Many of us are in similar positions: we’ve discovered sound personal finance skills, but only after making some dumb decisions. I’m still paying down a $16,000 home equity loan that represents my residual credit card debt. John writes with a similar problem, one that he hopes he might escape.

A little over a year ago, I bought a new VW Jetta. I now have a hefty car and insurance payment, which I’ve been making every month without incident. However, after reading GRS for a while, I’m trying to get my finances in order (i.e. pay off debt, build up an emergency fund, etc). I can’t help but think that would all be so much easier if I didn’t have that massive car payment, but I still owe more than the car is worth. Plus, I do need some sort of car to get to work. Can I get rid of my current car and get a decent used car, despite owing more than the VW is worth, and despite not having any savings?

I’ve never been upside-down on a loan before, and don’t know the best way to deal with the situation. It hasn’t come up in my reading yet. Do any of you have experience with this?