Jul 23

David Ramsey – Good Advice?

I just finished the paper and noticed the David Ramsey post for the day…. every time I read his advice I have my questions…and today was no different.

Today’s advice was to 1. keep an old car as opposed to replace it and 2. get rid of the all credit cards.  (The person was paying for credit cards)…

SO: here’s my thoughts on this.

1. An old car is great as long as it hasn’t reached the point that repairs are costing more than the value of the car.  Normal wear and tear on a vehicle includes tires and general maintenance – but after a while you may start having pieces break one at a time.  We had the extended warranty on our van and had to fix everything from the seatbelts to an oil leak before it reached 90,000 miles (lots more).  Once you reach issues like the transmission slipping or even the motor needing replaced it gets expensive!  To top it off who wants to break down on a deserted road in the middle of the night.  Believe me, the odds are a lot higher as your car gets older.  Personally for my son we did keep his 2001 Prius.  It needed a new hybrid battery about 2 years ago and it became debatable whether it was a good idea to keep it or not – but the cost of the battery was about $3000 and pricing the same car in a lot worse shape and more miles (and we looked everywhere) was $5000 to $6000 at that time.  My son is still driving it and will until he decides it needs more repairs than it’s worth for him. He does love that car!  He also has replaced the CV boots or something like that just recently.  (Almost 200,000 miles)

2. Credit Cards.  The person asking had cards that require a fee.  I totally agree those are not the ones to have.  I do believe that you should have at least one card though.  Debit cards have a higher fraud risk, so personally I like the protection my credit card company offers. If there is fraud, I never see the money leave my account.  Not so with a debit card.  None of my cards charge a fee, and if I noticed a fee on my card I’d immediately be closing that account.  The key to credit cards though is to pay them off fully on time!  Keep an eye on charges. Don’t charge more than you have the money for, look at it as the money coming from your account – just hasn’t debited yet.  Having a good credit rating is important.  Ramsey advised the person that wrote in that you can still get a mortgage even if you don’t have a credit rating, but he didn’t mention that your interest rate will be higher!