The Ramsey Show - App - Why You Should NEVER Lease a Car (Hour 2)

Episode Date: January 17, 2020

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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 am Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Grant is with us in Baton Rouge, Louisiana.

Hi, Grant. Welcome to the Dave Ramsey Show. Hi, Dave. Thank you for taking my call today. Sure. What's up? Look, I'm 21. I'm looking to get ready to be married here. But

my question is, financially speaking, what is the best way to know when I'm ready to buy an engagement ring and what is the best method to go about purchasing one? Cool. Well, you're ready. How much do you make? About $55,000 a year. Good for you. What do you do? I'm an operator in the petrochemical industry. Cool. Very cool. So how long have you been dating her? We've been dating for five years, and we're high school sweethearts. Yeah, obviously.

Wow. Very cool. Very cool. So when are you thinking about getting married? Hopefully within the next year or two. Okay. Cool. All right. thinking about getting married um hopefully within the next year or two okay cool all right well uh do the jewelry stores are not in the financial advice business they're in the jewelry business and so um i will give you a different number than they will give you okay the rule of

thumb i use when you're buying an engagement ring is no more than one month's income, which is a pretty stinking nice ring in this case. Okay? So, I mean, your take-home pay is, what, $3,500, $3,800 a month? Yes, sir, something like that. Yeah, okay. That's a nice ring. And it's not a five carat, but you're 21 years old and you're getting married.

Who cares, right? Okay. So, I mean, $3,800. And here's the thing. Learn a little bit about anything you're going to put money into. And as you start to shop for diamonds, you'll learn about clarity, cut, carrot, and so forth. I'm afraid I have a lot of dollars tied up in diamonds, none of which are on my person. That means they're on the other person.

But I've learned a lot about it. And I will tell you this, don't fall for the, oh, if you get this one, it'll go up in value more. It's clearer. You just don't want something that to the naked eye when waved around under somebody's nose is noticeably a bad color or noticeably a bad cut or noticeably has flaws in it, okay, for clarity. And so color, clarity, and cut. And carrot, of course. Carrot is the size and so forth so it's not an investment i own a bunch of them we've never sold any of them and they've never gone up in

value in 30 years so that's a bunch of crap okay the only thing they're good for is it makes the girl smile that's all they're good for okay so and they're worth it for that because my girl needs to smile and so every so often she gets one that's how that works okay but they're good for, okay? And they're worth it for that because my girl needs to smile, and so every so often she gets one. That's how that works, okay? But they're not good as an investment. That's just a bunch of garbage, okay? So what are we going to do?

We're going to get a deal. I never buy a perfect stone, but I never buy a junk one either. I try to land in the middle, and I learn about it a little bit before I get into it. A really good place, if you can land somebody in your life that it a little bit before i get into it a really good place if you can land somebody in your life that knows a little bit about diamonds that will go with you uh knows more than just a little bit you actually can find steals on diamonds at a pawn shop there are high end high quality pawn shops out there that you will get stuff for probably a quarter on the dollar of what it would be at the jewelry store so in other words ten thousand dollar ring if you can find it at a

pawn shop you can afford it for 3 800 bucks if you found one now you need to you're brand new at this and i wouldn't tell you just walk in off the street you could buy a piece of glass and not know the difference right now and i don't want you to do that so you need somebody to help look at it with you that knows something about it that'll help you shop around the other thing you can look for is a diamond broker someone that actually brokers them and they'll teach you and you can learn about buy a loose stone and have a ring made and it's not that expensive to do that so diamonds are a little bit like furniture they have very very high markup, double, triple. And so you'll find twice as much stone for the money as you will just walking into the typical mall jewelry store that you hear the ad on the radio, okay?

Or you hear a TV commercial or whatever. And all the girls are gasping and saying, oh, he bought it there. No, that means you're paying for that ad. So, you know, if you can find a broker or a pawn, that's a good way to get a deal. One month's salary, I think you can save that up pretty quick, can't you? Yes, sir. Yes, sir, I can save that up pretty quick. All I need to have is my home mortgage, and then I have a little pawn trailer I'm paying for.

That's about it. Very cool. Good for you. Well, just to finish the story, my bride and I got married with a.23 carat, less than one-fourth of a carat. You can't even see it. It's so small. It's tiny.

