Money Matters
Xstatic3333
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
H's Car-Help Me Strategize
This week has been a major financial wake up call for us. We have a lot of work to do on our finances.
Right now we owe on both of our cars. I owe around $2,500 at 4% interest on a car worth about $6,000 that I love and that will last many more years. H owes around $5,500 at 6.9% on a car worth about the same, and it is having major problems. Both of us have much better credit than when we took out these loans, but H's car is too old to refinance anywhere that we have found.
The problematic car is a 2004 Subaru Forester Turbo with about 124,000 miles. We've loved it, but when we noticed it was burning oil a few weeks ago we brought it in and spent $900 on repairs, including the routine 125,000 mile service. We bring it to a dealership for a few reasons: 1) we know NOTHING about cars and have no friends that do either, 2) they give free loaners, and neither of us can be without a car during the work week, 3) the last couple of times we've attempted to find local mechanics, even with recommendations, we have gotten burned. I know this part of why we are spending so much. H got back to it after our trip, and it is still burning oil, and also needs to tires soon. We've spent over $1,000 a year on repairs since we bought it at 85,000 miles. That was in much worse financial times and we felt pretty desperate.
We've been paying above the minimum since the beginning, and it'll be paid off in about 1.5 years at our current rate. However, I'm starting to worry it won't last that long. I know car buying is a hot topic of debate around here, and it is between my H and I as well. I'd love to never have a car payment again, while H is okay with a three year car loan with reasonable payments on a lightly used vehicle. Our compromise is going to be one car loan at a time; his vote counts here and I can live with that.
I am in the long process of sellling $2,500 worth of stock, which I've mentioned before, and was planning to use that to just pay off my car and then start "banking" my payment towards our next DP. Is this still a good strategy if H's car may be on the outs, or should I funnel this money towards his loan instead? If you were me, would you also pause e-fund and Roth IRA contributions to accelerate either the saving or the pay down? We've already stopped travel savings. There are a few expensive things (our dog adoption and my dive instructor course) that we're locked into at this point, but they will be cash flowed. Federal SLs and mortgage are our only other debts, but e-fund is significantly lower than I'd like. My car payment is only $140 a month so it won't add up that quickly.
I feel like a total MM failure right now and would welcome any advice. I know we all have different strategies with these things. The only other thing I'll add is that my car has a cosigner, and that adds to my desire to get it paid off.
Re: H's Car-Help Me Strategize
You mentioned H's car is worth about what you owe, could you get this last repair done, sell the car and in the mean time sell your stocks and buy a beater car for him?
That way you don't increase debt, you get out of the money pit car and you can continue to pay on your car more aggresively.
I bought a great '96 Toyota Camry in high school for 3K and the thing still runs and has very minimal repairs even with 280K miles.
ETA words I forgot.
Selling the Forester is an interesting idea. I'll bring it to H. He's pretty gunshy about selling on Craigslist (he's afraid that if something goes wrong the buyer will come after us) but there's a huge market for private party Subaru sales in our area.
I wouldn't stop retirement for it.
Love: March 2010 Marriage: July 2013 Debt Free: October 2014 TTC: May 2015
Before you step foot on a dealsership's lot - talk with a local credit union and bank to see what their used car loan rates would be (for the kind of vehicle in which you are interested). Then you can compare against what the dealership has to offer.
Subaru's generally have a great rating - however, some of the Foresters have had more problems than other models and I always avoid anything Turbo.
DH's Subaru Imprezza is now 12 years old and going strong (DH bought it new) and only has had basic maintenance and normal wear replacements, We have also had success with Hondas and my current car is a 2008 Toyota Corolla which I love.
@hoffse Carmax definitely feels more comfortable to me. I *doubt* they'd offer what we owe, but it can't hurt to check.
Can you buy a car without a DP? As mentioned, no plans to touch the e-fund or Roth for that.
ETA: The $30-50 is just the part cost for each valve, I was not quoting the whole repair cost. If you can find anyone other than a shop though, that would be great because I guarantee a shop is going to want to charge a couple hundred or more in labor just because they can and you won't know any better.
Also check around for dealerships that buy outright (and promise to beat Carmax's price) I'm not sure if this is a wide spread thing but in our area they are popping up more often. Carmax offered my H $3000 for a car because it apparently had frame damage (it did not really) and my H ended up selling to a local dealership for $12000... Obviously this is rare, but worth looking into! Carmax can be kind of slimy IMO.
I would be inclined to pay off your car and see what you could get for trade in. Having 1 car loan is better than 2, and if you're getting a more reliable car with less repair costs that would be great for your budget too.
For what its worth, I drove a Chevy Nova in high school that was over 20 years old at the time. I don't know if it burned oil, but it definitely leaked oil a little bit. I would have to give it more oil about 1-2x/month. But my mom drove it for a number of years like that before she gave it to me and I drove it for 3-4 years after that. I did have a major repair to the engine during that time...the head gasket blew...but I don't think that had anything to do with the oil issue because it long pre-dated the head gasket and was still the same after the head gasket was fixed.
The muffler fell off the car when I was driving it one day. Pretty hilarious looking back on it now. One second the engine was making its usually soft rumbling noise and the next second the car sounded like I was racing it in the Indy 500.
I sold a car on Craigs List. It was a Honda Civic, but was 11 years old. It also had a lot of problems, including a slipping transmission. The mechanic told me it wasn't worth fixing and I would be lucky to get $1500. Blue book for good condition was $4500. I asked $2500 in the ad and mentioned the transmission was on its last legs.
Got a few responses within a couple days and the first guy to show up and test drive offered me $2000. I accepted. I had two basic purchase agreements ready to go, which included the phrase "as is". We signed both so we both had a copy. He gave me the cash, I gave him the signed title and took my plates off, he drove my car away. Pretty simple and I never heard from him again, as it should be.
I've sold other cars to private parties, though that was the only one through CL, and they all basically worked just like that. True, you can open yourself to more trouble if you sell to a jerk who doesn't want to understand the meaning of "as is", but I would think that is a small percentage of private party sales.
(Dog can't be delayed. It's been a long adoption process and we're financially and emotionally committed).
Thanks @Gdaisy09. I'm so excited! I'll aw some pictures once he's here.