Throwaway for obvious reasons.
tl;dr – Unemployed. Sold car for $15k, paid credit union (PenFed) $4k to pay off the loan, $2000 on bills, CU is holding title until I pay $15k CC in charge off (still with them). Can't buy car back now, can't pay CC. I'm screwed, what happens next?
Well, I have completed the personal finance tour de stupid. 2 days ago, I thought, cashier's check in hand, that I was going to pay off my auto loan, bring my CC current ($1300), pay my friend ($900), and start unscrewing my life. Interview clothes, certifications, etc.
I'd talked to PenFed a few times about selling the vehicle and bringing the CC current, for context. The day before the sale, I called in and verified the payoff amount and that the loan was in my name for a buyer. Then, I called in and paid the loan off (clearly indicating that it was a sale), paid the loan off, and then was informed that I wouldn't be receiving the title due to the CC in charge off, which had been set as a charge off about 3 business days prior. I was completely ignorant that this could or would happen. I should have… asked someone? I'm not sure. Read the T&C, I guess. I didn't know to ask.
According to PenFed, I've screwed myself without recourse. I've spent hours on the phone with them and my only options are:
Settle – may not have the money to meet their requirement, will take 30-45 days for a response, buyer will be without title for almost 2 months
Pay the balance in full – Will not be able to find $6k in 10-20 days (to get the buyer a title in a reasonable timeframe)
Let it sit in collections and maybe it will get sold (they say this will release the title to me) – I actually want to pay the CC off and I don't want to screw the buyer
Pay 2% for 6 months, at which time the CC account will be taken out of chargeoff – buyer still screwed
None of the options I can fulfill get the buyer his title and, honestly, I really just don't want to screw the guy. I also /want/ to pay the CC, but I can't pay it in full right now, though I'd love to pay a few thousand (that I actually have) against it, both because that's what I had planned and, yes, this title problem is a problem.
I have nothing to sell that would remotely make up the difference to pay off the CC. I have asked to pay thousands just to bring it out of CO, but they refuse to accept that (and I understand why, I'm a risk). They advised me to assuage, or 'pay off', the buyer for a while until I can 'figure it out'.
I have no family to borrow from and no way that I can think of short of criminality to find $6k in a few days- (not because I've ever screwed them, my family just doesn't do that).
I think I've screwed up completely. And, far worse, I think I'm going to inadvertently screw the buyer of my vehicle (at least in the short term. I'll do whatever I have to to make it right in the long term). Is there any hope for me to get this guy his title? I would do almost anything to have it to him in a reasonable timeframe. I've been frantically looking at options to make enough to pay the loan off. I can find a grand or two in a week, possibly, though I'll end up penniless and that still won't satisfy PenFed.
What should I do? What would be the best course of action? I've never dealt with anything like this and I don't have anyone to ask who knows any more than I do on the subject. I'm also honestly not able to think clearly at the moment.
EDIT: Thank you all for the responses, including the criticisms. I am reading them all now. I do want to clarify that I indicated on the bill of sale that there was a lien and that I did not have the title.
EDIT2: The buyer has the car
No, You Didn’t Just Lose Half Of Your Retirement Savings
So here we are just a month later, in a full-blown economic panic, and at the start of the most sudden recession ever.
The pandemic has spread much further and faster than most uninformed people (including me) would have ever guessed, and the whole world is on some form of lockdown. Nothing quite like this has ever happened before in the modern world.
What should we do?
On the financial side, I’ve seen media stories about “The End of FIRE movement”, and a close friend even said to me, “Well, I’ve got to go back to work now because with all my investments down 35%, I’m not financially independent any more.”
And I’ve seen plenty of similar statements out there on the Internet:
Even worse, some people are trying to time the stock market, selling off their investments at a discount in the hopes of “protecting” them, hoping to subsequently outsmart everyone else and re-buy them at an even lower price just before some future rebound.
On the human side, we have seen a death toll of thousands of people per day in the US alone with best-case forecasts of 200,000 by the time things calm down, which implies several million worldwide.
And so far, we have not been performing like a best-case country so these numbers will probably be higher.
This all sounds terrible, doesn’t it?
It makes sense that many people are fearful and pessimistic. So why is it that I remain as optimistic as ever, with the full expectation that you and I will come through this humbled but also wiser and better than ever?
