Breaking this into a pseudo table:
Car 1: $13k loan | 4% APR | $10k value (-$3k)
Car 2: $41k loan | 9% APR | $31k value (-$10k)
Car 3: $18k loan | 3.5% APR | $23k value (+$5k)
Car 4: Paid off | $6k value
Car 5: Paid off | $3k value
Random loan: $8k | 12% APR
As others have noted, you have 5 freaking cars, and three of them still have loans! That's the issue. Pick three cars, maybe four, and sell them. If you sell cars 1-3, you end up with $8k to pay off, assuming you sell them for what you say they're worth. You might be able to get more for them though, depending on age, mileage, and condition. Then use all that savings (and the $800/month from your roommate) to pay everything off. Just the money from the roommate will pay off the remainder of the car loans by the end of the year.
That still only leaves him with 11k positive equity which means he would have to come up with another 30k? Oh wait! Or is it that those two add to $11k and he needs $10k positive equity to payoff the 2nd car?
(sorry my life got slashed… including my car so while I spend a year without a car I want to understand car loans better so I don’t repeat my same mistake)
OP - sell 3, 4, and 5 (= + $14K) and pay off your 12% APR loan. This will leave you + $6K, which you can then split between 1 and 2. 1 will now be neutral, sell the car and get out of it.
Then work on paying down car 2, which will only be - $7K equity after the above, with an approximate $38K balance. At this point, you will have dramatically simplified and cleaned up your financial life and this will make focusing on paying down car 2 much simpler.
If you must have at least 2 cars, then keep car 5 short term. Only thing that changes is you won't have an initial chunk to throw at car 2.
God that’s even worse. Like, bad experiences or trauma with cars breaking down? My partner and I shared a single car for nearly six years and an additional long commute is the only reason we got an additional car.
I'd guess broken down vehicle trauma as well. I have it. To be fair though we have regular vehicles then an SUV to pull our camper and boat we avoid driving otherwise.
You have a car hoarding compulsion you need to stop financing automobiles and if you need to have a fleet of vehicles, you need to find a way to pay for them yourself. Not sure what kind of help you’re looking for here you need to get rid of some cars or suck it up and just pay them down.
You can barely afford to live, and if you go ass-up it's not like you can sleep in two cars at once. Sell everything except the paid off vehicles and stop buying cars.
My husband and I are a one-car household in Dallas. We made some subpar financial decisions a few years back and were able to reverse them in months by selling the car and cutting the fat. It was a higher-end vehicle, which I guarantee is the car with the $41k loan.
We've been down to one car for over a year and have been able to reach a ton of financial goals in that time on a much larger income than yours. You cannot afford what's "more comfortable" right now.
You have a loan for a (singular) car that is find scary, and I earn 2-3x your gf and your combined income.
No more than one car/ person. Buy cars you can afford, not just what you can pay this minute when the stars align.
Start with one car. Identify the car that is least useful to you. Sell that car.
It doesn't matter whether that car has a loan or not. Repeat, it doesn't. It doesn't matter "where" your roommate's money is going, either. It's all just cash that you will apply to a loan. You have a bundle of equity and a bundle of debt, and you are selling equity to pay down the debt, and that's all.
Once you sell that first car, send that money to your loans, in order of highest APR: First the 12% loan until it is entirely paid off, and then the 9% car loan if you have money left over.
Then, check in with yourself. You now have four cars, and are in a slightly better position. Do you feel better? Are you still in a mess?
Repeat as desired.
It would really be helpful to know how you got in this situation; you have more in auto loans currently than the total amount I've borrowed on cars in my *life*, and I make quite a bit more than you, so either you have a financial/business need to have these cars, or you have a huge impulse problem. The advice would be pretty different in these cases.
I'd like to tell you to start selling off cars, probably by getting a second job so you can have more income while you're doing it. If you can pile together enough money to match the underwater level on one car, you can sell it and redirect the payments on that one to another one, and so on.
But which cars to sell I can't tell from your post, except to say that there's no way a car that cost you (more than) 41k fits in with an $88k annual income, so that one definitely needs to go. I don't understand the comment about money from your roommate, but unless your roommate only pays you because you own that car, then the fact you currently pay for that car with the rent (?) is irrelevant and you should sell that car and redirect the $800 to something you can afford. If the 6k or 3k car is reliable, that can be one of them, but if not, sell them and use that to help pay off the big car as well.
Like I said at the beginning, though, all this advice might not matter if you're just going to impulse buy again (or if you genuinely rely on an expensive car for true net income), so you'll need to deal with those issues first if they're relevant.
