We Really Need A Car. Are Car Payments Okay?

Eric is with us in Olympia Washington hi Eric how are you hey I'm doing well sir how are you better than I deserve what's up hey I'm have a little bit of a disagreement with my wife I was hoping you could tip the skills and give us some outside perspective I want she wants to move up in car I'd like to save up and pay cash for the vehicle however she thinks that having a larger savings is okay she wants to finance the vehicle and she's okay with having a car payment if it means we have a larger savings and I tried to explain to her about you know depreciation and tell her why it's stupid to get debt but I think she needs to hear from somebody else so I was hoping you could speak to that a little bit okay the thing I've noticed after 30 years of doing this is that different classes of people regardless of race different socio-economic rungs on the ladder do different stupid things poor people the rough into town play the lottery more often than anybody else lottery tickets are almost all sold in poor zip codes payday lenders eight hundred percent Interest rent to own title pawning you don't see these places in the rich into town you know why because rich people don't do them that's how they got rich okay in the middle class middle class struggles with credit cards with student loans with car payments and with whole life life insurance and they give their money they give their money the middle class ensures that they're never going to be anything but middle class by being in debt to credit card companies and car companies and borrowing and using whole life policies which are a complete ripoff and in credit cards and so the and then you look at the upper class and go okay what do they do well we want to mimic that because 90% of millionaires in America started with nothing and became millionaires they didn't inherit their money they're not crooks and they're not professional athletes or regular people they just did things different so what do they do when I'm interviewing people on the millionaire theme hour for example I asked them how many new cars of you bought before you are a millionaire they almost always told me one or two and it was the worst mistake of my life how much did debt cause you borrowing money cause you to become wealthy they almost always say oh no I never borrowed any money that was a blessing every time I borrowed money it held me back from building wealth and so that's what rich people say and what you're broke brother-in-law thinks or what some journalism student with eighty two thousand dollars in student loan debt writes on market watch I couldn't care less about or is a you know a guest contributor from motley fool and they meant fool for sure I mean you know I don't care if you're broke what your opinion is about money you follow me so we follow the money here show me the money it's a jury McGuire moment and if rich people say the best way to get out of the best way to become wealthy is stay out of debt then we do what rich people say because that's how they got there you can't you know there's just no disputing that and the bottom line is this the average car payment America now this month we got last month we got data that it's now five hundred and one dollars a month is the average okay $500 a month invested from age 30 to age 70 and the decent growth stock mutual fund in a Roth IRA is over five point six million dollars that's what a car payment costs you it's five million bucks over the scope of your life and so that that's why you know rich people don't have car payments because that's how they got rich and so your the point is your most powerful wealth building tool is your income and you can't make middle-class mistakes with money and be anything but middle-class there's nothing nothing immoral are in noble about being middle-class it's a matter of if you if you eat the same food fat people you're gonna be fat duh you know and if you want to be skinny find out what skinny people eat and eat what they eat I wish I could do more of that I don't do enough of it myself but I mean it's still a this great example right find out somebody's been married 50 years and they have a fabulous marriage and they can't keep their hands off each other so what did you guys do because other people I know about killed themselves and I want to know how you get a marriage like that you know and so I'm going to talk to people who are winning at something and do what they do and not somebody that's just got a feeling or an opinion because that'll make you broke your whole life so all of that is how I came to the conclusion that and through the faithlyn's but the borrower is slave to the lender and I can't find anywhere in scripture it says to get a car payment although deep Jesus did say they were all in one Accord right what a bum Shh okay okay so all of that to say there's no possible way you should ever buy a car with a car payment I would ride a bicycle before I had a car with a car payment and it's not forever I'm just gonna save up and pay for it but it sounds like you have the cash to pay cash for the car you want we're not far off we have about seven thousand dollars above our emergency fund and I would like to spend a few more months saving up the additional amount but she's I guess little anxious doesn't want to work or doesn't want to wait she commutes an hour each way to work currently and so it's right understand being a more cautious it's harder her cart is she driving now she drives the 2001 Mustang right now how many miles are just about two hundred thousand I would move up in corn now I agree with her but I would do it with the seven thousand in cash and then save up and do it again next year okay sorry both of you get your way I want her to have the nicer car she wants but I'm with you she waits till next year to get it in the meantime you can move her up about three times but good a car she's in now or four times as good a car she can now with that car plus seven grand right right well you know honestly I didn't think of it that way and that's a good idea sure I sure appreciate your help Dave you know but the big thing here is if you get the Y that whole diatribe I went on well if you get the why behind why you don't do car payments then it's not a matter of if I do them because I'm not going to do them but how do I work around it and still accomplish some of the goals once I take car payments off the table other creative answers start you know like staging it like we're talking about coming up on the table but the typical person just goes I wanted the moogle boy mmm and then writer scratch their head while they're broke their whole life because they're giving it all the stinking Ford Motor Credit or Lexus Motor Credit or Toyota credit or Chrysler creditor credit it is somebody's getting credit and in you you know and so it's a problem it's a real problem but just figure out a way to work around it hey I'm with her I think she's driving a piece of crap I'm an hour 2 hours a day and she's Riedel rattling along the road going when's this thing gonna leave me stranded out here in Washington because it kind of gets cold there in the winter yeah I'm getting her a better car or give her yours and you drive the crap on the - if you got a better car by the way that is federal law mom gets the good car was it our house anyway so but I tell you what man you guys the car payment is truly the mantra of the middle class and we have said many times on here that you know the credit card everybody credit cards are interesting everybody knows credit cards suck but everybody keeps using them so we're at the stage with the credit card that we were with the cigarette about 1985 everybody was disgusted with cigarettes everybody knew they killed you but nobody did anything about it but somewhere around 1985 it became like not cool at all to smoke anymore because it kills you and it's stupid and you smell bad things think things true credit card prepare card is the cigarette of the financial world and it's heading that direction it just may take another decade to get completely uncool I'm gonna help anything else to do this is the Dave Ramsey show hey guys thanks for watching if you enjoyed this video click the subscribe button to get the latest content and check out these other great clips from the show [Music] [Applause] [Music]

Channel: The Dave Ramsey Show

Views: 983,848

Rating: 4.8562279 out of 5

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Id: _oG6mQ5rjFI

Length: 8min 56sec (536 seconds)

Published: Fri Sep 08 2017