Car and the cycle of poverty

[MrFrugalChicago]

Hi,

So I have a Sister in law of need of my help. She is in need of a new car, and I want to somehow help. Mixing finances and family can be hard, but it seems also something awesome I can do if it will really help the person. It is not something I want to do if I am just going to string the person along, or teach them to fall deeper in a hole. I know the true MMM would say ride a bike, but I don't think that is the right answer right now. Open to discussing it more though.

Basic story:
* Sister in law has had a 15-20 year old car for a while given to her by her parents
* The car is about ready to be dead for good, not going to be worth fixing it.
* Needing a new car, but running into some challenges in getting it.

Positive contributing situation:
* Does not have consumer debt
* Works fullish time making $12-$14 an hour
* Lives in an inexpensive apartment with a roomate

Negative contributing situation:
* Little no to cash saved up (few $100 at best)
* Servery overweight, perhaps 300 pounds. All previous attempts at help has been unsuccessful. This partially complicates thing as my standard answer of buy a $2000 geo metro is not possible, and she could not fit in the seat.
* Parents grew up very poor with no money sense, so have no financial background. Result of this is partially 0 credit cards of any kind (which is good from a debt POV), but also it means 0 credit, so unable to qualify for a normal car loan.
* Lives in a very rural midwest town. Summer could maybe get by with walking, but no sidewalks and no public transit, winter would make it almost impossible to do the basics (get to work, get to grocery store, etc). On the plus side, everything is within 5 miles, so maybe there is a bike solution out there.
* Limited credit and savings means all traditional banks have denied her a car loan. No savings to buy anything.

Possible solutions:
* Buy here pay her shady car dealership is offering a car loan to her. She would end up paying something like a 23% APR, which her end result would be paying something like $9000 over 4 years for a car worth at most $2500. I feel this is going to lock her in a cycle of poverty, hence wanting to step in.
* I offered to find a very cheap car ( <4k) and let her make payments on it to me as she can afford it. I would consider it a gift, so if it never got paid back I never get paid back. But she is a very moral person, so I do not think I would get stiffed, but may only get $50-$100 a month. Compounding problem is she won't fit in the super small cars that I would prefer to buy.
* I offered to cosign a loan for a newer car in the 5-9k range. Then I would make payments, and let her pay me as she could. Again, willing to consider it a gift, if she never paid me back I would not suffer. I am demanding I make the actual payments though so that I don't get a credit ding if she "forgets" to pay the bank
* Suggest she move to a more walk friendly place where she can get by without a car. But she can't afford the move, and has limited educational diplomas that would make living in a high cost of living area like a big city.
* ??? need ideas

I am open to other ideas. One MMM thought would be to encourage a bike. I love bikes. These are the complications with that:
* Really hard to get around town in the snow via bike. Would be a problem.
* She is already severely socially isolated in this small town. Only a few people her age in her town. Without a car she would see even less of them, and perhaps even gain more weight.

[Retire-Canada]

Cheap. No balance req'd. Can carry groceries. Will force her to exercise. Large seats are available to provide comfort for larger butt.

Studded tires will allow winter use as long as snow is plowed.

-- Vik

[MoneyCat]

Cheap. No balance req'd. Can carry groceries. Will force her to exercise. Large seats are available to provide comfort for larger butt.

Studded tires will allow winter use as long as snow is plowed.

-- Vik

Seconded.

With the problems she is facing, the last thing she needs is the added expense of a car.  Right now, she should be focusing on improving herself by using a bicycle for fitness and to save money.

[Blackadder]

The personal loan sounds like the best approach to me - no money is wasted on fees and interest, and you can still waive the remaining amount in case of unemployment or such. Just make a sensible, clear (!) contract (which also handles edge cases like, what happens if someone dies, how much has to be paid each month beginning when, maximum number of years until paid back, etc.). The closer you are, the more explicit the contract needs to be. From your post I read that she might not accept a gift, so it sounds reasonable to towards her handle it as a personal loan and towards yourself see it as a (possible) gift. If you foresee emotional stress on her part of being indebted to you, you could also arrange some ownership-related reality-bending (like, you own the car until paid by her, so, technically, she's not in debt with you).

