Trying to make a difficult decision

[canoetrpr]

Lots of food for thought here. I appreciate all the input and will stew on it over the next few days while trying to decide.

On the income side, I do pretty well. Well enough that my wife does not have to work and can home when the kids are home and takes care of chores around the farm.

We used to board horses and the money was actually good doing it. Unfortunately the boarders were a hassle. So we went from the boarding to the cattle and are quite enjoying maintaining the genetics of a good old heritage breed. There is a market around the urban parts here for grass fed beef. Between that and pure bred sales I feel pretty good about the animals being able to at least pay for their hay and misc. expenses. If things were tight enough, I'd lose my hobby and the animals would be gone.

I am not in a massive debt hole vs income but after staring at cash flow numbers it just does not make sense to spend $1500 a month on a vehicle - even though it is perfect and will be paid off in 3.5 years.

I did overbuy if you were guessing but I have always done so with vehicles and in the past it has never been an issue as I have kept my previous two brand new vehicles for 10 years, 300000 km. I am always able to get a great finance rate on new vehicles and been able to negotiate a good deal so found that if I kept it for a good long time, the yearly depreciation was not terrible and I got to drive a new car and know the entire maintenance history. A couple used cars I had before that were a real hassle. I guess the trick might be knowing how they were used and maintained before. When I think of my van at 200000km and 5 years old, it is worth WAY more to me that what I would get for it if I sold it now. Yet I'd be very hesitant purchasing a used vehicle with that kind of mileage not knowing how it was used and maintained. If I start looking at used vehicles that are only two and three years old with 80000 km on them or less, they often are not far enough down the depreciation curve to really make them worthwhile over a new one.

I think those of you that make it a policy to not use debt for anything other than your mortgage and/or investments are pretty darn astute. I'm going to seriously consider your advice. It will mean something that is 5 or more years old with high mileage so that I can use a line of credit and get it paid off within a year.

Upon doing some research locally I have found that the uglier / boxier Honda Element typically found in FWD, rapidly goes down the depreciation curve (given a pretty niche buyer) compared to the sleeker CRV, typically found in AWD. I've seen a 2007 and 2006 FWD both with less than 100000 km for ~$11000-12000. They might be worth considering as they would be ideal for hauling the dogs or a dump run.

My choices boil down to:

1. Keep the truck. It will be paid off in 3.5 years. Until then find a few other corners to cut and use extra income that tends to come my way to cover any shortfall.

2. Sell the truck. Buy as cheap as possible a commute vehicle as I am prepared to without regretting my daily driver. Have it paid off in a year.

3. Sell the truck. Buy a 2009 Forester or CRV. Will take me about 3 years to pay off but I will save about $300 monthly on payments and $200 on gas.

4. Sell the truck. Buy a new Forester or CRV. Will take me about 5 years to pay off but again I will save about $500 monthly.

Right now I am leaning towards 2.

Thanks for all the thoughts.

 

[75H2]

I'm glad someone mentioned Dave Ramsey already. Find him on the radio or online & listen during your commute. It will change your thinking. a wise man once told me everything with an engine will depreciate. I tell that to myself several times a day as I car shop right now. I'm committed to only buying what I can pay cash for, not what I want but, don't really need:thumbsup:

 

[Hooked_on_HP]

How about selling your full size truck and buy a used smaller fuel efficient truck.
Bill

 

[CinderSchnauzer]

Some good suggestions already.

If you don't have one get a financial management / tracking program (Quicken for example) and keep track of everything. Prepare a monthly / annual budget and try to stick to it. Run monthly reports on your spending. You may be surprised how many $$$ go into certain things.

Credit cards - pare down to a bare minimum - they promote impulse buying. If you have outstanding balances - pay them off - put them on your credit line, the interest will be way less. If you are not paying off all credit cards on the due date - this has to become a major priority.

Look at major fixed expenses, mortgage / taxes / insurance etc and determine the amount you need to set aside each and every month so that when the bill comes you have cash on hand to pay. Set a savings goal - pay yourself first. Maximize your RRSP contributions if possible.

Ditch the truck. Get a small trailer for DW's van and get a used economical commuter vehicle. Gas has gone up 10% or more in the last couple of weeks - expect more of the same. A F-150 commuter vehicle is a luxury - not a necessity.

Take a look at your food expenditures, minimize junk food / processed foods and concentrate on real food - from local farmers where possible. Brown bag it to work. Stay out of Tim's

Test the market for auto / home insurance. Look at an umbrella policy for liability instead of having high amounts on each individual policy. Make sure you are getting any good driver / accident free / low mile / multiple vehicle discounts that may be available.