It’s because I already know how this all ends.
The world will keep rallying and doing its best to slow down contagion. Caring people will keep helping each other. People will stay home and heal, hospitals will expand, nurses and doctors will do their best to save as many lives as possible, and the 80% of us in jobs that allow us to keep working, will keep doing our jobs.
Meanwhile, innovators are still innovating all over the world. People are staying up late working in labs, vaccines are being tested, genes are being sequenced and the current virus will end up beaten and then written up as a very significant chapter in the history books.
But apart from all of this, there is still way more going on out there, which just isn’t making it to the headlines. Engineers and scientists are still inventing things that will drastically improve the future. Solar panels are still streaming out by the trainload and being installed worldwide. Better and better batteries which will eventually displace all fossil fuel use are evolving. The most efficient factories in history are being built. Gene therapies are advancing which will eventually make a mockery of all of our current health conditions. Internet connectivity and education is becoming more widely available and cheaper which is allowing the next generation of brilliant kids to to grow up and learn faster and do more than you or I could have even dreamed. And all this will happen regardless of the course of the current pandemic.
If all that is true, then why is the world so Scary right now?
I get it – never before has something from the daily news come home to affect our daily lives so much. Grocery stores are cleaned out, people are wearing masks, and you probably have friends who are currently unemployed, or sick, or both.
But in this situation, it really helps to understand the big picture of what is actually going on. The world is not ending. The air outside your windows is not a swirling cloud of certain death.
All that has changed is that we are in a self-imposed economic slowdown that has been created purely to save the lives of our most vulnerable people.
Which is one of the most compassionate things our society has ever done. To me, this is a remarkable and wonderful moment and I would not have guessed that such a capitalist country would ever have the balls to do it.
To put it into a visual, we have decided to prevent the following worst-case scenario:
(IMPORTANT NOTE: The timing of these hypothetical deaths is not real medical data, just an illustration of my own personal guess – made with a mouse pointer rather than a spreadsheet. However the US background death rate really is about 2.8M per year per the CDC)
And turn it into this:
In the worst case, our public officials would all downplay the risk of COVID-19, and we’d keep working and traveling and spreading it freely. We’d maximize our economic activity and let the disease run its course.
From the disease models I have seen so far, about 70% of us would eventually contract it. Half of those would have no symptoms or very mild ones, a smaller (but still huge) number would get sick or very sick, 10% might end up in a very overloaded hospital system, and in total about 1-2% of our population would die from complications – partly depending on how quickly we could put up temporary treatment centers to cycle through 30 million people in only a few years.
It would feel cruel and chaotic, but in reality we would still not be even approaching the conditions that people in the developing world deal with every day. Our world has always been cruel and chaotic in so many ways which affect a much larger number of people – we just happen to be used to them. And one thing that humans are exceptionally good at, is getting used to things.
In the more compassionate case which we are currently following, we drastically reduce the amount of contact we have with each other for a few months, which cuts the number of deaths in the US down from 3-6 million, down to perhaps 200,000. In exchange, our economy shrinks by several trillion dollars (it was about 21 trillion in 2019) for a year or more.
Assuming we are preventing 3 million early deaths, this means our society is foregoing about one million dollars of economic activity for each person’s life that we extend and frankly, it makes me happy to know we are capable of that.
So that’s the big picture: we are cautiously and temporarily buckling down and making some sacrifices, in order to help other people.
To me, that is not a cause for panic or fear – it’s a chance to try even harder and be thankful for such a once-in-a-lifetime opportunity.
Meanwhile, some good stuff is happening as a byproduct:
- We are driving around and polluting far less. The air is drastically cleaner everywhere.
- People are out walking with their kids far more. The streets of my town are nearly free from cars, and are being enjoyed by (appropriately spaced) bikes and people for the first time.
- Our expectations are being reset. Someday soon, it will feel like an absolute joy and privilege to walk into a store and see things fully stocked and prosperous again. And imagine the feeling of taking a vacation or attending a big event or a restaurant or a party!
- People in rich countries may realize that we can afford to be helpful and compassionate after all – while actually increasing our long term wealth and happiness rather than compromising it.
