Dave Ramsey Car/Boat/Motorcycle Buying Advice

[bruceb58]

I listen to Dave Ramsey during my lunch hour if I am driving somewhere and he was asked a question by a listener if he could buy a car if he paid cash no matter what the price the car was. Dave's answer was interesting and makes total sense to me. He basically said that the sum of anything you own that has a motor in it be it a car, boat, motorcycle...should not equal to more than half your yearly salary. He said this is a rule no matter if it is financed or paid for in cash.

I looked back at when I had cars and boats and don't ever remeber a time where my vehicles ever approached half my salary and that includes even after I just graduated for college.

Wonder what everyone else here feels about that rule.

Another thing he says is never buy a new car unless your net worth is a million dollars or more. I know I haven't followed that rule early in my life but I have only purchased a handful of new cars..I am 52.

 

[yetiman]

Re: Dave Ramsey Car/Boat/Motorcycle Buying Advice

Yeah because your average car depreciates so fast, most people can't afford the 30% hit you take when you drive it off the lot. Most people that call Dave have more car then they can
Afford, all bout perception for some people.

 

[southkogs]

Re: Dave Ramsey Car/Boat/Motorcycle Buying Advice

That's one that I agree with Dave on - Even if I had a million bucks, I'd have a hard time blowing $30K on a car. I've been driving used cars that cost under $13K for most of my life.

If the million bucks ever makes it in my bank account, I might plunge into a more expensive boat - but it would be a BIG one

 

[TBGixxer]

Re: Dave Ramsey Car/Boat/Motorcycle Buying Advice

But isn't financing the American way? lol. I definitely break that rule since I typically only buy new. My thought process is that the new vehicle is always under warranty so I've never had any costly repairs. Also, I have great credit so get the good interest rates which helps keep payments low. I also buy Honda which retain value really well. I'm 2.5 years into my loan and already have equity in the vehicle.

 

[bruceb58]

Re: Dave Ramsey Car/Boat/Motorcycle Buying Advice

I'm 2.5 years into my loan and already have equity in the vehicle.

So is it just me or does that prove the point that you shouldn't buy a new car?



A used car, depending on the age, can also be put under warranty. Bottom line, the car depreciates more in the first two years than the cost of any repair you will need to make so buying a new car because of the warranty really does not make sense.

Even though I can afford to, I will probably never buy a new car again. A 2 year old car will typically still be under warranty as well.

Won't even talk about leasing! Friends don't let friends lease!

 

[TBGixxer]

Re: Dave Ramsey Car/Boat/Motorcycle Buying Advice

I sea (pun intended, boat forum) your point, especially on the lease. I like the low maintenance of a new car and then if I decide to keep it atleast I know how it's been treated. My last Honda was purchased new and I ran it to 120,000 miles with not one maintenance issue. Then traded it in for 5,000 towards my new car. It's all preference anyways, right?

 

[bruceb58]

Re: Dave Ramsey Car/Boat/Motorcycle Buying Advice

True. I guess... My preference is having more money after 10 years of owning a car. I also run my cars for over 200K miles. I have a Lexus which I have to admit I bought new. I will definitely keep it for 200K miles and now wish I just bought a used one.

I definitely wouldn't buy a new boat..they depreciate worse than cars!

 

[rivermouse]

Re: Dave Ramsey Car/Boat/Motorcycle Buying Advice

A thing I try to remember is "that its only worth what it would cost to replace it"

 

[skargo]

Re: Dave Ramsey Car/Boat/Motorcycle Buying Advice

Well that's one thing I agree with DR on.

 

[sublauxation]

Re: Dave Ramsey Car/Boat/Motorcycle Buying Advice

I think everybody should buy new cars so it makes it even cheaper for me to buy used. Sometimes boating stuff can be different. I did buy a new outboard, but there wasn't much difference in price for a newer used one. The same can be true for some boats. My dad bought a brand new basic 16 ft aluminum boat for at most a couple hundred more than a 20 year old used one.

 

[Woodnaut]

Re: Dave Ramsey Car/Boat/Motorcycle Buying Advice

We've bought several new cars and used nearly all of them for 10+ years. We prefer to buy a new, good quality vehicle and maintain it well. We put a lot of miles on our vehicles in a week an will drive them as long as is reasonable - which is usually a very long time. 200,000 miles is not unusual and we even put 357,000 miles on a Volvo that we bought new several years ago.

If you can find a good used car, well then that's great. But just because you buy a new car that doesn't mean your going to loose your shirt. At the end of it all, what's important is the cost per mile and aggravation it took to get there. (And for the ladies, the most important feature of a car is its reliability.)

