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billryan
billryan
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October 25th, 2022 at 8:00:27 AM permalink
I used to be a huge Dave Ramsey fan and even volunteered to work several of his Financial Peace classes. I know quite a few people whom he saved from financial ruin, although in recent years, I think he has wandered into " cult light" territory.
He recently published an article on how your car can end up costing you TEN MILLION dollars. While the article is full of his usual hypes and exaggerations, I think the gist of it is worth mentioning.

Using two examples- Mister A graduates from school and gets an entry-level job with a good company. He takes mass transit to work, saves some money, and buys a decent used car. Every few years, He buys another used car and avoids ever making a car payment. Each month, he faithfully puts $577 away, and as he approaches retirement in forty years, his portfolio is approaching the ten million mark.

Graduate B also graduates and gets a good job. He, however, leases a new car, falls in love with the new car smell, and for the next forty years, makes his $577 monthly payments and drives his fancy new cars. At retirement, he has a three-year-old car to show for all his monthly payments.

It's obviously not a real-world example, and the extremes are highly exaggerated, but it is a good example of the importance of investing early and letting the seeds grow and flourish. My friends and I have reached the point in life where those who invested early and often are making great retirement plans while others are looking for work with uber and Walmart.
A very good friend, who once was much in demand as a near-celebrity bartender, just turned 68 and has nothing but his small social Security check to live on. He rented expensive apartments, wore the finest clothes, drove new sports cars , and pissed away the rest.
Now he is driving a cab twice weekly to help pay the rent. Working in cash businesses, he never bothered to report much of his income, and his SS check is ridiculously low. MY SS is low because I started collecting at 62, but he waited until 64 and couldn't wait any longer.
A word to the wise is sufficent.
The difference between fiction and reality is that fiction is supposed to make sense.
TigerWu
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October 25th, 2022 at 8:19:46 AM permalink
Dave Ramsey gives good advice to people who are bad with money, and bad advice to people who are good with money.

$577 a month is $6,924 a year, compounded for 40 years at a historical S&P growth rate of ~10%, comes to about $3.5 million. Where is he getting that $10 million figure from??
billryan
billryan
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October 25th, 2022 at 8:27:52 AM permalink
Quote: TigerWu

Dave Ramsey gives good advice to people who are bad with money, and bad advice to people who are good with money.

$577 a month is $6,924 a year, compounded for 40 years at a historical S&P growth rate of ~10%, comes to about $3.5 million. Where is he getting that $10 million figure from??
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He generally uses 12% when making long-term projections, and tends to round up to make the numbers sound better. I no longer recommend anyone follow his programs , but do suggest they read them to get a better understanding of what is possible.

In the article, he says an 11% return until age 67( so roughly 45 years) will give a nest egg of just under ten million.
The difference between fiction and reality is that fiction is supposed to make sense.
unJon
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October 25th, 2022 at 10:27:37 AM permalink
If you compound 12% monthly instead of annually you get $6.856 million.

Not endorsing that assumption, just calculating it.
The race is not always to the swift, nor the battle to the strong; but that is the way to bet.
billryan
billryan
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October 25th, 2022 at 10:37:47 AM permalink
Quote: unJon

If you compound 12% monthly instead of annually you get $6.856 million.

Not endorsing that assumption, just calculating it.
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I reread the article, and he seems to be saying Person One ends up with five million dollars and Person 2 ends up with a leased car and not five million for a ten million dollar swing. He's known for his hyperbole and exaggerations, which often overshadow his original points.
I used to listen to him nightly, and I give him a lot of credit for where I am today, but recently I listened to him while driving back from Phoenix, and he is not the same guy from fifteen years ago. I found him quite condescending and far more political than in the past.
I think he makes a valid point but went over the top on it.
The difference between fiction and reality is that fiction is supposed to make sense.
TigerWu
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October 25th, 2022 at 10:41:05 AM permalink
Quote: billryan


In the article, he says an 11% return until age 67( so roughly 45 years) will give a nest egg of just under ten million.
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Those numbers make slightly more sense, but 11% is still pushing it.

Also, his entire premise is kind of stupid to begin with. Virtually no one is going to be making a brand new car payment of almost $600 every month for their entire working life, especially early in your career. Most people that get a car loan are not going to be paying nearly that much, and even then the car will be paid off in 2-5 years, and then you'll be driving it around for a number of years after that with no car payment whatsoever.

I understand what he's trying to say, but he says it in such a terrible way...LOL
billryan
billryan
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October 25th, 2022 at 11:08:08 AM permalink
Quote: TigerWu

Quote: billryan


In the article, he says an 11% return until age 67( so roughly 45 years) will give a nest egg of just under ten million.
link to original post



Those numbers make slightly more sense, but 11% is still pushing it.

