Warm up your keyboards...Dave Ramsey

It really all comes down to what car you had previously and what you get for your Prius when you sell it and trade it in. Those people that bought their Prius two years ago are getting awesome money on resale. So actually the Prius could be cheaper to own by a longshot in many cases. For me I went from 26 cents a mile to 6 cents a mile on gas. If my resale is even decent, I'll be fine.

 

i think the problem is one of 2 things.....people are generally uneducated as far as the prius is concerned OR they are die hard american made vehicle backers. i can understand both positions so have to consider the source in reading this kind of commentary. as i have said before, we bought our prius because it was time for a new vehicle and the prius seemed like a really good option. i just received our 3rd shell gas card bill since we bought the prius and we are consistently saving half of what our car payment is on the prius on the gas savings......tell me how we could have done that with the hybrid malibu that we were considering. we couldnt wait for the stats to come out on it and were just blown away when they were the same as our 2002 buick lesabre. i dont know if this would be the right thread to tell a story but i had a very interesting phone conversation with a local car dealer who everyone in the st louis metro dealer would recognize.....dave sinclair. i got tired of his foreign car bashing and emailed him my thoughts. lo and behold he called me!! HEHE

 

if "Becoming Debt Free" is the goal, then buying ANY new car works against that goal.

 

I didn't see Dave mention a Prius specifically in the article, I think he was talking Hybrids in general. Some have got their panty's in a wad as if the Prius is the only Hybrid.

 

I understand but the comment was taken off his website and the radio show, it wasn't like he made a post here. I heard him when he was talking about it on air.

 

Right ... I guess he's talking about the hybrid Lexus LS 600 ... 450ish horsepower / 0-60 time in 5 seconds. If you believe that he's not talking in big part about the Prius ... the hybrid outnumbering all others, I've got just the bridge for YOU. No, the reason Mr. Ramsey speaks in a nebulous manner about general hybrids is obvious.

Nope. It's evident that poor Mr. Ramsey is a 2nd cousin to Mr. Spinella ... busy pumping out uninformed-dumb data for an unknown reason. The only thing dumber?

Simple! Next Mr. Ramsey will tell us how dumb the major airlines are. You see, THEY are all dumping THEIR gas guzzlers airships for super efficient models that now roll off the assembly line. Poor slobs at Delta, Alaska, United et al ... so sad ... if they'd only listen to Ramsey's pearls of wisdom . . .



.

 

common sense dictates as time goes by you should want to own the most fuel efficient
car possible. only an idiot would brag about a car that they own guzzles gas and they
like it that way.

as for saving money... i agree with others here that buying a new car is not the best
way to save more money when you can buy one 2-3 years old and save a bundle and
maybe still have some warranty left.

i found the article to be shortsighted and silly... but look at the intended audience
and maybe it was relevant for them, "today".

 

This is the conventional wisdom, but in my first car buying experience this past year I could not find a way to make it work. That's why I ended up just buying a new Prius. Looking at used Corollas, Civics, and Prii I found that they all fell into one of two categories...

1) If it had low mileage it was virtually the same price as a new one - no 30% drop in value immediately after driving off the lot, apparently. A quick check in my area shows Corollas with 40K miles going for about $16,000 - same as MSRP on a new base model.

2) If the price was significantly lower it was because someone had already run up at least 90K miles on it. Looking for used Prii at the time, I couldn't even find one with less than 120K miles. To me, that just means higher maintenance costs and having to buy another car just a few years later.

I think that you can save a bundle buying 2-years-used, but maybe only on vehicles that don't have a reputation for quality like Toyota and Honda. And then that kind of defeats the purpose of finding a reliable used car, doesn't it?

Tim

 

buy a prius if you want it,and if they foreclose on your house you can always live at a motel6

 

often it makes no sense getting a prius. Even though I own one, the math certainly doesnt work to trade or get rid of my subaru to replace it with a prius. Dave Ramsey is right.

There's nothing wrong with being brand or product loyal, but some people on this site take it to the extreme and can't even see the truth when it's layed out in front of them.

The prius may be a cool car, but it's not the be all and end all of vehicles - nor is its mileage (though admirable) so stunningly amazing that it is some sort of "magic bullet".

come on people.

 

Well said.

While I agree with you that hybrids shouldn't be singled out, I think that folk like Mr. Ramsey often focus on them because of the perception that "buying one will save you money." This was something that I saw right after I got mine, all of a sudden people I know who were/are feeling the crunch of higher gas prices were talking to me about getting a hybrid.

Maybe I'm just dense, but it took me a while to realize that they weren't just being curious or even "copycats", but rather that they really hadn't been through any analysis at all and were having a knee-jerk reaction based on popular misconceptions and myths. Those misconceptions and myths boil down to "you save money by driving a hybrid" because they "pay for themselves in gas savings."

Those knee-jerk reactions are part of what's fueling the current demand spike.

Sorry if I'm preaching at the choir on this one.

Yes, there certainly are.

Most of these are intangible "wants" rather than "needs"; you're using phrases like "you don't like", "you give a crap", etc. I don't think that makes them invalid, but if you're really going to run a cost/benefit analysis, they need to be labeled properly. In a really honest and accurate analysis, "wants" always fall lower on the pecking order than "needs" do.

People who are having difficulty with gas prices as they are have a need to reduce their automobile expense. This need is not likely going to be met by purchasing a hybrid, as at best doing so is likely to leave their automobile expense unchanged. I know this case well, as I'm in it, but I accept and can absorb the expense; that enabled me to follow my wants and make the choice I did about where I was going to spend my money.

