Three Purchases Dave Ramsey Advises Against - and Two He Finds Justifiable
In the world of personal finance, Dave Ramsey's advice is highly sought after. Here, we delve into his recommendations regarding car and home purchases.
When it comes to used vehicles, certified pre-owned cars are a favourable option. These cars have undergone thorough examinations and come with some warranties, providing peace of mind for potential buyers. Ramsey also advises arranging a pre-purchase evaluation for these vehicles to ensure their quality.
One of the key benefits of buying used cars is the avoidance of high initial insurance costs. Unlike new cars, used cars have already taken a depreciation hit, which can significantly lower insurance premiums. Ramsey further advises purchasing used cars entirely with cash to steer clear of added debt.
In contrast, financing a new car requires purchasing full coverage insurance, which can increase premiums. Furthermore, Ramsey warns against purchasing new cars with loan payments due to the added debt and the depreciation in value that new cars experience.
Extended warranties, while often marketed as a safety net, are not recommended by Ramsey. He states that they are not worth the cost due to low chances of use and limited coverage. He also cautions that the costs can add up quickly if purchased frequently.
In the realm of home maintenance, Ramsey recommends spending on preventive measures, as long as the costs are budgeted and not financed. Neglecting basic home upkeep can lead to more expensive repairs in the long run.
Ramsey's advice on real estate investments is clear: avoid timeshares. Timeshares come with additional fees such as annual dues, maintenance fees, and utilities, and they lack investment value. Moreover, getting out of a timeshare can be difficult, making them a risky investment.
Lastly, Ramsey advises avoiding payday loans, car title loans, and high-interest credit card debt to maintain a debt-free lifestyle. These types of loans can trap individuals in a cycle of debt, making it difficult to achieve financial freedom.
In summary, Dave Ramsey's advice on car and home purchases emphasises the importance of budgeting, avoiding debt, and making informed decisions. By following his guidance, individuals can make wise choices that lead to a more financially secure future.
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