Debt relief

Hey everyone, I have a 2019 Tacoma TRD Off-road with 25k miles. Lately I’ve been thinking about the value my truck has and the possibility of selling it and paying off nearly all of my debts with the money. With what’s leftover I want to use to buy a used Gen 2 Tacoma. 2 questions. 1: Is that a good idea or should I stick with the current truck and work on paying the debts off another way? And 2: how many miles is too many for a used Gen 2? I’ve seen a 2012 with 264k and a 2010 with 142k. Do those trucks still have plenty of life in them? I’m looking to make it last me at least another 10-15 years. Thanks for any input!

 

Very personalized question that needs to factor in a lot of variables that are not included in your original post.

Without getting into too much personal finance matters, I would ask “how long would it take you to pay off those debts without selling the truck?” And “do you love/really like your truck?”.

I think that (and other personalized info) answers question 1.

Question 2 depends on condition. You can have two VERY DIFFERENT 150k mile vehicles. One could have not been cared for, rusted frame, beat motor, ragged out, etc, the other could be babied, clean frame, well maintained, etc.

I think a 150k mile, well cared for gen 2 has a lot of miles left.

 

If you are worried about selling your truck so much to pay off your debts, something more economical and better on gas is likely a better option for you until you're in a better spot. The ONLY way I would buy a second gen is a single owner, old man/woman who didnt drive it. With values being so inflated, it's going to be tough to walk into anything and not be a little upside down on it when things inevitably do cool down but that isnt a big deal if you get something long term.

My suggestion?
Sell your truck if you really need too.
Spend 10k on a 4 door civic or something similar.
Save your money until the bottom falls out, or buy a trail rig you are comfortable wrenching on and don't rely on for a daily driver.

 

To make it last 10-15 years. The frame better be like new.
Then you better coat it, YEARLY.

The hard part will be finding a good truck with known maintenance history.
If maintenance is done regularly, the 4.0 can go 300k+ even 400k.
Eventually, the timing chain will stretch or head gaskets will go. But that’s no fault of the engine. Not at 350k-400k.

This is a hard one. If at all possible, I’d try to find a good used 2nd Gen first.
And then sell the 3rd Gen.

If you sell the 3rd Gen now, you might have to settle for “what ever you can get”.
And sometimes, you get problems.

 

Talk to an accountant

 

Generally depends on your financial situation but I agree with the others.
If you do sell, buy a used 2nd gen or even econo-car depending on your needs for a vehicle.
100-150k+ 2nd gens are pretty normal nowadays given their age. If you do get a 2nd gen it should have good maintenance history and no frame rust and they last forever.

 

Lots of good suggestions. I think an older high mileage vehicle will be a money pit and potentially give you reliability issues. You need dependable transportation for work ect.

You could sell it and then lease something cheap like a Honda civic, but that's kind of the same debt rabbit hole. Especially when the lease ends. Vehicles and houses are extremely over priced these days as I'm sure you know.

Have you thought about setting up a consultation with a financial advisor? Some offer free consultations or only charge minimal amounts for potentially great advice.

Everyone's financial situation is different. Have you heard of Dave Ramsey or his baby steps?

https://www.ramseysolutions.com/dav...MIn4X6tt2BggMVdSKtBh0UXwLxEAAYASAAEgJWzvD_BwE

Debt isn't a negative thing necessarily. Some of it is deductible and will improve your credit if you pay on time.

Credit card debt, medical debt, student loans, ect are the ones you want to minimize.

The first step is recognizing the issue and the second is planning a solution. BTW, you don't have to be 100% debt free you just have to know how to manage it.

 

All great suggestions and I appreciate everyone’s input. Currently the debts I have are credit, school, medical, and 2 car payments. If I sell my current truck I can pay off all debts except for the one car. If I keep my truck and keep making the current payments on these debts, which currently im paying as much as possible on them, it will take me close to 6 years to completely pay them off. I’m not attached to my truck I could take it or leave. It’s a great truck but when it comes to having a nice new vehicle vs having debts taken care of I’d choose being debt free. When I got the truck in 2019 I didn’t have most of these debts and that’s why I got it. Regarding the used 2nd Gen, the page online shows it has no accidents reported, a clean title, but has had more than one owner. That’s all the page shows which I’m sure with a little digging I could find more information on it. Again, there are a lot of variables to the situation im currently brainstorming. Thanks again for all of the input.

 

Biggest question is

how much high interest debt do you have? IE of your debt how much of it is credit card debt and do you have favorable rates on both car loans?

 

Spoke to an accountant, sold my house and living in a teepee down by the river making my own soap. Am I doing something wrong?

 

Sounds like you know what to do

 

Depends on a lot of factors, but have you thought about selling your truck, paying off your debt, and leasing new?

With my first wife, I was buried in debt. Immediately after our divorce, I pretty much brought myself to baseline. I didn’t own anything, and I didn’t owe anything.