If you need something - check Kijiji before purchasing new. Evaluate all new purchases - is it a need or a want - proceed from there.

 

[buck12]

I feel for you. I have an 09 F150 and would miss her if I had to let it go. Good luck.

 

[ultrarunner]

I'm glad someone mentioned Dave Ramsey already. Find him on the radio or online & listen during your commute. It will change your thinking. a wise man once told me everything with an engine will depreciate. I tell that to myself several times a day as I car shop right now. I'm committed to only buying what I can pay cash for, not what I want but, don't really need:thumbsup:

So far... I've never sold a car for less than I paid for it... all of my cars have been used with one exception and this one will be a loss if I ever sell it.

Owned many cars... a Model A Ford was my first

Growing up in the car business taught me there is a premium for buying new... 15 to 20% from the get go... some can only buy new because it takes less cash upfront.

Sounds like your on the right track...

 

[petes]

Lots of food for thought here. I appreciate all the input and will stew on it over the next few days while trying to decide.
** snip **
My choices boil down to:

1. Keep the truck. It will be paid off in 3.5 years. Until then find a few other corners to cut and use extra income that tends to come my way to cover any shortfall.

2. Sell the truck. Buy as cheap as possible a commute vehicle as I am prepared to without regretting my daily driver. Have it paid off in a year.

3. Sell the truck. Buy a 2009 Forester or CRV. Will take me about 3 years to pay off but I will save about $300 monthly on payments and $200 on gas.

4. Sell the truck. Buy a new Forester or CRV. Will take me about 5 years to pay off but again I will save about $500 monthly.

Right now I am leaning towards 2.

Thanks for all the thoughts.

In my opinion you could still do much better than #2: Buy a ~2002-2004 vehicle instead. A 2009 Forester goes for what, $17-20k? A 2002 with 80k miles should be easily found for <$7k. You said you could pay off a 2009 in 3 years. That should mean roughly the ability to pay off a 2002 in one year and you're $ ahead after that. They're both going to get you where you need to go warm and dry and use about the same amount of gas to do it. Sure, the older one may not have as many bling'd out options, but personally I'd sure rather have $10k in my pocket (or not hanging over my head) than heated seats and a Limited Edition trim kit.

Don't even consider buying new. I can't fathom how people think it's perfectly normal to take a 30% value depreciation hit to drive something off the lot. Cars continue to depreciate at about 20% per year for the first couple years, then it starts to flatten out: Buy a brand new car for $30k and it's only worth $21k a year later. Buy a 2 year old used car for $20k and it's worth $16k in a year, but buy a 10 year old $7k car and it'll be worth almost 6k a year later AND you'll save the difference in payments. Auto loans tend to follow the curve fairly closely, meaning that if you sell before it's paid off, you usually end up walking away with nothing to show for all the $ put put into it.

Especially for older cars, consider buying from a private party. Used Car Dealers don't offer anything worth the premium they charge. A possible exception is if you're stuck on buying a nearly new car you might be able to get a certified-pre-owned car from a dealer with a good warranty (not my style, however).

If you're not in a position to pay cash and need to finance the purchase, talk to your bank about using a home equity loan, making the interest tax deductible (in the US). (but DON'T use it for what many Americans did when equity loans were "easy" - using it to finance $60-100k motorhomes, wakeboard boats, or other "toys". Save up and pay cash for anything in the "toy" category)

 

[dstig1]

Sell the truck to clear the loan ... buy a less expensive one for the farm. Diversify ... find a way to generate income from the acerage ... sell hay, produce a commodity that folks will buy ... eggs, beef, pork ... a large Garden ... vegtables sell ... just my thoughts.

I'd say that pretty much covers all the options you might want to consider. Raise income, reduce expenses...

I agree with many of the points already stated, plus it sounds like you are pretty well convinced that the truck needs to go.

