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When I first heard about Ramsey and looked at his baby steps, I knew things were going well when I was already on step 6 and 7. I learned important financial lessons early in life.
I find his radio program entertaining. He has solid basic advice especially for those struggling and in debt. His advice is less useful for those with decent savings and investments with little or no debt. Personally, I never agreed with his views on paying off a mortgage early when rates were 3% or a low interest auto-loan. Other than that, his baby steps are solid. He should probably update the baby step 1 emergency fund of $1000 to $2000 due to inflation. Car repairs have risen drastically in the past few years.
This is the first time that I listened to a DR video, after hearing the phony southern accent and the many biblical phrases, I knew I must be sitting in the wrong pew. After getting his most enthusiastic response from the comment about his gun carry permit, I also knew he was preaching to the right audience.
Not impressed. I noticed Dave never really answers the question and just beats around the bush with non sense generic conversation that doesn't really consist of any "advice". Where the person got the money, what did so and so do for a living.
Watching a reply on one of his shows reminded me my I can't be a fan of all of his advice.
Caller:
-- fully funded emergency fund (he never asks exactly what she means by that)
-- saving 22% of income toward retirement
-- paid off house (He did ask how that happened. She didn't answer that, just nervously chuckled "I know please don't beat me up for that.")
-- 22K to buy the car she's leasing. Said Kelly Blue Book on the car is 27K
-- she makes $41K
He said that's a lot of car for only making 41K, and asked if she could pay it off right away. She said she would have to eat into her emergency fund. And at first he said so do that. THEN he asked how much she made. She said 41K. Then he said don't tap that EF. (Not even know how much she has.)
Despite her first three positive factors, he told her to sell the car and make 5K on it. He never explicitly said by a 5K car with that "profit" or said take that five pull some out of EF and get, say a 10K car for cash. So no he provided no guidance there.
-- She never answered how the house got paid off.
-- He never asked just how much EF she had.
So even with a paid off house, and "fully funded" EF and saving 22% for retirement -- he still didn't want the woman to keep her car and just pay it off as quickly as she could.
Can someone please tell me how car leases work?. The caller said she owed 22K, and KBB value was 27K.
1) Can she sell a car she's leasing?
2) If she wants to "trade it in" does the dealer HAVE to give her that 27K, if she only owes 22K on it?
It was clear to me the caller knows nothing about money because at one point she asked should I sell the car for the 27K and just cut her losses. Dave pointed that owing 22K and selling for 27K isn't "cutting your losses." She may have seen divesting her self from or getting rid of the car as "cutting her loss." But it's still not "cutting a loss."
Watching a reply on one of his shows reminded me my I can't be a fan of all of his advice.
Caller:
-- fully funded emergency fund (he never asks exactly what she means by that)
-- saving 22% of income toward retirement
-- paid off house (He did ask how that happened. She didn't answer that, just nervously chuckled "I know please don't beat me up for that.")
-- 22K to buy the car she's leasing. Said Kelly Blue Book on the car is 27K
-- she makes $41K
He said that's a lot of car for only making 41K, and asked if she could pay it off right away. She said she would have to eat into her emergency fund. And at first he said so do that. THEN he asked how much she made. She said 41K. Then he said don't tap that EF. (Not even know how much she has.)
Despite her first three positive factors, he told her to sell the car and make 5K on it. He never explicitly said by a 5K car with that "profit" or said take that five pull some out of EF and get, say a 10K car for cash. So no he provided no guidance there.
-- She never answered how the house got paid off.
-- He never asked just how much EF she had.
So even with a paid off house, and "fully funded" EF and saving 22% for retirement -- he still didn't want the woman to keep her car and just pay it off as quickly as she could.
Can someone please tell me how car leases work?. The caller said she owed 22K, and KBB value was 27K.
1) Can she sell a car she's leasing?
2) If she wants to "trade it in" does the dealer HAVE to give her that 27K, if she only owes 22K on it?
It was clear to me the caller knows nothing about money because at one point she asked should I sell the car for the 27K and just cut her losses. Dave pointed that owing 22K and selling for 27K isn't "cutting your losses." She may have seen divesting her self from or getting rid of the car as "cutting her loss." But it's still not "cutting a loss."
As many others have said, he's best for people who are in debt or have nothing and are just starting to save. His "baby steps" are good advice for someone just starting out.
A fully funded EF in his case is 3-6 months of living expenses. It's likely he didn't ask her the amount because he knows what it equals and he doesn't want her to touch it, in case of job loss or sickness, etc.
Would I sell the car? No. But in her/his case maybe he wants her to sell it because 1) it's a lease and there are hidden fees upon turn in and 2) there is equity in the lease so it's likely he is having her tap into that equity to purchase a more reasonable vehicle. It's not a terrible move IMO, but probably not something I would do.
I've never leased. That's why I was curious about the 5K "equity."
Can she sell a car she's leasing?
And does the dealer have to give her that 5K spread?
If not there goes the whole rationale.
Unless the dealer thinks they can get that 27 K for the car she turns in, what's in it for them to give her more than she owes on it. Especially, if she wants a cheaper car, especially from somewhere else.
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