How to fix completely lousy car loans

tuna55 wrote:

mad_machine wrote:

tuna55 wrote: They ask "Why didn't she pay attention in school when they showed her how to write a resume" "Why doesn't she know how to get a car loan, didn't they teach that in high school?"

I do not know about you, but I am almost 47 and I was NEVER taught that stuff in High School.

Neither was I. I am pretty sure they are just happy with their own success and assume it's all normal.

I learned most of this stuff in high school. In shop class. Our shop teacher took a few of us to the back of the shop, told us we would probably top out at mechanic and double wide, and needed to know how to do it.

volvoclearinghouse wrote: In reply to ProDarwin: There was an article in a recent Wall Street Journal recently about financial summer camps. WSJ online is a pay site, but here's a similar article. Something like that would be really beneficial. Perhaps a non-profit set up to give scholarships to send kids to them? A few of the people I work with have talked about their "financial planners". I know these people both make less money than I do and have fewer assets than I do. My dad was an accountant- he once told me, no one is more interested in your money than YOU. I have a friend who's father is a CFP, and he's told me unless you have 7 figures worth of assets, a CFP is basically worthless. That said, you and I are engineers, we can do maths- or find online calculators to do it for us, and interpret the results. E36 M3, I have an Excel spreadsheet on my computer I programmed to do a full amortization schedule.

Interesting article.

Agreed on the CFP. Everyone should either be their own CFP or recognize when its too much for them at seek help from a CFP. But to simply give up and just hand your $ and paperwork to a planner because you have zero desire to understand... not cool. That's the situation I feel like many are in.

SVreX wrote: I have always had open conversations with my kids about money. However, as they come of age, they seem embarrassed to talk with me about it. I am not convinced they are making good decisions, but don't know how to talk about it with my adult children who are out of the house and unwilling to have open conversations. I think there is a cultural problem- when we become "grown ups", we are supposed to know how to act like a grownup about our finances. It's embarrassing for most people to admit they are ignorant on very basic things, and we promote a culture of financial secrecy. For example, the standard in non-government and non-union employment positions is to not discuss salaries. In some places you can get fired for discussing salaries. This accomplishes nothing other than promoting a culture of secrecy and shame.

I agree, to an extent. I don't like to post details online, and I struggle a bit to even talk about it with some friends. I make pretty decent money and so does my wife... like several times over what some of our friends make. I'm certainly willing to talk finances with them, but I hold back dollar figures because it can almost seem like bragging. I am very proud of my financial literacy, but I don't want to rub my salary in someone's face.

I do think a lot of people are hesitant to discuss even small details. And I agree that many people are embarrassed to admit that they don't know what appears to be a pretty basic concept that others have grasped so well.

When I come across friends that are interested, I use hypothetical numbers to discuss situations with them (I have a blog on this subject I've been meaning to start and have done a lot of math for these made up scenarios), or I send them to other financial blogs like MMM, etc. Often anonymous people will post scenarios that bloggers will analyze and they will have their real financial data - sort of like this thread.

In reply to ProDarwin:

Agreed with everything you just wrote.

handing your finances to someone and saying "have at it!" - you might as well put a pile of steaks in front of a lion and say, "don't touch!". I have an accountant, and I go over what she does for me every year to make sure I understand it. As for financial planning, I talk over things with my dad and my wife. One has more financial experience than I ever will and the other is my partner in this game, so it's her skin, too.

Money is touchy. I try not to share too many exact details about it, but in my industry its one of those deals where everyone sees everyone else's salary. But that can get dicey, too. I roll up to work in a 30 year old Volvo and all the people making half what I do have new, expensive cars. They rib me a bit for it, honestly, and not necessarily in the nicest way. They go out to lunch a lot and don't even bother asking me anymore, I say 'No" so often.

My wife stays home, too, which I think bristles some of the women I work with- either they're jealous, or think she ought to be working (women's liberation) or, possibly, some combination thereof.

volvoclearinghouse wrote: My wife stays home, too, which I think bristles some of the women I work with- either they're jealous, or think she ought to be working (women's liberation) or, possibly, some combination thereof.

