Financial advice re: car

[shane_c]

Originally Posted by calumniate

How much driving do you do on a yearly basis?

probably 35-40K a year.

[Table 5]

That's a lot of driving. By any chance do you use it as part of your profession (ie youre a delivery man)? If so, there's a chance you can write off at least a portion of those car payments/maintenance. Although that sounds kind of obvious, so I'm sure you've thought of that already if you are in the position to do so.

Is there anyway you could live without the car? Ie, take the blue limousine?

[shane_c]

Originally Posted by Table 5

That's a lot of driving. By any chance do you use it as part of your profession (ie youre a delivery man)? If so, there's a chance you can write off at least a portion of those car payments/maintenance. Although that sounds kind of obvious, so I'm sure you've thought of that already if you are in the position to do so.

Is there anyway you could live without the car? Ie, take the blue limousine?

Not a delivery man, just need it to get back and forth to work (~40km each way) and to make one or two trips home a year to see my family. Can't be without a car. There's no transit in my neck of the woods.

Thanks for all the replies. One of my goals for 2011 is to take a better look at things in my life (finances, living healthier, etc.) Think it's probably best to get rid of the CC with the LOC. And then figure out if I should keep the car a while longer or try to get rid of it and get something more reliable.

[IliketoPuck]

Seriously man. Get rid of that car. Sell it and find a car with a more reliable track record.

[Ace]

keep in mind that $2000 a year in repairs is $167 / month. If you buy a new vehicle, and your monthly payments go up more than this, then it is effectivly costing you more in Vehicle expenses per month.

[Sliver]

Are you sure there isn't a small part of you trying to justify buying a newer car you can't afford? Even with buying a used Matrix or whatever, you're still going to have maintenance expenses.

[Traditional_Ale]

Maybe get something you can work on yourself?

[Dynamic]

Not sure about all the other stuff, but getting rid of the focus and getting a Honda Civic or Accord will solve your issue. I drive alot more than you and thus needed a reliable car, my 2005 Civic has 358 000, will be well over 400 000 by years end. Having a car you can count on makes all the difference for me.

[shane_c]

Originally Posted by Ace

keep in mind that $2000 a year in repairs is $167 / month. If you buy a new vehicle, and your monthly payments go up more than this, then it is effectivly costing you more in Vehicle expenses per month.

Good point but from what I figured out it would cost me about $50 more a month for a 2007'ish Matrix once I figure in the gas savings too since my Focus isn't that great on gas.

Originally Posted by Sliver

Are you sure there isn't a small part of you trying to justify buying a newer car you can't afford? Even with buying a used Matrix or whatever, you're still going to have maintenance expenses.

I think the repair bills are justification enough. I understand that even a newer more reliable car will require maintenance but I would hope not this much.

[opendoor]

Sell the Focus and buy a reliable older car. You'll save on car payments and your repairs will almost surely be cheaper. I usually just drive older Japanese cars/trucks that I can pay cash for and I've never once spent $1000 in a year on maintenance, let alone $2,000 in consecutive years. There's usually a sweet spot in a car's life span where you can get it used for a good price but avoid a lot of the expensive maintenance that comes later on so I usually try and shoot for that. Once that car gets a bit older I can sell it and move on without having put too much into it.

If you owe $7,000 in CC debt and $5,000 on an unreliable car, buying a newer more expensive car is about the last thing you should do. Driving newer cars is a luxury that it seems you can't afford right now and there's nothing wrong with that.

[Jedi Ninja]

Cars are money pits no matter which way you go. The cost of depreciation and interest* on a newer car are likely going to exceed your current maintenance and repair costs by far. The main difference is that the newer vehicle comes with a predictable monthly payment and you aren't stuck with an unexpected, large repair bill that you didn't budget for. Admittedly, avoiding this drama and inconvenience can be worth the extra money.

It looks like a 2004 Focus can be sold for $4000. A 2004 Civic costs $8000 and a 2004 Accord is like $12000. More debt if you go that route.

I think people are selling the Focus short because it's a Ford. Ask yourself if you're driving it hard and maybe you could start babying it a little? The truth is, you can get high mileage out of almost any vehicle so long as you do the right maintenance and avoid body damage. Just look at the #### boxes that taxi drivers drive.

*And, as a side note, don't be fooled by the 3% financing deals, the market cost of a car loan is more like 7%, when you get a low rate financing deal on a car, it just means they've built the rest of the interest cost into the price.

[DownhillGoat]

Not a lot of options, really.

As noted already, increase the LOC if you can, throw the CC debt on there (unless you've got a better interest rate on the CC, but doubtful).

2k a year on a car with that many miles isn't completely unreasonable, IMO. Don't fool yourself by thinking a used car is going to be any cheaper. You can assume 1-2k to put into a used car right off the bat (assume you'll need tires, an oil change, and a battery in the first 6 months).

The cars you're looking at in particular:
Matrix - I owned a 2006 Vibe (EXACT same car. GM body panels, but the rest was a Matrix) and it was a flaming POS. Tranny went at 60,000 km. Gas mileage was horrendous (and that wasn't just mine. It was a common problem on the Vibe forums too).

Subaru - I have my doubts a 2007 Subaru (whatever model) is going to be at a low price point. Or it'll have 300k kms on it. When I was looking for a winter car last year the Subies held their value well, and people didn't seem to sell them with low kms.

Based on your numbers the Focus is negative equity. So you sell it, lose at least a grand, then buy a more expensive car, you're not really ahead. Until you're looking at spending more on repairs in a year than the car is worth, you'd be better off getting rid of the LOC and CC first. Make sure the car is maintained, and try to reduce your mileage until the debt is paid down.

