Celebrating! Less than 10k in total debt

[Radiance]

ok, remember I come from years of irresponsible spending...
So there are 12k on a 401 k and 1500 of EF, that is it.
No house to my name, I am renting.

oh, and I'll be 40 this year... ladies usually don't admit to that, but, what the heck, in the name of honesty.

But, I find a reason to celebrate, this month my whole debt has gone right under 10k!!

A visa CC Last time used was Sep 2009 with a balance of $2290.06
A car loan for my Honda Civic 2006 with a balance of $7655.00

So my total debt in the whole world is: $9,945.06

I am going on a shopping spree!!!! Just kidding, this is buying me a lot of freedom and peace of mind.

I have a whole new set of beliefs and a nicely defined yet flexible budget that allows me to stay on track. And I have the support of this wonderful community which has been pivotal to my sucess! Thank you!!!

[BlackDiamond]

Congrats!

I don't really consider car loans the same caliber of debt (I'll probably always have one because I need a reliable car for work/commute) as credit cards and non-secured debt.

[Radiance]

I don't really consider car loans the same caliber of debt (I'll probably always have one because I need a reliable car for work/commute) as credit cards and non-secured debt.

Hi, I have been scold before for saying that

But in reality, if I don't prepay, I will be done in 2 years with that loan when my car is 6 years old. At that point I could save to buy my next car in cash or perhaps take a small loan. I like the cars that are in the 20k range...
Most likely I will buy civic again.

Many here advocate for used cars, but I am not yet convinced. Since I dont need one right now I am not losing too much sleep over that

[graceful]

Congratulations!!!

[disneysteve]

Congrats, Radiance! That's a nice milestone to hit. You'll be debt-free before you know it.

Originally Posted by BlackDiamond

I don't really consider car loans the same caliber of debt (I'll probably always have one because I need a reliable car for work/commute) as credit cards and non-secured debt.

I would disagree with this. If you buy a car that is well-within your means, there is no reason that you shouldn't be able to pay it off and keep it for at least several more years.

I'm driving a 13-year-old car that I bought used 12 years ago. It was paid off ages ago. We paid cash for my wife's car in 2002 (that was also bought used) so we haven't had a car payment for over 7 years. They are both perfectly reliable.

[EconoMutt]

You are making excellent progress!!
Very inspirational to the rest of us "Up to Our Eyeballs in Debt Crowd."

[BlackDiamond]

Originally Posted by disneysteve

Congrats, Radiance! That's a nice milestone to hit. You'll be debt-free before you know it.



I would disagree with this. If you buy a car that is well-within your means, there is no reason that you shouldn't be able to pay it off and keep it for at least several more years.

I'm driving a 13-year-old car that I bought used 12 years ago. It was paid off ages ago. We paid cash for my wife's car in 2002 (that was also bought used) so we haven't had a car payment for over 7 years. They are both perfectly reliable.

When you live in Boston, it's easier said than done. I actually don't live IN Boston, because at 50K a year, there is NO WAY for me to afford a home, or even an apartment in the city. So I live 30 minutes North. I spent an hour and a half each day, each way in traffic to get to the closest subway station. I drive a 2007 Ford Focus that I got in late 2008. Well within my means. But I don't expect that it will last much longer than my last two cars did, which was 5-6 years, even with good care.

The alternative is driving 30 minutes every day to a train station, paying $4/day to park and $200/month to take said train. I am autistic. I can't be on public transportation for very long before I start to freak out. The $200/mo train takes over an hour. The $34/month subway takes 10 minutes to get to my work site and costs less overall. It just means I go through cars faster than average.

[buildmybudget]

Car issue aside, congratulations! I just paid off my car and it was the best feeling in the world when my title showed up in the mail. Celebrate your progress!

[Joan.of.the.Arch]

I imagine there are people who have read your story here over the months and have been inspired. So you have been a part of helping others. Thank you and congratulations.

[creditcardfree]

Congratulations you are making excellent progress!

[maat55]

Originally Posted by BlackDiamond

Congrats!

I don't really consider car loans the same caliber of debt (I'll probably always have one because I need a reliable car for work/commute) as credit cards and non-secured debt.

Are you suggesting that you can only have reliable cars with payments attached? The reliable car excuse for debt does not fly with me.

Funny, I have three reliable vehicles with no payments, and an car fund building for the replacements.

[PetMom]

Congratulations Radiance!

That is something to be proud of and takes work and effort - watching dwindling debt is a wonderful thing.

Good job.

[BlackDiamond]

Originally Posted by maat55

Are you suggesting that you can only have reliable cars with payments attached? The reliable car excuse for debt does not fly with me.

Funny, I have three reliable vehicles with no payments, and an car fund building for the replacements.

