Trying to make a difficult decision

[canoetrpr]

Lots of food for thought here. I appreciate all the input and will stew on it over the next few days while trying to decide.

On the income side, I do pretty well. Well enough that my wife does not have to work and can home when the kids are home and takes care of chores around the farm.

We used to board horses and the money was actually good doing it. Unfortunately the boarders were a hassle. So we went from the boarding to the cattle and are quite enjoying maintaining the genetics of a good old heritage breed. There is a market around the urban parts here for grass fed beef. Between that and pure bred sales I feel pretty good about the animals being able to at least pay for their hay and misc. expenses. If things were tight enough, I'd lose my hobby and the animals would be gone.

I am not in a massive debt hole vs income but after staring at cash flow numbers it just does not make sense to spend $1500 a month on a vehicle - even though it is perfect and will be paid off in 3.5 years.

I did overbuy if you were guessing but I have always done so with vehicles and in the past it has never been an issue as I have kept my previous two brand new vehicles for 10 years, 300000 km. I am always able to get a great finance rate on new vehicles and been able to negotiate a good deal so found that if I kept it for a good long time, the yearly depreciation was not terrible and I got to drive a new car and know the entire maintenance history. A couple used cars I had before that were a real hassle. I guess the trick might be knowing how they were used and maintained before. When I think of my van at 200000km and 5 years old, it is worth WAY more to me that what I would get for it if I sold it now. Yet I'd be very hesitant purchasing a used vehicle with that kind of mileage not knowing how it was used and maintained. If I start looking at used vehicles that are only two and three years old with 80000 km on them or less, they often are not far enough down the depreciation curve to really make them worthwhile over a new one.

I think those of you that make it a policy to not use debt for anything other than your mortgage and/or investments are pretty darn astute. I'm going to seriously consider your advice. It will mean something that is 5 or more years old with high mileage so that I can use a line of credit and get it paid off within a year.

Upon doing some research locally I have found that the uglier / boxier Honda Element typically found in FWD, rapidly goes down the depreciation curve (given a pretty niche buyer) compared to the sleeker CRV, typically found in AWD. I've seen a 2007 and 2006 FWD both with less than 100000 km for ~$11000-12000. They might be worth considering as they would be ideal for hauling the dogs or a dump run.

My choices boil down to:

1. Keep the truck. It will be paid off in 3.5 years. Until then find a few other corners to cut and use extra income that tends to come my way to cover any shortfall.

2. Sell the truck. Buy as cheap as possible a commute vehicle as I am prepared to without regretting my daily driver. Have it paid off in a year.

3. Sell the truck. Buy a 2009 Forester or CRV. Will take me about 3 years to pay off but I will save about $300 monthly on payments and $200 on gas.

4. Sell the truck. Buy a new Forester or CRV. Will take me about 5 years to pay off but again I will save about $500 monthly.

Right now I am leaning towards 2.

Thanks for all the thoughts.

 

[75H2]

I'm glad someone mentioned Dave Ramsey already. Find him on the radio or online & listen during your commute. It will change your thinking. a wise man once told me everything with an engine will depreciate. I tell that to myself several times a day as I car shop right now. I'm committed to only buying what I can pay cash for, not what I want but, don't really need:thumbsup:

 

[Hooked_on_HP]

How about selling your full size truck and buy a used smaller fuel efficient truck.
Bill

 

[CinderSchnauzer]

Some good suggestions already.

If you don't have one get a financial management / tracking program (Quicken for example) and keep track of everything. Prepare a monthly / annual budget and try to stick to it. Run monthly reports on your spending. You may be surprised how many $$$ go into certain things.

Credit cards - pare down to a bare minimum - they promote impulse buying. If you have outstanding balances - pay them off - put them on your credit line, the interest will be way less. If you are not paying off all credit cards on the due date - this has to become a major priority.

Look at major fixed expenses, mortgage / taxes / insurance etc and determine the amount you need to set aside each and every month so that when the bill comes you have cash on hand to pay. Set a savings goal - pay yourself first. Maximize your RRSP contributions if possible.

Ditch the truck. Get a small trailer for DW's van and get a used economical commuter vehicle. Gas has gone up 10% or more in the last couple of weeks - expect more of the same. A F-150 commuter vehicle is a luxury - not a necessity.

Take a look at your food expenditures, minimize junk food / processed foods and concentrate on real food - from local farmers where possible. Brown bag it to work. Stay out of Tim's

Test the market for auto / home insurance. Look at an umbrella policy for liability instead of having high amounts on each individual policy. Make sure you are getting any good driver / accident free / low mile / multiple vehicle discounts that may be available.

