How Can I Convince My Boyfriend To Buy Fewer Gifts This Holiday Season?

Question: My boyfriend is driving me crazy. He agreed that we would both tighten our belts so we can save to get married and get a house and start a family. For the most part, he has been good about this. Then the holidays roll around. 

He believes you need to spend a lot of money on gifts for everyone. When I remind him of our plans, he says, “But these are our friends and our families, I’m not going to be a Scrooge to the ones I love most!”

He also says it’s no big deal to run up our credit cards, because we can make the minimum payments, as little as $15 or $25 a month. If it gets really bad, he says we can sign up for programs that will cut our monthly payments by half. And if THAT fails, we can declare bankruptcy and just start over with a clean slate.

I know he’s full of it, but I don’t have the facts to explain it to him. Can you? He’s a good man the rest of the year, but the holidays might actually break us up.

— Katrina in Michigan

Howard Dvorkin answers…

The holidays are marketed as a time for families to come together. Sadly, I’ve seen them rip families apart — precisely for the reasons you just described, Katrina.

Your boyfriend proves that a little financial knowledge can be a dangerous way to live. Let me give you the facts…

Minimum payments equal maximum cost

For Halloween, Debt.com compiled an interactive map called Credit Hell. It shows you just how long it takes to pay off the average credit card balance if you only make minimum payments, and it’s broken down by state. For Michigan, it would take 16 years and four months — and in 35 other states, it takes longer.

When you make minimum payments, you rack up huge interest charges. Sure, you don’t have to pay up right now. You will pay even more later.

DMPs are effective but not easy

When your boyfriend mentioned cutting his monthly credit card payments in half, he was most likely referring to a debt management program. Called a DMP for short, these are administered by nonprofit credit counseling agencies and can reduce your payments by 30 to 50 percent. They’re powerful tools, but they’re not panaceas.

I suggest you consult the Debt.com report, Debt Management Program Pros and Cons. One big con: You can’t open any new credit cards while you’re enrolled in a DMP. That makes sense, because credit card spending is what got you into trouble in the first place, but there are similar restrictions you need to know about.

Bankruptcy is serious business

Likewise, I suggest you read — or insist your boyfriend read — The Pros and Cons of Bankruptcy. From student loans (which aren’t discharged) to your credit score (which will take a hit), bankruptcy is a last resort. Thinking of it as an easy way out is like driving your car recklessly because, “Hey, I have airbags to protect me if I crash!”

 If none of this sways your boyfriend, Katrina, I have one idea that’s been known to work wonders: Talk to his parents. I bet you they’d be horrified by his approach to holiday spending, and they’ll be the first to tell him: We love you, not what you buy us. Take us to a movie or a reasonable dinner, and we’ll be happy.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

We Might Win $100,000. What Should We Do With It?

Question: My husband is now part of a class-action lawsuit. It looks like he’ll win around $100,000. He wants to use it to buy a $92,000 condo near us and then spend $8,000 fixing it up so we can rent it.

He says this way, we can make much more than $100,000. I want to use the money to pay off our mortgage and maybe even our credit cards, since we have around $10,000, I think, on five or six cards.

My husband says this is short-sighted, and that every rich person has debt, and that wealth is simply juggling your debts. We’re at loggerheads. What do you think? 

— Marilyn in Lousiana

Howard Dvorkin CPA answers…

If you really want to know what I think, Marilyn, here it is. You both need to take a deep breath and consider what you’re proposing.

Here are the troubling signs I see from your email…

  • Lawsuit settlements are often taxable. This being taxes, it get complicated. For instance, if the settlement includes money for “pain and suffering,” that’s not usually taxed because the IRS might consider it a reimbursement for your injuries. However, the point is: You need to ask before you count on the money.
  • Lawsuits are rarely slam dunks. Right up to the end, not only can the verdict change, but so can the terms. I’m concerned that you might be counting your settlement before it’s sealed.
  • Credit card debt is one figure you can know for sure. You say you “think” you’re carrying $10,000 on “five or six” credit cards. Before you decide what to do with new money, you need to be sure what’s happened to your old money — right down to the penny.

