Car Payments – Dave Ramsey Rant
I’ve got this friend who drives a car … the only way to describe it is it’s just a piece of crap. It’s just the worst car on the planet. I mean I don’t know and here’s the problem; is the guy actually has money. Like a lot of money but he’s just become a freak about this car. Like he’ll spend money on other stuff he takes his family on vacation and they’ve got a nice house, but he’s like it’s like this car is some kind of a reverse status symbol for this guy. And you know and you know, Lord willing most people more people would be like that rather than driving around in cars you can’t afford with car payments to impress people at a stop light you’ll never meet. A lot of you spend a lot of money to impress people you will never meet with your car and I’ve got some nice cars I like cars, I’m a car boy, there’s no question about that, but man when we were broke we were driving .. well to start with, I was driving a Jaguar and then I went broke and I sold it the day before they took it, so that they didn’t take it to avoid the repossession; the proper thing to do to try to pay my bills of course I didn’t pay the whole bill, I had to sign a note for the difference. And as part of the bankruptcy, it was a disaster and so we’re down to one car. So a friend of mine loaned me a car like my buddy has. He loaned me a .. true story, a 1978 Cadillac, with 478 thousand actual miles on it. The predominant color on this puppy was bondo. It had a vinyl roof and when you drove it, the vinyl roof was broken loose so it filled up with air like a parachute on top. So I’m driving bondo buggy with a parachute on top. I drove that car for 10 years one three-month period, but I saved some money buddy, because I wanted out of that car, I want to take my friend his blessing back. But it rolled, it started; most the time it started, and most the time it rolled. And it got me there. It was really, really embarrassing; humiliating is a better word. To drive that car to our church, because that the church we were going to people didn’t have cars, like they had nice cars. A lot of them were in debt and had car payments, I knew that, but I’m still sitting there driving bondo buggy with a parachute on top up to the church. I park it and the top settles, like … you know it drops down. That seems like 20 minutes ago. It was almost 30 years ago. I drove like no one else so that later I could drive like no one else, so now I’ve got nice cars again, and of course this time they’re a very small percentage of our net worth; a very small percentage of our net worth. And of course I paid cash for them and they just in other words, they’re small enough percentage of a world they don’t matter. Well my buddy’s got money and were he to buy at least one decent car it would be a small percentage, a very small percentage of his world . He’s probably worth 20 million dollars, I don’t know, but something like that, and he’s driving this $200 car and it’s ticking me off , ’cause I’m like dude, you are not modeling success here. You know this is not anything to be proud of; you drive a 200 dollar car so that you never have to drive a 200 dollar car again. That’s the only reason you drive a 200 dollar car. Not because it’s a badge of honor, it’s not something to be proud of son. And I can’t get through to him, so I don’t know what I’m going to do with him. But he’s the reverse of most Americans. Most Americans the average car payment in America is 386 dollars over 84 months right now. Driving a car you can’t afford, not even close to being able to afford it, and then scratching your head wondering why your kids college fund didn’t fund. Well you’re driving it!! You’re driving the college fund that’s why! I mean I get why my friend has become such a freak about his car. I get why he’s thinking that way. Because so many other people, most other people, are the opposite end of the spectrum. I mean he’s a little overboard and a little bit freaky about this old beat-up car, but most you are just stupid. I mean just most of America is just straight up car stupid! You fleece your car, acting like that you when you rented your car, you did a good deal. Give me a break! And the stupid thing loses 60 to 70 percent of its value when you buy a new one in the first four years that you drive it. So you turn thirty thousand dollars into eleven thousand dollars and then scratch your head and wonder why you can’t get ahead financially. What if all your investments; what if all your IRAs, you put money in a mutual fund, every time you did it you turn thirty thousand into eleven? Well everyone knows that’s a formula for not getting rich. Hello! This is not hard to think about people! It’s the largest thing we buy that goes down in value. That’s why my friend’s become a freak about it. He’s like I don’t want to put money and something goes down in value. I’m like yeah, but you’re embarrassing me and everybody else that knows you. Buy a car son. Even if you only spend ten grand, I mean it’s what one one-one hundredth of a percent of his net worth or something? But the rest of you are driving .. you know you’re making thirty thousand dollars a year, you’re driving a seventeen thousand dollar car. Well, that that’s just nuts!! It’s just nuts! You got a household income of 60,000 bucks, and mama gets a $32,000 SUV. Somebody ought to smack you! That’s just nuts! You do not have the financial margin to lose thirty thousand bucks. To lose ten thousand bucks. To lose twelve thousand bucks. If you’ve got enough money that you can throw twelve thousand dollars off the edge of a bridge, and it not damage you, then you can afford to drive a car that expensive. But this idea that you can just ..’well I can afford it’, what most people mean when they say that is they think they can pay the payment if they keep their job. Let me help you with a new definition of I can afford it. I wrote a check and paid for it; that’s the definition of I can afford it. If you can’t pay for it, in cash, in total, on the spot cash on the barrelhead, you can’t afford it. Whatever it is; your car, your clothes, your groceries. Some of you are charging groceries. Huh. Talk about financing a depreciating asset. Wow. We’ve lost our minds in this culture guys, we really have. And all of it is because people have been sold stuff and sold stuff and sold stuff, and they’ve got this entitlement thing, and they say, you know I meet 42 year old men who say stuff like I deserve a nice truck because I work hard. You don’t deserve anything, you little child! ‘Cause you work hard. What do you think, that makes you pregnant? Nobody else is .. nobody else is out here not working hard. Well some of them aren’t, but I mean everybody works hard deserves to go deeply in debt by truck that can’t afford is that what you’re saying? That’s your philosophy of life? How stupid and backward is this? So here’s an idea, pay cash for your cars, and don’t let your cars and boats be more than half your take-home pay and then that’s an indication that you’re not got too much invested in things that are going down in value. I’m not against cars. I’m not against car dealers. I’m against people doing stupid stuff with cars that cause them to be broke and that includes car payments and leasing fleecing your stupid car. There we go. This is the Dave Ramsey Show.