It sounds strange, right? An underwater car loan brings to mind a car going off a bridge and slowly sinking.

Well, an underwater car loan does sink you in debt. The term “underwater” refers to owing more than your car is worth.

Say you borrowed $25,000 to purchase a car five years ago. You still owe $15,000. But when you looked up the price, it was only worth $9,500. You’re underwater, to the tune of $5,500. Even if you sold your car tomorrow, you wouldn’t get anywhere near what you owe.

More and more car owners owe more than their vehicles are worth. When new car buyers at dealerships offer their current cars for trade-in, 32 percent are underwater. That’s the highest percentage since the number began to be compiled in the early 2000s.

Why are an increasing number of people underwater on vehicle loans? Many factors contribute. Car prices are very expensive. Dealers and other lenders are allowing low or no down payments. Since cars depreciate 20% in price the minute you drive them off the lot, you can be underwater before you get the car home if you don’t have a 20% down payment.

Longer loan terms also play a role. A $25,000 car may leave you making payments for many years. This is especially true if you are a single person. You have less disposable income than a couple, and may have wanted a low monthly payment. That’s great for your monthly budget. Not so great for putting a dent in your car loan.

Car depreciation also plays a role in the rise in underwater car loans. By the third year, your car has lost 50 percent of its value. So your $25,000 car is worth about $12,500 in year three. You may still have about $15,000 to $20,000 left on your loan.

Underwater loans can hamper your ability to save and buy a house or start a family. They can hamper your ability to go eat pizza, for that matter.

So how do you get out of an underwater car loan? Here are four methods.

1. Keep Your Car

The most prudent way to get out from an underwater loan is simply to keep your car. Many cars today will keep going past the 100,000-mile mark and beyond quite nicely as long as you keep up the maintenance. At some point, if you are in a fender-bender, you may find the car is worth less than the cost to fix it. But until then, keep on drivin’. Put the loan payments to good use.

2. Increase Your Monthly Payments

You can pay down any type of debt faster by increasing the monthly payments. Vehicle loan debt is no exception. Go through your budget and determine if you can hike the payments. If you can double the amount of your payment, it can pay down your debt nicely. But even $25 more per month will help.

3. Refinance Your Debt

You may be able to refinance your debt. If you can get a lower interest rate, your payments will be lower. This depends on your lender’s policies on refinancing car loan debt. It’s worth trying, though, especially if your credit score is good to excellent. Credit unions may be the best candidates for this strategy.

4. Roll Over Your Loan

Some of those new car buyers with underwater trade-ins may have been rolling over their loans. This requires a lender who will give you a loan for a new vehicle and roll over the outstanding amount from your previous car into that amount. In other words, if you are buying a $25,000 car and have $4,000 still outstanding, your total loan is $29,000.

5. Sell Your Car and Borrow the Difference

This is recommended for people whose goal is to decrease their overall debt, not solely to get out from an underwater loan. Say you owe $17,000 on a car now worth $12,000. You’re $5,000 underwater. You sell the car and pay off $12,000 of your car loan. Then you pay down the $5,000. The downside? You will no longer have the car. It is workable if you either don’t need a car or can use another car.

6. Borrow on a Credit Card

If you have offers for 0 percent or low-interest rate credit cards, it may be a good idea to borrow the amount you need on the credit card. Then pay off either the underwater amount or the entire car loan with the credit card money. Note that this will only make financial sense if the interest rate on the credit card is less than the one on your vehicle.

It’s no fun being one of the many folks underwater on a car loan. But you are not alone. These steps can get you out of being underwater.

Anum Yoon is a millennial money blogger who runs Current on Currency. You can find her work in various sites across the web, sharing her thoughts and views on money and life.

Financial management is not an academic subject. Some learn it the hard way, others not at all. The recession caught out even the experts and looking at domestic finance statistics in American Society there are many concerns. Good parents may have taught their children about the value of money, perhaps asking them to do a small chore in exchange for their allowance or encouraging them to set a little aside each week towards something they want to buy? Such lessons can put them in good stead for college and their careers and carrying forward an appreciation of the value of money is likely to help them be part of the minority whose financial affairs are in good shape.

Unfortunately even for financially astute parents life is not all plain sailing. As they advance in years their parental responsibilities may reduce. They should because children reaching adulthood have time on their side. Student loans are readily available and parents should think twice before they stretch their personal finances to help out because their own needs in retirement must be their priority. The recession hit many well thought out financial plans and it is sometimes difficult to make up for losses in limited time. There is increased nervousness among those in late middle age, about to retire or already retired that they might run out of money as life expectancy is increasing.

