Tag Archives: Dave Ramsey

Automobiles, Financial Freedom, Financial Independence, Investing, Wealth

Rejecting Buying New Cars Has Made Me Richer

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Car, Sedan, Luxury, Vehicle, Automobile

The other day I overheard people talking about being 90 days late and past due…blah blah blah I couldn’t make out the rest, but I heard enough to fill in the blanks. Debt, debt, and more debt.

Two of the biggest culprits are house and car loans. Some may disagree with me, but cars are wealth killers! At least Dave Ramsey agrees with me.

Then it hit me.

After three years of blogging, I found my niche.

This blog is really all about rejecting new car ownership to become financially independent (FI). That’s right. I refuse to buy new cars so I can become FI.

Previously I have spoken on the topic of why I can’t stand buying new cars and instead put that money in stocks thereby earning myself $100k in Mr. Market by ending my car payments.

When I hear people complain about having no money but paying $600 a month for their car, all I hear is the same sound Charlie Brown’s teacher makes. Cut the excuses!!!

Image result for charlie brown wah wah gif

Obviously, reminding people why they should reject buying a NEW CAR bears repeating.

Do BMW’s really equal happiness

To drive a brand spanking new car out on these streets today, it will cost you about $554 a month; as that is the average car payment in the U.S. according to Experian.

However, you and I both know that those are small potatoes compared to what some folks are shelling out. We gotta Keep Up With The Joneses’ today or life just plain sucks!

There are now new luxury vehicles coming off the assembly line with an MSRP of $80k! MSRP stands for the Manufacturer Suggested Retail Price — also known as “sticker” price — which is a recommended selling price that automakers give a new car. A dealer uses the MSRP as a price to sell each vehicle; it’s different from invoice price on a car, which can stand thousands below the sale price.

Vehicles have become so expensive that dealerships are offering 84 month car loans! I have no intention of owing the man that type of moola.

Especially, considering that the REPO Man is out there lurking in the shadows, ready to take my car if I miss even one single car payment.

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And BTW the REPO Man tends to show up at the worst possible times; such as when you are already 20 minutes late picking up your kids from soccer practice, while the Walgreen’s pharmacy is texting you that this is the last day to pick up your $600 EpiPen or else it goes back on the market.

I actually have a friend that was unable to continue making payments on her BMW. Before, we get into this story here is a little background. She owns a home with an ARM and payments can fluctuate wildly from $1500 to $2400, is finishing her bankruptcy payments, and calls herself a Glam Ma and not Grand Ma.

She used to use dating apps after her divorce, but stopped after one guy told her he was looking for a place to stay. Hard pass. No more Bumble Bee for her! She likes her independence. Always has, always will.

For instance, her son recently asked if his mother would be willing to watch his newborn infant after she is born to save on daycare costs, which is astronomical in America and can cost people one whole paycheck, to which she replied, “not unless she got ID to sit with me at the bar on Friday’s, then no I can’t watch her.”

Getting back to the car situation, she decided to stop all car payments due to financial constraints.

Therefore, she stopped paying for two years.

Two whole years!!!

Since she knew she could no longer afford it; she just strategically stopped paying and put that money towards other obligations. The same way a squatter strategically walks away from an underwater mortgage. No reason to raid the retirement accounts and then end up completely broke now is there.

Anyhoo, she kept the car clean and left nothing in it in case the repo man ever showed up to take it. Well that day finally came and they took it right out of her driveway.

She then decided to hail cabs, and take Lyft and Uber rides until she got her tax refund and then she bought her next car with cold, hard cash baby! Lesson learned. If you own it, no one can take it.

Setting money on fire

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Cars are making people go broke. SUV’s are some of the priciest on the market.

And Americans LOVE their SUV’s.

They are willing to SHELL out the big bucks here and dealers know it. Why do you think they stopped making Mitsubishi’s, GM stooped making Pontiac’s, and Ford stopped making compact cars? It is because they are not making money on moderately priced vehicles.

