You’ve hunkered down. You’re eating .33 a box mac and cheese and you’re working two jobs but you still can’t make ends meet. You may have a payment problem.
This is the point where you need to look at your payments. Do you have a car payment? How much of your take home pay is that car payment? What could you do if you didn’t have that car payment? Even if you are upside down in your car, you may want to sell your car and get a loan from a credit union to cover the difference. If you owe $10,000 on your car, you could probably sell it for $7,000 and borrow $4,000 from the credit union. This will give you $1,000 to purchase a crappy car. Having the crappy car and paying off $4,000 over 2 years will cost you much less than trying to carry the $10,000 loan.
If it’s your mortgage that’s the problem, you need to seriously consider getting rid of the house. I know that’s not something you want to consider but if you have a $2,000 a month mortgage payment when you could rent for $1,000 a month, think how much better your budget would be if you had that extra $1,000 a month in your pocket. Think how fast you could get rid of the rest of your debt.
If you really want to get ahead, you’ll need to make some significant changes in your life. You cannot keep this debt cycle going. Remember that this is temporary. If you are struggling to make your payments and dig yourself out of debt, this may be an option for you.
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I usually love your advice but have to say, not this time. Ah, but that $1000 car will cost you way more in the long wrong in repairs and to maintain. Yes, my car payment sucks but I never fork our any money to repair anything and I know I have a reliable car every day.
Jen,
The $1,000 car (and I’ve seen some pretty good ones lately) is there to get you though a year or two so you can pay off some debt and start getting back on track. If you have a $300 a month car payment, you could save $150 a month for another car in 18 months and add an extra $150 a month to your debt snowball ($2700). I’ve had a number of $1,000 cars, one of which lasted me 4 years with little maintenance. There are some great deals out there if you look for them.
In the spirit of this thread, I say learn how to repair and maintain the $1000 car yourself. I bought a $1000 ’92 Chevy truck over 4 years ago, and it has been a great investment. I have spent about $500 during that time in repairs that I performed myself, and this includes the cost of several specialized tools that I now have forever to use in the future (most jobs can be done with basic tools-socket and wrench set). This truck works just as hard as a new $35,000 truck and cost less than the down payment on a new one. It has paid for itself many times over.