Confessions of a Laid-off Lawyer

Just Your Average Joe Blogging Away His Debt—In One Year or Less

And Done

with 7 comments

Total Black: $543.66
Total Red: $247,910.21

Finally.  I paid the remaining balance on the new car today.  Correction—I paid the remaining balance on the down-payment for the new car today.  Picture doesn’t look as bad as I worried it could have been.

First, the line on the auto loan retail purchase agreement for “State, County, & Road Taxes” is empty; there’s no sales tax in the Virgin Islands, so that’s one cost increase that I side-stepped.  Second, by making a down-payment that was 34% of the total purchase price (after fees, etc.), I’ve overpaid, so to speak.  As it was explained to me, with the full coverage I took out on the car, if I were in an accident tomorrow and totaled the jeep, whatever amount the insurance company paid, it would cover the remaining balance on the car and then some.  So I needn’t worry about being without a car and also saddled with a Third, by buying a new Jeep, and a 2009 one, the warranty includes a lifetime Powertrain warranty.  2010 models only have a five-year coverage.  Fourth, the balance due is only $18,498.00.  That’s hardly something to use “only” with, but still . . . it’s not $26,000.00 due and I didn’t have to come up with $8,000.00 or $10,000.00 for a used vehicle without a warranty and nowhere to turn but a local mechanic if something went wrong.  And lastly, the monthly payment will only be $478.83—payable at the Jeep dealership here on island.  Plus I get a ten-day grace period each month before any late fees are tacked on.  Oh—and there is no prepayment penalty.  So although I do not have to pay $500 a month, as allocated in Breakdown—I’m sure as hell going to try to.  Ah—and the truly last thing—tags, plates, registration, etc.—all included.  Not bad all things considered.

Now just to get it paid down.

The APR unfortunately is 18.9%.  Much less than my credit cards, but nothing to sneeze at.  I’m not sure how the APR is calculated though.  Credit cards, I believe, engage in some shady math designed to calculate your balance for the year divided by twelve months and then add that amount on monthly.  18.90% of the remaining balance: $18,498.00 is $3,496.12.  So . . . do I add that amount on to the eighteen thousand and then add both into total red? Just add the current balance due to total red and wait until next July to account for the annual percentage rate?  Not sure.  I thought perhaps when I got the paperwork I’d also be able to set-up an online payment system.  That’s not going to happen.  The lender who financed my loan is out in Utah somewhere, and though it has an A rating from the Utah Better Business Bureau it doesn’t have an online account system to see in real-time what your current amount due is.  That’s unfortunate because I really like the Bank of America My Portfolio software; it pulls your current financials in and syncs all your accounts.  You can add manual accounts—debt owed my mother, for example—but those can’t account then for periodic changes, fees, and so on.  One flaw is that it isn’t always 100% accurate.  Sometimes a lag.  Like today.

Total black and total red are down.  Total red is down because I sent $2,400.00 to the AmEx card yesterday as noted in Trifecta.  The software is only now recognizing the reduced balance.  Except I charged that $2,400.00 back up on the card.  By tomorrow total red should shoot up by $2,400.00.  Total black is down because I paid $1,100 on the debit card.  If I had known that the debit card had arrived, I wouldn’t have sent the money to the AmEx card.  But I was feeling pressured to get money into some source whereby I could pay something on the car.  At least wiping the AmEx balance out once can clean the plate, so to speak.  The remaining amount above in total has been mostly allocated to that Visa credit card that was closed.  Once the payment posts the balance on that card will be down to $4,000.00 even.  The line of credit should be available tomorrow for my mother to pull  on.  But Bank of America won’t be open on Saturday in Scranton.  So we’re stuck waiting until Tuesday because of the holiday.  At least I sent the IRS something.  I just wish I could send them more now.

7 Responses

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  1. That is an enormous APR. If that is monthly compounding, it’s even worse.

    Have you thought about a consolidation loan? You are getting killed by interest.

    Anonymous

    July 3, 2010 at 00:33

  2. Car payments use compounding interest just like credit cards. There are many online calculators that will show the total amount you pay back. Or you could take your monthly payment $478 and multiply by 60 months. Total repayment = $28,680.

    I agree that the interest rate is really high. For a new car AND a huge down payment that seems crazy. Usually new car loans are well under 10%.

    Of course if you’re only keeping the car a year and selling it at the end of the clerkship, none of this matters.

    Anon

    July 3, 2010 at 08:33

  3. I thought you had to come up with $7,100 by June 28 for the IRS to avoid a levy. Is that what you sent them already? I really wouldn’t mess around with the IRS. If they’re looking to levy your property, you now have a shiny new car in your name. Maybe it would have been smarter to put it in your mother’s name until your tax problems cleared up.

    Anon

    July 3, 2010 at 20:21

  4. Umm . . . sort of . . . I guess. I agreed to a payment plan and had to pay $7,100.00 by the 28th. But that was just a date picked by the IRS representative with whom I spoke. I’ve already paid off 2007 taxes via OfficialPayments.com. Because of the holiday, however, my mother can’t get the additional cash out and into my bank until Tuesday. So on Tuesday, I’ll pay 2009 taxes and a portion of 2008 taxes, whatever amount equals 2007 + 2009 – $7,100.

    I can’t imagine the IRS really getting that upset that I’m a week late. They’ll probably just tack on fees if anything.

    Laid-off Lawyer

    July 4, 2010 at 11:06

  5. In the grand scheme of tax debt, this one isn’t that impressive. I doubt we’ll see federal agents roughing LL up any time soon.

    Frankie

    July 4, 2010 at 14:35

  6. Paying $7,100 still leaves him with $25,000 in tax debt. Not something the IRS is going to overlook.

    Anon

    July 4, 2010 at 17:29

  7. OMG you are right. I hope he can keep blogging from debtor’s prison.

    Frankie

    July 4, 2010 at 17:51


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