Our debt headed the wrong direction in a big way last night. We bought a new car. A brand new car. Ultimately, it was the right decision. I need to keep telling myself that, because the new car payment makes me want to scream and throw myself off of a building, but it was a necessity.
A little over a month ago, we were told that our car had a rusted out cross member. We were quoted between $5-6k to fix it. We owed $8000 on the car. And it was only worth $5500 in trade. We looked at the numbers, tried to figure out what our best option was, and ultimately decided that we needed to get a new car. We wanted to keep the payments as close to our existing payments as possible, which meant $288 a month. After walking into several dealerships and being told that it was an impossibility for a new car, we started revising our numbers. After looking at our actual payment (we were paying on a biweekly basis) and realizing we were actually paying $313 a month, and seeing that our gas mileage would be cut in half with the new car, saving us about $50 a month (maybe more) in gas, I set our ceiling at $350 a month.
We were still being quoted in the $360-$370 range though, so I told my husband that we should wait until next month and see if there were any other incentives, lower interest rates, or Labor Day sales. I thought, when I left work yesterday, that we were waiting to buy a new car. However, one of the guys that we had been talking to called and told my husband that he could get us into the car we wanted for $350 a month, so we went up tot he dealership. Of course, we got there, and he told us the lowest he could go was $367. So, my husband decided to play hard ball and called the other dealership that we had visited and they said they could beat that. So the dealership we were at said they could go to $365, taking a loss on the car, and they would throw in the free Homelink mirror and oil changes for a month. The other dealership said they could beat that, and the men at the dealer we were standing in were irritating me anyway.
My husband decided that $2 was worth driving to the other dealership. I told him there was no way we were going back to the first dealership if we left. We got tot he second dealership and they quoted us $367 with no Homelink and no free oil changes. After buying Gap insurance because of the negative equity we were rolling into our loan, we ended up with a $378 a month car payment (nearly $30 more than my ceiling) for less of a car. I was, and still am, pretty irritated.
Ultimately, I know that we were lucky to get a new car for less than $400 a month. We are lucky to be out of the money pit that was our old car and we're lucky we got $5500 on it, given everything that was falling apart. I'm just angry that we could have got the car we really wanted, for less, at the first dealership, but my husband wanted to haggle over $2 and we ended up paying even more. I can tell you, when I buy my car (not the family car), I'm doing all of the talking and I'm deciding which car we buy.
I plugged the numbers into my debt snowball calculator and discovered that it will take a year longer to pay off this car than it would have taken to pay off our old car. With a 3.9% interest rate, by paying it off early, we'll be saving quite a bit of interest. Our old car loan was at 6.75%, so I don't feel so bad about the 3.9%. It's better than what either of our credit unions could have given us.
I'm just sucking hard on that $378 a month car payment.
Looking at the numbers, I hope it works out the way it looks on paper and we are only paying about $15 a month more for car ownership than we were, but that only works if the car gets the mileage they say it does.
I also made a decision that a lot of people will probably disagree with this morning. I stopped deductions from my paycheck for my 401(k). As I see it right now, I'm looking at negative return on investment consistently. I felt like I was throwing good money after bad, and feel like, after about six months of applying my 401(k) deductions to credit cards, we'll be in a better place financially so I can start contributing again. Right now, I just really want to get out of this debt that is plaguing us so I can stop worrying about making our monthly bills all of the time.
I put in a call to our mortgage company last week and they haven't called me back, so I'll have to follow up with them today. I also contacted my credit union to see if they happen to refinance upside down loans. I'm trying to streamline our finances as much as possible. It will relieve a lot of stress in the long run.
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