Tuesday, June 16, 2009

F150 vs Ramsey

Probably a little less than a year ago, my wife turned me on to the newest financial guru in the business, Dave Ramsey. I’m not into gurus, finance, and while we’re at it, I don’t much like talking politics/politicians either. Ultimately, I’m not real big on people who tell me how to do me, or feel the need to try to protect me from me. But she was really into this guy, listened to him on the radio, always was on his website, so on and so forth. I didn’t give it a lot of thought until I realized that my mom was saying very similar things independent of my wife, serving to me to illustrate that this guy might just be the real thing. At the very least, what did I have to lose by reading his book?

Now, ultimately, I’m not writing this to hype Dave, but seeing as we’re here, read the book. Here’s the caveat; you have to make it into, probably, the 7th or 8th chapters. Sounds easy enough doesn’t it? Well, it’s easy enough to read, but it’s hard not to get irritated and put it down. Why? Because you’re going to be told that in spite of your best efforts to understand the financial world that envelops us all, chances are, you’re still wrong. Buy a car for 0% interest thinking you were making a smart move financially? Wrong. Using credit cards at 0% to buy things to “beat the system”? Wrong. Getting some kind of consolidation loan (2nd mortgage, HELOC, etc) to get out of credit card debt? Wrong. And yeah, I know what you’re thinking because I thought all these were the best ways of doing things too. He’ll show you the math as to why that methodology is mistaken, but you can only lead a horse to water.

Bottom line: the only way to beat debt into the ground and keep it there, is to alter your thinking, dismissing everything you think you knew, and consider something new.

My wife and I decided to try it. And yes, it did require a new mentality. Yes it did require us to make sacrifices. But I was really surprised once we got underway with the whole thing, how much we really didn’t miss. Furthermore, it was surprising how much our lifestyle didn’t really have to change.

Here is the problem: I want a new car. According to Dave, it is something of a sin to buy a brand new car. Well, that’s not totally right. More accurately, it’s a sin to buy a brand new car at this point in my life. And that part isn’t the trouble. I can find something that I like that is a few years old with reasonable mileage. The problem is, that I want it now. That is not something of a sin, but rather THE CARDINAL SIN of the Dave Ramsey plan. You never, ever, ever finance a vehicle.

I was told that I could have a new car under the following conditions: the credit cards that I have had to be paid off…check. And the payments had to be equal or less than what we pay for the car I have now…check. If I was to hold on to my car for as little as about 10 months, it’s paid off. Anything after that is essentially profit. I can handle 10 months. What’s bothering me is in order to make the best possible financial decision available, I would continue to pack that payment that I was making towards making a purchase in cash later on. But that, however, means making roughly a $400 payment to myself for another 4 years! And that’s just no good. Stupid crisis of conscience. I guess that must mean I’m growing up…and it sucks.


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