The Ramsey Show - App - Keep Your Car and Pay It Off in 2 Years (Hour 2)

Episode Date: February 20, 2019

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. This is your show. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. You jump in, we'll talk about your life right in front of you. Josh is with us in Pittsburgh.

Hey, Josh, how are you? Hey, Dave, such a pleasure to speak with you, sir. How are you? Better than I deserve. What's up? Hey, so I'm very excited to say I'm on track within the next two months, Better than I deserve. What's up? And my employer, my new employer, will offer a 50% match on a ROP 401K up to the max. So if I do 15% of my income into that retirement account, I'll max that out. But I'm getting married in a year, and at that point my wife and I will have the remainder of her student loans to pay off at about $25,000. And then another year after that, so about two years out, we'll be looking to buy a house. So I'm not sure if I should go ahead and start doing my 15% into retirement, or if I should

save up a little bit more liquid cash for things like a modest second car, her debt, and the house. Okay, cool. Good question. Well, at least you're thinking through it and you're winning. And it sounds like probably the two of you are talking about this stuff in your pre-marriage counseling, right? Yes, sir. We talk about finances.

And, you know, she's not quite as aggressive on the debt as I've been, but, you know, she shares the same values in terms of living within our means, so that's very important to us. Gotcha. So you're going to get married in about a year, and what is your income? My income is currently $78,000 a year. It's going to go up to $90,000 here starting in March. Awesome. Congratulations. And what is her income? Thank you. Her income, I'm not 100% sure. It looks like she was at about $20,000 last year.

She worked several part-time jobs. Okay. All right. Cool. So, well, the first goal is going to be preparing for paying off her student loan when you come back from the honeymoon. So I would build out your baby step three, and that's your emergency fund, and then I would save up $25,000 to pay off her student loan when you come back from the honeymoon. So I would build out your baby step three, and that's your emergency fund, and then I would save up $25,000 to pay off your student loan when you get back. That's probably going to take up your year without a doubt.

And then if you want to save for a down payment past that, it's probably going to take you another year. So you're probably two years from buying a house, not counting whatever it takes you to get your baby step three done. So which is what kind of what you were saying. And that makes sense. But I want you to be debt free after the honeymoon. Come back, pay off her student loan if she hasn't paid it off.

And if her income doesn't change, she will not have paid it off by the time you get married. Then when you come home, pay that off and, you know, keep keep on moving and take about a year more, which is about right. I try to tell young couples not to buy a house in their first year of marriage it takes a good year of getting to know each other before you should buy a house together um takes about a year being married to know how close to your mother-in-law to buy and uh give yourself just that right amount of distance and yeah so anyway that's what i'm going to do in that situation. Just walk it straight through. And so if you're missing out on your 401k match for two years while you accomplish those three goals,

finishing the emergency fund, paying off her debt after you're married, and then saving a down payment for a house, it's not the end of the world. You'll still get there, and you're going to be able to easily put in 15 and you'll get that wonderful match at that point uh obviously you can after you finish baby step three go ahead and start your uh you know your 15 going into retirement and but but i'm still going to want to make sure you save up the 25 000 and you're debt free by the time you get home from the honeymoon and then you're going-free by the time you get home from the honeymoon. And then you're going to want to save up that down payment on the house. So that 15% for two years is going to slow things down. That's about another $30,000, 15% of $90,000 for two years.

And so that $30,000 would have really gone a long way towards these other goals right now. So I don't think it's going to set you back on retirement, anything substantial, and you're going to start promptly upon moving into that house doing your 15%. And by then, her career will have kicked off, hopefully. And she'll be, you know, your household income by the time you're married and move into that house should be substantial. And so you'll catch up on anything you've lost ground on at that point. So good question. Thank you for joining us.

Brad's with us in Springfield, Missouri. Hey, Brad, how are you? Hey, thanks for taking my call, Dave. Good. How can I help? So my wife and I have got all of our debt paid off, and we were working on college savings and retirement savings and paying our house off.