Also, you mentioned the Focus tends to have engine problems around 200k. You'd be better off prepping for that and having some cash for another car then. Makes little sense to buy another car in case the current one fails. May as well get another 50 - 100km on this one in the mean time. If it grenades then, so be it. If it grenades at 250k or 300k, you're well ahead of the game.

[shane_c]

Originally Posted by kunkstyle

N
The cars you're looking at in particular:
Matrix - I owned a 2006 Vibe (EXACT same car. GM body panels, but the rest was a Matrix) and it was a flaming POS. Tranny went at 60,000 km. Gas mileage was horrendous (and that wasn't just mine. It was a common problem on the Vibe forums too).

Interesting. I had the exact opposite experience with my 06 Vibe that I sold prior to moving back east. It was great, very reliable, and great on gas. The worst mpg I had in the Vibe was better than my best with the Focus.

[Deegee]

You should get a car loan for the car rather then dumping it on the LOC.

You'll likely get a better rate.

With your proposed scenario of buying an 04 with a LOC so you can focus on your CC, by the time you're done the CC you will be 1-2 years removed so you will still need to payoff the 04 car (on the LOC) starting in 2012-2013.

That sounds horrible.

You should be getting rid of the CC debt first rather then getting more debt for new wheels, and then focus on paying the LOC next.

Where is the current debt owed for your current car? A LOC? Or a car loan?

[MoneyGuy]

Originally Posted by Sliver

It doesn't exactly sound like this guy has a ton of money, so I'm not sure how "pay off your cc and buy a new car" is good advice lol.

He can't afford the money-sucking car. It needs to be replaced.

I'm also suggesting he pay off the card as quickly as he can.

[Sliver]

Originally Posted by MoneyGuy

He can't afford the money-sucking car. It needs to be replaced.

I'm also suggesting he pay off the card as quickly as he can.

I don't know, maybe there's more to the story. Like why does he have $7K in cc debt in the first place? Is it poor spending habits, insufficient income, a life emergency that necessitated unaffordable debt levels, etc.? Maybe we all have tunnel vision on the options he laid out, when really something more significant needs to happen.

Like why does he live 40kms from work? Is it possible to move closer to work or get a job closer to home? Is his income going to increase dramatically at some point in the near future to allow him to pay down this cc debt and the debt on a new car (not to mention the debt on his old car still)? If it isn't, it sounds like a newer car will just add more debt and more problems.

Spending more right now is not the answer no matter how you spin it - spending less is. Suggesting to this guy to take out more debt when he can't seem to pay off the debt he has now (nobody with enough money has cc debt) is not good advice, IMO.

[shane_c]

Originally Posted by Sliver

I don't know, maybe there's more to the story. Like why does he have $7K in cc debt in the first place? Is it poor spending habits, insufficient income, a life emergency that necessitated unaffordable debt levels, etc.? Maybe we all have tunnel vision on the options he laid out, when really something more significant needs to happen.

Like why does he live 40kms from work? Is it possible to move closer to work or get a job closer to home? Is his income going to increase dramatically at some point in the near future to allow him to pay down this cc debt and the debt on a new car (not to mention the debt on his old car still)? If it isn't, it sounds like a newer car will just add more debt and more problems.

Spending more right now is not the answer no matter how you spin it - spending less is. Suggesting to this guy to take out more debt when he can't seem to pay off the debt he has now (nobody with enough money has cc debt) is not good advice, IMO.

Believe me, I live far from a lavish lifestyle and did not rack things up with foolish spending. I make decent money but the last 3 years has been one financial bomb after another (not just the car, although it's cost me about $4000 in the last 2 years in unscheduled maintenance) and I've decided that this year I would try to get things back on track, move things to lower interest rates, pay everything I can to bring them down, and also look at the car which has cost me a lot of money these last 2 years. It's hard to get ahead though when you're getting hit with major bills all the time.

[Sliver]

Originally Posted by shane_c

Believe me, I live far from a lavish lifestyle and did not rack things up with foolish spending. I make decent money but the last 3 years has been one financial bomb after another (not just the car, although it's cost me about $4000 in the last 2 years in unscheduled maintenance) and I've decided that this year I would try to get things back on track, move things to lower interest rates, pay everything I can to bring them down, and also look at the car which has cost me a lot of money these last 2 years. It's hard to get ahead though when you're getting hit with major bills all the time.

I'm not saying you're living a lavish lifestyle, but if getting out of debt is a priority for you, going deeper for another car is not a good idea.

[DownhillGoat]

Originally Posted by Dynamic

Not sure about all the other stuff, but getting rid of the focus and getting a Honda Civic or Accord will solve your issue.

Maybe, maybe not. A used car is a gamble no matter what. Heck, new cars are a gamble. While the civics have a great track record, there's nothing saying that EVERY civic has a good track record. You could go through all the due dilligence, get a PPI done, compression tests, the whole 9 yards before you buy it, and still get hit with a 5k repair bill in 6 months.

Originally Posted by shane_c

Interesting. I had the exact opposite experience with my 06 Vibe that I sold prior to moving back east. It was great, very reliable, and great on gas. The worst mpg I had in the Vibe was better than my best with the Focus.

Case in point. I might have got that one lemon that made it through the QC line when the new guy was training. Maybe you got the one good one. While you can get a vehicle that has a good track record, there's nothing saying the one you buy is going to follow suit. I picked up a cheap GMC for the winter months with a pretty brutal track record. I figured parts were cheap and it's a car that I can work on myself without having to buy a bunch of specialty tools, and even things I couldn't fix I could get any independent mechanic to work on it.

Lo and behold, it's been the most reliable vehicle I've owned thus far. Over a year into it and I've put in less than 1k into it on headlights, tires, and oil. All of which are consumables anyways.