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The truth is, most people don't buy a car for transportation. They buy it to make a "personal statement". Why in the hell else would anyone pay 50k for a shiny new 4x4 pick-up truck? Mine cost $700 and is still running. I bought it 3 years ago, replaced the door hinge pin bushings, replaced the distributor cap and wires and it's as reliable a rig as I've ever owned ('cept the 1978 Mercury Zephyr I bought for $400 and drove for 3 years without even changing the oil. I later sold that for $650).
Used cars are one of the best deals money can buy. For under 5k you can get very reliable transpo. The sales tax is lower, they do not require full coverage to insure (if you paid cash), and if they get a parking lot ding you're not gonna lose your mind. You can also throw Taco Bell wrappers on the floor and not diminish the value.
If you're going to drive an old car for sub-3000, you need two of them. One for backup when the other inevitably goes offline. My 1988 S10 Blazer is down right now, awaiting arrival of a part.
And while we are on the topic of Dave Ramsey, everyone should do themselves a huge favor and listen to 2 or 3 of his radio shows or podcasts. It will open your eyes to RATIONAL use of money, even though he sprinkles the advice with religious silliness. Throw out the Jesus stuff and DO EVERYTHING ELSE HE SAYS. You will be in control of your money. Since money IS time, you will also control that to a much greater degree. And since time is literally life, following a smart financial plan is literally giving yourself more life than you have now.
Great stuff. Inspiring stuff. Life changing stuff. Rational and sensible stuff.
How is it any better to sink all your cash into a car and lose out on better returns through investments, as opposed to minimizing your out of pocket expenses on a depreciating asset? The car isn't going to be worth more or less later on because of how you paid for it. Find a good interest rate and finance and keep the cash in the bank or in investments.
Again, DR's advice is for those whose finances are on their way into the toilet. Do you think the people who have mismanaged their money so badly that they are about to lose everything understand investments? Doubtful.
I'm not saying sink all your cash into a vehicle..... I could buy a lot nicer vehicle than I have, but I don't NEED it. That's the issue he is trying to address. Many people who are broke live on credit. They have to get that new 4k TV. So they finance it. They need that diamond ring, so they finance it. They need that $60k car because Sue at work has it, so they finance it. They desperately have to get a bigger house, so they pick the one that has a payment that stretches their budget with the mindset of "Oh, we can just eat out less" and finance it. They want to go to a nice $100 dinner and can't afford it so they pay with a credit card.
He's trying to get people to think logically about how they use credit and spend their money. People spend the most money on two things.... a house... and a car that are also the biggest drains on a bank account. You have to stop the hemorrhaging at some point and have to start somewhere.
If you're going to drive an old car for sub-3000, you need two of them. One for backup when the other inevitably goes offline. My 1988 S10 Blazer is down right now, awaiting arrival of a part.
Not always the case. I drove a 1995 Mazda MX3 with 150k miles on it for two years. I bought it for $1,800 and the only thing I ever did was swap the radio when the factory one stopped working. It wasn't glamorous, but I didn't have a car payment for two years, the insurance cost me $18 a month, and I spent about $50 a month in gas.
I took the extra money that I had in car payments previously (saved $350 a month) and paid off some things we needed to take care of. When everything was paid off and I was comfortable going back to something nicer, I sold it for $1,700.
We should probably modify that statement to, "If I don't buy a new car, will there be used cars available for me to buy." Yes, a silly statement. Do you have the idea that DR doesn't want anybody to buy a new car?
The person I was responding to was telling everyone that buying used is what you need to do. I was not responding to DR's statements, but just that one individual. And my response was if everyone followed THAT advice, then no one would buy new cars. And if no one bought new cars, then soon there would be no used ones for HIM to buy.
If you're going to drive an old car for sub-3000, you need two of them. One for backup when the other inevitably goes offline. My 1988 S10 Blazer is down right now, awaiting arrival of a part.
Are you suggesting that only older vehicles break down? That's interesting, because I drive by two repair shops on my way to work and both of them have had newer cars setting there for 3-4 days waiting on parts or the time to fix them.