It is never easy to adapt to a lifestyle that is restrictive after years of being able to pay all your bills and enjoy yourself. Some will have little choice and may now be regretting that they did not do more for themselves before retiring. There are several regrets and if parents still have something to teach their now grown children it is not to make some of the typical mistakes they have made.

We haven’t done enough!

A recent survey by BMO Harris Financial suggests that 75% of retired people wish they had done more. It takes more than cutting back on dollar and cent spending each day to make a significant difference. What you really need to achieve is something like $10,000 extra saving which represents spending that much less each year.

• How many times do you eat out each month? You should include takeaway food delivered to your door and a coffee on the way to work. It is easy to spend $100 for dinner for two. If you dine out regularly then saving a couple of hundred dollars a month is entirely feasible. You’ve made 25% of what you need overnight. It is not really a sacrifice and using your kitchen more can be fun.
• You should take your time over buying your new auto and think hard about how frequently you really need to change it. If you decide on a specific model you should make sure you get the best possible price. There are members only discount clubs whose buying power is such that you should be able to save a few hundred dollars on your new auto and on many other purchases. The annual fee is insignificant compared to what you may save.
• Everyone has a smart phone these days. Your children should be perfectly capable of paying their own way and there are plenty of comparison websites that will guide you towards the best deals in the market place.
• It is easy to find an insurance provider and simply agree to the renewal when it comes in. You should compare like with like each time but once again comparative websites do much of the groundwork for you to regularly check whether you are getting best value.

Credit Cards

The money that these actions can save you should be put directly into your retirement plans whatever your age. However there are actions that you can take if you have allowed yourself to build up debt, especially credit card debt. The figures are disturbing. The average debt per credit card is over $5,000. However the average debt of those who are not settling their statement at the end of each month is over three times that. It is likely that you will be paying over 16% interest each month on your balance. That is sheer waste and if you are only paying the minimum the credit card company require each month you will hardly reduce that balance.  If you pay off your balance with nation 21 fast loan you will have to factor your monthly installment into your budget but at the end of the term typically 3 years your debt will be gone and that will release more money for your retirement.

Join a Plan

It goes without saying that you should be taking advantage of any retirement plans that are being run by your employer. The 401(k) not only has tax advantages but employers will match your contribution up to a certain level and that is effectively ‘free money.’ As you get older you are allowed to add more ‘tax free’ and if you are not certain about the detail then ask.

You simply cannot afford to rely on the Social Security System which was never designed to be more than a support to retirement. Its future is under threat with estimates suggesting that benefits will reduce by 25% by 2030 without a significant injection of funds. You need to act if your provisions for retirement are poor and also give another piece of advice to the children; get started, even in a small way and their future will be much more secure.

This is a guest post from Pauline of InvestmentZen.com

I used to spend a ton of time managing my finances. I would sit down every week, and because I was too messy to keep receipts or write down my expenses, I would log in to every account I had with online banking, have a look at the transactions, and write down my balance. Then I would put the whole thing into Excel, and vaguely track my net worth every month. I was afraid making automated transfers into savings would make me overdrawn, so I would do these manually every time I had a little money left over.

I then read it was the worst thing you could do. Because you would wait until the end of the month to put whatever was left in savings, chances were there would be less than expected, since you left the money there, available to spend as you please. On the other hand, if you set up a wire transfer on pay day to send $100 to your savings account, you would be guaranteed to save at least $100 that month.

Our brains are lazy, and will always follow the path of least resistance. If you see money on your account, you know you can spend it. Like you can’t really be on a diet with your cupboards stocked with junk food. You know you’ll succumb sooner or later. And then regret it. Don’t trust yourself to save or invest your money.

The best way to spend less time managing your finances is automation. It will save you hours every month. You just need to define where you want to be three months from now, then adjust your automated debits. Review three months later, and see if you need to fine tune anything. You can set longer term goals as well.

For example, I want to set away $200 every month for retirement. I will fund my 401k and take advantage of my company match to get the tax savings on top. I also want to have $500 ten months from now to go on holiday. So I will set up a debit to send $50 extra into savings with every paycheck.  Because I will need access to the holiday money pretty soon, I will send the $50 to a high yield savings account. And because I am no professional investor, and even if I were one, beating the markets would be a tough full time job, I will simply invest in low cost index funds via a low fee robo-advisor. That should take care of savings for the vast majority of us.