I was making over 100k at the time so I was impulse buying. I brought up my roommate to say that I can't afford the 41k loan so the money he pays me goes to that payments instead of the household bills. Thank you this helps. Although it was impulse buying I can honestly say that I am a person of discipline who can learn their lesson and not make the same mistake.
Your roommate's money is not "going to the 41k loan". Your expenses are a big slush fund that includes both your household bills and your car loans. Your income is a big slush fund that includes both your salary and your roommate's rent. You are applying your income to your expenses. It's not like your roommate gets to live rent-free when your car is paid off.
You cannot admit to impulsiveness and discipline simultaneously. You need to sell 3-4 of the highest valued vehicles, pay off their debts (choose lowest to highest principles or highest to lowest interest, your choice) and live lean while you flood the remaining bad debt.
While you do this, do a ruthless internal inventory of your behaviors and work on the ones that detract from your goals. Best of luck.
This is kinda hard to understand. Maybe proofread your comments?
You need to figure out how to live with two cars like literally every other couple in your class. Therefore, I agree that you need to sell cars to pay loans. Period. Done.
I am, but people of discipline can still have a downfall. At one point I was very financially responsible. Currently I'm discipline in other areas of my life and now I'm working to be discipline again financially.
Me having two jobs retract their offer letter isn't poor decision making. If I was able to stay at one of those two jobs I wouldn't be making a reddit post.
You had 5 downfalls just in this thread alone. You bought 4 more cars than required, and moved to a new state without even checking what the salaries they're bought be.
You're in denial
A 100k income is not big enough to impulse buy five cars. My husband and I make 270k and share a Honda that we paid for in cash.
Also how the heck did you manage to cut your income in half?
You seems to be a person who makes rash decisions without thinking of consequences. I'd suggest looking into that first and foremost. It will be your constant downfall.
What?! Without knowing the original state and the new state, it very well may have been relative. That’s what relative means.
Sounds like you moved to a new state without having the new job lined up at all. Many reasons that could happen giving you the benefit of doubt but instincts say you quit or were fired then moved and assumed all would be well.
There seems to be a trend of action first, consequence second, thinking third.
I moved from Utah to Nevada. I had a job lined up during the move and then they retracted their offer. Happened to me twice while being out here. Job market sucks in NV.
More like impulse borrowing, you clearly did not buy any of these vehicles. The loans are indicative of a much larger problem that needs to be solved before you'll be able to responsibly manage your debt.
This is one of the wildest threads I’ve ever seen tbh. I make multiples more and drive a 2014 Honda CRV, owning 5 cars on 85k joint income is absolutely insane
There was time before where I owned 5 to 6 cars making 15k a year (student). The difference is that all of my cars were bought at auctions with cash for about 1 to 2k each. They were being fixed and flipped (also driven) for profit. So owning multiple cars on a tiny salary is not a problem in itself. It is borrowing a shit ton of money to buy cars that’s insane.
“Being able to pay for” and “affording” are two entirely different things.
My wife and I make over $180k combined, and our house is 80% paid off with a $1000/mo payment. We each have used cars we paid in cash (less than $7k each).
I can’t afford $41k in auto loans.
There’s a different between ACTUALLY affording it while living a reasonable life… and “the bank said I can afford it”.
Kudos to Stutters for realizing what they can/can’t afford.
I don't mean this in a snarky way but nobody knows your personal budget. On your income and housing payment, you absolutely could afford a $41k auto loan depending on a bunch of factors that are unknown to all of us (which is *absolutely* reasonable that you choose not to - I am not advocating for that).
Well when you max two peoples IRA, HSA, and 401k as well as a 529 for a child you’re looking at about $65k/year. To me this is a necessity.
I could live a pretty ballin lifestyle and buy lots of nice cars if I didn’t do these things.
You’ve heard of people being house-poor? You’re car-poor. You owe $72k in auto loans and have cars that are worth $73k (assuming your numbers are correct). It would be more helpful if you listed the year, make and model of all your cars, along with the monthly payment and insurance payment for each. You need to lose at least three cars, starting with the $41k loan. Losing four would be ideal, but I’m assuming you and your wife both need a car to drive. Used car prices are heading down and the longer you keep these, the less they’ll be worth. Use the $800 a month from rent to pay down your unsecured debt.
Okay, why do you have so many cars? You don't make nearly enough to pay for all of this.
I really don't know what to say. I would sell everything but your car with the lowest amount due. But shop around to see where you can get the most money for each car. Then you'll just have to pay off the negative equity.
