The Dave Ramsey Dichotomy...

[Trell]

When I need a car I rent it, otherwise public transport works very well for me.

 

[highfigh]

Don't let DR hear you say that ;-) I agree with him on cars in letting someone else take the depreciation hit. But if it's no impact to your budget and you drive them for a while that's fine. I purchased one new car and drove it for 14 years and 200K miles.

*and yes I paid for it in cash at the ripe old age of 26.

I think the price of cars is insane and I can make a lot of the repairs, so I do- even if it involves fuel injection. If I need help, I know people, so that's not a problem. I ought an Astro cargo van in March, 2011 and it's still going strong with 234K- it had 78K when I bought it.

 

[highfigh]

When I need a car I rent it, otherwise public transport works very well for me.

What is the longest trip you would normally make, or do you mainly go from home to work, to the store, out for dinner (under normal circumstances)? If everything is close to you, there's really not much need for a vehicle, but it's absolutely necessary for many of us, especially in some kind of service business (like me) or living in a more remote area. Also, the time spent on public transportation is substantial and isn't productive, unless someone can work during the trip.

 

[Trell]

What is the longest trip you would normally make, or do you mainly go from home to work, to the store, out for dinner (under normal circumstances)? If everything is close to you, there's really not much need for a vehicle, but it's absolutely necessary for many of us, especially in some kind of service business (like me) or living in a more remote area. Also, the time spent on public transportation is substantial and isn't productive, unless someone can work during the trip.

Most things are things are fairly close by for us, either walking distance or short public transport. When renting a car it's usually for summer vacations in Scandinavia and then I drive long distances. I put a premium on living and working so that I don't need a car for everyday tasks.

 

[highfigh]

Most things are things are fairly close by for us, either walking distance or short public transport. When renting a car it's usually for summer vacations in Scandinavia and then I drive long distances. I put a premium on living and working so that I don't need a car for everyday tasks.

The difference really is cultural, more than anything- after WWII, Americans came back with a huge case of "I can do anything", and they did. Most households had one car until the '60s and at that point, two cars were becoming more common because more women were working. Now, people will drive an hour one way to go to work even outside of California, which makes mass transit a no-go for anyone who can afford a car. In places where the terrain is difficult and no mass transportation system exists, it's too expensive to build.

 

[jinjuku]

Oh, we hang onto our vehicles for a long time. My pickup is 10 years old and I have no intention of replacing for a few years yet. The car is relatively new at 4 years old. I get the logic of buying used, but I'm also leery about buying someone else's problems.

With the build quality now it's less of an issue, but not a non-issue. I get it. I purchased a 2003 G35 in 2009 with 52K miles on it for 11.5K all up front. Drove it for 10 years and sold if for $2900. Didn't need anything else at the time and now Covid hit so really don't need a vehicle.

My only repair costs were crank shaft sensors and starter. Both were DIY. I ended up driving a nice car for $75 a month.

 

[jinjuku]

I got myself in some hot water with the Wife.

Wife: Why don't we send our child to $20K year private school?

Me: Why don't we invest $20K year for the next 9 years in a trust and the kid can retire at 50.

 

[Mr._Clark]

Watching the Super Bowl, I found myself wondering whatever became of Warren Sapp? Short answer: He made $75 Million, spent all of it and then some, and is now broke.

Warren Sapp Made Over $75 Million in the NFL, but His Expensive Taste Cost Him Every Penny

Warren Sapp made over $75 million over three NFL contracts, but his rapid spending launched him into bankruptcy after he retired.

www.sportscasting.com

 

[jinjuku]

Watching the Super Bowl, I found myself wondering whatever became of Warren Sapp? Short answer: He made $75 Million, spent all of it and then some, and is now broke.

Warren Sapp Made Over $75 Million in the NFL, but His Expensive Taste Cost Him Every Penny

Warren Sapp made over $75 million over three NFL contracts, but his rapid spending launched him into bankruptcy after he retired.

www.sportscasting.com

That's my ex business partner to a T except he's never accumulated any wealth. Couldn't make a financially responsible decision if his life depended on it.

Case in point:

He's paying $200 a month in car insurance because his credit is so poor (and he lives in a state that doesn't ban this heinous practice). I put him as a named user on three of my cards. 60 days later my good rating starts showing up on his account like I told him it would. He calls his insurance and he goes from $200 to $79 a month.