- And the world is getting a valuable “practice run” at handling a pandemic, with a relatively mild disease rather than something even more serious.
So How Does This Affect my Retirement?
Once you really get the big picture above, you can see that we are going to come through this better in every way.
Just as with any recession, weaker companies will go bankrupt, stronger ones will streamline their operations and get smarter, and the chaos and broken pieces will become the raw materials from which an enormous batch of brand-new companies will form.
Better ways to track and treat disease, more scalable and less bureaucratic hospitals, more options for remote medicine and more support for remote work and virtual offices and virtual learning in general. More home delivery services and fewer big box stores and wasted parking lots, more support for biking and walking, and a million other things that a billion other people will think of.
The end result will be a better, more resilient and richer world than ever. Yes, that will also eventually mean more money in your retirement account, but more importantly it means better and happier living conditions for every living thing on Earth.
While this all sounds like optimistic magic, it’s actually just a byproduct of human nature. We are a lazy and change-averse creature and we become complacent when our fearful and primitive brains think things are “good enough” for survival and reproduction.
So, oddly enough, we often need a good slap upside the head to get off of our collective asses and actually make some improvements. Observe the wisdom of our elders:
- When the going gets tough, the tough get going.
- Necessity is the Mother of Invention.
- What doesn’t kill you, makes you stronger.
As old and repeated as these slogans might be, they stick around because they keep proving to be remarkably true. They are the real-world manifestation of a badassity that is built right into our Human DNA, which is why they are some of my favorite phrases in life.
Are things a bit hard right now?
See you in the inevitable and incredible boom-time that will result.
Other Interesting Things That Might Help You Feel Better:
The Simple Path to Wealth, by my longtime author/blogger friend JL Collins, explains long-term investing in the most simple and calm way imaginable.
Towards Rational Exuberance is a more technical and detailed (but still very fun to read) history of the stock market and how the Federal Reserve bank serves to stabilize our system. Although I read this book over fifteen years ago, it has underpinned my understanding and confidence in long-term investing ever since. I would love it if author Mark Smith would add a few chapters to cover the two most recent market crashes as well!
A Guided Meditation for when the Stock Market is Dropping, is Jim’s witty YouTube reminder of the same thing, which he somehow created long before any of this panic started – how could he possibly have known in advance??
Good News, there’s Another Recession Coming is my own magical forecast of the present moment, made over two years ago.
Why We are Not Really All Doomed, my 2014 take on why the world was (and still is) well positioned for many decades of future prosperity.
How To Retire Forever on a Fixed Chunk of Money gets into the reason why stock market drops like the present one don’t really hurt an early retiree (it’s because the vast majority of your shares will be sold several decades from now, when the present panic is barely a blip on the graph.
And finally, just for fun here’s an example of something that is not written to make you feel better. In recent weeks, I spent several hours writing out some interview answers for an article in the New York Times.
I was truly excited to share the details of why the Principles of Mustachianism are more useful than ever in times like these, and it’s quite the opposite of “The End of FIRE” that the silly and financially naive media have been peddling in recent stories.
I was disappointed in the end result. Most of my answers were cut out, and instead the article is focused on “hardships” that other early retirees are currently working through. And the clickbaity title sets the expectations wrong to begin with:
(that link will take you to my Twitter post about it, where an interesting discussion has formed in the comments – what do you think?)
5 Strategies to Manage Finances During Coronavirus Uncertainty
Writing this post is eerily familiar to one I wrote at the end of 2008, just a few months after I became the host of the Money Girl podcast. The Great Recession, which lasted from the end of 2007 to the summer of 2009, was getting real. The show was a response to many questions I received about how to invest and shore up finances successfully during the crisis.
We should be prepared for significant hardship in the economy every decade. It’s been about 12 years since the last one, so you could say we’re overdue. The coronavirus is a big but invisible challenge that’s causing a host of first-time problems for families, businesses, and the medical community.
Until we know more about what the specifics of pending legislation mean for your finances, consider what you can do on a micro level to make your financial health as resilient as possible.
In early March, Congress approved an $8.3 million round of funds for various government health agencies dealing with the virus, including Medicare. The response from the federal and state governments is still unfolding. It should be aggressive to preserve public health, help consumers manage living expenses, and help business owners cope with major disruptions.
