HELP: Should I sell my car?

[yhwhismysalvation]

Just for context, I (31f) earn about 37k take home a month. I own two cars, a Suzuki which I pay 3.4k a month, and a Toyota which I pay 9k per month. Both cars are insured at a value of about 2.2k.

I have other expenses, a credit card repayment of about 3k a month, cellphone repayment of about 1.5k a month, parents 1.9k a month, groceries 3.5k, salary adjustment 3.9k, savings 2k (which I very often disinvest) and other material expenses which eat up everything left.

I have close to zero legroom every month, let alone enough to contribute towards a retirement annuity. If anything, the weeks before month end are some of my absolute worst.

This month, I had to scavenge coins and notes around the house just to top up on groceries.

I hardly use my 9k car, it's a nice to have but if I'm being honest, I use the Suzuki more for fuel efficiency. Sometimes, I even struggle paying off the Suzuki instalment, because I've racked up so much debt.

I want to buy a house in two years and I don't see the point of owning two cars anymore. I'd rather save 11000k a month towards a deposit than towards a nice to have car that hardly does anything for me.

I think I know the answer already but should I keep or sell?

 

[sban]

@yhwhismysalvation Ditch the 9k car. And look at reducing debt with that freed up 9k as quickly as possible. Once done you'd freed up almost 40% of your expenses.

Where you can reduce do it. It's tough and you'll be tempted to buy something but just keep reminding yourself your end goal

Best thing I ever did was living ridiculously uncomfortable for 6 months whilst crushing my debt with every little bit of cash I could free up. Wife and I now cover expenses with 60% of my salary and the rest of it and her entire salary is free to use /save/invest

 

[yhwhismysalvation]

@sban I completely agree, definitely selling the car.

 

[kukikumar64]

@yhwhismysalvation And OP make sure you don’t live it up with the money it frees up. Pay down the rest of debt. Don’t let lifestyle creep eat up that money.

 

[sban]

@yhwhismysalvation Also OP thinking about it. If you sell the car try get more than what you owe on it. (Obviously depending on how much you owe) But if you get like 20k over what you owe use that 20k and pump it into your credit card/other debts

good luck!

 

[kworld12]

@yhwhismysalvation Look to me personally, see it like this… you have a working car right now, what’s the second one for? It’s depreciating value constantly so what’s the use of it?

You should be using debt to leverage assets to build wealth… not using debt to fund liabilities that don’t bring in anything.

As an example before someone who doesn’t understand debt replies I’ll give an example.

You wanna buy a house? The loans fixed at 3%?

You got enough cash to buy house outright so why am I talking about debt?

Because I’d do it this way.

SP500 gives average of 10% yearly returns.
The debt from bank would be 3% yearly.

So seeing that wouldn’t it make logical sense even with the money in hand to get a loan for the house at 3% and put the money I could have used for the house into an index fund mirroring SP500 thereby gaining an average of 7% yearly offsetting the entire debt situation to begin with and even growing wealth through that kind of debt usage as you essentially get free stuff. That 10% yearly? 3% would be towards the debt, maybe 5% let’s say. But I’m still making 5% more if that makes sense now

 

[contratodo]

@sban I fully agree with this - it’s easy to abuse debt and get into a bad place quickly,
We cleared everything out, and now my wife gets to stay home looking after the kids instead of doing a job she hates, to pay off debt for things we don’t need

 

[hopefulheart80]

@yhwhismysalvation I earn a similar salary, but have no debt and have more than enough money for my lifestyle. I keep things simple.. You most probably going to be spending over 1m on your car in 5/6 years then be able to trade it in for 400k. The harsh truth is that you need to make better decisions, you dont need a cellphone that cost 1500 a month or a car that cost 9k plus insurance. You earn a decent salary thats way above the average south african that is struggling, but you are making yourself poor. Get rid of that car, take the knock from depreciation but at the end it will prob be the better option.

 

[thevikingland]

@hopefulheart80 Agree on the phone here too. I buy myself a 4k smartphone every 3 or 4 years and use pay as you go. Hardly ever use it to phone (will use WhatsApp calls over our home WiFi) so no need to buy airtime really.

 

[hopefulheart80]

@thevikingland Same here, I havent had a contract in many years. What you are doing is the correct way.

 

[yhwhismysalvation]

@hopefulheart80 Such a reality check. Thank you for this, I'm taking your advice.

 

[peter_g]

@yhwhismysalvation Is this even a question?

Sell the expensive car, pay off your credit card. Suddenly you have 14k a month extra.

 

[wala]

@peter_g Then the other car. 17k pm, snowball away!

 

[yhwhismysalvation]

@wala I'm about 60k away from paying my Suzuki off. If I can ditch the Toyota, I can most likely settle payment by early next year.

 

[arrabon]

@yhwhismysalvation A lump sum of capital can be hard to come by, I would save the money from the sale of the Toyota in a tax free investment account that makes decent interest.
And then pay off the Suzuki and your credit card with the money you save monthly on the Toyota. That way in a year or so time, you are not only debt free but have a lump sum of capital towards your next investment, like a down payment on a house or something.

 

[panteleimon2]

@yhwhismysalvation This is one of the worst threads I have seen here in a long time. You already know you should sell the car. You aren't gaining anything by owning two cars. You would immediately solve most of your financial problems if you sold your car. R37k after tax makes you one of the top 2% of earners in the country. You should be living very comfortably off that income and putting away a decent amount towards your future. Sorry if I sound rude but I find some people need harsh words.

Our economy is shit, cost of living is going up, buying power is going down, we are unsure if anything is going to get any better anytime soon, but you're in a great position and throwing it away. Come now.

 

[mocforums]

@panteleimon2 That's a sad fact. South Africans earn next to nothing these days.

 

[smilesss]

@yhwhismysalvation An amazing vacation to another country can cost 40k - 60k. You're spending at least 132k per year on a car.

Personally id rather travel more then have a fancyish car. And yeah you could get a bond for less than 9k a month if you're talking about buying a house.

 

[truthseeker52]

@yhwhismysalvation Sell the expensive car. It is merely lifestyle creep. Take the money you save from that and clear your credit card debts. You are using these incorrectly. Once you've done that, save up for emergency savings. Once that's done, then get to saving for property.

I'm 30, earn 80k net, and drive a Honda Brio with enough money to pay it off, but I'm using that money for dental issues. I also just bought an apartment for 1.4m when the bank was willing to give me 2.2m. Instead I now have a 10 year bond which I have enough room to pay into it and make it even shorter, meaning I will be debt free by 40 and own property outright.

Figure out a goal for yourself and stick to it.

 

[finbar]

@yhwhismysalvation 100% I'd sell the car and then save a large portion of the repayments. Maybe put away a part of it to start building a safety net and then the balance to build up as a deposit on a home.