Money Advice... (PLEASE HELP ME OUT)

[dmw16]

Ok, so first, I recognize that this may not be the perfect place for money advice, but I need some insight and it seems like sometimes people here have some. So here it goes...

Through college i made the mistake of living beyond my means. I racked up about $4000 in credit card debt (wish I could even remember on what now) and then when I graduated I spent another $2500 getting myself moved into my new apartment (furniture and what not). I have been working hard to pay the debt down and it will be fully paid off in about 14 months from now.

But, in a moment of stupidity, I bought a car. I had a car I was driving and it was working fine and I had no payment on it, but I really THOUGHT i wanted a new (used) car, so I bought one.

I traded in my car and got $5000 for it and financed the rest of the new car (along with tax, tags, title, etc). I am now paying $330/mnth on my car for 60 months.

So with all that in mind I have a few choices.

1) sell my car for what I owe (even tho I just got it 3 months ago) and either buying a car that would give me payments more around $200/month for 36months

2) buy a POS off of craigslist and dealing with that for a while (I commute 75miles round trip per day, but carpool with one other person so I need something at least half decent)

3) Live with my mistakes and try to get thru it as best I can

The payments aren't strapping me right now. I am still able to put money into savings and contribute enough to my 401K each week to get my company's full match. But in the next 5 years (when the car is paid for) I will want to make a few big purchases. Namely a car and an engagement ring for my long-time girlfriend.

I have beat myself up enough for this so please don't post telling me I'm a moron with money. WHich may have been true but I am trying to get back to being square so that I can move on. If you have any insight into which of my 3 choices is best or just advice from experience that owuld be great.

As a side note, my credit card bill is on a 0% interest balance transfer and the car is at 7%. My company is giving me 50% return on my 401K contribution so reducing that would not make sense.

 

[huberm]

how long is the 0% interest for and how good is your credit now?

 

[dmw16]

18 months. Credit score (last I checked) was a 750.

 

[SonnyDaze]

Go with option 3 and don't look back. You've probably still got a few years ahead of you to make up for it. And if getting out of debt means extending the engagement, well you'll definitely find out if she's the one for you.

 

[Skeeedunt]

So you're paying something like $450/month on the cc's? Will be payed off in 14 months even now that you have the car payment? Have big purchases to make in next 5 years? Already have extra money you're investing?

I'm no financial expert, but I'd just pay it off. You're not exactly selling selling vital organs just to get by. If the car is worth the cost to you, keep it. If it's not... don't.

 

[alm99]

Stop the 401K contributions and start placing that towards credit card debt, with the amount of commuting you do it sounds as if you need something reliable.

How long have you been with your current employer? Do they have a time frame for when the amount they match to your contribution vests?(I think the norm is 3 years)

 

[Budmantom]

You want to sell the car you bought 3 months ago so you can buy another car in 5 years?

 

[dmw16]

Thanks for the input. To address a few questions...

Stopping the 401K would be foolish. They are giving me 50% on top of my contribution and now is the time to invest because nothing makes up for an early start. There is no vesting. Their match is already going in every week along with my contribution. So that's out.

I guess riding it out is the way to go. Selling a car I got 3 months ago would be throwing good money after bad.

As for big purchaes in the next 5 years, just an engagement ring and hopefully a house.

 

[RaistlinZ]

Any chance you could just (gasp!) increase your income? Maybe you could work a part time job on the side or on weekends until your CC debt is paid off.

 

[dmw16]

that is one thought. it has been harder than i thought to find part time work. seems like retailers want people who dont have other jobs. I applied to best buy, tweeter, and home depot and never heard back. i even spent 3 years working @ best buy in HS and 1st year of college. (my degree is in aerospace engineering, so not directly related to retail ) but yes, I did try that.

 

[TXHokie]

Originally posted by: RaistlinZ
Any chance you could just make (gasp!) increase your income? Maybe you could work a part time job on the side or on weekends until your CC debt is paid off.