 

[woodsyfeller]

Re: Dave Ramsey Car/Boat/Motorcycle Buying Advice

Dave Ramnsy finacial advice is a program on getting out of debt and saving when you get out of debt, What hes basically saying when people are paying @ 500 bucks a month for car payments with insurance , and on a $20k car after you pay it and intrest off your close to $25k+ into and you will never get that back. His basic philosophy is let someone else take the hit and buy a car a few years older and save literally thousands of dollars and if you are getting 200k miles on a car why not buy it with 50k miles and only pay $12k or even better look for a car with @100k miles or less and pay it off with cash for a couple grand and have no payments. What it basically boils down to is check the used vehicles thoroughly, just like you would a used boat.With proper maintainace your car should get another 80-100K miles and its paid off because you paid cash for it and the 500 bucks a month you were spending on your car would pay off other bills like credit cards or mortgages ect.(could you imagine an extra 500 bucks a month spent towards your mortgage)

 

[Silk]

Re: Dave Ramsey Car/Boat/Motorcycle Buying Advice

My philosphy has always been I can buy whatever car I want, I just can't buy a brand new one....that being said I would never purchase a car worth half my salary, new or used.

I love having no car payments, so I purchase older vehicles, pay cash and be done with it. My boat hauling vehicle is a 2000 Tahoe, still going strong. My commuting car is a 2006 Kia (yes, Kia). This frees me up to have fun stuff, like a boat for fishing and a place on a lake I can go to and fish to my hearts content spring, summer and fall... its all a matter of trade offs and priorities, since we are by no means wealthy, we live by the rule we can have anything we want, but we cannot have everything we want.

 

[skargo]

Re: Dave Ramsey Car/Boat/Motorcycle Buying Advice

Dave Ramsey is actually for people who have a limited financial education, and you don't get that education at school BTW No offense meant, but that is where his program is aimed. If it helps people great!

 

[Silk]

Re: Dave Ramsey Car/Boat/Motorcycle Buying Advice

Dave Ramsey is actually for people who have a limited financial education, and you don't get that education at school BTW No offense meant, but that is where his program is aimed. If it helps people great!

funny you should say that, but my son's highschool has started a basic personal economics class for highschool students featuring Dave Ramsey's course. I am all for it, he became much more conservative with his money then he was going into the course...it is a good course to have for students, imo. I learned by reading books on my own when I was in my twenties, after making some foolish decisions..yikes, school of hard knocks.

All that being said, I don't thnk I would have what it takes to dump everything and pay off my mortgages (house and business building) and live entirely debt free,

 

[southkogs]

Re: Dave Ramsey Car/Boat/Motorcycle Buying Advice

To agree - Dave Ramsey is a new package on basic household economics, but I think he actually packages it that way "giving you the same advice as your grandma would..." And ultimately, there's nothing wrong with buying a new car ... if you can afford the financial blow.

I think if you boil message down, it's all about doing math on a high end consumable. A year or two ago I purchased a 2007 Ford E150 with 30K miles for $12K. It was replacing a '97 Dodge Caravan with 310K miles. At that time, the cost for a comparable minivan was running more like $17K - $20K. In the end, I bought the big Ford because I would loose the least amount of money on it over it's life-span. Even with the extra gas, the math worked to being ahead of a $17K purchase over 5 years.

It's not about how the purchase works out, it's about how much money you can afford to lose when you buy a car.

 

[bruceb58]

Re: Dave Ramsey Car/Boat/Motorcycle Buying Advice

Dave Ramsey is actually for people who have a limited financial education, and you don't get that education at school BTW No offense meant, but that is where his program is aimed. If it helps people great!

Which is also most people.

How many people look at just the payment on a car as what they can afford vs what the total price of the car is?

 

[jkust]

Re: Dave Ramsey Car/Boat/Motorcycle Buying Advice

The fact a guy like Dave Ramsey exists to me shows how poorly people are educated or aren't self educated where financial well being is concerned. It just isn't that hard to earn a lot of money, become wealthy at a young age and make smart decisions to stay that way. Just takes working smart and self control. Those things are easy. It reminds me of the news article yesterlday locally talking about what is and isn't a healthy lunch to pack for you kids. Seriously, who on earth doesn't know that? All these rules of thumb are to me just silly. As for new cars, keep buying them so I can get then nearly new but used at a steep discount and less depreciation. Same with boats.

 

[ezmobee]

Re: Dave Ramsey Car/Boat/Motorcycle Buying Advice

I would not buy a new boat or RV. They just depreciate too fast. I used to say I would never buy a new car also. However, we have a problem. Our main commuting car gets 25-30k miles put on it annually. That leaves out buying the 5 year old 60-75k mile used cars I prefer as they would be worn out too quickly. Our experience with the 2-3 year old used cars with like 25-35k miles that we've bought is that they've been abused and had major issues. Even if the issues are covered by a warranty, the inconvenience of being without our primary car is great. So we currently have an '09 Accord we bought new to commute in, and a '05 Jeep Cherokee we bought at 5 years old with 80k miles. Both have been very reliable. We will probably continue on this path as each vehicle is paid off with hopefully a little better equity each time. My experience with 5-ish year old used vehicles with 60-75k miles on them has been that they were better maintained by owners than the 2-3 year old cars that were apparently thrashed by leasers or worse yet renters.

 

[ezbtr]

Re: Dave Ramsey Car/Boat/Motorcycle Buying Advice

I've bought ONE new car in my life, an 86 Toyota truck, great vehicle, but the next one was a 93 Toyota 4x4, with shell, lift and nice wheels with 50K on it for 11K, had a 100K warranty on it, I never used, sold it at 110K for $7500.00. Have always bought used since - you can get a warranty on ANY used car.