People will judge you no matter which route you take

We have a son and my wife works. She's clearly guilty of child neglect!

As someone whos been the person deep in the hole, seeking advice was the smartest thing i have ever done. My childhood was spent in HUD/section 8 housing and i thought i had it all figured out until my wife was taken off work early for a complicated pregnancy. By the time they were home from the nicu 6 weeks later we had debt up to our eyeballs and no future.

My father in law whos much better at money management then me or any member of my family helped me out. It took alot of loss to get me to were i was even willing to ask for help.

Money always seems simple right up until an emergency need happens. Im no were near wealthy but with controlled spending and evaluating any large purchase we have managed to climb out of debt and manage not too go back.

47% of Americans say they could not come up with $400 in a pinch without selling something.

Interesting (long) article about this sort of thing and the state of (personal) economies for "regular" people.

Edit: And, of course, the cure is education and discussion. I know most people here are aware of it, but if you know anyone struggling with finances, I'd recommend you try to encourage them to read blogs like http://www.mrmoneymustache.com/. Start at the beginning and read one article a night or something.

Not allowing your employees to discuss their salaries with their peers is the best way of ensuring discrimination never gets noticed.

ESI Money had an article today about people with >$3M who can't retire because they spend $250k a year and can't imagine spending less. Won't hear it even suggested. The 12 steppers have somethings the right way - admit you have a problem.

Dr. Hess wrote:

tuna55 wrote:

Patrick wrote: Does she have any credit cards? I would recommend she get a couple if not, if she can use them responsibly. By responsibly i mean charge something small every month and pay it to build up her credit, and it would help her score to have more available credit versus her balances(ie the car loan). I got a 13000 limit card a few months ago and my score went up just because my balances to available credit went down significantly. Not because i paid more on my truck but because citi gave me more credit. That's all i use all my cards for except the one i get hotel rewards from.

I wonder. I'll ask.

I think that's a bad idea. I think it is a whole lot like someone that is a recovering heroin addict keeping 100 bucks worth of smack around to show the world how clean they are.

It wasn't a bad idea until we found out the credit card situation is bad. Just because one has a crappy upside down car loan doesn't mean they will run up credit cards. But sounds like in this case that could happen or has happened and it's not even an option.

I think the only solution here is trying to find extra part time work to help pay things off quicker and keep above water. That's a hard thing to do when you count on other people to watch your kids.

I have nothing to add at this point except:

• Thanks to WonkoTheSane for http://www.mrmoneymustache.com - I will be reading one a day!
• I wish I had the handwriting of a caroonist (or an architect)...People would think I took the COOLEST notes in the world.

volvoclearinghouse wrote: In reply to ProDarwin: Agreed with everything you just wrote. handing your finances to someone and saying "have at it!" - you might as well put a pile of steaks in front of a lion and say, "don't touch!". I have an accountant, and I go over what she does for me every year to make sure I understand it. As for financial planning, I talk over things with my dad and my wife. One has more financial experience than I ever will and the other is my partner in this game, so it's her skin, too. I roll up to work in a 30 year old Volvo and all the people making half what I do have new, expensive cars. They go out to lunch a lot and don't even bother asking me anymore, I say 'No" so often. My wife stays home

$300 for a reasonable car payment * 12 monthes+ (3 lunches per week at $10 each and 48 work weeks in a year) = $5k a year. That is not a negligible amount. Given the average American income is $34k gross which gives you about $27k gross. So your wife would have work a little over two months to break even on a new car at these assumptions.

Roll on 30 year old Volvo, Roll on.

FLAME SUIT ON.

Guess I'm firmly on the "conservative" side here, if you want to call it that. Nobody is responsible for your bad decisions but you. What decisions got her that poor credit score in the first place? What made her decide she needed a brand new car? What made her decide she could afford a brand new car?