About the car -- I believe that some smallish cars still have roomy interiors. I certainly have sat in a lot of big cars that had tiny interiors. I'd say just test-sit a couple of them. 150kg does not sound extremely big, so you might still find a car that's cheap and suits her.

Also, maybe there are hybrid solutions like ride-sharing on some days (roommate?), using a bike or a scooter on other days.

[RunHappy]

Cheap. No balance req'd. Can carry groceries. Will force her to exercise. Large seats are available to provide comfort for larger butt.

Studded tires will allow winter use as long as snow is plowed.

-- Vik

Sorry to hijack this thread with a non-related question.  How could one put a baby seat/carrier on something like this and still carry groceries?   I love this bike!

[RunHappy]

You said this is your sister-in law, how does their sibling feel about helping them out?  Is it possible for you to offload one of your vehicles (assuming you have more than one) to her?

[MrFrugalChicago]

Her sibling wants to help. Like me we don't know the best way.

Only have 1 car so giving it isn't really an option.

I bought her a normal bike about a year ago as a gift. So she does have some bike options. I do know in her town roads are pretty rough in the winter.

[James]

I think buying a cheap car and giving it as a gift isn't a horrible thing to do. I don't see it as a great thing, for all we know it might just enable her current lifestyle, but it could also save her a great deal of money and allow a better lifestyle. We just can't know, and you might not know either. I would definitely try to find something very cheap if you are asking her to pay you back, both so you aren't out much and so she can feel good about the success of paying you back. If she does pay you back then maybe you can find a nicer car for her in the future that she can again pay back, selling the cheaper one. Just don't talk yourself into buying a nicer or newer car.


The three wheel bike is a great idea if she has a place to keep it. With her weight it would probably work a lot better than a regular bike, with easy storage. If you got this instead of a car for her, as the old car stopped working it might be a transition into a different way of transportation for her. Both exercise and saving money. Obviously if she wouldn't use it then you haven't improved or changed anything, but the up side is so great that it might be worth any chance that she would use it. Given her lifestyle and weight do you really think she will bike if she has a car? My bet is that getting her a car is just going to continue the status quo. So if you know she will just go with the expensive car plan if you don't get her one, then maybe giving her a cheap car is the way to go.

[KD]

Do you know that she actually uses the bike any that you've already bought?

[ender]

I think buying a cheap car and giving it as a gift isn't a horrible thing to do. I don't see it as a great thing, for all we know it might just enable her current lifestyle, but it could also save her a great deal of money and allow a better lifestyle. We just can't know, and you might not know either. I would definitely try to find something very cheap if you are asking her to pay you back, both so you aren't out much and so she can feel good about the success of paying you back. If she does pay you back then maybe you can find a nicer car for her in the future that she can again pay back, selling the cheaper one. Just don't talk yourself into buying a nicer or newer car.

Ugh I could not disagree more. Cars are huge costs, but the purchase price is only a small portion of it. Repairs, gas, maintenance, insurance, registration, all are big.

Many, many, MANY people stay broke because they work to have a car (up to a lot higher income than your SIL too). You should have a car to work, not the other way around.


$12/hr fulltime is about $25k a year, higher if it's on the $14/hr side. Without knowing expenses it's hard to say, but that's probably $1.5k takehome a month and midwest living is cheap especially in an inexpensive apartment with a roommate. Should be several hundred in discretionary a month since she has no debt.

If you want to give a car as a gift, tell her you will match her 1 to 1 up to say $4k (or 2x whatever you are willing to gift her).

[KD]

@RunHappy - one of these for a tee-tiny baby or the more upright one could be attached on front once you reach toddlerhood...


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[mozar]

I don't think it's up to the OP to help with the weight problems. If the OP brought it up it would probably lead to depression and binge eating for the sil. I think gifting a very cheap car is reasonable, if she can handle the maintenance.

