Put money towards debt or down payment on a used car?

**younglady50** · 04-03-2008, 11:40 PM

I have a cc debt balance of $4600.00. I was able to get a balance transfer for 0% for 1 year. I am aggressively attacking this debt so I can become debt free within the year. My minimum per month is $46.00. I put $300.00 towards it.

I also put $100.00 away a month for a down payment on my car. I will be needing a used car within the year. I don't know what is more crucial, getting rid of my debt and having a low down payment towards a car. Or putting more on my down payment so I will not have to borrow against my credit card.

I also have $100.00 taken out for my Emergency Fund. This is also important, should my car need repairs, the money will be there.

The extra money that goes towards my cc is from cutting down completely on every day expenses. I have no problem sacrificing just to get rid of the debt. Should I keep paying down my cc debt?

**kaykwilts** · 04-04-2008, 07:49 AM

I think you should aggresively attack the debt but I also think you should put enough money aside so that when you do buy the car you can pay cash for it rather than get into debt again. You can buy a $1,000 car that is in good working condition and drive that while you save to upgrade to a better car. This is what Dave Ramsey avocates. Don't get into the trap of a car note.

**PrairieRose** · 04-04-2008, 08:39 AM

I'd pay down the debt as quickly as possible. Save up for the car, buy what you can pay cash for. Then, save up for a better one (after you fund an EF that is).

**mombottoo** · 04-04-2008, 04:23 PM

I would pay off the cc debt and pay cash for a car I could afford to own. We have never financed a car and many of the people I know who do finance cars end up paying on a dead horse.

**Jenna** · 04-06-2008, 07:26 PM

Well, I'm not as bothered by a car loan. My last one was paid off a year early, and refinanced to lower the rate.

Since you'll need the car soon, I would continue on the same path you're currently on... you'll have $1200 or so for a down payment.

I, personally, wouldn't buy a $1000 car. I'd worry about maintenance issues and reliability. In 2000, I bought a new car for less than $20k. I don't regret buying new, since I bought what I felt I could afford. I took on a second job to help pay it down quickly.

**cheles2kids** · 04-07-2008, 11:01 AM

I know this goes completely against what Dave suggests to do, BUT how about taking $3,000.00 and applying to your cc. and take the other $1,600.00and put away towards a nice, used car?

That way you'll get a jumpstart towards having cash to pay for your car and you'll still be putting a large chunk of money towards paying off your cc. debt.

I would normally say put it all towards the cc., having no debt should be first priority BUT if you *know* you will be needing another car (notice, I didn't say "new") in the next year, I think it would be wise to start putting away as much as you can towards it as well. If you don't have a reliable car to get to and from work, you won't be paying down any debt, kwim?

Remember a good rule of thumb to remember, when buying a brand new car, it will depreciate 40% when you drive it off the lot, go with a used car everytime (this is something Dave *does* suggest)!

Good Luck!