Anyone use Dave Ramsey's Debt Program - Sell your car?

[tlbwriter]

No one is talking about a "beat up clunker", let alone one that would break down or cost a fortune. The term "beater" in DR terms doesn't mean that.

Honestly, when I've listened to DR I get the impression that this is exactly what he means. Especially when you read his "drive free" plan, which suggests starting out with a $2000 car. I'm sure some people don't need to rely on a car, but I live in a town with little mass transportation (and none that goes to my neighborhood), and I regularly drive my car to visit the ILs (it would cost $1200 in airfare plus baggage fees plus a car rental to visit them otherwise). The beater plan just doesn't work for everyone.

 

[natenapril]

Honestly, when I've listened to DR I get the impression that this is exactly what he means. Especially when you read his "drive free" plan, which suggests starting out with a $2000 car. I'm sure some people don't need to rely on a car, but I live in a town with little mass transportation (and none that goes to my neighborhood), and I regularly drive my car to visit the ILs (it would cost $1200 in airfare plus baggage fees plus a car rental to visit them otherwise). The beater plan just doesn't work for everyone.

I live in Alaska and there is no way I am risking my family by buying a clunker and being broke on the side of the road at negative temperatures. BUT we did downsize our pymt. We had one car payment that was $600 for a 2009. We traded in it on a car that was a 2007 with a $270 car pymt. Works for us.

 

[MrsPete]

The beater plan just doesn't work for everyone.

I live in Alaska and there is no way I am risking my family by buying a clunker and being broke on the side of the road at negative temperatures.

I'd say that if you just can't do something in one area of the budget (in this case, transportation), you should go ahead and do what makes sense for you . . . BUT that means you have to make drastic cuts in some other area to keep your budget stable. So if you simply can't cut transportation, you might choose less expensive housing.

For us, having only one car used to be wonderful. It saved so much and wasn't nearly such an inconvenience as you might think. But then we reached the point that it was impossible, so we had to make changes. Once we're retired, we'll slash transportation again.

 

[TnTWalter]

When we were dumping debt we didn't have new or expensive vehicles. We just added my van into the snowball [DH's truck was owned]....but

I ran into a friend at the store today who was gushing about how she paid off her last debt October 1. I had given her a TMMO book in early January. She sold her new and expensive SUV shortly after starting the program and she said it felt so much better without it. She was on cloud 9 I tell you. It was awesome!

Regarding 'reliability' of used cars...Let's pretend you had $500 of issues with your car every year.....that's still much less than monthly payments....plus you will have an emergency fund in place for such repairs...and really...I haven't had any repairs with this van and spent less than $1k on the other van for the 5 years I drove it.

Trish

 

[nowellsl]

I paid cash for my last car (around $10,000) and even though it was 7 years old, it only had 37,000 miles on it. After 2 years I've put about $1,500 into it (tires, brakes, battery, belt, oil changes) but really no mechanical problems at all. I'm up to about 54,000 miles now and hope to get at least another 100,000 before I have to buy another one. It's a Toyota, so 154,000 is not uncommon. I would never buy a brand new car, let someone else pay the depreciation. A reliable used car is the only way to go for me! I had a mechanic check it thoroughly before I bought it. I would definately sell any car that I had to pay $600 a month to pay for, I can't even imagine that!

 

[MasonDuo]

Thanks for the advice everyone. I'm still torn. I do like reading all of your stories. Cars are just such a frustrating expense because most of the time it's sitting in the garage or the parking lot at work.

I would love to have no car payments. When we bought our new Forester we went into it with thinking it's just one payment but then my husbands older car took a total dive and we ended up having to pick up another car payment. They are manageable but I feel like they are such a waste of money.

I would love to build a good emergency account and have some spare money so you don't feel the pinch.

 

[playtimeover]

Selling your car to buy a beater cash can be a great way to get a jump start on debt repayment, or it can be a total disaster. I would crunch the numbers and see how the debt repayment plan looks like without downgrading the car. If you can make the numbers work, then I'd keep the car. Unless one is able to make basic repairs themselves, getting a cheap used car can be asking for trouble. Even if it runs well when you buy it, you'll never know when it will go south on you. My DH can fix anything on wheels which is why we've kept my '98 Saturn so long. When you can do a $1000 repair for $150 it costs for the part, it makes sense to fix it and keep going rather than start car shoping.

