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Why I am Focusing on my Student Loans

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As many commentors have pointed out over the last several posts, I have been all over the place with my goals and commitments the last several months. There is no denying that.

Frankly, there are still a lot of factors in the air that seem to change my direction on a regualar basis…for instance:

We are trying to determine a week Princess can go see my parents by herself for a week or so this summer. However, she wants to work at the summer camp she used to attend. This would be a 4-6 week commitment and we are not sure when we would get the dates. And if she is not able to work at the summer camp, she is going to pursue getting her welding certification at the local tech school which will require her to be on campus at least 1-2 nights per week. And that would start before the spring semester of high school ends. But she would have the week before July 4th off. And she does not want to go see my parents at the same time Gymnast is going, which will be after July 1 as he wants to wait until he has his learners permit.

Are you dizzy yet? Yes, me too.

This is kind of the same situation with my finances and deciding on a target…it seems to always be moving.

The Car

As long time readers know, we went without a car from April last year until August of this year after a car wreck on our way back from Texas. I did not want to finance a car. (Yes, despite readers suggestions to the contrary, I am keeping my credit score in my head as I make decisions.) And we probably could have kept going without one since Sea Cadet was leaving and had already decided to leave his car behind.

But my Uncle, seeing our situation and knowing the commitment I had already made for Princess to attend a private school about 20 minutes from our house, offered to purchase us a car and be very flexible on payments. So that is what we did. And I have been paying $500+ per month since then. Assuming that Princess and I would share it when she starts driving in May and she would help pay for it. (And no, I do not think it is unreasonable to ask a teen driver to help pay for the car they drive.)

In steps a couple more factors…

  • Princess father has now stated that he is going to buy her car. Not sure if that is going to happen. But certainly not against it. We had a conversation yesterday about the cost of insurance of said car and if he was going to cover that too – no, he’s not. So I emphasized how it was important that any car he got her be reasonable as far as insurance goes because I do not want her burdened financially when she goes to college. He wasn’t even thinking about that, as he has never had to deal with it…so I think we are on the same page there. Princess was present for the conversation and understands why I said “absolutely not” to a Mercedes Benz.
  • I don’t know if he is going to buy her car. Only time will tell that. Lots of history there and we are not going into it here.
  • My boyfriend will most likely be moving here this year. And we have talked extensively about finances. If he moves here and if Princess’ dad gets her a car, we will most likely get rid of my car and live with just his car…we have previously decided that one car will be plenty for us especially since I work from home and he is essentially “retiring” as he sells his business.
  • If Princess’ dad does not buy her a car and my boyfriend moves here, we may try to make do with the one car (mine) until we see a need for another car. At that point, hopefully we will have more clarity on if Princess will take a car with her when she leaves for college.
  • If Princess’ dad does not buy her a car and my boyfriend does not move here, then we will continue as originally planned and deal with the need for another car when it comes…earliest I anticipate would be fall of 2022 when Princess goes to college if she is going to take a car with her.

This is Why

The factors that come into play and change regularly boggle my mind. But in a nutshell, this is why I decided to focus on my student loans rather than the car. Even though the car has a higher interest rate, it may go away sooner rather than later on its own. (We are not upside down in the car according to KBB either so I don’t anticipate problems selling or trading it.)

My #1 financial goal for 2020, other than continuing to pay my regular monthly obligations on time is to pay off 1/3 of my student loans. I think this is a very safe goal.

 


28 Comments

  • Reply Margann34 |

    I think it is a good idea to focus on the student loans for now until you have a definite decision on the car. Would her father be willing to contribute towards the car you are paying on instead of purchasing a different car? Is the a chance he would finance a car the end up defaulting and having a car repossessed? My own daughter will be driving soon. I am planning on finding a good used sedan for her to drive. I am hoping to spend about $3000. I think new drivers need an inexpensive car that runs well enough and won’t be too costly of they wreck it. Make your student loan payment automatic. You will be more likely to stick to the goal. Good luck!

    • Reply Hope |

      Frankly, I have no control over what he does. And felt I did good to point out the burden he would be putting on her with his idea of a car for her.
      But will he really follow through and buy her a car, I don’t know. Thus the decision to just focus on my student loans. Whatever is going to happen will sort itself out this year and then I will go from there.

  • Reply angie |

    Hope seriously. Wth? You swore you wanted a new car because you’d keep it forever. Now your thinking of getting rid of it already in less than two years! Just so her father can have the priveledge of buying her a car? Why? Stick with the original plan. Don’t take his handouts. If he wants to help out can’t he pay for insurance or her final year of school? He wants to be the savior finally coming in and gifting extravagant things after many years away and you’re just letting it screw up all your plans.

