Net Worth Same, Financial Security Up
I’m feeling a lot richer today, even though on paper, our net worth hasn’t changed. What has is that we have made our first major Mustachian lifestyle change: We sold off our 2007 CRV. We are now a one-car family, relying exclusively on our 1999 Accord (only 126K miles and running great, knock on wood).
We were including the CRV’s value in our net worth (minus what we still owed on it), so from that perspective, all we’ve done is moved money around. But what a difference! When we first decided to sell the car, we owed about $5700 on it. We sold it for $10,300, meaning we cleared about $4600. Actually, by the time we sold it, we only owed $500–having thrown a lot of money at it in the meantime–so we have a lot more than that to play with.
Here’s how we’re better off:
- Save $150-$200 in interest over the year and a half left on the loan.
- Save $200 in insurance every six months, plus registration, taxes, etc.
- Paid off Mrs. FP’s student loan, eliminating a $65 monthly payment.
- Cut Mr. FP’s student loan in half.
- No more $300 monthly payment for the car loan. That’s a total of $365 in freed up cash every month.
- Built cash savings up to $3000.
With only a few thousand dollars left on Mr. FP’s student loan, we anticipate being completely debt-free by the end of May. Getting rid of that additional $90 monthly payment will give us a lot more breathing room after this summer. We’ve had free housing through Mr. FP’s employer, but that ends in June, so our expenses will rise dramatically.
How we sold a car with a lien
Our home state makes it extremely difficult to sell a financed car to a private buyer. In other states, you can use a service like escrow.com’s lien payoff and have the title mailed directly to the buyer, giving the buyer much greater security. Pennsylvania titles are more complicated than that, and there is no way to have the title sent to the buyer. What we wound up doing was using a cash advance on our credit union card–there was no fee for this service in this case–to pay off the loan and get the title.
We actually could have saved ourselves the trouble. After not getting any nibbles through our Autotrader and Craigslist ads, perhaps because it’s winter and there’s been snow on the ground for weeks, we wound up selling to We Buy Any Car. They gave us a reasonable price–less than we would have expected from a private buyer but much more than trade-in value. (A Honda dealership had low-balled us at $6500, for comparison, which is why we were so anxious to get the title.) They do take cars with liens on them, so they could be a good option for getting rid of a car when you don’t have the title (assuming you’re not underwater). Our experience was positive and hassle-free.
What about you, readers? What major and minor lifestyle changes are you making in the name of frugality and financial independence?