Dave Ramsey on new car purchases.

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Originally Posted By: supton
Sometimes lately I've been wishing I had maxed out my 401k etc; but eh, I've lived a bit of life and done stuff I wanted to, and got quite a bit of it out of my blood. Nice car, home ownership, marriage, kids, travel, etc. Now I won't be wondering about what I'm missing out on; maybe in a few years I'll get my 401k etc contributions up to the max. And then pursue those "nicer" things in life again.

But unless if the rich have figured out how to take it with them when they go I'll be content to have lived a little in the now. Tomorrow might not come, and 59.5 is still a long ways away. And I never envisioned myself ever retiring anyhow (not until after I got a house and learned about all the things I could be doing/fixing/improving!).

[In my defense I got out of college during the dot com bubble burst, and things were slow; I sat through a couple of recessions after that. They don't teach about retirement in college, and I had zero trust in the markets. Foolish in hindsight.]



As said, it's not always about the money....and it's never too late to learn!
 
Dave Ramsey bah i was looking at the Dodge Hellcat and my 22 year old daughter said " dad you would loo stupid driving that car"would look stupid driving one. So it is off my list of new cars.
 
I consider myself pretty financially smart but also temper that with enjoying some things in life now as tomorrow is never guaranteed. I payed off my house almost two years ago at age 46 and have no credit card debt but I did buy a new 2014 Mustang GT last year and a new 2014 Honda Rancher 4x4 ATV this year and financed both.

I contribute 15% of my pay to my thrift savings plan and will also get a pension at retirement which I'm eligible for at age 49 and am mandatoried out at age 57.

I also don't feel the need to leave all of my money and assets to my kids when I die so I plan on enjoying my retirement as much as possible.

My mom recently told me she tried not to spend a lot of money in retirement so she could leave us kids something. I told her to enjoy her money and not worry about leaving us anything. Life is too short for that.

wayne
 
I like the idea of staying debt free and buying what you can afford with cash but sometimes I feel a car payment is necessary. I feel the "buying what you can afford with cash" is more for credit card people. If you can afford to pay off your card each month, you're golden.

As said, a cheap car could very well be a money pit lemon. When a person has to have dependable transportation for their job, a cheap car isn't the way to go IMO especially when your workplace reputation (the money maker) is at risk.

I think the key to car buying is getting a nice used one. Don't listen to the dealers that say they can get you low payments on a new car. Get a used one that fits your budget and have enough saved to make a decent sized down payment if possible.

Another thing Dave says is to shop before buying. What if a "new" car is needed right away? If I need a new car, it will be because my current one has failed and isn't fixable and I will have no time to shop. If someone has time to shop, their current car is still good enough IMO. That being said, if I had to make an impulse car purchase, I might be more inclined to spend a bit more on something that I actually want and will want to keep in the long run. Its a double edged sword I suppose.
 
The man gives good, generic financial advice. His advice does not factor thoughtfully using credit to leverage a purchase.

I generally choose to purchase new 1 year old cars at the end of the model year and use the used NADA value as my purchase target price. I have discovered that if I run the car out to the end of its useful life, the cost difference is a wash because I am purchasing a new car at or near a used car price.

If one of the advantages of buying a new car is discount financing, I see no reason not to take advantage of that. When I purchased my Accord, after negotiating the price to the minimum, I was offered .9% financing. My other option to buying the car was to take the money from my mutual fund (which was making 16.9% at the time) to purchase the vehicle. What is the purpose of having excellent credit if one cannot leverage it to conserve capital and still pull down a 16% return on the money in question?

Much of what he has to say is common sense. It is advice for the masses, not the individual investor.
 
Originally Posted By: dlundblad


Another thing Dave says is to shop before buying. What if a "new" car is needed right away? If I need a new car, it will be because my current one has failed and isn't fixable and I will have no time to shop. If someone has time to shop, their current car is still good enough IMO. That being said, if I had to make an impulse car purchase, I might be more inclined to spend a bit more on something that I actually want and will want to keep in the long run. Its a double edged sword I suppose.


