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^ was going to post that same thing before I saw it, also I like having a warranty... I should drop a few grand on a used car with unknown history and possibly have hundreds $ a month in repairs, or go new for peace of mind... I think Dave Ramsey is an idiot.
Also I like to reward myself with a nice car. So I choose to spend 500 a month on a lease or depreciation on something new, rather than $1000 a month on fancy food and drinks going out every weekend. It's all relative
DR is kind of like financial advise for dummies. He waters everything down to simplistic situations and terms, based on assumptions.
For someone who is clueless in any kind personal finance, following DR's advise will help them a lot. For someone already savy in their personal financial and wealth management, DR's advise is going to be making assumptions that do not apply to them and therefore will make the advise not completely relevant to their situation.
The real point though is valid. New cars depreciate a lot, and as such are not wise purchases from a financial standpoint. For an awful lot of Americans who have next to zero retirement savings or capability to change that situation, taking huge depreciation on new car purchases is an extremely poor financial decision.
He's saying that you take a huge loss on the purchase of a new car, and that only millionaires should buy new cars because they can afford to take the loss. I think his point is just that's it's a silly waste of money, because as soon as you sign on the dotted line, it's lost value as a "used car" anyway.
He then goes on to say that if you put the car payments into an IRA instead, you could become a millionaire. If only life was that simple. But, I do agree that buying new cars is a waste of money.
I buy cars based upon my needs and wants, so financial and especially depreciation are not the primary factors driving the decision. My net worth does not factor into my evaluation.
Get what you want / need at the best affordable price... forget this rule.
I think the author was using the $1million figure to grab attention to an otherwise valid argument. You know how they teach you in writing or English class to use attention grabbing headlines? That is it.
His point, albeit not the million dollar figure, is correct. Folks that don’t have lots of disposable income or depend on their weekly paychecks shouldn’t invest a huge chunk of their financial asset on something that would only depreciate.
Dave Ramsey's advice is kinda simplistic and sprinkled with Jesusy nonsense.
But IMO he's not really wrong on this point. Maybe you could adjust the number by a few hundred thousand if you like, but it's a valid point.
For your *average* American, a new vehicle is a ridiculous luxury that they can't pay for in any responsible manner.
You are exactly on point. I see your last sentence in reality every day. I live in the Metro Detroit area and on my commute home travel thru a suburb that is generally lower , to low/ mid income. Houses in the $25k to $70k range, yet I constantly see Escalade's, Denali Yukons, Mercedes and BMW's. Or SRT Challengers and Chargers.
Last time I checked on the price of an Escalade , it was $80k. Driving an $80k vehicle while living in the south end of East Pointe just doesn't make sense to me.
I would assume that most people on the economics board are financially educated, so of course Ramsey's advice is going to sound dumb to the majority of us--because the message doesn't cater to the majority of people on this board. However, I wish he wasn't so damn condescending.
What would be foolish about buying a basic Toyota/Subaru for $25,000 and keeping it for as long as it runs? (e.g. 200,000 miles) That seems like a very sensible thing to do.
Last edited by NW4me; 05-11-2018 at 10:19 AM..
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