If you need something - check Kijiji before purchasing new. Evaluate all new purchases - is it a need or a want - proceed from there.

 

[buck12]

I feel for you. I have an 09 F150 and would miss her if I had to let it go. Good luck.

 

[ultrarunner]

I'm glad someone mentioned Dave Ramsey already. Find him on the radio or online & listen during your commute. It will change your thinking. a wise man once told me everything with an engine will depreciate. I tell that to myself several times a day as I car shop right now. I'm committed to only buying what I can pay cash for, not what I want but, don't really need:thumbsup:

So far... I've never sold a car for less than I paid for it... all of my cars have been used with one exception and this one will be a loss if I ever sell it.

Owned many cars... a Model A Ford was my first

Growing up in the car business taught me there is a premium for buying new... 15 to 20% from the get go... some can only buy new because it takes less cash upfront.

Sounds like your on the right track...

 

[petes]

Lots of food for thought here. I appreciate all the input and will stew on it over the next few days while trying to decide.
** snip **
My choices boil down to:

1. Keep the truck. It will be paid off in 3.5 years. Until then find a few other corners to cut and use extra income that tends to come my way to cover any shortfall.

2. Sell the truck. Buy as cheap as possible a commute vehicle as I am prepared to without regretting my daily driver. Have it paid off in a year.

3. Sell the truck. Buy a 2009 Forester or CRV. Will take me about 3 years to pay off but I will save about $300 monthly on payments and $200 on gas.

4. Sell the truck. Buy a new Forester or CRV. Will take me about 5 years to pay off but again I will save about $500 monthly.

Right now I am leaning towards 2.

Thanks for all the thoughts.

In my opinion you could still do much better than #2: Buy a ~2002-2004 vehicle instead. A 2009 Forester goes for what, $17-20k? A 2002 with 80k miles should be easily found for <$7k. You said you could pay off a 2009 in 3 years. That should mean roughly the ability to pay off a 2002 in one year and you're $ ahead after that. They're both going to get you where you need to go warm and dry and use about the same amount of gas to do it. Sure, the older one may not have as many bling'd out options, but personally I'd sure rather have $10k in my pocket (or not hanging over my head) than heated seats and a Limited Edition trim kit.

Don't even consider buying new. I can't fathom how people think it's perfectly normal to take a 30% value depreciation hit to drive something off the lot. Cars continue to depreciate at about 20% per year for the first couple years, then it starts to flatten out: Buy a brand new car for $30k and it's only worth $21k a year later. Buy a 2 year old used car for $20k and it's worth $16k in a year, but buy a 10 year old $7k car and it'll be worth almost 6k a year later AND you'll save the difference in payments. Auto loans tend to follow the curve fairly closely, meaning that if you sell before it's paid off, you usually end up walking away with nothing to show for all the $ put put into it.

Especially for older cars, consider buying from a private party. Used Car Dealers don't offer anything worth the premium they charge. A possible exception is if you're stuck on buying a nearly new car you might be able to get a certified-pre-owned car from a dealer with a good warranty (not my style, however).

If you're not in a position to pay cash and need to finance the purchase, talk to your bank about using a home equity loan, making the interest tax deductible (in the US). (but DON'T use it for what many Americans did when equity loans were "easy" - using it to finance $60-100k motorhomes, wakeboard boats, or other "toys". Save up and pay cash for anything in the "toy" category)

 

[dstig1]

Sell the truck to clear the loan ... buy a less expensive one for the farm. Diversify ... find a way to generate income from the acerage ... sell hay, produce a commodity that folks will buy ... eggs, beef, pork ... a large Garden ... vegtables sell ... just my thoughts.

I'd say that pretty much covers all the options you might want to consider. Raise income, reduce expenses...

I agree with many of the points already stated, plus it sounds like you are pretty well convinced that the truck needs to go.

