Comments on: Meet Credit Cruncher: $61,000 in Debt

By: credit crunch blogger

credit crunch blogger — Tue, 28 Jul 2009 23:33:35 +0000

It’s all about discipline at the end of the day, my debt was a lot smaller but still just as unwelcome. I am within a week of paying off the final part of the main debt which I moved to 0% credit cards. Unfortunately recently I have used my other ‘normal’ credit card to the point where I don’t have the funds to pay it off in one go, so it will take a couple more months to be totally debt free (I will probably move this new debt to a 0% card simply because …well…why wouldn’t you?)
My formula has been get it all on 0% so that every penny paid comes off the principle, try to go all ‘cash’ and no credit cards if you possibly can (fuel for the car is where I usually break this rule..). After that it’s all about discipline and being able to do without today to build a bright new debt-free tomorrow… Seeing the debt fall away without having any interest to pay is a massive boost psychologically.
When the debts are gone, having all that extra cash each month is going to be so sweet…

By: creditcruncher

creditcruncher — Mon, 06 Jul 2009 02:32:08 +0000

Thanks for the response Aristotelian. Sorry it took all weekend to get back to you but I was out of town without internet. Now if I were to do it all over again….a great question I ask myself daily. In order to give you a proper response, I will need to make this a new post. With all the bad decisions/choices I made, it has created one heck of a learning experience and forcing me to establish habits (compared to just a financial diet) that will pay off in the long term.

The student loans are both at extremely low interest rates and continue to decrease due to payment history. The credit card debt was not as much or as obvious a problem at the time I purchased the car. I believe there are pros and cons of used versus new and what you decide totally depends on your particular situation. I also always believed it is extremely dumb to buy a new car and something I would never do. But in my situation and what the vehicle market is/was, a new car fit me. I did quite a bit of research and read numerous financial blogs that compared the used versus new. I did do a cash flow before buying it to make sure I could make the payments. I included the credit card debt but at the time it did not click on how dumb and extremely unnecessary it is. Not to mention how great it would feel to have debt off my back. Are you debt free? If so, how have you gotten there?

My previous vehicle started having severe problems that no one was able to fix. I also started a new position at work which now required me to be out on the road quite a bit more and would need a car that got better miles/gallon, be reliable, and could be one to take customers out in. Work does reimburse for gas and maintenance although not very much.

I have a good family friend who owns a dealership and was able to get me a great price on it with a great warranty program because of the amount of miles I will be putting on it. Because of him I also know I will be taken care of with whatever problems I do have. I did shop around and make sure it was a good price and there might have been a dealership with a slightly lower price but I felt the service I will/have received was worth a few extra dollars.

Now was it in my best interest to purchase a new car or an older used one? Only time will tell. Of course I would love not to have a car payment and looking back I should have saved more to put down. Or purchased a used one which may or may not have had lots of service issues. At the purchase and still now, my plan is to keep this car until it just won’t go any farther. Paying down the car loan is the 2nd part of my debt snowball plan.

By: Aristotelian

Aristotelian — Fri, 03 Jul 2009 01:13:30 +0000

Interesting story. If you could do it over again, for the benefit of the readers, what would you do differently?

What jumps out at me is $20k for a vehicle loan while you already had student loan and credit card debt. The house and student loan can be excused as “good debt” because they typically carry low interest and should pay off in the future. But anyone with a middle class job simply cannot afford a new car. You should be paying cash for a 10 year old or so Honda or Toyota in good running condition. Yes, the maintenance costs may be higher than for the first couple years of your brand new car, but you would be saving $300+ a month not having car payments. And after a couple years, the maintenance costs probably even out.

I remember reading debtkid early on when he was trying to avoid bankruptcy, and he was faced with struggling to keep up the payments, or paying the dealer to take the car back.

People are just killing themselves to drive a new car when there are perfectly good used cars out there. I just don’t get it. Maybe people will learn from your story.