Sell the Car or Truck and BE FREE!
October 11th, 2007 by Ana
Yesterday while I was blowing off steam in the My Total Money Makeover chat room I realized I have an odd reputation in there: apparently I have become the “sell the car” chat regular. We had a newbie to both chat rooms and the Dave Ramsey program in asking about how long it should take to work through “baby step two” aka the debt snowball, which included TWO car notes. One note (auto loan for non-Southerners) was $290 a month, and the other was $390 a month, and the person had already decided to sell the car with the smaller note. He (?) was surprised when I recommended selling both.
Car and truck notes eat up a huge portion of just about everyone’s monthly budget who has them. A hidden cost of carrying a vehicle note is the requirement to carry full coverage auto insurance, with the noteholder being the loss payee. Dave Ramsey likes to joke that most times he does the car theme hour on his radio show it becomes the “Sell the car” hour as he tells caller after caller they need to sell the car or truck that they still owe on. And in at least 99.99% of the calls I listen to, I agree with that advice.
All that being said, we do still have the stupid truck note in our monthly budget, and most of y’all know just how much I hate that. We’re not being hypocrites here, though - we can’t sell the truck until hubby gets home from his tour in South Korea next month. I do have the “For Sale” signs already in preparation for the Big Event. Selling the Chevy truck and paying off the stupid truck note will make us “debt free but the house” so that makes it a Big Event! I’m already happy about it LOL
I think the most depressing phrase I hear is the “You’ll always have a car note” mantra. I’ve carried a note on only two vehicles that I have ever bought. All the rest of them I have paid cash for. So the concept that a person is destined to pay a auto note for their entire adult life is truly foreign to me! Why do people become convinced that they must have a vehicle note?
For the record, the Dave Ramsey criteria for selling a vehicle is if it cannot be paid off within 18 months and the total value of all things that have a motor and wheels is more than half your annual income. If your car or truck note meets either of these, then it is time to sell the car or truck and be free of the chains of that payment.
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October 11th, 2007 at 5:51 pm
I’ve never read Dave’s criteria for selling a car, but it makes a lot of sense. I know a lot of people who talk about $300-400 a month car payments as though that is what everyone does and should pay. I don’t agree with that at all! The only cars I ever financed we cars I could buy with cash, but preferred to leave myself a buffer as an emergency fund. I paid off every car I have owned within 1 year of buying it - including the new car that I purchased 2 years ago. (that’s another story!)
October 12th, 2007 at 7:23 am
I don’t think you should sell the car if it won’t reduce the total amount you owe. Like if you owe more than the car is worth and need to have a car. If you sell the car you will still owe money and you’ll have to buy a new (to you) financed car.
October 13th, 2007 at 5:29 am
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October 13th, 2007 at 8:37 am
I completely agree. I don’t understand why so many people think they have to have a car payment the rest of their lives.
October 14th, 2007 at 7:22 am
[…] DebtFREE-Revolution: Sell the Car or Truck and BE FREE […]
October 19th, 2007 at 10:38 am
Great article. One question I’ve been chewing on: What should a family with young children do about a vehicle they have a loan on? I’ve thought about going without cars before, but then we would not be able to transport kids.
P.S. My daughter’s name is Annabelle.
October 19th, 2007 at 10:42 am
Ryan, I don’t say “go without a vehicle” I say “get a vehicle without the note.” Last month I picked up a little 1993 Ford Ranger for only $600…it’s cute because it’s purple but its not exactly the epitome of a fine automobile! But the true beauty of this little truck is that I was able to completely pay for it, and still have a little money left over at the end of the month. There are bargains out there, you just have to look. The truck was on a front laewn, and I just happened to deliver a pizza to the lady. Also, the kid who bought the new truck at work the other weekend was selling his 1995 Ford Ranger for $500.
October 19th, 2007 at 8:17 pm
[…] says Sell the car or truck and be FREE. I sold my […]
May 2nd, 2008 at 6:03 pm
My mother lost her job because of her disability. And she owns a 2003-s type Jaguar with 38,000 miles on it. She owes 21,000. after checking around online the most that people are selling that car for is 17,000 and the least is 15,000. Banks won’t lend her money for the difference because her credit is maxed out and riddled with late payments. I don’t know what to do to sell this car. Btw- she is disabled (blind)and a senior citizen and has no assets. I have been watching Dave Ramsey but going to a credit union won’t cut it. Anyone have any ideas for me?