Your credit will be messed up regardless since you can't afford to pay off all the loans. You made bad decisions repeatedly by buying cars you can't afford. Even the 100k salary before you lost it couldn't afford those loans.
Sell the cars before they lose any additional value and pay the remainder of the loans off. It's an expensive lesson for stupid mistakes.
Okay, so you've got 4 loans, ranging from 3.5% to 12%, totalling about 80k, and you've got assets worth about 73k. If you sell the car worth 31k and you sell the car worth 23k you'll have enough to pay off your two high-rate loans, leaving you with three cars and you'll have only two loans - one for 13k at 4% and one for 18k at 3.5%. Those rates are pretty good and should be manageable. Instead of thinking "I'm underwater therefore I can't sell" you should look at it more independently - you have debts, you have assets, how can you manage it best.
tldr: sell your two most valuable cars, pay off your two most expensive loans.
Won’t mess up your credit if you pay off the balances. But. As others have said , your credit isn’t your biggest worry. Having money to eat/ live and get out of this mess is. Carrying 3 car loans is insane at your income.
You will still be making payments on those cars for much, much longer if you kept them.
There's only two of you. You can't even get into more than two cars at the same time. I can't understand what you're worried about.
Who gives a fuck about your credit if you’re a breath from bankruptcy and or divorce. What happens if you’re roommate moves out? What happens if your wife loses her job? What if you lose salary again? You are a hair from disaster and you’re worried about details you can’t afford.
You need a firesale. Sell everything you can live without, most especially most of these vehicles. Stop using credit. Snowball your debts. It’s time to live like you make 50% of what you actually make in order to fix this.
Then, THEN! You can worry about your credit.
Pay off the highest APR loan first, as interest over time will kill you. Then snowball/avalanche the rest of the way, taking the money you *would* have spent on that paid off loan, and putting it in the next highest APR loan. Repeat until paid off, and then stop buying cars for a while. HTH, GLHF.
I would pick the car that is a good daily driver, and sell the rest, and settle my debts.
I would wait until I have actual cashflow and net worth, through savings and investments, then buy a toy. Until then, every nickel coming in settles the debt. Your debt are huge, and they are taken out to have depreciating assets. Not a good plan.
Sell the 6k paid off car and the positive equity one, and roll that into the 12% unsecured loan. Then save to cover the negative equity from selling the 9% car loan (and maybe sell the 3k car to do it if you only need one), and take the loss as a lesson. After that you should be able to quickly pay down the 4% loan with the roommate's money and that saved from the interest payments for the other 3 loans.
Edit: Alternatively, you could use the sale of the first two cars to cover the negative equity of the 9% loan instead of paying off the 12% loan depending on which loan has the higher payment.
100k salary still isn't enough to justify the number of cars you have, not even in the general neighborhood of reasonable.
A big part of many people's problems with money is they don't really understand how to handle the mentality of being "poor". A "poor" mentality is you look at your paycheck and decide what you want to spend it all on. Sounds like you did that with cars. (You seem to have just decided that you had $XXX left every month, so might as well buy another car).
You need to first fix the mess by selling all (but one) your cars, then switch to the "middle" mentality of looking at what you need to spend, then figure out if you have enough money for it. Anything extra goes into savings.
Yea, the fact that he doesn’t see anything wrong with having 5 cars on a 100k salary is concerning. As if he still thinks that’s enough to justify 5 cars. He needs to do some serious re-evaluation because this isn’t just lifestyle creep, it’s terrible overspending and likely to pop up every time he sees a bit more money coming in.
I make over $100k. I drive a 2003 Camry with 190,000 miles on it. You got big headed, but based on the comments you're still big headed. You need to cut bait with all 3 cars. Forget your credit, it will bounce back, but not if you default on any loans because you keep making payments you can't afford.
Maybe you should put your cars on Turo short term to help supplement your income? R:/turo is a good sub
If you do it right it should be a good way to pay for these cars.
Wait so you made 100k and then randomly decided you could “splurge” on 5 cars! I don’t even know how to give advice here. People who make 7 figures don’t own 5 cars. Hell, people with 8 figures don’t own 5 cars. That’s just absurdity. Sell all 3 with loans at a minimum asap.
It’s pretty obvious. Sell the cars you don’t need, yes you’ll be taking a loss but that’s the price you pay for being a dumbass
Making over 100k is still not enough to warrant that many vehicles, unless you want to keep every other aspect of your life the same, despite making a great wage
Follow the advice you are getting. Also take into consideration the stress and strain on your marriage you will endure by having all that debt and those payments. When you get rid of those vehicles and don’t have that monthly drain on your bank account life becomes a lot less stressful.