Recently found out my parents needed a little help, so I ended up putting a contract down to buy them a house to make sure that they had a place to live. And I'm trying to prioritize between savings and college and the house at my house where I should be putting extra money. You took out a mortgage and bought them a house. I did. So it was that or give them money every month, and I thought that was the better investment. Okay.

Well, yeah. All right. So you've got your house to pay off and that house, and then so you're just working baby steps four, five, and six, we call it, because you've got your emergency fund in place. You should be putting 15% of your income away for retirement. Are you doing that? I am.

Good. Okay. And then past that, how old are your kids? So my oldest is 18. I have a 16 and a 12. And what's your household income? So it ranges, I'm pure commission, but on an average about $225. Good for you.

Well done. So how much do you have saved for the three college students? So I started that late, so I've got 70 saved. Each? No, total. Okay. Well, I think what I would do, that's kind of what's up next, is we've got, this is bearing down on us.

You've got these three kids that are college age or virtually, and so you've got to just start looking at what's college going to cost, because it's not really going to be a thing where you're going to make a lot of money on your money because there's not enough time. You're basically going to say, I'm going to set aside a chunk of my income to get ahead of this, and then I'm going to cash flow the rest of it out of my income. So let me ask you this. So my plan before I ended up having to buy this other house, my first one has done a great job getting scholarships.

It's only going to cost me, he's got all the tuition paid, just really room and board. It's going to cost me about $1,000 a month. So I was just going to pay that and save what I had saved for the following two children. Okay. But should I? That's okay. I mean, you're going to cash flow and save.

But, you know, what I want to do is I want to make, before I start paying down on your house and for sure before I start paying down on the rental house for the parents, I'm going to make sure college is funded because they're on top of it. I mean, it's not like these are three year olds. They're here, you know, and so your time frame is upon you. And so, yeah, you got the first one covered at your cash flow in thousand bucks a month. And now we got the you got the first one covered, your cash flow in $1,000 a month, and now we got the $70 for the other two.

We start figuring out what it's going to cost to send those two through, and we add to that $70 until we get up to that, and then I would start paying down your house. And then, lastly, I would pay off the parent's rental house. That would be the last thing I'd do. So I hope that helps.

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We're glad you're here. Open phones at 888-825-5225. Becky is in Phoenix. Hi, Becky. How are you? Good. How are you, Dave? Better than I deserve.

What's up? Well, I have, the last few years, chosen one of your ELPs in the area, and I'm a little bit embarrassed to give it to him because I still owe him a few more docs. So I received this. It's called a cancellation of debt. It's from Midland Funding, which I think is a collection agency. I think it's a medical bill. But it says it's a 1099-C, and they have instructions for debtor that I am to add this into my income. And it looks like the identifiable event happened on 12-17. So do I need to turn this into my CPA and add this amount to my earnings or do I find a way to call them to find out what this is?

What it is is debt that is forgiven, debt that is canceled, is income, and they issue a 1099-C for that. And so have you been working with them or they just randomly canceled this debt i i as far as i know they randomly cancel it i don't know what it is i think it might be a medical bill um but you don't you didn't know you owed it um well probably i have quite a bit of medical um i don't have any other credit card debts or car payments or anything like that, but I do have medical debt. Okay. Well, you know, what I would do is keep a copy of that

in case they ever try to collect the debt, because this basically says they have forgiven the debt. So do I need to turn this into my tax plan? Yeah, because it's going to be turned into the IRS. Right. Yeah. So turn it in. It's going to show as income.

Debt forgiven debt that is not, with rare exceptions, around a mortgage, but the rest of the debt, anytime someone, if you've got a $5,000 credit card and you settle it for $2,000, the $3,000 that's forgiven, they can issue a 1099-C and it is technically taxable income. And that's what you run into. That's what you've got here. Wendy is with us in Pittsburgh. Hi, Wendy.

How are you? Good, Dave. How are you? Better than I deserve. What's up? Great. Hey, Dave. How are you? Better than I deserve. What's up? Hey, I got a letter today from our mortgage company saying that we qualify for a cash-out refinance. And I'm pretty sure that it's a bad thing. Just wanted to make sure that it's nothing that we should pursue. No, you would not pursue it.

