Car and motorcycle debt.

[ua_guy]

Yup, good choice on deciding to get rid of the bike.

I don't understand the deal with the car. Being debt free just for the sake of being debt free doesn't always make sense.

You're in a losing situation with the car, but it still has value. Assuming you are still able to make the payments, it represents a modern and reliable source of SAFE transportation. You're $8k underwater, but the water will recede as you continue to pay on the car. Then, you can safely get out of it at break-even. Meanwhile, you've enjoyed and reaped the benefits of having a new and safe vehicle.

To get rid of the vehicle today means not only not having the vehilcle anymore, it also means setting $8,000 on fire just for the privilege of being without a car. See my point?

Do not borrow against your retirement accounts. Do not borrow money to get rid of the car.

In short, do sell the bike. Continue to pay on the car. If you're still battling debt or have other life plans, sell the car as soon as market value represents break-even on the loan.

[JoeP]

You're in a losing situation with the car, but it still has value. Assuming you are still able to make the payments, it represents a modern and reliable source of SAFE transportation. You're $8k underwater, but the water will recede as you continue to pay on the car. Then, you can safely get out of it at break-even. Meanwhile, you've enjoyed and reaped the benefits of having a new and safe vehicle.

Or keep the car, while continuing to make "car payments" to yourself. After it's paid off, maybe it will be another 5 years until the car croaks or your vehicular needs change. Saving even $300/mo into a car fund for 5 years equates to $18k...you can buy a good used car for than money and you won't have to incur debt.

[Eagle]

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….

Congrats on getting married!

Sorry your wife lost her job that paid a decent salary. Sounds like your wife is still living like she is making a decent salary and that is no longer the reality. Part of getting out of debt is delayed gratification.

What is your DW (dear wife) doing to try to find another job? You can do one of two things: increase your income or decrease your expenses. Preferably do both. Good call on decreasing your internet payment to $25 a month. $112.99 a month seems like high way robbery.

Something that was unclear to me… So on top of what you listed in your budget for Student loans ($234.32) does your wife have additional SL payments and car payments?

[hamchan]

Where in Alaska are you? Depending on where you live there may be cheaper phone options. My daughter lives in Fairbanks, and is on our cell phone plan with Ting. We pay about $75 a month for three of us.

[Eagle]

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)

Looks to me like your budget is a bit off above. Edit: found your budget here. Is Doterra the side job your wife has? Otherwise why spend $200 a month ($2400 a year) on the product? My wife does Doterra and the minimum per month is the purchase of one item. Unless she is a distributor...

$289.63 x 12 months is $3475.56 a year in car insurance. Is there no way to check to see about getting different coverage? That seems really expensive. How much will it go down if you take off the motorcycle off the insurance?

I re-organized your budget into 3 categories for simplification purposes: fixed expenses, fixed debt repayment, and variable expenses…

Description | Budget | Actual
Income ------------> | 5,000.00 | 5,000.00


*Fixed Expenses
Description | Budget | Actual | % of actual budget
Mortgage | 1946.36 | 1946.36 | 38.93%
Electricity | 100 | 92.27 | 1.85%
Gas/Oil | 100 | 98.73 | 1.97%
Water/Trash | 100 | 92.52 | 1.85%
Phone | 180 | 164.35 | 3.29%
Cable/Satellite | 80.99 | 80.99 | 1.62%
Internet | 113 | 112.99 | 2.26%
Insurance Auto | 289.63 | 289.63 | 5.79%
Tithe | 500 | 500 | 10.00%
--------- --------- --------- --------- --------- --------- 67.56% Total Fixed Expenses


*Fixed Debt Repayment
Description | Budget | Actual | % of actual budget
Vehicle Payment Car | 484 | 484 | 9.68%
Motorcycle Payment | 136 | 136 | 2.72%
Student Loans | 234.32 | 234.32 | 4.69%
--------- --------- --------- --------- --------- --------- 17.09% Total Fixed Debt Repayment


*Variable Expenses
Description | Budget | Actual | % of actual budget
Groceries | 400 | 400 | 8.00%
Doterra | 200 | 200 | 4.00%
Fuel | 200 | 180 | 3.60%
Personal Supplies | 50 | 0 | 0.00%
Clothing | 100 | 0 | 0.00%
Play Money | 200 | 0 | 0.00%
Dining/Eating Out | 100 | 0 | 0.00%
Dry Cleaning | 25 | 0 | 0.00%
Coffee | 25 | 0 | 0.00%
Alcohol | 50 | 0 | 0.00%
--------- --------- --------- --------- --------- --------- 15.60% Total Variable Expenses

Total Expenses | 5064.3 | 5012.16 | 100.24% Actual
Difference | -64.30 | -12.16 |

Your mortgage along with utilities accounts for 44.6% of your budget. 17.09% is going towards your debt. Respectfully, I'm going to disagree that your budget is sound.

