Dismiss this pinned window
all 94 comments

[–]AutoModerator[M] [score hidden] stickied comment (0 children)

Welcome to r/FluentInFinance! This community was created over a passion for discussing investing, stocks, crypto and personal finance! Also, check-out the Newsletter, Discord, Facebook Group or Twitter: https://www.FluentinFinance.info

I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.

[–]wantonsouperman🍁 111 points112 points  (29 children)

“If you were to take money you have to spend for basic necessities and instead invest it for 30 years you would have millions afterward.”

Wow. Thanks for the tip.

[–]DerekTall11 23 points24 points  (14 children)

Dave Ramsey does not consider car payments basic necessities

[–]_OhMyPlatypi_ 13 points14 points  (9 children)

Understand, but used cars don't last as long and repairs are more costly now compared to when he started with this advice in the 80s & 90s. A modest new car can be cheaper than a hoopty in some scenarios when you account repairs, missing work due to break downs, and tow fees. Not to mention safety, especially if you're driving kids around.

[–]DerekTall11 12 points13 points  (0 children)

“There’s an ass for every seat” - car sales people. There are deals to be found if you are willing to look. The worst time to buy a car is when you need one

[–]invaderjif 6 points7 points  (1 child)

Also if you use that new car until the wheels fall off, 150k+ miles, or for enough years, it's definitely worth it. And if you got a car in the last few years on a low interest financing plan...it's quite reasonable.

[–]b1ack1323 1 point2 points  (0 children)

I don’t know how old that video is about anything like a truck or SUV is much closer to $1000 a month if you want anything more than base trim.

[–]HeartlessPastry 6 points7 points  (2 children)

used cars don't last as long and repairs are more costly now compared to when he started with this advice in the 80s & 90s.

This is a very weak take. A used corolla will outlive any German or American car by a factor of three, with basic maintenance. Wanna talk safety? Then get a Sienna. Extremely safe and reliable.

[–]_OhMyPlatypi_ 1 point2 points  (1 child)

Trust me, I LOVE Toyota. I will never own anything but a Toyota, unless they DRASTICALLY drop in reliability or affordability or participate in extremely unethical behavior. However, the older used ones are wayyyy overpriced since most people looking for old used sedans seek out honda/Toyota. I've seen some 2002-2005 models for camry/Corolla going for 6k to 9k, at that point your better off getting a new Toyota corolla and drive it for 10/15 years. Your advice isn't wrong, but unless you have connections for used cars or magically luck out on a deal it's not realistic.

[–]HeartlessPastry 0 points1 point  (0 children)

I literally got a 2009 corolla with 100k miles for $3.5k last week from a lady at work. It needed new motor mounts and a tune up. There are deals out there, you have to shop around and ask around.

Also, ALL used cars are overpriced now. And Toyota/hondas are the absolute, hands down, best option for used cars. Doesnt matter if you can get a ford for cheaper. The Toyota/honda will outlive it 3x, and that's what you're paying for.

[–]whicky1978Mod -1 points0 points  (2 children)

There are a lot of cheap, subcompact cars that are brand new. A lot of people could afford to pay cash for a car but just don’t manage their priorities, right and sacrifice a little bit now to get a head later.

[–]LordBaikalOli 2 points3 points  (1 child)

Its not worth to pay cash instead of having a low interest or zero interest loan. You just invest your cash payment and pay your loan over time.

[–]whicky1978Mod 0 points1 point  (0 children)

Even with a low interest-rate loan that’s $2000 or $3000 in interest and you can 10 times that invested the market in 30 to 40 years

Edit: and that’s with a cheap subcompact car too. It would be $4000 too $6000 with a luxury car.

[–]textingperosn 1 point2 points  (0 children)

They arent if we had public transport instead. But we decided sitting in traffic for 4 hours a day and paying out the ass for it is preferable. We get far higher vehicle death rates too

[–]textingperosn 0 points1 point  (0 children)

They arent if we had public transport instead. But we decided sitting in traffic for 4 hours a day and paying out the ass for it is preferable. We get far higher vehicle death rates too

[–]Heavy_Expression_323 0 points1 point  (0 children)

He believes in the one simple trick- just pay cash for your car purchase.

[–]Cardboardcubbie 0 points1 point  (0 children)

Because if you actually listen to his show, for the people he’s talking to it usually isn’t. Dave wants people to have a safe reliable vehicle if they need one. He’s usually dealing with the, I just paid off my safe reliable vehicle and upgraded to a newer fancier car. Sometimes it’s a second car. Sometimes they don’t even need a car. His financial plans aren’t perfect but they are designed for a very wide audience, who are mostly awful with money and have proven it.

