One of the things that put me into the debt crunch I’m in today was something that happened to me shortly after I was married. While I was single, I lived at home, saved my money in stocks (just in time for the bubble burst), 401k, savings accounts– all over the place.
When I got married, a lot of the extra cash I had on hand went into our honeymoon– and a little over. We took care of that debt, and went to work on her school debt. After having paid that off, we had two cars, an apartment, and a job.
We planned on having children, and knew that neither of our sports cars would be good for a car seat. Seeing as my car was the better of the two, and hers was having chronic problems, we went into the Saturn dealership and talked prices with the friendly guy there. We wanted something with four doors, and we looked through the lot.
First, we were silly. We opted for a car based on color and that it had three days left on its warranty. It was a thousand dollars more than the blue one next to it who was a week over its warranty.
Next, we let the nice guy talk us into a trade. He drove my wife’s car, and told me that he could give us a whopping $300 for it. He said that it would only be good for parts, and that we weren’t going to get better. We actually believed him. A few weeks later, the same car was driving up and down the street– and was in for repairs at a local mechanic– but we were in our new four door.
Later, when we learned our lesson and decided to get out of debt, we had two rules.
- We would not go into any more debt for a car.
- We would sell the cars ourselves.
And we did. I listed one car at a time online. The first car I listed for a thousand more than it was worth in the book. It was, after all, my second sports car (that story another time). Some parents came by looking for a good first car for their child. The father liked to barter, and I met him halfway. So I got $500 more than the Internet said it was worth.
We then went to buy the other car with a 0% credit card (I wasn’t fully converted, obviously!) and put the second one up for sale. Again, I listed about $1,000 high and the man came and took it for a drive and bought it that same day, didn’t even dicker.
It was then that I learned– and hopefully you’ll learn– never go to a dealership with a trade in. Sell it yourself.