Bottom line you need more income or less house. You can't afford your current mortgage with your current household income.

[ramseyfollower]

I live in Anchorage.

Phone Option: Ting? what is that.... Never heard of it.

We have 2 vehicles, one is paid off.

I am contacting my insurance agent today to see about better rates... We have also contacted State farm. I suggested Esurance online, but I don't know enough about that company.

My wife used to make $2500... So yes, we are living above our means currently. She took a job that doesn't pay as much because that was the only offer available. She has a counseling education degree and is currently substituting at a school until she can get a salaried position. She is working 40 hour weeks. They just don't pay very well.

Eagle: Wife has no additional student loan payments or car payments. Everything is accounted for.

Yes, doterra is what she does on the side. She said she can bump that down to the minimum which i believe is $125? She is also going to get a seperate business account for purchasing and income for that. I had a talk with her about that as well.

All good sound advice. Please keep it coming.

[Petunia 100]

So, Doterra is a MLM? Does she not sell enough to cover the cost of the products she buys? If Doterra is a drain on your budget, what is the point of doing it? You'd be money ahead to just stop.

Ting is an awesome cell phone service provider. They use Sprint's network. If Sprint works fine in your area, Ting will work fine. If Sprint does not work well in your area, you don't want Ting.

I have been a happy Ting user for nearly two years. I've saved a small fortune since leaving AT & T.

[hamchan]

If you're in Anchorage then Ting might work for you. If you spend a lot of time outside the city and need your cell phone to work, it might not be your best bet though. Go to ting.com and check it out. I've been very happy with it so far.

[ramseyfollower]

Thanks for the info!

Today is my day off... So I literally have been calling every auto insurance company.

I finally went with Progressive.

Both cars insured with the same coverage we have now... For only $150.20! That saved quit a bit of money there. Now I just need to get term insurance for both of us and we should be good.

[Eagle]

Thanks for the info!

Today is my day off... So I literally have been calling every auto insurance company.

I finally went with Progressive.

Both cars insured with the same coverage we have now... For only $150.20! That saved quit a bit of money there. Now I just need to get term insurance for both of us and we should be good.

Wow RF you were paying 289.63 a month before! That's about half what you were paying before. Fantastic!

We had Farmers for years. We were paying about $180 a month. Now with Progressive ours is about $100 a month for 2 vehicles. You can also get a 5% discount by paying every 6 months.

Through Progressive you can also get a permanent discount through their snapshot program. May not be available in Alaska though.


So you're saving about $100 a month on your internet now and $100 a month on your car insurance. Keep up the good work!

[ramseyfollower]

I think I may have my motorcycle sold here in about 3 weeks... I also do woodworking on the side, figured I can sell those tools since I won't have any money to throw at the hobby for some time. If I can get close to what I am wanting I should have my car paid down to 23,800 by the end of next month!

Just 4k more to go and I can sell that car and get a beater for around $1k and be debt free besides my home and the wifes student loans.

[disneysteve]

I also do woodworking on the side, figured I can sell those tools since I won't have any money to throw at the hobby for some time.

I would think hard about that. Do you - or CAN you - use your woodworking skills to make some extra money? If so, why not do that as part of your "get out of debt" plan? If you can make some items that you sell either locally at craft shows or via the internet, that probably makes more sense than ditching the tools. I'm guessing you paid a pretty penny for them and they'd only sell for a fraction of what they cost you.

[LivingAlmostLarge]

Long term what are you going to do about the house? It's pricey for your income alone.

[Eagle]

I think I may have my motorcycle sold here in about 3 weeks... I also do woodworking on the side, figured I can sell those tools since I won't have any money to throw at the hobby for some time. If I can get close to what I am wanting I should have my car paid down to 23,800 by the end of next month!

Just 4k more to go and I can sell that car and get a beater for around $1k and be debt free besides my home and the wifes student loans.

Good call on the motorcylce.

+1 to what DisneySteve said... Can you make any money with the hobby?

+1 to what LivingAlmost large said... What do you plan to do long-term about the house?

One final thought... If you buy a beater for 1k you'll be debt free sure but you'll very likely have car repair expenses. In order to pay for those you'll need a decent emergency fund set aside just for car repairs. Why not keep the car for a while and build up your e-fund?

[ramseyfollower]

I consider it a hobby because I don't make any money off of it. I spend money on it and that's about it.

Long term I plan to sell and move. I bought the house because resale on a 4 bedroom house is much better than a condo. It was a fixer upper. I plan to sell by next spring hopefully.

Yes a reliable car is nice, but I already have another vehicle and with my wife not working soon, she could drive me to work or I could borrow her car, carpool etc.

I figure if we can live debt free moving forward, why not?

After all that's the goal.

My band saw sold today and I lost $50 from what I originally paid. So not a bad deal....