Depreciation, park it or drive it daily

[nb11]

I was recently in a similar situation... When I turned 16 I shared my ranger with my dad, and he made the payments. I started working as soon as I could drive and About a month later I decided to buy a motorcyle. Well now two years later, my dad has another truck so the ranger and bike are mine. Two payments, which I can't manage. My dad has been helping me with the bike, and I've been paying off the truck. Well we were going to sell the bike (owed more than it's worth) but I decided that instead of taking that loss, I'd apply that to my truck payment. Now I have to make 3 more truck payments and then I'll take over the bike payments again. Long story short.... Rather than pay for a car that needs work (needs work=money pit, only it'll still be a turd), just put that toward the ranger and drive something you can be proud of!

 

[darkspork]

there is more to consider too, if u take the money for another car and pay off ur truck then u will no longer have to pay the full coverage insurance that u have now.

Don't have to doesn't mean shouldn't. Insurance companies work hard to prove the other driver at fault, do you really want to be out the money if somebody cuts you off and slams on their brakes (it happens, and you better be quick not to hit them)? $145 is more than reasonable for comprehensive coverage for two drivers on two vehicles (IMHO). It's also a full $100/month cheaper than what I was paying just for myself 3 years ago.

 

[Legend]

Generally cars depreciate, require maintenance and consumables (gas, oil, tires, etc.). They are an evil expense that should be avoided if possible. Two cars are more than twice as bad as one car. Even worse is compound interest. Insisting that you must have something NOW and borrowing the money to pay for it ($1,000 for example), means that somewhere in the future you not only won't have what you want (that costs $1,000), you also won't have something you need (that only costs $200 [the interest you paid]).

The truth of this creates opportunities, sort of....

It is possible to buy a car and pay for the operating expenses. Operate a taxi, providing transportation for people who don't have a car. Charge more for the service than your operating costs (including wages for the driver, even if it is yourself), and it would be possible to make a profit. The window where the profit is possible is the difference between what it costs someone else to own and operate a vehicle and what it costs you. With really careful management and good luck a profit is possible. If you have to borrow the money for the vehicle to start with - it's hopeless!

"When you're in a hole, at least stop digging!" is good advice. Borrowing money is bad business and to be avoided if at all possible. Borrowing money to pay for an evil expense that you think you need or rationalize yourself into thinking you can make a profit on, is insane.