According to Business Insider, Ford made a game-changing decision in April when the company announced it would dissolve its entire line of sedans and compact cars that includes Focus, Fusion, Fiesta, and Taurus by 2020. Other cars that will be discontinued this year and beyond include the Alfa Romeo 4C Coupe, Chevrolet Sonic, and Cadillac ATS.

Maybe this is why Aston Martin has rolled out its latest car with a pricetag of this: New $189,000 SUV.

You could wind up spending $2500 a month just to own this luxury monster!

Let’s do a little math

I’m going to pull back the curtain on this and show you why you need to take off your BMW rose-colored glasses.

Buying a 2020 BMW truck will cost you about $176,000 after all is said and done.

Item

2020 BMW X6 SAV M50I AWD

Interest:

Maintenance:

Gas:

Total Cost over 7 years:

Cost

$104,095

$104,095 x 3% = 31,228 BMW of Alexandria website

$3,122.85 x 7 = $21,859.95 Setting aside 3% of purchase price

$50 x 52 = $2,704 x 7 = $18,928

$176,110.95

You get to basically drive to work, the grocery store, gym, and Pottery Barn for the low, low price of almost the cost of a house in Georgia.

20 Marietta St NW Unit 6B Atlanta, GA 30303

$179,000 Price 2 Beds 2Baths 1,156 Sq. Ft.$155 / Sq. Ft. Redfin Estimate: $175,558 On Redfin: 70 days Status:  Active

20 Marietta St NW Unit 6B
Redfin Listing

That is also more than three times the median salary of an American adult making $56,000. Even Rappers are buying into this crap before the ink is even dry on that million-dollar deal they just signed!

This is a clip from way back in 2003 from Dame Dash (who has his own money issues; he can’t afford and is too cash poor to pay $2400 in a lawsuit due to his paychecks being garnished by creditors to pay off debt).

That video came out the same year I bought my car.

Maybe if I had seen this, I would have done something different.

Hopefully seeing this here will help all of you out there.

Put that money into Mr. Market

I know this is the part where your eyes glaze over but please bear with me.

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Here’s my story. In 2003, I decided I needed a new car. BIG MISTAKE! I previously had an Nissan Altima that cost about $8k and I was paying $229 per month for it. Then it started having problems so I decided to trade it in for a new Ford Explorer.

Original MSRP was $30k, but I got it on sale for $24,000. Stupid. I had a negative equity balance on the Altima so I rolled it over onto the new loan. I went from owing $6k to $32k in the span of 5 hours at a car dealership from the time I walked in until I signed the papers.

The payment on the Explorer was $448.65 a month for about 5-6 years. Therefore, from 2003-2009 I was paying on this car instead of investing that money in Mr. Market. DUMB!!!! For 6 whole years, I could not do much of anything because the car payment was always due.

Want to go on that trip to Dominican Republic? Sorry guys, can’t do it. The gas guzzler has got to get paid.

Want to buy new socks and clothes because yours are worn out and have holes in them? Sorry, no can do. The car note is due on the first, which is same time as the rent. Sucker! They got me good.

I was even paying over the phone for faster processing at the tune of $5 a pop!

All that changed once I paid it off. I got down to $1500 and just paid it off. I was free b#tche$!! Can’t nobody hold me down…oh no…I got to keep on moving!!!

I haven’t had a car payment in over 10 years! Not since Steph Curry was selected as a draft pick in the NBA.

I took that money and started investing in stocks. Before I know it, I had like a couple hundred grand in Mr. Market just from rejecting new car ownership.

How would you feel having $200,000 working for you everyday 365/24/7 in the market paying you just for having a pulse?

Celebrities and Money, Financial Freedom, Financial Independence, Saving, Self-Made Millionaires, Wealth

I Like To Write Big Fat Checks Just Like Cardi B

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American, Bills, Business, Cheque

Big fat checks, big large bills.  – Cardi B

I’m a lot like Cardi B in that song Money and I like it because like her, Now I like dollars, I like diamonds! However, in order to fund that lifestyle you have to have money in the bank.

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I want deep-pockets; therefore, I avoid debt, save and invest.

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And between you and me, I can’t stand debt. That’s no secret if you have been reading my blog. It just weighs you down.

