cancel
Showing results for 
Search instead for 
Did you mean: 

Dave Ramsey says FICO is "Stupid" ????

increasingmyfico
Contributor

Re: Dave Ramsey says FICO is "Stupid" ????


@Anonymalous wrote:

@Junejer wrote:

Truth. Very few things in life are necessities. I never said that I need credit or debt. In fact, I tend to feel quite the opposite. It wasn't until recently that I have started to dive deeper in the CC game. We routinely pay cash for our "new to us" cars. We typically buy a year or two old and pay cash.

 

That's a good approach. Cars lose too much value just driving them off the lot, so buying a car that's a year or two old is a sweet spot. My family sometimes buys new cars anyway, but they typically keep them indefinitely, until repairs start costing too much compared to the remaining value. It's the people who lease new cars every year or two who absorb a lot of cost for a status symbol.


Not in this market. Cars are up bigly. Yes in normal times the people who buy new take the hit and they make sweet deals for owner number two. Then owner two trades it to owner three who has to maintain it. Leasing a new car isn't a bad proposition though. Probably the best way to go for the average person. 


Message 31 of 48
Junejer
Moderator Emeritus

Re: Dave Ramsey says FICO is "Stupid" ????


@increasingmyfico wrote:

@Anonymalous wrote:

@Junejer wrote:

Truth. Very few things in life are necessities. I never said that I need credit or debt. In fact, I tend to feel quite the opposite. It wasn't until recently that I have started to dive deeper in the CC game. We routinely pay cash for our "new to us" cars. We typically buy a year or two old and pay cash.

 

That's a good approach. Cars lose too much value just driving them off the lot, so buying a car that's a year or two old is a sweet spot. My family sometimes buys new cars anyway, but they typically keep them indefinitely, until repairs start costing too much compared to the remaining value. It's the people who lease new cars every year or two who absorb a lot of cost for a status symbol.


Not in this market. Cars are up bigly. Yes in normal times the people who buy new take the hit and they make sweet deals for owner number two. Then owner two trades it to owner three who has to maintain it. Leasing a new car isn't a bad proposition though. Probably the best way to go for the average person. 


Certainly understand that logic for fleet vehicles. I have never understood the appeal of leasing for the average consumer. It feels like running 'up' a 'down' escalator that's been turned up seven times its normal speed.






Starting Score: 469
Current Score: 809
Goal Score: 825


Take the myFICO Fitness Challenge
Message 32 of 48
increasingmyfico
Contributor

Re: Dave Ramsey says FICO is "Stupid" ????


@Junejer wrote:

@increasingmyfico wrote:

@Anonymalous wrote:

@Junejer wrote:

Truth. Very few things in life are necessities. I never said that I need credit or debt. In fact, I tend to feel quite the opposite. It wasn't until recently that I have started to dive deeper in the CC game. We routinely pay cash for our "new to us" cars. We typically buy a year or two old and pay cash.

 

That's a good approach. Cars lose too much value just driving them off the lot, so buying a car that's a year or two old is a sweet spot. My family sometimes buys new cars anyway, but they typically keep them indefinitely, until repairs start costing too much compared to the remaining value. It's the people who lease new cars every year or two who absorb a lot of cost for a status symbol.


Not in this market. Cars are up bigly. Yes in normal times the people who buy new take the hit and they make sweet deals for owner number two. Then owner two trades it to owner three who has to maintain it. Leasing a new car isn't a bad proposition though. Probably the best way to go for the average person. 


Certainly understand that logic for fleet vehicles. I have never understood the appeal of leasing for the average consumer. It feels like running 'up' a 'down' escalator that's been turned up seven times its normal speed.


  You're always going to have a car payment. Either to a bank or to maintance and upkeep. If you pick the right new car lease deal you can pay sub $300/mo including all required maintenance and total loss liability. Buy the same car CPO and you have the same or slightly higher payment and be on the hook for maintenance and upkeep. Before the new car warranty expires you're in to get a new one with newer safety and other features. 


Message 33 of 48
Junejer
Moderator Emeritus

Re: Dave Ramsey says FICO is "Stupid" ????


@increasingmyfico wrote:

@Junejer wrote:

@increasingmyfico wrote:

@Anonymalous wrote:

@Junejer wrote:

Truth. Very few things in life are necessities. I never said that I need credit or debt. In fact, I tend to feel quite the opposite. It wasn't until recently that I have started to dive deeper in the CC game. We routinely pay cash for our "new to us" cars. We typically buy a year or two old and pay cash.

