Free Cars

[dusred]

http://www.youtube.com/watch?v=BKyV8CTHeJ0

Discuss.

[RCA]

Pretty spot on, just make sure you find that fund that gets you 12%; there are ETFs and mutual funds designed specificly to follow the growth of the market but even then I doubt it's 12%.

As for myself, I never had a car payment in my life. I always buy in cash but the most I've ever spent on a car was $10k (used); I have had too many friends buy a new car and they are in love until the payments come in. They then realize how much of a burden it is.

As for having you money work for you, I aprove

[Amays U G37S]

SIGN ME UP!

[dusred]

I listen to Dave Ramsey on a daily basis. I've gotta admit it's damn hard breaking the tradition of car payments. I paid cash for my truck but it wasn't because for 2 years new trucks weren't tempting me. Paid for vehicles = WIN!

[Dattebayo]

I love how the comments suggest all old cars are unsafe. The driver is the problem in most crashes, dookwads.

[dusred]

I love how the comments suggest all old cars are unsafe. The driver is the problem in most crashes, dookwads.

That seems to be the most common argument against this plan. Remember, you're only driving a $1500 car for 10 months and I dare say all $1500 cars have air bags. Hell, my 20 year old infiniti had air bags. Now if you're cruising around a 77 Blazer that's made of solid steel (FML) and you are hit head on by a semi truck then yeah, having an old car would probably cost you your life. But a 77 Blazer is a $300 car.

[simmode1]

I dare say all $1500 cars have air bags. Hell, my 20 year old infiniti had air bags.

S13's dont... Wait... uhh...

I always only buy cash cars. I'm allergic to car-notes. I've been looking to get into flipping cars for profit at this point. I'll definitely be seeing if I can pick up any tips from Mr. Ramsey...

[hitbychance]

cool concept, maybe ill try this after my 5 year loan is over
but then again i already have the car i always wanted

[Urabus GodofTraction]

I've been on the "Ramsey Plan" for 4 years now. No debt, no credit cards, just freedom. About a 1/4th of the way to a cash starter home too, though at 15 year fixed as he lets slide is reaaaaal tempting at sub 4% rates out there these days.

[alms24sebring]

III like it!

Ive always tried to put payments away for myself and it was real successful. I also have never had a car payment. Partially because I cant bc of loan costs/unreliable jobs and all that, but still, I would much rather buy a good used car for descent cash... for free

"I dont know about you but I've never seen a car worth $5.5 million"... I have

[AZhitman]

I've been on the "Ramsey Plan" for 4 years now. No debt, no credit cards, just freedom. About a 1/4th of the way to a cash starter home too, though at 15 year fixed as he lets slide is reaaaaal tempting at sub 4% rates out there these days.

Ditto.

FWIW, Ramsey isn't preaching anything new. 90% of his shtick is based in Biblical teaching...

Most everything he says is rehashed stuff from Givens. I was reading Charles Givens' s books as early as the late 80's.

http://www.amazon.com/Wealth-Without-Ri ... 0671619381
http://www.amazon.com/More-Wealth-Witho ... pd_sim_b_1

Get them, read them, live them.

[Urabus GodofTraction]

I thought you were paying 4.5 or so on the Cube?

[AZhitman]

Ah - yep. That $ is in a fund, paying out automatically. There's enough in there to pay it off, which means it's effectively "forgotten".

We have the old house and our current house as well, but the old house is making money on a monthly basis from a long-term renter.

[dusred]

So Greg, if you have the money why not just pay it off? Why give the bank money in interest when it's not necessary?

[AZhitman]

Because I'm making far more than 4% on that chunk of cash while it sits there.

The car depreciates - the money doesn't.

[PoorManQ45]

Because I'm making far more than 4% on that chunk of cash while it sits there.

The car depreciates - the money doesn't.

Yep, A lot of people fail to realize this part. If you can earn a higher percentage on your money then your loan, it's worth it not to pay off the loan completely.

Now, can someone provide me links to this 12% consistent mutual fund?

[dusred]

Because I'm making far more than 4% on that chunk of cash while it sits there.

The car depreciates - the money doesn't.

So you're taking the risks of debt so you can make $2-$300? I'm not faulting you for it I'm just wondering.

Yep, A lot of people fail to realize this part. If you can earn a higher percentage on your money then your loan, it's worth it not to pay off the loan completely.
Now, can someone provide me links to this 12% consistent mutual fund?

It's not like you can put money into this fund and tomorrow start making 12%. It's up and down but over 10 years it averages 12%. Long term investing, son.

[PoorManQ45]

It's not like you can put money into this fund and tomorrow start making 12%. It's up and down but over 10 years it averages 12%. Long term investing, son.

That's the thing, the calculation he used in that video is based on a consistent 12% yearly.

Using the rule of 72(or 69) your investment would double every 6 years.