For the purposes of illustration and education, let’s assume you get a cool $100,000.  If the condo costs $92,000, I’m assuming your husband hasn’t factored in closing costs, insurance, and other expenses. Just selling a home can add $15,000 in hidden fees. Even if buying this condo is half that, you’re already over budget if you need to make $8,000 in renovations.

Now let’s turn to paying down your existing mortgage. You don’t mention what your interest rate is, but let’s assume it’s 5 percent. You also don’t mention what the interest rates are on your credit cards, but the national average right now is hovering around 15 percent.

I’m sure you see where I’m going with this. Paying off your credit cards will save you around 10 percent more than paying off your mortgage. If you really want to know what I think, Marilyn, I suggest paying off your credit cards with whatever money you may be awarded.

Next, I’d make sure I had at least three months of living expenses in an emergency fund. If hurricanes Harvey and Irma have taught us anything, it’s that a natural disaster can cost a lot of money.

Finally, with whatever settlement money is left, I would look at other debts I have: an auto loan, student loans, personal loans. These I would pay off from highest interest rate to lowest. Finally, I might indeed pay down some of the mortgage.

Whatever you do, Marilyn, I urge you to gather facts and make dispassionate decisions with your husband. Facts like I’ve outlined here can help avoid a fight over this windfall — if it becomes a reality.

Even if it doesn’t, you can use this experience to still do the things I’ve outlined here.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

Where Is the Safest Place To Live In The United States?

Question: So Hurricane Harvey and Hurricane Irma trashed two of our biggest states. Wildfires are doing the same in California, which is our biggest state. Last winter, there were blizzards where I lived that killed people.

Every time there’s a big natural disaster, the news shows homes that are destroyed. I hope these people had insurance, but even if they did, the deductibles are sky-high. My homeowner’s insurance deductible is $10,000 because I can’t afford any less than that.

I’m a computer programmer who works remotely. So I can work anywhere. I want to live somewhere where I don’t have to spend a lot of money fixing up after Mother Nature gets mad. Any ideas?

— Mac in Vermont

Howard Dvorkin answers…

Natural disasters are one of the leading causes of catastrophic debt. The others are divorce, illness, and accidents. If they all have one thing in common, it’s this: They can happen to anyone at anytime.

As a financial counselor for more than two decades, I’ve spoken with Americans who have been wiped out in natural disasters all around the country. So I had the same question you did, Mac. I asked Debt.com researchers to answer it.

They came up with this animated map…

An animated map of extreme weather events in the United States from 2005-2015

As you can see, there’s really no place safe from hurricanes, blizzards, tornadoes, wildfires, earthquakes, floods, avalanches, mud slides, and sinkholes. Any of these can destroy a home.

Even if you could find such a place, you might end up paying more to live there in other ways. Debt.com has written about the most expensive ZIP codes in every state in the nation, and if one of them should have no natural disasters, you may not come out ahead.

Better than trying to avoid natural disasters is preparing for them. While the federal government has helpful information on how to physically get ready for each type of disaster — see Prepare for Disasters and Emergencies — preparing financially is much simpler.

Basically, you need an emergency fund. Ideally, it should have three months of living expenses. Realistically, that’s not possible in a nation where the total credit debt is nearly $1 trillion. That’s $16,245 per cardholder.

That’s why Debt.com ran this brazen, definitive headline earlier this year: None of Us Are Ready for an Emergency.

Mac, I don’t know what your debt situation is, but if you don’t have cash laying around to create an emergency fund, read this: How to Prepare for and Deal With an Income Emergency.

Finally, let me talk you off the ledge. Financial counselors like me talk so seriously about all debt disasters because we want Americans to be prepared. Perhaps we’re trying to scare them into action. However, we don’t want to paralyze you, either.

The statistical odds of your home being wiped out by a natural disaster are slim. More likely is some damage at some point during your life. So don’t give up by telling yourself, “I’ll never save three months of living expenses, so why bother?”