1. Small utility trailers are vastly more cost efficient than trucks, especially for how you describe your needs. Nothing really to wear out, and no daily mileage penalty when you don't need the hauling capacity. As long as you have one vehicle that can pull a trailer of the size you need, put a hitch on it and you will be in much better shape. Plus you get to brag about your trailer backing up skills after a few months!:thumbsup:

2. How immediate is the issue/crisis? I'd say clean it up and start selling the truck NOW. It takes time to sell a vehicle. Take that time to start looking at replacement vehicles and see what's out there and costs, what you like, etc. I would bet you would be very well suited with a smaller commuter car and an old PU truck or SUV. But you don't need both right away. No, vehicles don't like to sit, but you can help that out by making sure to use the sitting vehicle once a week or two. Even driving a gas hog once a week is a lot cheaper than feeding the gullet of a 1/2 ton V8 daily, and keeps it limber. A midsize or compact sedan will be a nice commuter car and you will be amazed what 30+mpg does to your gas bills. Right now I'm driving a little '98 Civic that I picked up for a song from a neighbor moving away a few years back. Once every 8-10 days I fill it up for $30, and my drive is 34mi roundtrip, so right about half of yours. That is a significant whack off the fuel bill. Actually this is pretty close to what I do now. I drive the Civic most of the time, and the F250 every week or two to keep it limber and when I need to haul stuff. For towing my tractor (my only option right now for having it) I need a bigger truck, so I have no choice there. And I bought it used.

You can find something dirt cheap to tide you over for a commuter vehicle. You don't have to keep it 6-12 mos if it holds you over until you figure out what makes the most sense for your situation. But doing it quickly will start the savings ASAP.

I read a car buying article last year that made a good point: When you buy a vehicle you are buying 150,000 miles of use. It doesn't matter if you buy it new or used, you are buying the remainder of 150k miles minus what is on the odo now. OK, now I disagree that 150k miles is the end by a long shot, but he made a good general point. In your case: if you find yourself needing very few truck miles per year (like me) then a much used truck will still have plenty of it's "150k miles" left for years to come. Age catches up with vehicles too, but not as fast as miles, and if you can keep it indoors, then that helps slow the aging a lot. You said you need a truck a half dozen times a year. That being the case, you might not even put 2-3k on it in a year.

Some more food (fuel) for thought (the fire).

Good luck in your decisions.

Dave

 

[clemsonfor]

I agree with what others have said. But again i fix my own cars. Now if my wifes Highlander threw a rod i would not fix it my self. But i do alternators starters sensors all PM and even manifolds and other things on my trucks. So i am not afraid of a starter going out on my wifes 01 mode toy. with 110K miles. If i were you i would go with a larger car and trailer like folks say but what i would do if i were you is to, buy a 20 year old 1/2 ton 2wd or a 20 yr old ranger or s10. And then buy a 1-20 yr old honda civic to commute in. I drive the wifes old 96 saturn to work ( i googled it, the metric conversion that is, my commute is 40km one way) cause it had a salvage title and would save me what we would get in resale in gas in a little over a year or so.. I also had my 1990 ford ranger with 280K miles on it. Its still reliable and will drive the 300mile round trip to the farm in it without thinking about it. I also have the 1980 K10 for a full size to haul or cut wood etc. The insurance on all these and taxes is less than the taxes on the wifes toyota thats 9 yrs old. You are a honda guy you can get 300K out of one of those with some maintence.

You said you worry about history etc and thats why i got 280K out of my ranger but your wrong i got it from the fater in law someone forfieted at his shop cause they could not pay the bill so i paid $900 for it with an assumed 150K miles on it (5 digit odometer). I use to have a 170KM roundtrip commute and i then decided it was not worth it to pay 30K for a truck that in 5 years would be slap depreciated with around 250K miles on it. I decided that i would always but a car or small truck for about 3-7K and save the payments and insurance etc. Property taxes here is the states will eat you up too, i pay less on the 3 vehicles property tax i will drive than we do for my wifes one.

My solution.

1. Get rid of that truck, hopefully for at least 1K in your pocket.

2. To be as cheap as possible get a 15 year old honda civic or accord and a small 3x5 or 4x8 trialer (with accord). Then buy you a 20 year old farm/go to town when you want or need truck and sell the trailer for what you paid (DO NOT buy a new trailer get a CL one).

3. Buy the 20 year old truck and 15 year old car at once on the same personal loan easily under 10K if you do it right. If the car blows up in 2 years buy another for $3500-4K if needed. Who cares what you look like in it save the money and laugh at all those guy powerstroking those $1500/month payments in cars that cost as much as a small house.

 

[schmism]

8K home owners loan

sell truck

buy $1000 1994 4x2 F150 weekend use only liability only

buy $7 used 2000 ish DD... 4 cylinder Honda civic...accord, etc STick to something reliable... honda, toyota... My BMWs have been great. :thumbsup:

still have a truck and an inexpensive DD. pay 400 a month on your own loan

 

[clemsonfor]

8K home owners loan

sell truck

buy $1000 1994 4x2 F150 weekend use only liability only

buy $7 used 2000 ish DD... 4 cylinder Honda civic...accord, etc STick to something reliable... honda, toyota... My BMWs have been great. :thumbsup:

still have a truck and an inexpensive DD. pay 400 a month on your own loan

BasicaLLY what i and others agree, but i do have to argue with your prices, i have never seen a 1K$ 1994 f-150 or a $6K civic. For a $1K around here you would have to buy a 25-30 year old beat to $h17 f-150.