However, I can't bring myself to generalize my situation and say that the blanket advice should be that everyone should "go out and buy a hybrid as soon as they can". That's as irresponsible as what Mr. Ramsey did. For the record, I don't believe that anyone is taking this extreme position, I'm just using the extreme contrast to Mr. Ramsey's position for illustration.

For an increasing number of people, the choice I made isn't an option. These people can't afford the cost of operating their current vehicle due to various other financial pressures (gas prices, mortgage payments, etc.). Buying a hybrid is out the question for these people; they can't afford what they've got, how're they going to afford a new car? Their only choice is to directly address their need by reducing their overall automobile expense (car payment + gas + maintenance + insurance + etc.) A new hybrid likely does not do this because of the "car payment" component; again, for me, that was the equalizer that made the cost of my old car about the same as the cost of my Prius.

This was one of the reasons that I chose the Prius. My choice was to spend my money with the company who had the best current (emphasis on that last word) solution on the market. My reasoning was that I was supporting the effort and hopefully eventually lowering the cost to the point where the vehicle is more accessible to more people. (OK, there also a component associated with spending as little with big oil as I could.)

People with various financial problems (how many mortgage foreclosures are there in your neighborhood?) may not have the luxury of choice that I had. For them, there does need to be an antidote to myths and misconceptions about hybrids being “money saving cars”.

Oh how true this is. I'm really not trying to defend Mr. Ramsey, however the "blanket dismissal" street is a two-way affair. He shouldn't have dismissed hybrids, but we shouldn't dismiss him; at least not until the technology that we all enjoy so much is much more generally accessible.

Unfortunately, I don't see that happening soon enough.

 

dwdean, nice post. Whether a Prius is financially wise decision is based on many assumptions which can make it go either way.

Eg.
1) Prius or Camry: Both cost about the same so gas saving makes the Prius a better financial choice

2) Prius or Fit:Much larger price of Prius makes it likely cost more over the long run.

Of course that's assuming gas stays at around $4 a gallon. If gas goes up to $8 it changes things as it does if gas goes back down to $2.50.

I really don't see gas in the next 10 years going that much higher once adjusted for inflation and declining American dollar - however, if I was sure about that I would short on oil and gas stock. The future is fuzzy.

 

Thanks Tweev.

Unfortunately, I don't know anyone whose crystal ball is in working order. The best any of us can do is evaluate where things currently are, take a SWAG at where we think they're going to go, and then plan accordingly. Of course the best plans always have contingencies in them.

If people can swing it, I hope that their plans include hybrids.

Petroleum futures are a different proposition (though I don't think I'd date a short position), and honestly only part of the problem. At some point, this all becomes circular. The key is going to be breaking that cycle without bringing the whole mess down on our heads.

 

EXCELLENT post dwdean! I like the part about looking at each situation as that is where I fall in, I average driving about 5,000 miles per year. I would like to have a Prius to save on the gas and not have to spend anymore to the oil companies than I have to BUT, when I see where the dealers are gouging to sell the Prius like they are versus the low number of miles I drive per year it just doesn't make any sense for me to buy one. Maybe in a little while when things calm down and the number of hybrids are a little more available I will make the move. I have been looking at the Civic Hybrids buy would really prefer the Prius. If I had to buy today it would be the Civic as the dealers in my area aren't marking them over MSRP.

Also, I have an 04 model with around 30k miles on it and I will have to take a ripping on it if I sell it or trade it. Like you said, each situation is different.

 

Personally, I bought the Prius because I liked the vehicle and the better fuel economy. I can afford to buy what I want and I did. I don't have to justify my decision to Dave Ramsey or to anyone else for that matter. And I'm not so paranoid about what anyone else thinks of me or my Prius that I have to start writing protest letters to someone that has a different opinion than I do.

 

I guess I'll take up for Dave since I have been through his 13 week "Financial Peace University", read all of his books, attended a live seminar, and talked to him personally during a book signing. First though I have to admit I'm not one that holds his opinion on high with cult like reverence. His basic points are valid but I disagree with his methodology.

First some background. Dave Ramsey is a financial planner that has a talk radio show, TV show, and multiple best selling books. However, as he readily admits his methods are not new, they are common sense and what your grandmother would tell you.

His basic plan is to live on less than you make and avoid all debt except a 15 year fixed rate mortgage. His steps are as follows and are to be done in order:

1. Save $1,000 for an emergency fund
2. Pay off all debt except your mortgage
3. Save 3-6 months expenses in your emergency fund
4. Invest 15% for retirement
5. Start saving for kids college
6. Pay off home early
7. Invest and give

Dave has almost an obsessive hatred of new cars and auto loans. His radio show could be called the "Sell Your Car Show" because that is almost always his first advice to any caller. Hybrids are not being singled out here, any car that requires a loan is forbidden in the Dave Ramsey plan. He recommends callers that are paycheck to paycheck to swallow their pride and buy a cheap $1000 car to drive until they get their finances sorted out. He recommend that the financially sound buy a 3-5 year old car that they can pay cash for and often specifically recommends Toyota's and Honda's.

Wow, there are a whole lot of people in denial here. The Prius is a nice car but, as he said, no new hybrid will ever cost less to operate than a good $10,000 used car. Something like a Corolla, Camry or Accord. I challenge anyone here to give a reasonable scenario were a $25K hybrid will cost less to operate than a $10k used Corolla.

 

Thanks, though credit for that particular point really does belong to the good Dr. Fusco. I just saw an opportunity to expand on what he said and introduce that concept of availability/accessibility.