Now, if you're getting 12% over 10 years you're looking at close to 1% yearly. That's nothing.

So again, where is this fund that will consistently return 12% yearly.

I know it can be done through vigorous investments, but financial advisers always talk about "oh just put $100 a month into this 12% mutual fund"... Yeah, that doesn't help very much as they will not specify a fund that averages that yearly.

A quick google search returned a few funds that have done very well in the past, but nothing much over 3% lately(for mutual funds).

[krash]

Because I'm making far more than 4% on that chunk of cash while it sits there.

The car depreciates - the money doesn't.

So you're taking the risks of debt so you can make $2-$300? I'm not faulting you for it I'm just wondering.

He has a lump sum in a fund thats making more than the 4% interest that the loan costs him. If he were to pay the car off completely with the money in the fund, he would earn less on it, since there would be less money in the fund. No risk of debt, seems like the money is all there.

[PoorManQ45]

He has a lump sum in a fund thats making more than the 4% interest that the loan costs him. If he were to pay the car off completely with the money in the fund, he would earn less on it, since there would be less money in the fund. No risk of debt, seems like the money is all there.

You pretty much summed it up.

Like I said in my first post, people have a hard time understanding this concept.

If you can make more interest on your money then your current loan rate, keep your money invested.

[wingFeather]

I had car fever for the past 5 years or so. I HAD to drive a new/different car every year (sometimes 6 months). Infiniti, Ferrari, BMW... you name it. I lost about $50,000 overall.

Fortunately I woke up & realized how stupid this lifestyle is!!! I plan on rocking older, paid for cars until I can buy a Ferrari CASH. We shall see...

[PoorManQ45]

I had car fever for the past 5 years or so. I HAD to drive a new/different car every year (sometimes 6 months). Infiniti, Ferrari, BMW... you name it. I lost about $50,000 overall.

Fortunately I woke up & realized how stupid this lifestyle is!!! I plan on rocking older, paid for cars until I can buy a Ferrari CASH. We shall see...

You on acid again?

[wingFeather]

You on acid again?

Nope, just a car enthusiast. To put it in perspective, a friend of mine lost $500,000 of equity in his Ferrari collection in 2009.

[HashiriyaS14]

I've been on the "Ramsey Plan" for 4 years now. No debt, no credit cards, just freedom. About a 1/4th of the way to a cash starter home too, though at 15 year fixed as he lets slide is reaaaaal tempting at sub 4% rates out there these days.

Not using debt to buy frivolous shxt is a good idea.

Not using debt to buy real estate is idiotic, at least if you utilize a responsible level of leverage. Ramsey's advice in this regard is targeted to people who don't understand how leverage works, but I will grudgingly admit that you are a great deal smarter than his target audience and well capable of keeping yourself out of needless trouble. Get the 15 year fixed at these rates. You'll have 25% down and you're buying at the bottom of the market.

The ONLY reason not to exploit a sub-4% rate is if you can't because you lack any equity, but it sounds like you have plenty, so buy the house and get the 15 year loan.


My only debt is my MBA loans and my mortgage. Both are, IMO, good/responsible uses of leverage. I've had credit cards and personal loans before, never again.

I fully expect my first-year bonus as a Sr. Associate to pay off my MBA loans in full.


EDIT:

Nope, just a car enthusiast. To put it in perspective, a friend of mine lost $500,000 of equity in his Ferrari collection in 2009.

He only lost equity if he liquidated, which I hope to hell he didn't do. I assume we're talking about vintage cars here, not new ones.

Or, I suppose, if he bought a car or cars for $500k more than they were worth, and lost his money on day 1 vis-a-vis his basis being too high.



Classic car sales prices are actually pretty good right now, anyone who sold anything in 2009 is a nut.

[PoorManQ45]

He only lost equity if he liquidated, which I hope to hell he didn't do. I assume we're talking about vintage cars here, not new ones.

Yep. I find it funny when people that invest freak out when their investment drops X%.

Them: OMG, I lost x%, I'm doomed!

Me: Well, did you sell? Because you shouldn't have(unless said investment just had horrid news or something)

Them: Yeah, my broker said I should sell.

Me:

Unless you're using leveraged investments you don't actually lose anything until you sell whatever it is that you have.

[AZhitman]

Ramsey's advice in this regard is targeted to people who don't understand how leverage works, but I will grudgingly admit that you are a great deal smarter than his target audience and well capable of keeping yourself out of needless trouble.

Remember, his "target audience" is the person who's already a**-deep in alligators, and has no idea why.

[dusred]

Re: Hash (rehash? lol):

Dave Ramsey isn't against a Mortgage. He says a house is the only thing you should go into debt to obtain because it isn't realistic to save up cash for 15 years and buy a house - it's neat if you can but meanwhile you've gotta have somewhere to live.

[wingFeather]

you've gotta have somewhere to live.

F that - live in a van