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

[MasonDuo]

Hi All - I've been reading up on Dave Ramsey's program. One of the suggestions I've read is selling your car and going to a cash-bought "beater" (well hopefully a little more reliable then that).

Has anyone sold their more expensive car and downgraded to get rid of the car payment? I'm afraid to lose the reliability of my new car but would love to get rid of the payment. I am not upside down on the loan and would probably break even.

Any advise???

 

[JackJack08]

We got rid of both of our cars actually.....and have no regrets! We went with 2 diesel VW's that are great on fuel. The kids miss having their DVD systems.....but they can listen to their ipods. OR heaven forbid, they talk, read or draw in the car, like we used to have to do!!!!

 

[dfchelbay]

We got rid of both of our cars actually.....and have no regrets! We went with 2 diesel VW's that are great on fuel. The kids miss having their DVD systems.....but they can listen to their ipods. OR heaven forbid, they talk, read or draw in the car, like we used to have to do!!!!

That's just crazy speak...what is this "Talk" you speak of...is that some of that new age, new-fangled foo foo shi shi stuff?

 

[lyncecelia]

Honestly, I don't even have a car. We can't afford two, and it's more important for DBF to have one since he works so far from home. I hope to have one at some point, but I don't know if I want to use the money to speed up my student loan payments or not

 

[tinker&belle]

We sold one car (we owed a little over 18,000, sold it for 15,000) and it was great! We paid off our other car and now are car debt free for the first time in our marriage! I highly recommend it. We didn't exactly buy a beater; we bought a reliable import for around 5,000. We have had to do a few repairs on it, but it runs great and we have no regrets.

 

[MomofM&M]

We sold my Honda Pilot with DVD system and we were a one car family for a while. I bought an electric wheel kit and a bike trailer and biked everywhere with my kids since I flew out of state for my job and rented a car there. When I got a job in state, I bought a used car for $2100, a 2002 Kia Rio Cinco with 60,000 miles. My kids talked about how they missed the TV but they got used to it. It was very liberating to purchase it with cash. We had already paid the loan off on our other car so it's a great feeling to not have car debt.

 

[bumbershoot]

We did not, as we were too upside-down AND could not pay the difference. So we just smashed the loan down, and in under a year paid it off (more than 2 years early). Now we own it, so if we see something cheaper that we would like better, we can sell it and buy the other thing.

I think the shorthand is if you can pay it off in something like 18 months or under, don't sell it unless you want to. If you canNOT pay it off in that time, get rid of it even if you have to pay the difference.

 

[JaymeC]

Something else I haven't seen anyone else mention, but if your car is a bigger car and you downgrade to a small car therea re other savings as well. Gas, tires, insurance. It's not just the car payment.

We haven't sold our car to get a cheaper one, but that's because we bought cheap cars to begin with Out in Japan we drove true beater cars. They cost us 1k and 2k. They both kept going with no problems for the three years we needed them though. Now that we're back home we have our older (paid off) nissan sentra and we'll be looking for another car for dh at some point in time, though I may see if we can put it off for a year just to save a bit more money. He won't get what I call a beater, but he will get a car that costs in the neighborhood of 5k, yet is reliable and in good shape for the money.

 

[ssawka]

Unless you are really good with cars or really do not need one, I would not sell yours. I actually just bought a new one. I like having a reliable car that I do not need to worry about. Also my old car needed some work and given what labor rates are where we live it just didn't make sense to throw money at an old car. I didn't get anything fancy, I bought a KIA Soul. It was $18K total with 0% interest. Comes with a 5 year bumper-to-bumper warranty and a 10 year powertrain warranty. I like the piece of mind that the warranties bring. Sometimes value is not about cost!

 

[WeLoveLilo05]

for 4 years we had 1 car, a 2001 chevy cavalier for the 3 of us to share, we finished paying it off back in 06. It wasn't a big deal, I didn't need a car, Im a SAHM and I went to college, but I lived around the block from college and the school I student taught at, when needed I'd borrow my mom's car.

But now we have an 07 Ford Fusion we got at a great price, it only had 22,000 miles on it. We also have the Chevy still, but now we needed 2 cars so we did what was best for us.

 

[MrsPete]

This isn't quite the same thing, but DH and I only had one car for the first three years of our marriage, and it was ABSOLUTELY one of the things that set us on the road to financial stability.

It wasn't always easy: We lived way out in the country (no public transportation), so we both needed the car every day. We gave up some flexibility and rode to work/school together every day, which was actually nice and was certainly cheap.