Anything you sock away for later can help you ease a debt disaster. If you start now, by the time bad luck catches up to you, it won’t keep you down for long.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

Am I An Idiot For Wanting To Lease A Car?

Question: The Mercedes C-Class is a hot-looking car, and I can get a lease for 36 months at $399 with $4,193 down. My girlfriend (who might be my fiance one day) says that’s a big waste of money.

But here’s the thing: A 2017 C-Class goes for almost $40K. I’m getting one for three years at around $18,500. So I’m looking at what I save, while she’s only looking at what I’m spending. Who’s right?

— Aiden in Florida

Howard Dvorkin CPA answers…

When personal finance experts like myself gather, we agree this is one of the most common questions we’re asked. Buying a car versus leasing one has been a hot topic these past few years, because leasing skyrocketed.

In 2016, 31.9 percent of all new vehicle sales were leases — almost a third, which still amazes me. However, the pace is off this year, according to the car experts over at Edmunds. They say leasing has dipped to 31.1 percent.

“Leasing remains a popular choice among car shoppers, but the era of steady growth is over,” says Edmunds executive Jessica Caldwell. “This year we’re seeing a drop-off in trade-ins going toward leases, signaling that the pool of people opting to lease is shrinking.”

I think this is a good trend, because leasing only makes financial sense in a very few situations. It doesn’t in yours, Aiden.

I followed up with you after receiving your email and learned you need the car to drive to work, which is a 40-mile round trip. That means you’ll drive 10,000 miles a year just for your job (figuring 50 weeks a year).

The lease you’re considering penalizes you for more than 12,000 miles a year. Are you really certain you’ll only drive 2,000 miles a year that aren’t for your commute? That’s a mere 5.5 miles a day.

Also, you tell me you like to take your two wild-and-crazy Great Danes on road trips. Why does that matter? Because in your lease is a clause that says you’ll return the car in “original condition, less normal wear and tear.” You admit your dogs like to chew on upholstery. You’ll pay a pretty penny for that.

Finally, you admit you really want this car not for financial reasons, but because you’ve simply “fallen in love with it.” I’m no expert in love, but I as a CPA for more than two decades I know this: Love can be expensive, especially when it’s unrequited. No car will return your love.

Bottom line, Aiden: You’re not an idiot. You’re a human being. It’s natural to be lured by a hot set of wheels. However, if you love your girlfriend more than you love a car, listen to her in this case.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

How Can I Save Major Money On Minor Surgery?

Question: I’m a 45-year-old school teacher and don’t have health insurance, but sometime in the next few months, I’ll need to get a painful plantar wart removed. When should I sign up for health insurance so I can get treated without paying for extra months when I don’t need to be treated? And can I drop the coverage right after? Is that what Obamacare is?

— Beth in New Hampshire

Howard Dvorkin CPA answers…

I don’t often write about healthcare. It’s a complex topic, and as a financial counselor, it’s difficult to advise people on how to best spend and save on their health coverage for their specific situation.

In your case, I can only tell you this: Please stop looking at health insurance like it’s investing in stocks. You can’t time the market, and you certainly can’t time your healthcare.

Sadly, a study last month from the research firm Bankrate found in the past year, a quarter of American families “have decided not to seek medical attention when they needed it because of the cost.” Of those, 13 percent had no health insurance.

The same day that study appeared, so did another from GoBankingRates, which showed prescription drug prices are rising faster than inflation. In 2016, drug prices soared 10.7 percent, and “pharmacy costs for employer health insurance providers have increased 21 percent in the past 10 years.”

That’s costly, because the same study showed that nearly half of all Americans filled a prescription every 30 days between 2009 and 2012.

What does this mean for you, Beth?

It means you need to do some homework. I’m unsure from your letter if you’re paying the penalty for the Affordable Care Act or if you had an exemption. I also don’t know if you have a job where health insurance is offered but you didn’t take it.