In short, if the ONLY way you can make the numbers work is to downgrade the car, then do so. If you are mechanically inclined (or have a friend/family member who is and is willing to help you with repairs) then it also could be a good idea. If you have no way of fixing the beater car cheaply and can make the debt paydown work even with keeping the new car, then that's the way to go.

I agree with your suggestion. I'm sure that you did that, aren't you?

 

[herdtoDisney]

I have not had a car with payments, so I've not sold it-but I have lots of experience with older cars Currently in our household (3 licensed drivers, dh , me, son) we have a 1995 Gmc Jimmy, a 1997 Chevy Cavailer, a 1998 Chevy Astro, and our 'new' truck we just got, a 2001 Dodge Ram. Our first new millenium car, lol. Dh also has a project car, 1978 Trans Am (this is not a daily driver).

Here, we pay property tax on registered vehicles. The property tax on the 4 registered cars, together, is less than I'd pay on one new vehicle like an SUV or van! Insurance, even for my teen, is low too. We only carry collision on the 'new' truck, the rest we carry the legal requirement. So we save there too.

If you have 2 cars in the household, if one breaks down, you can share during repair, so I don't worry too much about breakdowns. Once, when we just had the Jimmy and the van, the van was in the shop (for something dh couldn't do at home) and I rented a car for a few days. It wasn't a lot of money (it was a toyota yaris, which felt like driving a lawnmower ). It was way cheaper than even just one car payment. We do have AAA, and have used the tow service-we consider it a good thing to have with our older cars.

Dh does a lot of work on our cars himself, so that helps. If you/dh aren't car handy, often a local high school with an auto shop will work on a vehicle for learning, for just the cost of parts. We've done that.

I think a lot of people are afraid of older cars, but my experience has been, that they tend to run well for longer than people think. I live in the NE and haven't had lots of rust, like cars used to do years ago. You could always try selling your car and getting a paid-for one, and if after a year you just don't like it-sell it again and buy a new one.

I will admit, while I am happy with my old, unfancy cars-I did love the Chevy Traverse I saw outside Test Track last year!!! Maybe in a few years, I'll find a used one for cash, lol.

 

[Tink-aholic]

We turned in a leased (FLEECED) Mazda Millennium with allll the bells and whistles (heated seats, anyone??) and bought a Hyundai Excel for $500. It didn't look pretty, but it ran GREAT. After four years, the only money we put into it besides regular maintenance was about $300 for brakes. When it died, we donated it to Goodwill and got a $600 tax rebate.

Best financial move we ever made.

 

[dcfromva]

My angst about buying a used car is that you really don't know how much it is going to cost to repair. Also, when we buy a vehicle we plan to keep it for a while. We had a van we owned from day 1 that was only 6+ yrs old that we put in about $3000 worth of repairs at year 6 (weird stuff--electrical problems--headlight socket burned out, fuel pump went south, windshield wiper motor burned out, window motor stopped working, ac compressor went out every 3 years and so on). We loved the van and kept fxing the problems until we were given another estimate for another round of repairs for $3,000 -this time the list of repairs included a head gasket replacement. (We donated the van to a charity that fixes the vans and gives them to a low income family that needs help getting back on their feet. But, with the latest round of repairs needed the charity sold the van at auction. )

We gave a family member a van (the predecessor to the one with all the troubles) that is now over 16 years old and has over 200,000 miles on it and is still running. The van did not need any repairs (other than normal maint) from years 8-15. So, it is possible to have a happy ending. The problem is you just don't know and it makes it hard to predict.