    Good luck on not being underwater. I wouldn’t assume that’s the case if you sell. Do a kbb search with your car as “good” condition and that’s what you can expect to get minus any pending maintenance. Especially if you rolled the taxes into the loan.

    And what about your retirement?!? My guess is you have less than 5k, if at all. You’ve got me seriously worried about old person Hope. Do you even get social security if your self employed? Are you expecting your kids to take care of you in old age?

    • Reply cory |

      Yes, Self employed people can receive social security. They pay both the employee and employer portion of FICA taxes. So Hope is paying double what a W2 employee pays towards social security (12.4% vs 6.2%).

    • Reply Hope |

      Ha! You misunderstand. I have NO CONTROL over what her father does or does not do, and as much as he may talk of buying a car, I have no idea if he will actually follow through.
      I do think our conversation got through to him, on considering the ongoing cost of insurance which he does not want to pay. But other than that, I have no control over this.
      Thus my decision to hold off on making the car my target…

      And yes, I contribute to SS…

  • Reply Cheryl |

    Hope you make my head spin. First why would anyone think of giving a new driver a Mercedes Benz? He isn’t going to pay for the insurance, poor Princess will be saddled with it. I’m not sure if I feel bad for your uncle or not. He thought he was helping, should have known better. Me I would keep the car and pay for it myself. Your daughter should not worry and a car payment that high while trying to go to school and might get a job. Have her dad buy her something that if she wrecks or hits something, life will go on.

    • Reply Hope |

      Agree completely! But again, I have no control over what he does. I can voice my opinion, but that is it.
      Only time will tell how the car situation will play out, just wanted to give the BAD community the reasoning behind my decision.

  • Reply jj |

    I wish your uncle had gotten you a slightly older car, so the cost would be lower on you overall…r I don’t think Princess can understand just yet how much she takes on if she gets her own car. And if your bf moves, he can help with paying your car insurance even if you decide he doesn’t want to help pay for the car itself.

    I would shut down her dad even getting her a car, if he can give her money to save for her own that would be better.

    • Reply Hope |

      I don’t have any control over her dad…

      And the only thing I know for sure, is that my bf and I will go down to one car between us and will jointly cover those costs. What car that will be is yet to be determined, but I will support his decision since I don’t really care one way or another.

    • Reply Hope |

      Ha, yes, good memory. But this car will not be in my name at all. If he does this, I assume he will either put it in her name (not sure if you can put a car in a 16 year olds name.) Or keep it in his. I have learned my lesson and will protect her as much as I can.

      • Reply Cheryl |

        But Hope if the car is in your daughter’s name and he doesn’t pay and she can’t afford the insurance your child will have horrible credit through no fault of her own. You said you are afraid of him, can you keep her away from him and have her not accept a car? None of this sounds good. You seem to be just shutting down and I am sorry.

        • Reply Hope |

          He will not be able to put it in her name if there is financing involved. I don’t know if he can if there is no financing. And yes, I will definitely be strong enough to keep him from doing anything to jeopardize her financially.

        • Reply Cwaltz |

          Hope you do indeed have control over what does or does not end up on your property. If he bought a car he just can’t drop it off on your property without your permission or you could end up towing it and sticking whoever the car is titled to( and since he’ll be the buyer he’d likely be the title holder) with towing and impound costs. Letting you know this because it sounds like there is friction between the two of you(I’m guessing he wasn’t thrilled with being asked to pay some money on the insurance on the car you chose and will be also using in addition to princess. I don’t know if you two talked beforehand when you purchased said vehicle to know if he felt blindsided being asked for money towards insurance..) Anyway if it were me I’d say thanks no thanks on the car(and in the interest of insisting I’d tell him any “surprise” cars will be towed from the premises.) Then I’d pay the financial costs that come with giving a 16 year old a $20,000 car. It’s actually kind of funny and sad because the kind of car you are now insisting he get(one where the insurance is going to be affordable for a 16 year old driver) is the kind of car all of us were pushing YOU towards, an older, lower cost, no bells and whistles vehicle that is paid for in entirety instead of having a lien. Any car that has a payment is going to be costly in terms of insurance because banks pretty much want to ensure they get their money should an accident result. Anyway if Gymnast is getting his learner’s permit then your ex is looking at the same thing except a little worse with a male driver under 25 . You probably get the better end of the deal if you cover Princess and he covers Gymnast. Princess may even be eligible for some discounts since she is a rock star at school. I know our insurance offered money off for good grades and drivers improvement. I

          Are we going to see a full budget and a debt update soon?

          On a positive note good job on a $10,000 emergency fund.

