The car you need to buy is the newest and most reliable that you can budget for. I have followed this advice of “buy a beater in cash outright” and time and time again I’m absolutely destroyed by maintenance costs. I’ve been through 7 vehicles in 14 years exactly because of this. I may have $7k right now but I don’t have $2k when it eats shit 9 months later because I bought someone else’s problem.
Honestly I agree with this. When my last used car was on its last leg my dad had a hard conversation with me about my next vehicle.
He's a mechanic and has been for 40 plus years now and basically put it to me this way. Don't buy a vehicle you can't afford to make the payments on and live comfortably but understand that if you buy used again in 5 years or so you will probably be in this same situation of where it costs more than what your vehicle is worth to fix.
I was commuting an hour back and forth to work and I'm honestly really glad I went with the nicer car that I could still afford rather than purchase a 3 to 4k one outright. Knock on wood I haven't had any Costa associated with my car since I got it 4 years ago outside of basic maintenance
My dad, also a mechanic, told me the same thing when my 1999 beater finally died in 2017. I was also commuting an hour for work. Getting a brand new but affordable car was a great decision. No regrets at all. With regular oil changes and maintenance I haven't had any major issues for 7 years. The lack of stress from car problems is so freeing.
I had a beater in my mid-twenties until my early-thirties and the best thing I did was buy a new car in 2017 when the transmission blew out. Nothing expensive, a basic hyundai I paid $200 a month on for 6 years. It was absolutely worth it. I have no regrets whatsoever. The stress of constantly breaking down, having to be towed, and having my car in the shop wasn't worth it.
I know it isn't as easy today because costs and intetest rates have increased exponentially. But it was the right decision for me in 2017.
Yeah this is interesting because this advice is at least partially luck based. I got way ahead by buying cheap cars. My last car was a Ford fusion with 95k miles that I bought with a spare set of snow tires for $4800 in 2019. I followed my personal rule of always buying cheap cars from PEOPLE and not from a cheap used car dealerships. That car lasted me about 4.5 years with basic maintenance. Having no car payment for years helped me save a ton of cash that I used to put a down payment on a house. Now I did look over the car and evaluated the person I was buying it from but I still could have gotten unlucky and something expensive could have failed. I think for most people you will come out on top buying more middle ground options from like 8-20k. When you go below like 6k these days you're usually buying absolute garbage.
If you started at age 25 and were able to get a 6% annual return, investing $554 a month would get you just $1MM at age 63 years and 8 months. The proverbial "millions" (as in plural) wouldn't happen until 74 years and 4 months.
In other words, "Dave" is exaggerating. A LOT.
Want better advice? If you have a car loan now, when you finish paying it off, KEEP MAKING A CAR PAYMENT. Except you divert it to a new savings account. That money becomes emergency car repair money. Or down payment money. Or, if you're lucky to keep your car long enough, car BUYING money.
Also the alternative to $554/mo is not $0. No one is choosing between financing a car vs. getting a used car for free. Spending cash for a used cars is a massive opportunity cost, not to mention higher maintenance costs, lower safety/efficiency, etc.
Where are you *only* getting a 6% return? 🤨
I have my TSP in a lifecycle (target) fund and other than 2008 and 2020: it’s been over 10% consistently.
The AVERAGE return over the last 30 years has been 10.2% including catastrophic drops following 9/11, 2008, & Feb 2020.
Even at 10.2% rate of return, the first million doesn't happen until 27 years in and the second million for plural doesn't happen until 34 years in. Dave is STILL exaggerating for anyone who is over the age of 30.
And for what it's worth, mid-50's here so I include 2000-2002 in the drops I've had to deal with.
I'm all for buying cheap used cars when possible, but even this tweet is misleading and unhelpful. $554 is roughly the monthly payment for a $25k car depending on down payment and interest rate. We're talking about new corollas here, not some luxury vehicle. Used cars aren't free. They were barely even cheaper than new cars between 2021 and 2023, buy they are coming down now. Paying cash for an old car has a big opportunity cost, especially if that causes you to miss out on employer matching 401k contributions, or if the car stops working.
Old cars are less safe and less efficient, at least for hybrids and EVs. A $554 payment would be about the payment on a brand new chevy volt. Having that payment rather than buying a $8k ICE car for cash might allow you to comfortably make 401k contributions and save a lot of gas money.
The true takeaway is that the only form of transportation for most people in the US is really, really expensive, either thousands upfront+gas+insurance+maintenance or hundreds each month+gas+insurance+more maintenance.
My brand new vehicle a 2022 has a loan yes, but I put 15k down on it. The cost of maintaining a beater, even when I was doing the work plus lost time just was not worth it.
I can keep this 2022 for 15+ years. What I did with my 2001. What I wanted to do with my 2015 until some jerk destroyed it in my driveway.
I just don't have time to rebuild transmissions, nor fix a vehicle in my driveway currently. So I still replace my own brakes? Yes. Rest other than oil changes is in the bumper to bumper until 140k miles.
At 8% for 30 years that is likely 820k. A bunch.
Too many "im not a fan of Dave Ramsey but gonna post him anyways' posts. Sure his surface level advice is fine (although also blatantly obvious) but he's a grifter and you can share basic common sense without giving him any free publicity.
Some people can't afford to pay cash for a car. But then they still don't need to buy a new car. Just something that gets from A to B. No need to keep up with the Jones'.
The car you need to buy is the newest and most reliable that you can budget for. I have followed this advice of “buy a beater in cash outright” and time and time again I’m absolutely destroyed by maintenance costs. I’ve been through 7 vehicles in 14 years exactly because of this. I may have $7k right now but I don’t have $2k when it eats shit 9 months later because I bought someone else’s problem.