Until we know more about what the specifics of pending legislation mean for your finances, consider what you can do on a micro level to make your financial health as resilient as possible. In this post, I’ll offer five strategies to manage money in uncertain times and address some questions that have come up from members of my Dominate Your Dollars Facebook group.
5 tips to manage money and investments during coronavirus uncertainty
Follow these tips to make the best decisions possible during a crisis.
1. Check your emotions
When the financial markets are down or extra volatile, the true nature of your risk tolerance gets revealed. Whether you’re a riverboat gambler or a stuff-the-cash-in-the-mattress kind of person, you’ve probably been wondering what changes, if any, you should make to your investments right now.
Before you do anything, remember that being a successful investor and money manager is mostly about managing your emotions. I know that’s easier said than done because there’s no separating money from emotions. However, in general, the fewer rash decisions you make, the better.
Instead of letting your emotions get the best of you, consider imposing a waiting period on yourself before making any large-scale money decisions.
We’ve seen how emotions affect the economy with panic-…
Coronavirus Megathread: Resources, discussion, and your questions
Given the number of requests we've had to post a megathread along with the volume of similar threads being submitted, we're consolidating future general discussion on this topic here.
We will continue to make updates to this post.
Stimulus checks (Minor updates April 4th)
The CARES Act authorizing relief/stimulus payments directly to individuals has been passed into law.
For non-dependent individuals, you are entitled to $1,200 if your AGI (Adjusted Gross Income) is below $75,000. For married couples filing jointly, it is $2,400 if your joint AGI is below $150,000. Taxpayers with dependent qualifying children will receive $500 per qualifying child (16 or younger, the rules are based on the child tax credit).
If your AGI is above the income threshold of $75,000 or $150,000, you will be entitled $5 less for every additional $100 of income above that threshold until the amount is fully phased out. For example, if you are single and without kids, the potential maximum amount of $1,200 is completely phased out once your income hits $99,000. If you are married with two young children then the maximum payment of $3,400 is completely phased out once your joint income hits $218,000.
Prior years' tax returns are being used to calculate each person's stimulus payment. If you filed your 2019 tax return already, that will be used. If not, then your 2018 tax return will be used. If you have not filed taxes for 2018 or 2019, you should do so as soon as possible to secure your eligibility for a prompt payment. Finally, if your 2020 income and status would allow you to receive you a larger payment, you will have to wait until you file in 2021 for the 2020 tax year, and you will receive the difference as a credit on your 2020 tax return.
Basically, you will get to keep the payment you receive and if you receive a smaller payment than your 2020 income would allow, you'll get a credit when you file your 2020 taxes.
How will I get paid?
If you received your tax refund by direct deposit into a single bank account, your relief payment will be deposited to the same account. If you did not receive your refund by direct deposit, or if it was deposited to more than one account, a physical check will be mailed to you at the address on your tax return. If you have not filed taxes, it is likely that the IRS will attempt to get your address from other agencies, like the Social Security Administration or the Department of Veteran's Affairs.
What if I am a dependent?
Feels bad, man.
It's worth noting that eligibility is based on your dependency status for 2020, so if you were claimed as a dependent in 2019 and can't be claimed as a dependent in 2020, you should get the $1,200 (or the lower amount if your income is high), just not until they file their 2020 return.
Finally, it's important to know that dependency status is not elective. You are either a dependent or you are not a dependent according to IRS rules.
Is this just an "advance" on my tax refund?
No. Assuming you're eligible, the money is a credit and not an advance on money you would have been owed already.
What if I am sent an amount that is higher than my 2020 income would allow?
There were some initial reports that the excess would come out of your future tax refund, but the consensus seems to be that you get to keep the money.
According to this article from CNN:
And those who make more this year than last would not have to pay back any stimulus money they receive if they end up exceeding the thresholds. The payments would not be subject to tax, and those who owe back taxes would still get a check.
The IRS does not have my direct deposit information. What can I do?
In the coming weeks, [the US] Treasury plans to develop a web-based portal for individuals to provide their banking information to the IRS online, so that individuals can receive payments immediately as opposed to checks in the mail.
If you lose your job or are at risk of losing your job
If you have any questions regarding those resources, feel free to ask here, but please be as specific as possible with your current situation and what steps you have taken so far.