And it was not a beautiful, wonderful stone or something like that. I bought it. She didn't think she was getting a ring, so it was a bonus. So that was her engagement ring. And I can promise you today that has been replaced with upgrades periodically. And now the woman wears a headlight on her hands. But she started with a.23 38 years ago, and it did the trick just fine. There is zero correlation between the size of the diamond and the success of the marriage. As a matter of fact, there might be a negative correlation at some point that the diamond gets too big

for the engagement ring. If she requires a three carat, she's probably not a keeper. So, yeah, that kind of thing. So you're going to be just fine. She's going to have a wonderful ring. You're going to be a hero, and I'm proud I got to talk to you about it. Thanks for calling in. Open phones at 888-825-5225.

You jump in. We'll talk 888-825-5225. You jump in. We'll talk about your life and your money. Julie is on our private Facebook page, The Place to Go, if you want to talk about Ramsey stuff. The Ramsey Baby Steps Community. It's a private Facebook page. We will let you join quite a few people in there. I think it's approaching 200,000,

and they're having different conversations all over the place now. It's a big deal. The Ramsey Baby Steps community, it's the official Facebook page, our Facebook community group, whatever you call that stuff. Is there ever a time when a 30-year mortgage is better than a 15? No. If you can't afford it on a 15, it means you can't afford the house. If you currently own a house,

and the only way to keep from getting foreclosed on or bankrupt is to refinance into a 30, yeah, you'd probably do that. But it's not better than. There's no time I recommend a 30-year mortgage. I would tolerate it in an extreme situation, but I wouldn't tell you to go do that. No. Why would you want to stay in debt for 30 years?

When one of the key points of becoming a millionaire, and the largest study a millionaire has ever done by our team, the Everyday Millionaire Study, one of the key points is the average millionaire pays off their home in 10.2 years. Why would you want to keep a mortgage 30 years? Because you don't want to win with money? You want to make sure you pay the bank a lot? Why? No.

No. Never. Hope I wasn't unclear. This is the Dave Ramsey Show. Let's talk about low interest rates, baby. I know right now that Churchill Mortgage can get qualified buyers into a 15-year conventional loan for well under 4% with no discount points or no hidden fees. Listen, if you're even thinking about buying a home or refinancing, do it right now. These rates are incredibly low. Here's what I'd like you to do.

Take 10 minutes and call Churchill Mortgage and see what you can qualify for. So even if you have to get creative and buy something further out of the city to get something you can afford, now's the time to make the move. That's why I'm sending you to Churchill Mortgage. I trust them to look out for you and your budget. Don't miss this opportunity. You can secure these low rates now for up to 90 days through Churchill Mortgage. Go to churchillmortgage.com or call 888-LOAN-200. That's churchillmortgage.com or call 888-LOAN-200. That's churchillmortgage.com. NMLSconsumeraccess.org.

Equal housing lender. 1749 Mallory Lane, Suite 100. Rent with Tennessee 37027. Devin is next in Houston, Texas. Hi, Devin. How are you? Hi, Dave. I'm great. How are you?

Better than I deserve. How can I help? So I have a question about a car lease. Okay. My husband and I make about $90,000 a year gross. We have no debt, no children. We live well below our means. Our total absolute necessity cost every month is right around $2,000. We bring home around $6,000. And my husband wants to lease a cheap car, something like a Hyundai Elantra or something like that. And I want to know if I should say yes to it.

Why? Well, because we've always bought cars that were about 10 years old, paid about $5,000 cash, and they've always given us problems. The one I have now is about to lose its transmission. Do you have any money? And I think he's just tired of that stress. Yeah, he wants to buy a new car. He just wants to buy a new car.

You don't have the money to buy the car? We could if we wanted to deplete our savings, and I'm not willing to do that. How much is in your savings? Right now, about $15,000. Okay. No, I wouldn't take it down. Is that your only savings? That would be your emergency fund and everything?

No, our emergency fund is separate. How's is that your only savings that would be your emergency fund and everything uh no our emergency fund is separate how much is that about three months worth of expenses in the emergency why would you not spend the other 15 000 on a car if your transmission is going out on a car i guess because i have a really unhealthy relationship with money i grew up very very poor i've never really had income. Why would you want payments then? I don't know the answer to this question. He really wants to lease a car. Let me start. Let's go at this another way, okay? Leasing a car is financially stupid. Okay. It's the most expensive way to operate an automobile, according to Consumer Reports, Smart Money Magazine, and MyCalculator. It is the most profitable way a car dealership can sell you a car.

