Should I Sell My Car?
Emily is upside down on her $16,000 car loan to go along with $42,000 in student loans and a mortgage at $1,200 a month. Should she sell the car to get out from under the loan?
QUESTION: Emily in Portland is a single mom making $60,000 a year. She is upside down on her $16,000 car loan (the car is worth $12,000) to go along with $42,000 in student loans and a mortgage at $1,200 a month. Should she sell the car to get out from under the loan?
ANSWER: Basically we’re saying you have $58,000 in debt that you need to pay off in two years with one child and a $1,200 house payment making $60,000 a year. That’s going to be very tough to do. It’s possible, but you have a lot of beans and rice to eat there.
I wouldn’t sell the car today. Let the car sit there and when you get to the car in your debt snowball, then you can make the decision. That’s probably a year and a half away, and that’s if you’re extremely intense. At that point, look at where you are and ask if it’s worth it.
By then you will have paid it down some as well. If it’s okay with you, I’d drive it. Then by the time you get rid of the student loans, reassess whether you need to keep it or not.