I figured out a way to make myself feel better about paying off debt. I tend to use the debt-snowball method. I like small wins. And you should too, if it helps you continue to work on paying off your debt over several years, which can be 2-5 years.

The debt–snowball method is a debt reduction strategy, whereby one who owes on more than one account pays off the accounts starting with the smallest balances first, while paying the minimum payment on larger debts. You typically use this method when paying off revolving credit card debt.

Dave Ramsey discusses this and the debt avalanche, paying off debt with highest interest rate first, both are good methods of paying off debt.

But my favorite is the debt-snowball method. This strategy is where you pay off debt in order of smallest to largest, gaining momentum as you knock out each balance.

When the smallest debt is paid in full, you roll the money you were paying on that debt into the next smallest balance. You get a chance to celebrate your hard work by knocking out small debts and slowly working your way toward paying them all off.

For example, I have done the following:

Paying off my payday loan in the early 2000’s, I wrote the final check for $333.

Paying off my car note in 2009, once it got down to under $2,000, I wrote the final check for $1,500 and paid that sucker off!

Paying off my personal loan for $20,000, once I got down to the end, I wrote the final check for $3,500.

Paying off my credit card I got in 2005, once I got it down under $15,000, I wrote the final check (electronic) payment for $14,745, so then I could continue to live my best life.

I did this by saving up my money, paying the minimums on all my accounts until I saved up a certain dollar amount and then I wrote big fat checks to pay off what I owe. I like to pay in lump sums and pay off huge chunks of debt at a time. It makes me feel better. I call it the debt-chunk method. I like to see big results.

I got this idea from reading personal finance blogs like Millennial Money and books like I Will Teach You To Be Rich and Set For Life. In addition to studying the self-made. I combined my knowledge of reading about the money habits of Grammy-winner John Legend and Millennial Money founder Grant Sabatier.

See my posts How Millennial Money Inspired Me To Start Saving $13,333.06 A Year

Money Advice I Got From John Legend

Basically, I combined two different philosophies on saving and debt.

From John Legend I learned that once you have money in your hand you should pay off your debt IMMEDIATELY. If you have the full amount, then pay it all off. Thereby, paying off debt in huge chunks!

Image result for john legend gif

From Millennial Money I learned to save huge amounts of money over time by making small increases in may savings rate. I also make sure to take other good advice as well.

For instance, over the years, I have learned to listen to the following:

My partner Charlie says there is only three ways a smart person can go broke: liquor, ladies and leverage – Warren Buffett

Find ways to advertise for less or free. Leverage what you know by thinking outside the box. – Daymond John, The Power Of Broke

Find ways to start or build a business for less, cheaper alternatives out there or for $0 to start. – Zac Bissonnette, Debt Free U

There has never been a time when reading a book has not helped me. Work 10X harder, get 10X the results. – Grant Cardone, The 10X Rule

Work out. Have Discipline. Save and invest your money. I started in real estate and built wealth that allowed me to devote more time to the things I wanted to do. – Arnold Schwarzenegger

See my post How Arnold Schwarzenegger Totally Recalls Making $20-Million-Dollar Paychecks

Try to save $5 a day. And increase your savings by 1% a month or more. Network. I bought coffee for those I wanted to learn from every week! – Grant Sabatier, Millennial Money

Save $25,000 to stop living paycheck-to-paycheck. Spend more on fun not less. Spend money on the things you care about and cut spending on the things you don’t. – Scott Trench. Set For Life, Bigger Pockets podcast

Spend extravagantly on the things you love, and cut costs mercilessly on the things you don’t. – Ramit Sethi

Focus your energy on the big wins!

If you can cut your housing and car costs, your stand a chance to save $500 or more per month. That is a nice amount to start stashing away in your 401k.

Cutting out $5 lattes and couponing alone are not going to get you to amassing a fortune. But first, before you do anything, you must save!

It is far easier to control and cut your spending than it is to go out and earn more.

Besides, the more you make the more Uncle Sam takes! I am all for people earning more money, but it will make no difference if you spend every last dime.

Therefore, start focusing on slashing expenses, cutting costs, saving an emergency fund (for big expenses), a rainy day fund (for short-term expenses i.e. a flat tire) and paying off ALL YOUR DEBT!!! Doing those five things can start you on the path from broke millennial to millionaire.