If you teach at a public school, you have a healthcare plan available to you, and I urge you to sign up for it — even if you think it’s costly. It’s better to cut spending elsewhere to have at least minimal coverage. If you think a plantar wart will be pricey, other procedures are far more expensive. I don’t wish to be morbid or cynical, but if you suffer a chronic illness or lingering pain from a car accident, you’ll really wish you had that insurance.

I also don’t wish to be impolite, but at your age, Beth, you need to have health insurance. While 25-year-olds may be able to skate by with no coverage, not so for 45-year-olds.

As a business owner myself who has struggled to find affordable plans for employees, I realize the burden of those monthly payments. I urge you to read this Debt.com story about healthcare expenses and to consult the human resources department where you work. There’s no easy answer, Beth, but there are answers, tough as they may be.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

How Do We Prepare For The Next Recession?

Question: My husband and I have read many articles by you and other experts that predict a recession is coming soon. We’re very scared about this, as we barely survived the last recession. We still haven’t paid off all the debts we incurred during that time period.

My husband read this article on the Fox Business website and wants to invest in silver stocks. He wants to divert the $50 a month we put into an IRA we have for retirement. This doesn’t feel right, but I can’t explain why it feels wrong. What do you think?

— Regina in Texas

Howard Dvorkin CPA answers…

When I originally wrote we’ll suffer another recession during President Trump’s first four years, I was worried. I wanted Americans like you, Regina, to know what might be coming — and get ready for it. However, I didn’t want to cause panic or even angst.

I have a formula: Preparation plus time equals inner peace.

So you can indeed prep for the next recession, but you don’t need to take hasty risks like investing in precious metals. Only a few months ago, I told another husband not to buy gold on his credit card. Now I’m telling your husband not to stop saving for retirement to buy silver.

What I wrote about gold also applies to silver or any metal: Prices fluctuate wildly, they’re impossible to predict, and you can lose your entire investment if you’re not careful.

Even worse, you seem to imply, Regina, that you still have credit card debt that you’ve been carrying since the last recession. Your first priority should be paying that off. If your husband is unconvinced, tell him to think about it this way…

  • Silver has a 16 percent annual rate of return, although that can fly in either direction at any given time. You might make 200 percent, or you might lose 100 percent.
  • The average interest rate on a credit card for someone with good credit is around 15 percent. It balloons to 21 percent for those with fair credit. It sounds like you might be somewhere in the middle, Regina.

…so paying off your credit cards will put just as much money in your pocket as investing in silver, and without the risk.

Investing in the stock market is something you should only do when you have money you don’t desperately need. Even then, it’s folly to buy individual stocks or even stock funds that are invested so narrowly in industries you and your husband know nothing about.

If you really want to prepare for the next recession, Debt.com has a special report that shows how Americans recession-proof their finances. Unlike that Fox Business story your husband showed you, Regina — which ended with a pitch to separate you from your money — the Debt.com report is free.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

Ask the Expert: Jump On The Trump Train?

Question: The stock market is going crazy since Trump got elected! When I was first out of college, there was the big stock market boom of the late ’90s, and I missed it because I didn’t get involved. I told my wife I want to take our savings, about $7,500, and invest in the hottest stocks.

She thinks this is a terrible idea because we still owe just over $2,500 on our credit cards. But I’m thinking we can make a lot more in the markets, then use the profits to pay off our debts. She won’t budge till she hears from an expert. You say you’re an expert. So let’s see what you got.

— Joe in Maine

Howard Dvorkin CPA answers…

I can’t tell you how much this idea scares me, but I’ll try.

First: if you’re carrying $2,500 in credit card balances, you should pay that off immediately if you have the means. It sounds as if you do.

Why do this? Because the average credit card interest rate is just under 16 percent. If you have your $7,500 stashed in a savings account, you’re likely earning around 1 percent right now. So paying off those balances is akin to saving 15 percent on your money.

Second: Even if you do well in the stock market, you won’t catch up to your credit card balances. From 1950 to 2009, the stock market has averaged 7 percent annual returns. That’s a number most market watchers know by heart.

