Too big for my britches

[dawnwes]

It sounds to me like things will start to get better financially in 2015 when your wife finishes school and can work full time.

Since we are talking about 8-10 months or so, I would buckle down right now with spending (cut corners as much as possible) and hang on tight until she goes to work. Then use her salary to get out of debt completely (cars and loans).

And I would vow to never get into this kind of financial constraint again (I assume you have done that.)

Dawn

[scfr]

"The Smartest Money Book You'll Ever Read" by Daniel Solin is a good money primer to read. It is recommended by mint.com, if you like the idea of using Mint as recommended by autoxer. The book covers many financial basics starting with chapters that include the following topics: why it's important to plan ahead, delayed gratification, tracking net worth, budgeting, and getting out of debt. Then it moves on to home buying, insurance, investing, and retirement & estate planning. It's an easy read that covers the basics well. It was published in 2012 so it's pretty current. If your local library doesn't have it, a used copy can be found on half.com for just a few dollars.

Tracking your spending and creating a budget are a great idea.

I also recommend spending a little time doing some navel gazing and thinking about the psychological reasons behind the car purchases. You say that you decided your wife should have a new car, and a pretty luxurious one at that. You know you over-extended yourselves with the vehicle purchases. Why? Take this opportunity to learn something that may help you in the future.

[cardtrick]

Not really, I am thinking heavily about it now. I would have no problem trading my Tacoma for a cheapo 4wd Pickup of some sort. I work nights and my wife has class during the day, so we pretty much share her vehicle. The truck is just for hauling large items we may need being homeowners, and for occasions she might need the vehicle in the evening.

The problem would lie with talking my wife into trading down her beloved Camry. I know we won't trade down and get anywhere close to the same luxury that car offers. Not to mention I get about 48 MPG going to work and back, she gets about 42 going to school and back. We've put 15,000 miles on it since Thanksgiving 2013. That's a lot of fuel savings VS a car that got less MPG.



I agree, now. If I could chop that 700/Month just in half, an extra $350 a month in savings would be awesome. It's nice to hear I'm not the only dumb-dumb that ran out and bought a new car



Like I said above, my thought process on the 74 Month loan was that my wife would be getting a job next year and we could aggressively pay it off very early.



Thank you for the site. I looked up her 2014 Camry Hybrid and it's not listed, I guess it's too new. I looked up my Tacoma and it says the Trade-In Value is $32,000-$33,000. This seems odd because I think I paid $33,176 after Tax/Title/All that stuff. Would I really be able to trade it in with such a small hit in the value??



I would very much like to start a ROTH IRA and start educating myself and getting involved in investing. My main focus right now is being debt-free (other than my house) as soon as possible.

First thing I need to figure out is if Trading my Truck for another much much cheaper truck at a dealership would be the best course of action?

Also how to talk my wife into letting go of her Camry???

I understand. We all make dumb choices from time to time. Now that the purchases have already been made, I think you will lose quite a bit when you sell those cars. I suspect that the moment you drove those cars off the lot, they lost at least a few thousand dollars.

If I were in your situation, I'd be willing to take $2-$3K hits on each. That is, if I'm able to get $3K less than what I paid for the car, I'd sell it and buy something for under $15K.

The hybrid might be better to hang on to. You have to run the numbers. How much does your wife expect to drive per year? Would the gas savings be worth hanging on to the car? Assume you sell the car and get a used $10K car. How long will the car be good for?

The truck is probably not a wise choice, no matter how you look at it. Get rid of the truck, buy a used car and keep the hybrid? Then, you have 1 new car and one old? Sort of a compromise? Would make the wife happy too.

Here is a sample excel sheet I made with some numbers. I don't own a car so I have no clue if these numbers make sense. I'm comparing 2 options here: keep the car vs sell the car, take a loss and buy another used car for $10K

Hybrid Sell + Used
Initial Cost 30000 14000
Cost of Gas per month 150 300
Insurance per month 100 80
Maintenance per year 100 400

Resale Value in 6 years 12000 0

Cost for 6 years of ownership 36600 43760

[isaac]

"I also recommend spending a little time doing some navel gazing and thinking about the psychological reasons behind the car purchases. You say that you decided your wife should have a new car, and a pretty luxurious one at that. You know you over-extended yourselves with the vehicle purchases. Why? Take this opportunity to learn something that may help you in the future.

