Hey guys,

Interested in some opinions on this, perhaps from those more financially savvy than myself. Things were going well until about six months ago when my personal life exploded in a ball of fire. Moved out three months ago, and will be getting divorced in the next few months. Our whole plan for the truck was to pull a camper in the near future to go travelling with the kids.

At this point I've got a lot of debt that we accumulated when my wife was in college, and unfortunately my ability to pay it off is in question because she's being more than a bit unreliable. She's making good money as a nurse, but blowing it.

I'm thinking about selling the truck for something cheaper to operate, but I owe a bit more than it's worth to a trade. Currently owe $31K, and it's worth about $27K to a dealer. I'm not the kind of guy who has to drive around something big and expensive, and at this point I don't really need it anymore. What do you guys think is the better move? Don't think there's a definitive right or wrong answer here, just looking for some other perspectives.

Truck in Question is an '15 F150 XLT 301A SuperCrew 4x4 with the 3.5L EB. I drive about 18,000 miles per year.

 

Sounds like you should keep it. Its going to cost you money either way.
What youre going through now is only temporary and in time everything will balance out. You need a good dependable vehicle. Everybody goes through highs and lows...the key is not to get overextended during the highs.

 

If you sell the truck you're going to have to fork up $4k to pay the loan off and then buy a vehicle that will be reliable for the amount of miles you drive in a year. I think in the long run the cheaper option will be to keep what you have.

 

Thanks, guys.

Two options I was considering were trading for a smaller car that's still reasonably new. Absolutely have to have reliable transportation, so was thinking something around the $15K range. Of course that negative equity would inflate the loan, but it would still lower my monthly costs by a few hundred.

 

Man, I'm so sorry to hear this.
I'd look for a well taken care of Toyota Prius.
My wife's is at 190,000 mi. One wheel bearing and
one set of brakes. 48 mpg. with a heavy foot.

 

I'm a huge fan of the Prius. Had a '13 Prius while my wife was in college that I traded on the F150. If I only knew...

 

What's your monthly on the truck? If you figure a negative $4K on the truck, you will end up holding close to $20K with the car. If it's used, your financing options won't be as good as you probably got on the truck, so you will have a shorter term note at a higher percentage rate (bigger monthly). Maybe not enough to make too much a difference, and then again?

 

Payment on the truck is $580. I'd finance said used car for 60 months and attempt to pay it off ASAP once I covered my revolving debt. Replacement car would probably be a Fusion Energi or Camry Hybrid...I really enjoyed my last hybrid, and with current gas prices they can be had used for cheap. About $30K on the credit cards, largely because she couldn't control her spending over the last six years. And, of course, my name is on all of it.

Being active duty military, the interest rates on the cards are between 0-4% courtesy of SCRA, so it's not as toxic as it otherwise would be. Gotta dig out sometime though.

 

First, I'm sorry to hear that, never an easy situation.
You're correct, there really isn't a definitive answer here, everyone's situation is different. Were it me, in my current financial situation, I'd just keep the truck. With 18K a year mileage, you'll be playing catch up with the depreciation for a while, but will eventually break even. Given the fact you will need transportation, take that note (whatever it may end up being) and add the $4 to $5K depreciation hit you will take by trading upside down and see if paying the truck loan to term would be cheaper of more expensive.
My BIL went thru some rough times here recently, got laid off and right after that his wife decides she didn't care much for the "or worse" part of the vows.....Anyway, they had gotten really over extended, he ended up with a huge financial mess (still working thru it) but ended up combining two vehicle loans, revolving credit and misc, thru a credit union and knocked a lot of interest off and is finally starting to dig himself out of the hole. Have you considered a re-fi or is the current loan manageable?

 

Thanks, Mitch.

Currently manageable as long as she lives up to her obligations...which she hasn't for the last month-and-a-half. My credit isn't great anymore due to credit card balances, but no delinquincies. Can't get a better rate than I currently have, which is 5.8%, which isn't awful. My big concern is what happens if she keeps up with the current trend. My job requires a security clearance, which disappears if I were to ever declare bankruptcy.

I'm a bit freaked out at the moment with how things have gone recently. As an E7 in the Army, I make a good living, but if this keeps up I'll be in trouble. Wasn't planning for any of this.

 

I'd talk to your credit union and see if I could consolidate the CC's and cut them up.....especially if they're joint accounts, you'll still owe the money, but at a much more favorable rate, and no one can then say that it is "joint" debt....


Anyway, the vehicle, seems the easy answer, the revolving credit is what needs to be addressed.....they'll get you before the truck, at least it is something tangible that you can sell / trade if need be, at a loss or otherwise, but the revolving debt and penalties / interest that come along with it, can overwhelm you in a hurry....(been there, done that).

 

Sorry to hear about your situation. My only advice is to get clear of her ASAP. Split the debt and start the recovery process. Heck, doesn't she technically own half the truck debt? I don't know how this stuff works and "who owes what" can vary state to state....so good luck.

I'd be wanting to cut bait and minimize risk as much as anyone, but I'd wait to see where your debt falls before making any huge vehicle decision. Having to cash-out your loan for something else may not put you that far ahead. Think of it this way, if you have to pay $4,000 to settle your current loan and the new car is saving you $200 a month (lower payment or fuel savings, or whatever), it will take 20 months to recover just the $4k you spent. So really, you're looking at nearly two years to just get back to where you're at right now. Doesn't seem like the right decision (in my cheap, non-specific math).

Another bit of advice...call in all the favors you have to friends and family. Find ways to get free legal and tax advice. I know folks that handled their own divorce due to limited funds. It worked, but it has some rough edges that lead to issues with the kids. On the other hand, a good buddy of mine found a great lawyer and he's free and clear of his ex. But he paid $$$$ for it.

Good Luck...I'll keep you in my prayers.

 

You might still consider a refi, even if your rate stays the same starting over with a 72 month loan could bring the note down. I actually just refinanced mine, I've had the truck 3 years and I don't know if I'll keep it longer than the payments now or not but I saved a $100 a month in the short term and about $700 overall in what the total payments would be. I'd keep the truck and just tough it out everywhere else, go beans and rice, rice and beans Dave Ramsey style... although the first thing he'd tell you is get rid of the truck.

 

I'd sell it, yeah it sucks, but you said you wouldn't mind something else, and you'd save money , which you'll need for the nightmare ahead..

 

I'd sell it and get something more manageable. If I recall MN divorce law, she ends up with something like 50% of your retirement funds. So I'd try to get out of that truck fast and into something cheaper and reliable for the foreseeable future. Gas prices are sure to spike here by the summer, so you could be a head of the game on that front. Just hope you can get something that handles the winter roads well.