Drive Free, Retire Rich

[Xtrema]

http://www.daveramsey.com/etc/lms/drive_free/player.cfm

I like the message but I like to see if everyone can poke holes in his theory.

For one, investment return and inflation are not guaranteed.

And they never look into effect of tax implication of leasing, nor did he include cost of maintenance for beaters.

[ExtraSlow]

Well, it's an interesting way to illustrate a point. Some of the underlying assumptions are a little skewed, but that's fine, he's trying to be dramatic. For instance, interest rates on new cars right now are nowhere near 9%, more like 0-3% for pretty much anything from a dealer.
The basic idea that a person who always drives a new car that's financed through a bank is killing themselves financially is pretty much correct.

I like the message, and hopefully it's simple and dramatic enough to get through to the financially illiterate masses that seem to populate this continent.

[bg_27]

yah his assumptions are out to lunch.

1) He is assuming owning a $1500 car is free. Not taking into the maintenance costs over time.
2) Average stock market returns of 12% lol, Not thinking of tax on the capital gains, inflation or LOSING your money lol.
3) I think his 4 year 70% depreciation is a bit crazy.

Anyways he is definitely trying to be dramatic.

[TomcoPDR]

Originally posted by bg_27
yah his assumptions are out to lunch.

1) He is assuming owning a $1500 car is free. Not taking into the maintenance costs over time.
2) Average stock market returns of 12% lol, Not thinking of tax on the capital gains, inflation or LOSING your money lol.
3) I think his 4 year 70% depreciation is a bit crazy.

Anyways he is definitely trying to be dramatic.

Exactly, and +10000 with stock market losing money and/or not 12% return.

Plus he's taken out the factor of the whole "car fever" factor, people who are in debt driving newer cars probably get bored of $1,500 beaters. Let alone that $11,000 "upgraded car" for another 4 years. Also +1 on the ignore on maintainence, whereas new car every few years has 5 year/160,000km warranty.

And he forgot to mention how you probably just decreased your chance of getting laid by 80% till you're 60yo.

[bg_27]

Originally posted by TomcoPDR


And he forgot to mention how you probably just decreased your chance of getting laid by 80% till you're 60yo.

hahahaha THE END.

[Isaiah]

Originally posted by TomcoPDR

And he forgot to mention how you probably just decreased your chance of getting laid by 80% till you're 60yo.
That's his next segment.

Let's say you forego the 'sex fever' and save all the money you're currently spending on broads. Dinners, movies, vacations...

Let's just go crazy with this. Let's just say you only invest $200 on hookers a couple times a month and invest the rest of your 'relationship money' into cocaine.

You could be higher than a motherfucker for the rest of your life.

[Lex350]

:thumbsup:

[TomcoPDR]

No doubt, and your assets depreciates by 50% in a divorce. So renting > buying in this case.

He should also touch base on getting stood-up is a great way to save/ invest too... Cuz everytime some broad decides to suck someone else instead of you, you automatically save 50% off the night; so for instance a $150 dinner would mean a savings of $75, movie for 2 from $40 to $20. So you take this $95 over a period of 2 stood-up dates/week = $190 * 4wk = $760 *12mn = $9120/year

[Wrinkly]

Whilst (lol - apologies to whomever it was that it irritates in the pet peeve thread - it's perfectly good 'English' to those conversant with the language ;)) his numbers may be off; the premiss is valid and actually makes perfectly good sense. Food for thought indeed.

[Mibz]

Originally posted by Wrinkly
Whilst his numbers may be off; the premiss is valid and actually makes perfectly good sense. Well, no. If the numbers don't make sense then the process doesn't work.

If you invest that $475 or whatever a month and gain barely enough to cover inflation or even lose money then you're fucked. You've got a shitty car -and- no money. So you put it in a low-risk investment and make a little more than inflation after taxes. Now, after a year, you've got $5000 to buy a $1500 car. Or do you? Looks like you had to cash in a couple of those bonds to fix the timing belt and water pump as well as recharge the A/C. So in a year you've got $3000 to buy a car and maintain it for a little while.

It's still technically a gain, and that's fine, but if the numbers look good to you then you're somebody who already doesn't care about what they drive and you didn't need some douche like this to tell you that spending a lot of money on a car is not a financially sound decision. That doesn't make it a bad decision though.

I like driving, I like cars. I want my cars to look good and go fast and I want to look like less of a knob than I am while driving. New, shiny vehicles are a price I'm willing to pay.

[grwnded]

interesting, and if the numbers were correct, it would be about the best idea ever. too bad they aren't, so it isn't.

with 0% auto finance rates and investment returns being about the same right now, the only difference between paying a bank $475 for 6 years and paying yourself the same and then buying a car with your saved up money is that if you finance you get the car now and you don't have to push a busted sled around. and the not getting laid issue brought up earlier is one that i just can't be a part of.

[Criticull]

I like how his voice basically carries the whole thing. If he didn't have the radio announcer, "get your free sample of Extendz" voice, it would have gone nowhere.