When I finished school and started working different hours in a different town, we were forced to buy a second car . . . and it was shocking just how much it affected our budget. Even if you don't have a payment, the insurance, tags, maintenance, and the money you spend because it's so easy to run around here and there -- it adds up!

I really think that many people could do with only one car IF they are willing to make some time and schedule sacrafices. When we retire, we'll absolutely drop back to one car. It's one of the things that'll allow us to live frugally and comfortably on less.

 

[okeydokey]

We live in a rural county, I would NEVER sell my car. We buy basic reliable cars and then use them 10 years. I would never buy a beat up clunker that would break down in the middle of nowhere or cost a fortune to keep fixing every other month. Bad advise IMO.

 

[JB2K]

I would never buy a beat up clunker that would break down in the middle of nowhere or cost a fortune to keep fixing every other month. Bad advise IMO.

Agreed -- Dave Ramsey's advice always sounds good at first glance, but consider this...

Whenever you buy a used "beater", you are buying that car "as is" -- not knowing its' mechanical history, or anything...which is OK, if you know a lot about cars/mechanically-inclined, or if you like to take a gamble on things.

A more "sound" option would be to keep-up on the scheduled maintenance on whatever vehicles you already have (that are paid-for, of course), which is way cheaper than a $400+ per month payment/lease payment.

 

[DisneyScraps]

I did it. I sadly sold my beloved Volvo Convertable and bought a very used boring Honda Civic. The catch was, it's a hybrid. My car payment was cut in half, my insurance dropped greatly, I dropped the warranty payment on the car and gas is sooooo much cheaper.

It was so smart!

There are certian days when I miss that car but most days I am happy that I am out from under that crushing payment. I could afford the car when I bought it, that was before my business took a terrible hit. Now my life is easier that I am not trying to make that large payment. I hope to pay this car off soon, the payment is so reasonable there have been a few months when I can make an extra payment.

Lisa

 

[jodifla]

We buy good solid cars and keep them at least twice as long as the payoff time. So if we pay it off in 4, we keep it 8 years. We now have 14 and 15 year old cars, and just added a 2 year old car to the mix.

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

 

[bettymae1121]

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.

 

[bumbershoot]

We live in a rural county, I would NEVER sell my car. We buy basic reliable cars and then use them 10 years. I would never buy a beat up clunker that would break down in the middle of nowhere or cost a fortune to keep fixing every other month. Bad advise IMO.

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.

It means finding someone like you who keeps their cars, and who also sells them while they are still good. I mean...what DO you do with your 10 1 day old car? Sell it, right? Surely you aren't selling a car that's going to explode 2 miles down the road after you sell it?

 

[Mama-san]

We buy good solid cars and keep them at least twice as long as the payoff time. So if we pay it off in 4, we keep it 8 years. We now have 14 and 15 year old cars, and just added a 2 year old car to the mix.

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

Yeah, that's what we've done. Bought a 2000 Honda Odessey new, had over 180k on it when it was totalled when my husband hit a deer last Nov., and got $6k from insurance! Went a long way towards my 2010 Sienna. I plan on driving it until it poops out. Would have done the same with the Honda if not for the accident. I like the idea of knowing the history of my beater as PP have said. We do several long distance trips each year, and having a reliable vehicle is important. Drove many a p.o.s. growing up, and if I can afford the alternative, I will!

 

[mrodgers]

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.

It means finding someone like you who keeps their cars, and who also sells them while they are still good. I mean...what DO you do with your 10 1 day old car? Sell it, right? Surely you aren't selling a car that's going to explode 2 miles down the road after you sell it?

No, but a 10 year old car isn't exactly a cash purchase when you are in debt trying to get out of debt. A 10 year old car means... a car payment, usually pretty darn close to what you would pay brand new because of very short terms and higher interest rate.

I have a 20 year history of buying used cars. At 10 years old, you are pretty much figuring above 100,000 miles. We put about 20,000 miles or more on per year for each car. At 140-150,000 miles you can start expecting the larger repair expenses. So, there's only 2-3 years of life with that car until the bigger stuff starts going (clutch, head gasket, etc.)

A "beater" car is just that, one that cost nothing but will cost you in repair. Here up north, that means you are buying right around the end of life as far as corrosion. The rust starts happening anywhere from 150-200,000 miles. Once that starts, there's no stopping it. It's a bodywork repair every year for state inspection. I know, my previous 3 out of 4 cars I've been through have been 185k, 165k, 189k. All have had extensive bodywork and expensive maintenance/repairs ($1000+) over the final 5 years I've owned them.

 

[ICF]

doesnt seem like a good idea to me......