What should i do before i get into anymore debt? -

Please take the time to read and give me serious feedback...thanks in advance I m an 18 year old full time college student and i also work part time. Up until now i was considered responsible for my age, working a part time job since the age of 15, getting good grades in school, and never making dumb mistakes but I recently made an impulse decision and bought a 2006 used car for around $20,000 plus tax and license fees even though, originally, i was only going to spend around $14,000. I admit I got suckered into a very crappy EXPENSIVE deal. I get sick to my stomach every time i think about my hard earned money coming and then going. I m paying $370 in monthly car payments plus insurance which because i m under my parents I pay only $100 and i also live at home so I only pay $200 a month for rent. So, my monthly expenses totals out to $670 (not including gas and regular maintenance fees). On average i earn between $880-$900 a month. I m considering getting a second job but I would like to hear any advice on how to handle my situation. Selling the car would be an option but I m almost positive it wont sell for how much I purchased it for. The blue book value for private sellers right now is only $15870 (good condition). What should i do??? sell the car and just pay the difference?...that s if anyone will buy it.|::::|Just keep paying for the car. It s unlikely you would even be able to pay off what you owe if you try to sell it. Consider this one of life s lessons. Get a second job if you must. Cut back all your expenses. Nothing but necessities. Good luck.|::::|I agree with akgunmeh. You have to look forward and work out how to get yourself out of a bad position. The great thing is you already realise you made a mistake so you have learned a lesson which you will take with you for the rest of your life. Consider the loss as tuition fees. Your car is far too expensive for your financial position. If you paid more than it was worth to get it, then that money is already gone. You cannot improve your position by keeping the car. In fact the car will depreciate and in a year will be worth even less than it is now. Do you really need a car or can you get by without one? Sell the car and get the most you can for it. Then get to work paying off any outstanding debt as fast as you can. If you need a car, get a cheap one. Here is a bit of advice I got when I was younger and it has proved absolutely true. Never borrow money unless it is for something that will earn you money. That is; you can borrow money to buy a house because it will appreciate, for school fees because you will get more income from going to school, for a car to go to work (but only for what type of car is neccessary). You don t borrow for a holiday, a new TV, or a Ferrari. You can have these things but you have to save up for them.|::::|First, do you pay rent to your parents? wow... I think in this case, you should definitely sell the car and close as much of the remaining debt as you can. That will also save you $100 on the insurance. Get a $3-4K cheap car and don t put any collision/theft insurance on it. Just get the state minimum requirement. Because for cheap cars, it s not worth the insurance expense. Also, one more piece of advice, don t put so much money into a depreciating asset. A car is a depreciating asset and especially being 18, and earning $10K a year, there is no way you can or you should afford a $20K car. Edit - wanted to add something around the term of quot;sunk costquot;. If you believe that a decision is wrong, you should forget about what you have already paid, and get out as soon as possible. Because that initial $20K expense is a sunk cost, and will not come back. This way at least you ll get $15870 back. If you wait a couple more years, that number will be $9-10K. Think regardless of how much money you spent initially, since that money is far gone (i.e. sunk).|::::|Yes, you should sell the car. It is better to owe $5,000 than over $20,000. You will have to get a loan for the difference (maybe from your parents?). You will have the $5,000 paid off within a year with your current income. Here is a plan that will get you out of debt and allow you to never worry about money again. You just have to decide to do it. If you work the plan, the plan will work for you. Get all of the debt paid off as soon as possible, that will enable you to start building real wealth. A. Have a garage sale and sell whatever you don t use or need and use that money to pay down your debt. B. Consider getting a temporary part time job or two and use all of that salary to pay off your debt quicker. It is better to have a no fun year than a no fun decade. 1. Make a budget. Make the budget a week before you get paid. A budget is not a punishment! It is a tool which will free you from ever having to worry about money again. Put everything in your budget. Especially those annual, biannual, or quarterly bills like car registration, insurance, etc. Give every dollar you are going to bring home the name of where it is going. Add an quot;emergency fundquot; category to your budget for 25 dollars and save up until you have 1000-1250 dollars. Your emergency fund will help keep you from getting into new debt because of an emergency. If you can, set up a direct transfer to a savings account for your emergency fund. That way it moves automatically and you don t even have to worry about it. You must cut your spending and live on less than you make. Pay cash for everything. If you can t pay cash or write a check, then you don t need it. Do not use credit cards. Debt (especially credit card debt with it s high interest rates) is like quicksand, if you fall in, you will drown. 2.First get current on all of you debts, if you are not already, and make no more late payments, if you have had any. Stop using your credit cards immediately. Do not take on any more debt. Credit cards are like quicksand only the death is much slower. Make a list of all of your debts in order of highest interest rate to lowest interest. Use cash only for your spending from now on. If it is not on your budget, then you don t need it. If you forget to add a necessity to your budget one month then re do the budget. If you add something in, you will need to take some money out somewhere else. 3.Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on debt #1 (the minimum payment and the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example: To start : Debt #1 (highest interest): minimum payment+ extra payment Debt #2 (middle interest): minimum payment Debt #3(lowest interest): minimum payment Debt #1: paid off Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment Debt #3: minimum payment Debt #1: paid off Debt #2: paid off Debt #3: minimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment. That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have. 4. After you get all of your debts paid off, add to your emergency fund until you have 6-12 months of income saved up. Put that emergency fund money into a liquid money market fund or into a Bank of America no-risk CD so that if you need the money you can take it out without penalty. 5a. When you have your emergency fund in place, add a category for quot;funquot; to your budget. Save for a holiday, a vacation, a big screen, or dinners out, whatever goal you want. Remember to enjoy your life. 5b. When you have your emergency fund in place, start saving for your retirement. Join the 401(k) plan at work and contribute the maximum. Your employer probably matches at least part of your contribution so why give up free money? The Human resources Department will have the forms for you to fill out. Open a Roth IRA and contribute the maximum on a monthly basis. If you start saving for your retirement now, you will probably retire a millionaire. Start learning about investments. Do some reading. I like quot;The Lies About Moneyquot; by Ric Edelman, quot;Ready, Set, Retirequot; by Ray Lucia, and anything by Ed Slott. They are very good books and each has a little different perspective so you can decide your own comfort level with your investment 5c. Start saving for a very cheap quot;garage salequot; car. Something in the $1-$2K range. Pay cash for it. You are only going to keep it for a year or two because you are going to save for your next better car. Never finance anything that