And that is because all millionaires know you get there by saving $10 bucks at a time. – Mr. Money Mustache

Therefore, if you want to get rich, just start by saving $10 bucks at a time.

Entrepreneurship, Saving, Television Shows and Money, Wealth

A Financial Nip/Tuck

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Image result for nip tuck

Are you looking for a way to change your finances?

Turn your money from small nuggets of gold into large platinum diamonds. Who wouldn’t? Lots of people could do with a financial facelift.

So, “tell me what you don’t like about your finances?”

That last question is a play on the signature line from the show, “Tell me what you don’t like about yourself,” but with a twist…a financial twist of course!

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Nip/Tuck is an American serial medical drama television series created by Ryan Murphy that aired on FX in the United States from July 22, 2003, to March 3, 2010.

Opening credits song: “A Perfect Lie”, The Engine Room.

Taglines: Truth is only skin deep. L.A.’s newest implants.

The TV series Nip / Tuck, originally broadcast in 2003 on FX, focuses on McNamara/Troy, a controversial plastic surgery practice, and especially its founders, Sean McNamara and Christian Troy played by Dylan Walsh and Julian McMahon respectively. Each episode was named after the incoming patient. The show sold itself as a melodrama with a facelift.

It made me think what if people could have financial facelifts instead of actual ones?

However, it would focus on inner emotional stability instead of outer beauty.

We would build the foundation to allow people to start at building good and long-lasting financial habits.

Let’s begin our consultation.

WHAT DOES IT COST TO BUY FINANCIAL FREEDOM?

In all fairness, you have to work for your freedom. It could be as much as having $500,000 in savings and investments in one place or up to $2 million in another.

For instance, it was recently reported that no two places are equal to retire in around the United States.

If you want to retire in Mississippi, then it would cost you $950,000 versus retiring in California, in which you would need $2.1 million.

Why the variance? Things cost more on The Coast.

Housing is a premium. Dilapidated shacks in San Francisco are going for 50% above asking price.

For example, this home at 479 Silver Ave. listed on 2/8 of 2018 for $649K and was sold by 3/22/2018 for $1.125M, a 73.34% over-bid.

Homes in the Bay Area are going for a median 1.61 million!

You should plan your escape from the rat race keeping in mind where you want to live. If we use the financial freedom formula of saving 25 times your income, then you can look up what it will cost to live in certain places in America, Canada or other countries and determine if you are financially prepared.

See my post How Do You Play With FIRE?

WHAT DOES IT COST TO BE BEAUTIFUL WITH A LITTLE NIP AND TUCK?

The show was definitely like nothing I had ever seen.

One of the biggest shocks were the graphic plastic surgery procedures that were shown. I had to turn my head and look away. But when it comes to your finances, you cannot afford to be that squeamish.

You have to face the facts head on. And one of those facts is that plastic or any type of cosmetic surgery is expensive.

Lifting the face. The average cost of a facelift is $7,448, according to 2017 statistics from the American Society of Plastic Surgeons. Facelift costs can widely vary. The average fee referenced above is only part of the total cost – it does not include anesthesia, operating room facilities or other related expenses.

That’s a lot of Benjamins. If you take that same $7,448 and invest it instead, after 40 years with a 10% return you could be closing in on $350,000!

I am all for people doing what makes them happy including what makes them look and feel good and confident. But at what price?

In another post, I discuss saving up money and using flexible spending to pay for braces and Lasik.

Lasik eye surgery, while life changing, is expensive. It can cost anywhere from $2500 to $10,000.

I prefer for people to pay cash if they do decide to have any cosmetic procedures performed. Who wants to pay interest on a $500 teeth whitening or $7,000 nose job?

In this case, I urge you to think of the opportunity cost.

Do you need clean, healthy teeth? Yes.

Do you need teeth so white that it blinds you every time you look in the mirror? No.

Think practically.

I have to agree with Dave Ramsey on this one: Learn to age gracefully.

MONEY IS A MOTIVATOR

A common theme on the show Nip/Tuck was money. Those guys lived in excess.

