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| Dave Ramsey Guarantees If You Have A Car Payment, 'You Will Be Broke Your Whole Life' |
| 2024-02-29 |
| [Benzinga] Despite being a self-professed car enthusiast, financial guru Dave Ramsey declares cars as a significant financial drain. Through a series of TikTok videos, he underlines the pivotal decision to purchase vehicles with cash and the financial drain posed by car payments. Ramsey compares homes, which generally appreciate, and cars, which depreciate, stating, "I guarantee you’ll be broke your whole life as long as you stay in car payments because it’s the most expensive thing you buy that goes down in value." He points out the irony of high car payments for luxuries, such as DVD players, at the expense of significant financial goals like college funds. Highlighting the societal shift that regards minivans as status symbols, Ramsey questions the wisdom behind such spending, especially when a vehicle like the Honda Odyssey commands a price comparable to luxury brands. Ramsey shares insights on the spending habits of millionaires when it comes to vehicles. In a TikTok video he said, "The average millionaire drives a four-year-old car with 41,000 miles on it, and of course, it’s paid off." This habit is starkly different from the prevailing consumer behavior of accepting car payments that now average over $500 a month for 84 months. He emphasizes that these individuals have not had car payments in decades, a factor he attributes to their financial success. Ramsey calculates the opportunity cost of such payments, suggesting that investing the same amount from age 30 to 70 could yield around $5 million in a Roth IRA, thus illustrating the trade-off between short-term satisfaction and long-term wealth. "I hope you like your car," Ramsey quips, underscoring the trade-off between immediate satisfaction and long-term financial growth. Ramsey’s advice extends to the practice of purchasing vehicles, where he cautions against buying new because of the steep depreciation cars face within the first four years, losing 60-70% of their value. He proposes buying a quality used car as a financially sound alternative, except for individuals whose net worth exceeds $1 million, for whom the depreciation of a new car poses a lesser impact. |
| Posted by:Besoeker |
| #4 I bought my current (and maybe forever) 2020 F-150 in June 2021 with a trade-in and $20,000. Told them I would pay it off ($72,000) within 18 months. Only bank that would lend was Ally (Amazon). Paid it off at 14 months. They were left like many of my lovers....unsatisfied, apparently |
| Posted by: Frank G 2024-02-29 20:12 |
| #3 When you are a car company and your quality control and cost-per-unit pricing exceeds market demand, you can improve quality, reduce overhead, decrease product inventory on-hand and refocus on basic markets. Or, you can buy a politician and have them politically define "obsolescence" of the past products to enforce sales, regardless of economic hardship for the customer base. Hmmmm, which do you think the demokrat, Ivies-grad, WOKE MBA will chose? |
| Posted by: NoMoreBS 2024-02-29 15:55 |
| #2 If the proposed European ban on repairing vehicles over 15 years old passes and spreads, my three paid-for vehicles (1999-2011) will all become scrap in two years. |
| Posted by: Glenmore 2024-02-29 14:20 |
| #1 Perspective: The average monthly car loan payment in the U.S. is $726 for new vehicles and $533 for used ones originated in the third quarter of 2023. |
| Posted by: mossomo 2024-02-29 13:51 |