Upside down on Automobile....

**rustyc24** · 08-24-2010, 01:07 PM

Hi all! I just finished Dave's Total Money Makeover and I have a question that hopefully someone on here will be able to advise me on....

I am one of the people Dave talksabout in the book as having a high car note. Dave recommends selling the vehicle. However, I am upside down on the note. Have some negative equity. I lined up my debts from smallest to largest and the car note is the second largest. Should I tackle the vehicle note first?

**Greebo** · 08-24-2010, 01:13 PM

Originally Posted by rustyc24

Hi all! I just finished Dave's Total Money Makeover and I have a question that hopefully someone on here will be able to advise me on....

I am one of the people Dave talksabout in the book as having a high car note. Dave recommends selling the vehicle. However, I am upside down on the note. Have some negative equity. I lined up my debts from smallest to largest and the car note is the second largest. Should I tackle the vehicle note first?

How much do you owe on the car, and what is it worth? What is your annual take home income?

If the car debt is less than 1/2 of your take home pay and will take less than 2 years to pay off, you can just pay off the car.

If not, then it's better to borrow a LITTLE bit to cover the difference between what it will sell for and what you owe and to buy a beater than to keep owing money on an asset losing value faster than Mel Gibson loses his cool.

**Greebo** · 08-24-2010, 01:14 PM

Oh but if you DO keep the car, then no, you do it in order with the other debts - smallest to largest.

**rustyc24** · 08-24-2010, 01:28 PM

I average around $80K a year and I owe $38,900 on the truck. Its probably worth around $33K. The debt is less than 1/2 of my take home pay. Im just trying to get everything in line for starting my snowball to pay off the other, much smaller, debts that I have. I just feel that the money I spend on the payment is slowing down my savings.

**made a dumb decision on buying the truck

it happens..just wont happen again

**Palooka** · 08-24-2010, 01:31 PM

Originally Posted by Greebo

If not, then it's better to borrow a LITTLE bit to cover the difference between what it will sell for and what you owe and to buy a beater than to keep owing money on an asset losing value faster than Mel Gibson loses his cool.

*snort* And that shows you exactly how fast a car can depreciate. Fast!

OP,
We was a few grand upside down on a car and sucked it up and payed it down until we could trade it in for a cheaper car and we got out of that debt. It sucked for awhile though.

**Greebo** · 08-24-2010, 01:38 PM

Originally Posted by rustyc24

I average around $80K a year and I owe $38,900 on the truck. Its probably worth around $33K. The debt is less than 1/2 of my take home pay. Im just trying to get everything in line for starting my snowball to pay off the other, much smaller, debts that I have. I just feel that the money I spend on the payment is slowing down my savings.

**made a dumb decision on buying the truck

it happens..just wont happen again

You're about where we were. We had two cars totaling in debt just under half our income.

In our case, we kept the cars and paid them off in order. Whether you do that, or borrow oh... 10k and use it to sell the truck, cover the gap and buy a 4k truck, then pay off the 10k instead of the 40k is up to you.

In our case, we had hybrids, which hold value better (not great but better) - and we *LOVE* our cars, so we WANTED to keep them.

If you don't love your truck, I'd sell it.