We currently have a car that is almost 12 years old (it's birthday is in Dec ). I believe we have put in about $2,000 worth of repairs within the last 12 months. I can usually count on at least a $2000-3000 repair bill each year. Lately, the types of repairs have been such things as the alarm system had to be reprogrammed because it went off even when the key was in the ignition (no idea what caused that) , got an check engine light error code which was due to a knock sensor being out and a few other things I can't recall. The other thing I worry about is the airbags--will they still work after all these years? (Hopefully I won't ever need to find out) I have kept the car because it has 4wheel drive (I still have to report to work even if it snows) and I figure it is still cheaper than buying a brand new 4wheel drive vehicle. (And, I only need the thing to last for another 4 months because I am seriously thinking about retiring! )

I think if you buy a used car it is wise to set aside a repair budget--just as if you had to make payments. Hopefully, nothing serious will crop up until the fund is built up to handle it. If no repairs are needed and the fund is getting too big--wonderful, you can siphon off some of the funds to other purposes (or even a replacement car).

 

[MrsPete]

I think a lot of people are afraid of older cars, but my experience has been, that they tend to run well for longer than people think. I live in the NE and haven't had lots of rust, like cars used to do years ago. You could always try selling your car and getting a paid-for one, and if after a year you just don't like it-sell it again and buy a new one.

Yeah, I agree:

With our last two cars we reached the point that the cars weren't completely dependable any longer. They were fine for driving 1.5 miles down the road to work, but we wouldn't take them out of town on a long trip. For about 8-10 years we had one "good car" and one old car. It was fine.

The blue book value of these old cars was essentially zero. Continuing to drive them made sense financially. Trading them in for a new-new car might've garnered us a couple dollars, but we'd already reached "bottom dollar" for their value. Trading them in NOW vs. trading them in a year later made no difference in the cost of a new car.

With both cars, we knew they were on their "last legs", and we were ready to buy a new car -- we had the cash in the bank, but we wanted to hold onto it as long as possible. In both cases, the old car kept going TWO YEARS longer than we expected it to. Two years x two cars that we were able to put off buying a new car.

We ended up giving away the two old cars -- one to the kidney foundation, one to a car smash fund raiser.

Right now we have three cars. Two of them could be described as "late model used" (though they were both bought new), and one is old. Our teenager drives the old one. It recently broke down, and my husband put it into perspective: The $750 that it cost to get that old car running again was the first BREAKDOWN that we've had, and we've owned that car since 1999 (it is a 1997). We've replaced tires, brakes, and oil . . . but that's maintenance. In all that time, that car has not left us stranded. The $750 didn't seem like all that big a deal when he pointed that out.

 

[MsStinkerBelle]

Better your OWN beater than an unknown entity, particularly if you depend on that car to get you back and forth to work!

DEFINITELY! My 'beater' is a 1999 Ford Explorer Sport whom I have 'babied' with respect to regularly scheduled maintenance. I actually had a Lexus dealer try to get me to part with it--kept going on about it having 'one owner'. While I'm not planning on buying a new car until this one finally 'buys the farm', I'm saving for a new one. Edmunds.com has a great car payment affordability calculator that can help keep your car shopping realistic and within your budget.

Dave Ramsey has some good advice but the 'buy a beater' thing I've never agreed with.

 

[Sagginit]

my first car is still my car. i have a honda, they are known for durability and the repairs have been less than 1 years worth of car payments in four years of owning it. my stepfather has been able to do minor repairs and i get the oil changed and fluids checked on schedule.

another thing to consider is who you buy it from. i was lucky, the car is now 18 years old and i am only the 3rd owner. the first was older, garage kept. the second was a relative of mine and she barely used it. if you know someone trying to unload a car for cheap it can work out. in my case it needed a few repairs so it was easier for them to sell to me than get it fixed to sell or be bargained down by people.

also take insurance into account. i live in NJ which is famous for high rates. this car has kept my rates down. if your insurance will drop a lot then its another reason to sell and trade in for a beater. i honestly think buying this car was the best financial decision i have made. i dont think i could ever bring myself to spend the money on a newer car.

 

[mrodgers]

also take insurance into account. i live in NJ which is famous for high rates. this car has kept my rates down. if your insurance will drop a lot then its another reason to sell and trade in for a beater.

