Help with Budget recently divorced.

**alphadore** · 10-07-2011, 12:56 AM

I think you are doing a good job by realizing the importance of reducing your debt. I suggest you first pay off your cc debt

**tim.frankcom84** · 10-07-2011, 04:39 AM

What you have done is good for your future.

**bjl584** · 10-07-2011, 05:19 AM

The first thing that I would do is sell your motorcycle. You can't afford it right now. Hopefully you aren't upside down on it. Next, I would downgrade the car to something that you can get into for cash. Take the money that you get for selling the motorcycle to get yourself a cheap car, then work on getting rid of your current car. You may need to get a loan to make up the difference. That will put you in much better shape to start rebuilding your life and your wealth.

**cschin4** · 10-07-2011, 05:42 AM

I would keep the motorcycle. I assume you have it as much for enjoyment as for transportation and i don't think that is too much. I don't know why you bought such an expensive car. A $40K car loan seems ridiculous in my book and not sure why anyone would want to spend that much unless it is some kind of work vehicle. I assume it is pretty new. So, my advice would be just to suck it up. You bought it you are stuck with it. If you trade it, you are still going to have to buy some vehicle to get to work anyway and you are have already taken the depreciation on it. I would work OT or a second job and pay that car off as soon as you can, and then drive it for the next 10 yrs.

**ActYourWage** · 10-07-2011, 06:44 AM

This is an easy one, sell the 40K vehicle. Buy 5k-6k vehicle, pay off the motorcycle loan and cc, then add the rest to your EF. At that point, reevaluate your situation.

**BuckyBadger** · 10-07-2011, 07:02 AM

Originally posted by 28andlearning View Post

I am single and trying to reduce my income as I don't want to be paying extreme taxes come next spring.

Can you clarify this point for me?

Also, the $40k loan is half your gross salary. And since you've probably paid off some of the loan already, it was probably for a car that cost more than $40k. What on earth possessed you to buy a car that cost that much?

Sell the car. Even being upside down by $8k, you'll still have $32k and only owe $8k. Your solution is simple -- if's just a worry that you'll fall into your old habits and end up right where you were before.

**28andlearning** · 10-07-2011, 09:35 AM

Ok, I think some of you are being biased...

Before I got divorced I had 500k in Apple stock, had 150k in equity in my home, 20k in EF, and the ex wife had only 10k in Student Loans for her masters.

I dont understand where you think I can get 32k for my current car... It isn't paid for. Its on loan. So I can't necessarily get any value out of it other than trading down.

I am not selling the bike, due to it being winter and unable to sell for what its worth. It's a 2009, runs good, etc, good gas mileage and it will be paid off come January along with my Credit Card.

So I will then only have my car loan. I am willing to take a hit to get into something a little cheaper, but a vehicle loan is going to happen one way or another. I like being able to take it to the shop and get a rental if something is wrong with it. I have always had a car loan and plan to keep one as I enjoy newer vehicles under warantee.

So back on topic...

What saving plan options should I be looking at? Mutal funds, stocks etc after my bike and CC are paid for?

I plan on doing side work for an extra 1-2k a month in the upcoming months to help pay down my debt.

So again, helpful information would be appreciated. Constructive criticisim is ok as well, but please try not to bash.

**disneysteve** · 10-07-2011, 09:52 AM

Originally posted by 28andlearning View Post

Debt
40k Auto Loan

I currently am backwards on my new car by about 8k.

I dont understand where you think I can get 32k for my current car

You said you owe 40K and are upside down by 8K. That means the car is worth 32K.

If you sell it for 32K you will still owe 8K. Buy another car for perhaps 8K. That will leave you with 16K in car debt instead of 40K in car debt, a 60% improvement. That will free up cash for other purposes.

**28andlearning** · 10-07-2011, 09:57 AM

Steve: Thanks, thats exactly where my mindset was going. I guess I mis-interpreted.

Thanks. I agree, thats a good idea... If I can trade in on something that old/cheap.

**BuckyBadger** · 10-07-2011, 10:04 AM

Originally posted by 28andlearning View Post

Steve: Thanks, thats exactly where my mindset was going. I guess I mis-interpreted.

Thanks. I agree, thats a good idea... If I can trade in on something that old/cheap.

You don't have to get something super old for $8k. You can get a very nice car for $8k.

But even with your prior savings in the bank, I can't say that buying a car -- the loan for which is more than half your salary -- is a good idea.

Did you really give up three quarters of a million dollars in assets to avoid lawyer's fees in your divorce? Seems brutal.

Also, I'm still not sure what you meant by this:

I am single and trying to reduce my income as I don't want to be paying extreme taxes come next spring.

**28andlearning** · 10-07-2011, 10:20 AM

Did you really give up three quarters of a million dollars in assets to avoid lawyer's fees in your divorce? Seems brutal.

Yes, I gave up a bunch of assets as well... I don't want to get into the reasoning why... Lets just say her family is very well off and I would have lost it all one way or another.

But even with your prior savings in the bank, I can't say that buying a car -- the loan for which is more than half your salary -- is a good idea.

Agreed, but I spend a lot of time in my vehicle, i have back problems and knee problems and this is worth the extra money to me. It's much like why do people spend 500-1million on homes? If they can justify it and can afford it they do it. I am not saying it's the best idea. But to some people its worth it.

I will look into trading and see what a dealer can do. $16,000 should be easy to pay off.

I am single and trying to reduce my income as I don't want to be paying extreme taxes come next spring.

I dont want to owe a bunch in taxes come spring... So I want to make sure I am putting into something like a 401k that reduces my overall income as I don't own a home, I am renting.

**disneysteve** · 10-07-2011, 11:01 AM

Originally posted by 28andlearning View Post

I dont want to owe a bunch in taxes come spring... So I want to make sure I am putting into something like a 401k that reduces my overall income

Ahh. That makes more sense. You don't want to reduce your income (which would make no sense). You want to reduce your taxable income.

**ActYourWage** · 10-07-2011, 12:50 PM

Originally posted by 28andlearning View Post

I have always had a car loan and plan to keep one as I enjoy newer vehicles under warantee.

So back on topic...

This kind of thinking is what keeps people in debt. Having a car loan maybe normal but being broke is normal too. I am not trying to bash here, but in the long run, you need to approach debt differently if you want to have a sound financial plan. Also, I realize you just joined but when the 40K auto loan appeared, a lot of people on this forum will raise questions, that's just part of the "advice" we give at Saving Advice

**Frugal** · 10-07-2011, 01:27 PM

I would agree that paying down your credit card debt is a good idea. However, it might be good if you could talk to a financial professional and discuss your debt vs. saving ratio. It might cost a little money, but it can be worth it.

Help with Budget recently divorced.