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We need advice... pronto! :)

July 31st, 2008 at 11:01 am

Okay... I have a few financial decisions coming up, and I need some advice before I make any decisions.

First: my truck.

It's a 1999 Toyota Tacoma, in fairly good condition, and the last time I checked, I got about 20 MPG. I've had it since I was 16, and it's always ran well for me. Recently though, I've had to replace the front brakes and the starter, which cost a pretty penny. I'm worried that I've started on a downhill spiral.

Now, the last time I got new tires was about 4 years ago, and one in the front keeps getting low. This morning, it was completely flat. BF is going to look at it when he gets home, but I guess I'll have to replace it. BF says we need to go ahead and get two new ones for the front if we're going to replace one.

My question is... I've been thinking about getting another vehicle for a while. This is the only one I've ever owned, so I'm not the type of person that has to have something new every year or anything. My pros & cons:

=Pretty dependable.
=Paid off!!!
=Decent Gas Mileage.

=Possibly starting to deteriorate.
=No room for the pup to ride with me.
=No extra cab or backseat for carrying anything.
=Gas mileage doesn't seem so hott when I'm driving 90 miles/day.
=Now needing new tires.

And just to throw an extra monkey wrench in things... my step-dad called to let me know about a buy-back program that Toyota is offering. Apparently, for some 1995-2000 Tacomas, there was an error in the corrosion-protection, and some have had extensive frame rust.

I have already called Toyota, and they told me that my VIN is one that could possibly be affected. So, the next step is to have an inspection with a Toyota dealer (got an appointment for next week), and see what they say. If the rust is repairable, they will do that, and Toyota pays for me to have a rental car in the meantime. If it is not worth replacing, Toyota will buy back my truck at 150% of the "excellent" Kelly Blue Book value!!!

Excellent value for my truck is $7,755... which would mean a check for $11,632. That would be freaking AWESOME. Obviously, if this is the case, I really have no choice but to take the deal.

But what if it just needs repairs, or not even that? Should I trade it in, or keep with it?

I would like to get something with better gas mileage, but I also need something that has some room for my big dog & (hopefully) one day family. I don't want to have to be buying something else in a few years. I was thinking a mid-sized SUV, which would probably get similar gas mileage, but have more room?

Should I go ahead and buy two new tires, or just one for now? Would one just be stupid?


Second issue: buying a house.

Obviously, this isn't something that I need an answer for right now. But it is something that I want to start thinking about, as I don't want to miss an opportunity.

Here's the deal. I know you should have a good downpayment for a home, which obviously, BF & I don't have. But common sense is telling me a different story at the moment.

With my job, we will be moving in early spring to another location, hopefully somewhere with lower cost of living, but who knows. At that time, we can either find somewhere to rent, or buy a house. Then, in about a year after that, we'll be moving again to a "permanent" location. If we can't sell our house in 30 days, my company will offer to buy it from us at the appraised value. If we do sell, they pay all realtor's commissions, travel for us to look at new houses, etc. The relocation package is really pretty good.

So with the housing market the way it is, and us paying $900 rent right now, it makes sense to me that we should start investing part of that $900 in a home. I know without a downpayment, alot of it would go to interest, but even if $300 went to the value, that's $300 that we are wasting now. And with my company buying the house and paying relocations expenses, we should come out ahead, right?

I am probably missing something, but in general, is this right? I just can't imagine how trying to save $100/month for a future downpayment WHILE throwing $900 out the window in rent is a good financial idea?

Any help on either of these two situations would be GREATLY appreciated. (Especially the truck as it is a current decision!)

Thank you all!

10 Responses to “We need advice... pronto! :)”

  1. gruntina Says:

    If you can, I would try to keep the Tacoma unless you can get the buy back and get something cheaper than the buyback amount.

    Tires are needed to be replaced no matter which vehicle you have. It is the fact with auto ownership. You went 4 years without replacing tires and thats a long time.

    From my observation (Which is something I totally wished I pay attention to when I was younger) is that those who did not buy a lot of toys or replacing cars and ect. , were more successful at obtaining a down payment for a house much faster.

    My bad thinking was I thought I could not come up with a nice down payment unless I had a better paying job so I went with what I could do at the time was to replace a nicer vehicle. Little did I know then that this took away my savings power for the home down payment.

    Cars come and go but homes do not. So combine your finance goals of having material pocession and homeownership and try to see the bigger picture to come up with a decision.

  2. gruntina Says:

    Sorry I meant to say processions

  3. momcents Says:

    When I wondered the same thing about if it was time to get rid of my older car with a newer one and lamented about the repairs that I anticipated happening, the best thing anyone ever said to me was, "If you have to put $1,000 into maintence in any year, that costs you under $100 a month. That is less than it would cost to have a newer car." This logic worked for me in that I didn't have money to buy a car outright and if you put that money (or whatever amount) into an account for repairs. Let it build and use that for a downpayment or to offset the cost of the newer car when you get one.

  4. monkeymama Says:

    Does the tire need to be replaced, or just a hole to plug? ($5?)

    Likewise, I'd just replace the one tire. Unless the other one was due to be replaced too. Not sure how many miles you drove in 4 years. They could need replacing, but I wouldn't jump to that conclusion.

    Repairs are normal as a car ages, but are far cheaper than buying another vehicle altogether.

