Should I Pay Off My Car or Build Up Savings?
Dave learns that Kendall from Midland, Texas, has a bigger problem than the Baby Steps. He has almost $90,000 in debt from two cars he's upside down on.
QUESTION: Kendall calls in from Midland, Texas, with a question about the Baby Steps. He has $2,000 in his emergency fund, but he’s also worried he may lose his job. During the call Dave learns that he also has nearly $90,000 in debt on two cars that he’s upside down on. Kendall made $186,000 last year, but Dave urges him to sell the cars immediately.
ANSWER: You’ve got to get these cars sold! Go to Kelly Blue Book.com, and find out what the cars are really worth. Then put them up for sale through a private sale. You’ll get thousands more selling them that way than a dealership will give you. You’ll have to talk to your local credit union or bank for a small loan to cover the difference, too, plus a little bit more so you can drive a couple of little beaters for a while.
But dude, you’ve got close to $100,000 in car debt here. That’s a disaster! Just think how things would be without these car payments. Your entire life would change! Hopefully, you’ll be able to keep your job, but the car debt scares me more than anything else you’ve told me.