23-Year-Old Earning $83k Owes $34k on a Car He Bought After Loss. Here's Dave Ramsey's Solution

A 23-year-old became debt-free, then bought a car after losing a close friend. The purchase was meant to help with grief, but it created new financial strain. The car loan totals about $34,000 for a vehicle worth about $30,000, with a $795 monthly payment at a high interest rate. Additional balances include $5,900 in credit cards and $7,000 in personal loans. With a baby due soon and a stay-at-home partner, the plan is to sell the car, cover the remaining lien gap, and buy a cheaper cash vehicle. The freed $795 monthly payment is then directed toward the unsecured debts to eliminate them quickly.

"“That car is tied to psychological trauma for you. So every time you get in it, every time you write a check for it, you know I got ripped off because my heart was broken and I made a bad decision. I'd want that reminder out of my life.”"

"“And with that, an $800 a month raise.”"

"“Keeping the car through August means roughly four more $795 payments, most of which is interest on a depreciating asset that is already worth less than the loan. Selling now requires scratching together about $4,000 to clear the lien, plus another $2,000 to $3,000 for a cash beater, per Ramsey's suggestion of 'a $2,000 or $3,000 car that you pay cash for.'”"

"“Call it $7,000 out the door, painful but finite. In return, Andrew frees the $795 monthly payment. Aim that freed cash flow at the $5,900 in credit card debt and $7,000 in Upstart personal loans, and the unsecured pile is gone in a handful of months.”"

Read at 24/7 Wall St.