Car loan and more messed me up, need advice!

[Dreams Fade]

First off, I found this place through google and just reading through some of the topics I think I came to the right place. Everyone seems real positive considering the circumstances in these threads.


I am 20 years old and in major debt. I drove a car I had no payment on, but wanted something nicer. I worked it out financially and wanted to do this for myself, my first "new car." What I found was used but in really nice condition. It's a Honda and suped up really nice. Kelly Blue Book is less than $10k, I paid the personal seller $15k for it because of all the extra parts that made it worth that much to me. Anyways, after I had it for a while it broke down a lot and in fact the clutch is going out as I type this!! I have had nothing but headaches with this thing.

What do I do? I still owe over $14k on it, spent over $3k to fix it already, and am just unhappy to the extreme with it. I pay $320 a month for payments, $200 for insurance. I live on my own (with roommates) and pay $500-$600 a month on all my household bills. $75 for my cell phone. I am completely independent, pay for all my bills. This doesn't include food and gas!

I make $300 a week, I am really panicking (that word doesnt look right!)! Aside from the car loan, I had to max out 2 credit cards just to pay to keep the car running (another $3500). I also owe on a tv which I need to sell ($2000).

I had cash flow bigtime which is how I managed to stay afloat but just typing everything I did right now I got a sick feeling in my stomach. I foolishly just spent the $5k I got for my old car on being able to work with my favorite musicians of all time (i am a musician too). it was a once in a lifetime chance and it's been a dream come true but now I am feeling the effects of everything.

I am binded to paying off my car and to where I live, what is the best way to get rid of this car and get something reliable and me out of the car loan? That is what kills me the most right now! If i sell it I will never get what I paid for it and still owe on a loan for a vehicle i dont have. I don't understand how it will work.

[terry1156]

Welocme and sorry to hear about your problem. I wish I could give you some good news, but you're going to have to mark it up as a lesson learned.

My opinion is if the car is breaking down and you think it will continue to do so, you need to sell it and get something reliable. That means you will take a loss and have debt and nothing to show for it, but this is better than letting the car run you further and further into debt.

Unfortunately, you're in a no win situation and you will lose money. Take it as a lesson learned that you won't want to repeat.

[disneysteve]

Welcome. I'm sure you've come to the right place.

Sorry to be downer on your first post, but you've got some serious problems. I think you realize that now which is what brought you here, so I commend you on that.

You earn $300/week. That's $15,600/year. On that income, you bought a $15,000 car apparently with nothing down. Honestly, I wonder how you even qualified for that loan.

You also bought a $2,000 TV. I certainly agree that you need to get rid of that, though I wonder what the resale value is. I suspect you will lose some money in the process.

Not counting your credit cards, the tv, food or gas, you listed $1,195/month in bills. You only earn $1,300/month, so that only gives you $105/month to cover food, gas and debt payments. I can't imagine that is nearly enough money to get by. How are you managing?

Time to buckle down and cut out every unnecessary expense, sell the car, sell the tv and figure out how to increase your income. You just can't keep going with your current bills making barely over minimum wage.

One thought about the tv. You mention that you have roommates. Might any of them be interested in buying the tv or at least helping chip in to pay for it since I'm guessing you aren't the only one watching it.

[scfr]

Welcome.

You are 20 years old. You have a lot of years ahead of you still, so you definitely have plenty of time to turn your situation around if you are willing to work hard at it.

Regarding the car, the big question is whether to sell or not. If you can get by without a car (if you can rely on walking, biking, and public transportation, plus the occasional ride from a friend in exchange for gas money), then by all means sell the car and do without one. Think long on hard and be honest with yourself whether you really need a car. It is easy for people to come up with lots of justifications about why they "need" a car when really it's just that they want one. If you live in a major city with good public transportation, you probably don't need one. If you absolutely must have a car, then you may just have to keep the car you have (it doesn't sound like you have the cash to pay for another car, and you may not qualify for a loan on a different car when you already have a car loan that is not paid off).

Regarding the TV, definitely look in to selling that.

Then, most important for your financial future, you need to come up with a plan for how you are going to manage your finances from now on. If you haven't already done so, find a good personal finance book (check it out from the library!) and read it, then put some of the suggestions to work. I haven't read this particular book, but Suze Orman's book "The Money Book for the Young, Fabulous & Broke" might be a good one in your circumstances. You will likely decide that you need to:
- Commit to not taking on any more debt
- Find a way to increase your income (2nd job perhaps?)
- Control your spending by tracking your expenses & setting up a budget

It may feel overwhelming right now, but if you read more on this board you will see that there are many people who have managed to turn their financial lives around. Good luck to you. Please keep us posted on how things are going.

[Scanner]

Axe the car.

You know now personally what the phrase "Money Pit" means. I wouldn't try to bite the bullet and pay it off if it's going to keep being a money pit.

Most people with boats are intimately familiar with that term.

And don't pay above Blue Book value ever again.

[Vapors]

A lot of people your age make these types of mistakes. When you think about how much money you are making, it can sound like a lot. But there are so many expenses you don't think about until you are faced with paying them. It's good that you are trying to correct this now before it's too late.

I agree with what a lot of others have posted. You really need to get a second job, at least until you get out debt. Make a budget so you can see where your money is going and how much is left over. Don't take on any more debt. Don't even charge lunch.

Good luck and keep us posted.

[prosper]

hey everyone, this is my first post.

Just one question: Do you make your primary income from being a musician?