Stock market turbulence
It's very natural to be feel concerned when there's a large drop in the stock market, especially after such a long period of growth, but it's important to keep perspective and avoid making rash decisions.
First, take a deep breath. Market downturns are not uncommon or unusual. Between 1980 and 2017, there were 11 market corrections and 8 bear markets.
Trying to time the market rarely turns out well and most people trying to enter or exit the market based on emotion, gut feelings, and everyone's predictions end up doing far worse than if they had simply continued business as normal. Stick to your plan and stay the course.
To quote Warren Buffett: "to buy or sell on current news is just crazy".
Don't make an emotional decision, don't try to predict where the market is headed in the short run, and make decisions for the long run. You're investing for decades, not trying to predict the Dow Jones or S&P 500 next week, next month, or even next year.
Being financially prepared and practicing sound finances
Budget your money and reduce expenses. Fundamental to a sound financial footing is knowing where your money is going. Budgeting helps you see your sources of income less your expenses. You should minimize your expenses to the extent practical.
Build an emergency fund. An emergency fund should be a relatively liquid sum of money that you don't touch unless something unexpected comes up. For most people, 3 to 6 months of expenses is good. A larger emergency fund may be warranted if your income is variable or uncertain. If you're in credit card debt, aim for one month of expenses and focus the rest of your money on paying down debt.
Don't check out of your finances. Continue following the steps in "How to handle $" as best possible starting at the beginning of the flowchart. If you can't make rent, contact your landlord. If you have trouble paying your mortgage, see below. If there are bills you can't pay, research your options and contact the company. Simply not paying a bill without any communication is almost certainly not your best option.
If you have travel planned, read Coronavirus & Your Finances: What to Know and Do from Clark Howard.
Also see the megathread on /r/travel for news and updates on the US travel suspension and other impacts the virus is having on travel plans.
If you're in the market for refinancing your mortgage, it may be worth considering, but if you don't have a healthy emergency fund and extra cash, you may not want to refinance right now due to the up-front costs.
Federal student loans (Updated on March 28th)
The CARES Act has some provisions to aid people with federal student loans including:
- Borrowers will be able to pause payments on federal student loans until September 30th, 2020.
- There will be no interest charged against your federal student loans until September 30th, 2020.
- Involuntary collection of defaulted student loans via garnishment of wages, social security, and tax refunds is also being suspended.
- Private student loans are not affected.
- If your loan is federally-held, you do not need to take any action to suspend payments. Your federal student loan servicer will suspend all payments automatically. You do not need to contact your student loan servicer.
- If your loan is not federally-held (i.e., federal student loans held by commercial lenders), do not assume you can pause payments without contacting your servicer. You may want to look into income-driven payment plans.
Federal tax payment deadline, filing deadline, and IRA deadline extended to July 15th (Updated on March 28th)
State deadlines are not affected by the extension, but some states are providing extensions (the terms may differ, though). The AICPA is maintaining a summary of states' filing and payment guidance due to Coronavirus.
If you are receiving a refund, you should probably still file earlier.
Many mortgage owners will be eligible to have their mortgage payments reduced or suspended for up to 12 months (New on March 20th)
- The move covers about half of all home loans in the U.S. — those guaranteed by Fannie and Freddie. But regulators expect that the entire mortgage industry will quickly adopt a similar policy.
- You can't just stop paying your mortgage. Contact your servicer to find out if you are eligible for this or if your servicer has adopted a similar policy.
Retirement account changes (Updated on March 29th)
The CARES Act provides an additional way for people to access cash by allowing the penalty-free withdrawal of up to $100,000 from qualified retirement accounts including IRA, 401(k), 403(b), 457(b), and several other types of accounts. It is also now easier to borrow money from 401(k) plans and the maximum loan size has increased to $100,000 from $50,000. Any loans due in 2020 are also being extended.
In addition, some other rules related to retirement plan distributions have been suspended or modified.
For details and numerous warnings about why you should try to avoid making early withdrawals, read these articles:
Money available for self-employed and small businesses (New April 2nd)
6 Ways To Incorporate SEO While Building A Business in 2020
How to Buy Liquidation Merchandise
No, You Didn’t Just Lose Half Of Your Retirement Savings
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