 

[Milton Burro]

Perhaps the biggest contributers to the bills we have vs. other families at our stage is the hobby farm - small herd of Galloway cattle, tractor and the rural lifestyle in general. But we are not willing to give that up as it is a way of life.

Adding up the records showed that we are spending a whopping amount of cash in vehicles and fuel. I have a 2009 Ford F-150 which I absolutely adore but it is costing me $875 per month in financing. My wife's van is paid for and has a lot of life left in it. I also work 50 km away (cost of rural living) so that is 100km trip to work. My F-150 is good on gas for a 1/2 ton truck but it still adds up to $600 per month in gas. So I am spending about $1500 in my vehicle alone not including maintenance etc.

It seems to be the only place we can realistically cut to balance the budget so to speak.

There is very little I need a truck for around here but when I do it is indispensable. Although I thought I would, I do not find my self hauling back stuff from auctions. The truck comes in handy when I need to make a trip to the dump for something. It was handy for me to take my bucket in to get a quick attach plate welded on and to pick up a heavy insulated dog house that a buddy built for me. A neighbor gave away 15 square bales because they were a year too old for her horses. Probably 1/2 a dozen times a year - you get the idea.

Other than that, it is my daily driver to work and a heck of a nice daily driver it is. A pleasure to drive on country roads in inclement weather. We do get some weather up here in the Toronto are and sometimes some not so well plowed roads.

I've done some research and found that I could sell the truck for about what I owe on it. Realistically, I don't see myself driving a little Honda Fit to work so I will step down to a small SUV like a Subaru Forester or so - about 50% more fuel efficient. It would cut down on what I pay a month by about $300. I could buy a used one about as old as my truck and get it paid off in about as much time as there is left to pay off my truck.

At the end of the day I estimate I would save about $500 a month.

Of course, I am going to be mighty dissapointed on those days when a truck could be very useful! I have found that I could rent a pick up for $110 for the weekend taxes in so that is always an option. I have pondered purchasing a used old pickup for the farm but I worry it won't get used much and will just decline in the weather. I find vehicles don't do well when they sit around and don't get used.

What do you guys think?

My .02, decide between what it is you need, and what it is you want.

You need dependable transportation, maybe back off on the auctions. Hobby farms are a money pit and it's hard to pass up an auction when they have something you "need" for the farm. Since you've stated the farm you are keeping, perhaps you could look closer at what you spend on it beyond the necessities.

Renting a truck when needed seems like an expensive option. Maybe pay a buddy to use his might be a lesser cost (i.e.: full tank of fuel) with a 12 pack thrown in. You would have to pay for fuel in the rental anyway.

I know for me, I could shave hundreds off my monthly expenses by cutting out the "wants".

Good luck.

 

[schmism]

BasicaLLY what i and others agree, but i do have to argue with your prices, i have never seen a 1K$ 1994 f-150 or a $6K civic. For a $1K around here you would have to buy a 25-30 year old beat to $h17 f-150.

ok $1500 for an early 90's f150...easy to do in my area... quick check of CL in my area lists like 20-30 decent options. another 50+ that could be had for less than half that but "need work"

CL lists 40+ decent "honda" between 6-7K in my area. both private party and sealerships. most years are early 2000. "toyota" lists another 40+ cars including a handfull of trucks.. which would satisfy both options if pick one with a 4cyl.

needless to say my numbers are very reasonable for private party sales of decent used cars.

 

[mjncad]

I have a friend who lives in Toronto, and she pays $2,500 a year in auto insurance for a Nissan Versa. The price of living in the city. On the other hand, we have a 10-year old full size pickup, a 5-year old CRV, and a 15-year old Accord and pay about $1,400 a year to insure them. all the vehicles are paid for. Even though the OP lives outside Toronto, he may be paying exorbitant rates due to where in Canada he lives.

Since the OP wants to maintain a rural lifestyle, that means he needs a pickup of some sort. My guess is he needs to find a way to make his hobby farm earn some or all of its keep, or cut back on the non-essentials of the farm until finances get better, even if that means not farming; but living on a quiet piece of property whose sole purpose is to provide privacy.