We both had decent cars a year ago, I had a little Corolla that was paid off, she had a little Focus that we owed $9,000(ish). I hit a deer and totaled my Corolla in October. We were originally only going to get myself a new Car. All of our friends convinced us we needed a Truck in the family because of Home Depot runs and the 4WD option for inclement weather. <- We live in West Virginia, very big snowy hills around us. Everyone owns a truck around here. I started to feel guilty about me getting myself a new truck and her still driving her old Focus. She told me she loved her Focus and not to worry about it but I'm stupid and took us to trade it in on her Camry anyway. (LESSON LEARNED: Always Listen To Wife) Then a few months later I bought my truck.

At this time she was almost done with school, but she ended up getting a D in a physical science class that would prevent her from being able to enroll in one of her final classes she needs, pushing everything back all the way to the next Fall semester. I was planning on her being able to work MUCH sooner. (LESSON LEARNED: Various, basically don't assume anything)

Update about our little world...

We've been doing some cutting back. Some examples..

We were consuming a 12-pack of Red Bull per week, these are about $18 I believe. That was really adding up. My wife just quit completely and I started settling for just 1 8oz can of the knock-off, Red Thunder from Aldi, per day. Trying to cut back but I'm not as strong as she is to just quit cold-turkey. (Lesson: Didn't know I was addicted)

I was really bad about stopping at a gas station on my way to work and grabbing snacks to battle boredom on my drive to work. Also fast food several days per week instead of eating what we have at home. This has completely stopped.

My wife gathered recipes and did a large shopping trip to prepare 18 healthy, energy efficient, 0 wasted food, quick and easy - Crock Pot 'Freezer Meals'. We have a freezer full of bags she can simply dump into our crock pot. So far 1 meal is lasting 2 days each, so we have over a month supply. -> http://i.imgur.com/onA5rhz.jpg As for snacks she cut up a bunch of vegetables and we picked up fruit, both are very cheap from Aldi, healthy too. (Lesson: Healthier is Cheaper)

I've started going to work about 35minutes (0.6 hours) early every day, and working about 20 minutes of my lunch (0.4 hours) for a total of an extra 1 hour of OverTime per day (OT Rate: $32.42/hour) That should add up to a nice extra bit per month.

We have tried 2 local Toyota dealerships to trade my 2014 Tacoma in on a 4WD pickup for $10,000 or less. Problem is 4WD pickups retain their value so well that something under $10,000 is a heaping pile of #$@!!!!! We will continue looking, possibly expand our search to $12,000. I do believe the 4WD will be necessary in the winter for us in West Virginia.

Anyway that's about it for now. Sorry for the long post. Thank you for your replies so far.
Looks like I have a lot to read and learn.

[isaac]

The hybrid might be better to hang on to. You have to run the numbers. How much does your wife expect to drive per year? Would the gas savings be worth hanging on to the car? Assume you sell the car and get a used $10K car. How long will the car be good for?

This question is trickier than fuel savings. Electric motors have an incredible life span. Since the electric motor handles the first 25mph of acceleration this takes nearly all of the stop-and-go stress off the gasoline engine. As well as the seamless shifting provided by the continuously variable transmission there's considerably less stress on the entire drivetrain at all speeds. It's safe to say my drivetrain will outlast almost every non-hybrid vehicle on the road. The battery, on the other hand: if I keep the vehicle forever will the cost of a new battery outweigh the reliability of my drivetrain and excellent fuel mileage?? I have no idea.. I guess I'll find out in 20 years,

Also, not really a big $$$ point but hybrids rarely need brake pads, where it uses the electric motor to slow the vehicle to charge the battery, but hey pennies make dollars, right?

I have the 2014.5 Camry Hybrid. We just got it in March. We paid more than $20,800 for it though.
Dawn

Right, our Camry Hybrid XLE with Leather & Entune Premium Audio with Navigation and App Suite MSRP for $33,050. Our discount brought it to $28,631.34, way below dealer invoice. Also on NEW Toyota, once every 36-months I can use an incentive where my company will put $2,250 down on my behalf, so that brought our price to $26,381 (plus trade-in and our down payment = $20,800). This deal is the reason we went with a NEW car. The discount on the Truck on the other hand was only about $3,000 and totally wasn't worth buying New. Lesson learned.