They make more money on the contract of the lease than they actually do spread of profit on the car. Plus, you're buying a new automobile, which is going down in value like a rock. Now, I don't want you to go buy a $5,000 junker anymore. I get that you're tired of those. I get that you make $90,000. But I would go buy

a fifteen thousand dollar really really nice one or two year old car and get over yourself on your worry about your childhood or whatever you make ninety thousand dollars a year you don't have any payments you've been very responsible but no i would not leasing a car is just a, it's financing a car at 15% interest. A new car. A new car that goes down in value faster than anything else. See, take a $20,000 car, $25,000 car, okay? That car is going to be worth $10,000 in 48 months. That's straight up stupid.

Okay. Unless you're worth over a million dollars, you should not buy a brand new car under any circumstances, but you should never lease a car under any circumstances at all, because all it is is financing the car. You're just borrowing the money. Okay. So a two-year-old vehicle is fine. That's a good purchase? The typical millionaire, until they become a millionaire or greater,

drives a two-year-old or older car that no one knows they're a millionaire, and they pay cash for them. Most of the loss of the value occurs in the first one to two years. I mean, think about it. The worst car accidents happen on the showroom floor as soon as you drive it off the curb it has dropped in value right right by the time you get it home i mean we all know this it's kind of common sense but what's happened here is is you guys have saved up the money you're clutching the 15 000 with both hands till your knuckles are white

and he and he's tired of messing with these dadgum, half-butt, breaking-down cars y'all have been driving, and you make $90,000 a year. So he's got a right to be disgusted with that part of it, but his reaction, due to his disgust, is taking him into the land of stupid. Is that logical? Do you see what I'm saying here? Yes.

So it's not a stupid man, but he's getting ready to do a very stupid thing out of frustration. Yeah, and I was just hoping I could let him do something stupid as a way to make him happy. No, no, no, no, no, no. Never let someone hurt themselves or you as a way to make them happy. That's just enabling. That's codependent as it can be. Now, go look up that exact car. What did you say, a Hyundai Elantra?

Yes. Or Sonata? Those are great cars, by the way. They're high quality. All the reports on them, they're right up there with like a good Honda Accord. They run, run, run, run, run, run, run. I mean, they do really well. But go look at what a two-year-old one is versus a brand-new one with, you know, 15, 20, 30,000 miles on it.

Okay, no miles. Just get something real low mile. You might find something with 10,000 miles on it. And look at its stinking half. I mean, half. I mean, I did look, and it seemed like it was only somewhere between $3,000 and $6,000 different from new. You're looking at dealer lots. Right.

Yeah, see, they're trying to sell new cars. They've got the used car prices high. Jump online and do a little research on just used cars, straight up buying a used car in your area. You'll find these depreciations will be very, very heavy. So anyway, what would I do if I were in your shoes? All the data points tell us that the millionaires buy used cars until they're millionaires, and they pay cash for them. Avoid a car fleece at all possible, in all possible scenarios.

It's a really, I mean, when you put the thing in a calculator, and you know how to run the calculator, it'll make you throw up. It's horrible. Bob is with us in Louisville, Kentucky. Hey hey bob how are you great good i'm gonna be able to talk to you today you too sir what's up well i've been laid off again i'm not in a hurry i'm not hurting but i'm also not ready to retire so i'm trying to figure out what to do with my life because I keep getting laid off. I'm in the education field.

And this fellow I know, he's thinking about retiring, and his family doesn't want to take over his locksmithing business. And he's offering the business to me, and he's willing to train me. And, you know, it's so different from being in a classroom, and I'm trying to figure out whether that's something that's worthwhile doing. Okay. Cool. Is it mobile?

A mobile locksmith? Yes. Okay, good, because that's going to be necessary in today's world. How old is this guy? This guy's getting ready to retire. Yes. Yes. Okay. And then he wants to sell you the business.

Do you have any idea what the price would be? He's asking $30. Why? What's that based on? We haven't actually discussed how he's evaluating or evaluating his business, but he has mentioned he's made six figures in the past. I think he's brought it down because as he's gotten older, he's done less and less work. Let's stop on business valuation just a second and camp there.

