Warm up your keyboards...Dave Ramsey

Discussion in 'Gen 2 Prius Main Forum' started by efusco, Jul 25, 2008.

  1. efusco

    efusco Moderator Emeritus
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    Real Debt Help - Dave Ramsey's July 2008 Newsletter

    Dave, should I get a hybrid to save on gas? They make financial sense in the long run, right? Gas prices are killing my budget…a hybrid is the only answer!
    I’ve been getting so many questions recently from people all over America about these cool, new hybrid cars. Let me tell you straight up – don’t get one!
    Since hybrids are new, they’ll get better rapidly… and also go down in value rapidly. You don’t want to try to be selling a high-mileage, first-generation model in 5 years because the value will plummet.
    Do you really want to lose money?
    The Math Doesn’t Work

    Let’s say you currently drive a vehicle worth $10,000 that gets 15 miles/gallon. There’s this $25,000 hybrid you’re thinking about buying that gets 25 miles/gallon. That’s a $15,000 price difference just to get 10 more miles a gallon. If you drive 100 miles a week, that’s about a $10 difference a week.
    So that would be about $40 extra you’re spending a month in gas if you stuck with the current car. A monthly car payment is MUCH more than that! To get your money back at current gas prices, it would take you almost 29 years to save $15,000 in gasoline! Listen to Dave explain this
    The math DOESN’T work! You’d have to drive to the moon and back to make it worth it!
    What You Can Do


    • Get a different car. If you want to sell your gas-guzzling car, buy another car worth no more than the previous car’s selling price – this means no car payments!
    • Move closer to work. Write down all the specifics to see if it makes sense in your unique situation.
    • Change jobs. No one says you have to work where you do. There’s always the option to work close to home – or even start a home-based business.
    Don’t use this high-gas thing as a rationalization to go get yourself a new car or spend a dime more on one. Just think and make smart decisions before you rush out to buy something like this that’s really going to lose you money.
     
  2. jammin012

    jammin012 The man behind The Man

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    wow... I cant say any more. I really don't know where to begin.

    Evan, you're my hero. :hail:
     
  3. Scummer

    Scummer Eh?

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    25mpg's? :lol: I thought he was talking about hybrids, not a compact car with an ICE and no hybrid.

    This guy obviously failed the math and science classes and is therefore reduced to write crap on the internet.
     
  4. bac

    bac Active Member

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    There is soooooooooooooo much FAIL in that article ..... I just don't know where to begin. Indeed basic logic and math skills are well beyond this man's ability.

    Do you think he get a stipend from the oil industry? :eek:

    ... Brad
     
  5. miamcm

    miamcm New Member

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    :blah:
    Wow! I am saving WAAAAAY more than that.....;)
     
  6. efusco

    efusco Moderator Emeritus
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    To his credit he's supposed to be answering the specific issue of financial cost effectiveness without regard to anything else. And I'd have to agree that it's hard to justify, financially a $22k Prius over a $12k reliable used Corolla even if you're using 55mpg for your FE rating.
    But yea...another tired effort that fails to acknowledge any of the other important issues in making a car choice.
     
  7. efusco

    efusco Moderator Emeritus
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    Here's an e-mail address in case anyone would like to address this in a mature civil manor...
    [email protected]
     
  8. miamcm

    miamcm New Member

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    Just did! I told him maybe I would feel that way if my car ONLY got 25mpg! Told him he should do more research next time before he writes! Surprised he didn't open his mouth about the battery too.....I hear alot of people talk about the battery for hybrids too.... ;)
     
  9. Courtney

    Courtney New Member

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    25 mpg? Isn't that the Tahoe hybrid?
     
  10. efusco

    efusco Moderator Emeritus
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    25mpg and 100 miles/week!

    Least he could do would be to use the EPA combined mpg and 12k miles/year...maybe show a range of numbers...something a little bit realistic
     
  11. ranchogirl

    ranchogirl New Member

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    Oh yah - quit your job and start a home-based business is real sound financial advice.

    Good grief!
     
  12. jdonalds

    jdonalds Active Member

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    Don't be so quick to judge. Purchasing our Prius was not a financial win, even with 10+ years of gas savings included. We bought the car because we really like it and we are now also enjoying eye popping fuel economy.

    If you already own a car that doesn't need to be replaced it usually isn't a win to buy a new car, even one that gets 2x to 4x the mileage. The extra license fees, insurance, capital cost, loss of investment income from paying cash, or the cost of interest may never be recouped.

    If you need a car (ours was totaled) then it makes perfect sense to buy something smart like a Prius. However we compared the Honda Civic non-hybrid to the Prius and the Civic would have been a financial win. In our case the extra $5K cost of the Prius over the Civic meant that we would have $5K less in investments. Figure your money should double every 7 years in the stock market and in just 21 years we've lost $20K. This is a hidden cost most don't consider.

    If you are comparing two cars of equal cost then the one with the better mileage may be the better choice.

    Dave Ramsey doesn't seem to have given this much thought. He certainly got his numbers wrong and is ignorant about Prius reliability.
     
