Buy what you can afford.
Never allow your ego and pride to negatively affect your finances.
Never allow your ego and pride to negatively affect your finances.
Dave Ramsey on new car purchases.
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I think Ramsey is right about a lot of financial things. But when it comes to auto purchases...and being realistic, he's a bit whacked.
In his world we'd all drive old beaters. Sure, the car repair places would be happy. Many of us would be nickel and dimed to the poor house....especially those that have crummy skills or mechanical know-how (and never would develop better ones) at finding sound used cars.
Personally, I LIKE to have a car that is nice, new, reliable, and I try keep it that way for years. I possibly COULD shell out $15 to $20k max in cash, but that would deplete my cushion in the bank to the point that I would be unprepared for a financial emergency. I can always make a car payment (even if a job is lost in the household), as long as I put a lot down...and I do.
The last two vehicles I owned I paid of (simultaneously) in 5 years. Not an issue. But if I would have paid in full up front, I would have been hosed for a very long time.
I wonder how much income Ramsey makes on his business, giving advice?
In his world we'd all drive old beaters. Sure, the car repair places would be happy. Many of us would be nickel and dimed to the poor house....especially those that have crummy skills or mechanical know-how (and never would develop better ones) at finding sound used cars.
Personally, I LIKE to have a car that is nice, new, reliable, and I try keep it that way for years. I possibly COULD shell out $15 to $20k max in cash, but that would deplete my cushion in the bank to the point that I would be unprepared for a financial emergency. I can always make a car payment (even if a job is lost in the household), as long as I put a lot down...and I do.
The last two vehicles I owned I paid of (simultaneously) in 5 years. Not an issue. But if I would have paid in full up front, I would have been hosed for a very long time.
I wonder how much income Ramsey makes on his business, giving advice?
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Originally Posted By: dishdude
Dave Ramsey is for people that have zero financial common sense.
Which would be about 95% of the population...
Dave Ramsey is for people that have zero financial common sense.
Which would be about 95% of the population...
Originally Posted By: Astro14
Originally Posted By: dishdude
Dave Ramsey is for people that have zero financial common sense.
Which would be about 95% of the population...
This.
Originally Posted By: dishdude
Dave Ramsey is for people that have zero financial common sense.
Which would be about 95% of the population...
This.
Originally Posted By: Lapham3
Buying a good older(say 5-10 years) used car takes some experience, skill and a bit of luck. The average person is at a disadvantage here and they can easily end up being into a money pit
Exactly. And no matter how hard some folks try, they just don't have the ability to not get ripped-off.
Buying a good older(say 5-10 years) used car takes some experience, skill and a bit of luck. The average person is at a disadvantage here and they can easily end up being into a money pit
Exactly. And no matter how hard some folks try, they just don't have the ability to not get ripped-off.
I recall from my college days the advice my personal financial planning instructor gave about car purchases:
1. Finance one car in your lifetime: the first one you buy after completing college and getting a job.
2. Finance it for 5 years, drive it for 10 years. The second 5 years you own it, keep making payments as you did before the car was paid off, but make them to your savings account.
3. After owning the car 10 years, you'll have enough saved to pay cash for your second car. Keep the system going, and you'll purchase a new car every 5 years thereafter. If you want a nicer car, increase the monthly payments to your savings account. But always remember that a car has but one primary purpose: to get you from point A to point B. You don't die rich by getting to point B in style.
4. After financing your first car, NEVER again borrow money to purchase a depreciating asset.
Smart man.
1. Finance one car in your lifetime: the first one you buy after completing college and getting a job.
2. Finance it for 5 years, drive it for 10 years. The second 5 years you own it, keep making payments as you did before the car was paid off, but make them to your savings account.
3. After owning the car 10 years, you'll have enough saved to pay cash for your second car. Keep the system going, and you'll purchase a new car every 5 years thereafter. If you want a nicer car, increase the monthly payments to your savings account. But always remember that a car has but one primary purpose: to get you from point A to point B. You don't die rich by getting to point B in style.
4. After financing your first car, NEVER again borrow money to purchase a depreciating asset.
Smart man.
Dave Ramsey usually gives good advice.
I bought a new car. It will be my last. Granted I'll own it until it's no longer safe to drive. Young and dumb.
Originally Posted By: dparm
Whatever happened to establishing good credit history by taking out a loan?
Or that taking out a loan below the inflation rate is effectively MAKING money? Getting 1.99% or better isn't hard these days.
Again, Dave's opinion is just that...his opinion.
