Single Mom Money - Part 2 / "Where's My Money?"

Wednesday, October 28, 2015

While going through all of my debts, one thing that keeps popping up is my car payment. In 2012 I bought a brand new 2013 Honda CRV EX-L. I love it. It's fully loaded, and beautiful and has zero issues. I've never had a car with zero issues. Last fall, I refinanced my car loan and pulled out some equity because we needed the money. We were running low on our reserves as my ex finished up nursing school and was getting ready for a full time job. We were new parents and in desperate need of more room - so we needed to move. That money helped us get to where we needed to be, but in order to keep my payment around the same amount, I had to tack on an additional year of payments. At the time it was no big deal but now I'm facing 3 more years of payments instead of only having two more years left. Plus, my car payment is huge. Gulp. It's $606 a month. That's not including the monthly insurance, gas, oil changes, etc. Just a flat $606 out of my pocket every month.

I've been thinking about what I should do. Should I keep the car and the payment and just focus on paying the car off. Then in 3 years I'll have no car payment and can drive my car into the ground? Or do I try to wiggle my way out of this car and opt for a lower car payment, a used car or even trying to sell my car privately and using my grandmother's car for a year (she doesn't drive so she has a brand new Corolla sitting in her garage). I don't know what I should do. But at times I feel like I'll never get my head above water if I don't eliminate some of these large payments that I have.

I consider myself lucky though. I only have a student loan payment, car loan, small personal loan and 1 credit card. In reality, my debt is not that large. However, just eliminating my car payment, personal loan and minimum monthly credit card payment I can have $860 a month back to my wallet. WHAT! I want to pass out.

Just for S and G's (ten points if you know what that means), I decided to check my credit score on CreditKarma. If I had crap credit, then even if I tried to get a loan, I'd only be offered in the double digits so it'd likely not be smart anyways. And, I was right. My credit score stinks mainly because my credit card is almost maxed out. We'll call it "marriage debt" since I haven't touched the card in ages. I'm under my max balance but it's like 84% used of my allotted credit limit. The good news is that once I pay about $500 towards the balance, it'll move me to the next tier (positively). I'm glad I checked my score. It's good to prevent me from making dumb decisions (ie. having my record pulled for another ding on my score) as well as make me aware of what I can do to make it better.

So I'd recommend to use your resources available to you to make smart financial decisions. Research the possibilities and make the best decision for you and your family. Know where you stand, financially, in terms of your credit to debt ratio and credit score. Be realistic in what it takes for you to meet your goals financially - to free up your money so you can do with it what you want to do with it. And be diligent! Don't let another week or month go by without re-evaluating your financial situation. It's a continuous process that you should have a pulse on every day!
This post is not sponsored by CreditKarma and contains my sole views from personal usage/experience. 

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