All that means is you're going to borrow more money than you owe now and put some money in your pocket by having gone further into debt. Oh. That's a cash out. You do a refinance and they hand you some cash. But you're further in debt is how that happens. They've added on to my mortgage. Yeah, well, it would be a new mortgage that is larger than your old mortgage because you've refinanced. Okay.

And so, you know, whatever you owe now you know if you wanted another twenty thousand add twenty thousand to that and you would put that twenty thousand in your pocket and go spend it but you would be twenty thousand further in debt on your house so no we're not going it's going the wrong way all right make sense thank you yeah that's great thanks for the call adrian is with us in Miami. Hi, Adrian. How are you? Doing great, Dave. How about you?

Better than I deserve. How can I help? So I was just wondering, I'm currently in grad school, and my program doesn't allow me. Your program doesn't allow you to do what? Does not allow me to work during the program. Why? It's a nurse anesthesia program, so you're doing about 40 to 50 hours a week of clinicals. Gotcha.

Okay. So my question is, I have about $5,000 in a 401k, and I was wondering if I were to pull that out, would I just be subject to the 10% penalty? And is that something I should probably do to minimize anything that I borrow? Hi. Yeah, you're subject to a 10% penalty. My general answer is never pull money out of a 401k except to avoid bankruptcy or foreclosure.

Do you have an income at all? I do not. Okay. So you don't have an income tax rate, and if you did, it would be very, very small. And so, yeah, the 10% penalty is all you're going to get hit with. Yeah, I probably would clean that out. All right. Very unusual.

Adrian, in 30 years, I bet I haven't answered that question that way twice. But you're in a very unusual situation. When I see pull money from the 401K on my screen software up here where Kelly's typed in what you're calling about, before I pick up the call, I'm like, oh, no, we're not going to do that. But you're in a very, very unusual situation. So, yeah, I probably would use that money to avoid this. How much further do you like being out of school?

11 months. All right, because you are in a great field. You're going to make some bank, aren't you? That's the plan, to jump into Baby Step 2. Yeah, just roll up your sleeves and keep living like a college student and clean up whatever student loan debt mess you got with this fabulous income you should be getting. So way to go, man.

Finish it up. Get her done. Open phones this hour. This is the Dave Ramsey Show. Our question of the day comes from Blinds.com. You can upgrade your home with Blinds.com, the number one online retailer of custom window coverings. Always put in the promo code Ramsey, and you'll see the best possible deal out there. That's the magic word, Ramsey, at Blinds.com.

Blinds.com slash Ramsey. Today's question is from Jeremy in Tennessee. I've got an elderly family member who's bought into the whole bank on yourself idea. She wants to buy a divided whole life policy and swears it is different from whole life. Is it? No, it's not. It's crap. I want to make sure she isn't getting suckered into a bad product.

Oh, she's suckered beyond belief into a bad product. If you look at her lip, you'll see the fishing lure hanging out of it with the hook. She's been hooked. This is awful. I mean, whole life is bad. This is one of the worst whole life products out there. So, I mean, it's like, you know, this is the dumbest horse in the glue factory is what this is. I mean, this is bad, really, really bad.

So, no, no, no, no, no, no, no, no, no. Bank on yourself. You're not banking on yourself. You're loaning money to a life insurance company and getting ripped off in the process. It's not bank on yourself. Just, oh, man, the stuff they'll do to sell that crap is just amazing. It is just amazing. Ashley is on Twitter.

Dave, is home ownership essential to responsible money management? Hmm. Over the course of your lifetime, yes. In a given moment, many times no. What I mean is this. If for the next 50 years, you're 25 and by the time you're 75, you rent, you're going to spend a lot more on housing and have a lot less wealth than you would have if you purchased a home over the course of 50 years. Is home ownership essential to responsible money management?

