When Should I Replace My Beater Car?

Jacob is with us in Sacramento hi Jacob how are you just the same sir how can I help so I've got a question about when you sell a car so I Drive a 2005 Honda it's got like a hundred and eighty-one thousand miles on it and I'm planning to drive it into the ground but I guess my question is when do you know it's financially a good idea to get out of that vehicle and not continue putting repairs into it you know the weird thing is that you can hardly ever justify selling a car based on repairs financially let me give you an example okay if you say okay the car drive the car all the way down to it's a two thousand dollar car it's not yet but someday okay you know three hundred thousand miles on it you've worn the wheels off of it and and you have a five hundred dollar or even a thousand dollar repair right yeah and you say well you know these repairs are killing me I'm gonna go buy a nice another little Honda for twelve thousand bucks well the first year that car is going to go down more than the cost of that repair on the old one so almost never can you justify mathematically buying a better car based on the math those are based on the gas mileage even very few people drive long enough miles to justify the difference on gas mileage especially cheapest gas is now so the whole Prius thing is a freaking joke you know in terms of figuring out a way to buy a thirty thousand dollar car versus a twenty thousand dollar car and make up that ten thousand dollars for the gas mileage you'd have to drive the freaking thing to the moon mathematically okay so you can't do it based on the math so what it comes down to is if you're going to buy a Prius you're doing that because you're worried about the planet or whatever you're doing I mean on the you know the the environmental issues right now in your case what we're saying is it comes down to hassle factor and the purchase of the newer vehicle is a small enough percentage of your world that the hassle factor is worth more than whatever that is you know and so let's say you're making you know you're making a hundred and a half and you go buy a $20,000 car you pay cash for it and you move up out of this car that you've driven down to 3,000 bucks in value and you really don't get anything except reliability for that and a lowered repair bill but I mean the difference in 17,000 bucks you'll never get that back in repairs okay you know what I'm saying it's just you got a little nicer car it's a creature comfort and you don't have you know you're not sitting on the side of the interstate with your cell phone in your hand trying to figure out how to get off the you know off the side of the shoulder here so because it's a pain in the butt to breakdown right so at some point it's just hassle factor and comfort as a percentage of your net worth and your income it's a non-issue so you move up in car and that's a reasonable thing but you really can't mathematically justify the expense but you'd never repair it you mean you could rebuild the whole freakin little car you know and and still would be less in it then then you paid to move up okay that make sense so I but it's still I still would tell you to move up at some point and not and not bark at you about it and you know my rule on cars is all of your things with motors in them added together should be less than half your annual income and you pay cash for them okay yeah I can do that the plan is eventually when when the element dies to go and get a Subaru Impreza that's used and you know yeah in our cash flow scenario yeah and you pay cash for it and you but again you're moving from the element which might be worth three or four thousand bucks at the time and you move up from that into maybe a fifteen thousand dollar Subaru right yeah yeah that that's what three years old or something at that time and low miles or something in there and and yeah do that and we tell people not to buy a brand new car for these exact same reasons unless you have a net worth of at least a million dollars now once you've got a million dollar net worth the loss in value on a brand new car is a small enough percentage of your world it's not ruining your life but when you got no money and you make 50 grand and you're driving a thirty thousand dollar car that's stupid zone yeah you're not there but I mean for our listeners sake you know that we tell people that because you you're just losing your butt every day do every time you start the car you lost another thousand bucks you know it's just crazy and then you scratch your head and wonder why your kids college fund isn't funded and that's what we tell people not to do so you're on track here but I also want to give people permission to you know drive it down till the wheels fall off that's fine but go ahead and move up when you've got the cash and when you got yourself in good financial condition you're out of debt you got the emergency fund in place you got a car you got some car money above that and then get you a decent vehicle I don't mind you doing that at all I was trying to encourage a young friend of mine who's got a net worth of about a million dollars this weekend go ahead and you know she was not wanting to buy a new car and I said you know you're in good shape you're just being a tightwad you know go get the the difference in the new one and the other one I would get a new one and I bought new cars but only in the last few years as I've gotten my net worth up there okay hey man thanks for the call 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] you [Music]

Channel: The Dave Ramsey Show

Views: 662,573

Rating: 4.8722982 out of 5

Keywords: When Should I Replace My Beater Car?, beater, dave ramsey live stream, dave ramsey show, dave ramsey, dave ramsey live, debt free scream, car, money, the dave ramsey show, replace, cars, engine, used, how to, dave, ramsey, dave ramsey debt free scream

Id: ho5XhqgoMEs

Length: 5min 46sec (346 seconds)

Published: Wed Dec 07 2016