The minimum a business is worth, the floor, the least price, is what he could sell off the parts of the business for, the equipment. If he sold off his inventory and the equipment and just closed it, that's called book value. And so it's worth that or more. The way it's worth more is if he's been making a profit after having paid himself a reasonable salary. But if all he's getting out of it is a reasonable salary, he just owns his job. He doesn't own a business. So if he's working 40 hours a week and the business is generating $100,000 a year,

I suspect if he sat at home, he could hire someone to do all of that work for, say, I'll just make up a number $30,000, okay? So just as an example here, if the business is making $100,000 and you could hire someone and be an absentee owner to run the thing for $30,000, then the real profit in the real world is $70,000. Do you see how I'm doing that? Yes. And then the business would be worth about four times that number.

So I suspect... Four times the 70? Yeah. I suspect it's not making anywhere near that. Net profit. Net profit is what we're looking at. I suspect 30 is a reasonable price. If you can pay cash for it, I don't think that's a bad thing to jump in there and learn and pay cash for it.

But figure out why he wants 30 and when he wants 30. And know we're not borrowing money to buy the business under any circumstances. Lastly, be sure you're studying technology changes in the locksmith world because everything is being affected by technology now. Business leaders, right now you have the opportunity to take your business to the next level this new year. You can start by hiring the right people to help your business grow. At Ramsey Solutions, we post on LinkedIn Jobs because they are the best at matching the right person with the right job. LinkedIn Jobs screens candidates with the skills you're looking for so you can hire smart and fast. The thing I love about LinkedIn is they look beyond just the work skills

and put your job post in front of qualified candidates who match your business requirements perfectly. That's how LinkedIn makes sure your job post is seen by the people you want to hire. People with the skills, qualifications, and other interests that will help your business grow. It's no wonder a hire is made every eight seconds on LinkedIn. So this year, set your business up to succeed. Get started today and get $50 off your first job post. Visit linkedin.com slash Ramsey. That's linkedin.com slash Ramsey. Terms and conditions apply. In the lobby of Ramsey Solutions, Lavinia. Lavinia is with us. Hi, Lavinia. How are you?

Good. How are you? Good. How are you doing, Dave? Better than I deserve. Where do you live? I live in Huntington Beach, California. Whoa. Bit of a haul across the nation to do a debt-free scream. Welcome.

Thank you. Good to have you. So how much debt have you paid off? I paid $107,000. All right. Well done. And how long did this take? It took 35 months.

Look at you. And your range of income during that time? Between 64 and 77, depending on overtime. Cool. What do you do for a living? I work as a staff accountant for a law firm. Good for you. Wow. So the $107,000 might be a master's in accounting? No. It was my mortgage. Your mortgage? Yes.

You paid off your house? I did. How old are you? I'm 30 years old. And you live in California? Yes. That's illegal. You're not allowed to pay off your house in California.

It's against the law. Yeah. It is a condo, but, you know. But it's yours. And it's mine. You are 30 years old with a paid-for condo in Huntington Beach, California. I am. Woo!

I love it! Well done! Thank you. Well done! Oh, that's amazing. And did it in three years. Yes. And so you came out of school with no debt.

Yes. How'd you do that? I went to a local school that, you know, was definitely reasonably priced and, um, my parents were able to afford most of it and, you know, and I worked through college as well to, to be able to pay it. Somehow I have a feeling you're not afraid of hard work. No. A lot of overtime.

Yes. And, uh, so are your parents wealthy? Is that how they paid for your education? Um, they, They're not wealthy. I mean, they started, they came to America with, you know, absolutely nothing from Romania. Escaped communism and came to America with absolutely nothing. Started, my dad started his own business. Of course he did.

Yes. And, you know, and now their net worth is over a million dollars. I call that wealthy yes and but it was you know with pure hard work and and you know they don't feel wealthy and they my mom shops we just came from ross and you know what i mean so it's not like um they're definitely not but they were able to help you with school they were and they were and there's um six of us so they they were able to help with all six of us. Wow, a lot of kids to feed. So what kind of business did your dad have? Or does he have?

He has a granite tile and marble installation company construction. I love it. This is a great story. It is. Your family story all the way leading into you being 30 years old with a paid-for condo is a great story. This is a great American dream. Come here in one generation, become millionaires, and raise a daughter like you.

