As you may already know, we are huge Dave Ramsey fans. When we got married in July of 2008, a dear friend gave us a Financial Peace University Kit as a wedding present. It was just the right tool at just the right time to get Scott and I started off well as a married couple. We needed to do things differently managing our money together than either of us did as single people. We set our sights on getting out of debt and we did so in 25 months.
Side note: When I tell people I'm a big fan of Dave Ramsey's and his "program", I get mixed reviews at best. A whole lot of people are skeptical of how anyone can live without credit in this day and age. But when I tell them we paid off $75,000 in debt in 25 months, that gets their attention.
I think this is another one of those times that gets people's attention. Not a lot of people pay cash for cars these days. When we said we were paying cash, the finance guy at the dealership we bought from on Monday looked at us like we were weird. (I know...we ARE weird.) He gave us a speech about how credit is important and how we can't live without it. He continued in his speech to tell us the best ways to go about getting credit and maintaining it. Scott and I both did our best to not preach at the guy about how wrong he was. I did say once, "Credit is only important if you're going to borrow money, would you agree?" Finance-dude glazed over my question.
Can you pay cash for a car? Absolutely. Can you pay cash for a car TOMORROW? Probably not. It does take time to save. Instead of financing a car and paying a dealer or finance company interest money, we save the money for a few years and keep the interest money. Admittedly, it is unCOOTH to talk about money. Good thing I'm not too concerned with cooth-ness. I want to talk numbers. Not to brag, although I am proud of our accomplishment. I want to talk numbers so other people reading this story can know they can do it too. It isn't impossible.
Sorry...I'm getting ahead of myself. 2008, $75k in debt. 2010, debt free. Even while we were getting out of debt, we put about $200/month in a car fund. Some months we spent most of that on oil changes, car repairs, taxes, inspections, etc. Other months we didn't spend any of it and therefore it got added to our car savings fund. About a year after we got out of debt, we doubled our car savings to $400/month. We were anticipating needing a new car sooner than later since I was pregnant with our second child. My 2002 Honda Civic was a wee bit cramped for two rear-facing car seats in the back seat and two tallish adults in the front.
We started our car search last week, with a Scott-set budget of $12-15,000. I'm the spender of the family. If it were up to just me, I likely would've allowed myself to buy a Corvette. Scott's gracious parents came down from Virginia and babysat our kids for two straight days while we drove around town and test drove cars and talked to (car) dealers. "Talked to dealers" sounded sketch. Had to throw in the word car to redeem that sentence... My gracious parents watched the munchkins on car-buying-day. (Did you know it takes forever at a dealership to buy a car, even if you pay cash?) We were mostly looking at the Subaru Outback, Hyundai Sante Fe, Honda CR-V or Pilot. Basically, some kind of wagon or a small SUV. What we ended up buying was a ginormous SUV.
A 2006 Jeep Commander. I had never even heard of this type of Jeep before last weekend. It met our requirements though: SPACE for two rear-facing car seats without the front seat passengers kissing the windshield, trunk space for multiple strollers, a price within our budget. The dealer advertised it for $13,600. We negotiated them down a little bit so that after taxes, tags, and fees, we paid exactly $13,600. I don't know about you, but I've never, ever written a check that large before. Of course I screwed it up the first time because my hand was shaking. Due to massive amounts of concentration, and sticking my tongue out a little to the corner of my mouth (go ahead and try it!), I was able to write the check correctly on the second try.
Badaboom, badabing, Bettyboop, WE BOUGHT A CAR! And paid cash for it! Holy freakin' moly.
Our car fund is now back to zero. We'll go back to saving $400/month, minus car maintenance, and hopefully buy Scott a replacement vehicle in about four years.
So...what do you think? Are you a believer yet in the Dave Ramsey system? Or do you still think we're nuts??
ps--fun video about Dave Ramsey's idea of paying cash for cars...