Also, his entire premise is kind of stupid to begin with. Virtually no one is going to be making a brand new car payment of almost $600 every month for their entire working life, especially early in your career. Most people that get a car loan are not going to be paying nearly that much, and even then the car will be paid off in 2-5 years, and then you'll be driving it around for a number of years after that with no car payment whatsoever.

I understand what he's trying to say, but he says it in such a terrible way...LOL
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I know many people in NY who make car payments their whole lives. Either they lease or they trade in early. My nephew leased a car the day he landed a job, while still in college. He's about forty now and has leased his cars since then. His current lease is $1350 a month, plus they have a second car they lease for much much less. It's a Toyota mid-range type of car.
Far too many people think monthly car payments are a way of life. I have bought many a car from friends for $100 more than the trade-in value because the car turned four or had 60,000 miles on it.
The article says the average car payment is $577 but I'm sure that is skewed by high-end leases. You can lease a fleet of Camry's for the monthly lease on a Navigator.
The difference between fiction and reality is that fiction is supposed to make sense.
TigerWu
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October 25th, 2022 at 11:29:29 AM permalink
Quote: billryan


I know many people in NY who make car payments their whole lives. Either they lease or they trade in early. My nephew leased a car the day he landed a job, while still in college. He's about forty now and has leased his cars since then. His current lease is $1350 a month, plus they have a second car they lease for much much less. It's a Toyota mid-range type of car.
Far too many people think monthly car payments are a way of life. I have bought many a car from friends for $100 more than the trade-in value because the car turned four or had 60,000 miles on it.
The article says the average car payment is $577 but I'm sure that is skewed by high-end leases. You can lease a fleet of Camry's for the monthly lease on a Navigator.
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That is absolutely bananas... I can't imagine living like that. It is absolutely unnecessary. I guess, like I said, Ramsey's advice is good for people who are terrible with money....LOL
DRich
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October 25th, 2022 at 11:44:05 AM permalink
I do lease cars and I think that I am good with my money. It all comes down to if you value expenditures more than the utility they can earn down the road. My current lease is $276 a month. I value having a new car more than the $276 it costs. To each their own.
At my age, a "Life In Prison" sentence is not much of a deterrent.
billryan
billryan
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October 25th, 2022 at 11:49:24 AM permalink
Quote: TigerWu

Quote: billryan


I know many people in NY who make car payments their whole lives. Either they lease or they trade in early. My nephew leased a car the day he landed a job, while still in college. He's about forty now and has leased his cars since then. His current lease is $1350 a month, plus they have a second car they lease for much much less. It's a Toyota mid-range type of car.
Far too many people think monthly car payments are a way of life. I have bought many a car from friends for $100 more than the trade-in value because the car turned four or had 60,000 miles on it.
The article says the average car payment is $577 but I'm sure that is skewed by high-end leases. You can lease a fleet of Camry's for the monthly lease on a Navigator.
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That is absolutely bananas... I can't imagine living like that. It is absolutely unnecessary. I guess, like I said, Ramsey's advice is good for people who are terrible with money....LOL
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Maybe. That's why they are luxuries. Car payments, country club, boat payments, time shares, vacation houses, etc. No one needs them yet most people want them. I'm moving from a five-bedroom house to a thirty-eight foot fifth wheel so I'm stripping down fifty years of stuff. None of it was needed, all was wanted.
The difference between fiction and reality is that fiction is supposed to make sense.
DRich
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October 25th, 2022 at 11:54:03 AM permalink
Quote: billryan

[ I'm moving from a five-bedroom house to a thirty-eight foot fifth wheel so I'm stripping down fifty years of stuff. None of it was needed, all was wanted.
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My mothers house was hit pretty bad in hurricane Ian and we have spent three weeks cleaning out 35 years worth of accumulation. It sucks and I will not leave something like this for my kids.
At my age, a "Life In Prison" sentence is not much of a deterrent.
billryan
billryan
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Dieter
October 25th, 2022 at 12:27:12 PM permalink
I got really lucky. I had prepared a lot of comics I was asking $40,000 for. A man came and came close to pulling the trigger but ultimately passed on it. The next guy who saw it bought it and bragged about it being a steal all over facebook and Instagram. The first guy came back, realized the treasure trove I had and bought everything at my asking price. He filled three 26 foot trucks and left a lot behind that I now get to sell a second time. When all is done, I'll be saving over $200 a month in storage fees. I found getting rid of half my stuff was hard, but getting rid of 98% of it was somehow easier.
The difference between fiction and reality is that fiction is supposed to make sense.
tuttigym
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October 25th, 2022 at 12:42:43 PM permalink
Quote: billryan