Wow. Yeah. Well done. Well done, Mom and Dad. I love it. How does it feel to not have a payment in the world? You have to feel like an alien. It's definitely so different because, you know,

for three years I did almost nothing. I, you know, didn't go out to eat. I didn't buy any clothes. I did literally almost nothing that was not bare necessity. So now it's just such a different feeling once you get used to that, to be able to, you know, walk into stores and not think about it and not worry about it and not plan it. And, you know, and even though that is's what i like to do i still live on a budget but actually having money in that budget for these categories so that's permission to spend yes exactly exactly and it's just such an amazing feeling to to you know just be able to do it and

and not have to think twice amazing do you know anyone in your age group in your neighborhood that you run around with that's even close no not even close no i don't know what i can think of right now but no you're amazing you're a rock star well done i'm sure your mom and dad are just bursting of pride and brought them with you to be your cheerleader they came down from where do they live from michigan so they drove down here from michigan and um to to be here they They were my biggest strength, my biggest support. Obviously, with and through God, all things were possible. But they were my cheerleaders the whole way. So they decided to come here and cheerlead for me as well for this moment.

I love it. I love it. I love it. I love it. It's as good as it gets. So when people tell you this and they look at you like you have one eye in the center of your head because you're 30 years old and debt-free, that's so unusual. And they say, how did you do that?

What do you tell them the key to getting out of debt is? Well, I think that the key is definitely learning to sacrifice. And the reason why I did it and I did it as hard as I did and I worked as hard as I did to do it was because I wanted to be an example of what it means to sacrifice and showing people my age, people with a social life. And you can still have a social life. You can still do fun things. But learning to sacrifice is something that's going to help you in the long run, no matter what you do and where you go. So, you know, when you have a family, when you have kids, you know, people think that as soon as you get married or as soon as you have kids, you're

just going to automatically become a good spouse or a good mother or a good father. But if you didn't train yourself to sacrifice in areas of your life, you're not going to be able to just instantly flip the switch and start to do that. So not only did I, you know, I didn't necessarily have to give up restaurants, but I wanted to be able to do it so that if somebody asks, you know, is it really possible to not go out to eat? I can say, yes, it is, because I've done it, and I didn't even have to do it, but I still did it. So, you know, I gave up restaurants, and then it became a fun challenge,

so I decided to also give up sugar and chocolate, which is insane to me. But I gave up those things for a year. I gave up junk food. I wanted just to keep challenging myself and testing myself and seeing what else I could do. And honestly, it was such a rewarding experience. And the sacrifice and learning what you can do and who you can become has just been so amazing and so fun, really, too, as well. When you figure out that you do control your own destiny and then you go about the business of doing it.

It gives you power in so many areas of your life. Yes. I can do all things through Christ who strengthens me. Amen. But when you figure out that when I take these actions, when I sow discipline, I reap success. When you figure that out, it allows you to control any area of your life. And bad stuff's always going to happen. Good stuff's always going to happen. There's blessings and there's curses.

There's things that happen in our lives. But you've got control of all the variables. Well done. Thank you. Very, very, very well done. Thank you. What was the hardest part for you? Well, I think just everyone around you is buying things constantly. And so

what I did was I made myself a debt-free treat list. So, um, the hardest part was, you know, people are getting the latest garments, the latest, you know, shoes or whatever. And so, um, so, you know, to, to strengthen myself, empower myself through it, I would just make this long list. I mean, I had maybe 30 things on there that I could buy as soon as I became debt-free. That's a good idea. Yeah. Well, and the crazy thing is, is that once it was over, I actually, I mean, I bought maybe five of them. And, you know, some really nice things, an espresso machine, my first gun, and things that I was really excited to buy and I love. But really,

once you did that for three years or sacrificing for three years and continually saying no to yourself, it doesn't become as urgent to have all the things on the list. In that moment, you want it, but now- The fever goes away. Exactly. The fever goes away and now it's like, okay, well, I'll wait for my massage chair. I can wait another six months or whatever it is. Your story is incredible. I'm so proud of you. I know your mom and dad are.

We've got a copy of Chris Hogan's retire-inspired book for you. That's the next chapter in your story for sure. You're going to be a millionaire and outrageously generous as you go along. Your mom and dad changed their family tree, and you're walking proof of it and outrageously generous as you go along uh your mom and dad changed their family tree and you're walking proof of it and you get to continue that tradition so well done very very very well done all right it's lavinia from huntington beach california 30 years old her condo is paid off i I don't believe this. This is amazing. $107,000 paid off in 35 months, making $64,000 to $77,000 a year.