Two months after that he is able to get an Amazon Chase Visa with $2400 limit. I told him: Put your Netflix account on it, setup auto pay, and cut the frikking card up!

NOPE: $2200 drum set.

Had a falling out shortly after, I took a buyout, and took him off all my cards. Last I checked his blog, he's swinging at the world for 'woah is me'. Good riddance.

 

[panteragstk]

I agree with Dave that if you are habitually bad with CC's then you shouldn't use them. The CC's that I use as listed I actually cut up. I can't use them. I don't even know the CC# or CCV code!

Also his advice on saving a 6 month emergency fund is just common sense but there seems there is a lack of that.

Unfortunately you need a FICO score. I did some reading on car insurance and some States have banned scoring based rates. They have to simply use your driving history. I would say that is just as easy to lookup as FICO scoring.

I didn't realize car insurance could rates could be based on credit score. It's odd that your FICO score can affect your life in ways you don't expect. I had a job where a co-worker was in the process of getting a manager position, but due to his credit score he couldn't be a keyholder. Apparently that would "tempt him to steal" more than it would if he had a high credit score. WTF?

 

[Irvrobinson]

I didn't realize car insurance could rates could be based on credit score. It's odd that your FICO score can affect your life in ways you don't expect. I had a job where a co-worker was in the process of getting a manager position, but due to his credit score he couldn't be a keyholder. Apparently that would "tempt him to steal" more than it would if he had a high credit score. WTF?

In many states I'm aware of (I did looked it up, 39 states and DC), your credit rating can legally be used as a reason not to hire you. For many companies the thinking is "If you can't manage your finances properly, why should I trust you with mine?"

 

[panteragstk]

Yeah, but look at it this way, *a lot* of people are so inept financially that if they follow Ramsey's or Orman's advice, however less than perfect, they're probably going to be a lot better off than they are on their own. Especially young people. Ramsey's claim to fame is that he's supposedly worth about half a billion dollars, and he's an evangelical Christian and likes to talk about it, so Fox is his natural platform. In case you're wondering, I read Fox because I want to read the stuff that's on the minds of people who don't think like me. It's sometimes scary, but not knowing is worse.

I got one of Dave's books on the cheap so I read it. He does have a "one size fits all" approach that probably does fit more than it doesn't. That's because (as you said) a lot of people just aren't financially savvy. I'm not. My parents didn't teach me much at all about finances. Probably because they don't know much of anything either. I think they do now, but not when I needed the information.

 

[panteragstk]

That's my ex business partner to a T except he's never accumulated any wealth. Couldn't make a financially responsible decision if his life depended on it.

Case in point:

He's paying $200 a month in car insurance because his credit is so poor (and he lives in a state that doesn't ban this heinous practice). I put him as a named user on three of my cards. 60 days later my good rating starts showing up on his account like I told him it would. He calls his insurance and he goes from $200 to $79 a month.

Two months after that he is able to get an Amazon Chase Visa with $2400 limit. I told him: Put your Netflix account on it, setup auto pay, and cut the frikking card up!

NOPE: $2200 drum set.

Had a falling out shortly after, I took a buyout, and took him off all my cards. Last I checked his blog, he's swinging at the world for 'woah is me'. Good riddance.

This is one of those "everything happens for a reason" kind of situations. My favorite quote on that is "Everything happens for a reason. Sometimes the reason is that you're stupid and make bad decisions." My brother is the same sort of person, and I've had to tell him that quote a lot.

 

[jinjuku]

In many states I'm aware of (I did looked it up, 39 states and DC), your credit rating can legally be used as a reason not to hire you. For many companies the thinking is "If you can't manage your finances properly, why should I trust you with mine?"

I could understand if your looking at a position that requires handling of money... Here's the thing there are other metrics. Just like car insurance. Driving infractions, accidents, claims made by/against are also all on record. They simply could use that.

But bottom line is Insurance companies can milk otherwise good drivers that happen to have a poor credit score. I spoke with my agent about this. They went to a credit based system about 3 years ago. Had a 20 year customer with ZERO bad driving history that they doubled their rate. What is this persons option? Find an insurer that doesn't use a FICO? Good luck. Move to one of 5 states that bans this practice? Doesn't sound feasible. Write your state rep? Maybe.

