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?

This article is about Ask the Readers, Cars, Debt