Comments on: OMG, I Agree with Dave Ramsey… In This Case

By: Jesse

Jesse — Sun, 22 Aug 2010 03:39:49 +0000

I think that if Dave told him to sell the car he would also tell him to buy another one with the cash proceeds, not get in debt with another one. The idea is to get rid of car payments. The car seems to be quite a bit more than anyone needs in a car anyway. Isn’t the rule not more than half of the total annual income?

By: Kristy

Kristy — Wed, 11 Mar 2009 07:17:39 +0000

@ Weakonimist – The problem I see with that solution is that he’s still paying interest on the car at 5.75% and his savings is only earning less that 3%. I see your point from the layoff standpoint, but he’s pretty sure that he’s going to be fine for now. So he’d rather get the debt paid off so he can put more away in the efund. But, if he were in an uncertain job, then yes, I’d suggest the same thing. But, this company has solid financials and no layoffs.

@ Grant – Exactly! I’m not usually one for Ramsey’s teachings, but in this case I think it makes complete sense.

@ Mr. NtJS – Why would he want to get rid of it? The car is in perfect condition because he takes care of it. If he got rid of it he’d be paying on another car note. He plans to keep this car for several more years – with no payments. That’s a great opportunity to save money, invest in retirement, and even store some aside as a down payment for a future car if that’s his wish. No, I don’t think the answer is to get rid of the car. He likes it, but he was upside down from a previous car and the 6 years was the only way to keep his payments affordable. Not the best solution, but he’s looking to pay it off a little early and it’s still in great condition. I think his best bet is to pay it off and keep it for a few years.

By: Mr. NtJS

Mr. NtJS — Mon, 09 Mar 2009 18:48:24 +0000

I dunno. Been paying on this car note for 6 years at 5.75% and still owes $5k?? Depending upon what he makes per year, I would wager that Dave would tell him to sell the car. But maybe not.

If not, then yes, he should definitely be consumer debt-free before going back to the E-fund.

By: Grant Baldwin

Grant Baldwin — Mon, 09 Mar 2009 13:09:34 +0000

I would agree with you/Dave to pay off the car. It sounds like this new job gives him a little more wiggle room in his budget, so even if he needed the money for an emergency, he could pause and cut back on some of his expenses including the excess amount he’s paying on the car.

By: The Weakonomist

The Weakonomist — Mon, 09 Mar 2009 12:52:08 +0000

I don’t disagree with you. My advice though would be slightly more conservative. Make the normal payments on the car and put extra cash into the emergency fund. Once he has enough cash (less $1,000) to pay off the car then do it. This would give home extra cash in the event of another sudden layoff.