 

[panteragstk]

I could understand if your looking at a position that requires handling of money... Here's the thing there are other metrics. Just like car insurance. Driving infractions, accidents, claims made by/against are also all on record. They simply could use that.

But bottom line is Insurance companies can milk otherwise good drivers that happen to have a poor credit score. I spoke with my agent about this. They went to a credit based system about 3 years ago. Had a 20 year customer with ZERO bad driving history that they doubled their rate. What is this persons option? Find an insurer that doesn't use a FICO? Good luck. Move to one of 5 states that bans this practice? Doesn't sound feasible. Write your state rep? Maybe.

This is why the phrase "it's expensive to be poor" exists. Employers can't give someone a better job due to bad credit, and that someone can't make their credit better because they can't get a better job. It's a crappy cycle that a lot of people are stuck in.

 

[highfigh]

I didn't realize car insurance could rates could be based on credit score. It's odd that your FICO score can affect your life in ways you don't expect. I had a job where a co-worker was in the process of getting a manager position, but due to his credit score he couldn't be a keyholder. Apparently that would "tempt him to steal" more than it would if he had a high credit score. WTF?

They want to be paid- if there's a risk that they won't be, they raise rates and the fact that they can cancel a policy with very little delay doesn't matter.

Most jobs require a credit check, too- certainly, anything in a position of security or management.

 

[highfigh]

I could understand if your looking at a position that requires handling of money... Here's the thing there are other metrics. Just like car insurance. Driving infractions, accidents, claims made by/against are also all on record. They simply could use that.

But bottom line is Insurance companies can milk otherwise good drivers that happen to have a poor credit score. I spoke with my agent about this. They went to a credit based system about 3 years ago. Had a 20 year customer with ZERO bad driving history that they doubled their rate. What is this persons option? Find an insurer that doesn't use a FICO? Good luck. Move to one of 5 states that bans this practice? Doesn't sound feasible. Write your state rep? Maybe.

On average, people with lower credit scores make more bad decisions than people with a good score and it doesn't need to involve handling money- many times in retail, people working at checkout will allow friends to leave without ringing up items and it happens often. In food service, especially in bars, free drinks are common, especially if the liquor dispensers aren't metered and cameras aren't aimed at the register. Once an employee is trusted by a business owner of a small retail operation, the place is ripe for the picking if the employees' backgrounds aren't checked. Lots of goods leave through the back door and it literally kills businesses without anyone literally dipping into the till.

 

[ski2xblack]

This is why the phrase "it's expensive to be poor" exists. Employers can't give someone a better job due to bad credit, and that someone can't make their credit better because they can't get a better job. It's a crappy cycle that a lot of people are stuck in.

This is where some of the austerity that Ramsey advocates for is actually helpful advice. Having a higher wage may or may not correlate with a higher credit score, but living within one's means does.

I don't want to give the impression that I fully endorse Dave Ramsey, as I generally detest cults, and he's created and leading his own. It's creepy. Some of his advice is solid, if formulaic and geared to his naive cult members.

The Millionaire Next Door is better than any Ramsey book for a novice in personal finance and investing, and devoid of the irritating religiosity.

 

[panteragstk]

This is where some of the austerity that Ramsey advocates for is actually helpful advice. Having a higher wage may or may not correlate with a higher credit score, but living within one's means does.

I don't want to give the impression that I fully endorse Dave Ramsey, as I generally detest cults, and he's created and leading his own. It's creepy. Some of his advice is solid, if formulaic and geared to his naive cult members.

The Millionaire Next Door is better than any Ramsey book for a novice in personal finance and investing, and devoid of the irritating religiosity.

That's what made me stop reading his book is when he started talking about the religious side. I don't mind a tiny bit sprinkled in like it's a natural random thing someone says, but if it's over the top, I'm out. I bought a book to learn something or other about finance. That's my focus.

It'd be like if he randomly starting talking about restoring cars in minute detail. Neat info, but not what I'm in it for.

 

[jinjuku]

They want to be paid- if there's a risk that they won't be, they raise rates and the fact that they can cancel a policy with very little delay doesn't matter.

I've never seen an insurance company provide 6 months of coverage and THEN bill you.