Dear Penny: Is It Ridiculous to Keep 3 Cars Thanks to My New Job’s Perks?

Dear A.,

Sell the Jeep. Surely you weren’t planning to bronze it and keep it in your garage for eternity, right?

There’s no easy time to part with something you’re emotionally attached to. But when that thing is a car and you have two other cars and dealerships are paying top dollar for trade-ins, it’s as close to a perfect time as you’re going to get. Focus on all the happy memories you can make with an extra $15,000 in your pocket.

That’s the easy part. Now for the trickier question, which is what to do with those other two vehicles you’ll have left in the driveway.

What I wouldn’t do is trade in your newish vehicle and the old Jeep for a fancy new Jeep. As you point out, you’d be paying top dollar. I’d much rather see you take the money you’ll get at trade-in and put it in savings, especially since your income is dropping by 20%.

Hang on to the vehicle you recently bought, as long as you have space and aren’t struggling with the costs. You just started this job. Give it a little time to make sure the trade-offs you’re making are worth it before making any big financial decisions. I’d hate for you to have to scramble for new transportation on top of a new job should you decide that the job isn’t the right fit.

If you’re happy with your decision after the new job honeymoon phase has passed, you’ll want to consult with a tax professional about whether it makes sense to rely 100% on your company car. Having a company car for personal use is a pretty sweet perk. But with sweet perks, the IRS always demands a cut.

The value of any personal driving you do (including commuting) on the company car will be taxable to you. Essentially, if 60% of your mileage was for business purposes and 40% of your mileage was personal, you’d owe taxes on the value of that 40%. Your employer can choose how it calculates the value of that personal usage. The rules can get complicated. But if you do a substantial amount of personal driving, you may want to use the vehicle you own as much as possible to avoid a hefty tax bill.

However, if the job turns out to be everything you wanted, you may also decide it makes more sense to get rid of your personal vehicle altogether, especially if most of your driving is for work. If so, you can use the money from selling the Jeep to cover your loan balance if the car is still underwater.

I’d go this route only if you plan to be at your current job for a long time, though. Given the frequency with which people switch jobs, it’s often best not to have your primary transportation tied to your employer.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].