When you’re getting out of debt, it makes sense to cut back on unnecessary spending wherever possible. One of the recommendations that comes up frequently is one to sell your car. That’s one way to go about it, but is it a practical solution? Before you put a “For Sale” sign in the window, ask yourself these three questions.
Can I Still Get to Work?
If you live somewhere with accessible transit and you work standard hours, you may be able to get by without a car. But if that’s not the case for you, it doesn’t make sense to add hours to your weekly commute, hours you could spend working instead.
We want to work with our clients to develop long-term strategies to get and stay out of debt, and figuring out how to keep your vehicle AND pay off your debt is a good place to start.
Is There an Outstanding Auto Loan?
If you have an auto loan, you can’t just leave the keys on someone’s desk and walk away. For starters, you may owe more on the loan than you’re able to get for the car. You may also face an interest penalty if you’re paying the car off before the term is over. You’ll have to spend a lot of time crunching numbers to find out if you will actually come out ahead if you sell your car to save money.
What Else Could I Try First?
When it comes to cutting costs, many small changes can do as much good as one big, drastic step. Do you have a gym membership you don’t use? Cancel it! Are you still paying for a long distance package on your cell or home phone plan? Join this century and start using one of the many online services that let you call everywhere for nothing. Brown bag your lunch, cut back on take-out, and go to the library for books and music.
None of these ideas will amount to as much as a car payment, but all of them are changes you can adopt forever. It’s certainly easier than learning to love the bus!
Doing whatever you can to lower your debt load is admirable, and we applaud you for thinking outside the box, but selling your car may not be a good way to save money. We can work with you develop sound financial strategies to get out of debt and plan for a better tomorrow. Contact us today to get started!