Dave Ramsey ?

iVillage Member
Registered: 10-16-2007
Dave Ramsey ?
6
Thu, 01-22-2009 - 3:19pm

So I just started reading Total Money Makeover (and I am addicted). My question is, Dave keeps mentioning to sell things with big balances (i.e a car). Right now, I have a car loan I will be paid off in 3 1/2 years, I pay 402/month and I owe 18,000. My car is not worth that, so how would I sell it? And if I did sell it, wouldn't I have

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Avatar for cl_phocid
iVillage Member
Registered: 03-26-2003
In reply to: lulu1231
Thu, 01-22-2009 - 3:34pm

Dave's theory is that it's better to sell the car and pay off the difference between what the car is worth and what you owe on it - even if that is on a cc, and to drive a $500 junker. He calls it a "stupid tax" - money you end up paying for something you no longer own, but a pattern you will not repeat ever again, having suffered through it once. Once you are out of debt, you can save and turn in your $500 car for a $1000 or $2000 dollar car, etc. Basically, he advocates paying cash for these things, and saving up the money needed to buy a car.

DH and I sold a truck some years ago - we owed about 2K more than we got for it, and put that on a cc. We paid off the 2k in 4 months, basically taking our $500 truck payment and paying off the difference, then we had $500 more per month that we were able to put toward our debt. It helped *tremendously* as we snowballed our payments. We were a one-car family for several years after that. DH just bought a truck again last year. He saved $3,000 and that's what he paid. He loves it because it's paid for!

All my best,
Danni
cl-phocid, Debt Support Group



All my best,
Danni

iVillage Member
Registered: 10-16-2007
In reply to: lulu1231
Thu, 01-22-2009 - 3:49pm

I looked my car up in the Kelley Blue Book and now it is only worth about 11,000. I just don't have the xtra 7,000 to pay it off. If I include it with my debt snowball, it would prob. be paid off faster anyhow. It is at a rate of 4.2%. My husbands car will be paid off the end of this year, so that will free up $367 a month.

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Avatar for cl_phocid
iVillage Member
Registered: 03-26-2003
In reply to: lulu1231
Thu, 01-22-2009 - 3:59pm
That sounds reasonable to me. I'm not saying I agree with Dave - he's about selling anything that's not nailed down or currently being worn on your back. That's a bit too all or nothing for me. :)

All my best,
Danni
cl-phocid, Debt Support Group



All my best,
Danni

Avatar for mahopac
iVillage Member
Registered: 07-24-1997
In reply to: lulu1231
Thu, 01-22-2009 - 5:48pm

That's one of the things I don't understand about Dave Ramsey either (though admittedly what I understand of him is entirely based on what I read on this message board; I haven't read his books).

If I can borrow money for a car at 0.9% interest while my savings are earning 4.0% in a CD, why wouldn't I do that, especially if I plan to keep the car for 8-10 years, as I always do?

Nor am I going to sell my house in order to live mortgage-free, since the only way to realize the value of the house would be to sell it - and moving out of this house is NOT part of my life plan. It may be an investment, but it's also where I'm raising my children.

I'd say that any approach to your money has to be in accord with your life plan. Just because an expert proposes a plan that's right for him or her doesn't mean it's right for you. Take what seems useful from Dave, and Suzy, and anyone else, and make it work for you!

Kelly

iVillage Member
Registered: 05-18-2005
In reply to: lulu1231
Thu, 01-22-2009 - 6:34pm

Kelly,

Jan
iVillage Member
Registered: 03-26-2003
In reply to: lulu1231
Fri, 01-23-2009 - 5:10am

Honestly, I think the selling stuff comes into it more so when you're in a desperate situation. If you're drowning and making a $600 a month car payment, Dave's advice is normally to try and sell the car. I think it's pretty good advice.

My dh and I did the Dave Ramsey thing and paid off a considerable amount of debt in 15 months. We had a car loan and a 4 wheeler loan and we didn't sell either one, just added them to our snowball.

The main thing I take from Dave is his emphasis on focus (the baby steps). You focus on one thing at a time and go at it with intensity. That's what worked best for us and in general, I think it works best for most when it comes right down to it.

Good luck!

Sue


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