Reader Question: Saying buh-bye to car payments.

Racheal left a comment on a previous post that I thought I should share... she had some great questions!

"I have been following your blog for a few weeks and I wanted to ask you about the debt paydown - especially how you sold your cars and bought new ones free and clear? My husband and I are thinking about this and don't really know where to start but we know that we need to do this! Any advice would be great! Thanks so much!"

Yeah, if y'all remember, we sold our 2005 Toyota 4-Runner last fall for the sole purpose of ditching the loan. Luckily, we were able to break even on it and weren't upside down on the darn thing - I know a lot of people are in that situation. So right now we've just got Phoebe, my sweet 1998 Honda Accord. We got her a new paintjob recently and she's looking fabulous. She's been paid for now for nearly 7 years... I bought her brand new (something I'll probably never do again).

ANYway, yeah the first the question Dave Ramsey asks his callers is how much they owe on their cars. His first advice is usually "SELL THE CAR!" He thinks car payments are completely stupid and now that we have a clue, so do we. We tried selling on craigslist at first... got some interest, but weren't getting our asking price. So after a few weeks the hub put it on Auto Trader. It cost about $50 to list, but within 24 hours it was sold at our asking price. We were thrilled! So I highly recommend going that route. People on craigslist are really looking for a bargain, so I think that' s why that didn't go in our favor. That's where we're currently looking for our new car. And by new, I mean something the $3,000 in cash we've saved up over the past couple of months will buy. So we're currently on the hunt!

So to answer your question, Racheal, I'd say go ahead and sell one of the cars so you knock out one loan while you're saving up the cash to buy a new one. And you can get a decent, reliable car for $2 or $3k. Once you've saved up enough to get a new one and buy, then you'll have the freedom to rid yourselves of the 2nd. And that freedom is awesome - freedom from the payments. That hot new BMW next to you at the gas station will suddenly just look like a big-ass car payment to you instead of something desirable. It's really nuts how all this changes your view on "stuff." Really the biggest thing with the whole debt paydown is you gotta get wicked fierce about it. You have to get pissed off and get aggressive as hell. That's when you start winning. From your post, it sounds like you and your hubby might really benefit from joining an FPU class near you. There are a bunch of new ones starting this month. We loved it - ours wrapped up this past November. Hope that helps, and best wishes to ya!