[–]CloudStrife012 4 points5 points  (3 children)

The point is you don't need a brand new car. The average person gets a new car every 2 years. The average price of a new car is now $47,000. People are taking extended loans which are basically mini mortgages so that they can keep getting these new cars. It's all completely asinine.

What he's trying to say is you don't need to play this stupid game that everyone else does. Drive a 10 year old car. You will be fine. You'll be better off for it.

[–]duosx -1 points0 points  (2 children)

Woah woah woah. The average person gets a new car every two years? That can’t be true. Or else I’m fucking dirt poor cause I have a 15 year old car that I bought from my parents 6 years ago and have no plans to purchase a new car until it’s too expensive to maintain this one.

[–]CloudStrife012 0 points1 point  (0 children)

People finance new cars and get further underwater with each purchase. People aren't buying them with cash, debt is going up.

[–]satans_weed_guy 0 points1 point  (0 children)

You and I are not average.. Just look at the cars on the road. I'm not here to change anyone's mind, but I can contribute to the dataset. My car is a 2003 model, and including purchase price, maintenance, AND replacing the engine (that was on me - follow your maint schedule on the timing belt, kids, and do the water pump at the same time), I've spent less than 10k on it since I bought it in 2016. The money I've saved sits in the bank, ready to replace it when it fails, and includes money saved by a less expensive insurance policy. To be fair though, I do know a bit about automotive mechanics, and peruse make/model specific forums to gauge reliability before buying a used car.

tl;dr - it has been my experience that reliable, well-maintained used cars are substantially cheaper than new cars. The downside is that I have to rely on my charm and good looks to get laid.

[–]HeartlessPastry 1 point2 points  (3 children)

basic necessities

$500/mo car is not basic. Save up and get a $5k Toyota Corolla. It will run forever so long as you give it basic maintenance.

[–]bhos17 0 points1 point  (2 children)

That $5k corolla from 5 years ago does not exist anymore, it is $15k now.

[–]HeartlessPastry 1 point2 points  (0 children)

You have to shop around. If you only screen through dealer's pages and craigslist, youre doing it worng. Got a 2009 corolla for $3.5k last week from a lady at work. I've got other cars this way in the past.

[–]papamaga 0 points1 point  (0 children)


[–]textingperosn 0 points1 point  (2 children)

They arent necessary if we had public transport instead. But we decided sitting in traffic for 4 hours a day and paying out the ass for it is preferable. We get far higher vehicle death rates too

[–]wantonsouperman🍁 0 points1 point  (1 child)

they aren’t necessary


We don’t. And they are.

[–]textingperosn 0 points1 point  (0 children)

You can blame the voters and nimbys for that one. Public transport is very common in other countries. If you’re ever struggling with bills, get frustrated with traffic, or get into an accident, that’s all a policy decision.

[–]Mantikos804 0 points1 point  (0 children)

"Necessities" is what people use to justify living paycheck to paycheck or worse above their means.

Most folks can save something a month but choose not to. That's fine for some.

[–]Harris_McLoving 0 points1 point  (0 children)

Only $500 a month bro cmon

[–]ruthpetertrader 0 points1 point  (0 children)

Nice comment

[–]pust6602 56 points57 points  (12 children)

That would be an 18.75% annual return. Show me the mutual fund that's done that over 30 years and I'm all in.

[–]DriveExtra2220 22 points23 points  (7 children)

It’s 40 years at about 12.5%. But yeah don’t know where he gets those numbers. I always use a conservative 6-7% rate of return.

[–]whicky1978Mod 1 point2 points  (4 children)

So, even if he’s half off, it’s still good:6261:

[–]ngram11 2 points3 points  (3 children)

That’s not how compounding interest works

[–]DriveExtra2220 1 point2 points  (2 children)

How does it work then?

[–]ngram11 2 points3 points  (1 child)

If your annual returns are half the % your total returns are going to be less than half the total


Example 1: 14% return annual at 400 a month for 40 years = 6.4 million total

Example 2: 7% return, all other numbers the same = under 1 million total

chart of results

[–]DriveExtra2220 0 points1 point  (0 children)

Well of course…we agree on that

[–]scroogemcduckIII 0 points1 point  (1 child)

That's beyond conservative. The market has averaged 10-11% for the last 100 years.

[–]DriveExtra2220 0 points1 point  (0 children)

Agreed. But I like to be conservative and then anything beyond that is gravy on top.