[MrFrugalChicago]

Do you know that she actually uses the bike any that you've already bought?

Ya she does. She does not ride it every day in the summer, bit she did use is over the past year... rides with the extended family, etc. She often tries really hard for a few months to make a lifestyle change, but then slips back.

Yes I am trying to fix the car and not the weight problem. But giving the gift if say studded snow tires may help with both.. but it also might be a slap in the face. 

[MoneyCat]

To be honest, at $12/hr wages your SIL would be paying so much to fuel, insure, and maintain the car that it wouldn't really do her much good at all.  I'd go with the studded tires for the bicycle and maybe a bike trailer for groceries and just explain why a car doesn't make financial sense for her so she understands that you are trying to help her not hurt her.

[MrFrugalChicago]

To be honest, at $12/hr wages your SIL would be paying so much to fuel, insure, and maintain the car that it wouldn't really do her much good at all.  I'd go with the studded tires for the bicycle and maybe a bike trailer for groceries and just explain why a car doesn't make financial sense for her so she understands that you are trying to help her not hurt her.

Ya for sure.

She isn't really able to deal when things went wrong on the last car. Seems like someone usually had to help her out. But I don't really know how to help her get ahead. I know when I was 16 I wouldn't have been able to get my first part time job in the next town over without a crappy car my parents gave me. But clearly she isn't 16.

[MoneyCat]

To be honest, at $12/hr wages your SIL would be paying so much to fuel, insure, and maintain the car that it wouldn't really do her much good at all.  I'd go with the studded tires for the bicycle and maybe a bike trailer for groceries and just explain why a car doesn't make financial sense for her so she understands that you are trying to help her not hurt her.

Ya for sure.

She isn't really able to deal when things went wrong on the last car. Seems like someone usually had to help her out. But I don't really know how to help her get ahead. I know when I was 16 I wouldn't have been able to get my first part time job in the next town over without a crappy car my parents gave me. But clearly she isn't 16.

Does she have any education?  Would Leapforce at Home be an option for her so she wouldn't have to leave home for work?

[MrFrugalChicago]

Does she have any education?  Would Leapforce at Home be an option for her so she wouldn't have to leave home for work?

HS grad but like 1 year of college. She likes wedding planning, but doesn't seem to be worth a lot of money as a career in a podunk town.

Never heard of LF@home, but I am generally skeptical of any such WFH site.

[MoneyCat]

Does she have any education?  Would Leapforce at Home be an option for her so she wouldn't have to leave home for work?

HS grad but like 1 year of college. She likes wedding planning, but doesn't seem to be worth a lot of money as a career in a podunk town.

Never heard of LF@home, but I am generally skeptical of any such WFH site.

Leapforce is legitimate and might be a good option for her to save money on commuting expenses.  The only real downside of it is that she would have to pay self-employment taxes.

[MrFrugalChicago]

Leapforce is legitimate and might be a good option for her to save money on commuting expenses.  The only real downside of it is that she would have to pay self-employment taxes.

Commuting expenses are not that high.  Few bucks a week in gas. Just having the car thing.

Living in the middle of nowhere, with no car, is pretty much like jail though. I would say dont live in the middle of nowhere, but if you are stuck there... complicated.

[MoneyCat]

Leapforce is legitimate and might be a good option for her to save money on commuting expenses.  The only real downside of it is that she would have to pay self-employment taxes.

Commuting expenses are not that high.  Few bucks a week in gas. Just having the car thing.

Living in the middle of nowhere, with no car, is pretty much like jail though. I would say dont live in the middle of nowhere, but if you are stuck there... complicated.

Sounds like you have made up your mind.  Good luck.

[MayDay]

I have a quite overweight aunt, who lost then gained right back after weight loss surgery.  Very sad. 

Anyway, she used to have a large sedan, but got a new car- the little ford SUV.  I don't know the name.  It definitely depends on how the car interior is laid out, whether she will fit or not. A small car might work if the layout works for her.