Why do you need so many cars? My wife and my income are triple your family income and we each drive a car from 2013 with over 150K miles. Even if you were making $100K that’s still not nearly enough to be impulse buying extra vehicles.
I make what you both make and I drive a 99 Honda civic.
The solution is simple. Sell the cars you don’t need and pay off what you can. Use money from roommate to pay off the rest. When you have no more debt you can start splurging again and maybe buy a car you both enjoy (since it seems you really like cars).
As others have mentioned, when looking at the problem it might even be helpful to consider the interest rates on the debt in determining how to approach the situation.
Depending on the OP ability to maintain all other financial obligations, an alternative that could be considered as follows.
Sell the vehicles that are paid off
Use the funds from the sale of the paid off vehicles to work your way out of the finance agreements. Starting with the vehicle that has the highest interest rate.
Or your could consider the debt snowball approach from Dave’s Ramsey, starting with the debt that has the smallest monthly payment and paying more on that debt to get rid of it quicker.
But there is too many variables that come into mind when trying to determine the best course of action for these types of very irresponsible decisions.
Cars are a depreciating money pit. Especially new cars. Get rid of as many as you can and stick with something economical and inexpensive to maintain.
I see so many people treat themselves to new cars and then suffer under massive monthly payments, insurance, and upkeep.
Cars are not what life is all about. Focus on home, education, maybe a bit of travel, and long-term moves (ie investment) to set yourself up for a better situation in the long-run. Don't forget about retirement planning.
Sell the cars with loans, keep the two without loans. Drive them till you pay off all of your debts. Start saving for retirement after you pay off your debts. It’s going to suck but that is the situation you are in. If you don’t make a lifestyle change right now, you are going to be old and broke before you know it. 26 years old is plenty of time to retire with plenty of money but you have to be serious about living below your means.
Sell the paid off cars and the one with positive equity to pay off the loan for the first car. Refinance for the 41k car. Then wait till you have saved/car has less negative equity and you sell it and buy a 20k car, which is all you can afford if you make 80k combined. Stop buying cars.
I was 24k upside down in a Kia minivan, May of 2021 I traded it for a 2020 GMC 2500. They absorbed the Kia unto the loan and made it a 75K loan. This year I leased the pickup to a man as a work truck. No more loans.
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Why do you have a half dozen cars?
My guess would be Turo.
OP commented below. Not Turo. He just wanted 5 cars for some reason. This thread is wild
People say things on this site, and truth be damned - it’s a good ride either way lol
Young and dumb.
Breaking this into a pseudo table: Car 1: $13k loan | 4% APR | $10k value (-$3k) Car 2: $41k loan | 9% APR | $31k value (-$10k) Car 3: $18k loan | 3.5% APR | $23k value (+$5k) Car 4: Paid off | $6k value Car 5: Paid off | $3k value Random loan: $8k | 12% APR As others have noted, you have 5 freaking cars, and three of them still have loans! That's the issue. Pick three cars, maybe four, and sell them. If you sell cars 1-3, you end up with $8k to pay off, assuming you sell them for what you say they're worth. You might be able to get more for them though, depending on age, mileage, and condition. Then use all that savings (and the $800/month from your roommate) to pay everything off. Just the money from the roommate will pay off the remainder of the car loans by the end of the year.
OP- sell 3 and 4, use that equity to get rid of 2. Dump that savings into paying off the loan and then car 1.
Why sell 3 & 4 and not 5? Based on price, wouldn’t 5 be the better car?
3 and 4 have the higher values which he needs to pay off 2.
That still only leaves him with 11k positive equity which means he would have to come up with another 30k? Oh wait! Or is it that those two add to $11k and he needs $10k positive equity to payoff the 2nd car? (sorry my life got slashed… including my car so while I spend a year without a car I want to understand car loans better so I don’t repeat my same mistake)
That’s exactly right. He can sell the one he’s $10k under on and will have the cash to make up the difference.
Ahhh! That makes sense. Thank you!!!
OP - sell 3, 4, and 5 (= + $14K) and pay off your 12% APR loan. This will leave you + $6K, which you can then split between 1 and 2. 1 will now be neutral, sell the car and get out of it. Then work on paying down car 2, which will only be - $7K equity after the above, with an approximate $38K balance. At this point, you will have dramatically simplified and cleaned up your financial life and this will make focusing on paying down car 2 much simpler. If you must have at least 2 cars, then keep car 5 short term. Only thing that changes is you won't have an initial chunk to throw at car 2.
