eyeontheprize
Member
Cash: $ 2.55
Posts: 12
Joined: 09 Feb 2006
|
| Car Loan |
 |
|
I'm too cheap to join the Dave Ramsey forums, so I'm posting here in hopes some of his pals will help me out here.
We're on Dave's debt snowball (baby step 2) and have a daughter going to community college in the fall. It's not close enough to walk and she'll be living at home, so she'll need wheels. Bottom line, she needs a car. She will be working FT in the summer, but she'll need the car to do so.
What would Dave say (or you wise financial advisers  ) about taking out a small (say 3K) loan to get her a USED car? Would it be best for her to take out the loan or us?
Thanks, we're kind of lost on this one. Before, we wouldn't have any problem taking out the loan. Now that we're on Dave Ramsey's plan, we feel like this is backsliding!!
|
Fri Mar 10, 2006 1:14 pm |
|
|
rockhound
Preferred Member
Cash: $ 26.45
Posts: 132
Joined: 03 Feb 2006
Location: West Virginia
|
| cheap wheels |
|
|
From what I've heard on the radio show, i suspect that Dave would say "Don't get any car loan whatsoever!" Especially if you are trying to work your way out of debt, the last thing you need is another loan. You say that college is too far to walk, so I assume your daughter will still be living at home? How far is too far? For instance, 3 miles is walking distance. There is also the option of a bicycle or moped, which will get her out to 5 miles. And then there is the bus. The other option is to look at a cheap beater car. On the food chain of used cars, a $3,000 car is pretty nice. If the purpose is to get you a short distance to and from school, then $500 (read, EASILY PAID IN CASH) will suffice. Even with a $500 car, the few repairs that you might need to make will be spread out over time, and can be handled by paying cash, and will still never add up to $3,000. You can find cars in the "less than $1,000" range by cruising through the classified ads, but stay away from the dealer's lots. Even if it only lasts for a year, you will be ahead, and perhaps by that time she will have been able to save enough money to buy something on her own.
|
|
Fri Mar 10, 2006 11:15 pm |
|
|
financialpeace
Contributing Member
Cash: $ 6.20
Posts: 31
Joined: 21 Feb 2006
|
|
|
|
As you can tell by my username, I'm a fan of Dave's also, and a coordinator for the FPU classes he teaches. I would wonder, will she be working within walking distance? One of the key statements you made here was, "she needs a car", not 'you', right? So, if SHE needs the car, maybe helping her get one, by doing exactly like Dave says he does with his kids, the 401Dave plan, meaning he matches whatever they earn for a car. See if she can earn $500 or even $1000 bucks by this summer, or within the first month or two of summer with a job close to home, or within an area you can let her borrow your car. Then when she's raised alittle dough, you would have had some time also to save for the match, go get her a car and match what she has raised. This would get her a car around $1-2k in value, which should be fairly reliable, and serve the purpose of A-B logistics, and she has some "bite" into the car, possibly helping her to take pretty good care of it, not that she wouldn't otherwise, but having some investment sure makes everyone tone it down a little. Either way, I would NOT take debt for a car, even when walking, riding the bus, or bumming a ride sounds out of place or impossible, sometimes it can be exactly what's needed for a short period of time.
By the way, how long have you been on the debt snowball and how much have you paid off so far? That's really cool that you're knocking out the debts! I know from experience that Dave's system works... Keep it up!
|
|
Sun Mar 19, 2006 7:10 pm |
|
|
eyeontheprize
Member
Cash: $ 2.55
Posts: 12
Joined: 09 Feb 2006
|
|
|
|
Sorry, I didn't mean to ignore your questions. Just been busy with life.
My DH decided to buy a $1500 Volvo with the Line of Credit. He will drive the old Volvo, and she'll drive the minivan. Her next car will be on her own bill.
We've been on the debt snowball only for two months. Obviously, even though my DH gave up the credit cards, he saw no problem using the line of credit for the car, though. (I don't agree with the decision, but we agreed to disagree.) We have paid off (of 15,000) $3K in debt. It sure seems daunting. Like Noah, we're just hammering those nails and sawing down those trees, trusting the Lord to see us through.
