It's realistic for anyone. It just depends on what sacrifice you are willing to make.

 

Not really.

It's realistic for anyone. It just depends on what sacrifice you are willing to make.

 

I have to agree with you (for once. )

Ok, somebody please tell me how this scenario makes sense. I have a car loan. Dave Ramsey would have me to stop putting money in a 401k so that money could be used to help payoff the car loan. The car loan is at 6.99%. The money I am putting into my 401k is matched by my employer at 50%. I just checked and the return on investment over the last 12 calender months is 25.14%. Why would I stop funding my 401k simply to save 6.99% on a car loan?

 

Once your debts are paid off, then ALL of your money can go towards investing. Under your current scenario, once this car is paid off, I presume you will get another with another loan. The bottom line is-he has millions of dollars, and his way works. Nobody is forcing you to do it. Keep doing it your way and see the score at the end of the game. 'The borrower is slave to the lender."

Not really.

 

Example?

It's impractical for a great majority of people.

 

Now if he said you don't need to buy a NEW car I'd be cool with that in many/most cases.

 

However, if I understand him correctly he's anti-car loan which is not practical for most people.

 

I drive 30,000 miles per year. When I need to replace my car I am not buying a $5k car and I choose not to stroke a $15k to $20k check. I do not want to lock up that much money when I need to use it for education expenses and when the interest rate on my loan is low.

 

Before you say I'm the exception due to the # of miles I'll throw out this example as well.

 

I'm a relatively recent college grad who gets a good job that requires me to drive a lot. I can't have a clunker for this job. I can't show up at a customer's site trying to represent my company professionally in my 1994 Taurus . I can't drive a $5k car because a)I don't have $5k yet and b)I need a dependable car to make sure I get to where I need to be.

 

Lots of examples where buying a cheap used car is impractical OR tying up $20k just to avoid a loan is impractical.

 

Example?

 

...

OK...so, I bought my '94 Honda Civic for $1500.

I had a new starter put in in January=$200

I plan to have the steering rack replaced shortly ~$700

I will have a window repaired-~$125

I will have the exhaust repaired-~$700

It has 244K miles on it, but no more than I drive it, it's probably take me another year to two to hit 250K, at which point I'll get a new motor.

 

So, all told, by the end of the year I will have spent ~$1725 on my '94 car, and it will STILL keep running. If I decide to go ahead and get the new motor next year before it gets to 250K, I still won't have spent more than $3600 on my car in two years. I can't possibly imagine a scenario that makes it a more logical choice for me to buy a new car instead of fixing the one I have.

...

You made the statement that it isn't practical for the majority of Americans. Clydes example would cover about .5%. On top of that it's not that good of an example.

 

Again, if you are willing to make sacrifices it is realistic for 100% of Americans.

OK...so, I bought my '94 Honda Civic for $1500.

I had a new starter put in in January=$200

I plan to have the steering rack replaced shortly ~$700

I will have a window repaired-~$125

I will have the exhaust repaired-~$700

It has 244K miles on it, but no more than I drive it, it's probably take me another year to two to hit 250K, at which point I'll get a new motor.

 

So, all told, by the end of the year I will have spent ~$1725 on my '94 car, and it will STILL keep running. If I decide to go ahead and get the new motor next year before it gets to 250K, I still won't have spent more than $3600 on my car in two years. I can't possibly imagine a scenario that makes it a more logical choice for me to buy a new car instead of fixing the one I have.

 

Is that realistic for someone who drives 20-40 miles a day to work? You only put about 6k miles on a car in a year or two. If I remember correctly you even ride the bus to work most of the time right or you used to? It's not worth the headache of having to worry about it breaking down like that when I need it to be reliable and get me to work everyday. Obviously it works for some but I don't think it is realistic for the majority of people. I'm not talking about $20-30K car.

You made the statement that it isn't practical for the majority of Americans. Clydes example would cover about .5%. On top of that it's not that good of an example.

 

Again, if you are willing to make sacrifices it is realistic for 100% of Americans.

 

I could sacrifice and eat Roman noodles everyday as well and have a lot more money than I do but that's not very realistic.

Is that realistic for someone who drives 20-40 miles a day to work? If I remember correctly you even ride the bus to work most of the time. It's not worth the headache of having to worry it breaking down like that when I need it to be reliable and get me to work everyday. Obviously it works for some but I don't think it is realistic for the majority of people.

 

The car thing is tough. The thing to do is to pay off all of your other debt. Then pay the car loan. I will be paying off an 09 Dodge Avenger (Mrs. Crunch's ride) Next month. Yes I took out a loan, but have since paid off all other debt (including a credit card) by using the snowball method. After those were gone all of the money that went towards those bills were aimed at the Dodge. Probably the one thing that I don't see eye to eye with Ramsey, is the emergency fund. I'm not comfortable with a grand for that.

I could sacrifice and eat Roman noodles everyday as well and have a lot more money than I do but that's not very realistic.

I know you're pretty young. If I would have known at your age what I know now, I'd be rich. And getting real close to leaving the salt mines.

The car thing is tough. The thing to do is to pay off all of your other debt. Then pay the car loan. I will be paying off an 09 Dodge Avenger (Mrs. Crunch's ride) Next month. Yes I took out a loan, but have since paid off all other debt (including a credit card) by using the snowball method. After those were gone all of the money that went towards those bills were aimed at the Dodge. Probably the one thing that I don't see eye to eye with Ramsey, is the emergency fund. I'm not comfortable with a grand for that.

 

And like others I don't agree with paying off the lowest interest rate first. Simple math proves why that doesn't make sense. It might make people feel good they finally paid off something and to move onto the next interest rate but it doesn't make sense IMO. If it works for you that's great. But all you have to do is be disciplined and keep pounding away at the cards or whatever with the high rates.

I know you're pretty young. If I would have known at your age what I know now, I'd be rich. And getting real close to leaving the salt mines.

 

 

Teach me.

And like others I don't agree with paying off the lowest interest rate first., Simple math proves why that doesn't make sense. It might make people feel good they finally paid off something and to move onto the next interest rate but it doesn't make sense.

 

It's not the lowest interest rate 1st. If it was then we'd be trying to pay off our mortgages 1st. It's the smallest debt amount 1st. When I started it was a Kohls card with about 500 bucks on it. Couldn't even tell you what the interest was

I could sacrifice and eat Roman noodles everyday as well and have a lot more money than I do but that's not very realistic.

 

Agreed, but look at where "realistic" has gotten most people from a financial perspective.

 

Something that has gone ignored in this discussion is the purpose behind Ramsey's program. He essentially says that there are three things God asks that we do with our money: Give it, save it, & spend it. A big motivation for doing the Financial Peace program, as he outlines in the final lesson, is so that you have money freed up to become a big-time generous giver. I don't understand why a financial plan, with that as one of its major goals, is so often ridiculed. Whether you are a Christian or an atheist, I would think that is an ambition we could all champion.