  • Reply Shanna |

    oh dear…first off, I have said this before, most colleges do not let freshman take cars to school. And if they do, they have to pay parking permits fees, the insurance is very high, and your child will be driving all her friends all over all the time (total pain), and the car gets trashed being parked with all college kids (I speak from having 3 kids in college who all got their cars at college after freshman or sophomore year). I strongly suggest that whatever the college says you don’t allow a car Freshman year, it isn’t needed at all. I agree with the posters who said to have her dad pay what he would spend towards the car you bought, or pay half her tuition, etc. Tell him no and that he can contribute in a meaningful financial way in other ways. A kind of funny aside-a used Mercedes (really old diesel one) is a great car for a teen! It is a tank, it is slow and very heavy and well made. However it requires a decent amount of upkeep and that is not cheap.

    • Reply Hope |

      Not directed at you…but I find it funny that so many posters think I have some control over what her dad or does not do with his money or for her. Anyone who has read me for a while knows that he is barely involved and does not contribute financially at all. So me telling him to what to do is kind of comical, especially since I am still mostly terrified of him and avoid him.

      On the other hand, I agree with you about car/college, but again, something that is a year and a half away so who knows what will happen in the meantime.

      • Reply Shanna |

        I hear what you are saying, I was hopeful that with G living with him, that perhaps he had mellowed and would be a more supportive co-parent than in the past. Hang in there…and good luck with your visiting mom/caretaking.

  • Reply Meghan1227 |

    Hope,

    When you initially purchased the car, your blog post indicated that the plan was for the car to become your daughters’. If her father is willing to make a financial contribution towards a car for her, why doesn’t he just help pay for the one that already exists? This would take the burden of those payments off of you as well as save the hassle of him finding/buying a car and you potentially choosing to sell your car at a loss. Depreciation on cars is astronomical and very few hold their value.

    Do you mind also addressing how the interest on the car is now higher than the interest on your student loans? When you first posted about purchasing the car you stated that your uncle was loaning you the money interest free and that he expected no payments until July of this year. This was all to give Princess time to get her license and a job and start paying for the car that would ultimately belong to her.

    I am glad to see you committing to tackling your student loans. They have been the albatross around your neck the whole time you have been blogging here and it is definitely time for them to go. I wish you the best of luck with getting rid of them this year!

    • Reply Hope |

      Yes, I do not taking something for free, so I set the interest rate. And pay what I can every month, which has been about $500. And yes, the original plan and plan if nothing changes is for her to become the primary driver on the car come May. I hadn’t planned to get a 2nd car, especially in light of me working from home, my bf eventually moving here and the cost. With two cars here now, I think we can get by without another car.

      However, if her dad decides to buy her a car…well, I have no control over that.

      And yes, it feels good to have a plan and a solid, reasonable goal. Thank you!

      • Reply Cynthia |

        Hope, what’s this second car you speak of? I don’t remember you mentioning having a second car in your household since the twins moved out.

        • Reply Hope |

          History Buff lives at home still. He’s been back since August, 2018. He just completed his high school studies last month and is continuining on at the local community college while working part time. He is driving Sea Cadet’s car while Sea Cadet is away for the year with Americorp. (We sold History Buff’s car when Sea Cadet left.) Sea Cadet will return in May and not sure what he will do yet…go back to school, pursue a full time job as a EMT or ??

          • Cynthia |

            Thank you for clarifying… With the whirlwind of family coming in and out of your home, it’s hard to keep track of everyone and their cars!

  • Reply Kili |

    Hi Hope,

    Another thought: I was wondering if Princess could sell a unwanted/ unnecessary gift….
    But I guess unless she’ll be the holder that won’t be possible, will it?

  • Reply amy |

    hope….
    i want to address something other than the car situation. Have you and the boyfriend talked about how you will share rent, utiliities, food, etc? Have you talked about expectation as far as co-parenting (if he is in the same house, its going to happen)? Has he met and get along with the kids?

  • Reply Sandra |

    Hope, there is another issue to consider. If and when your boyfriend moves in with you, you simply will not be able to work the enormous number of hours you are currently putting in now. He will expect, and rightly so, that you would be spending time with him and working on the relationship. ‘Just wanted to bring that up as you plan for your coming year.

  • Reply Demaddog |

    You may not have control over his choices, but you absolutely have control over what happens in your home. Don’t be a limp noodle. The answer should be a firm no, and as another suggested, towing off any car that shows up. And a reminder to princess you already have one very nice car you have to pay for.

    You could suggest other expenses if he’s suddenly decided he wants to pay some kind of support. I find the offer surprising since, haven’t you said he refuses to pay for gymnasts cell phone? Regardless I wouldn’t expect him to pay other expenses. If I were the non custodial parent and it was suggest to me that, instead of paying for something that provides a direct benefit to my child and only my child, I should help pay for a car that neither my child nor I were using, I would also refuse.

So, what do you think ?