Yes. From my personal experience, I have never had good luck with an older car. And I do not have the money to buy a new car with cash and likely never will.

Your perspective would change if you spent 3 hours in traffic every day.

[Radiance]

It should always be possible, even with new cars
Let's say you buy a car in credit, that is tipiccally 5 years
Any decent car should last you 7 years and I am being very conservative.
During the extra 2 years you set aside the payment so when you need a new car, you only need a 3 year loan
Again, you keep the second car at leat 7 years, so your third and any other car willl be bought in cash.

Also you need a reliable car, I am no expert but Ford Focus don't have the best reliability recordss.
They are not known to last 10 years as others do.

Please don't be offended, just challenging you car loan beliefs

[disneysteve]

Originally Posted by BlackDiamond

Yes. From my personal experience, I have never had good luck with an older car. And I do not have the money to buy a new car with cash and likely never will.

Your perspective would change if you spent 3 hours in traffic every day.

I don't believe this is true and neither do many other people. I'm sorry if you have had bad experiences with older cars but that is not the norm. Have you heard the Toyota ad that says that 80% of all Toyotas ever sold in this country are still on the road? Lots and lots of people drive older cars without a problem. Our cars are 13 and 11 years old. In August, we will be taking our 11-year-old van on a 2,500 mile roundtrip drive to Florida, which we do every year.

Originally Posted by Radiance

Let's say you buy a car in credit, that is tipiccally 5 years
Any decent car should last you 7 years and I am being very conservative.

Please don't be offended, just challenging you car loan beliefs

If you need to finance for 5 or more years, you can't afford the car. Stick to 3 year loans, 4 tops if necessary. So let's say you buy a 2-year-old car with 25,000 miles which is about average. You take a 4-year loan. You drive more than average, maybe 20,000 miles/year. In 4 years, you own the car outright and it has about 105,000 miles. There is no reason why you couldn't keep that car for another 3 years until 165,000 miles. That's 3 years with no payments when you can bank the money in a "car fund" to use for the next purchase.

[Radiance]

Steve, what percentage of your net is the recommended amount for car payment? Assuming it is the first car you buy and it is bought in credit.

Or maybe my question really is, how much car can I afford?
Thank you

Hey, i am highjacking my own post!!!

[BlackDiamond]

I'd rather have my car payment and be able to keep my job than not have my car payment and be unemployed. My alternative would be quadrupling my housing expense to rent in the city. Not gonna happen.

I make decidedly less than the average person in Boston but right now, it's all I have. I have no doubt that this car will last about the legnth of time of the loan.

It must be nice to have the money to do a 3 year loan, but not everyone is that fortunate.

I have a small savings but basically live paycheck to paycheck, just like everyone else I know.

[disneysteve]

The general rule I've read is that your total car payments should not exceed 20% of your monthly take-home income. That's 20% total for however many cars you have, so if you and your spouse each have a car loan, the total payments shouldn't exceed 20% of income (not 20% to each car). Of course, you need to modify that number based on your own circumstances. If you have a big mortgage or lots of other debt like CCs and student loans, 20% may be too high for you.

You also need to factor in other costs of ownership. Some cars cost more to insure. Some cars have higher maintenance costs. So you need to make sure you can afford the overall costs, not just the monthly payment. If you are buying a car with higher than usual insurance or maintenance costs, you probably want to keep the payment well below the 20% figure.

I also think it depends how much you earn. Someone bringing home 10K/month certainly doesn't need to be spending 2K/month on a car payment.

[disneysteve]

Originally Posted by BlackDiamond

It must be nice to have the money to do a 3 year loan, but not everyone is that fortunate.

The point is to buy the car that you CAN afford with a 3-year loan. That might be a few years old and have some miles on it, but so what? You should be able to find a good, dependable car that you can afford with a 3 or 4 year loan. My car has 125,000 miles on it. It works fine. It is worth about $3,000 right now. I see no reason why it shouldn't last at least 200,000 miles before it starts giving me any major problems. Someone buying it today would have a perfectly good car that they could drive for at least a few more years. Of course, I'm not selling it since I plan to be the one to hit that 200K mark myself.

[nanamom]

I realize this wasn't started a a car thread but....
My husband and I drive a 2005 van because while we only have 2 children we do like to "borrow" our grandkids from time to time and need the space. In all honesty if it weren't so expensive to drive (gas and all) I'd have a 15 passenger van! But I digress. My van won't be paid off for about 5 years more. I am praying it lasts that long. By then it will have mega miles on it. At that point while we hope to keep driving it it doesn't look good. We won't have money saved to buy a "new" (we always buy used) on with cash and so I think I am on the car payment merry go round for ever.