How an Ugly Car can Make you Rich!


You probably drive by one everyday. Full of new shiny cars with bright numbers and red tags in the windshield. New car lots. I am somewhat (although not full bore) of a Dave Ramsey subscriber. I do firmly agree that debtors are slaves to the lenders and I have seen the statistics and done the calculations to see what getting rid of a car payment and investing that money instead can do. It is nuts. Lets play this game.

So, you have 3,000 let’s say. You can 1. Put that as a down payment on a new car that costs 21,000. 2. Put that as a down payment on a used car for 10,000 and still feel pretty cool. Or…#3. Use that cash in hand to negotiate a deal on a not so new or pretty but reliable car. The average car payment in America is around 5 years (60months) and let’s be conservative and say $350.

Stick with me. Let’s buy the old car. So, I pocket and invest the money for those payments. Let’s say i make just under the market average and make it easy to calculate with 10% growth. Alright, so 350 a month payment for a year is $4,200. Plus 10% interest: $4,620. That’s your money!

Running that calculation for 5 years…..26,472.60… Of Your own money! Not owed. Can you afford a 10,000 car now? I’d hope so! And…if you kept saving and investing, you’d be able to do the same thing a few years later… Also, how much would that 21,000 car be worth at the end of 5 years? 5,000? Not a good investment.

Moral of the story: let your money work for you, instead of chasing around things on credit you can’t afford. It will keep you poor!

(Here is Dave’s example)


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