:thumbsup: Was in same situation years ago and parttime job helped pay down debt + prevent me from more spending.

 

[chusteczka]

I think you are making good decisions considering the situation. You need a good car for the commute, although I am not certain you need that good of a car. Since you bought it already though, it makes sense to keep it and pay for it. I like the idea of moving in with your parents for at least 6 months. Since it is a voluntary decision, you may find you like living with your parents. Especially if you stay at work later to prevent extra free time that may increase your expenses.

I would have purchased a cheaper car but that decision has already been made.

 

[ponyo]

What's done is done. I say stay the course and continue to pay down your credit cards. Once you pay that off, start making extra payments on the car. 60 months on an used car is unacceptable.

Baby steps. You're still ok.

 

[d3n]

I would save up for a down payment on a house. anyway, anyhow I could. If you are still paying for a car when you make that jump try and get a mortgage that you can roll the car payments into. That way its tax deductible an you won't get as big a hit just for the car per month, more interest overall but the house will be working for you somewhat instead of just the car payment working against you.

 

[amdskip]

I'd get a second job and keep the car.

 

[doze]

Keep the car but right now a savings account is worthless for you with credit card debt so cash it in and pay some bills. Pay the most you can on high interest debt, and the minimum on low interest. Get engaged when your bills are paid. If she loves you then she will understand, if not then be glad you found out before you bought the ring, and furniture, and whatever other crap she wanted.

 

[dmw16]

Thanks for all the advice and not being critical. I have certainly learned my lesson.

I dont want to stop saving because I still need to have 'just in case' money to fall back on. I can't move in with the parents as they live 150miles away (that would be a looooooong commute). I am still persuing a part time job, I just need to find a place that will hire me (like I said, I applied and we suprised I never heard back given my sales experience). ANyway, I will keep looking. Just a $100/week would offset the carpayment and then leave me a little extra to pay down my debt.

 

[akshatp]

60 months on a used car? Thats alot, but keep it and pay as much as you can towards it. No point in selling it and then spending money and stressing after a non reliable car...

 

[dmw16]

In my defense, it's a nice car and wasn't "too used" but that may be part of the issue. It is a 2001 Honda S2000 (it has a warranty until 2013 so it should serve me a long time)

 

[akshatp]

Originally posted by: dmw16
In my defense, it's a nice car and wasn't "too used" but that may be part of the issue. It is a 2001 Honda S2000 (it has a warranty until 2013 so it should serve me a long time)

12 year warranty????? Explain!

 

[Jinru]

wow... a S2000. I was thinking bad choice on purchasing another car, but now I'll say good move . What was your previous car?

 

[j00fek]

get rid of the cc

/thread

 

[Schfifty Five]

Originally posted by: dmw16
Thanks for the input. To address a few questions...

Stopping the 401K would be foolish. They are giving me 50% on top of my contribution and now is the time to invest because nothing makes up for an early start. There is no vesting. Their match is already going in every week along with my contribution. So that's out.

I guess riding it out is the way to go. Selling a car I got 3 months ago would be throwing good money after bad.

As for big purchaes in the next 5 years, just an engagement ring and hopefully a house.

50% up to how much? You're saying if you contribute 20% of your total salary, they will match 10%? I doubt that...they probably match up to like 3-5% of your total salary yes?

And technically, it's called "immediate vesting", not "no vesting".

 

[psydancerqt]

like others have said, i'd keep looking for a part time job. places are hiring now for holiday season help. go to the mall if you have one near by. you'll definitely find someone looking for you there.

 

[dmw16]

I misspoke...it is a 10 year/100k mile warranty. Anyway, it will be @ 100k first. Previous car was a Pontiac Grand Prix GTP ( did like the extra space it had over this car and the extra torque, but a Honda is a Honda when it comes to reliability).

The 401K is 7% of my salary pre-tax.

I will check out the mall and best buy and stuff.