1. Small utility trailers are vastly more cost efficient than trucks, especially for how you describe your needs. Nothing really to wear out, and no daily mileage penalty when you don't need the hauling capacity. As long as you have one vehicle that can pull a trailer of the size you need, put a hitch on it and you will be in much better shape. Plus you get to brag about your trailer backing up skills after a few months!:thumbsup:

2. How immediate is the issue/crisis? I'd say clean it up and start selling the truck NOW. It takes time to sell a vehicle. Take that time to start looking at replacement vehicles and see what's out there and costs, what you like, etc. I would bet you would be very well suited with a smaller commuter car and an old PU truck or SUV. But you don't need both right away. No, vehicles don't like to sit, but you can help that out by making sure to use the sitting vehicle once a week or two. Even driving a gas hog once a week is a lot cheaper than feeding the gullet of a 1/2 ton V8 daily, and keeps it limber. A midsize or compact sedan will be a nice commuter car and you will be amazed what 30+mpg does to your gas bills. Right now I'm driving a little '98 Civic that I picked up for a song from a neighbor moving away a few years back. Once every 8-10 days I fill it up for $30, and my drive is 34mi roundtrip, so right about half of yours. That is a significant whack off the fuel bill. Actually this is pretty close to what I do now. I drive the Civic most of the time, and the F250 every week or two to keep it limber and when I need to haul stuff. For towing my tractor (my only option right now for having it) I need a bigger truck, so I have no choice there. And I bought it used.

You can find something dirt cheap to tide you over for a commuter vehicle. You don't have to keep it 6-12 mos if it holds you over until you figure out what makes the most sense for your situation. But doing it quickly will start the savings ASAP.

I read a car buying article last year that made a good point: When you buy a vehicle you are buying 150,000 miles of use. It doesn't matter if you buy it new or used, you are buying the remainder of 150k miles minus what is on the odo now. OK, now I disagree that 150k miles is the end by a long shot, but he made a good general point. In your case: if you find yourself needing very few truck miles per year (like me) then a much used truck will still have plenty of it's "150k miles" left for years to come. Age catches up with vehicles too, but not as fast as miles, and if you can keep it indoors, then that helps slow the aging a lot. You said you need a truck a half dozen times a year. That being the case, you might not even put 2-3k on it in a year.

Some more food (fuel) for thought (the fire).

Good luck in your decisions.

Dave

 

[clemsonfor]

I agree with what others have said. But again i fix my own cars. Now if my wifes Highlander threw a rod i would not fix it my self. But i do alternators starters sensors all PM and even manifolds and other things on my trucks. So i am not afraid of a starter going out on my wifes 01 mode toy. with 110K miles. If i were you i would go with a larger car and trailer like folks say but what i would do if i were you is to, buy a 20 year old 1/2 ton 2wd or a 20 yr old ranger or s10. And then buy a 1-20 yr old honda civic to commute in. I drive the wifes old 96 saturn to work ( i googled it, the metric conversion that is, my commute is 40km one way) cause it had a salvage title and would save me what we would get in resale in gas in a little over a year or so.. I also had my 1990 ford ranger with 280K miles on it. Its still reliable and will drive the 300mile round trip to the farm in it without thinking about it. I also have the 1980 K10 for a full size to haul or cut wood etc. The insurance on all these and taxes is less than the taxes on the wifes toyota thats 9 yrs old. You are a honda guy you can get 300K out of one of those with some maintence.

You said you worry about history etc and thats why i got 280K out of my ranger but your wrong i got it from the fater in law someone forfieted at his shop cause they could not pay the bill so i paid $900 for it with an assumed 150K miles on it (5 digit odometer). I use to have a 170KM roundtrip commute and i then decided it was not worth it to pay 30K for a truck that in 5 years would be slap depreciated with around 250K miles on it. I decided that i would always but a car or small truck for about 3-7K and save the payments and insurance etc. Property taxes here is the states will eat you up too, i pay less on the 3 vehicles property tax i will drive than we do for my wifes one.

My solution.

1. Get rid of that truck, hopefully for at least 1K in your pocket.

2. To be as cheap as possible get a 15 year old honda civic or accord and a small 3x5 or 4x8 trialer (with accord). Then buy you a 20 year old farm/go to town when you want or need truck and sell the trailer for what you paid (DO NOT buy a new trailer get a CL one).

3. Buy the 20 year old truck and 15 year old car at once on the same personal loan easily under 10K if you do it right. If the car blows up in 2 years buy another for $3500-4K if needed. Who cares what you look like in it save the money and laugh at all those guy powerstroking those $1500/month payments in cars that cost as much as a small house.

 

[schmism]

8K home owners loan

sell truck

buy $1000 1994 4x2 F150 weekend use only liability only

buy $7 used 2000 ish DD... 4 cylinder Honda civic...accord, etc STick to something reliable... honda, toyota... My BMWs have been great. :thumbsup:

still have a truck and an inexpensive DD. pay 400 a month on your own loan