My car insurance is the opposite. I traded my beater, also a Honda and my rates stayed the same.

The difference is the coverage. I had liability only on my 94 Civic, traded for a 7 year old newer car, increased to full coverage, and my rates stayed the same. It was the safety features of the VW Jetta vs. the little Honda that drastically lowered rates so that I was able to have full coverage for the same cost.

 

[mhsjax]

DEFINITELY! My 'beater' is a 1999 Ford Explorer Sport whom I have 'babied' with respect to regularly scheduled maintenance. I actually had a Lexus dealer try to get me to part with it--kept going on about it having 'one owner'. While I'm not planning on buying a new car until this one finally 'buys the farm', I'm saving for a new one. Edmunds.com has a great car payment affordability calculator that can help keep your car shopping realistic and within your budget.

Dave Ramsey has some good advice but the 'buy a beater' thing I've never agreed with.

I buy new but I baby them and drive them until they drop. I think Dave is crazy in this area. I live way out in the burbs, there is no bus service here and I have 3 kids that I transport all over town, I want something that I trust.

Frankly, I don't pay too much attention to anything this man has to say.

 

[mrodgers]

I buy new but I baby them and drive them until they drop. I think Dave is crazy in this area.

I've been checking into all the Dave Ramsey stuff and he is really extreme. A bit too extreme. Sure, I need to pay off debt, but with 2 of us working, I'm not selling my 2 current cars and replacing with beaters just to get out of debt sooner. The DR way seems to be put your entire life on hold to pay off your debts. I've started going the budget route, most importantly is starting next year we will be saving for expenses that come occasionally or seasonally, but I'm not putting my entire life on hold to pay stuff off. It will get paid off and new debt won't come, but to sell everything including your cars is just unrealistic, especially when you have kids in the household.

 

[tlbwriter]

I've been checking into all the Dave Ramsey stuff and he is really extreme. A bit too extreme. Sure, I need to pay off debt, but with 2 of us working, I'm not selling my 2 current cars and replacing with beaters just to get out of debt sooner. The DR way seems to be put your entire life on hold to pay off your debts. I've started going the budget route, most importantly is starting next year we will be saving for expenses that come occasionally or seasonally, but I'm not putting my entire life on hold to pay stuff off. It will get paid off and new debt won't come, but to sell everything including your cars is just unrealistic, especially when you have kids in the household.

Well, it works for a lot of people. But one of DR's big flaws, in my opinion, is that he claims this is the *only* way to get out of debt, and that's simply not true.

 

[bryan jackson]

Hello new to this forum. But wondering how long it took to sale your cars. I've had mine up for a couple of weeks now but no buyers yet. Well any firm buyers. And what did you use to sale it. ? Internet or car lots. Thank you.

 

[Sundowner2]

Our cars are old, a 2004 van 2006 rav 4 and 2002 truck, but they are all paid for, and we've been saving up (way too slowly) because we will need to replace one eventually. The van will be taking us on our last long trip, because with it's age, we aren't sure about another one, but honestly, they all run great. We don't want a car payment, and can't afford one since I don't work right now.

I think the biggest thing when you are wanting to buy a "beater" or any used car is to research. Read reviews, check consumer reports and the highway for safety, they will tell you which cars break down and which ones are good. Then go from there. Dave Ramsey has said over and over not to get a beater in the sense it's going to fall apart the second you drive off in it, but to get a car that's not cool looking, but runs really, really good. So look for a used on based off of how well it's going to run, not the color, or the body style or the extra things it comes with.

I know someone mentioned not wanting to put their life on hold, and I am the first to admit, I prefer the debt free screams from people making on the lower end (50,000 or less, like us) but every single one of them talks about how great it is to be debt free. And I agree. There's a LOT of comfort that comes from writing you checks each month and not wasting money anymore on interest, or late fees. There's a great comfort in knowing your car is YOUR car, and if you lose your job suddenly no one can take it. Or your house. Sometimes you have to give up things temporarily, to make things better for the future.

 

[Sundowner2]

Oops, sorry, I saw that someone brought back a dead thread. My thoughts still stand though.