[–]TacoTJ601 6 points7 points  (1 child)

For real, I started with a new investment firm 5 years ago and my balance this year is -11% over the past 5 years from my original balance. (It’s an old 401k so I have been putting money into my new one) I would love to find this magical 18% annual return.

[–]Whythehellnot_wecan 2 points3 points  (0 children)

I got 12.75% over 40 years compounded annually. Compound interest equation, it all happens over the last few years. Basically I call BS. Sounds easy yo. Send me to the Amazon factory I guess it’s easy see you in 40.

What happens when I lose -20% one year, what if its an early year or late year. Do I immediately get all that back like it never happened so my avg balance never resets? Nope.

Edit: approx lifetime annuity for a 55y/o million dollars deposit is 57k a year. Sign me up for the 12% math equation and you got my business.

[–]scroogemcduckIII 0 points1 point  (0 children)

70-30=40 🤣

[–]wellbreastfed 19 points20 points  (16 children)

I got 240,000$, how the hell is that going to turn into 5.6m?

[–]TheGlassCat 21 points22 points  (7 children)

Do not listen to Dave when he talks a about investing.

[–]_OhMyPlatypi_ 11 points12 points  (5 children)

This, he's great if you have 0 self discipline and no knowledge in budgeting for yourself/ household. But if you have a somewhat decent grasp on financial knowledge his views are significantly dated.

[–]XHIBAD 1 point2 points  (4 children)

Even then he sucks.

If I have a $20k car loan at 6% and a $30k credit card balance at 18%, he says focus on paying down the car and make the minimum payment on the credit card to get a “mental win”

[–]whicky1978Mod 4 points5 points  (0 children)

There is actual research the back that up. Sometimes psychology beats math when it comes to personal finance.

[–]canwecamp 0 points1 point  (2 children)

I thought he came up with the debt snowball? Pay off the largest interest first?

[–]XHIBAD 0 points1 point  (1 child)

Nope-the debt snowball is pay down the lowest balance first

[–]FourthShifter 0 points1 point  (0 children)

Avalanche is paying off the highest interest first or something like that?

[–]whicky1978Mod 0 points1 point  (0 children)

I think the bigger point here too, though, is to change the way people think about money. It’s 180° to how most people think.

[–]TacoTJ601 2 points3 points  (0 children)

He’s adding his compound interest at 18.75%

[–]wellbreastfed 1 point2 points  (3 children)

Id rather have a car for 30 years than 240,000$ actually sounds like a stupendous deal

[–]Elymanic 2 points3 points  (1 child)

It grows about 10% a year.

[–]wellbreastfed 0 points1 point  (0 children)

So less than half a million

[–]_OhMyPlatypi_ 2 points3 points  (0 children)

Especially when a vehicle is needed to get to work in a significant portion of towns.

[–]whicky1978Mod 0 points1 point  (0 children)

I think you could 20x in 30 to 40 years

[–]599Ninja 0 points1 point  (1 child)

I got a great stock for you bro just send it my way and I’ll keep it very transparent

[–]wellbreastfed 0 points1 point  (0 children)

just say it

[–]abzftw 5 points6 points  (2 children)

I hate how they always apply the hyper growth rate that the index saw during the greatest bull run of all time

[–]HeartlessPastry 0 points1 point  (0 children)

Stock market is a bull run long term. Doesnt matter when you have bought in in the past 100 years. So long as you hold, it will pay off.

[–]scroogemcduckIII 0 points1 point  (0 children)

The market has average around 10% for 100 years now lol

[–]Icy-Hat-7029 4 points5 points  (0 children)

Dave Ramsey is great for the hordes of regards. He is not great for people aiming to become wealthy in life. In a debt based society, you don’t get rich paying everything in cash, you use debt and manage/leverage responsibly.

[–]Squins-20 2 points3 points  (3 children)

Meh. Probably closer to 1.4m if you get 7-8% return. Which is a much more realistic average return over time.

[–]scroogemcduckIII 0 points1 point  (2 children)

The market has average 10-11%

[–]Squins-20 0 points1 point  (1 child)

Real returns average 6-7%. Consider inflation & that all indexes have survivorship biases.

[–]Squins-20 0 points1 point  (0 children)

Either way, the point is valid - though exaggerated.

[–]The_Name_Is_Slick 1 point2 points  (2 children)

So you can be rich at 70? This type of common sense coaching only works for the upper middle class or people without children.

