My wife and I have recently started listening to the Dave Ramsey radio show on XM as well as downloading his free iTunes podcast.
In case you aren’t familiar, it’s a show about how to completely eliminate debt from your life. He’s an entertaining speaker and is very fanatical about not carrying any debt – no car payments, no credit cards, no mortgage.
One idea of his that hit home revolves around car payments. I figured as I increased income and credit rating over the years I’d keep purchasing better and better cars. I thought I’d probably have a car payment as sort of a “negative investment” for the rest of my life. And I’d probably do the same with a boat payment.
In fact, it never occurred to me to just pay cash for a car and be done with it.
However, his philosophy is only the “filthy rich” should buy new cars and even then, not carry a payment on them.
“The money saved by buying a used car is because of depreciation (the loss of the financial value of an object due to its use). Used cars have already depreciated (60 to 70% in the first 5 years). Buying used allows the person who bought the car when it was new to eat the cost of the depreciation. Then the person who buys the car used can get a great car for much less than the new wholesale prices….
…Say you are looking into financing a sports car with payments of $400 per month… The car that you are driving now is worth around $1,500. If you take that $400 and pay yourself instead of paying it to the dealer, you will save $4,000 in 10 months. You will have $1,500 from selling your old car, so you will be able to buy a $5,500 car just 10 months from now. Continue doing that for another 10 months and you will be able to buy yourself a $10,000 car.”
His show has really got Kim and me thinking. Currently, we are very close to his debt-free utopia. We’ve just got to make some phone calls and “bite the bullet” on some things. But overall I think his plan is definitely worth working through. I’ll let you know how it goes…
Any other Dave Ramsey listeners out there who have a story to tell?
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Yes, I’ve been listening to Dave Ramsey for many years, and as of this past March, my wife and I are DEBT FREE! I can’t tell you guys how incredible of a feeling that is. Having NO payments is absolutely incredible. The question is: why not give it a try? If it turns out that being debt free is a really bad idea, you can always go back out and get back into debt!
Now that my wife and I are debt free, she is able to stay home with our new baby that is coming in February!
Really, it’s worth it!
Hi Brian, thanks for stopping by and commenting about Dave Ramsey. I hope you didn’t take my post to mean I was thinking about trying it. No, we’re already knee deep in it.
In it to win it! I was just saying that even though I’m new to it, I have no problem recommending others give the Ramsey way a try. Worst thing that can happen is you might be bored during the time you used to make loan payments. 
I like Ramsey too. While I’m a long way from saying that I’m DEBT FREE, I only have cars and the house now. Working on the car thing now.
If you like Dave Ramsey then you will really appreciate Martin Lewis, he is a money saving guru in the uk and his website is at http://www.moneysavingexpert.com there is loads of advice on being frugal there.
Brad,
My wife and I are big fans of Dave Ramsey. One of our first decisions as a married couple was to pay off all of our debt (in the interest of full disclosure – the debt belonged to me.) We payed off $15k in less than 12 months. We also built up our emergency funds.
The best result of all of this is that we are able to decide what we want to do rather than feel forced. My wife spent a year focusing on her acting career and now we are expecting our first child, and she doesn’t have to work – unless she wants to (and we live in Manhattan!)
We still have a ways to go before we’re rich, but we are making progress.
Bub, just wanted to say I’m big-time proud of you for working to deep-six your debt, Dave Ramsey style. Dave’s plan makes tons of sense, doesn’t it? Way to go on the dough, baby, and thanks for spreading the word!
Dave Ramsey is great. I was carrying $10K in student loans and $8K on a car. I was able to pay more than necessary each month but I was reluctanct to use my $4K in savings to help pay off the loans for fear of “security”. How stupid. I finally got focused and saved up the payoff amount (including my 4K is savings). I paid the loans off and felt great. Better still, not having any monthly payments, I easily relaced my $4K security blanket and then some.
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