  13. dwdean

    dwdean Member

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    There's part of me that agrees that there's a great deal "wrong" with this article, but there's another part of me that knows that for people with the means, a need/want analysis is really informative and can really help inform the whole hybrid decision. But there's another set out there for whom the need/want thing becomes much more black and white and for whom the pure financial analysis this guy did is a much better plan (heck, for some, it's the only plan.)

    If memory serves me right, there was a case of this around here not too long ago. The general consensus in that thread, based on a nearly pure financial analysis, was that the poster should probably not buy the Prius they were interested in. In fact the argument to "not buy" was very similar to Mr. Ramsey's.

    The difference as I see it is that the argument here was made to a specific person in a specific situation while Mr. Ramsey is trying to cast a much wider net to a much more broad audience. On casual inspection I found that the supposition that Mr. Ramsey is evaluating "cost effectiveness without regard to anything else" rather hard to support. IMHO, he seems to be making very general and rather encompassing statements that have wide applicability. Am I missing something here?

    I'd love to see someone really sit down and put together a discussion that the "average Joe" could use to navigate through this that avoids the emotion that so often gets involved.
     
  14. bwilson4web

    bwilson4web BMW i3 and Model 3

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    I would write <BLING> a reply <BLING> to Dave <BLING> Ramsey but <BLING> this dang <BLING> gas pump keeps <BLING> interrupting me. <BLING>

    Bob Wilson
     
  15. timwalsh300

    timwalsh300 Member

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    We should also remember that Dave Ramsey's audience is largely made up of people who have come to him with HUGE financial problems... debt up to their eyeballs, no self-control whatsoever with money, etc.

    Ramsey's typical recommendation to people, I believe, is to sell whatever car they have (even if they aren't making payments on it anymore; even if they are going to lose big on depreciation) and buy a $400 jalopy. That way they can throw the rest of their money at their debts.

    The majority of his audience is NOT in a good position to spend $20-30K on a new car without taking on another high interest loan.

    A new Prius really only makes sense if you are of the financial means to be shopping for a new car of similar or higher value anyway.

    Tim
     
  16. sandman

    sandman Member

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    Remember Dave Ramsey is in the business of making money from people that are in financial trouble..I have listened to him in the past even borrowed one of his book's form someone. Mostly what was in the book was common sense there was some good charts to help you see how bad off you where, I cant believe people pay him money for him to tell them not to spend more than they make but if it helps them I guess its okay..Back to my Prius I drive 174 miles a day and was getting 26 miles to the gallon in my truck now I am getting 56MPG + so it cut my gas bill in half.. I went from 33.36 gallons of gas($133.84) to 15.53 gallons ($62.12)a week based on $4 a gallon thats a monthly savings of $286.88 yearly savings of 927.16 gallons ($3708.64):) not to mention all the other driving I do in my prius not just to work..
     
  17. galaxee

    galaxee mostly benevolent

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    you know, i find it ironic that he would recommend trying to sell a car you purchased new after 5 years. i thought this was the anti-debt guy. most people are paying off their car loans at 5 years, so why the hell is he talking about trying to sell a car when you've finally rid yourself of the debt associated with it? might as well keep it at that point, right?

    i think his methods are a little nutty, but that's just me.

    any idiot can argue that a reliable used car is cheaper than a new car. however, lots of people think dropping a ton of cash on something in the long term (ie, in 36-72 car payments) is a good solution for the short term (gas tank fills) too. that's the short sightedness that gets people buried in such debt in the first place.
     
  18. cairo94507

    cairo94507 Active Member

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    I love to read that kind of stuff- misinformation abounds. Is he subsidized by big oil? Or maybe the Big 3 in Detroit? Regardless, my Prius makes absolute sense to me and I would not trade it for anything but another.
     
  19. Zythryn

    Zythryn Senior Member

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    Isn't he showing up in one of the GM commercials touting high gas mileage??
    Buying a new car when your old one is still working for you is always a bad financial decision.
    However, if you are buying a new car anyways, that is the time to look at a Prius as a money saver.
     
  20. efusco

    efusco Moderator Emeritus
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    Had he been thoughtful and tried to be complete in his answer there would have been several scenarios addressed...
    1) You have a reliable paid-for car--clearly not financially wise to replace with any new or used car, hybrid or otherwise.
    2) You need to replace a car for whatever reason (broken, crashed, unreliable, whatever)--consideration to replacing with a reliable used car if you're comfortable with used cars would be the financially wisest, on balance, decison...then the question is whether a used hybrid or used conventional is a better deal.
    3) You've already made the decision to buy a new car (we all have our own reasons). a)he can try to convince you that a new car is not the best choice regardless if it's conventional or hybrid. b) He can do a realistic comparison of lifetime cost (let's use 7 years) using purchase cost of similar vehicles...the easiest would be to use the Civic and Civic hybrid...look at purchase cost, lifetime maintenance, lifetime fuel cost, anticipated resale value after 7 years based upon historical precedent. Now what's your difference in cost? Betcha it's a Hell of a lot closer than he's giving credit.

    Finally, he completely fails to address the intangibles...the single biggest factor that influences people's purchasing decision. It's not something you can put down on paper, but it is important and has value.
     
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