Need some finacial advice

[FDF12389]

Ok, I got myself into some financial trouble, I've been pulling out pretty quickly, but I need some advice on whether this is a good move or not.

Background:
20 y/o
Currently in college, already have associates degree.
Renting for another two months($550 per month) then moving back home for a few months to replenish savings account.
Income is 600 a week take home.
3,500 in student loans
650 left on credit cards(Down from 4,700)
1000 in savings

Car insurance is 278 a month, car payment is 200 but I have been paying 400. I owe 8,300 on the car(@ %6.9 56 months left).

I am thinking about buying a 2000 Chevy S-10 with 105k for $2,000, this will bring my car insurance down to 78 a month with just liability, and I would then garage my other car until I pay it down enough to sell it.

Thanks for reading and any advice you can give!

 

[CRXican]

It's likely that your financed vehicle requires full coverage even if you only "park it." Maybe get rid of it completely.

Also

you fail

 

[thegimp03]

What year/model is the kind of car you're currently paying off? The Chevy S-10 would be a cheaper option with saving $200 on insurance a month and obviously not having to pay off the rest of your other car. How much more are you going to pay off on that one?

IMO it's best to get rid of the CC payments first as you're probably getting bent over by the interest.

 

[Mermaidman]

If I understand correctly, your problem is the car insurance? Keep these in mind:
-Your car will depreciate further while it's gathering dust.
-You will still have to insure that car because of the loan, even though it's not registered and not driven.

IMO, your best bet to borrow enough money so that you can sell that car ASAP.

edit:
Why is your insurance so ungodly expensive?!

 

[zCypher]

Doesn't sound like that bad, could be much worse. You only have a bit over $4k left of debt to pay between cc/loan, so just keep paying it down, before you know it you'll be debt free.

As I understand you're making more payments on your car than what's required in order to pay it down faster - this is good. How much could you sell the car for? Save up the difference needed in order to sell it, then do it.

Sounds like you're in a good direction and not in a downward spiral.

 

[Baked]

56 months payment w/ interest... clearly your degree didn't teach you anything.

 

[FDF12389]

Originally posted by: Baked
56 months payment w/ interest... clearly your degree didn't teach you anything.

The interest rate was the same as the 48 month and 36 month loans since I am financing through navy federal, I did 66 month loan to have some cushion but have been paying it down at the 36 month rate.

Originally posted by: Mermaidman
If I understand correctly, your problem is the car insurance? Keep these in mind:
-Your car will depreciate further while it's gathering dust.
-You will still have to insure that car because of the loan, even though it's not registered and not driven.

IMO, your best bet to borrow enough money so that you can sell that car ASAP.

edit:
Why is your insurance so ungodly expensive?!

I wont have to insure the car if it is parked in a insured garage, and I have a friend who will let me keep it there for free. After my lease is up I plan on taking the money I would have spent on rent and pay down the car until I can sell it. Insurance is expensive because I am young, been in two accidents and have a ticket, also I live in the city.

The only other option I'm considering is selling the car and using the line of credit on my credit card to make the difference, but then I would still need to but a new car, so I'm not sure yet.

 

[Farang]

That is a great deal on the S10, if nothing else buy it and sell it and you'll get some extra cash.

 

[FDF12389]

Originally posted by: Farang
That is a great deal on the S10, if nothing else buy it and sell it and you'll get some extra cash.

Thats why I'm thinking of buying it now while I try to sell my car, that way when i sell my car I wont have to worry about buying a new one.

 

[JS80]

Originally posted by: CRXican
It's likely that your financed vehicle requires full coverage even if you only "park it." Maybe get rid of it completely.

Also

you fail

why is he fail?

 

[gramboh]

No offense, but at this point in your financial life, paying that much for a car and insurance is absolutely insane. You should ditch the other car if possible and get the S10. $478 - $678 a month on a car when your weekly take home is 600 is ridiculous. I know new/fast cars are awesome, but wait 10-15 years then buy/finance one when it makes sense. Pay down the CC debt/student loans and save while driving the 2000 S10 which is a perfectly respectible vehicle.

 

[FDF12389]

Originally posted by: gramboh
No offense, but at this point in your financial life, paying that much for a car and insurance is absolutely insane. You should ditch the other car if possible and get the S10. $478 - $678 a month on a car when your weekly take home is 600 is ridiculous. I know new/fast cars are awesome, but wait 10-15 years then buy/finance one when it makes sense. Pay down the CC debt/student loans and save while driving the 2000 S10 which is a perfectly respectible vehicle.

The only problem with that is I owe more on the car then it is worth, it need the back fender and drivers side door repaired thanks to my lovely ex, unfortunately I have 1000 dollar deductible and the repair est is 1300, so I don't think its worth a extra claim on the insurance. Now you all can proceed to laugh at me for letting a female drive the car and for having a 1k deductible.

 

[JS80]

Originally posted by: gramboh
No offense, but at this point in your financial life, paying that much for a car and insurance is absolutely insane. You should ditch the other car if possible and get the S10. $478 - $678 a month on a car when your weekly take home is 600 is ridiculous. I know new/fast cars are awesome, but wait 10-15 years then buy/finance one when it makes sense. Pay down the CC debt/student loans and save while driving the 2000 S10 which is a perfectly respectible vehicle.