Count it down. Let's hear a debt-free scream. Three, two, one. I'm debt free Well done Well done Man That one had layers to it. If you didn't hear all the layers you weren't listening. Wow

This is the Dave Ramsey Show. One of my favorite parts of this show is hearing your debt-free screams. You guys are our heroes. You've kicked debt to the curb and you've saved for the future. Now we want to celebrate with you. If you have lived like no one else and are currently in baby steps four through seven, well, it's time to enjoy some money. And the perfect place to do that is on board our first ever live like no one else cruise in March.

That's right. Just a couple of months away but get this it's not too late to book your cabin so don't miss your chance this caribbean cruise is going to be an incredible seven days at sea on a stunning new ship with amazing experiences i'm talking all of our ramsey personalities and other world-class entertainers. We're stopping in the Bahamas, Puerto Rico, St. Thomas, and Turks and Caicos. It's going to be an amazing, debt-free celebration designed just for you. Don't miss the boat. Head over to RamseyCruise.com today to reserve your room. Elliot is in New York City. Hi, Elliot. Welcome to the Dave Ramsey Show.

How are you doing? Better than I deserve. How can I help? Yeah, hi. I'd like to know if it's a wise, bold, or foolish decision to trade in a perfectly conditioned car based on high mileage and consumer reports for an upgrade. Based on high mileage and consumer reports, doesn't like your car?

Yeah, I have a passion for traveling, and I'm committed to it. And I'm looking to possibly upgrade, but I've had this for two and a half years. Okay. So what's the car worth? The car is worth like $17,000 private, $14,000 trade-in. Okay. And how many miles you got on it? $60,000.

Okay. That's not a lot. It's a 14 Dodge Charger. Okay. And how many miles you got on it? 60,000. Okay. That's not a lot. It's a 14 Dodge Charger. Okay. Nice car. So you're committed to traveling, meaning you're just planning on putting a lot of miles on it because you're out there running the road. Exactly. Yeah. In the last two and a half years, yes. Okay. So the thing we know about putting miles on a car, and you know this, is the more miles you put on the car, the more you destroy its value, correct? Correct.

And so if I'm going to travel, or for instance, people who travel for a living, people, road warriors I call them, they have to travel for work all the time. In that case, you want to drive the least expensive vehicle that will get the job done because you're destroying whatever you drive. I mean, you don't want to drive a $100,000 car. It's going to be worth nothing by the time you finish traveling. And so unless you've just got millions of dollars and you can afford to lose $100,000, but most people don't have that. So basically what we're saying is you're going to lose 100 grand but but you know most people don't have

that so basically what we're saying is you're going to take this 17 000 vehicle and you're going to cause it to drop in value faster than anything else what's your household income um i make about 80 000 okay you're single i single, bachelor, renting a small room. Okay, all right. Since I'm always hanging out. Do you have any debt? Just the car, that's it. What do you owe on it?

$11,000. Okay, all right. Well, there's nothing I'm hearing here that's crazy as long as you realize that, you know, this $17,000 car might be worth, you're going to lose a few thousand dollars extra on it just because you're going to travel in it, okay? And as long as you're willing to do that with the kind of money you make, you should be okay. Let's get the car paid off as soon as possible. So your preference is keep it and drive it. Is that right?

My preference is to keep it for five or six years. Yeah. But my friends and co-workers, whatever they say, to trade it in, to trade it, you're crazy to keep it. To trade it in for what? Well, last night, for fun, I was spinning around the

BMW 440 Exile, falling in love with it. Right. Well, that'd be easy to fall in love with that. But that's even more expensive, so we're going to destroy even a more expensive car if you want to travel in that, right? Yeah, and to upgrade to a brand new one, you know, that would be 20% less. Well, number one, you're in debt, and you don't have the money to do that, so that's ludicrous. We wouldn't do it on that basis alone. But on the idea that you're going to travel in it, no, you don't want to upgrade

and destroy a more expensive car's value. So if you're going to travel, you need to run the wheels off of something that's not going to cost you as much. So we don't upgrade in order to lose more money when we don't have any money that that doesn't make sense at all so whoever your friends are i mean they're encouraging you to do stupidity but i've had friends that have encouraged me to do stupidity i didn't have to do it though brian's with us in bakersfield california hey brian how are you better than i deserve dave how are you better than i deserve how can i help okay are you? Better than I deserve. How can I help?