Because the average financial moron doesn't understand the difference, they just shop payments. A bar tender I know and was hitting on the other day started talking cars with me, she is paying...get this...13.1% on her new Mazda 3. She is the kind of person Dave here needs to help.
Whatever happened to establishing good credit history by taking out a loan?
Or that taking out a loan below the inflation rate is effectively MAKING money? Getting 1.99% or better isn't hard these days.
Again, Dave's opinion is just that...his opinion.
Because the average financial moron doesn't understand the difference, they just shop payments. A bar tender I know and was hitting on the other day started talking cars with me, she is paying...get this...13.1% on her new Mazda 3. She is the kind of person Dave here needs to help.
Originally Posted By: andrewg
In his world we'd all drive old beaters.
Dave didn't say "don't buy a car" he said "don't FINANCE a NEW car".
People should listen more carefully. Dave advocates for buying used cars in good condition rather than financing for new. For example, you CAN get a quite nice car for 8-10K, and perhaps even pay cash, rather than finance a new 32K ride.
Dave bases his advice on common sense and is grounded in Biblical principle of stewardship and debt avoidance. Dave is a blessing to many!
In his world we'd all drive old beaters.
Dave didn't say "don't buy a car" he said "don't FINANCE a NEW car".
People should listen more carefully. Dave advocates for buying used cars in good condition rather than financing for new. For example, you CAN get a quite nice car for 8-10K, and perhaps even pay cash, rather than finance a new 32K ride.
Dave bases his advice on common sense and is grounded in Biblical principle of stewardship and debt avoidance. Dave is a blessing to many!
Originally Posted By: hattaresguy
A bar tender I know and was hitting on the other day started talking cars with me, she is paying...get this...13.1% on her new Mazda 3. She is the kind of person Dave here needs to help.
She suddenly became financially undesirable with that fact.
A bar tender I know and was hitting on the other day started talking cars with me, she is paying...get this...13.1% on her new Mazda 3. She is the kind of person Dave here needs to help.
She suddenly became financially undesirable with that fact.
I think the problem I have with Dave Ramsey is that his advice is one size fits all. Don't EVER go into debt, no matter what. Again, this is designed for people who can't manage money on their own.
When I bought my RAV4 recently, I had enough money in savings and investments to pay cash. However, interest rates are so low right now that it was actually cheaper to keep my money saved/invested because it is earning more interest than I am paying toward the auto loan. Of course, if I was living in Ramsey-land, I would have kept my 2000 Audi and continued to throw $1000 at a time to fix it.
People who can't manage their own money are frustrating. So are those who just want to take Dave's advice as gospel without thinking through how it applies to their situation. A lot of what Ramsey says is good, and you should have the common sense to apply it to your life as it fits.
When I bought my RAV4 recently, I had enough money in savings and investments to pay cash. However, interest rates are so low right now that it was actually cheaper to keep my money saved/invested because it is earning more interest than I am paying toward the auto loan. Of course, if I was living in Ramsey-land, I would have kept my 2000 Audi and continued to throw $1000 at a time to fix it.
People who can't manage their own money are frustrating. So are those who just want to take Dave's advice as gospel without thinking through how it applies to their situation. A lot of what Ramsey says is good, and you should have the common sense to apply it to your life as it fits.
Originally Posted By: hattaresguy
she is paying...get this...13.1% on her new Mazda 3. She is the kind of person Dave here needs to help.
That's nothing. I was hanging out with my brother and nephews the other day. One of my nephew's buddies was there also.
My nephew's buddy was bragging up his "new" '09 Honda Civic SI.
I about choked when he told me the interest rate was 30%...yes 30%
The kid is 20 years old,makes $13 an hour and has a car loan with a 30% interest rate.
she is paying...get this...13.1% on her new Mazda 3. She is the kind of person Dave here needs to help.
That's nothing. I was hanging out with my brother and nephews the other day. One of my nephew's buddies was there also.
My nephew's buddy was bragging up his "new" '09 Honda Civic SI.
I about choked when he told me the interest rate was 30%...yes 30%
The kid is 20 years old,makes $13 an hour and has a car loan with a 30% interest rate.
Originally Posted By: gfh77665
Originally Posted By: andrewg
In his world we'd all drive old beaters.
Dave didn't say "don't buy a car" he said "don't FINANCE a NEW car".
People should listen more carefully. Dave advocates for buying used cars in good condition rather than financing for new. For example, you CAN get a quite nice car for 8-10K, and perhaps even pay cash, rather than finance a new 32K ride.
Dave bases his advice on common sense and is grounded in Biblical principle of stewardship and debt avoidance. Dave is a blessing to many!