Yea OP i don't think you'll regret following this advice. I make way more than you and I spend $100/month on my car (insurance only, no car note).

 

[FDF12389]

Originally posted by: JS80

Originally posted by: gramboh
No offense, but at this point in your financial life, paying that much for a car and insurance is absolutely insane. You should ditch the other car if possible and get the S10. $478 - $678 a month on a car when your weekly take home is 600 is ridiculous. I know new/fast cars are awesome, but wait 10-15 years then buy/finance one when it makes sense. Pay down the CC debt/student loans and save while driving the 2000 S10 which is a perfectly respectible vehicle.

Yea OP i don't think you'll regret following this advice. I make way more than you and I spend $100/month on my car (insurance only, no car note).

I already came to that conclusion, I have been slowly but surely taking control of my budget, I use to set aside 450 a month for parties and going out, now its 50.

Its just not worth it anymore.

 

[ponyo]

I would sell the car and pay the upside down difference. No point in trying to store it til you break even as the car will continue to depreciate as you make extra payments. Just sell it, pay the difference, and be done with it.

Buy the S10 and drive it til the wheels fall off. Continue to pay down your debt and then work on your savings. Buy your next car in cash.

 

[FDF12389]

Originally posted by: Naustica
I would sell the car and pay the upside down difference. No point in trying to store it til you break even as the car will continue to depreciate as you make extra payments. Just sell it, pay the difference, and be done with it.

Buy the S10 and drive it til the wheels fall off. Continue to pay down your debt and then work on your savings. Buy your next car in cash.

I think this is what I am going to do.

 

[nerp]

278 for car insurance a month! OMG. I drive a brand new car (financed with 0 percent interest) and I pay a fraction of that. Pays to not be 20, I guess.

 

[Playmaker]

Unless I'm reading your OP wrong, you owe $8k on a (used?) car you paid $12k for 10 months ago? How far upside down could you be?

 

[FDF12389]

Originally posted by: Playmaker
Unless I'm reading your OP wrong, you owe $8k on a (used?) car you paid $12k for 10 months ago? How far upside down could you be?

About two grand :/ Keep in mind 1300 of that is cosmetic repairs needed.

 

[Mojoed]

Originally posted by: FDF12389
Car insurance is 278 a month

Woah, I pay $24 per month. :Q

 

[gramboh]

Ouch, that sucks, maybe you can try to take your ex to small claims court (if you have time, could be entertaining if nothing else).

But yeah, just eat the loss now, it won't get any better, and you have potential liabilities surrounded with the car even just sitting there, plus the interest costs of the debt. You've learned the painful lesson early and know what to do going forward. Definitely always buy cars with just cash until you are well established financially, they are rapidly depreciating luxury items with high service costs, rather than investments. I bought my first (and only so far) car for about 9k in cash and will drive it until it dies. I do not plan on buying a nice/new vehicle until the gf is done school/debt paid off and combined income is >300k.

 

[JS80]

Originally posted by: FDF12389

Originally posted by: JS80

Originally posted by: gramboh
No offense, but at this point in your financial life, paying that much for a car and insurance is absolutely insane. You should ditch the other car if possible and get the S10. $478 - $678 a month on a car when your weekly take home is 600 is ridiculous. I know new/fast cars are awesome, but wait 10-15 years then buy/finance one when it makes sense. Pay down the CC debt/student loans and save while driving the 2000 S10 which is a perfectly respectible vehicle.

Yea OP i don't think you'll regret following this advice. I make way more than you and I spend $100/month on my car (insurance only, no car note).

I already came to that conclusion, I have been slowly but surely taking control of my budget, I use to set aside 450 a month for parties and going out, now its 50.

Its just not worth it anymore.

Fatwallet community would be proud of you.

 

[alkemyst]

Originally posted by: nerp
278 for car insurance a month! OMG. I drive a brand new car (financed with 0 percent interest) and I pay a fraction of that. Pays to not be 20, I guess.

I don't get you guys...did your parents cover everything growing up and you never looked at it.

My insurance was paid for by my parents. On a 1966 Mustang GT and a 1988 Mustang GT from about 18-23ish my insurance for non-full coverage was $225-250 with State Farm and then Progressive back in 1990-1995...

some areas/vehicles are simply more expensive.

 

[Skeeedunt]

Well you're not going to be very baller if you don't drive a car you can't afford or drop $400/mo on partying. I'd seriously reconsider these puritanistic spending cuts and focus instead on being a totally cool guy. You know that's what you want.

 

[Playmaker]

Originally posted by: FDF12389

Originally posted by: Playmaker
Unless I'm reading your OP wrong, you owe $8k on a (used?) car you paid $12k for 10 months ago? How far upside down could you be?

About two grand :/ Keep in mind 1300 of that is cosmetic repairs needed.

That's tough if the LoC on your CC is the only way you can cover the difference. I'd live like a pauper and save for a couple months to make sure you have the cash to pay it off without taking on more debt, assuming you can't get some short-term money from family and you really want to cut down that insurance premium.

I also think you and many of the posters here are exaggerating your situation. If you're netting $600/week, your debt situation as a 20 year old STUDENT isn't that bad. And with a meager $50/month budget for going out (how sustainable is that, though?) and impending free rent, you're fine with the ridiculous insurance payments for the short-term.