I got really lucky. I had prepared a lot of comics I was asking $40,000 for. A man came and came close to pulling the trigger but ultimately passed on it. The next guy who saw it bought it and bragged about it being a steal all over facebook and Instagram. The first guy came back, realized the treasure trove I had and bought everything at my asking price. He filled three 26 foot trucks and left a lot behind that I now get to sell a second time. When all is done, I'll be saving over $200 a month in storage fees. I found getting rid of half my stuff was hard, but getting rid of 98% of it was somehow easier.
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So, you made a fortune and will report it all as capital gains, right?

tuttigym
DRich
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October 25th, 2022 at 12:50:06 PM permalink
Quote: tuttigym

Quote: billryan

I got really lucky. I had prepared a lot of comics I was asking $40,000 for. A man came and came close to pulling the trigger but ultimately passed on it. The next guy who saw it bought it and bragged about it being a steal all over facebook and Instagram. The first guy came back, realized the treasure trove I had and bought everything at my asking price. He filled three 26 foot trucks and left a lot behind that I now get to sell a second time. When all is done, I'll be saving over $200 a month in storage fees. I found getting rid of half my stuff was hard, but getting rid of 98% of it was somehow easier.
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So, you made a fortune and will report it all as capital gains, right?

tuttigym
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I don't consider $40k to be a fortune but knowing Bill I would expect that he will declare it because basically that is his business.
At my age, a "Life In Prison" sentence is not much of a deterrent.
tuttigym
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October 25th, 2022 at 12:55:00 PM permalink
Quote: DRich

Quote: tuttigym

Quote: billryan

I got really lucky. I had prepared a lot of comics I was asking $40,000 for. A man came and came close to pulling the trigger but ultimately passed on it. The next guy who saw it bought it and bragged about it being a steal all over facebook and Instagram. The first guy came back, realized the treasure trove I had and bought everything at my asking price. He filled three 26 foot trucks and left a lot behind that I now get to sell a second time. When all is done, I'll be saving over $200 a month in storage fees. I found getting rid of half my stuff was hard, but getting rid of 98% of it was somehow easier.
link to original post


So, you made a fortune and will report it all as capital gains, right?

tuttigym
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I don't consider $40k to be a fortune but knowing Bill I would expect that he will declare it because basically that is his business.
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He stated that he sold everything (else) at his asking price which infers to me that a lot of $$$$ changed hands, thus "a fortune."

P.S. His accountant will be working overtime. My guess.

tuttigym
billryan
billryan
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October 25th, 2022 at 1:15:25 PM permalink
A sale is a sale, no matter if it is for $5, $50,000, or $500,000. The only difference is this time, I'm not replacing the sold inventory. I do expect my tax guy will want more for next year's filings, but that is the cost of doing business.
I left Vegas with 12 pairs of shoes- riding boots, sneakers, hitops , sandals, dress shoes, dress boots, hiking boots, shitkicking boots, etc. In three years I wore none of them. Off to the community thrift store. I don't generally track my charitable giving, but between Ukrainian relief and downsizing, it will help the taxes a bit.
The difference between fiction and reality is that fiction is supposed to make sense.
gordonm888
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October 25th, 2022 at 2:24:39 PM permalink
Quote: billryan


Maybe. That's why they are luxuries. Car payments, country club, boat payments, time shares, vacation houses, etc. No one needs them yet most people want them. I'm moving from a five-bedroom house to a thirty-eight foot fifth wheel so I'm stripping down fifty years of stuff. None of it was needed, all was wanted.
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Bill, you're going the RV route? Would love to hear the thoughts behind that decision.
So many better men, a few of them friends, are dead. And a thousand thousand slimy things live on, and so do I.
rxwine
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October 25th, 2022 at 2:54:19 PM permalink
Quote: billryan

A sale is a sale, no matter if it is for $5, $50,000, or $500,000. The only difference is this time, I'm not replacing the sold inventory. I do expect my tax guy will want more for next year's filings, but that is the cost of doing business.
I left Vegas with 12 pairs of shoes- riding boots, sneakers, hitops , sandals, dress shoes, dress boots, hiking boots, shitkicking boots, etc. In three years I wore none of them. Off to the community thrift store. I don't generally track my charitable giving, but between Ukrainian relief and downsizing, it will help the taxes a bit.
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5th wheel luxury
https://www.businessinsider.com/photos-living-vehicle-luxury-340000-rv-trailer-creates-water-air-2022-7
There's no secret. Just know what you're talking about before you open your mouth.
billryan
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Dietergordonm888
October 25th, 2022 at 2:55:15 PM permalink
Quote: gordonm888