Okay, Dave. So before I found you at the beginning of this year, I impulse and purchased a ridiculous car. And then as soon as I found you, I was like, crap. What'd you buy? We bought a 2017 Mazda 6 with all the bells and whistles. Sweet. Yeah. Well, not so sweet and whistles. Sweet. Yeah. Well, not so sweet because my pocket hurts.

Yeah, well, I guess. But, I mean, the car is great. Okay. Oh, yeah. So what do you owe on this silly thing? We owe $35,000. Mm-hmm. Okay.

And what's your household income? This year we'll be making $60,000 to $65,000, maybe touching $70,000, depending on my overtime. Oh, yeah, this car's gone. So then next year I'll be getting a good 15% raise plus another 5% raise down the road. So here's my, I'm calling to see if you're okay with this. Me and my wife finally agreed to let it go.

Good. And sell it. Good. It's worth $ wife finally agreed to let it go. Good. And sell it. Good. It's worth $21,000. Oh, God. Yeah. So you rolled something upside down into it or died that bad? Yeah, it died that bad.

It only took like three months. Good Lord. So $21,000 on trade-in? Yes. Oh, well, that's a problem. And $22,000, $23,000 on private sale. Something. That's not enough of a spread on private sale so you're saying this car went from 35 000 to 23 000 in one year actually technically it was 40 000 to 35 000 i also canceled the warranty on it

because we had an extended warranty yeah and then we found out that it's funny how when you pay off the vehicle or you reach certain miles all of a sudden uh it starts to fail on you and the warranty is canceled you know because you overdid it all right so yeah we need to get rid of this thing for so many reasons so so what's your plan the plan is uh me and my wife we've been looking around, and we saw some $4,000, $5,000 cars. I could save up that money, and I probably have it by next income refund. But what I was thinking is because our monthly payment throughout the whole month is like $800 because I also have a student loan,

and the student loan payment is like $168. But I'm almost done with that. I only have like $ loan, and the student loan payment is like $168,000, but I'm almost done with it. I only have like $6,000 left over. So what if I just go ahead and sell this car, borrow the difference, and then go to the guy on the car that's selling for like $4,000 or $5,000 and just make payments off of it for like $100, and the monthly payment will go down to $400, making the math. Yeah, I mean.

Would you be okay with that? Yeah, sure. But I'm not sure I understood how you're financing your second car, the one you're financing. The $5,000 car that you're buying, how are you financing it? I'll just go on ahead, just like, you know, just like if you're going to go buy a car, put a little down payment on it. Oh, okay. And then over the, you know what I mean? Yeah, that's fine.

If you can just get a regular car loan on it, that's fine. Let's do that. Because we're still reducing your debt by half. Right. And by doing this, and then you can concentrate on getting that car paid off and then getting the hole that you dug with this other car which is absolutely horrendous it's a great car i'm surprised that thing has dropped that far in value um make real sure you got your numbers right on that because i mean i the cars are horrible as far as going down in value i get it i i'm a car

guy but they and they go down in value rapidly But that one is like a black hole for money. I never saw anything like it. That's incredible. What a horrible, horrible car on holding its value. So check that and make sure your numbers are a little high on terms of lost money. Maybe you haven't lost as much. I'm hoping you haven't lost as much as you think you've lost.

So let's dig into that a little bit further. And you do not want to sell it to a dealer at wholesale. You want to sell it private sale. It should be in this situation about a $5,000 difference. In other words, you should be able to get $5,000 more out of selling a private sale than you would for my dealer on something that expensive. So really check those numbers i'm not sure you've got correct stuff there but wow what a dad gum kick in the teeth man you got hammered amazing good luck with it but yes i would get out of it for sure it's too much car it's a mess it's going down in value

it's breaking i mean there's nothing good in this story. Thanks for the call. Well, that puts this hour of the Dave Ramsey Show in the books. Thanks for hanging out with us, America. James Childs is our producer. Kelly Daniel is our associate producer and phone screener. I'm Dave Ramsey, your host. And we'll be back. Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. This episode is over, but if you heard about a product or service and didn't have a chance to write it down, don't worry.

We list everything that is mentioned during this episode in the podcast show notes section. Thanks for listening.