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Should I save an older car for my child or sell it?

Dear Dave,

I’ve got a 1993 Chevy Corvette. It’s a good car, but it’s now sitting in the garage because I use a company car. I have a 14-year-old son. Does it make sense for me to keep the car for two years so that he can use it when he starts to drive? Or should I sell it and plan to purchase a car when he needs one?

Clay

Huntsville, Al.

Dear Clay,

That car has taken about all the hits it can take, meaning it is no longer significantly depreciating in value. By keeping it in the garage for the next two years, you are not losing a lot of money. And then you won’t have to shell out for another car.

By weighing the amount that you will get for this car and the amount that you are losing by keeping it, I think it’s wise for you to keep it. Give it to your son in two years and he’ll have a great first car. If the car were new, I would tell you to sell it because you’d be losing too much in depreciation. Also, if you still owed on the car, I would tell you to get rid of it as well. Since it’s old and you’ve paid it off in full, keep it and bless your son.

Dave


30-years old and worried about bankruptcy

Dear Dave,

I am 30 years old and I am afraid that I may be headed down that ugly road to bankruptcy. My wife and I make about $70,000 per year. We have credit card debt in the amount of $23,000, a small remaining car lease, a home with a $143,000 balance, $10,000 in student loans and $500 in medical expenses from the birth of our baby. We are trying to sell our house and we’ve cut up our credit cards and closed those accounts, but it really isn’t looking too good. Am I bankrupt?

Tony

Memphis, Tenn.

Dear Tony,

The good news is that you are not bankrupt. The bad news is that you will be if you don’t change something. I am going to make an assumption here and guess that you are not doing a monthly budget. That would be where I would start…today. Go home tonight and turn off the T.V. and sit down and do this month’s budget. You guys are making pretty good money and you need to give every dollar a name. The budget is real simple. I want you to tell next month’s income what you are going to do with it before it gets here. What you will do is have a V-8 moment and slap yourself in the forehead and say, “Where are you going?”

That will cause you to get focused, and intense, because you are at the place where you are going to start to win. I know this because you are desperate enough to be writing in and asking this question. This is starting to matter to you. Les Brown, the great motivator, says people change their lives only when they come to a place where they say, “I’ve had it.” And if you are there, to where you don’t care what your neighbor thinks, you don’t care what your friends think, you don’t care what your mother-in-law thinks; you are taking an extra job, you are not taking a vacation this year, everything is for sale except for the kids, (and they may go at the right price), you’re sick of this mess and you are getting OUT! Then you will get out of this debt.

First thing is first; list these debts smallest to largest. Make the minimum payments on all of these except for the first one. Knock out that first $500 on the kid. Put everything you can on that small one until it is gone. Then I want you to get $1000 in the bank. Don’t touch it for anything, except for emergencies. Attack all of these debts, smallest to largest. You also need to get a game plan together for getting a cheap car to get around in so you can get rid of the car lease.

Get focused and get on a plan. You can be completely out of this in 18 months. You are not bankrupt.

Dave


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