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Alright, I will be 34 years old by the end of this month and after analyzing my current financial situation, I am not really where I want to be.
First off, my first mistake was getting a new car on one of those 'lease to own' companies back in 2009. And the payment is about $520 a month on a 5 years lease (yeah realizing that its the stupidest choice I ever made concerning cars). So now I want to dump this car and get some cash together to buy a decent 'beater' according to Ramsey's teachings and not have a car payment.
I talked with the leasing company last month....I can get out of the lease early if I gave them $5K (which I don't have right now) and will report to the credit report as settled. Otherwise if I turned it in without the amount, then it would be considered a repo. But honestly, I can care less about the repo if I never plan to ever to finance a car again. Though I have never been late on my payments, I really want to dump this car and get me a decent used car that can not only get me to work and back, but to be able to make occasional road trips on (like seeing my dad in OH on occasion).
So looks like I will need to gather up some cash as quickly as possible to make sure I can get another car before I give the current one I have up. It will feel awesome to never have a car payment again.
Secondly, I have nothing really in savings nor in retirement. I did manage to finally complete DR's first baby step by having $1K set aside as the starter emergency fund so that's a start. I know nothing about investing since it sounds very confusing and overly complicated to not really want to be bothered with it. But I guess at my age I guess I need to do something so that I can retire with dignity when that day comes. I surely don't plan to struggle, that's for sure.
Since I am single with no kids, I really don't have to worry about life insurance as much nor having to worry about funding college.
And I do currently have my house up for sale in TX still. I can still make the payments on it until it sells, but by getting rid of the leased car soon that will free up a payment for me to rent a decent place somewhere (not an apartment) until I get to the point where I can save up a nice down payment for another house.
As for personal bills, all I have is the car insurance and my cell phone bill. Everything else I had I cut off since I really don't need it.
So, is there hope for me to turn things around here? I believe it is.....but I need to start now as I can no longer afford to let time pass by like this.
At 34 you have plenty of time to turn things around. Some here will talk down on Dave Ramsey, but I like his message a lot. And yes, a 500 dollar car payment is crazy. I finally got off the car payment wheel, and am quite happy with my 6 year old car. I am putting money aside so repairs won't be a problem. You can do this! Good luck with whatever you decide to do about your current car.
Its hard to answer....obviously, it will be easier to catch up on retirement, building a real 6-mos efund, and starting to save for your future cars (as "beaters" are cheap to buy, but no one knows when they will die) and other needs IF you make $60k than if you make $22k.
Have you gone through your budget to see if there are other items you can cut or cut back on? Have you created a budget showing what day of the month you will move "x" dollars into savings? You have GREAT ideas, but without a concrete action plan of HOW you are going to execute, it may feel overwhelming at times.
Does your employer offer a 401(k) savings plan? If so, sign up ASAP and start with contributing 3-6% of your gross salary/pay. Every year that you get a raise, increase the % saved by 1% until you are saving 15% each year for retirement. Most companies have an investment option that is your retirement year (ie, "2040 Target Fund" for you because you'll be 65 in 2041) and it has a good blend of stocks & bonds for how aggressive someone your age should be saving. You can ALWAYS move your money into different funds within your 401k later as you learn about investments, but this is a great and easy way to start saving ASAP!
Re: car. It's really not ideal to pony up $5k OR have a repo on your credit (many people on the forum are "anti credit score" and think loans/debt are evil, BUT most companies DO run your credit score as a test of how reliable/organized you are and CAN & DO rescind offers if your score is too low.....think hard if you might change jobs in the next 7 years as to the negative impact a repo could have on your career).
Have you looked into those websites where people can "buy" other's leases? Leasetrader.com is one, I think. It would be best to find someone else to assume your lease and the car to avoid a repo.
It sounds like you have a game plan, which is a good start.
As far as the car, your car payment is a budget killer. Worse yet, it's a lease. You realize you made a mistake. I personally would be more inclined to take the credit hit and just turn in the car than scrape up $5K (which you said you don't have anyway). If you don't plan to buy another house or take on more debt anytime soon, the credit hit isn't going to mean anything to you anyway.
If you don't plan to buy another house or take on more debt anytime soon, the credit hit isn't going to mean anything to you anyway.
But he said he wants to buy another house.
Also, if it gets turned in on a repo, is there a possibility they will still try and come after you for anything?
This is a tough spot. I know you think it won't matter if it gets repoed, but you never know what the future holds and if you'll be wishing that wasn't on your credit. Is there really now way to scrape together the $5,000?
Its hard to answer....obviously, it will be easier to catch up on retirement, building a real 6-mos efund, and starting to save for your future cars (as "beaters" are cheap to buy, but no one knows when they will die) and other needs IF you make $60k than if you make $22k.
Have you gone through your budget to see if there are other items you can cut or cut back on? Have you created a budget showing what day of the month you will move "x" dollars into savings? You have GREAT ideas, but without a concrete action plan of HOW you are going to execute, it may feel overwhelming at times.