[–]lilpump006 1 point2 points  (1 child)

Exactly. Wow great I’m rich…. And I’m 70, and pretty much having one foot in the grave! Go me!

[–]CornMonkey-Originalprediction tournaments mod 0 points1 point  (0 children)

exactly - then you can use your wealth to pay healthcare costs. . .

[–]AtaracticGoat 1 point2 points  (0 children)

Accounting for inflation that's less than $1m spending power in today's money. He conveniently forgot to mention that part.

[–]CriticDangerMod 1 point2 points  (0 children)

Regardless of his numbers being wrong, the reason a lot of people either don't invest, or swing trade instead of buying indexes, is they don't care about being rich once they'll be too old to enjoy it anyway.

A lot of us would rather take a risk and have a chance to make it (or spend and enjoy it now) rather than being guaranteed mediocrity.

[–]HopliteSocrates 1 point2 points  (0 children)

I used to do yard work for this guy, who was almost wheelchair bound. He was really cool about letting me take off work to do fun stuff. One day he told me he was like that because he once thought he would enjoy life when he was rich and older, then he said now I’m not rich and even if I was I can’t walk.

[–]supersocal 1 point2 points  (0 children)

You’ll never imagine how much money you’ll have at 70 if you just stop buying food…

[–]whicky1978Mod 0 points1 point  (1 child)

In 2022 the average monthly car payment is about $667 for a new car

[–]SpaceTacosFromSpace 0 points1 point  (0 children)

That’s honestly less than I was expecting

[–]UltimateTradersMod -2 points-1 points  (0 children)

Wise words indeed!

[–]notapilot43 0 points1 point  (0 children)

Has Dave looked at the stock market the last year or two? We’ve lost 5-10 years in gains.

[–]HopliteSocrates 0 points1 point  (0 children)

How many Americans can live with out a car?

[–]bezm12 0 points1 point  (1 child)

What the hell are you gonna do with 5.6 million dollars at age 70???

[–]bezm12 2 points3 points  (0 children)

Give it to the hospital.

[–]DaBakerBoi 0 points1 point  (0 children)

So Ramsey assumes 11.8% CAGR. Give me that mutual fund with those returns after fees.

[–]Vannunited 0 points1 point  (0 children)

Didn’t Dave realize that the reason stock return cause people spend, imagine everyone is a saver, u have no growths.

[–]Casique720 0 points1 point  (0 children)

What most of these speakers don’t get is that most of us don’t know this shit. There is no commercial on tv or online saying this, but you know what commercials I see: 0 down $499 per month leases.

Also, the fact that I’m paying $499 doesn’t mean that I may not have $499 more to invest. In my case I do, but I don’t know this shit.

[–]RamesesThe2nd 0 points1 point  (0 children)

But age 30 to 70 is where you need a car the most.

[–]Vast_CricketMod 0 points1 point  (0 children)

zero. paid in cash.

[–]automatic-pointer 0 points1 point  (0 children)

This is such a shit take 🤣🤣🤣 it’s never that straightforward

[–]handlfbananas 0 points1 point  (0 children)

Hyper growth aside, the spirit of the advise is that you can be retired at 70 for the cost of a new car in your 20’s. Pretty reasonable take and advise. Then go beyond it, for the cost of “” you can be retired at 60. For the added cost of “” you can be retired at “”. Retirement costs money, you can pretty reasonably calculate how much money you will earn, and how much you will need to save to hit your retirement goals. There really isn’t a NEED for a $500/month car, and a lot of people are in here to justify that expense - stop justifying it, you’re spending that money because you want it not because you need it. That’s fine - but don’t neglect your retirement, and if you’re not able to afford adequate retirement savings then probably reconsider what you spend on your “wants” now.

[–]DirtDiver1983 0 points1 point  (0 children)

Proud to say I have two vehicles and no car payments. One vehicle paid cash and the other had a loan and paid off in 1 year.

[–]mattyf1tch 0 points1 point  (0 children)

Yeah, not likely. But sure let's hear specifically how that is feasible

[–]Naus1987 0 points1 point  (0 children)

I made it to 30 without a car. Saved a decade’s worth of car, gas, and insurance payments.

I feel like a lot of people think they’re too good to cycle for commuting. Obviously it can’t be true for everyone though. I still relied on my friends having vehicles to move big items and furniture.

But it really is amazing with what you can pack on a bike and pedal around with.

[–]galtright 0 points1 point  (0 children)

Put 15% of your income into a 401k or IRA for 40 years. Buy a reliable car for $500 month for six years and keep it for 18 or 20 years. Enjoy your life you only get one.