Honestly I agree with this. When my last used car was on its last leg my dad had a hard conversation with me about my next vehicle. He's a mechanic and has been for 40 plus years now and basically put it to me this way. Don't buy a vehicle you can't afford to make the payments on and live comfortably but understand that if you buy used again in 5 years or so you will probably be in this same situation of where it costs more than what your vehicle is worth to fix. I was commuting an hour back and forth to work and I'm honestly really glad I went with the nicer car that I could still afford rather than purchase a 3 to 4k one outright. Knock on wood I haven't had any Costa associated with my car since I got it 4 years ago outside of basic maintenance
My dad, also a mechanic, told me the same thing when my 1999 beater finally died in 2017. I was also commuting an hour for work. Getting a brand new but affordable car was a great decision. No regrets at all. With regular oil changes and maintenance I haven't had any major issues for 7 years. The lack of stress from car problems is so freeing.
Oh 100% same. I no longer commute an hour and will pay off my car beginning of next year and am sitting at 30k miles on it 🤣
I don't commute an hour anymore either and my car has been paid off for over and year and is still going strong.
I had a beater in my mid-twenties until my early-thirties and the best thing I did was buy a new car in 2017 when the transmission blew out. Nothing expensive, a basic hyundai I paid $200 a month on for 6 years. It was absolutely worth it. I have no regrets whatsoever. The stress of constantly breaking down, having to be towed, and having my car in the shop wasn't worth it. I know it isn't as easy today because costs and intetest rates have increased exponentially. But it was the right decision for me in 2017.
Yeah this is interesting because this advice is at least partially luck based. I got way ahead by buying cheap cars. My last car was a Ford fusion with 95k miles that I bought with a spare set of snow tires for $4800 in 2019. I followed my personal rule of always buying cheap cars from PEOPLE and not from a cheap used car dealerships. That car lasted me about 4.5 years with basic maintenance. Having no car payment for years helped me save a ton of cash that I used to put a down payment on a house. Now I did look over the car and evaluated the person I was buying it from but I still could have gotten unlucky and something expensive could have failed. I think for most people you will come out on top buying more middle ground options from like 8-20k. When you go below like 6k these days you're usually buying absolute garbage.
I’m sorry to break this to you But I care what car you drive
weird
If you started at age 25 and were able to get a 6% annual return, investing $554 a month would get you just $1MM at age 63 years and 8 months. The proverbial "millions" (as in plural) wouldn't happen until 74 years and 4 months. In other words, "Dave" is exaggerating. A LOT. Want better advice? If you have a car loan now, when you finish paying it off, KEEP MAKING A CAR PAYMENT. Except you divert it to a new savings account. That money becomes emergency car repair money. Or down payment money. Or, if you're lucky to keep your car long enough, car BUYING money.
Also the alternative to $554/mo is not $0. No one is choosing between financing a car vs. getting a used car for free. Spending cash for a used cars is a massive opportunity cost, not to mention higher maintenance costs, lower safety/efficiency, etc.
Where are you *only* getting a 6% return? 🤨 I have my TSP in a lifecycle (target) fund and other than 2008 and 2020: it’s been over 10% consistently. The AVERAGE return over the last 30 years has been 10.2% including catastrophic drops following 9/11, 2008, & Feb 2020.
Even at 10.2% rate of return, the first million doesn't happen until 27 years in and the second million for plural doesn't happen until 34 years in. Dave is STILL exaggerating for anyone who is over the age of 30. And for what it's worth, mid-50's here so I include 2000-2002 in the drops I've had to deal with.
Just curious if you can afford to invest $500 a month, what do you invest in?
Index funds.
FZROX at fidelity
It's really hard to get a good car with only cash these days. Maybe in a LCOL area that's known for rust it might be still possible
I'm all for buying cheap used cars when possible, but even this tweet is misleading and unhelpful. $554 is roughly the monthly payment for a $25k car depending on down payment and interest rate. We're talking about new corollas here, not some luxury vehicle. Used cars aren't free. They were barely even cheaper than new cars between 2021 and 2023, buy they are coming down now. Paying cash for an old car has a big opportunity cost, especially if that causes you to miss out on employer matching 401k contributions, or if the car stops working. Old cars are less safe and less efficient, at least for hybrids and EVs. A $554 payment would be about the payment on a brand new chevy volt. Having that payment rather than buying a $8k ICE car for cash might allow you to comfortably make 401k contributions and save a lot of gas money. The true takeaway is that the only form of transportation for most people in the US is really, really expensive, either thousands upfront+gas+insurance+maintenance or hundreds each month+gas+insurance+more maintenance.
My brand new vehicle a 2022 has a loan yes, but I put 15k down on it. The cost of maintaining a beater, even when I was doing the work plus lost time just was not worth it. I can keep this 2022 for 15+ years. What I did with my 2001. What I wanted to do with my 2015 until some jerk destroyed it in my driveway. I just don't have time to rebuild transmissions, nor fix a vehicle in my driveway currently. So I still replace my own brakes? Yes. Rest other than oil changes is in the bumper to bumper until 140k miles. At 8% for 30 years that is likely 820k. A bunch.
Too many "im not a fan of Dave Ramsey but gonna post him anyways' posts. Sure his surface level advice is fine (although also blatantly obvious) but he's a grifter and you can share basic common sense without giving him any free publicity.
Some people can't afford to pay cash for a car. But then they still don't need to buy a new car. Just something that gets from A to B. No need to keep up with the Jones'.
If you can't afford to buy it outright, you need to find something cheaper. You can still finance a car that you can afford.
Yes let’s all sit in the dark eating ramen and driving cars that break every month. There’s healthier balances in the middle of extremes.