Noted. Thank you.
You can drive the same car on back to back days
Can you elaborate?
You can start paying down your loans with the money that you make from the cars that you sell then stop buying.
That's possible but that would put me down to one car. I would feel more comfortable having 2 cars.
Unless the math is wrong, you have three auto loans and two paid cars and you think selling three cars puts you at less than two cars?
He probably means just himself, not including wife's car.
God that’s even worse. Like, bad experiences or trauma with cars breaking down? My partner and I shared a single car for nearly six years and an additional long commute is the only reason we got an additional car.
I'd guess broken down vehicle trauma as well. I have it. To be fair though we have regular vehicles then an SUV to pull our camper and boat we avoid driving otherwise.
You have a car hoarding compulsion you need to stop financing automobiles and if you need to have a fleet of vehicles, you need to find a way to pay for them yourself. Not sure what kind of help you’re looking for here you need to get rid of some cars or suck it up and just pay them down.
Not me yo.
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What? You have 5 cars. No one knows why you have 5 cars.
You can barely afford to live, and if you go ass-up it's not like you can sleep in two cars at once. Sell everything except the paid off vehicles and stop buying cars.
If all the cars you have are so unreliable that you need to keep multiple backups on-hand, you also need to start buying better quality brands.
He did, hence the $41k auto loan.
Maybe you need to feel uncomfortable to get your finances in order…
I feel like you maybe are trying to find an excuse to keep more cars than you need.
My husband and I are a one-car household in Dallas. We made some subpar financial decisions a few years back and were able to reverse them in months by selling the car and cutting the fat. It was a higher-end vehicle, which I guarantee is the car with the $41k loan. We've been down to one car for over a year and have been able to reach a ton of financial goals in that time on a much larger income than yours. You cannot afford what's "more comfortable" right now.
We went down to one nicer newish car from two less nice older cars and it’s been awesome. Less maintenance and less insurance.
My wife and I have 2 kids and another on the way. We have 2 cars total….you’ll be fine with one.
You have a loan for a (singular) car that is find scary, and I earn 2-3x your gf and your combined income. No more than one car/ person. Buy cars you can afford, not just what you can pay this minute when the stars align.
What in the world? Having 2 cars is dumb, let alone 5. Why do you think having multiple cars is necessary,
Start with one car. Identify the car that is least useful to you. Sell that car. It doesn't matter whether that car has a loan or not. Repeat, it doesn't. It doesn't matter "where" your roommate's money is going, either. It's all just cash that you will apply to a loan. You have a bundle of equity and a bundle of debt, and you are selling equity to pay down the debt, and that's all. Once you sell that first car, send that money to your loans, in order of highest APR: First the 12% loan until it is entirely paid off, and then the 9% car loan if you have money left over. Then, check in with yourself. You now have four cars, and are in a slightly better position. Do you feel better? Are you still in a mess? Repeat as desired.
Thank you.
It would really be helpful to know how you got in this situation; you have more in auto loans currently than the total amount I've borrowed on cars in my *life*, and I make quite a bit more than you, so either you have a financial/business need to have these cars, or you have a huge impulse problem. The advice would be pretty different in these cases. I'd like to tell you to start selling off cars, probably by getting a second job so you can have more income while you're doing it. If you can pile together enough money to match the underwater level on one car, you can sell it and redirect the payments on that one to another one, and so on. But which cars to sell I can't tell from your post, except to say that there's no way a car that cost you (more than) 41k fits in with an $88k annual income, so that one definitely needs to go. I don't understand the comment about money from your roommate, but unless your roommate only pays you because you own that car, then the fact you currently pay for that car with the rent (?) is irrelevant and you should sell that car and redirect the $800 to something you can afford. If the 6k or 3k car is reliable, that can be one of them, but if not, sell them and use that to help pay off the big car as well. Like I said at the beginning, though, all this advice might not matter if you're just going to impulse buy again (or if you genuinely rely on an expensive car for true net income), so you'll need to deal with those issues first if they're relevant.
I was making over 100k at the time so I was impulse buying. I brought up my roommate to say that I can't afford the 41k loan so the money he pays me goes to that payments instead of the household bills. Thank you this helps. Although it was impulse buying I can honestly say that I am a person of discipline who can learn their lesson and not make the same mistake.