If you're in debt and don't have an emergency fund and don't have a down payment, it's essential to responsible money management that you don't buy a house right now until you get that cleaned up but long term throughout the scope of your life you don't want to rent because the rent's going to go up every year every year i mean and if your landlord doesn't raise it every year rents in your area went up every year through that 50, 60, 70-year period of time that you need a place to live. Every year your cost goes up. And when you buy a home on a 15-year fixed-rate mortgage, you've locked in your monthly cost for now,

plus the value of the real estate is going up. So you've got an investment, and you've controlled your cost of housing. And so absolutely I would buy a home as a part of an overall life plan. But in the middle of a certain situation, there's plenty of situations I tell you you're not ready yet to buy a home. So, no, you can't quote me and say, we're broke, we have no money, But home ownership is essential to responsible money management. No, it's not. You didn't quit being broke and have no money first. That would be the first plan.

This is the Dave Ramsey Show. With more frequency than you know, I get calls and emails from people dealing with the recent loss of a spouse or a parent. You can hear the struggle and the heartache that they've been experiencing. And at a time they should be grieving, what breaks my heart the most is the strain and tension that they're going through because of money. Especially when it's a situation that could have been avoided. If you have a family, it is your responsibility to have term life insurance. It's one of the things you do to say I love you. And yes, this is an ad for Zander Insurance. But since this is one of the most effective ways I have to get my point across, so be it. For over 20 years, I've been telling you about the importance of term life insurance and protecting your family. Listen, you need to check out Zander.com or call 800-356-4282. I can't say it enough. Protect your family.

It's what you're supposed to do. Go to Zander.com or call 800-356-4282. Thanks for joining us, America. We're glad you're here. Open phones at 888-825-5225. Brittany is with us in Oklahoma City. Hi, Brittany. How are you? I'm good. How are you? Better than I deserve. What's up? I need some advice. My husband and I just started the Total Bunny Makeover. We are about three weeks in and just started Baby Step 2. We sold, or I guess

we're in the process of selling his truck. We bought him a $1,000 car and we are in disagreement on whether or not to sell my car. I want to, but he doesn't think we should. He thinks we should keep it. What is your car worth? It's worth $20,000. What do you owe on it? Right at $20,000.

Okay. And how much other debt do you have, not counting your house? Right now it's $68,000 because we still have his truck, but it's for sale. As soon as we sell that, it's about $20,000 as well. Okay, so $48,000. So there's another $28,000. What is the other $28,000? Student loans.

Okay, so $28,000 in student loans. All right. And your household income? It is $75,000 student loans. All right. And your household income? It is $75,000. Okay. All right. And what is your car? What kind of car?

It's a 2014 Hyundai Santa Fe. Okay. And do you have children? We have one. Okay, good. All right. Do you like your car? We both love it. Okay, good it okay good all right well here's the

math all right forty eight thousand dollars in debt is what you have after his truck sells did i do that right yes okay and 48 divided by two would be 24 000 a year correct. For two years to be debt-free out of 75. 24 out of 75. I think you can do that. Yeah, definitely. Okay. So our rule of thumb is this on cars. Two things.

One is, can you be debt-free but your house within two years and keep your car? If the answer is yes, then that's okay. Two is, does the total of all your vehicles equal more than half your annual income? With his truck sold, the answer is no. So in both cases, you're in a position to keep your car. Okay. Now, you would not be able to keep both of them because you would have $40,000 worth of cars on a $75,000 income, which totals more than half your annual income.

Right. So we're pretty heavy on your car, even after we get out of debt and get things moving pretty good. He's not going to be in a car equal to yours. He's going to be in about a $10,000 car when things are going good, even, until your incomes come up. Right. Or the value of your car goes on down. But do not own a total of vehicles more than half your annual income because you have too much tied up in things that are going down rather than up. Yeah, okay.

And so I say if you're willing to buckle down and pay $2,000 a month on debt out of your $75,000, which is $24,000 a year, $48,000 in two years to be debt-free. I think you can do that. I say keep your car. Okay. So I'm going to side with him on this one. I'll tell you this, though. I really have to compliment you on being willing to.