Yeah, it sucks she's paying a really high interest rate but that's due to her poor credit score. Nobody gave her that poor credit score. Nobody made her walk into the dealer and buy a brand new car and (I assume) roll the tax/title/tags cost into the loan as well.

It sucks that her situation is what it is, but she's the one that put herself there.

I spent years and years (and years!) in school, living off of $1200 a month. After I graduated from school with a doctorate degree (!!) I spent the next several years living off $1400 a month.

I still paid all my bills, I still maintained a good credit score, I paid off my 6 figures of student debt. I built my financial future, I wasn't given anything. I vividly remember wanting a skateboard when I was 11 and working the next 6 months washing my Dad's car to pay for it.

All the vehicles in my garage are at least ten years old. I haven't bought a new car, well, ever. I spend less than I earn, pretty simple to understand. I didn't need to take economics classes to learn and understand that.

Not everyone makes good decisions but that doesn't mean we, as a society, have to bail them out and protect them from themselves.

She needs to ask work for OT, find a second job as a waitress/bar tender/whatever and pay off that loan. Then she can build her future.

Don't associate that stuff with Conservatism.

I don't think anyone has argued anything about it wasn't her fault, and no one said society should pay.

Your post is pointless. Nobody gives a E36 M3 how she got into the situation- she's asking how to get out.

And if you think you are immune to the same problem, you are an idiot. We are all one bad medical problem away from similar problems.

In reply to docwyte:

All true, and we're proud of you for going it your own way. This young lady sounds like she's trying to improve her lot in life but as has been amply pointed out, the poverty trap is real and it's very hard to escape.

Clearly she could have done things differently and sure, her finances would be better now but because she started out ignorant shouldn't condemn her to a life of misery. Don't marry an shiny happy person, don't have kids too early, don't neglect your education, the list of mistakes she's make is obvious, the question now is how to give her the tools to climb out of that hole.

In reply to docwyte:

When did you go through college and live off of $1200/month? I'm guessing $1200/month wouldn't go as far now as it did when you went through it. Did you have 2 small children to support at the same time? Did you need reliable, safe transportation in order to make it to work to keep the lights on and food on the table, or could you walk to your classes with nothing but your books? I'm not suggesting that you didn't struggle. My point is, that your situation was different than this one. In fact, everybody's financial situations are unique.

This young woman has made more than a couple of poor choices, but it sounds like she's recognized that they were poor choices, and decided she wants better for herself. Based on Tuna's posts she's not blaming others for her situation, but she needs to know how to make good decisions from here on. Tuna has kindly taken an interest in assisting her (not financially necessarily, but educationally).

Poverty is usually multi-generational, and it's difficult to break the pattern. You don't know what you don't know, you know? Let's acknowledge and appreciate that this young woman has seen the error of her ways and is seeking guidance in order to better her life and that of her children. So few people in her situation would do the same. Maybe instead of talking down about her, we could provide her the tools she'll need to do better?

docwyte wrote: I paid off my 6 figures of student debt. I built my financial future, I wasn't given anything.

Wrong; you were given 6 figures of unsecured loans that allowed you to get to where you are. There's nothing that bothers me more than the "I got where I am on my own" from people that got government assistance, and don't kid yourself that your loans weren't gov't assistance. In addition, you had a lot of advantages growing up that millions of others in this country do not.

I got where I am because a caring family and caring society helped me get here. I've never held a regular job and have built a successful business and earned a very stable financial position, but I have no false conceptions that I'm some sort of boot strappy Daniel Boone type that did it all on my own - none of us are. Don't ignore the things you were handed and advantages you were given when constructing your own narrative.

In reply to docwyte:

I'm not judging your reply harshly, because I used to think the same way. But in the decades since I graduated college, my conservative/ libertarian views have softened a bit when confronted with real life and real people. I don't think you're an ass- I was there once, too. Reality is neither conservative nor liberal.

I could tell you stories for weeks about people who made reasonably good financial decisions and had decent safety nets and income, and had life happen to them. People get sick, people's jobs change, people lose their licenses (due to illness) and then lose their jobs, people get divorced, tons of stuff. There are thousands of reasons why you or I could have been financially ruined. You may not even know them all now.

