In general, Dave Ramsey and his cohorts have one History of giving something terrible And Honestly not very helpful advice when it comes to buying a car. However, in this case it is a young crypto investor who is “poor at planning,” according to Ramsey Buy a cheap car and have no debt would have been beneficial.
I came across this Instagram clip for a financial podcast by George Kamel, a Ramsey student who also serves as host of the Dave Ramsey Show. Kamel has its own call-in program with a familiar format. People who have made poor money decisions ask for advice on how to deal with it and are then judged accordingly.
This episode is about what I think is a 20-something gentleman who wants to know if he should cash out his cryptocurrency to pay off his car loan. This is a pretty simple question, but it gets interesting when the hosts dig a little deeper.
This man, who is about to get married and makes $50,000 a year, bought a Tesla at a retail price of $51,000. Frankly, I’m just as shocked as you that someone financially savvy enough to invest in Ethereum didn’t realize that buying a car that costs more than your salary is a bad calculation. To be fair to the caller, he didn’t make a completely stupid move and fully financed the car. He made a sizable down payment of around $23,000. Now that his Ethereum has risen to over $20,000, he wanted to know if he should cash it out and pay off his car loan, which still has $17,000 remaining.
The host never got around to answering the question and I couldn’t find the full show on YouTube. Although I am not a “financial guru”, I assume that he has a “currency” whose value can fluctuate wildly, which is currently advantageous, and a car loan, which is very real. The smart move would be to use the profit and get rid of the debt. Of course, we can debate the time value of money and interest investments over holding a debt with a reasonable interest rate. But this guy makes $50,000 a year (I’m assuming it’s before taxes), he needs to keep as much of that take-home money as possible.
Additionally, in 2021, he probably would have been wiser to use Ramsey’s tactic of buying a high-quality used car in cash and putting some money aside for a rainy day. Admittedly, the car wouldn’t be as “cool” as a Tesla probably wouldn’t be worth a fraction of the original selling price.
Of course, callers like this are why Ramsey is so popular. My point was that you don’t necessarily need Ramsey’s “brand” of financial advice to make better money decisions. There are many so-called “smart” people who would benefit from a financial reality check.
Tom McParland is a writer for Jalopnik and runs AutomatchConsulting.com. It makes buying or leasing a car a breeze. Do you have a question about buying a car? Send it to [email protected]