    If Toyota really gives you $12k, then I'd just get another car with that money (newer, roomier & better gas mileage). Sounds pretty iffy though.

    A house costs a lot more than the monthly payment, and like you said, most would go to interest. I'd rent. Putting 0 down on a home is an extremely risky financial move. A guaranteed buyer is a nice thing, but is a lot of hassle AND expense for only one year.

    Save the money with not having a car payment, towards a house down the road.

  5. merch Says:

    On the truck, I think momcents gave excellent advice. I would also say if you are going to replace the truck get a used car for cash. And if you haven't noticed, oil prices have been drop (and gas prices).

    Now the house. This one is harder because of the answer. I don't think you are ready to buy a house. As for appraisal value, who are they going to use? Appraisal for tax purposes?

    I pay about $2,775 to my mortgage company. This covers taxes and insurance (banks will require insurance) at 775, interest payment of about $1,500, and principal of about $500. This is on a conforming non-jumbo loan at fixed 5.5% for 30 years.

    Since you wouldn't be putting 20% down, you would have to pay PMI which is a couple of hundred a month. This pays the bank if they foreclose on you. Or you could do and 80/20, where the second loan is 20%. The interest rate on the second loan could be over 7%.

    On top of this, you have to pay water, sewer, buy a lawn mower, water the yard, flowers, mulch, rakes, hoses, wheel barrow, etc. And do you have savings if something big breaks? Like dishwasher, furnace, roof leaks, etc.

    My point is that a house should be a blessing and not a burden. I just don't think financial you are ready. You want to do this right, I would suggest 20% down and 15 year fixed at a quarter your take home pay.

    You want to live and enjoy and not work for a mortgage. But just focus on saving for a house and go in smart. And I really wish the best for you and your BF.

  6. gamecock43 Says:

    Yeah! Home ownership! What a fun concept to kick around! I love reading about people thinking of getting houses. I have been saving for almost 4 years and just now have the 20% down. But I have been unemployed for 2 years, you can save it up faster, probably.
    3 things to consider about buying a home for a year:
    1. First-time homebuyer programs! You only get those once, and you get a pretty good stuff. Lower mortgage rates, tax write offs, ext. It would be a shame to waste those resources when you own for a year. Then not get that deal on your next home.
    2. Also, since the market is going down...I would worry about buying a home that ends up being worth less in 1 year. Then the company would only reimburse you for the 'current market value'. And you pay the difference on the loan.
    3. Ohhh...and new houses need grown up furniture. I'm sure you have some nice things now, but in a new place you will need more, and want nicer things.
    Homeownership is such a big deal that no one should rush the memories. Instead of your first home being a whirlwind of buying, 1 christmas and packing up again, you might want to spend that 1 st year going to open houses, realtor.com (my favorite website ever!) and such.
    And the car thing is a no brainer- if they take the truck back at 150% value, do it. I have never heard that, but maybe there is no catch.
    Keep us updated!

  7. sillyoleme Says:

    Thanks everyone.

    Like I said, I know buying a house without a sizeable downpayment isn't usually advisable, but I don't want to be set against everything if the opportunity presents itself. And yes, merch, I realize there are other things that go along with a house besides just a house payment. During part of my college times, I helped my mother and grandmother pay part of their homeowner's expenses. And I used to work in insurance sales, so I know all about PMI and how it can surprise some buyers. You'd be surprised how many people we'd have that thought they wouldn't need homeowner's insurance because the bank made them pay PMI. lol.

    I am taking everyone's advice to heart... but I still have some thinking to do. I think I forgot to mention that with the company's offer to purchase the house from us, it's an option... we don't have to sell it to them if we want to hang on to it for a while. According to the employees that have used this option before (the ones I've talked to), they were very happy with it. Most said that it was much easier than if they had sold to a private buyer to begin with. Just a thought.

    And who knows... we may end up in an area where we can rent a house with a backyard for much less than we're renting this apartment now. I just REALLY hate throwing so much away in rent every month. I also hate having to worry about whether our dog is barking loud enough for the neighbors below us to hear, or not being able to take the pup on a walk without a close leash, always worrying about the state of the carpet & paint & walls and whether the apartment community is going to try to screw us out of our deposit or more when we move out. (Lord knows that has happened before!)

    By all means, keep the advice coming, everyone!

  8. gamecock43 Says:

    Apartment living really does stink. But you pay for freedom. If the right oppertunity presents itself then it presents itself. I have been waiting for my home to present itself and nada so far. Frown

  9. merch Says:

    My point is you want to go in strong. And a lot of people are losing houses going in with 100% + loans.

    Anyway whatever you decide good luck and go in with eyes open. This whole conversation reminds me of a song:

    It's not time to make a change, just sit down, take it slowly
    You're still young, that's your fault, there's so much you have to go through
    Find a girl, settle down, if you want you can marry
    Look at me, I am old, but I'm happy

    (Cat Stevens, Father and Son)No disrespect Smile Sometimes I have an opinion (more like always).

  10. whitestripe Says:

    hmmm. it's scary considering a 100% loan, but as you've seen and commented on my entries too, BF and I are considering it as a very real possibility. while we most likely will have about 3% ($10 000) at the end of the year, it's no where near the $60 000 people would have recommended ten years ago. but my advice is that you just make sure you consider all options, and know the costs you are getting yourself into. Smile

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