Dear Mary: I bought a car I can no longer afford. Thanks to your book, "Debt-Proof Living," I have made changes in my life and finances, but I still have some problems because of my car. I have put it up for sale, but I owe more than it's worth. How do you sell a car when you don't have the title? And how do you get out from under a car loan you can't afford? — Kelly
Dear Kelly: First, call your lender to find out your exact payoff and the procedure for transferring the title to a new buyer. Next, go to a site like Edmunds or Kelley Blue Book to determine a realistic amount you can expect to get for the car. Check local listings to see if that number squares with what similar cars are going for in your area.
Now determine how much you will need to pay off the loan once you secure a buyer. Go to your credit union or bank and tell them your plan to sell the car and why you need a short-term, unsecured signature loan to make up the difference between what you owe and the sale price you expect to get. I know this represents new debt, but it will be required for you to finally get out of this.
Once you have a buyer, you will need the proceeds of that new loan together with the buyer's money to clear the title so it can be transferred.
Once the car is sold, you will not be free of the debt, but you will have a much smaller loan. Even though the new payment will be a lot less than your old car payment, continue to pay as much toward the new loan each month as you did on the old loan. Doing this will get it paid off quickly.
Don't let the fear of the unknown deter you. It may sound like a big fat hassle to sell a car for which you do not have the title, but people do that every day. If you take it one step at a time and make sure everyone involved knows what you are doing, you'll be just fine.
You don't mention your plans for a replacement car, but I suggest you forego that for now and opt for public transportation. Or a bike!
Dear Mary: I am in a sticky situation. My husband and I have been trying to get out of debt by using your debt-proof living plan. Our emergency fund is slowly gaining ground. Here's the problem: My in-laws are horribly in debt, having lost their business and their home. They called my husband recently asking for a $1,400-loan to buy a car. We don't have that built into our plan, so he put it on our credit card. He did this because he feels he needs to help his parents. I am so mad! I love my husband dearly. I just don't know how to deal with this. — Nancy
Dear Nancy: I understand your angst, but I don't think this is the hill you want to die on. The deed is done, so it's time to back off and trust the decision your husband made. Worst case, this will add a few more months to your get-out-of-debt-plan. Best case? They make a full repayment.
In spite of everything, it sounds to me like you've got a pretty good guy.
Would you like more information? Go to EverydayCheapskate.com for links and resources for recommended products and services in this column. Mary invites questions, comments and tips at EverydayCheapskate.com, "Ask Mary." This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of EverydayCheapskate.com, a lifestyle blog, and the author of the book "Debt-Proof Living."