If moving to somewhere close to work will solve the problem, I'd offer to cover the moving costs.  That seems like a more long term solution.  But if she has a good roommate situation now, she may not come out ahead with moving. 

[MrFrugalChicago]

I have a quite overweight aunt, who lost then gained right back after weight loss surgery.  Very sad. 

Anyway, she used to have a large sedan, but got a new car- the little ford SUV.  I don't know the name.  It definitely depends on how the car interior is laid out, whether she will fit or not. A small car might work if the layout works for her.

If moving to somewhere close to work will solve the problem, I'd offer to cover the moving costs.  That seems like a more long term solution.  But if she has a good roommate situation now, she may not come out ahead with moving.

She actually is close to work. That is a nonissue.

[alsoknownasDean]

Probably best getting the cheap beater and 'loaning' her the money.

Alternatively, is there anything that can be done to keep the old car going while she saves for a replacement? Maybe drive as little as possible in the meantime.

After all, if she can manage to put away $100 a week while driving the old car around, that's around $2600 in six months. That should be able to get her something.

Are there any ways for her to earn more money? You've said she's into wedding planning, is she crafty at all? Could she make fancy wedding cards and sell via Etsy? Import stuff from China and sell on eBay for a profit?

[firewalker]

Am I right to say there is a big spending problem here? I make about as much as she does, I don't have a paying roomate, and I simply live within my means. Meanwhile, I contribute to the 401K, HSA, etc. No two lives are identical, but is she truly that strapped for cash?

[MrFrugalChicago]

Am I right to say there is a big spending problem here? I make about as much as she does, I don't have a paying roomate, and I simply live within my means. Meanwhile, I contribute to the 401K, HSA, etc. No two lives are identical, but is she truly that strapped for cash?

Yah not sure what the whole picture is. I sat down and had a finance talk a few years ago, not sure where the money is going now. McDonalds is consuming plenty of it though.

[JetsettingWelfareMom]

Ditto for buying the beater...I would not even tell her how much you spent. Let her think it cost $10,000 since it's the exact same car that she would finance through a shady dealership for that price anyways! Find it on Craigslist for 2-4K , get a backyard mechanic you know and trust (always good to know car guys--always) to check it out. Not sure why you think a tiny car is so much cheaper than a gas guzzling old Ford my experience is the little Mazdas and Hondas hold their value better.
Are people on burnout or just parrots? I got the biking thing but it's sorta like telling you're cigarrete smoking friend that you won't give him a loan until he quits smoking--it's not realistic as a starting point. Baby steps especially in the Midwest with it's biter cold, horrible to nonexistent public transportation, lack of bike paths or bike cities, and very long distances between things. And she's 100 pounds overweight--so just telling her to get a better bicycle is not meeting her in the middle.
I tried LeapForce--read a 112 page booklet (learned a lot though), took a 5 hour long test (twice) but inexplicably failed the very last section each time. They're free to test for though and I thought the material was interesting!

[Retire-Canada]

Sorry to hijack this thread with a non-related question.  How could one put a baby seat/carrier on something like this and still carry groceries?   I love this bike!

There are many designs depending on your precise needs.

https://www.google.ca/search?q=front+mounted+baby+bike+seat&espv=2&biw=1871&bih=919&source=lnms&tbm=isch&sa=X&ei=zznpVP7OF5HwoATbu4DwDg&ved=0CAYQ_AUoAQ

-- Vik

[YoungInvestor]

I have a severely overweight/working in a bad job close relative as well, there's no way biking is going to happen in January. Or July, for that matter.

I feel like I need a ton of willpower to walk to work (a job that I really like) on decent sidewalks in the winter and get close to buying a car twice a week (and my BMI is around 25), I can't imagine how that would be if I was almost twice as heavy and going to a dead-end job.

Find a cheap-ish car that she'll fit in. Focus on helping her to find a decent job, that's a much better use of your time.