Car and motorcycle debt.

[ramseyfollower]

Hey everyone,

I am new here and I am following Dave Ramsey's 7 baby steps. I have his financial peace university DVD series and just got done paying off 14k in credit card debt in 12 months. Now have no credit card debt and I am working slowly on my car/motorcycle.

After following the zero budget plan I have $400 am allocating into savings each month. This is the only money I have after paying all required bills.

I don't want to get into my budget as I can tell you its sound. I have $400 after all total bills +/-1 $2 depending on the pay period.

Here is my delima.

2011 Subaru Outback - Lien through bank of $27,000
2008 Yamaha Raider - Lien through bank of $4,600

Subaru is worth $19k if I was to sell
Raider is worth $6k if i was to sell

I have $1,000 in emergency savings per dave's plan currently.

In May I will have $400 extra =$1400 in savings.

I need advice on what I can do to return the car/motorcycle to free up extra cash and get out of these debts.

I have sold quite a bit of things and that's not an option anymore.

I have $30k in a retirement fund that my company will let me borrow against 50% of the value... So 15k eligible.

I am 31yrs old.

I look forward to your responses.

[autoxer]

Is selling the bike an option? That could free up a little bit to put towards the car loan.

[JoeP]

Can you go to a simpler cell phone or broadband plan?

I'd sell the bike tomorrow, and use that cash on the car loan principal. Make extra principal payments on the car loan if possible. If you can sell the car tomorrow, you'd still be on the hook for $8k and have nothing to show for it, and you'd be out a vehicle, so I'd put all my energy on the car payments and drive it forever.

Also, I know it is water under the bridge, but you really should avoid financing such expensive cars. The long term debt commitment on a depreciating asset is not a smart financial choice. Look at your numbers. A wiser choice would be to buy a used car in the $5k-$8k range using cash, and use those years of ownership to build up your EF and save toward your next car.

[bjl584]

I'd sell the bike. It's most likely a want and not a need. Nothing wrong with wants, but you need to clear up your budget before splurging. Sell it, get yourself out of debt, then buy a bike again sometime in the future with cash.

As far as your budget being sound, it would still be beneficial if you posted it. There are most likely some places to make cuts and/or adjustments.

[disneysteve]

Sell the bike. That gives you an extra $1,400 to put toward your debt snowball. What's the dilemma exactly?

[ramseyfollower]

My delima is do I take out another loan to pay off the car and then ride the motorcycle in the summer until I can get some money saved to buy a vehicle in cash. Then sell the motorcycle.

I know the motorcycle needs to go. It's just a matter of symantecs of what would be the best method to reach my goal of paying off the car thats so expensive.

The car payments are $480 while the motorcycle payments are only $136.

Hope that helps.

I went in yesterday to a bunch of cell providers and due to my location (Alaska) I am unable to get a cheaper plan. I have been on the same plan for 10+years and I am grandfathered at the old prices.

It would cost me $80 more a month to get into a "new" plan and the service would be worse.

I currently pay 23.99 for internet. I am living bare bones here.


I understand I made mistakes to get in debt and thats why I am here to look for sound advice on how to move forward.

[Eagle]

Hey everyone,

I am new here and I am following Dave Ramsey's 7 baby steps. I have his financial peace university DVD series and just got done paying off 14k in credit card debt in 12 months. Now have no credit card debt and I am working slowly on my car/motorcycle.

After following the zero budget plan I have $400 am allocating into savings each month. This is the only money I have after paying all required bills.

I don't want to get into my budget as I can tell you its sound. I have $400 after all total bills +/-1 $2 depending on the pay period.

Here is my delima.

2011 Subaru Outback - Lien through bank of $27,000
2008 Yamaha Raider - Lien through bank of $4,600

Subaru is worth $19k if I was to sell
Raider is worth $6k if i was to sell

I have $1,000 in emergency savings per dave's plan currently.

In May I will have $400 extra =$1400 in savings.

I need advice on what I can do to return the car/motorcycle to free up extra cash and get out of these debts.

I have sold quite a bit of things and that's not an option anymore.

I have $30k in a retirement fund that my company will let me borrow against 50% of the value... So 15k eligible.

I am 31yrs old.

I look forward to your responses.

Welcome!

Good job on building your emergency fund! You already got your 1k e-fund. Wow 14k in CC debt knocked out in 12 months? That's great! Seems like your being very gazelle intense with your debt reduction.

Is there a local community or church you can be a part of to do Financial Peace University through? We did it back in 2011 and it was really helpful to be around others trying to get out of debt at the same time. May be a little tough in Alaska depending on where you live but perhaps worth a try.

Honestly, I think sharing your budget is a good idea particularly if you truly are wanting help to free up cash to get out of debt. While you may think your budget is sound there's lot's of experienced people here and perhaps someone might have a different perspective to help you out?

For example…
1. When was the last time you got a car insurance quote?
2. How often do you eat out?
3. What do you spend a month on entertainment?
4. Do you have a cable/satellite bill?
5. Do you have a home phone?
6. Are you married or do you have a partner? Have you considered getting a roommate to split the bills?
7. Is it possible to get a 2nd job while working through this debt? Or perhaps get a better job or a raise? (Consider these suggestions here for ways to make extra money while in debt.)

I agree with others sell the bike. Pay off that loan and put the remaining cash ($1600) into your emergency fund. That would more than double your e-fund. It would also give you $136 a month extra to go towards your car loan. Don't borrow from your retirement fund. You can't borrow your way out of debt. The best ways to reduce debt are a combination of reducing expenses and increasing income.