I built everything back up in a slow and regulated way. I’ve never been in debt since. (Mortgage excluded, but my payments are less than an apartment now.)

 

You're contradicting yourself...

+1 for following Dave Ramsey and the Baby Steps. But -101 for saying debt isn't a negative thing.

If you follow the Baby Steps and any of Dave Ramsey's principles, debt of any kind IS a negative thing and credit is not necessary or a good thing. Mortgage debt is the only "acceptable" debt.

 

6years really isn't that long. And if you factor in work bonuses and raises, as well as assuming you're tentatively planning the financial spending sparingly, that's really not too bad.

The big thing is to have a plan of action and follow it, but also leave enough wiggle room adjustment that allows for "stupid spending" like going out to eat, date nights, and surprise breakages.

The statement I always make with a used vehicle is this.

Take a look at the brands(in this case Toyota) official maintenance schedule, and compare it to the trucks current mileage.

The very first assumption that should always be made is, if the vehicle lacks receipts documenting a service, assume ALL services up to that mileage have been avoided and not done. Which means you'll be on the hook immediately to cover those.

--this rule came to be for me after being on a vehicle forum that used a timing belt that must be changed at 60k miles, or the motor blew up. Lots of new members buying a vehicle at 70-90k, and a week later looking for a new motor...



Your current truck is a known condition. You know what has been done, and what needs to be done, and can somewhat budget to do for the most part.

The question you need to be asking is if you sell off the current truck, would that leave enough financial space for a surprise $5k-10k worth of work on the replacement vehicle that might not have been as well maintained as you thought?

 

Credit card debt can be pretty high interest - How are the rates on the other loans?

I also hate debt - but some is good; for your home or building a profitable business (it is not wise to pay off 2% debt when you can get 4.5% return risk-free). The amount of debt is not the problem, it is the reason for the debt that can be problematic if it is wasteful and impacts your ability to pay.

Education or a business are good reasons - mostly; cars and trinkets are certainly not...

I'd throw every penny I had available at the highest rate debt (Making minimum payments on the rest) and tackle each loan in this way. (make sure you have a few bucks in the 'mattress' to deal with unforseen trip-ups). I would not sell the truck unless it made sense and you had a reliable replacement (There are transaction costs - even if it is just the loss of the confidence you have in the known history of your truck.) I would definitely sell the truck if I was not able to keep the cost of the debt reasonable. I'd rather keep my $$ and not pay high interest to someone...

I would not get a high mileage vehicle even if it is a taco. That can cost you a bunch if lady luck fails you. I'd trade only for a practical (a manual corolla would be fun for me if I had a commute...) if I could get a good deal on one from a private party...

Do you drive a lot? Fuel is expensive (to litterally just burn...) and saving on fuel costs will be a benefit...An EV will avoid fuel costs and they are getting cheaper! (I dont drive my Taco much as I don't commute AND I am currently fueling my EV for free using only the sweet sunshine falling on my roof!)

Get on it so you can keep your well earned $$$ - Good luck!

 

If a mortgage is "acceptable" debt, how are you gonna get one with zero credit history? Responsible use of credit is the only way to get a reasonable mortgage. So used properly, debt is not ALWAYS negative.

So yeah, in your own words, you are also contradicting yourself, lol. not trying to argue, just saying you can't use debt as a negative DEFINITIVELY.

 

Do you even NEED a truck? could you get by for a few years with just the car?

 

I’m at the point in life I’m beginning to second guess this part too

 

Welcome to TW...

 

I can tell you haven't read any of Dave Ramsey's books, otherwise you would understand. Total Money Makeover - I'd highly recommend giving it a read, the worst that can happen is you might learn something (or a lot like I did). I, like most people, was taught about credit/debt wrong.

Yes, you can get a mortgage without credit. It's called underwriting. Not everyone does true underwriting. But yes, you can definitely get a mortgage without credit. Or if you follow Dave's principles, you just pay cash for it and don't have any debt (or mortgage). The only reason that mortgage debt is "acceptable" is because it is an appreciating asset.

Credit just means you're good at having debt and things you can't afford.

A high school teacher of mine rolled up in a brand new 3500 Dodge one day. Someone asked how much his payments were and how he could afford it as a teacher. He said my payments are $0, I paid cash. I don't finance anything. He said if I can't buy 2 or 3 of something in cash, then that means I can't afford it. I work hard, save and don't spend frivolously. It blew my mind that someone could have ~$80k cash to buy a vehicle. He went on to say his house also was all his and that he went $0 into debt to build it. BTW I know plenty of people personally that own a house and never had a mortgage...

If you can't pay cash for it, you can't afford it. No way around it, no denying it. Debt is ALWAYS negative...That's why they put a NEGATIVE symbol in front of the $ sign. I say this all of this as a person with debt and with credit. But soon, I will have none of either. To each their own though!