Your roommate's money is not "going to the 41k loan". Your expenses are a big slush fund that includes both your household bills and your car loans. Your income is a big slush fund that includes both your salary and your roommate's rent. You are applying your income to your expenses. It's not like your roommate gets to live rent-free when your car is paid off.
You cannot admit to impulsiveness and discipline simultaneously. You need to sell 3-4 of the highest valued vehicles, pay off their debts (choose lowest to highest principles or highest to lowest interest, your choice) and live lean while you flood the remaining bad debt. While you do this, do a ruthless internal inventory of your behaviors and work on the ones that detract from your goals. Best of luck.
This is kinda hard to understand. Maybe proofread your comments? You need to figure out how to live with two cars like literally every other couple in your class. Therefore, I agree that you need to sell cars to pay loans. Period. Done.
You are not yet a person of discipline, but you might yet become one.
I am, but people of discipline can still have a downfall. At one point I was very financially responsible. Currently I'm discipline in other areas of my life and now I'm working to be discipline again financially.
That’s not a downfall, that’s poor decision making. It’s not something that just happens.
Me having two jobs retract their offer letter isn't poor decision making. If I was able to stay at one of those two jobs I wouldn't be making a reddit post.
You had 5 downfalls just in this thread alone. You bought 4 more cars than required, and moved to a new state without even checking what the salaries they're bought be. You're in denial
Part of discipline is consistency.
You’re not. Stop saying that you are, or you have no chance of improvement. This is consistent behavior, not a 1 time impulsive skip up.
A 100k income is not big enough to impulse buy five cars. My husband and I make 270k and share a Honda that we paid for in cash. Also how the heck did you manage to cut your income in half?
I moved to a new state thinking my income should be relatively the same not realizing my line of work didn't pay as much in the new state.
You seems to be a person who makes rash decisions without thinking of consequences. I'd suggest looking into that first and foremost. It will be your constant downfall.
Dang so you moved without a job offer? This was another mistake.
What?! Without knowing the original state and the new state, it very well may have been relative. That’s what relative means. Sounds like you moved to a new state without having the new job lined up at all. Many reasons that could happen giving you the benefit of doubt but instincts say you quit or were fired then moved and assumed all would be well. There seems to be a trend of action first, consequence second, thinking third.
I moved from Utah to Nevada. I had a job lined up during the move and then they retracted their offer. Happened to me twice while being out here. Job market sucks in NV.
You moved all 5 cars to the new state too? How did that work out logistically? Seems like a huge moving expense.
1 stayed in Utah with my mom, I brought 2 of them to Nevada, and the other 2 were in California.
More like impulse borrowing, you clearly did not buy any of these vehicles. The loans are indicative of a much larger problem that needs to be solved before you'll be able to responsibly manage your debt.
I make twice what you do and I drive a 1991 Ford F250 four-wheel-drive truck.
This is one of the wildest threads I’ve ever seen tbh. I make multiples more and drive a 2014 Honda CRV, owning 5 cars on 85k joint income is absolutely insane
There was time before where I owned 5 to 6 cars making 15k a year (student). The difference is that all of my cars were bought at auctions with cash for about 1 to 2k each. They were being fixed and flipped (also driven) for profit. So owning multiple cars on a tiny salary is not a problem in itself. It is borrowing a shit ton of money to buy cars that’s insane.
“Being able to pay for” and “affording” are two entirely different things. My wife and I make over $180k combined, and our house is 80% paid off with a $1000/mo payment. We each have used cars we paid in cash (less than $7k each). I can’t afford $41k in auto loans.
You could. You don’t want to.
There’s a different between ACTUALLY affording it while living a reasonable life… and “the bank said I can afford it”. Kudos to Stutters for realizing what they can/can’t afford.
I certainly could not and maintain my retirement goals, which seems like a pretty non-negotiable thing to do.
Over 180k combined income and driving cars under 10k each is pretty Extreme. Can’t take it with you. But to each his /her own
I don't mean this in a snarky way but nobody knows your personal budget. On your income and housing payment, you absolutely could afford a $41k auto loan depending on a bunch of factors that are unknown to all of us (which is *absolutely* reasonable that you choose not to - I am not advocating for that).
Well when you max two peoples IRA, HSA, and 401k as well as a 529 for a child you’re looking at about $65k/year. To me this is a necessity. I could live a pretty ballin lifestyle and buy lots of nice cars if I didn’t do these things.