Let’s say, however, you’re twice as smart as the market. Your stock picks return 14 percent. Meanwhile, your credit card balances are growing at around 16 percent. This doesn’t even take into account capital gains taxes, which can cost you 15 to 20 percent, depending on your tax bracket.

So the math doesn’t add up.

Notice I haven’t even mentioned the risk involved here. There’s certainly a time to buy stocks, but that’s not until the rest of your financial house is in order. I understand the allure of quick cash. Sadly, that’s often the quickest way to lose cash. I’ve been a CPA and financial educator for more than two decades, and I’ve yet to discover a “quick and easy” way to make money. The best ways are slow and steady, and the quick ways require considerable expertise and even some luck.

I urge you, Joe, to consider how much you can profit simply by eliminating debt. Then you can take a deep breath, do your research, and learn how to best invest your money. For starters, you want to build an emergency fund of at least a couple months of living expenses. You also want to start saving for retirement if you haven’t already. Even if you have, you want to add more, because very few of us realize just how much we need for golden years.

You sound like an ambitious and conscientious man, Joe. You have more money in the bank than you owe, so you’re on your way to financial freedom. Just don’t put that freedom at risk for no good reason.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

Should I Save or Invest My Money After Getting out of Debt?

Question: Last year, we finished a debt management plan and finally got out of debt that was dogging us for a decade. Now we’re actually saving some money! But my hubby is mad. The interest rates we’re getting in our savings account and in a CD we signed up for are just so low.

My hubby wants us to take our savings and invest it in the stock market or buy some property. I’m not sure about that. What if we lose it all? He says a lot of people make money in the stock market, and real estate is a safe investment. What do you think? I don’t know who else to ask.

— Paula in North Carolina

Howard Dvorkin CPA answers…

First, congratulations on getting out of debt. I’m always surprised when I talk to people who say, “I’ve been in debt so long, there’s no hope of ever getting out.” You were suffering for a decade and now are debt-free. So it can be done.

Second, before we talk about investing, let’s talk about an emergency fund. As Debt.com reported a few weeks ago, “two-thirds of us can’t handle basic household needs if we lost our income for three months.”

So the first thing I’d do with your sudden savings is…nothing much. Yes, you’re likely earning a fraction of a percent in interest in a savings account. However, that’s money you can access immediately if there’s, God forbid, an accident or an illness.

I recommend you study your bank statements and make sure you’re getting not only the most interest, but that you’re not paying any fees. Stash your emergency fund in a bank where the money might not grow much, but it won’t be drained, either.

How much should you keep in an emergency fund? That’s a matter of some controversy. If you polled financial experts, you’d get a range of answers. For example, Dave Ramsey says three months of living expenses, while Suze Orman says eight months. Me? I don’t fixate on that number. Instead, I suggest you set aside a small amount per month, to build the fund over time.

When it gets somewhere between three and eight months, you can decide what to do with the surplus. My suggestion? The next step is ensuring you’ve saved for retirement. As Debt.com reported last year, retirement is now the nation’s biggest source of financial stress — even more than credit card debt.

You can start saving for your retirement just like you compiled your emergency fund: a little all the time. One young Debt.com staff writer started with just $25.

Only after these steps would I even consider investing. Between now and then, you can educate yourself on the pros and cons of specific investments — because investing isn’t going to make you rich quick. Anyone tells you otherwise, run in the opposite direction.

creditrepairad

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

Ask The Expert: Are Gift Cards Tacky Wedding Presents?

Question: I’ve dated my boyfriend for two years, and I’ve never seen him give a gift that wasn’t a gift card. He buys them for everything — my birthday, Valentine’s Day, everything. 

We’re going to his best friend’s wedding next month, and he wants to get the couple a gift card! I told him that’s a TERRIBLE idea, and he should just buy something from their registry. He says he’s always given gift cards, so what’s the big deal?

Is he right? Am I being too intense?

