Trading-in a new car is a bad idea

Dear Terry,
I just got my car two months ago -- a 2007 Ford Escape financed for $20,000. I went to try to trade it in for a Mustang but they were only going to give me $12,500 for my truck, which makes me almost $8,000 in the hole and my payments around $520, which I can't afford. I have a good credit score and I want to trade my truck in and get a new Mustang. What should I do?
-- Missy

Dear Missy,
I don't see any way you can trade a two-month-old Escape for a new Mustang and not have to come up with a lot of cash. Any new vehicle depreciates sharply when you drive it off the lot. While you could probably sell the Escape privately for more than $12,500, you're not going to get $20,000. My advice: Live with the Escape for a few years and then get your Mustang.

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