Just a few thoughts and questions. Hopefully it's helpful.

[Petunia 100]

I think what he is asking is...should he take a 401k loan, pay down the car loan, then sell the car? He could ride the motorcycle for now, giving him until the end of summer to buy another car, hopefully with cash.

This approach might make sense, because that expensive vehicle depreciates with every passing month and mile. How long would it take you to save up for your next vehicle? How much would you spend?

[disneysteve]

My delima is do I take out another loan to pay off the car and then ride the motorcycle in the summer until I can get some money saved to buy a vehicle in cash. Then sell the motorcycle.

Absolutely not!!!

Never, never, never borrow money from your 401k. Just forget that the option even exists. It is a HORRIBLE thing to do and will cost you thousands more than the car loan is costing you when you figure what you lose in the process over the next 30 years.

Sell the motorcycle now. You don't need it and you know it needs to go. You live in Alaska so I'd think the car is a much more practical thing to own than the bike going forward.

[breathemusic]

Maybe it's just me, but other than selling the motorcycle, what's wrong with just continuing to pay off the car loan as scheduled? (I mean, pay extra toward it if possible, but what is the need to sell it other than some general idea of "OMG I want to be 100% debt free").

I agree with others that the bike should probably go. And I also think it makes more sense to put the extra money from the bike into savings rather than the car loan. I'd just continue to make the car payment and use the money you would have paid on the bike payment to pay extra on the car (also suggested by others).

Do you like the car? Is it running well? Does is actually meet your needs (I assume that in alaska you need a vehicle that handles snow well). If it meets all your needs then just pay down the loan as fast as you're able.

[snafu]

Good on you getting $14.K of CC debt cleared in 12 months. Following DR and sticking to it on a DVD takes a lot of determination and I hope you're giving yourself a giant pat-on-the-back. While I'm sure you're tired of frugal living, I hope you'll use this site for support to work through the car and motorcycle debt.

SA responders almost never suggest borrowing or cashing-out retirement funds because that investment demands time to compound to give you the sums you will need to support yourself/family in the future. If you have regrets over car/motorcycle purchase and problems that resulted, you'll be in a mega mess if you aren't self supporting later.

What has changed that is driving the demand to end these payments? Is there any possibility of refinancing that car at a lower rate? What is the ideal time to advertise the motorcycle in Alaska? Will you also sell the garb to make a bit more?

I'm confident you can get through this patch and choose a more practical and affordable transportation.

[ramseyfollower]

Thanks for all the feedback. Seems the consensus is that I should get after selling the motorcycle right away. So I will get on that. Now is a good time to sell the motorcycle.

I decided I wanted to be debt free because I recently got married (8 months married now). My wife lost her job that was paying a decent salary so we took a big pay cut. She has a job, but makes barely anything. She has a masters degree, I don't even have a college education... You would think she could make more money after all that schooling.

My wife makes little to no income. $800 a month. While I make $4200 a month. Between her school loans, car payments, cell phone etc and the things she wants like internet, cable TV etc her income basically goes down the drain. Mine then covers everything else.

Here is my budget.

This was last months... As you can tell we are in the hole. Prior to being married I was doing just fine. House is in my name, and I have been making payments on it just fine for 2+ years.

We had a discussion last night and she said we need to tithe 10% non negotiable. I have upped our tithing to reflect the 10% in the spreadsheet. So at this point its just a losing battle and we are going to eventually go broke.

We don't go out to eat. We don't see movies, we don't do anything but stay at home at this point.

Motorcycle would at least free us up so we are status quo. I want to get rid of cable TV, but its $400 fee to kill the contract... And its ending in a few months. Once my contract ends I am killing TV.

Internet was more expensive as reflected in the spreadsheet, but it will only be 23.99 next month.

[ramseyfollower]

Something must be wrong with this site. No matter how I try to upload a photo it doesn't take. Says sight unreachable.

s29.postimg.org/53edajbnr/monthly_bills.png

I don't have 15 posts...

Put Http before s29.

[Petunia 100]

Something must be wrong with this site. No matter how I try to upload a photo it doesn't take. Says sight unreachable.

s29.postimg.org/53edajbnr/monthly_bills.png

It's because you are new to the forums. How about just typing it out?

[ramseyfollower]

INCOME Budget Actual
Wages & Tips 5,000.00 5,000.00

HOME EXPENSES Budget Actual
Mortgage/Rent 1,946.36 1,946.36
Electricity 100.00 92.27
Gas/Oil 100.00 98.73
Water/Sewer/Trash 100.00 92.52
Phone 180.00 164.35
Cable/Satellite 80.99 80.99
Internet 113.00 112.99

DAILY LIVING Budget Actual
Groceries 400.00 400.00

TRANSPORTATION Budget Actual
Vehicle Payments 484.00 484.00
Fuel 200.00 180.00
Motorcycle Payments 136.00 136.00

INSURANCE Budget Actual
Auto 289.63 289.63

CHARITY/GIFTS Budget Actual
Religious Donations 500.00 500.00

OBLIGATIONS Budget Actual
Student Loans 234.32 234.32
Doterra 200.00 200.00

BUDGET SUMMARY Budget Actual
Total Income 5,000.00 5,000.00
Total Expenses 5,614.30 5,012.16
NET (614.30) (12.16)