Two cars no car payments. Love every minute of it no stress

"Broke people with a car payment and an opinion." ❤ Classic Dave!

Peace of mind because of being debt free goes a long way.

According to Dave 'no one got rich on 2100 a year' (which is just the spread) but his compound interest theory is 12% a year 2100 over 35 years = 1mil .... so technically I disagree here Dave

The thing is that paying off the car/s give you peace of mind. My husband and I talked about how to approach money before we got engaged and we approach it the same. Everyone should date for marriage and discuss this sort of thing.

Well, think whatever you want, I sure do sleep well at night with no home, vehicle, cedit card, or student loan payments.

He is a “I’m always going to have a mortgage and a car payment” person

Last time I checked... 3.49% and 2.94% are both > 0%. Imagine all the "free money" you'd save with a 0% interest rate. Bro got the dumbest logic 💀

Dave compares the difference in interest rates one way when he wants to prove one thing and compares the difference another way when he wants to prove the opposite. Sure, nobody became a millionaire by making $2,100, but $2100 is more that $0. Keep the low interest car loans. Leave the money that you would use to pay off the loans in SPAXX earning 5%.

Don't save him, he don't want to be saved

Even if he is right,which he is not, this is not a math question. He is wanting to keep the loan for at most < 1,000 per year. He needs to start looking at what it’s worth to have a happy wife. It’s worth much more than what he gets on the interest spread.

First time I’ve heard of anybody wanting to keep a car note.

Paying off your loans increases your INCOME.

Not to mention, the car is a depreciating asset.

*Amazing video, you work for 40yrs to have $1M in your retirement, meanwhile some people are putting just $10K into trading from just few months ago and now they are multimillionaires*

I got in a debate with my girlfriend's ex-boyfriend over this. He said to never buy a car, get a loan or lease. His reasoning is that he wants the best car to drive RIGHT NOW, and saving up to buy a car later doesn't meet his goals at all. Getting rich in the long run doesn't matter, it's just getting the best stuff right now.

Where on earth do you get a car loan at 2.94%?

Kenneth looks pissed…I think it was a wrong Lunch Order again…He got Fried Rice instead of Chow Mein 😂

No car payment, no house payment and net worth over a million. Life is good!!!

The guy has no drive to be debt free.

This guy is willing to fight his wife and deny her peace of mind for a few bucks. What a jerk.

Actually with extreme self-discipline this could make them some money.

Hubby won't be convinced no matter how you phrase it. People that take this "but the interest rate is low, so we save" tack DO NOT invest the difference. I don't know ANYONE who actually does that. Whatever they "save" they just eat up in day to day life.

I've heard a similar argument from car dealers. Instead of paying off the balance of the loan, you just take the cash you would've paid toward the loan and invest it in something that would give you a higher rate of return. In theory, it's not incorrect. It's just that most people who believe in this menthod aren't actually out there aggressively investing. It's the follow-through that we should be focused on.

I've invested instead of paying off the mortgage. Investing HALF my original mortgage balance (over the course of 3 years) has made 90% of the interest I would pay over the entire 15 years. To be fair, I am taxed on that, so it's only about a 7% annual spread after-tax. Thankfully my wife doesn't want to pay off the mortgage either! :)

We’ve paid off student loans, gotten out of debt, and are getting serious on our investments over the past few years. Essentially the same income, but we refinanced to a 15 year mortgage at 2.5%, along with the student loan payment pause. Saving/investing the spread was life changing for us. I imagine Dave would tell me to pay off the home now. I’m going to continue investing and perhaps be set for life in 12 years.

Dumb advice as usual. Then why do they advise to invest while paying the minimum on a mortgage? Same logic

All thay mental gymnastics is just not worth it! Get clean, get peace back to your life, and put your focus on building wealth. Stop messing around with the penies you could “potentially” make

The husband is mathematically correct. His strategy will work better in the majority of cases. I’ve got a 0% interest rate on my car and I’ve made 2,500 on my invested money over the life of the loan. That money will continue to compound for the rest of my career and be worth 165,000$ by the time I retire.

I paid off my car early and it was just a 2.5% interest rate. As a nerd it never made sense to me on paper but I had the money and paid it off anyway and now I can see the point of not owning money to anyone. It is a $40k car so not so expensive yet not the cheapest and I could easily trade it in for a nice Porsche or a nice Corvette but I am never again taking a loan for a car.

Dave literally does straw man arguments every show. Everytime he doesn’t like something, he says “no one ever became a millionaire bc of X” Duh Dave, almost no individual action or decision made someone a millionaire. Can’t believe he doesn’t get called out for this… ever

Paying off and staying out of debt was the best thing I ever did.

Yes, David I happen to agree and I also agree that making that spread is not a bad idea if actually investing the 7% spread. I would not waste too much time on the issue though. Two cars with under 4% rate loans are doable.

Does this guy know that cars usually depreciate in value regardless of how low the interest rate is?