 

That's a good approach. Cars lose too much value just driving them off the lot, so buying a car that's a year or two old is a sweet spot. My family sometimes buys new cars anyway, but they typically keep them indefinitely, until repairs start costing too much compared to the remaining value. It's the people who lease new cars every year or two who absorb a lot of cost for a status symbol.


Not in this market. Cars are up bigly. Yes in normal times the people who buy new take the hit and they make sweet deals for owner number two. Then owner two trades it to owner three who has to maintain it. Leasing a new car isn't a bad proposition though. Probably the best way to go for the average person. 


Certainly understand that logic for fleet vehicles. I have never understood the appeal of leasing for the average consumer. It feels like running 'up' a 'down' escalator that's been turned up seven times its normal speed.


  You're always going to have a car payment. Either to a bank or to maintance and upkeep. If you pick the right new car lease deal you can pay sub $300/mo including all required maintenance and total loss liability. Buy the same car CPO and you have the same or slightly higher payment and be on the hook for maintenance and upkeep. Before the new car warranty expires you're in to get a new one with newer safety and other features. 


Maybe, but not necessarily to the tune of $3K per year. I have owned my vehicle outright for four years come April. The only maintenance I have had are oil changes once per year at $150 per pop (recommended every 15K miles), Every 15K mile maintenance $900 - $1,000 each and new tires for about $1,200. And, with the vehicle that I chose to own, there is no way I would be able to get a lease on one of those for under $500/month.

 

I agree that used car prices are out of control at this point. For that reason, we are holding off on getting DW another vehicle until this madness levels off.






Starting Score: 469
Current Score: 809
Goal Score: 825


Take the myFICO Fitness Challenge
Message 34 of 48
mark3038
Established Contributor

Re: Dave Ramsey says FICO is "Stupid" ????


@Anonymalous wrote:

@Junejer wrote:

Truth. Very few things in life are necessities. I never said that I need credit or debt. In fact, I tend to feel quite the opposite. It wasn't until recently that I have started to dive deeper in the CC game. We routinely pay cash for our "new to us" cars. We typically buy a year or two old and pay cash.

 

That's a good approach. Cars lose too much value just driving them off the lot, so buying a car that's a year or two old is a sweet spot. My family sometimes buys new cars anyway, but they typically keep them indefinitely, until repairs start costing too much compared to the remaining value. It's the people who lease new cars every year or two who absorb a lot of cost for a status symbol.


UH OH, that would be me. I always buy new cars every year or two. The warantee starts over, you get new tires , breaks etc. I found for the cost to upgrade the service would be as much and this way I am always in a new car under warantee. I dont go overboard. I keep each car under $50,000 and they really dont loose too much value as one may think.

I traded in my 2020 Lexus UX200 for a 2022 BMW X2. I got for the Lexus just $1,800 less then I paid new and it gave me a sales tax allowance so I saved a few thousand there as well. I did manage to get $5,500 of the sticker price on the BMW but this was on 4/30/2021 before the car shortage and I wanted the BMW as it was a 2022 that came out so early. And that is another reason I got so much for my Lexus the time was really good for the trade and the new car. I am trying now to decide on what 2023 to get next.

Thanks

Mark

Please note; My postings are my opinion only. You can accept them or reject them. Thanks, Mark
Message 35 of 48
Anonymalous
Frequent Contributor

Re: Dave Ramsey says FICO is "Stupid" ????


@mark3038 wrote:

@Anonymalous wrote:

It's the people who lease new cars every year or two who absorb a lot of cost for a status symbol.

UH OH, that would be me. I always buy new cars every year or two. The warantee starts over, you get new tires , breaks etc. I found for the cost to upgrade the service would be as much and this way I am always in a new car under warantee. I dont go overboard. I keep each car under $50,000 and they really dont loose too much value as one may think.

I traded in my 2020 Lexus UX200 for a 2022 BMW X2. I got for the Lexus just $1,800 less then I paid new and it gave me a sales tax allowance so I saved a few thousand there as well. I did manage to get $5,500 of the sticker price on the BMW but this was on 4/30/2021 before the car shortage and I wanted the BMW as it was a 2022 that came out so early. And that is another reason I got so much for my Lexus the time was really good for the trade and the new car. I am trying now to decide on what 2023 to get next.

Thanks

Mark


I'm skeptical it's a good deal, but I'll keep an open mind. It's really about running the numbers.

 

Agree with everyone else the used car market has gone crazy. We have an extra car in my family that we'd normally sell, but we're keeping it because we might need another car later in the year, and we really don't want to have buy a used car given the current prices.