The last time my 1989 Caprice was in the shop was to fix the exhaust which was ripped off when I hit a deep pothole on a gravel road. The same thing could have happened to a brand new car, the only difference is that it would probably have taken a couple of days to get the parts to fix a new car where mine was fixed within a few hours.
I've listened to Ramsey off and on for years and while I don't agree with some of what he says his basic message is one that needs to be heard by many people.
We just "retired" our '97 Tahoe with 205000 miles. It still runs well and when I sell it to someone will make them a decent vehicle, the problem is it is needing some mechanical work that I just don't want to do AND the mileage it gets is no longer makes sense for us (12 city/16 hwy).
I got a '14 Ram truck w/15k miles for a very,very nice price and 2.5% interest. We intend to keep this truck for at least 10 years like we did the Tahoe.
And while we are on the topic of Dave Ramsey, everyone should do themselves a huge favor and listen to 2 or 3 of his radio shows or podcasts. It will open your eyes to RATIONAL use of money, even though he sprinkles the advice with religious silliness. Throw out the Jesus stuff and DO EVERYTHING ELSE HE SAYS. You will be in control of your money. Since money IS time, you will also control that to a much greater degree. And since time is literally life, following a smart financial plan is literally giving yourself more life than you have now.
Great stuff. Inspiring stuff. Life changing stuff. Rational and sensible stuff.
His advice is simple and not sophisticated. While this is fine for the audience he is trying to reach (those who are desperately drowning), it is often not enough for those who want to get more sophisticated with their money. Dave has his place, but it's not the end all, be all of financial advice. Still, I agree with you that if you were to listen to Dave and do NOTHING ELSE, you'd be far better than the average person off the street.
My girlfriend's Chapter 7 was just discharged in the last couple of weeks. She surrendered the 2013 Ford Focus she had on loan and bought a 2000 Pontiac Grand Am in cash for $850. The car has more wrong with it than it's worth, and left her stranded last night within the first two weeks of using the car.
We saw several nice cars in the $5k range about a month ago that were in far better shape and likely more reliable than what she has. There is a definite sweet spot between spending too much and getting into too much debt, vs. swinging the other way and getting something so cheap that it costs more to repair than it's worth or is downright hazardous.
His advice is simple and not sophisticated. While this is fine for the audience he is trying to reach (those who are desperately drowning), it is often not enough for those who want to get more sophisticated with their money. Dave has his place, but it's not the end all, be all of financial advice. Still, I agree with you that if you were to listen to Dave and do NOTHING ELSE, you'd be far better than the average person off the street.
My girlfriend's Chapter 7 was just discharged in the last couple of weeks. She surrendered the 2013 Ford Focus she had on loan and bought a 2000 Pontiac Grand Am in cash for $850. The car has more wrong with it than it's worth, and left her stranded last night within the first two weeks of using the car.
We saw several nice cars in the $5k range about a month ago that were in far better shape and likely more reliable than what she has. There is a definite sweet spot between spending too much and getting into too much debt, vs. swinging the other way and getting something so cheap that it costs more to repair than it's worth or is downright hazardous.
Yes it is simple. That's what some folks need.
Dave's advice is the first big step. Once you're out of debt and back on your feet it's time to make decisions on how to increase your wealth and manage your finances better. It's the vehicle to get to financial independence, not necessarily the vehicle to maintain it long term.
When choosing a cheap vehicle to get you by on some wise decision making is necessary there too. You really can't grab the first thing you see. You need to do your due diligence in making sure that what you get will sustain you through the tough times of buckling down.
What's "cheap" for me might not be "cheap" for someone else. I fix my own... so that $850 car might work for me if I have inspected it and know that I can easily and cheaply repair it myself. If I see that I can make it a reliable vehicle for $1,200 then maybe that is a deal I'd risk some money on. For someone that isn't able to do that, the $850 car may end up costing closer to $2,000 after repair so it might be wiser for that person to increase their definition of cheap to $2k+ in hopes of finding something that won't need those same levels of repairs.
They may also need to budget in some money to have a reputable garage do a vehicle inspection before they purchase it to make sure they understand what they are getting into.
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