Dave Says

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Time to pay it off! (September 2013)

Making It Through Medical Leave (July 2013)

Should We Ever Buy A House? (January 2013)

Be Tightfisted Until The Crisis Is Over (January 2013)

Paying the parents (December 2012)

Sallie Mae vs. selling the car (December 2012)

What’s the worst that can happen? (December 2012)

Letting them in on the secret (December 2012)

Not ready to combine finances (November 2012)

What The Law Will Allow (August 2012)

Making The Right Choice (August 2012)

Baby comes first! (August 2012)

Get the brother-in-law out! (August 2012)

Trust Broken After Cosigning (April 2012)

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Do I Tithe On An Inheritance (March 2012)

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Where Do Toys Fit In The Baby Steps? (March 2012)

Guilt and Cynicism (March 2012)

Where Does Debt Go When Filing Bankruptcy? (December 2011)

Where Does The Donation Go (December 2011)

Ready to Buy (December 2011)

Intensity Hurting The Marriage (December 2011)

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Not Quite Dearly Departed… (November 2011)

Enough For Retirement? (November 2011)

It’s Just Another Gimmick (November 2011)

Will Paying Early Help? (November 2011)

Bargain Master! (November 2011)

Sisters Should Have Asked! (August 2011)

Buy Now Or Wait? (August 2011)

So, He Knows How To Manage Money? (August 2011)

Girlfriend’s Money Problems (August 2011)

Smaller Down Payment? (August 2011)

Why Can’t She Get Another Job? (August 2011)

Landlord Wants Protection (June 2011)

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Should I Reduce My Tithe? (June 2011)

Closing The Account (February 2011)

Dishonesty Is Not The Best Policy (February 2011)

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New Car In A Bad Situation (February 2011)

Drop Coverage? (November 2010)

Can't Pay For Her Wedding (November 2010)

Does Pride Keep Us In Debt? (November 2010)

Not Time For A Reunion (November 2010)

You're Being Hoodwinked! (November 2010)

Buying Used or New? (November 2010)

Is There A Recommended Vacation Percentage? (July 2010)

Don’t Do it for the Gas Mileage (July 2010)

Investing Strategy for Retirement (April 2010)

Insurance? (April 2010)

Triple Play Investing (February 2010)

How Do I Get Started in Real Estate (February 2010)

Published: December 2012
Sallie Mae vs. selling the car  

Dear Dave,

I make about $70,000 a year, and I have $9,000 in student loan debt. I also have a car that would bring enough to allow me to pay off the student loans. Do you think I should sell?

Dave

Dear Dave,

Nice name! Seriously, there are two questions I ask when it comes to selling a car to pay off debt. One, is the value of your car and other vehicles—including motorcycles, boats and such— more than half of your yearly income? If so, then you have way too much money wrapped up in things that are going down in value. So, unless you’re talking about a super-expensive car, I’d say the answer on this one is no.

The second question is this: Can you become debt-free, except for your home, in 18–24 months without selling the car? If the answer is yes, then I wouldn’t sell the car. There’s no reason to sell your car in this scenario, unless you just really hate the thing or need different transportation.

In this case, it sounds like your car is a reasonable percentage of your income. I’d hold on to it and just save like crazy to kill off this student loan debt. With your income, it shouldn’t take more than a year. Good luck, Dave!

—Dave

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