He's selling his truck, so I'll sell mine, too. Way to go. Yeah, I think that's what it is. I feel guilty for keeping my car. But just a good spirit on your part. You're the kind of person that will work with a husband, the kind of person that will work with a wife and cause things to become prosperous

because you're not selfish and greedy and it's not all about you. Hey, I don't want to sell my car. I want him to sell his truck. I don't want to sell my car. You know, you sell his truck. I don't want to sell my car. You know, you're the opposite of that girl, right? Yeah, definitely. And so way to go.

That just speaks very highly of your character and so forth. But the truth is, if you guys both like this car and you're willing to buckle down and be debt-free in two years, I would keep the car. Mathematically, it fits my guidelines, and the guidelines work because they're based on ratios, and they're based on, you know, 30 years of doing this. So I think you're in good shape, and the good news is you're both on the same page. We're both willing to do whatever it takes to get out of debt. Now, I guess the only caveat to that is

you'd be debt free a year sooner if you do sell the car. But you're going to turn around and buy two better cars later, both of you then, anyway. So it's kind of just a flip-flop. In other words, if you sell your car and you're debt-free a year from now, both of you driving $1,000 cars, the first thing we're going to do is move you up a little bit, and we're going to move him up a little bit. So you're going to move back up in car within two years anyway so i'm probably just going to fight to keep this one and get it sold off since you like it and you know the car brandy is with us brandy's in austin texas hi brandy how are you good how are you better than i deserve what's up um so my husband and i are really close to being

debt-free we're um probably in april is what we're thinking to be being debt-free. We're probably in April is what we're thinking to be completely debt-free, and we're really young, and so we're just trying to figure out if we want to save up for the next five or six years and buy a house in cash, or do we want to save up for like three years and pay a down payment and then get a mortgage? So we're just not sure what the best route is. Well, neither one of them are bad routes, because if you save up for three years and put them down, and then you could go ahead and pay that mortgage off really, really quick based on this conversation. Right, yeah.

And we're just trying to figure out if it's five or six years to pay in cash, if that's too long to jump into something like that, because we don't want to miss out on, you know, taking a good assessment. So what is your income? Household is $75. Good for you. How old are you guys? 25.

Wow. Okay. And so how much would you save a year towards this project? So through this debt-free journey, we've kind of been living only on my income and then using all of my husband's for debt. And so when we're kind of like playing with numbers and talking it through we've kind of determined what if we just always live on my income and always like use his for savings and investments so what's his income so his income is 30 but it's i mean he's it's going to go up between now and six years so okay so you save 30 a year for three years is 90

for six years is 180 right and that's if the income that's not counting his income going up okay right and um so not a ton of properties in austin texas for 90 yes absolutely that you want to live in probably right but uh but you know you could find a little condo of some kind for 90 maybe and buy that after three years and then keep rolling and and then after three more years move up to a $200,000 house paid for right and you'd be owning the condo during that time and it would be going up in value during that time that's an interim way to do this and not quote unquote be on the outside of home ownership looking in i'm okay either way because the only thing we don't yell at people for here is a mortgage on

a 15 year fixed as you probably know where the payments no more than a fourth of your take-home pay and all of these numbers are less than that okay so i'm okay with that uh and of course full disclosure you probably heard me say i don't borrow money for anything ever. So I would be in the wait five, six years and pay cash for it or wait three years and buy a $90,000 little condo just to get it out of my system, live in that little condo, and then save up another $90,000 and sell the $90,000 condo. By then, it's worth $100,000, and maybe I can even save up more than $90,000 and buy a $200,000 house six years from now. But for that interim three years, I'm living in a paid-for condo, which also helps you save because you don't have any payments. Right. Right now, you're paying rent.

Yep. Yep. And we just didn't want to go too long paying rent. Yeah. So, if you could find a little, you know, Austin and Nashville are fairly similar in terms of prices and makeup and demographic and that kind of a thing. And I spent a lot of time in Austin. So, you know, I suspect there's some little condos, little one bedrooms,

maybe even a little two bedroom that you can find, you know, around the edges of an area that you want to live. This is not your forever home crud. This isn't even your four year from now home. But you could probably pay cash for that in two or three years. Yep. And I probably would suggest that rather than just waiting six. Right.