A unique subset of needing a different car is when the current car has a known terminal issue such as rust or can't pass emissions without a lot of money. That gives enough time during good weather or before next year's inspection to pick out a different car for a good price. That does take some planning and basic knowledge of cars, which not everybody can or wants to do.
 
Originally Posted By: Mykl

The amount of money you saved by not renting may have saved you that 25% over those ten years.


Highly doubtful when you count taxes, any repairs, labor and materials for upkeep and interest. IMHO when you factor it all in, houses are a money pit just like cars.
 
Originally Posted By: itguy08
Highly doubtful when you count taxes, any repairs, labor and materials for upkeep and interest. IMHO when you factor it all in, houses are a money pit just like cars.


Taxes and insurance are factored into rent, and surely landlords are factoring in cost of repairs over a long period of time when calculating what is charged. Yes, there's the occasional repair, but it's been my experience that to rent a similar size dwelling it costs roughly 35%-40% more per month to rent when compared to a mortgage payment where 100% of the hosue is financed, sometimes more. That adds up really quick.
 
Best thing I ever did was selling my house. Taxes are too much...just not worth it.

I'm in a nice apartment for not much more than just the property taxes were costing me.
 
Originally Posted By: Jarlaxle
Best thing I ever did was selling my house. Taxes are too much...just not worth it.

I'm in a nice apartment for not much more than just the property taxes were costing me.


Yeah, but you're still paying property taxes. They're just rolled up into your rent now. If you owned a property that appraised for the same as your apartment you'd be paying the same as the owner of that apartment.
 
Originally Posted By: Jarlaxle
Best thing I ever did was selling my house. Taxes are too much...just not worth it.

I'm in a nice apartment for not much more than just the property taxes were costing me.


How much do you pay for rent ?
 
Originally Posted By: Mykl
Originally Posted By: Jarlaxle
Best thing I ever did was selling my house. Taxes are too much...just not worth it.

I'm in a nice apartment for not much more than just the property taxes were costing me.


Yeah, but you're still paying property taxes. They're just rolled up into your rent now. If you owned a property that appraised for the same as your apartment you'd be paying the same as the owner of that apartment.


You missed the point--for what he payed in property taxes he now rents. Minus a mortgage payment. Thus a net savings.

When I ran the numbers, to see what I needed in retirement, it dawned on me that I should expect my property taxes to exceed my mortgage payment. Inflation ought to see to that. I mean, I don't pay taxes elsewhere, but prop tax is going to be a large drain in retirement.

I pay about $1,300 for mortgage, insurance and tax. I could probably rent for less, and then not be on the hook for repairs. Then again in ten years it might drop to $500 once the pesky mortgage is paid off! Rent tho will just keep climbing.

I have low taxes, just under $4k. I have a coworker who has $12k, but his house is easily 3x mine if not more. He also doesn't hate his house.
 
Originally Posted By: sciphi
Originally Posted By: dlundblad


Another thing Dave says is to shop before buying. What if a "new" car is needed right away? If I need a new car, it will be because my current one has failed and isn't fixable and I will have no time to shop. If someone has time to shop, their current car is still good enough IMO. That being said, if I had to make an impulse car purchase, I might be more inclined to spend a bit more on something that I actually want and will want to keep in the long run. Its a double edged sword I suppose.


A unique subset of needing a different car is when the current car has a known terminal issue such as rust or can't pass emissions without a lot of money. That gives enough time during good weather or before next year's inspection to pick out a different car for a good price. That does take some planning and basic knowledge of cars, which not everybody can or wants to do.


Very valid point. I forgot about emissions and inspections. None of that here in Indiana!
laugh.gif
 
Originally Posted By: Mykl
Originally Posted By: Jarlaxle
Best thing I ever did was selling my house. Taxes are too much...just not worth it.

I'm in a nice apartment for not much more than just the property taxes were costing me.


Yeah, but you're still paying property taxes. They're just rolled up into your rent now. If you owned a property that appraised for the same as your apartment you'd be paying the same as the owner of that apartment.


You can deduct the property taxes, utilities, repairs, and interest, etc., in a business, plus take depreciation. The math is different compared to a purely residential scenario, but, yes, everything is factored into the rent.
 
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