First, working in Miami Florida and then moving on to Los Angeles.

These guys knew where the money was and what type of clientele could afford their services.

They were not all about the money though. They performed tons of pro bono work.

I decided to pursue financial freedom because I did not want the lack of money to cause me to make bad financial decisions.

Lips, Taboo, Secret, Silence, Mouth
Confessions of a Teenage Waitress
Image result for shh gif
Shhh! These are my lipstick confessions but I’ll tell you. xoxo 💋

See my post Confessions Of A Teenage Waitress

Pick a target number. Make a goal. Then aim for it. That is the secret sauce to financial independence.

However, the secret ingredient is patience.

It takes time to get wealthy.

It is not easy to get rich.

It is not easy to get thin.

All good things take time.

It took me a year to save up my first $10,000. It took me 6 years to start saving 40% of my income. It took me years to save up my first $100,000.

It usually takes 10 years to save the first $100,000. Then it takes about 4 years to make the next $100,000.

Knowledge and money accumulate and compound over time. YOU HAVE TO PUT THE WORK IN! And then be willing to wait. You get back out of anything what you put in.

The problem is that no one wants to GET RICH SLOW.

Dave Ramsey has said he worked his tail off for 25 years, but today people call him an overnight success.

The thing of it is, when you are not trying to get rich quick you will GET RICH SLOW. Or as I like to say, GET RICH LEISURELY.

Through automation of savings and investments over time. Those are the words and advice of The Automatic Millionaire author David Bach.

Let those words be a reminder and motivator for you to build lasting wealth with patience, time, and persistence.

That is why I have been blogging for 3 years.

The reason I write is because I want to inspire the uninspired to act.

So, “tell me has this post inspired you to pursue wealth?”

Budgeting, Financial Freedom, Saving

Dom Perignon taste on a Budweiser budget

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“A budget is telling your money where to go instead of wondering where it went.” ― Dave Ramsey

Most people out there have probably heard of the saying “champagne taste on a beer budget,” and that is exactly the kind of behavior I have been seeing more and more of lately.

It is not that I have a problem with nice things.

Quite the opposite.

In fact, I like to buy high quality and first-class items. This can include anything from airline tickets to a nice vacation. However, you have to be able to afford it.

You must therefore follow this advice: “Act your wage.” ― Dave Ramsey

Therefore, if you can only afford Bud Light instead of Rosé, then go for the beer.

If you are familiar with the Suze Orman show, she had a segment called “Can you afford it?”

Basically, people would call in and ask if they could afford to buy whatever item was the hot new thing that year.

Suze Orman would require certain criteria like a six plus month emergency fund, a job, income, and a realistic way to pay for the item either outright or over a reasonable period of time.

It was very engaging. By far, the most popular part of the show.

Let’s see if this post can bring back some of those feelings tonight.

If you can’t afford champagne, then it is perfectly acceptable to buy sparkling wine.  Just make sure when you pay for it, that you use cash and not plastic or it will not matter how much you think you are saving, if you are paying interest on it. Then beer can turn into the price of champagne.

Interest over time makes any purchase more expensive.

For example, buying a pair of jeans that cost $50 on plastic at a 25% interest rate could turn into a $500 pair if you pay the minimum payment over 5 years. That wasn’t on the price tag!

It seems that if you pay cash you are protected against this type of price inflation. Especially, if you get a 0% deal (teaser rate) and then do not pay it off and are charged interest retroactively from the date of purchase.

So, be very wary when it comes to credit cards. They will give one to anybody with a pulse.

In Elizabeth Warren’s books, The Two-Income Trap and All Your Worth, she discusses how even with two-income earners Americans are still struggling with debt, filing for bankruptcy in record numbers, and still unable to afford housing and higher education for their families.

Credit, in large quantities, is trapping people in an eternal debtor’s prison.

In the book Maxed Out, author James Scurlock talks about how having access to easy credit at young ages (college kids) is ruining people’s financial future before it even begins.

Starting out in a hole due to student loans and credit card debt means playing a constant game of catch up and struggling to get by.