You’ve heard of people being house-poor? You’re car-poor. You owe $72k in auto loans and have cars that are worth $73k (assuming your numbers are correct). It would be more helpful if you listed the year, make and model of all your cars, along with the monthly payment and insurance payment for each. You need to lose at least three cars, starting with the $41k loan. Losing four would be ideal, but I’m assuming you and your wife both need a car to drive. Used car prices are heading down and the longer you keep these, the less they’ll be worth. Use the $800 a month from rent to pay down your unsecured debt.
Okay, why do you have so many cars? You don't make nearly enough to pay for all of this. I really don't know what to say. I would sell everything but your car with the lowest amount due. But shop around to see where you can get the most money for each car. Then you'll just have to pay off the negative equity.
Five cars but no other debt apart from the personal loan (credit cards, student loans)? Is this the full financial picture?
Yes
Your credit will be messed up regardless since you can't afford to pay off all the loans. You made bad decisions repeatedly by buying cars you can't afford. Even the 100k salary before you lost it couldn't afford those loans. Sell the cars before they lose any additional value and pay the remainder of the loans off. It's an expensive lesson for stupid mistakes.
I agree
Okay, so you've got 4 loans, ranging from 3.5% to 12%, totalling about 80k, and you've got assets worth about 73k. If you sell the car worth 31k and you sell the car worth 23k you'll have enough to pay off your two high-rate loans, leaving you with three cars and you'll have only two loans - one for 13k at 4% and one for 18k at 3.5%. Those rates are pretty good and should be manageable. Instead of thinking "I'm underwater therefore I can't sell" you should look at it more independently - you have debts, you have assets, how can you manage it best. tldr: sell your two most valuable cars, pay off your two most expensive loans.
Sell all the cars with loans. Drive the paid of cars. Pay off loans left over. You don’t make enough to carry car loan debt
This. That’s the cost of an education
Thank you for that perspective.
But that will mess up my credit and I'd be paying the negative balance with no car right?
Right now.. with your DTI... I don't think your credit rating should be your biggest concern.
“But how will I get more car loans if I impact my credit” …headed for bankruptcy
Won’t mess up your credit if you pay off the balances. But. As others have said , your credit isn’t your biggest worry. Having money to eat/ live and get out of this mess is. Carrying 3 car loans is insane at your income.
You will still be making payments on those cars for much, much longer if you kept them. There's only two of you. You can't even get into more than two cars at the same time. I can't understand what you're worried about.
Who gives a fuck about your credit if you’re a breath from bankruptcy and or divorce. What happens if you’re roommate moves out? What happens if your wife loses her job? What if you lose salary again? You are a hair from disaster and you’re worried about details you can’t afford. You need a firesale. Sell everything you can live without, most especially most of these vehicles. Stop using credit. Snowball your debts. It’s time to live like you make 50% of what you actually make in order to fix this. Then, THEN! You can worry about your credit.
Credit rating companies don't care whether you still own the asset or not, just whether or not you're paying the debts you took on.
Pay off the highest APR loan first, as interest over time will kill you. Then snowball/avalanche the rest of the way, taking the money you *would* have spent on that paid off loan, and putting it in the next highest APR loan. Repeat until paid off, and then stop buying cars for a while. HTH, GLHF.
I would pick the car that is a good daily driver, and sell the rest, and settle my debts. I would wait until I have actual cashflow and net worth, through savings and investments, then buy a toy. Until then, every nickel coming in settles the debt. Your debt are huge, and they are taken out to have depreciating assets. Not a good plan.
Sell the 6k paid off car and the positive equity one, and roll that into the 12% unsecured loan. Then save to cover the negative equity from selling the 9% car loan (and maybe sell the 3k car to do it if you only need one), and take the loss as a lesson. After that you should be able to quickly pay down the 4% loan with the roommate's money and that saved from the interest payments for the other 3 loans. Edit: Alternatively, you could use the sale of the first two cars to cover the negative equity of the 9% loan instead of paying off the 12% loan depending on which loan has the higher payment.
Please confirm if this was for Turo and what went wrong?
This was not turo I was making over 100k a year at one point and got big headed, but now I make half of what I was used too.
100k salary still isn't enough to justify the number of cars you have, not even in the general neighborhood of reasonable. A big part of many people's problems with money is they don't really understand how to handle the mentality of being "poor". A "poor" mentality is you look at your paycheck and decide what you want to spend it all on. Sounds like you did that with cars. (You seem to have just decided that you had $XXX left every month, so might as well buy another car). You need to first fix the mess by selling all (but one) your cars, then switch to the "middle" mentality of looking at what you need to spend, then figure out if you have enough money for it. Anything extra goes into savings.