Set a monthly amount, invest regularly so you can dollar cost average, forget about it for a couple of decades. The markets will go up and down, but you can still expect a 7-8% annual return over the long term. Taking your hands off your finances also prevents you from selling in a panic and regretting it down the road. We all get emotional when it comes to money. That is perfectly human. But if you want to be comfortable in retirement, you can’t afford to get emotional. In a crisis, you will want to sell low, and then when the markets go up again, you might buy back higher than what you sold for. That is disastrous to your nest egg. Add to that the management fees and all your hard earned cash will have an abysmal return. The less time you spend on your finances, the more your money will work for you. If you need proof, look up the average S&P500 returns over the past 50 years, and try to find an actively managed fund that consistently beat that.

Spending less time managing your finances will also free up some valuable time in your schedule. Time you can use to earn more money, or simply do something that is important to you, such as spending time with your family or working on a hobby. Right now, I have gone from obsessing over every line of expense to reviewing my finances every quarter, and my net worth had been growing much faster.

You know you need financial advice, but you’re not sure whom you can trust. It’s typical. While some people tout the benefits of an independent advisor, others say you should stick to restricted ones. Here’s what you need to know about both so you can make the right decision.

Independent Financial Advisor

An independent financial advisor is probably the most common of the two, especially since 2013. Independent financial advisors don’t work directly for a firm that requires exclusivity or a non-compete agreement.

Because of this, the advisor is free to establish himself as a private business offering financial products and services.

Some advisors operate as a broker, while others operate as fee-for-services advisors.

A broker sells financial products, usually on a commissioned basis. Today, the law restricts this activity, so you normally only see commissioned advisors with some type of insurance product.

Most independent financial advisors in the UK charge an hourly fee, a percentage of the money you’ll be saving, a flat fee, or some other fee-based structure which is apparent before you sign a contract to do business with him.

A few advisors charge a fee based on the amount of money that you have them manage for you, called “assets under management.” This fee is typically between 1 and 2 percent of those assets.

Unlike other types of advisors, independent advisors try to position themselves as “comprehensive” in nature. This means that they attempt to deal with every aspect of financial planning, and do not specialize in any one area.

They can, for example, recommend Jayne and Moss if you’re looking to buy a home, help you plan the mortgage payments and loan process, and even help connect you to a real estate broker. They can then turn around and provide advisement on investments and insurance. Or, they can help you with your budget and savings plan, advise you about your pension, and help you figure out whether an annuity makes sense when you retire.

These types of professionals typically work with you on a “client engagement” basis. This means you sign an agreement with them to do business for a set number of months, up to a year. At the end of the planning engagement, you can either resign for another year or switch advisors.

Independent financial advisors are not tied to any one financial firm, so many feel that their advice is unbiased.

On the other hand, because they are not experts in any one area of financial planning, and they do not have close-knit relationships that come with being a restricted advisor, they may not have the same kind of specialized knowledge that a restricted advisor has, and thus may not fully understand the financial products or services they’re recommending.

Restricted Financial Advisor

A restricted financial advisor is one who works exclusively with one financial services firm. He or she only recommends products and services offered by that firm, and rarely, if ever, sells outside of that firm.

Because of this, the restricted advisor has intimate knowledge of financial products and services that that firm sells. The advisor may also have relationships with key contacts within the company that can help the advisor better understand the products and services.
For example, a restricted advisor working for a life insurance company might have relationships with internal wholesalers, external wholesalers, actuaries who design products, and management that understands how the insurer manages the money in the general investment account.

The advisor’s team of professionals can provide absolute clarity and financial education where the independent cannot, since he is an independent advisor who doesn’t work for the firm.

Which Should You Choose?

Both types of advisors have their strengths and weaknesses, but you can generally count on an independent advisor if you need someone who will “shop the market” for you for inexpensive products and services. Independent advisors are also good if you just want financial advice and don’t want to buy products.

Independent advisors may also be able to show you products and services that you wouldn’t ever think to buy or invest in, can educate you on a wide range of options, and can provide you with more non-investment advice that is independent of product offerings.

On the other hand, if you already know you want a particular product or service, go to a financial advisor working for that company and buy direct. You’ll find you get more personalized service, and often better advice about that product and service line than an independent advisor can offer.

Benjamin Butler is a finance major who plans to enter the world of finance as an accountant. Numbers have always come easily to Ben, but he also has an interest in words, and enjoys writing articles for both business and personal finance blogs.