Curtailing spending and only buying what you need and can afford are the only ways to stop this phenomenon of being maxed out.

Therefore, we budget.

However, “A budget tells us what we can’t afford, but it doesn’t keep us from buying it.” – William Feather.

Below I will provide some fictitious examples of how it all goes down similar to the show.

So, let’s go back to the infamous Suze Orman question of “Can you afford it?”

What do you want to buy?

So, let’s say I get some tweets from followers asking if they should make a purchase. Let’s go.

Thank you for tweeting Greenbacks Magnet (GBM for short). What do you want to buy?

FOLLOWER: I would like to purchase a brand new Lexus RC 300 priced at $43,305. My birthday is coming up and I have never had a new car only used. Growing up, my parents said buy new. Why inherit someone else’s problems? I have always wanted one.

GBM: Ok. Show me the money.

FOLLOWER: I have $15,000 in savings, no credit card debt, $10,000 in student loans, no mortgage, no auto or personal loans and $55,000 in my retirement accounts. My after-tax income is $4,150 monthly. My expenses are $3,300 per month.

GBM Email reply: It’s great that your expenses are lower than your income by $850 so that you are able to save, but you could knock out the student loans and then have no debt. You have a 4 month emergency fund. I prefer to see 9 months ($29,700) as that is how long it takes the average person to find a new job (including me). Check out out my post How to build an emergency fund.

A car at that price of $43,305 will cost $676 per month at a 3.9% interest rate over six years. That will bring your monthly expenses up to $3,976 and decrease your net saving from a respectable $850 to $174. That is too close to the financial edge.

I want you to start putting more money toward retirement such as $200 more per month or whatever gets you to 20%. A car is not going to feed or house you it will only get you from Point A to B. You should also consider setting aside enough for a 20% down payment on a home as I know you are not going to want to rent forever.

Setting aside 4% of the purchase price of a home for 5 years will net you the 20% down payment. If you can beef up the 401k by $200 per month, pay off the $10,000 in student loans, start setting aside 4% for a home down payment, and get a 9 month emergency fund then you can get your car, but not before.  Until then, keep taking Lyft.

Next follower. Thank you for tweeting Greenbacks Magnet (GBM for short). What do you want to buy?

FOLLOWER: I would like to buy a Sony PlayStation 4 at $300. I am 20 years old and currently a college student, but I am working part-time. I have a game system, but the PS4 has more of the games I want to play and is cheaper than a new Xbox One X.

GBM: Ok. Show me the money.

FOLLOWER: I have $1,200 in savings, no student loans as I go to college online which is cheaper than traditional and stay at home, no credit cards, no 401(k) and a car note of $150 per month. My after-tax income is $600 monthly and my expenses are $350 per month.

GBM tweet: It’s awesome that your expenses are lower than your income by $250 so that you are able to save, always a plus, but I would like to see you open a Roth IRA. You are so young that this money could compound for like 40 years! Your future self will thank you.

GBM 2nd tweet: You can contribute $50 per month just to start in a Roth IRA. I do prefer to see a 9 month rainy day savings ($3,150). Since you have so few expenses, and live at home with virtually no debt other than a car note you could simply take the money from savings. Have fun!

Next follower. Thank you for tweeting Greenbacks Magnet (GBM for short). What do you want to buy?

FOLLOWER: My name is Lucy and I am 13 years old. I would like to buy an Apple watch for $219. I like it because it’s so cool and fun. A lot of my friends have it and I want one of my own.

GBM: Ok. Show me the money.

FOLLOWER: I have no debt. I have savings of $5oo from birthday money and saving my allowance. I get an allowance of $80 a month. I have no expenses.

GBM: Well, it is nice to see you saving. You could just take the money from savings as you have no expenses. I just want you to continue the habit of saving. You can afford it.

Less stress with a budget

You can see from the examples above that saving makes all the difference.

The more control you have over your money; the more control you have over your life.

Hope you enjoyed this walk down memory lane with me.

Now remember this: People first, then money, then things – Suze Orman

My motto is this: Always remember that cash is the best option. Cash is king. – Miriam Joy, author of financial freedom blog Greenbacks Magnet