 

[CinderSchnauzer]

I you want to get out from under that $800 / month truck payment, but still must have a newer truck (instead of a trailer to pull with your van) check out something like this on a 2011 Sierra / reg cab / 2wd.

Purchase Financing Payment
$122 Bi-weekly
84 months
$0 Down Payment
$1,450 Freight

Even adding tax etc you're still probably under $4K per year compared to $9,600 with the current truck. May not be as fancy BUT.............

Ford / Dodge may have something similar.

 

[clemsonfor]

I hear all this talk about selling the newer F-150 and getting an old truck and an old daily driver. If the older replacement pickup is going to be on the road at all, it's another plate to purchase and another vehicle to insure. Is that really going to be that much of a step in the right direction? Personally, I don't think it's a good idea to have an old clunker as a long distance daily driver. The other aspect of high insurance rates is paying for a high annual mileage commute. When I retired, my mileage went down to less than 4K miles a year, and the insurance rates looked real nice after that.

You missed many of our points. The older say 1995 truck is to sit at the house for hay trips lumber trips pulling garbage trailer pulling stumps hauling stuff in general for his farm. The second car is what he would drive on the road to work 30 miles each way. Look at my sig line. I have all those vehicles tagged and insured. The K10 is a farm use truck as thats its primary duty. All 3 of the vehicles besides the toy do not add up to the cost of the annual tax and tag of the toy (yes im talking annual tax and tags on all three). In this state an 09 f150 will cost you at least $300/yr esp if its a loaded one like he has.

You will now say yes but those clunkers require maintence, i do it all and what i dont or cant do i have done when i can afford it, after all i have extras. I dont put into all these 4 vehicles a year even 2 of his payments a year.

I also said the cheapest solution would be to buy a honda civic or accord and a small trailer to haul the stinky garbage water bags of trash. That would be the cheapst solution. And i would get a civic or accord from the late 90's with 150K on it so its fully depreciated

 

[RayCo]

I also vote for selling the truck. If nothing else, having a car payment sucks, as a new vehicle is the worst investment you can make. I once bought a 3 year old vehicle on a five year loan. After the novelty of the vehicle wore off, it sucked to pay for, and I don't think I'll do that again.

So, I'll add another vote for selling the truck and getting an SUV and a trailer. Unfortunately, a 1/2 ton SUV won't help with your gas bill much, so I guess you wouldn't want to get that. My wife has an 02 GMC Envoy, and the gas mileage in that is noticeably better than a 1/2 ton truck. (Although the tank is also noticeably smaller!) I also think that it would be capable of towing 98% of the stuff that I'd want to tow. For the other 2%, I'd hire a rollback.

Spending money every month on buying something that depreciates as quickly as a vehicle really sucks. Hard.

 

[CinderSchnauzer]

So, I'll add another vote for selling the truck and getting an SUV and a trailer. Unfortunately, a 1/2 ton SUV won't help with your gas bill much, so I guess you wouldn't want to get that.

Wife has a VAN - paid for - don't think he needs a SUV to tow a small trailer and certainly not as a commuter vehicle. A small utility trailer that holds as much as a 1/2 ton is relatively inexpensive (even new) and less used. Most current vans are capable of towing say 1,500 lbs.

 

[Soundguy]

I hear all this talk about selling the newer F-150 and getting an old truck and an old daily driver. If the older replacement pickup is going to be on the road at all, it's another plate to purchase and another vehicle to insure. Is that really going to be that much of a step in the right direction? Personally, I don't think it's a good idea to have an old clunker as a long distance daily driver. The other aspect of high insurance rates is paying for a high annual mileage commute. When I retired, my mileage went down to less than 4K miles a year, and the insurance rates looked real nice after that.

I read it as a single old er vehicle.. which means he could xfer the plate and the insurance.. thus a net savings..

soundguy

 

[clemsonfor]

Wife has a VAN - paid for - don't think he needs a SUV to tow a small trailer and certainly not as a commuter vehicle. A small utility trailer that holds as much as a 1/2 ton is relatively inexpensive (even new) and less used. Most current vans are capable of towing say 1,500 lbs.

Snauz makes a good point that i forgot. His wife owns a mini van. Yea its not cool to roll up to lowes in a van to load your 4x8 triler up, but that 4x8 will haul more than a ranger or s10 behind that van and easily haul equal to a 1/2 ton bed capacity. So i would get a CL trailer to tow behind the van and get a late 90's honda civic. And if a year you cant take not having a truck, buy you a $3K one get an older 1/2 ton 2wd or a ranger and laugh at all the others.