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Here is an interesting video about car payments. It's from Dave Ramsey.

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

That really only works if you already have your car payed off... but it's not a bad idea all the same. When we were shopping for off program Sedonas (12-18 months old/less than 20k miles) the dealer tried to pitch us into a "newly reduced" fully loaded EX. It had leather, 6 CD, DVD, etc. When I said, "so is the payment like 380 a month", he laughed. It was closer to 500. I said no thanks, and we walked away with an 06 with 12k miles for 14k total purchase price. I can't ever imagine having a car payment that's more than half of my mortgage payment. It just boggles the mind.

That really only works if you already have your car payed off... but it's not a bad idea all the same. When we were shopping for off program Sedonas (12-18 months old/less than 20k miles) the dealer tried to pitch us into a "newly reduced" fully loaded EX. It had leather, 6 CD, DVD, etc. When I said, "so is the payment like 380 a month", he laughed. It was closer to 500. I said no thanks, and we walked away with an 06 with 12k miles for 14k total purchase price. I can't ever imagine having a car payment that's more than half of my mortgage payment. It just boggles the mind.

True, it only works if you have a car that is paid off. But if you are currently making payments, there are alternatives as well. Most people don't want to do that, and that is what keeps car dealers in business.

I did this, except instead of putting my money in a market or account when I got out of my loan, I put it in an awesome bike. Which I'm making payments on. Regrets? Nope. But I sure don't plan on getting into another car loan any time soon.

My mom has pretty much done this with her current car. She bought it with 30k miles. It now has 136k miles and she's hoping to see 200k out of it. At which point she will deserve a nicer replacement.

Here is an interesting video about car payments. It's from Dave Ramsey. ...

The part about the average mutual fund earning 12% per year is BS. That means the 7-figure "retire rich" numbers from saved car payments are also BS.

That said, I can state from first-hand experience the rest of this plan is excellent. Though my cars were purchased new, I also paid 50% down and financed the rest for just 24 months, despite even my own credit union recommending twice as long. If not for a desire to pad the credit record, the most recent one wouldn't have been financed at all.

The last car payment to anyone other than myself was 119 months ago, so the car replacement fund is healthy. With no more need to maintain a credit record, the next cars will be paid in cash. But not until the existing ones wear out. I did wear out a Ford once, but haven't yet worn out an American-built Honda or Subaru. One Honda is almost done, but we will downsize from three to two, so another car will also have to go before we buy again.

Any old car maintenance budget must include provision for unplanned repairs. I allocate the same amount per mile that a new car would cost to purchase, divided by how long it should last before major repairs become common. (My guidelines are 10-cents per mile for the Hondas, 15-cents per mile for the Subaru. Neither has been adjusted for inflation.) As long as a car stays below budget and safe, don't even think about replacing it.

Retire rich? Not with this plan alone, especially in this market. But it does greatly reduced a major drain on the household budget. Combined with other frugality measures, I have reduced to a seasonal work schedule, which does wonders for reducing workplace stress.

debt sucks! not owing money to the man really makes a diff in how you can live your life. Buying used inexpensive cars makes a big difference!

The part about the average mutual fund earning 12% per year is BS. That means the 7-figure "retire rich" numbers from saved car payments are also BS.

Retire rich? Not with this plan alone, especially in this market. But it does greatly reduced a major drain on the household budget. Combined with other frugality measures, I have reduced to a seasonal work schedule, which does wonders for reducing workplace stress.

You probably would need to listen to his show before saying this. I"ve been listening for close to 9 yrs now. He explains the 12% a year mutual fund quite well it just requires people to life within their means which is like asking someone to loss an arm nowadays.

Don't just dismiss this because its different than what you currently do.

I have a self directed 401K at work. I've been there 5 years and last year was the worst at 11%. 18% and 30% for the 2 years prior. For some strange reason, it's not doing as well this year!:eek: I'm dumping the small percentage I have in large caps and split it up between the small cap and foreign funds.

You probably would need to listen to his show before saying this. I"ve been listening for close to 9 yrs now. He explains the 12% a year mutual fund quite well it just requires people to life within their means which is like asking someone to loss an arm nowadays.

Don't just dismiss this because its different than what you currently do.

I'd never heard of him. A search finds that he plays on just one local station, which I never listen to, at a time I don't listen to any radio unless traffic reports are needed, so I never will hear him.

But this is something I do -- investing, including mutual funds -- and it is a major contributor to my less-than-full-time work schedule. Lacking other context, I must dismiss the 12% average return claim as false because mutual funds inherently lag their underlying investment returns due to management expenses. Other research shows that the fund industry average is about 2%/year below this curve: finance.yahoo.com/q/bc?s=^GSPC&t=my&l=on&z=m&q=l&c=

With thousands of funds available, 20/20 hindsight can easily find many hundreds that beat this curve, but mathematical reality requires the average to fall below it. Foresight is far more tricky than hindsight.

Long term, e.g. 1950 to 2000, this curve returned almost 10%, so the average mutual fund was lower. Low cost providers (best known example is Vanguard) keep expenses low enough to do better, but still don't beat this curve by any significant amount. But this curve has not maintained 10% during the 21st Century, and few investors expect it to return to and maintain that rate anytime soon.

Living within one's means is a completely separate issue from mutual fund investing. But it does provide more resources to invest, and both are essential parts of financial independence.

Mr. Ramsey is very clearly pointing in the right direction. I won't dispute that, and repeat my earlier statement that first-hand experience finds the rest of his plan excellent. But his projections stretch just enough beyond realistic expectations that I must call "foul".

I have a self directed 401K at work. I've been there 5 years and last year was the worst at 11%. 18% and 30% for the 2 years prior. For some strange reason, it's not doing as well this year!

If you've been at it just 5 years, then you are still a short-timer. Had you been doing this 8 or 9 years, you'd be very lucky if your worst year was just zero%.

Ramsey wouldn't reccomend conventional mutual funds anyway.
He'd probably tell you to put your money in a SPYDER [1] unless you were very close to retirement and needed to get into bonds.
I'm personally [don't laugh] 100% in my employer's stock, but that's only because I got in when the company stock took an inexplicable 40% one-day nosedive thanks to some unfounded rumors. Once the 401K's rule about not selling my fund within 90 days passes, I'll be cashing back out with a 30% yield on 6 months of investment.
I'm 31, so I'll be going back into my SPYDER for the next couple of decades.

[1] http://en.wikipedia.org/wiki/Standard_%26_Poor%27s_Depositary_Receipts

Ramsey wouldn't reccomend conventional mutual funds anyway.
He'd probably tell you to put your money in a SPYDER [1] unless you were very close to retirement and needed to get into bonds.
...

The graph I pointed is the underlying investment of SPY.

I'd never heard of him. A search finds that he plays on just one local station, which I never listen to, at a time I don't listen to any radio unless traffic reports are needed, so I never will hear him.

He has a website. daveramsey.com

He basically talks about getting out of debt, and outlines a plan to do so. Good basic advice for the majority of Americans. Sounds like you are doing well enough on your own though!

I think Ramsey is good for general personal finance. His ideas about investing are a little basic, though. For his target audience (lots of debt and poor money management), it's good enough.