It is hard to buy his "no credit" philosophy, but if you know the logic behind it it makes total sense. Really he's advocating not being in a position where you need credit to bail you out, thus the notion of having 3 to 5 months of living expenses in the bank. Very hard to do, agreed, but if you can pull it off then you are your own backup plan, not Visa. As far as driving an old car, I think he's right. Again, you have to get the entire logic behind anything he says, you can't make judgments based on face value. Here's his logic. An average car payment of $350 paid perpetually (as most people upgrade or trade in before a vehicle is paid off) from the age of 25 to 65, placed instead in a good mutual fund, would make you a millionaire. As he says....hope you like the car! He's not saying to go out and drive a 1977 Pinto. He's saying to buy what you can afford to pay cash for. Here again creeps in the notion that we work hard, therefore we deserve nice shiny pretty cars. I drive 800 miles a week and did so for many years quite comfortably in a 10 year old Accord that was perfectly safe, reliable and not bad looking. And I paid cash for it used. I even have a big gas guzzling SUV for the family, but instead of buying a $45K Tahoe, I bought one that was 8 years old that is just as nice in my estimation. I know this scenario is unrealistic for a lot of people, just wanted to give a little more insight for the benefit of those not familiar with him as to why Dave advocates ditching credit. I think MM1234 is right. If you can find a happy medium then you're doing well. I want a good FICO so I feed the credit monster, for now at least.
Message Edited by devhip on 05-11-2007 11:07 AM