Quote: billryan


Maybe. That's why they are luxuries. Car payments, country club, boat payments, time shares, vacation houses, etc. No one needs them yet most people want them. I'm moving from a five-bedroom house to a thirty-eight foot fifth wheel so I'm stripping down fifty years of stuff. None of it was needed, all was wanted.
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Bill, you're going the RV route? Would love to hear the thoughts behind that decision.
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Living in Bisbee got me more attuned to nature and I began to realize how all the stuff I collected was holding me down. My original plan was to sell half my stuff and store the rest. I tried to buy a shipping container, but the prices have gone crazy. They cost about 60% more than two years ago, when you factor in delivery. Someone I knew was getting married and had a trailer he used three months a year for the last decade. He's a former Submariner, a neat freak, and a licensed handyman who hates smoking so I figured it was a good buy.
I got lucky and found buyers much easier than I expected and the next week I become a full-time RVer. I'm going to winter in Bisbee and then my plan is to head up to Pershing County in Northern Nevada for the summer.
If I like it, I might buy a second one and keep one in each location. Maybe even a third for the Poconos or upstate NY.
Instead of spending $100,000 on a dualie pickup to haul the RV around, some people find it easier to keep three or four trailers in different spots, especially with diesel at $6 a gallon.
One problem with Bisbee is it is incredibly hilly and not very good for walking. My new place has five miles of walking trails, has a labyrinth, and a sparse gym in the clubhouse.
One concern I had was if I died, my nephew would have been left with quite the burden as my executor. Now the heavy lifting is done, and at worst he will have many less headaches.
The difference between fiction and reality is that fiction is supposed to make sense.
Dieter
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Dieter
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October 25th, 2022 at 4:15:33 PM permalink
Quote: billryan

Living in Bisbee got me more attuned to nature and I began to realize how all the stuff I collected was holding me down.
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Sincere congratulations. It sounds like you've already made it through the hardest part.
May the cards fall in your favor.
billryan
billryan
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October 25th, 2022 at 4:29:36 PM permalink
It's a new chapter that I hope is worth sharing.
The difference between fiction and reality is that fiction is supposed to make sense.
BillHasRetired
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October 25th, 2022 at 6:13:21 PM permalink
Quote: TigerWu

(snip for clarity)
Those numbers make slightly more sense, but 11% is still pushing it.

Also, his entire premise is kind of stupid to begin with. Virtually no one is going to be making a brand new car payment of almost $600 every month for their entire working life, especially early in your career. Most people that get a car loan are not going to be paying nearly that much, and even then the car will be paid off in 2-5 years, and then you'll be driving it around for a number of years after that with no car payment whatsoever.

I understand what he's trying to say, but he says it in such a terrible way...LOL
link to original post

(Bolding mine)
Let me introduce you to one of my in-laws, since deceased (fairly early, too). As long as I have known him (some 38 years until his passing) he always had a new car. Once auto leasing came into vogue, he jumped on it. He drove into NYC from NJ (tolls and parking are now in the $35-40 range, daily) instead of taking icky mass transit. Moved four times, but always to a more expensive house with pools, etc. When his wife passed away, he was reduced to living with one of his kids in Florida.

I told my kids "My father taught me the value of a dollar by never giving me any." I am a lot like Graduate A. First brand new, zero-odometer car we bought was at the end of 2021. Life is good, and I have spare cash to gamble/entertain ourselves with.

I occasionally listen to Dave Ramsey, but really, I sussed out a program remarkably like his without ever hearing about him until about 5-6 years ago. Thus, I can't comment on his transmogrification over the years. I have to admit, I sometimes I hit up YouTube for some of his 'best of' call compilations for the same reason I watch car races or watch Scared Straight episodes: it's why people rubberneck at car wrecksódisasters are compelling. It is amazing to me the financial disasters some folks get into. The secret to comfortable retirement is delayed gratification. Save your serotonin hits for your golden years, so that retirement is completely stress free.
JohnnyQ
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October 26th, 2022 at 12:17:34 AM permalink
Interesting discussions on down-sizing.

We have talked about it and at the very least we want to START to get rid of some of our accumulations that we never or rarely use.

Goodwill and Salvation Army and Habitat for Humanity stores are close by.
There's emptiness behind their eyes There's dust in all their hearts They just want to steal us all and take us all apart
DRich
DRich
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October 26th, 2022 at 4:16:16 AM permalink
Quote: JohnnyQ

Interesting discussions on down-sizing.

We have talked about it and at the very least we want to START to get rid of some of our accumulations that we never or rarely use.

Goodwill and Salvation Army and Habitat for Humanity stores are close by.
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I have found that by moving houses every few years it helps to accomplish the downsizing. I was in my last house about 7 years and can't believe how much we accumulated. Last year my wife and I moved across country and only took what would fit in one small U-haul. If it didn't fit in the U-haul it wasn't going. We moved from a 3300 sq ft house to a 1900 sq ft house. It was kind of fun deciding which few things to keep.

At my age, a "Life In Prison" sentence is not much of a deterrent.

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