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Starting the New Year with More Debt?
Three hours ago, as everyone was partying with the ringing in of the new year, my truck was quite possibly ringing the death bell. The registration and inspection are now both expired, and as I’ve discussed before, I have no intention of putting much more money into it. It goes in for inspection Monday, and I’m not expecting good results. As such, I’ve been planning for the inevitable in the past few days, but due to a limited amount of savings combined with pretty poor credit, my options are limited.
- Secondary loan. I could actually improve my credit with a secondary loan, but it would be at the expense of a crazy high interest rate. I would also have to get full insurance coverage, which is an expense I don’t want to incur.
- Buy here pay here dealers. This is probably my best option for getting a new vehicle in a timely manner. The finance costs would be similar to a secondary loan, though, and while the payments would be much lower, the terms are much longer. I’ve been looking into several local buy here pay here dealers, and inventory is limited. Then again, beggars can’t be choosers.
- Stick with the scooter. Part of the intention of getting the scooter in the first place was to have a secondary means of transportation in case my primary means of transportation is unavailable. With the scooter, I already have one vehicle payment, which is more than enough. Again, the gas mileage kicks ass, and it has plenty of storage options. I can still buy cat food, litter, or a case of beer with the scooter and get it home safely. Storage is also expandable if I’m feeling crafty. Only problem in this season is snow and ice. I rode it all last winter in the bitter cold, so that’s not an issue, and snow doesn’t stay on the streets forever, so the worst case scenario there is that I’d have to walk to work for a day or two while the streets clear up.
A few days ago, I was heavily leaning towards option #2. Right now, though, #3 is looking incredibly appealing. I could save $50/mo on insurance by not having the truck, as well as an estimated $90/mo on gas. That’s $140/mo, in addition to any extra payment and insurance costs a new set of wheels would set me back. The only planned future maintenance for it is a new rear tire, which barely slipped through it’s last inspection. And of course, as a matter of safety, it’s not something I want to hold off on for too long.
The other question that arises with option #3 is if I should be saving up for a new vehicle in the meantime. Honestly, I’d prefer to wipe out my debt first. Thoughts?
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{ 4 comments… read them below or add one }
First of all, congratulations on your dedication to reducing your debt. I have been reading your exploits. I wish you the best.
As for the vehicle, if the truck does not pass inspection, go with option #3. Purchase the rear tire and then commit to driving this the rest of the year.
From what I can tell through the blog, the need for more than the scooter is limited. I am certain those times when you need a larger vehicle you can make arrangements.
And finally, absolutely save for a newer vehicle while you are riding the scooter. My folks used to explain to me how the only vehicle they purchased on time was their first. You keep paying the payment to yourself after you own the vehicle so you can pay cash (and negotiate a better deal) when it comes time to buy a new vehicle.
Let’s face it: at some point you know you’re going to need a new vehicle. Shouldn’t you be prepared for that purchase? Don’t overextend yourself. Paying down your debt is important.
Part of being fiscally stable is balancing needs, debt, and wants.
Best of luck to you.
That presents another problem, then – how much of my extra income to direct towards vehicle savings versus paying off debt. 50/50? I really want to bring my debt payoff numbers at least to the level needed to be on track for my 5 year goal, so maybe base it off of that?
Hi, I agree that you should just use the scooter for as long as possible. A 50/50 split sounds good, too. Pay off a little extra, and put the rest on a bill you can get paid off sooner. Our car is paid off in 2011 and I am planning to do something like that, save for another car and also put some away for repairs (my husband drives 60 miles a day), plus pay down a credit card bill I am ashamed to say that has gotten a little high. Good luck this year on lowering your debt.
I don’t know what the magic number is. It is probably good habit to practice saving while paying down debt. Stick to your goal and then anything above that gets dumped into your automobile fund.