3/13/2005
Advice from Nashville's leading Financial Aid Advisor Dave Ramsey
Dave Says
By Dave Ramsey
Author of:
Financial Peace and
The Total Money Makeover
"Growing family and growing auto needs!"
Dear Dave,
We’ve got five children with another on the way. We have two vehicles – a 1995
mini-van and 1989 Honda Civic. With the new child, we will have outgrown the
mini-van. The Civic is my husband’s car from before we were married and it’s
surely not big enough for us. However, both vehicles are paid for. The only debt
we have is on our credit cards. We’re working on our budget and trying to pay
this debt down. How do we move to a bigger vehicle without going deeper into
debt?
Carrie in Monroe, LA
Dear Carrie,
I recommend that you buy another 1995 van that is full-size. Don’t go into debt
to do this, just buy a larger vehicle that is, money-for-money, an even swap for
your mini-van. You’ll end up with a van that’s not quite as nice, but it will
carry more people and get you around until you can get your debt cleaned up.
Then you can save for a nicer large van and pay cash for it as well.
Also, when you sell your van, you can sell it yourself or trade it to a dealer.
If you sell it yourself and then buy a vehicle, you may be without a van for a
week or two while you shop around. That could be challenging for you. On the
other hand, if you trade it to a dealer, you’ll get less for your mini-van
because they will pay you wholesale value and then attempt to sell you one of
their used vans at a retail price. The first option will be a better deal for
you, but I’d go ahead and start shopping – become an expert on what vans are
selling for in your area – so that you’ll be prepared when you do sell your van.
Congratulations!
-Dave
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