his pocket, plus the $800/month outgo stops. Now if he spends say $2K on a good economical used car, he might have to pay (in my state) $120 in sales tax, $50-$75 year in registration, and maybe $300-$400 year in insurance. So he's ahead over $5K, reduced his monthly outgo by over $700, and still has a car to go places, if his lifestyle is such that going places is important.
Now whether his lifestyle is such that not having a car available would severely reduce his quality of life is a question neither of us can answer. I can only say that it sure would put a crimp in mine.
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Forum tone, people, forum tone.
bprmp -- That sounds like a pretty sweet deal! If it were me, I'd probably try to gut it out for 6 months with only driving to and from work and nowhere else. Bike, walk, public transit, whatever for all your errands, shopping, and weekend fun. But I really hate buying cars, so like Spork, it takes me a long time to find the right deal. Whatever you choose, it sounds like you'll be set up pretty nicely in the future.
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Forum tone, people, forum tone.
Hm, me? No 'tone' intended, just terse replies saves some keystrokes :) I think each key is only going to manage 100,000 in its life so I try to type as little as possible ;)
@Jamesqf - the $800 outgoing only partially stops, OP might buy a clunker, just not worth the hassle - IMHO. Which is just that. And as others said, at least some small part of that $800 is reducing the loan amount.. And OP already said they aren't going to get a replacement vehicle. As to the legalities.. I have no idea /shrug.
Peace, hugs all round. No crankiness intended.
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@Jamesqf - the $800 outgoing only partially stops, OP might buy a clunker, just not worth the hassle - IMHO.
Sure, but as I see it the choice is between continuing the $800/month drain for another 6 months, or greatly reducing it. As to whether buying a "clunker" is worth the hassle... well, as I said, that's a subjective decision that neither of us can make for the OP. I think it would be worth it, but then I've never owned a car that wouldn't arguably fall into the clunker category :-)
And OP already said they aren't going to get a replacement vehicle. As to the legalities.. I have no idea /shrug.
Sure, but that was before other people pointed out that there were potential problems with personal use of a company vehicle. I think he'd come out ahead buying the clunker now, even if he only kept it for six months.
No crankiness intended.
Nor on my part,
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Thank you all for the input. I think I'm going to avoid the hassle of another car purchase (an attempt to curtail my $800 per month costs).
As for tax implications etc. regarding the personal use of a company vehicle....I'm not very knowledgeable on the subject, but this is a small company (Houston, TX). I'm not required to log mileage or front any maintenance or operating costs.
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And no, 18 miles is not too far to bike to work, at least if the route's reasonably level. I used to do 16.5 miles.
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This is an 18 mile stretch along interstate 10 from one side of Houston to the another. Houston, in general, is not friendly towards bike traffic in the slightest. Biking to work in the future also will not be an option once I receive the company vehicle because it is intended to carry me from site to site during business hours.
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This is an 18 mile stretch along interstate 10 from one side of Houston to the another. Houston, in general, is not friendly towards bike traffic in the slightest.
From what I know of Houston, I'll have to agree on the non-bikable part. My own 16.5 miles was mostly rural, non-interstate highway with good wide shoulders.
Biking to work in the future also will not be an option once I receive the company vehicle because it is intended to carry me from site to site during business hours.
So what is the company policy on using it for your personal trips? Or do you just stay home evenings & weekends?
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Personal trips around town and the surrounding area are fine. Any further and I'll be expected to cover the cost of fuel.
The vehicle is required for business use, but essentially doubles as an employee perk. It would probably not be okay to drive from Houston to Alaska for a summer vacation:D