QuestionI need some sound financial advice please:
I live in Alabama, and our gas price average is around $3.60 right now. My wife and I have two sons, age 9 and 7. We put an average of around 12,500 miles on our two vehicles per year. That would be 12,500 on a Toyota Sequoia and 12,500 on a Toyota Tundra.
Last spring I purchased a 2002 Toyota Sequoia (very nice car with only 37,000 miles). At that time our combined income was approximately $24,000.00 more than now (we took jobs with less demanding schedule to spend more time with our children). I paid approximately $21,000.00 for the sequoia. Our payments are $350.00 per month. My vehicle is a 2000 Toyota Tundra 4x4 which is paid for with 105,000 miles.
I have become quite paranoid lately about our terrible gas mileage and the prospect of gas not getting cheaper in the future. How can i know if it is wise for us to keep what we have or try and find a more efficient cost wise family vehicle as well as a truck for myself?
I have looked lately at a Toyota Highlander, GMC Envoy and Ford Freestyle. We like the SUV and 3rd row seating. We dont want to "give" our car away (sequoia), but we believe that our value is dropping through the floor. With our income less than last year, would we be wise to take the loss on the sequoia and look for more efficient SUV? Or will we be making a mistake in the end because of what we have invested in the sequoia?
What about my truck? Gas mileage is terrible, but it is paid for? How do I determine the smart thing to do for my truck as far as a more efficient vehicle or keep the truck that is paid for.
Thank you for any advice that you can give us.
Charles and Kim Nails
AnswerIn your situation, I would keep the truck, if it runs well and you keep it maintained, it should run a lot longer, I know the gas mileage is not good on it but how much gas could you buy on what it would cost to replace it with a more fuel efficient vehicle, especially since fuel efficient vehicles are selling at increased prices, and the decline in the value of your truck.
The Sequoia, on the other had is a little perplexing for me, I know it is a Toyota but 21000 for a 5 year old one, sounds high that is spilled milk now. It is going to be hard if not impossible to trade this vehicle in, which has dropped like a brick in value, and buy something that gets good gas mileage, the freestyle is an excellent choice by the way, that has actually risen in value.
One thing to consider however is that any vehicle barring some classic models, drops in value daily, so to think of it as taking a loss on it is not the right way to look at it, since you would take a loss on any vehicle you purchased. The simple fact is vehicles depreciate, some faster than others depending on market conditions, that is why most people in the business lease them. Which may be a good choice for you since it does not appear that you drive very many miles. You could roll in any negative you have on your sequoia and at the end of the lease, you turn in the vehicle and start over with no negative other than any damage that is on the vehicle, no matter what the market conditions. Most peoples first response to leasing is that they don't own it, technically, right now you don't own your sequoia, the bank does, you take all the risk on the value of the vehicle and you owe the full amount regardless of if the vehicle goes down in value, on a lease, the bank takes all the risk of what the vehicle is worth, you just own the payments for the part of the car you use.
hope this helps