Explain to me why you have to pay taxes on a total market passively managed index fund. His premise is correct, but he needs to be investing the extra money.

Poverty mindset, this how the wealth divide exists. This is how the 1% have wealth, 99% pay us

This is what happen when your significant other don't understand about money 😭

Dave said, "No one ever got rich on $2,100 a year" Umm, Dave, investing $2,100 per year into one of those theoretical 10-12% mutual funds you constantly tout will be worth over $1,000,000 in 36 years (12%) to 41 years (10%).

😩 paying off the cars would free up cash, which in turn would leave that money available to invest/save. If he is talking about the interest offset it still doesn’t make sense.

We have $1565 left on our vehicle, has 46,000 kms, and 6 years of warranty left still, cant wait to have no payment.

Oh, he invested the $27,000 alright. He invested it into two vehicles that are depreciating in value. So, he is paying the 3% interest and getting pounded by the depreciation.

Our education system has horribly failed.

I assume those are dealership rates on two brand new cars so they already started 25k in the hole when they bought them 😂😂😂

Paying interest IS giving away money.

Lack of respect? Where did that come from? If she had her own money there wouldn't be a problem.

First minute; husband says free money because low interest rate… low interest doesn’t mean zero interest rate.

I could pay my car off right now with my savings. But I have a super low interest rate and I am making a few hundred dollars a month off interest. So why give that up?

I keep seeing comments about investing investing investing. Where are you people investing? This is an honest question because every investment I see out there seems to be a scam.

Dave is objectively, mathematically wrong. Again. His argument that "it's doesn't make you wealthy" is braindead. Not eating out doesn't make me wealthy and neither shows changing my own oil. Doesn't mean I shouldn't do it.

Mr. Ramsey has beautiful eyes.

How about im your wife and im not comfortable being in debt on these cars. Its not about the math or who is right but does he respect you enough to respect that and be willing to do things that make u feel better.

I love it when they both had the same impression of what was going through the man's mind and talked to her the way girlfriends would looking out for her and filling her it in, but just from the man's perspective. It's nice when decent men validate what's up and stick up for her side of things.

Dave is so full of shit here, if you have 35k to pay off the car loans you have 35k to capture the spread. The sad part is he knows it, but unfortunately it doesn't fit his agenda. Additionally he blames the husband for somehow putting the wife down as if she "doesn't understand math", but does similar with some archaic anecdote " oh she doesn't understand". DISGUSTING!

I looked at paying off my car early. The loan was 1.9% I would have saved less than $400. I chose to keep the flexibility of holding on to my cash.

It is like a bet that is 52% in your favor. Technically, you should take it. BUT when you are poor, and have $1000 to your name. You definitely don’t throw that money down on the bet.

This may not have been the best answer for their marriage, but it would have made for a real short call. Just tell him to pay the loans off and then have him send the monthly payments to a high yield savings account with around 5% interest instead.

Assuming you do have the cash to pay those loans off yes you could make more in a good high interest saving account I earn over 5% APR in my savings but you have to actually put the money in savings. If your trying to make 10% return you might take a 10% loss

OK, Dave didn't even ask the question, so how does he know that they aren't aggressively investing instead of aggressively paying off the loans. The husband could be right, but only if they were as gazelle intense at investing as Ramsey suggests people should be at paying off debt.

Not to mention if he was investing with the money from the loan then he is investing in a vehicle that is a depreciating asset.

I wonder if he'd rather pay for something ELSE first where the interest is higher.

Her husband is right. LOL. But seriously don’t call Dave about a debt question and expect an honest, efficient answer.

Good for Tabitha!

Women’s intuition? Good grief

How much can you save in interest when you pay off your car loan? Duh and duh.

If he wants to really use cars to help make money buy 3k cars and invest payment. Making payments on a loosing asset is dumb

I’m still trying to figure out what Ken adds to the show

You earn faster when Investing good Money rather than Spend it on LOW LOW Credit

Thanks Uncle Dave

The videos about cars are always interesting because if you actually look at the math, I’m still trying to figure it out myself. in order to buy Let’s say just to pick a number $30,000 car probably like an average price car these days maybe a little less even, to buy that $30,000 car in cash you would have to still save up money monthly. That’s just going into something like a savings account until you have the money to buy it in cash. Once you spend that 30,000 in cash, you can no longer invest that money because all of the money in one big lump sum chunk is now in a depreciating asset. The vehicle will continue to depreciate to the point it’s worth nothing or is also straddled with repairs. If you invest that 30k into a mutual fund for the same length as a car loan, let’s say 60 months, the 30k you initially put in will now be worth around $53,000. A gain of $23,000. If you spend the 30k up front then invest the money you would have otherwise spent on a car payment over the next 60 months let’s say $500ish dollars, you won’t have anywhere near that because you are making compound interest on the whole 30k the entire time, sure it’s not crazy money and Dave is right that alone won’t make you rich but to say that a car payment is what’s keeping people broke if they do that method is just inaccurate. Even if he’s right and you won’t make that much money doing that method investing the spread, it’s still a negligible amount between the two that one is not gonna make you more broke in the longer and then the other.