Retards: "Well, he sounds confident and somewhat smug, so yeah, I'll believe everything he says! My portfolio has been making about 12 per.....wait a minute."

[Lex350]

Originally posted by TomcoPDR
No doubt, and your assets depreciates by 50% in a divorce. So renting > buying in this case.




don't get me started on this topic!! :banghead: :banghead:

[jjmac]

Interesting...

I did my own calculation for my car.

In theory, if I saved all my car payments, insurance, maintenance blah blah blah....


I could've paid cash for my car today

:banghead:

[Pahnda]

That's possibly the dumbest thing I've seen this month. It's basically common sense with a dash of fictional numbers and BS thrown in.

As people have said, the avg of 12% return won't sustain itself for the long term. Making a life-long plan based on STOCK market return is like throwing your money at your drug dealing cousin and hoping he'll cut you in on the deal. Also previously mentioned, the total lack of expenses on that used car Vs. a car with full warranty isn't really looked into.

And 9.6% interest on a car for SIX years? What kind of retard would accept over 3% to begin with? If you are on a car loan for over 3%; sorry, no excuses. 2% or lower is where it sorta makes sense, up to 3% is acceptable, but that's where I draw the line of sensibility. If you have to accept over 3% you shouldn't be buying the car.

Thirdly, the move from that $6000-ish car to the $11,000-ish car... where is the depreciation on the $6000 car? Does he honestly think you won't take a hit, or that you're lowballing the owner of that $6000 car and getting a sweet deal?

And great, I can enjoy myself only after I've retired. At 475/mo with no initial investment, it'll take just over 40 years to get to the 5.5 million mark at 12% return. I'll be some creepy 60-something-year old in a Veyron who's claim to life was he saved up for his 'golden years' by not chasing ass, not going out to chill with friends, and otherwise not really balancing enjoyment with responsibility. That is, if I happen to get lucky for 40-something consecutive years in the stock market.

The message from the video is good. Too many people don't realize that life needs to be a balance of financial responsibility and fun. Not everyone comes from a loaded family (well, I guess this IS beyond... :P ) yet they're buying ridiculous $200 shirts that look like a handicapped 4 year old stitched together, going out EVERY weekend to pay their $15 coat+cover as well as like $8 for a drink with a single shot of vodka (and often buying them for random bar-skanks :P), and otherwise really not understanding that saving $100 / month in a savings account really doesn't cut it as far as savings go.

Sorry for the rant on the topic. But misinformation, especially when the publisher tries to present it so slick, just pisses me off when it comes to financial issues.

At least beyond is here to poke holes in such crap ;)

[Sugarphreak]

....

[sputnik]

Originally posted by Pahnda
That's possibly the dumbest thing I've seen this month. It's basically common sense with a dash of fictional numbers and BS thrown in.

Pretty much the same as almost every financial self-help and get rich quick book out there.

Rich Dad, Poor Dad immediately comes to mind.

That said. Even Warren Buffet used to drive a 6 year old Lincoln.

[sputnik]

Originally posted by Pahnda
What kind of retard would accept over 3% to begin with?

Anyone leasing anything other than an American car.

[Pahnda]

Originally posted by sputnik
Anyone leasing anything other than an American car.

Yeah, but I mean from a logical standpoint. If I was leasing my car, I would be having about 9.67% equivalent interest rate. I ended up with 2.9% financing and still had to crunch a bunch of numbers to make sure the amount lost to interest will be within what I had in mind, haha. I can't imagine how anyone would feel comfortable doing any type of long term loan at 9.67%... :nut:

[KLCC]

^ There are some people that just wish to live beyond their mean.

[Lex350]

For 95% percent of the cars out there you can't look at them as an investment. If you're a car guy then you pay the price for your vice...just like anything else. Life is too short and throws too many curveballs at you to not enjoy(and pay) for the things that make you happy.


Like anything in life it just requires a balance. The way I see it, more and more people are too preoccupied with getting rich (money) rahth than living a fulfilling life (truely rich)

[max_boost]

Originally posted by rotten42
For 95% percent of the cars out there you can't look at them as an investment. If you're a car guy then you pay the price for your vice...just like anything else. Life is too short and throws too many curveballs at you to not enjoy(and pay) for the things that make you happy.


Like anything in life it just requires a balance. The way I see it, more and more people are too preoccupied with getting rich (money) rahth than living a fulfilling life (truely rich)

Bingo.

Cars=Expense

Why does everyone keep thinking it's an asset? Well a depreciating asset right? lol

Just like insurance, gas, food, utilities, I set aside a certain amount which I can afford of my car. Once that money is spent, it's gone.

Forget about the car, I should just move back home into my parents basement. Rent/Utilities free. Free food. I'll drive their car.

All I'll have to pay for is a cellphone, an unhappy wife and some clothes plus going out expense. The amount of money I can save would be insane haha

I'm Chinese. My parents won't mind. LOL