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And what connection is that? We have no money issues. Credit cards are paid in full each month. Two vehicles and one house are owned outright. Easily affordable when monthly pension income alone is in the five figures.
Really ? your monthly pension is at least $10,000 a month ? That's not really that hard to NOT have money problems then .. . .
That markup for a used car means “team used cars” are buying massively depreciating vehicles just like “team new car”
Guy A buys a new car full cash at $100K, takes it off the lot, brings it back in a day and is offered $70K. Dealer will still mark up that car at $95K when they put it back on the lot for re-sale as a used car. Guy B negotiates the price down to $90K and buys it the next day.
Guy A took a hit of $30K but he paid cash
Guy B took a hit of $20K but he financed it. Oh and he got an extended warranty which now puts his depreciation hit at $26K.
I’ll let you decide which guy was the fool.
In the scenario as described above, Guy B didn't take any hit, as he didn't sell the car.
I'll let you decide if your question (and scenario) make any sense.
You're missing Dave Ramsey's whole point. Just because you paid cash for the new car doesn't mean you can afford it ..
If you follow ALL of his advise it makes sense. The reason is instead of paying cash for the car, you should have put alot of that cash into a mutual fund..
If you put $350/month into 4 different types of mutual funds, all the data shows you will be a millionaire .. IT really is that easy ..
so paying cash for cars, but then not having enough to invest, really does mean you cannot afford the car.
But it doesn't. There is NO scenario that fits everyone.
Ive taken DR financial peace class and it is very good, but aimed mainly at people that dont know how to budget and it is alot of people in this country that fall into that category.
DAVE RAMSEY WILL NOT being picking you up from the side of the road when your hoopty they told you to buy while you save to buy a car cash breaks down.
Ramsey's philosophy is to live below your means so you can really enjoy life in the end vs struggle, but we are not guaranteed the future either, so if it is not breaking your wallets or affecting your savings, get a nice car you enjoy and enjoy life. Sometimes a piece of mind comes at a cost or having a way to get to work to make money costs money in the way of a automobile.
I think what DR speaks of is the insane amount of people paying $30-50K for all the Crossovers and Pickups you see all over the place costing $500-1000 for 5-7 or even 8 yrs worth of payments. And alot of these people live check to check and are a layoff from loosing everything.
You can get a nice used or CPO vehicle for $13-20K with 7r/100k powertrain warranty vs buying that same car new for $22-35K+ new.
Cars will always be a gamble, as you never know what can fail any given day. My friend has a 2013 Taurus that she paid $5k for extended warranty and was almsot done paying it off and once the warranty ended, the water pump failed at 120K and it cost $2000 to fix because its a 14hr job on the Ford 3.5L FWD's. Someone else I knew has a used Explorer for about $18K and when they car got to 68K miles past the 60K powertrain warranty, their water pump failed and their failure spit coolant into the engine and it cost the $8000 for a new engine, while they still owed $15K on the car. Nothing worse that making car payments and the equivalent of payments on repairs as well.
You cant take $$$ to the grave with you, so if you have it and have good saving buy a nice car you can enjoy and keep it 7-10yrs if it holds up. This can easily be done for $250 a month payments or just staying below $18K on used car purchases.
WRONG. If you followed his advise, you would be a millionaire within 20 years of being out of debt, and certainly wouldn't work until your 75.. No idea where you got that from, must be just making stuff up... . Dave Ramsey has never said anything along the lines of working until your 75, more like the exact opposite..
The OTHER part, that people seem to ignore on this forum, is after you are out of debt, you invest, save, and become a millionaire.
He backs up how to become a millionaire with actual data, and facts, $350 / month for 20 years in 4 different mutual funds, all the data and statistics show you will be a millionaire
All of his Mutual funds outperform the S&P500 ..
So now you're a millionaire with busted old stuff living in a dumpy apartment, living dollar to dollar while squirreling away millions. Now what? You retired at 45 with a million bucks but a million dollars won't make it through retirement unless you live a peasant lifestyle for the rest of your life. Then you die and leave what's left to your cats.
I think people don't understand what the entire point of making money is.
Thanks for correcting me. I shouldn't have said that.
I'm not saying new cars aren't possibly lemons either, just that there are a bigger number of used cars that have issues after the warranty is up and end up nickel and dining you in the end because one month the timing goes on you, the next you need an AC fix, etc.
He makes sense but the net worth criteria is pretty dumb IMO.
I like my method of buying a car. I get paid every two weeks, and throughout the year, I get 26 paychecks-24 of them I use to pay for my monthly expenses. I save those two extra paychecks and stash them in my car savings account. In year 5, that's when I evaluate if I need to replace a car. Whatever money I accumulate in that savings account is my maximum I would use to spend on a car purchase, including tax. If I don't need a car in year 5, then I evaluate my vehicle situation, on a year-to-year basis, until it's time to buy a car.
Any analytical approach -- such as yours -- is better than no analytical approach.
At the same time, I think it makes sense to include in the analysis a sober look at net worth required for retirement and progress towards achieving it relative to a person's age.
He's crazier than I thought. An unskilled wage earner with very little net worth can afford a new Kia with the kind of terms now being offered...
Life is about trade-offs regarding unlimited wants and desires in a life with limited resources. The choice for your hypothetical unskilled low-wage earner with very little net worth is as follows:
A) Buy & enjoy the Kia today and thereby put zero away for future retirement savings, virtually ensuring poverty in "retirement" and precluding his kids from affording college, etc
-- or --
B) Don't buy the Kia today and then invest that car payment money for a retirement 40 years hence, contributing to college for his kids along the way...
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Dave Ramsey has never said anything along the lines of working until your 75, more like the exact opposite..
