november / december 2023
14 dave says
Featuring the advice of personal finance expert and best-selling author Dave Ramsey , the Dave Says column is filled with timely , relevant questions and answers taken from actual letters and calls on Ramsey ’ s radio program , The Dave Ramsey Show .
$ 15,000 BUYS A NICE USED CAR ! Dear Dave , I was recently in a car accident that totaled my car . My old car was paid for , and the insurance company is writing it off and giving me $ 15,000 . I ’ m a physical therapist who does home care treatment , so I need a reliable car for work . I ’ m debt-free , and I ’ m in the process of finishing up my emergency fund , but I can ’ t seem to find a car like my old 2014 Toyota Camry with all the accessories . My rental car is paid for by insurance until the end of the month , and I ’ ve looked at used cars at a few dealerships , but the dealers and salespeople are telling me used cars still cost the same as new ones , and that I should just finance a brand-new car . I ’ m not sure what to do . Valerie
Dear Valerie , Asking a new car dealer if you need a new car is like asking a dog if it ’ s hungry . The answer ’ s always going to be yes .
The smart answer , though , is this : If you ’ ve got a $ 15,000 insurance check in your hand , go buy a great , used $ 15,000 car . You may not be able to find the exact car you had before , right down to all the bells and whistles , but Toyota Camrys aren ’ t exactly rare , either . That money will get you virtually the same car — one that is very comparable in equipment , reliability , miles and overall quality to the one that was totaled .
I realize this whole thing is a big inconvenience . And you ’ re probably feeling a little pressure to make a decision . But the line you ’ re getting about used cars still costing the same as new cars is a load of crap . Used cars do not cost as much as new ones anymore . That was true for about five minutes on the back end of the pandemic , when the Mississippi River ran backwards and used cars went up in value . It was an absolute miracle !
There seems to be something in the human brain that tries to tell us we have to get an upgrade if we total a car . I want you to fight that idea , because you don ’ t need to wreck your emergency fund over something that ’ s not an emergency . Go online , and look around there without the pressure that always goes with being on a car lot .
And I ’ m just going to say this out loud : A $ 15,000 car today is a much better vehicle than anything I drove for the first 30 years of my life . The quality of used vehicles and the life left in them are so much greater than even a new car back in the day . You know that old saying , “ They don ’ t make ’ em like they used to ”? Well , thank God for that !
But a $ 15,000 pre-owned car in today ’ s world ? That ’ s a nice car !— Dave
CONTROL YOUR OWN DESTINY Dear Dave , I read where you recommend saving 15 % of your income for retirement . Should I count my employer ’ s contribution to my retirement plan as part of that 15 %? – Carlotta
Dear Carlotta , That ’ s a great question . Employer contributions do not count toward the 15 percent I recommend setting aside for retirement . It ’ s great if you work for a company that offers perks like that , but I want you putting 15 percent of your money into retirement . Whatever your company matches , whatever its pension may be , or even having a military retirement package , none of that enters the equation . I want your money in your name .
Baby Step 4 of my plan says to put 15 percent of your income into retirement accounts . The first thing you should put money into is a matching retirement account . If you ’ ve got a 401 ( k ), a Roth 401 ( k ) or a 403 ( b ) and your employer offers a match , you should do that up to the match before anything else .
Let ’ s say your employer will match three percent . Since the goal is 15 percent , that still leaves you with some work to do . You ’ ve got three percent of your own money already going into retirement , so then you could look at a Roth IRA . If the Roth , plus what you invested previously to get the match doesn ’ t equal 15 percent , then you could look at a 403 ( b ), or go back to your 401 ( k ) to hit the 15 percent mark .
And remember , if you ’ re going to reach your retirement goals , you can ’ t do it alone . King Solomon , one of the wisest men who ever lived , wrote : “ Where there is no counsel , the people fall ; But in the multitude of counselors there is safety ” ( Proverbs 11:14 NKJV ). That ’ s why you need a quality financial advisor — one with the heart of a teacher — to help you navigate complicated financial issues , and guide you toward the kind of retirement you want .
Do you see what I ’ m saying here , Carlotta ? I want you — not the company you work for — to control your financial destiny . I want you to be able to retire with dignity , and enjoy life after working hard and saving . The responsibility for making that happens falls to you ! — Dave