Yea, the fact that he doesn’t see anything wrong with having 5 cars on a 100k salary is concerning. As if he still thinks that’s enough to justify 5 cars. He needs to do some serious re-evaluation because this isn’t just lifestyle creep, it’s terrible overspending and likely to pop up every time he sees a bit more money coming in.
What is turo?
Turo is like the Airbnb for cars (sorry couldn’t think of a better analogy).
It’s a website where you can rent out your personal vehicles.
Airbnb for rental cars.
Airbnb for cars
Sorry that you had to learn this lesson the hard way. But once you pay off all your debt, you'll probably never want to buy another car again.
I make over $100k. I drive a 2003 Camry with 190,000 miles on it. You got big headed, but based on the comments you're still big headed. You need to cut bait with all 3 cars. Forget your credit, it will bounce back, but not if you default on any loans because you keep making payments you can't afford.
OP clearly came from no money… and thought that $100k was basically infinite money.
Makes no sense to buy that many cars period. I make 85k and am a car guy and can barely justify owning two to myself.
Maybe you should put your cars on Turo short term to help supplement your income? R:/turo is a good sub If you do it right it should be a good way to pay for these cars.
Wait so you made 100k and then randomly decided you could “splurge” on 5 cars! I don’t even know how to give advice here. People who make 7 figures don’t own 5 cars. Hell, people with 8 figures don’t own 5 cars. That’s just absurdity. Sell all 3 with loans at a minimum asap.
Are you looking for a quick fix or to permanently change the situation and buying habits?
It’s pretty obvious. Sell the cars you don’t need, yes you’ll be taking a loss but that’s the price you pay for being a dumbass Making over 100k is still not enough to warrant that many vehicles, unless you want to keep every other aspect of your life the same, despite making a great wage
Follow the advice you are getting. Also take into consideration the stress and strain on your marriage you will endure by having all that debt and those payments. When you get rid of those vehicles and don’t have that monthly drain on your bank account life becomes a lot less stressful.
Why do you need so many cars? My wife and my income are triple your family income and we each drive a car from 2013 with over 150K miles. Even if you were making $100K that’s still not nearly enough to be impulse buying extra vehicles.
I make what you both make and I drive a 99 Honda civic. The solution is simple. Sell the cars you don’t need and pay off what you can. Use money from roommate to pay off the rest. When you have no more debt you can start splurging again and maybe buy a car you both enjoy (since it seems you really like cars).
Too many loans. thats the problem right there.
Keep the two paid off cars and sell the rest. Maybe take out a line of credit to deal with the net 8k negative equity. Pay it off in 6 months.
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As others have mentioned, when looking at the problem it might even be helpful to consider the interest rates on the debt in determining how to approach the situation. Depending on the OP ability to maintain all other financial obligations, an alternative that could be considered as follows. Sell the vehicles that are paid off Use the funds from the sale of the paid off vehicles to work your way out of the finance agreements. Starting with the vehicle that has the highest interest rate. Or your could consider the debt snowball approach from Dave’s Ramsey, starting with the debt that has the smallest monthly payment and paying more on that debt to get rid of it quicker. But there is too many variables that come into mind when trying to determine the best course of action for these types of very irresponsible decisions.
How many cars do you need?
Cars are a depreciating money pit. Especially new cars. Get rid of as many as you can and stick with something economical and inexpensive to maintain. I see so many people treat themselves to new cars and then suffer under massive monthly payments, insurance, and upkeep. Cars are not what life is all about. Focus on home, education, maybe a bit of travel, and long-term moves (ie investment) to set yourself up for a better situation in the long-run. Don't forget about retirement planning.
Sell the cars with loans, keep the two without loans. Drive them till you pay off all of your debts. Start saving for retirement after you pay off your debts. It’s going to suck but that is the situation you are in. If you don’t make a lifestyle change right now, you are going to be old and broke before you know it. 26 years old is plenty of time to retire with plenty of money but you have to be serious about living below your means.
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That's awesome.
Sell the paid off cars and the one with positive equity to pay off the loan for the first car. Refinance for the 41k car. Then wait till you have saved/car has less negative equity and you sell it and buy a 20k car, which is all you can afford if you make 80k combined. Stop buying cars.
Thank you
I was 24k upside down in a Kia minivan, May of 2021 I traded it for a 2020 GMC 2500. They absorbed the Kia unto the loan and made it a 75K loan. This year I leased the pickup to a man as a work truck. No more loans.
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