Buying a "used car in good condition" doesn't always go hand-in-hand for folks that don't have $10k cash to spend on one. But yes...if a person has enough cash (very, very, difficult for folks starting out and with a couple of kids), the skills and ability to tell if a vehicle is mechanically sound, and SOLID employment/money flow, then it would be great to avoid financing one. But $8-$10k? Not likely. Most folks, even thrifty ones, would be hard pressed to have that much. More like $5k to $7k. And nobody said anything about a $32k car.
"Biblical" stuff aside...there is nothing AT ALL wrong with borrowing a reasonable amount of money to buy a car. The problems come into play when people buy (take out a loan) for something they don't need and can't afford. Discipline to get the right vehicle...large down payment....low interest rate......early payoff...and sound budgeting. Nothing wrong with that.
Originally Posted By: andrewg
In his world we'd all drive old beaters.
Dave didn't say "don't buy a car" he said "don't FINANCE a NEW car".
People should listen more carefully. Dave advocates for buying used cars in good condition rather than financing for new. For example, you CAN get a quite nice car for 8-10K, and perhaps even pay cash, rather than finance a new 32K ride.
Dave bases his advice on common sense and is grounded in Biblical principle of stewardship and debt avoidance. Dave is a blessing to many!
Buying a "used car in good condition" doesn't always go hand-in-hand for folks that don't have $10k cash to spend on one. But yes...if a person has enough cash (very, very, difficult for folks starting out and with a couple of kids), the skills and ability to tell if a vehicle is mechanically sound, and SOLID employment/money flow, then it would be great to avoid financing one. But $8-$10k? Not likely. Most folks, even thrifty ones, would be hard pressed to have that much. More like $5k to $7k. And nobody said anything about a $32k car.
"Biblical" stuff aside...there is nothing AT ALL wrong with borrowing a reasonable amount of money to buy a car. The problems come into play when people buy (take out a loan) for something they don't need and can't afford. Discipline to get the right vehicle...large down payment....low interest rate......early payoff...and sound budgeting. Nothing wrong with that.
I don't watch or listen to Dave Ramsey religiously, though I do find him mildly entertaining.
One of his most famous sayings from his 2003 book; The Total Money Makeover is: "'We buy things we don't need with money we don't have to impress people we don't like."
That same saying was said in the 1999 movie; Fight Club.
He speaks a lot of common sense, but what he says is not groundbreaking or original.
One of his most famous sayings from his 2003 book; The Total Money Makeover is: "'We buy things we don't need with money we don't have to impress people we don't like."
That same saying was said in the 1999 movie; Fight Club.
He speaks a lot of common sense, but what he says is not groundbreaking or original.
Originally Posted By: andrewg
Discipline to get the right vehicle...large down payment....low interest rate......early payoff...and sound budgeting. Nothing wrong with that.
A simple summation. Stunningly accurate.
My last fleet van was purchased with a zero interest rate loan. Zero. Needed almost 10k down, they want you deep in bed with them, too!
Our first new personal vehicle since 05 was bought with Credit Union money, 0.9% rate. Not even a penny down.
We pay off loans aggressively, typically in about half their term.
Everybody is different. To us Dave R is simply common sense, but it ain't very common anymore!
Discipline to get the right vehicle...large down payment....low interest rate......early payoff...and sound budgeting. Nothing wrong with that.
A simple summation. Stunningly accurate.
My last fleet van was purchased with a zero interest rate loan. Zero. Needed almost 10k down, they want you deep in bed with them, too!
Our first new personal vehicle since 05 was bought with Credit Union money, 0.9% rate. Not even a penny down.
We pay off loans aggressively, typically in about half their term.
Everybody is different. To us Dave R is simply common sense, but it ain't very common anymore!
Let us face it, Americans love " DEBT" .
What would we all have to talk about at the "water cooler" at work if we could not brag about our auto payments and how good we look at red lights so others can drool over our cool rides, right??
Let us add in Credit Card debt, you know, the one where you are paying off that vacation you took 5 years ago,,aww, you forgot that one, didn't you....
What would we all have to talk about at the "water cooler" at work if we could not brag about our auto payments and how good we look at red lights so others can drool over our cool rides, right??
Let us add in Credit Card debt, you know, the one where you are paying off that vacation you took 5 years ago,,aww, you forgot that one, didn't you....
Last car payment I had was in 1972, for a 1972 Corvette. Had one car payment, the one to pay it off in full after I had owned it a month. I've purchased many new cars since and many used cars since. Never financed any tho.
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