This is an odd conversation. The point is they are in debt with car payments. The interest amount is not relevant. I believe the guy is thinking that the interest rate is so low that over time inflation will overtake it and he will be paying less in real currency value. The problem is their cash flow is going into an "asset" that only goes down. A savvy person gets a crappy used car that they can purchase and uses the rest of their cash flow to invest. As Dave says, car payments are the payday loans of the middle class. I also agree that anything she says wont work because his thinking is irrational and and reasoning wont work with an irrational person.

Putting your money in a high yield savings account would be better than paying off these cars.

I want help just not your help. 😂

Dave's premise only works if you can pay off the entire amount owed on the vehicles. Take my situation. I owe $215,000 at 2.5% on my 15 year fixed mortgage. I also maintain a bank account at the same bank that has the mortgage (my bank balance is less than $215,000). The bank account pays 4.91%. It would be stupid of me to use all of the money in my account to pay down my 2.5% mortgage balance while foregoing a 4.91% interest rate. If I had the full $215,000 to pay the mortgage off, the situation might be different. So for every dollar $10,000 I keep in the account, I make about $200 extra after taxes each year by keeping the money in my account and not paying my mortgage early. Additionally, I have autopay setup on this account, so on the first of every month, the bank pulls the mortgage payment out of the bank account and the monthly payment is made!

Its not just most of this but the rate comparison doesn't check out. Its bad math. You cannot compare percent paid vs percent earned and actually come to any conclusion. The math is nonsense. You can take any two numbers and i/you can demonstrate and give example situations where all 3 outcomes are true. Paying it off early. Keeping it & investing early. Or a complete wash and it doesn't matter what you do. You have to project the pattern out to full term. So if the keep the loan path is 5 years and paying it off early is two. You need to project that outcome 5 years in the future. Which you need stable predictable spending patterns. Income patterns. Investment patterns. And it all assumes theres no surprises. Like what if at year 3 your daughter has a major medical problem that insurance doesn't fully cover. Or someone looses a job. And even then.. The actual outcome depends on you acting on that plan. And what you would actually do. Like dave said.. hes probably not actually investing anything. So if you figure out investing while paying off is better but you don't actually invest... then you just made a choice and your using this quote to justify whats probably a bad decision. Now i do disagree on some points with dave. Not every step needs to result in millions in returns. Sometimes you just have to ask the question which path im better off with. I had a recent emergency where my roof and my hvac system gave out. I just happened to have enough in my emergency fund for both. I prefer a higher emergency fund than dave teaches. I also had a financial goal i really wanted to hit. Two things incompatible. I hate loans. So im with dave loans suck. But my rule for loans is they need to leave you better off when they are done or you don't do one. I did a no interest loan. And the reason is because i did invest. And the math checks out. Im almost done with my plan and reality ended up being even better. Ill hit my financial goal and itll all be paid off by the end of the year. If i hadn't. I would have came up several thousand short. Sometimes that actually matters. Dave misses that point.

No you build wealth by getting out of debt and piling every penny you have into crypto if you want any chance of retiring with dignity.😃

Tabitha probably knows more about football then Dave ever has. I'm appalled at how dismissive he was!

Husband is mathmatically correct assuming there is a corresponding investment. The math doesn't lie. He does in fact win the argument.

How is he making money when HE'S paying the interest?!!

Money market funds pay 5%+ right now. Math is math. Put all the money in there and make the payments from it. Other wise you are throwing money down the drain.

Ramsey needs to to a new study cause now days there a lot of crypto millionaires

Marriage is a tuff job once the honeymoon is over so it's not meant for everyone people are plug in different different strokes for different folks

I understand they making 5.5 on money in the bank but ugh its not worth the 1.5% spread he making like 350$ a year

Dave doesnt think women can be sports fans lol.

You still can’t afford crap if you have $1million in CA.

Debt free and ability to be debt free are in the same place for a lot of people that understand opportunity cost and he's correct not the debt crusader wife.

I agree with her boyfriend

You can’t convince him bc he is correct. I wouldn’t pay my car off either.

Well he already borrowed on the cars. MIGHT AS WELL invest the difference

He's a fool

😀

It's a lack of respect on her part not his

She just wants to manipulate him to doing something he doesn't want to do. And according to Dave magical mutual funds the spread makes sense.

All I'll say is they should divorce!! Clearly their views on finances do not align. People should marry those whose financial, religious, child rearing and other views align. Otherwise the marriage will struggle at best and fail at worst.

Honestly 2% on a car why would u pay it off? Dave cant do math

Maybe because instead of paying the cars off he's making 8%+ with the money in the markets. So by his logic why would I give up the investments to pay off these debts. Ramsay completely misses this and assumes this guy thinks the cars are investments. Let's say the guy knows they are depreciating assets and let's say he knows the math and has the money in cash in investments.