That's my guess. Because I love real estate. And I'm going to pay cash, period. Because I don't borrow money for anything ever. You've heard that. And so I'm going to jump in and just give me a little place and then I don't have any payments and that's going to accelerate the amount I can save

because all it has is a little condo fee or whatever then and now I can rock it then. And that, you know, that's kind of an interim way of playing this. But somewhere in there, either one of that, all of that's in the smart column. It just depends on which box you want to check. This is the Dave Ramsey Show. thank you for joining us america this is the dave ramsey show open phones at 888-825-5225. You jump in, we'll help.

It's a free call. Andre is in Jackson, Tennessee. Hey, Andre, how are you? I'm all right, Mr. Rant. How are you doing? Better than I deserve. What's up? First, I just wanted to thank you for all that you do, Mr. Rant.

I have a question for you. I think you can get me out of it. So, the past, let's say, four or five years... I'm having question for you, and I think you can be able to help me out with it. So the past four or five years... I'm having trouble with your phone. Can you get where we can keep it from breaking up, possibly? Can you hear me better now? Yes, sir. Thank you. All right. Thank you. Thank you. For about the past four and a half years,

I've been saving up for a particular purpose of trying to pay down debt. And we have now, right now, is around $58,000 in debt and mortgage with like a 3% interest rate, but also a $118,000 debt when it comes to student loans. And my question for you in regards to the advice, should we pay the mortgage off that we set up and refinance the student loan mortgage to the house? Does that make sense? No. No, because if you die with a mortgage, the mortgage is still on the house. If you die with a federally insured student loan, it's no longer due. If you become disabled, the mortgage is still on the house. If you die with a federally insured student loan, it's no longer due.

If you become disabled, the mortgage is still on the house. If you become permanently disabled, the student loan is no longer due. You lose the benefits of all of that. And so I do not want an unsecured student loan debt to become a mortgage. So how much money do you have saved to pay down on the debt? $50,000. Say again? $50,000. $ again? $50,000.

$60,000. And what is your household income? Right now, we've been blessed to have an income of around $250,000 a year. Okay, you broke up again. $150,000? $250,000. $250,000? Yes, sir.

Well, dude, just pay it all off. My gosh. I wouldn't do that either, Mr. Ramsey. It is. You make $250,000 a year. It is that easy. You should be debt-free by the end of the year. Well, I hope so.

Praise God. I hope we are. If you make $250,000 taxable income, dude, I mean, there is no – you pay the $60,000 on the student loan today and then knock the rest of that student loan out really really fast and then turn around knock your mortgage out dude you are killing it get yourself on a budget and quit spending money like you're in congress knock this stuff out 150 000 in debt is all you have 160 000 in debt and you have 60 000 in the bank which means you only have 100 000 in debt and you make have. $160,000 in debt. And you have $60,000 in the bank, which means you only have $100,000 in debt

and you make $250,000. You should be debt-free inside of 12 months. Pay the $60,000 on it. Be done with it. Now, Candice is with us in Charlotte, North Carolina. It's not in South Carolina. What's up, Candice? Hey, Dave. How are you

today? Better than I deserve. How can I help? Well, so I just totaled my card last week. It was paid off. A lady hit me. It was her fault. So her insurance company is reimbursing me $6,800. And I'm currently on baby step two. So I have a little under $4,000 left on my student loan.

I was on track to have that paid off by this summer, but I was wondering if I should put that on hold or if I should take this money that they're giving me and knock out the student loan. You're getting how much from the insurance company? $6,800. And what do you owe on your car? I don't owe anything on my car. I paid it off oh okay and um

and your household income is what um about 27,000 okay all right and so our options are to spend all of this money on a car or spend like three3,000 on a car and be debt-free right now. Is that the options? Yeah. I would spend $3,000 on a car and be debt-free right now, and I would immediately build my emergency fund. And as soon as that's done, I'm going to save another $7,000 and move up to a ten thousand dollar car with cash baby step baby step 3b after you're debt free and build your emergency fund i want to move you from a three thousand dollar car up to a ten thousand dollar car with paid cash okay you see how i'm

doing that yeah and i think you'll be i think you'll be doing all of that within 12 to 18 months. Okay, that sounds doable. Yeah, your emergency fund plus $7,000. Starting today, you're 100% debt-free with a $3,000 car. Okay. I guess my second question into that is, in buying a used car, are there any tips that you would have? Yeah, a couple things. A $3,000 car in particular. What you're looking for in a $3,000 car is not something that's pretty.