It's easy to poke holes in other people's life. I'm sure you didn't make every decision perfectly. I haven't either. Even if you did, things can happen to you.

Life is way harder than you think it is. Just because you succeeded doesn't mean that you were really good at it, or that other people should also succeed.

Yeah, my post was/is harsh. So is life. Yeah, $hit happens. Sometimes its more than you've prepared for and you get in a bad way. You need to prepare for the worst to happen. Sometimes even with that you might not have enough set aside, but hopefully it'll give you a little breathing room to try and figure out a way to deal with whatever is going on.

No, I didn't have small kids when I was living on $1200 a month. That was ~20 years ago and I had room mates plus worked when I could in addition to going to professional school. When I had a full time job, even after I was out of school I still had room mates.

My now wife thinks it was hilarious that I was a doctor and still living with room mates, sleeping on a futon and eating mac n cheese. I gave friends excuses for why I couldn't go out with them when the reality was I couldn't afford the gas to go meet them, let alone the activities.

Yeah, I got student loans. They're not hard to get. If you can sign your name and you're breathing, you can get student loans. It wasn't a hand out and I paid every red cent back. Ironically, the ease of getting student loans is letting people dig themselves into financial holes as well.

Life is hard. You need to work hard to succeed. You need to sacrifice. You can't just buy stuff because you want it and then hope to pay it off with your next pay check. You have to spend less than you earn. You have to save. You have to plan. I'm sure that's not a news flash to any of us.

Listen, I feel for your friend, you shouldn't have to suffer your entire life because of some bad decisions made in your youth. My point is there is no magic pill out there and you've gotta make your own destiny. If she lives close to family maybe they can baby sit the kids for her while she picks up OT or works a second job. If family is around to help with the kids, then friends, or someone at church, or her ex husband. That way she can get rid of that loan payment ASAP, save up a little money and things will get better for her.

In reply to docwyte:

What exactly is the point of your posts?

25 years ago I started volunteering with Habitat for Humanity. I spent 10 years as a full time volunteer.

It changed me.

I met people who didn't know how to buy food without food stamps. People who had never seen a flush toilet (in THIS country). Hard working people whose annual household income was less than $200. People who didn't know that the stupid little room in the corner of the bedroom was called a closet, and it's where you were supposed to put your clothes.

I watched a carpenter and wife once redistribute their household budget and skip a couple meals so he could buy a hammer to replace his broken one.

I met tenant farmers who still lived in the shacks their enslaved grandparents had lived in. I met whole communities where the sewage ran in open trenches, and children played in it. I met entire towns where no one had held a job for generations since the mines had closed.

I once paid to bury a man's son, who was unable to pay the $8 US it cost to make a coffin. I was the only one in the town who could afford it.

I've built new homes for people who were proud to live in a waddle and daub hut, or a 1 room house made of mud bricks.

I supported my family (of 4) on less than $500 per month for 10 years. And when my 4 year old daughter asked me, "Daddy, are we rich?", I made no excuses comparing us to others. I wept, and looked her in the eyes and said, "Yes, sweetheart. We are rich".

I used to think like you, Doc. But I learned from people with far more experience than I will ever have. And they changed me.

The supposed correlation between hard work/sacrifice and 'success' is a lie.

In reply to Driven5:

Hard work and sacrifice do not automatically lead to success. But without them you will never become a success unless you are starting out rich, or are extremely lucky.

In reply to Duke:

Like hard work and sacrifice, success is not binary. It's a spectrum. And of the numerous elements that contribute to success, I would easily argue that hard work and sacrifice are not even the most important two. So while yes, some amount of 'hard work' and some amount of 'sacrifice' may typically be necessary to succeed...The all too common self-righteous implication that unsuccessful people simply have not worked hard enough and/or sacrificed enough, that simply working harder and/or sacrificing more is likely to produce greater success, or that more successful people simply worked harder and/or sacrificed more, is purely a fallacy.