For some, a vehicle is not a necessity. Those who live in a city with readily available public transportation can often do just fine without owning a car. But for those of us who live in rural areas or have to commute a long way to work, having wheels of our own is essential.
A car is usually one of the biggest expenses we incur, second only to our homes. But unlike a house, which usually goes up in value, automobiles lose value. And when you buy one that’s new or nearly new, it loses value very quickly.
When someone is said to be “upside down” on their car loan, it simply means that they owe more on it than the vehicle is worth. This often occurs when someone finances a new car for a term of several years. But it can also happen with used vehicles. Sometimes they lose value more quickly than you can pay the loan down, and sometimes dealers charge buyers more than the car is worth in the first place.
Finding that you’re upside down on your car loan can be quite distressing. It is particularly problematic if you need to trade vehicles for one reason or another. You might be having trouble with it or need a larger vehicle for your growing family, but if you owe more than the car is worth, you can’t just take it to a dealership and trade it in. You must pay off the loan in full before you can transfer the title.
So what can you do if you find that you’re upside down on your loan? Here are some ideas.
* Keep the car until you’ve paid the loan down to a level that’s lower than the car’s value. If you’re just hankering for something new, this isn’t so hard to do. But if you’re making repairs every way you turn, it can be difficult to wait it out. Still, you’ll have an easier time selling and getting something else if you wait until you owe less on the vehicle than it’s actually worth.
* Get a loan to cover the difference between the car’s value and the amount owed. If you go this route, you can go ahead and sell the car for what it’s worth, pay the original loan off with the proceeds from the sale and the new loan, and get on with your life.
* Sell your car to a private buyer. By doing so, you’ll get more out of it than you would if you traded it in or sold it to a car lot. You still might not get enough to pay off the loan, however, so you may end up having to borrow money to pay it off anyway.
* Many car owners who are upside down just stop making payments and let the lender repossess the vehicle. This is the worst possible choice, because it ruins your credit and you’ll still be responsible for the difference between the amount the lender sells the car for and the balance of the loan.
If you find that you’re upside down on your car loan, don’t despair. A lot of people find themselves in the same position. The best thing you can do is either keep paying until you’re no longer upside down or sell and get a new loan to pay the car off and get it off your hands. And most importantly, you can learn from your mistakes and strive to avoid such a situation in the future.
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Travel has a reputation for being expensive. And it certainly can be if you feel it necessary to go first-class all the way. But it’s also possible to travel on a budget. You just have to be vigilant about finding the best prices on everything.
Here are some tips that will allow you to travel without spending a small fortune.
* Find the best deals on flights, hotels and car rentals. Sites like LastMinute.com and Travelocity.com are great for finding deals on these travel essentials. But it’s also a good idea to check with individual airlines and hotels, too. Sometimes they offer deals that you won’t find on such sites.
* Consider traveling by train. It’s less expensive than flying, and you’ll experience fewer security delays. The biggest disadvantage is that it will take you longer to get where you’re going.
* When traveling to a foreign country, do some research on exchange rates. Your best bet is usually to withdraw money from your bank account at an ATM, but different ATMs offer different exchange rates. You’ll also pay some fees to the bank that owns the ATM, and probably your bank as well. Try to find out how much these fees are in advance so you’ll be prepared.
* Consider a traveler’s cheque card. These cards are not linked to your bank account and will be replaced if they are lost or stolen. You’ll have to pay an issuance fee, but withdrawal fees are often lower than those charged by banks.
* Avoid eating in restaurants for every meal. Most hotels include a breakfast of some sort with a room rental, so you can take advantage of that in the morning. If you can get a room with a kitchen, you can cook your own lunch and dinner. Or you could take along some bread and sandwich meat and pack picnic lunches.
* Take vacations in the off-season. If you’re going to a theme park with a small child, for example, plan your trip for the spring or fall. If you check with the ticket office, you’ll often find that admission is discounted. And the school-aged children will be in school, so it will also be much less crowded.
* Consider vacation packages. Travel agencies offer packages that include travel, accommodations, car rental, admission to popular attractions and more for one low price. Some packages even come with gift certificates to restaurants and shops, so you can eat and get souvenirs at no additional charge.
If you’re on a tight budget, travel might seem out of reach. But if you are willing to spend some time finding the best deals, you might be surprised at what you can afford.
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You’ve worked hard all year. You’ve paid the legally required percentage of your income to Uncle Sam. When tax time comes, you find that you’re getting a refund. That’s great! But what are you going to do with it?
Few people have trouble finding something to do with their tax refunds. But frequently, that “something” is spending it with reckless abandon. Sure, it feels good to buy some shiny new things. But there are more productive things we could do with that money.
Some refund recipients dedicate all or part of their tax refund to paying off debts. Depending on the amount of debt you’re in and the amount of your refund, this could save you lots of money in interest payments. For maximum impact, it’s best to use your refund to pay down the debt with the highest interest first. If you get that one paid in full and still have some money left over, move on to the one with the next highest interest rate.
Another smart thing to do with your tax refund is starting an emergency fund. Everyone needs a financial cushion in case of emergency or job loss. If you don’t already have one, a tax refund could give you a good start on it. But a tax refund is rarely enough to make up the three to six months’ worth of income that we should put away, so you’ll probably have to add a little more to it each time you get paid.
If you’re debt-free and already have an emergency fund, investing your tax refund may be a good strategy. You could put it in an existing retirement or college fund or use it to start a new one. You could purchase stocks and bonds with it. Or you could put it into an annuity. Investing your tax refund will allow your money to grow.
Another thing that some taxpayers do with their refunds is prepay their bills. This will give you peace of mind for months to come, because you won’t have to worry about being late with your payment, or even being unable to come up with the money to pay a bill. Most utility companies will allow you to do this.
Sometimes there is a legitimate reason for spending your tax refund on consumer goods. Perhaps your refrigerator is on the blink, or your car has seen its better days. Of course it’s always best to make repairs if possible, but in some cases we may not be able to justify the cost of repair because the item is very old or in poor condition. In these and similar situations, making that purchase (or putting a down payment on it) may be a wise way to use your refund.
When we receive our tax refunds, visions of things we want often start running through our minds. But going on a spending spree is not usually the wisest way to put that money to use. Instead of blowing it, why not use it to make your life less stressful?
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