Okay. You're more concerned, like 99% concerned with how mechanically sound it is because you're going to be driving it for about a year. Okay. And I don't care if it's ugly. I don't care if it's a car people make fun of or you have to give it a name. Actually, that's kind of what you're looking for, but has very low miles and is in very good shape in terms of the mechanics of it.

The body might not be pretty. It might be faded. It might be a type of car that people make fun of or whatever. All I'm looking for is a year's worth of transportation, and then I'm going to sell this thing. Okay? Second thing is when you're looking for a car, how old are you? I'm 26. Okay.

Is your family in the area? Yes. Okay. Because sometimes when you're looking for a car, that is one of the spaces that sexism will abound. Sometimes men don't look at a 26-year-old lady like she knows what the flip she's doing and they can take advantage of her it makes no sense and it shouldn't be but it is that if your dad was standing beside you even if he says nothing you'll probably get a different deal than if you walk up there by yourself okay just just because and it shouldn't be that way i'm not saying it is i'm not saying it's always that way it's not but can you imagine what I'm saying might be true? Mm-hmm.

Okay. And then the last thing is this. If you really want to be super careful about it, find a repair shop that will charge you like $100 or something for a little bit of an inspection. And they can look over the car and look at the belts and the hoses and give it a drive. And they'll tell you if the transmission's there. You want to get super nerdy, you can actually have the oil changed with permission of the current owner and a good mechanic can run their fingers through that oil and maybe even do an actual technical analysis on it and tell you a lot about the condition of the motor on that car whether it's burning smoke or the rings are running out or whether there's shavings in the

bottom of that oil pan or whatever you got there i mean you can find a lot about an old car doing that not 100 necessary i probably wouldn't go to that that extreme because i'm pretty comfortable buying an old car but uh but if you really want to get super nerdy about it at least get it inspected by a mechanic spend a little 50 bucks whatever to get it inspected. And if you want to go super far like that, you can do some other stuff and have it looked at. So that's three ideas. But the biggest one is don't buy something that's a sexy, cool car with a crummy engine and transmission in it for $3,000 that looks nice but won't run. Go the other way. Want something that doesn't look nice but that will give you that full year of service.

That's what you're looking for is a year of service. Because during that year, you're going to get your emergency fund in place, and you're going to save $7,000, and you're going to move up in car. Because the good news is a $3,000 car won't go down much in value this year. It's pretty well done. So you could probably still sell it for three thousand and put your seven with it you probably won't lose any money on it maybe a tiny bit you might even make a little bit on it if you buy it right so that kind of stuff and that's what you're looking for

it's almost what we call a garage sale car you pull up and they're having a garage sale at the estate sale and it's a 15 year old vehicle that's only got 25,000 miles on it because Grandma never drove it, and Grandma died, and they're doing the estate sale now, and the car's sitting out there with the furniture in the driveway where they're doing the sale. That's a garage sale car. And you find something like that, that's a beautiful $3,000 purchase

because, again, we're not driving this long, and we want it to run while we're driving it. Good question. You're going gonna do well you're gonna do really well you're thinking this is good good stuff well done well that about puts this particular hour of the dave ramsey show in the books our thanks to james childs our producer blake thompson our senior executive producer and kelly daniel our associate producer and phone screener i'm dave ram your host, and we'll be back.

This is James Childs, producer of The Dave Ramsey Show. Once again, you made The Dave Ramsey Show one of the top five most downloaded podcasts last year. To get your daily dose of motivation and inspiration, subscribe today.