The debt snowball has motivated us to increase our income. We have always been on the low end as compared to everyone we know (seriously). Having the goal to pay off the cards though has motivated us to make more money and get this monkey off our backs.
Thanks for asking. This really isn't easy since I like to see the END and not so thrilled about the day-to-day.
|
|
Fri Mar 24, 2006 1:30 am |
|
|
rockhound
Preferred Member
Cash: $ 26.45
Posts: 132
Joined: 03 Feb 2006
Location: West Virginia
|
| 7-10 split |
|
|
i guess by buying a $1,500 car on credit, you sort of split the difference, and marriage is often about compromise. While that $1,500 erodes what you've managed to pay off from your debt, at least it was only half the originally anticipated amount. And really, unless you're a somewhat accomplished gear-head, most people would have a hard time finding a decent running car for much less than $1,500. Hopefully you can take car of it and make it last. People seem to get in so much trouble over cars. Paying the $3,000 (minus the new $1,500 for the car) in two months is great. If you can keep it up for a year, then before you know it that remaining $12,000 will be gone. And then if you can continue your newfound frugal ways, the next year you'll actually be putting $15,000 into the bank! It sounds like you really did the right thing by dumping the credit cards.
|
|
Fri Mar 24, 2006 2:06 am |
|
|
eyeontheprize
Member
Cash: $ 2.55
Posts: 12
Joined: 09 Feb 2006
|
| Thanks for the encouragement |
|
|
Thank you both for the encouragement. Sometimes it seems it's two steps forward and one step back, but at least we know where we're headed now.
|
|
Sat Mar 25, 2006 4:34 pm |
|
|
JCook
Full Member
Cash: $ 11.20
Posts: 56
Joined: 24 Jan 2006
|
I would also like to congratulate you on your success so far but I also want to warn you to keep "keep your eye on the prize".
Be careful to not let any more of these "needs" come up.
Stay mad and motivated and make sure you teach your daughter what you have learned. It will do her well the rest of her life.
|
|
Fri Mar 31, 2006 4:11 am |
|
|
Kiaser
Senior Member
Cash: $ 43.05
Posts: 209
Joined: 12 Apr 2006
|
Not to be offensive but I'd be making daughter get a part time job and buy something cheap with a warranty (used kia or something under $8k). She could even work two nights a week and have enough to make the payments herself.
|
|
Wed Apr 12, 2006 8:27 pm |
|
|
Stock Mama
Full Member
Cash: $ 13.80
Posts: 68
Joined: 06 Apr 2006
|
Nothing wrong with working part-time while in college. I did it. I'm still doing it. My students to it. My son will probably do it. If your daughter wants a car, she's old enough to contribute to its purchase and upkeep.
Though the community college where I teach has a lovely bus service and a shuttle that will take them to the nearby university, handy for dual-enrolled students. And both are free for students. That's a deal you can't beat with a stick.
|
|
Thu Apr 13, 2006 3:45 am |
|
|
autoartist
New Member
Cash: $ 0.60
Posts: 3
Joined: 25 Apr 2006
|
| Dave should be proud of us |
|
|
I too am a Dave Ramsey fan and I am too cheap to pay for his forum too 
I think he would be proud of us to admit that. As folks who build wealth we should always look for ways to save money and being here is one of them....hee hee
Well ofcourse as we all know Dave would say no to the small loan.
However your daughter needs wheels and it is for college so in essense it is an asset. It is going to help her build wealth in the long run. Ofcouse get the cheapest most realiable vehicle. I love Ford Taurus. They are dirt cheap. Ofcourse it is a six cyclinder but you said the school was close by, right? If your daughter works I say let her get the loan and have her pay the bill. Have her work the snow ball on her car loan. I think it will build responsibility in her. That is just me though.
I suppose there is noway you can save the cash and buy it for her and then have her pay you?
|
|
Tue Apr 25, 2006 8:05 pm |
|
|
|
