Sunday, November 10, 2013

Planning, Pondering, and Car Loans?

I've spent all of nap time budgeting out next year. I've come up with a very conservative zero based budget for the year. That just means we start the year off with zero dollars in the bank account and end with zero. I've done what you're supposed to and spent every penny on paper (actually in the computer) before it's gotten here. That's planning.

I have to admit my budget is a bit depressing. I've accounted for very light day to day spending for myself and my husband. That part is scary because he still does not spend conservatively even if he's getting a bit better. I based our income on what we "should" take in next year without raises but also without me losing a lot of hours. Our gasoline expense could sky rocket if gas prices shoot up to $4 a gallon again next year. I based all the credit card payments on minimums. I made sure we got $1000 in the emergency fund pretty early on in the year. But when all is said and done the only extra we had for debt payoff was about $1500. That's awful!

Granted we'll be paying off debt with the regularly scheduled payments that have been plugged into my budget but $1500 extra for the whole year... that's harsh. We could spend $1500 "extra" easily on this and that here and there. We'll already be paying $1040 extra on health insurance premiums what if car insurance goes up too?

I'm not going to take this eye opening moment as a huge punch in the gut. I'm just thinking, pondering, looking the harsh cold reality in the face and realizing that an extra penny here and an extra penny there really, REALLY adds up.

Okay, it's question time. No one ever talks about paying off the car; selling it yes but paying it off, not so much. We drive alot and we can't sell our car. We have a nice car, not expensive but nice. Anything less nice would not be reliable. But I can't bank on the thing making it to the end of the life of our loan. We put too many miles on it. Who thinks I should work on paying off the car (in case of it ever clonking) instead of paying off credit cards? What do you do with a car loan, let's say there's $3000 left on the loan and your car dies; what do you do? There's no way we'll ever just have $3000 laying around to give the bank. Do you just have to pay two car loans then; the one on your old car and the one on the new car you had to buy? I bet you can't even get a new loan if you already have one. Okay, any extra income: car or credit cards?


  1. I think they can roll the old loan into the amount of the new one. Which means you'll payment will be that much more.

    I'd still focus on paying off the credit cards if the interest rates are high.

  2. I agree, usually credit card interest rates are higher, so I concentrate on those. Typically, we run our cars into the ground, so we get them paid before we buy another. We just paid our family car off about a year ago. Now we just have one note, but it will be done in 3 years naturally. I hope both cars make it that long!

    M Ripples is right though - the loan for the first car will be rolled into the new note. Still, though - credit cards first IF the interest rate is higher.

  3. I think if the car is nice, even though you put a lot of miles on in, chances are that IF something does happen to it, you'll most likely be able to fix it.
    Compared to if you had a really old car that was beyond repair.
    So with this logic, I would concentrate on the credit cards.
    WOW about planning out next year!