 

Message 36 of 48
increasingmyfico
Contributor

Re: Dave Ramsey says FICO is "Stupid" ????


@Anonymalous wrote:

@mark3038 wrote:

@Anonymalous wrote:

It's the people who lease new cars every year or two who absorb a lot of cost for a status symbol.

UH OH, that would be me. I always buy new cars every year or two. The warantee starts over, you get new tires , breaks etc. I found for the cost to upgrade the service would be as much and this way I am always in a new car under warantee. I dont go overboard. I keep each car under $50,000 and they really dont loose too much value as one may think.

I traded in my 2020 Lexus UX200 for a 2022 BMW X2. I got for the Lexus just $1,800 less then I paid new and it gave me a sales tax allowance so I saved a few thousand there as well. I did manage to get $5,500 of the sticker price on the BMW but this was on 4/30/2021 before the car shortage and I wanted the BMW as it was a 2022 that came out so early. And that is another reason I got so much for my Lexus the time was really good for the trade and the new car. I am trying now to decide on what 2023 to get next.

Thanks

Mark


I'm skeptical it's a good deal, but I'll keep an open mind. It's really about running the numbers.

 

Agree with everyone else the used car market has gone crazy. We have an extra car in my family that we'd normally sell, but we're keeping it because we might need another car later in the year, and we really don't want to have buy a used car given the current prices.

 


The key is to buy something with high resale value. Lexus, Toyota, and Honda to name a few. I bought a new Toyota Tacoma and drove it 40k miles and sold it for $1,000 less than I paid for it. Toyota gave free maintenance for 25k miles. So with property taxes, insurance and interest all together it cost me less than $3500 for two years. 


Message 37 of 48
theNavigator
Regular Contributor

Re: Dave Ramsey says FICO is "Stupid" ????

 

Unreal. In realistic world, a mortgage is the main way for home buyers. 

 

My mortgage is cheaper than rentals in my area. I was already renting for 5-6 years. I'll be damned if I continue to rent and pay someone else's property off. The other thing is back in the day home ownership was more affordable, people are not thinking realistically and looking at what the take home pay is anymore and the cost of a home. Lots of factors to involve, it's not like it was "before".. I have even been told this by many people who are 20-30 years older than I am at this point.. 

 

Remember we never truly own our properties either, real estate taxes never end. The good old government owns our properties if it really comes down to it at the end of the day. Smiley Mad

Message 38 of 48
sxa001
Established Contributor

Re: Dave Ramsey says FICO is "Stupid" ????

I have listened to my fair share of Dave Ramsey, sometimes he makes sense and sometimes the dogma is too much.  It sounds like in your friend's case this is really a case of the husband looking for excuses to not buy and trying to use Dave Ramsey as evidence of what makes sense.  

The reality is, buying cash for a home is indeed as others have pointed out rare.  I used to believe that it wasn't wise to put down less than 20% on a home, but I was watching home prices skyrocket, I am glad I went ahead and got in, had I waited another year I wouldn't be able to buy the house that I have.  I am sure Ramsey would have told me to wait had I called into his show.  

I hope your friend works things out and gets what she wants in life in the end. 




Message 39 of 48
jmw1
Frequent Contributor

Re: Dave Ramsey says FICO is "Stupid" ????

On houses:

Spending extra time to save for a bigger down payment has been a very poor decision over the past three years. Even in Dave's home state of Tennessee, the secret of Tennessee as a nice and cheap place to live is no longer a secret at all and house prices are jumping just like in Texas and California. A mortgage payment less than 25% of net wages which must be 15yr (Dave's guideline, not mine) is admirable, but it's not realistic for most. Wage increases get harder to get when you move up in your career and taxes for non-business owners are a big drag as wage income goes north of $100k. Get the house today. I would even stretch housing to an uncomfortable percentage of income make sure it's in a nicer neighborhood and better public schools. Pay extra on your mortgage when you can so you can remove PMI faster on a conventional. Refinance as the mortgage balance and rates go down in the long run.

 

On cars:

Thank goodness I have an extra car in the driveway for an emergency. I do pay a bit extra for registration and insurance, but cars are a necessity at all times. If I needed to buy a $30k car, it would be a 2005 for $8k and it needs to include $22k cash in the glove box. I agree with Dave that anyone who has not won the game and can afford to pay cash on a new car has no business buying a new car.  Don't forget that a $750 car payment is like over $150k in buying power for a 30 year mortgage. A house is an appreciating asset. A car is not. Car loans are a financial weapon of destruction even at 0%. New cars are now at ridiculous MSRP prices and above.

 

Message 40 of 48
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.