Car debt

[huskcrow]

Right now i’m a E-3 with regular base pay, not married. my car is a 2019 ford fusion se. 6% rate for 5 years. my payments every month are 405$ and then my insurance on top. i’ve had some other financial problems arise and honestly the car is becoming more of a struggle to keep. but if i sell it i’d be lucky to get the amount i have left on the loan. realistically i’d have like a 3k difference to payoff if i sold the car but it is possible to get what i paid. Also a car is kind of a necessity to me where i’m at. Should i sell and get a beater in a few months? Or does it look possible to keep?

 

[kitty346]

@huskcrow Where’s the rest of your money going?

A $400 car payment isn’t totally unreasonable and that’s a decent interest rate for right now. Is it in good repair? What’s the insurance cost? Have you shopped around on insurance? If you need a vehicle, I’d probably look at other parts of your budget first.

 

[huskcrow]

@kitty346 it’s in good condition. Insurance is about to 130 right now. I do have savings that i contribute to every check but i recently went on deployment (still currently on) and my phone broke so i had get a new one and it was relatively costly just under 900. and i also had to pay for international service which is not cheap either. recently i but the bullet and just cut the service off and pay only for wifi. but all that combined are thru a good bit of savings and i still have to pay off the phone.

 

[coltbeck76]

@huskcrow You can change your insurance to "non-driving" for your period of deployment. This should drop your monthly to about $20. I did it for my time in Korea. Same with the phone. Also there are plenty of android phones for half what you paid. I got the galaxy 22 for free through Verizon last year under their "upgrade" plan.

 

[athenstojerusalem]

@coltbeck76 This is the biggest way to cut your bill. If you want to budget military one source has a spreadsheet they can give you and it has helped me tremendously.

 

[kitty346]

@coltbeck76 OP has a loan on the vehicle. Lenders usually require comprehensive and collision insurance. OP could decrease the miles per year, but it probably won’t drop that much.

 

[tisiphonesrc1]

@huskcrow Did you have no savings at all ? You should aim to have 5k in a hysa in case of emergency( emergency leave, car breakdown, etc). If your currently in deployment your make more money, u should of canceled everything & just had WiFi. You total car payment included insurance is less than $550 per month. You should be able to afford that with a e3 salary ($2,260) no food costs, rent, utilities. How long have you been in ?

 

[kitty346]

@huskcrow This doesn’t tell me much about where your money is going.

You make approx. $2400/month.
Expenses so far are probably
$400 taxes
$120 TSP
$405 car
$130 insurance
$120? Phone

That’s about half your income. Where’s the rest going?

 

[meredithhww]

@kitty346 It's hard to gauge without other information, but $400 is roughly 18% of their pay. Not including fuel and insurance. Factor those in, and your likely looking at 30%+ just in transportation. From a bird's eye, it looks like the bought too much vehicle.

 

[kay11]

@kitty346 400 dollars is 25% of what a E3 takes home a month. It is terrible. Do you need a car?

I like the Money Guys take on buying a car. Check it out. That’s if you need to take out a loan. Month payment should not be more than 8% of take home, 20% down payment, and no more than 3 years term. Watch their videos or listen to the podcast on it.

Or buy a beater straight up and learn to work on it. I like that option too.

 

[kitty346]

@kay11 $400 is closer to 20% of what an E-3 makes, but they live in the dorms. This isn’t a situation where somebody makes $30,000 a year and needs to pay for rent AND $4800 a year on the vehicle. A single E-3 with 2 years of service makes the equivalent of about $57,000/year (RMC calculator), so this car payment is about 8.5% of income. I wouldn’t recommend every E-3 go out and spend this much on a vehicle, but it may be worth keeping at this point.

 

[kay11]

@kitty346 Yeah, OP sounds like this “8.5%” of his “57,000 dollar” is really a blessing.

 

[kitty346]

@kay11 Given the lack of info, I’m just not convinced the car is actually the problem.

 

[kay11]

@kitty346 Oh I bet. I would recommend they sit down with someone and do a budget.

 

[presvytera]

@huskcrow $405 is pushing it for E-3 pay, id trade it in for smaller monthly payments. Insurance, maintenance, gas adds up and although you can live a fairly frugal life on deployment and even on base, that's a good chunk of your money.

 

[lordane]

@huskcrow Can you refinance to get a lower interest rate/lower payment?

 

[shingler7992]

@lordane Lol do you know how high interest rates are right now?

 

[huskcrow]

@lordane possibly but i don’t think it would lower it enough to make a big difference

 

[vincepolston]

@huskcrow Try a credit union.

 

[mwangi22]

@huskcrow Can you lay out all your bills/debt and income. That would make it easier. You said E3, but then you also said you are currently over seas. Is it a non taxable deployment etc. When I was an E3 and over seas, I put my entire check at my car and paid it off bc I had no other expense at the time besides phone and wifi.