— Celeste in New York

Howard Dvorkin CPA answers…

Howard Dvorkin on how to get out of debt fastI don’t think you’re too intense, Celeste. I think gift cards are too intense. The latest numbers from a market research firm called Packaged Facts reveals…

  • Americans spent $46 billion on gift cards last year.
  • Of that, employers gave $7 billion in gift cards to their employees.
  • Here’s the most intense stat of all: Americans “spent $11 billion on gift cards they gave to themselves.”

So your boyfriend is simply riding the trend. Still, I understand your concern, Celeste. I’ve always counseled my clients and readers: The best gifts are about emotion, not money.

Here’s how to make your boyfriend’s gift cards mean more without spending more.

Instead of simply slipping a gift card in an envelope and leaving it on the gift table at the wedding, ask him to write a handwritten note that expresses how much his friend means to him.

That note should include a story from their past, along with best wishes to the future with his new bride. You can also include a note of your own. I promise this: Long after the gift card has been spent, those notes will be cherished.

If you give gifts as a couple in the future, I suggest your boyfriend buys the gift card, and you buy the Hallmark card. It’s a compassionate compromise.

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Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

Which is a Better Investment, New vs Pre Owned vs Used?

Question: Me and my girlfriend have been together long enough that the cars we brought into the relationship have finally crapped out.

She wants us to buy two new compact cars from one dealer and save some cash. I want to buy two luxury used cars from a discount lot — because for the same money, we can get more car, even if they’re a few years old.

Of course, we could each buy what we want, but we wouldn’t save us as much by going to one place. So we’re asking experts like you and have agreed to abide by the first one that gets back to us.

— Chris in Wisconsin

Howard Dvorkin CPA answers…

Howard Dvorkin on how to get out of debt fastI don’t know if I’m the first to reply, but I hope I am — because this is a topic I feel strongly about.

As I wrote right before President Trump’s inauguration, another recession is coming, and it’s literally being driven by cars. Specifically, Trump will face an “auto bubble” not of his making.

While your instincts are correct and you’ll save money by buying from one place, I urge you to choose an entirely different option, Chris.

First, let’s review what you and your girlfriend are considering…

Why new isn’t always nice

Buying two new cars at the same time makes me nervous. The “auto bubble” I mentioned has saddled too many Americans with long-term loans they might not be able to pay off.

As car prices have crept up, so have the length of the loans to pay for them. Before the Great Recession, five years was the longest term you’d likely be offered. To entice buyers, lenders stretched that to six years, then seven. Last year, I saw reports of eight-year loans.

Now ask your girlfriend, Chris: Will both new cars last at least six years? If not, you run the risk of owing an old loan (or two) while you shop for a new car (or two).

Why used can be scary

As for buying used cars from a used-car dealer, I’m leery. Instead, I’d suggest buying “pre-owned” cars from an established dealer.

I’m often asked what’s the difference between used and pre-owned. Frankly, the latter is just a marketing term created by new-car dealers who were selling off-lease or trade-in vehicles. Now it’s emerged as a profitable chunk of new-car dealers.

The term really refers to dealers who are offering warranties and guarantees that smaller, independent used-car dealers can’t and don’t. I’ve heard too many horror stories over the years about used-car lots that went out of business or changed ownership, and whatever promises were made have suddenly perished.

Try this

If you really want to save money, you’ll need to separate your emotions from your finances. That’s difficult to do with many purchases, but cars are among the hardest. So I’d recommend shopping for one inexpensive pre-owned car and one slightly nicer car at the same dealer.

I’d look for one car that could safely handle a vacation drive, combined with one suitable for local commutes. I’d also study what you and your girlfriend earn each month and only spend as much as you can comfortably afford to pay off in three years.

If you want more specific advice on car shopping, I’d recommend this post from Debt.com partner Stacy Johnson called 7 Steps to Buying a Reliable Used Car. What makes his advice better than most: Johnson is nearly 60 years old and quite successful, yet he’s never bought a new car in his life. He considers it a waste of money.

Something to think about.

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Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.