Does your employer offer a 401(k) savings plan? If so, sign up ASAP and start with contributing 3-6% of your gross salary/pay. Every year that you get a raise, increase the % saved by 1% until you are saving 15% each year for retirement. Most companies have an investment option that is your retirement year (ie, "2040 Target Fund" for you because you'll be 65 in 2041) and it has a good blend of stocks & bonds for how aggressive someone your age should be saving. You can ALWAYS move your money into different funds within your 401k later as you learn about investments, but this is a great and easy way to start saving ASAP!
Re: car. It's really not ideal to pony up $5k OR have a repo on your credit (many people on the forum are "anti credit score" and think loans/debt are evil, BUT most companies DO run your credit score as a test of how reliable/organized you are and CAN & DO rescind offers if your score is too low.....think hard if you might change jobs in the next 7 years as to the negative impact a repo could have on your career).
Have you looked into those websites where people can "buy" other's leases? Leasetrader.com is one, I think. It would be best to find someone else to assume your lease and the car to avoid a repo.
Good points here. Since I have recently moved in the last few months and gotten rehired at the last company I have worked for before, I will have to wait awhile for the 401K to kick in again. But I will start some research on the different options and try to learn about them.
As for the car, in most cases even though I know that the negative stuff stays on the report for 7 years, most times if I ever needed to finance anything or whatever usually 2 years for the most part would be the minimal. I would like to avoid the repo if possible but its not the end of the world if it goes that route. As for careers, I am a truck driver currently so really the only time I would have to be concerned is if I chose a job that required a credit check (mostly places that handle money). Since I am not in that field of work I am not too worried about that.
I haven't heard of Leasetrader.com so I will look into that. Thanks for the info!
I read that thread, it pertains mostly to credit card use. I got rid of my credit cards several years ago and I don't miss them at all. Besides, the cards don't really do much to help the score anyway since they are only a small portion of the score impact. I use my checkcard for everything and have never had a problem. When I did a vacation trip to Seattle last fall, I had no problem reserving my flight and the hotel (which was an expensive one). But I had the money saved months prior so it was a vacation that 'didn't follow me home'. And, for such ventures that require hotel stays as they usually put holds on the cards, I always use a separate card just for that alone and used a different card for regular purchases. That way don't have to worry about the holds and such.
Quote:
Originally Posted by MaseMan
It sounds like you have a game plan, which is a good start.
As far as the car, your car payment is a budget killer. Worse yet, it's a lease. You realize you made a mistake. I personally would be more inclined to take the credit hit and just turn in the car than scrape up $5K (which you said you don't have anyway). If you don't plan to buy another house or take on more debt anytime soon, the credit hit isn't going to mean anything to you anyway.
I won't be buying another house anytime soon, maybe within the next 3-5 years and have saved up a sizable amount for a downpayment. By that time I should be in much better shape for buying my next home and the way the Michigan housing market is here, there will be plenty of houses available by that time. So I don't have a problem with renting in the meantime. Short-term pain would mean long-term satisfaction later on and that's what I want to focus on. And for any big purchases, I prefer to save up and buy it cash so that the item is the one I OWN, not something with someone else's name on it.
Quote:
Originally Posted by jkcoop
But he said he wants to buy another house.
Also, if it gets turned in on a repo, is there a possibility they will still try and come after you for anything?
This is a tough spot. I know you think it won't matter if it gets repoed, but you never know what the future holds and if you'll be wishing that wasn't on your credit. Is there really now way to scrape together the $5,000?
With a lease, I don't know and don't think they may come after me with the difference, since its not exactly a traditional car loan. But I will check to be sure though. As I replied to the previous poster, I am not ready to buy another house at this time so I have no problem renting until I am ready again. And there will be plenty of houses by that time.
So, is there hope for me to turn things around here? I believe it is.....but I need to start now as I can no longer afford to let time pass by like this.
Quote:
Originally Posted by AVTechMan
When I did a vacation trip to Seattle last fall, I had no problem reserving my flight and the hotel (which was an expensive one).
Quote:
Originally Posted by AVTechMan
I won't be buying another house anytime soon, maybe within the next 3-5 years and have saved up a sizable amount for a downpayment.
Stop taking vacations that include air flights and 'expensive' hotels, for one.
Get your emergency account completely funded before you start saving for a house downpayment.
Where is the rest of your paycheck/cash going? Do you still eat out? Do you brown-bag lunch? Starbucks? Unneeded clothes shopping? Sports? Entertaining?
Anything that is not a fixed expense (rent/mortgage, utilities, loans) is a variable - and those can be cut. (I'm a big fan of Gail Vaz-Oxlade's TV show )
You're on the right track. Definitely get rid of your "fleece". The best choice would be to scrape up the $5000 any way you can. I'd even check into getting a personal loan at a credit union. You could pay it off in 10 months. Dave always says don't do the investing until you have no debt and a 3-6 month emergency fund. Then do 401K up to the match, then Roth IRA up to the max, then go back and fund the 401K until all of your investments equal 15% of your income. Hope that helps!
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