[97guns]

you have jumped the first hurdle of turning things around, realizing you are in over your head is the first step, many people can not even see that they are in too deep.

you must build on that, when your "grown in" and your wife is in the workforce it will be easy to spend more, keep your liabilities low and everything else will fall into place.

right now your front running your liabilities for future incomes, keep liabilities the same and raise your future income is your plan and can work.

[kimb]

It was limiting my ability to save for a house. Just keep your expenses where they are and as you get raises, bank them all. I have to have a car loan also.

[LivingAlmostLarge]

I had no idea about electric motors and brake pads. Kind of neat to think about in the future. I just have still such a hard time swallowing how expensive the hybrids are now.

[isaac]

I have received an offer from a Toyota dealership for $28,000 to buy my Tacoma off of me. No trade in. I have asked several other dealerships if they can beat the offer. One offered me $30,000 to trade in my truck, but they have nothing on their used lot for less than $15,000.

Should I take the $28,000?? :-\

[scfr]

Update about our little world...

We've been doing some cutting back. Some examples..

We were consuming a 12-pack of Red Bull per week, these are about $18 I believe. That was really adding up. My wife just quit completely and I started settling for just 1 8oz can of the knock-off, Red Thunder from Aldi, per day. Trying to cut back but I'm not as strong as she is to just quit cold-turkey. (Lesson: Didn't know I was addicted)

I was really bad about stopping at a gas station on my way to work and grabbing snacks to battle boredom on my drive to work. Also fast food several days per week instead of eating what we have at home. This has completely stopped.

My wife gathered recipes and did a large shopping trip to prepare 18 healthy, energy efficient, 0 wasted food, quick and easy - Crock Pot 'Freezer Meals'. We have a freezer full of bags she can simply dump into our crock pot. So far 1 meal is lasting 2 days each, so we have over a month supply. -> http://i.imgur.com/onA5rhz.jpg As for snacks she cut up a bunch of vegetables and we picked up fruit, both are very cheap from Aldi, healthy too. (Lesson: Healthier is Cheaper)

I've started going to work about 35minutes (0.6 hours) early every day, and working about 20 minutes of my lunch (0.4 hours) for a total of an extra 1 hour of OverTime per day (OT Rate: $32.42/hour) That should add up to a nice extra bit per month.

Congratulations on your high level of self-awareness and willingness to make changes to improve your situation! It's sounds like you and your wife are really working together as a team to improve your situation.

Those Crock Pot meals look GREAT!

You mentioned boredom on the drives to work. I have a fairly long commute myself so I try to always have an audiobook (checked out for free from my local library, of course) on hand to "keep me company."

[LivingAlmostLarge]

Sell tacoma. Rent pick up or borrow when needed (since everyone has one). Then buy cheap beater and put snow tires on. You'll do better anyway. I love my AWD but my DH drives a sedan and if it were really bad we'd snow tires on. My MIL said we should but we're too lazy, cheap, and don't have a garage or basement to store them honestly, and he drives the subaru if it's bad out and I stay home. And he's from northern most canada and his parents always drove sedans with snow tires even up in oil country wayyy up north. Even his friends who work in the oil fields, they do drive pick ups for work, but just scouting work not actually working on oil lines? Sedan with snow tires is fine (think jetta with snow tires).

[JoeP]

You could easily get away with a decent SUV, and outfit it with a trailer hitch and buy a simple trailer. Compared to a truck, you'll get more interior space. You'll also have 4wd and the ability to tow when needed.

What you're going through right now is the after-effects of moving forward too quickly with auto expenses, possibly related to your income being what it is: you may feel "richer" and capable of paying for big-ticket items through loans, and may feel you "deserve" the newness and luxury.

The good news is that you did the math and detected a problem early on.

[isaac]

Sad Day

Well. The Tacoma is gone. I contacted about 5 local dealerships and $28,300 is the most I could squeeze out of it. I have a check for $2,600 from the remaining balance.

Should I find a little turd-box for $2,600 or use that as a down payment on something more reliable? My mechanical skills are non-existent.

My wife informed me 2 cars will be necessary come January due to her starting student teaching. She will need to leave for school before I get home from work.

The SUV idea is good, I need to brainstorm on where in the world I could store a utility trailer while not being used.

http://i.imgur.com/SiUJakS.jpg

[97guns]

how far are the commutes?

for $2500 you can get a mid to late 90's toyota or honda with over 100,000 miles

you should be able to get another 100,000 miles out of one

do not take on another loan