Dave Ramsey Fall 2014

Buying new versus used, budgeting money for children and entertainment spending.

Dave Ramsey is a personal money management expert, popular national radio personality and the author of three New York Times best sellers:  The Total Money Makeover, Financial Peace Revisited and More Than Enough. Ramsey offers life-changing financial advice as host of a nationally syndicated radio program, The Dave Ramsey Show, which is heard by 5 million listeners each week on 500 radio stations throughout the United States.
Dave Ramsey is a personal money management expert, popular national radio personality and the author of three New York Times best sellers: The Total Money Makeover, Financial Peace Revisited and More Than Enough. Ramsey offers life-changing financial advice as host of a nationally syndicated radio program, The Dave Ramsey Show, which is heard by 5 million listeners each week on 500 radio stations throughout the United States.

Dear Dave:

What things should I buy used versus buying brand-new? — Amy

Dear Amy:

I’m afraid there’s not one good, across-the-board answer, because it all depends on where you are in your financial plan.

When it comes to cars, you should always buy good, used vehicles, unless you have a million dollars or more in the bank. New automobiles drop in value like a rock, so buy smart and let someone else take the hit in depreciation. You don’t become wealthy by investing in things that go the wrong way.

If you’re talking about clothing and you’re broke or trying to get out of debt, there’s absolutely nothing wrong with shopping consignment stores—especially for kids. They wear things three times, and then they’ve outgrown them. “Experienced” clothing is a great buy for adults too.

Of course, there are other things, but here’s the deal. As your money situation improves, you’ll be able to buy more new things. The price of “new” will become a smaller and smaller percentage of your financial world.

But when you’re broke, deep in debt or don’t have a big income, the money you spend on anything is a big percentage. At times like this, a decent $50 washer or dryer in the classifieds can be the best deal on the planet! — Dave


Dear Dave:

We have three children, ages 15, 10 and 9. With our oldest starting high school, we’re spending lots more money on her than the others. It’s almost like she’s the favorite child. Should we spend more on the other kids to make things seem a little more fair? — Julie

Dear Julie:

I don’t think so. In five or six years, it’ll be their turn and you guys will be spending that kind of money on them too. That’s the way it is with teens.

Here’s a question for you. When the 15-year-old is 23, and you’re buying prom dresses and all the other teenage stuff for the younger kids, are you going to turn around and give the older child extra money just to “even things up”? Of course not—that would be silly. She had her moment in the sun, and now it’s their turn.

Just make sure you hug on all of them equally, and let them know you love them! — Dave


Dear Dave:

In terms of a family’s financial plan, when is it OK to purchase something like NFL season tickets? Is this the kind of thing that should wait until you’re debt-free and can afford to pay cash for them? — Greg

Dear Greg:

Absolutely, you should wait until you’re debt-free and can pay cash. That kind of thing is a prime example of a luxury purchase.

I’m an NFL season ticket holder for the Tennessee Titans. But I’ve been debt-free for years, and my family’s financial future is very secure. Whether the Titans win or lose, or whether I watch the games in person or in front of the television, has no impact on my family’s security. However, if you’re sitting there with credit card debt, a car payment and living paycheck to paycheck, you’ve got no business buying season tickets. Get yourself out of debt, build an emergency fund and make sure your family is taken care of first. Have some fun later.

Remember, this kind of thing is entertainment. I know a lot of silly people out there act like whoever wins a football game is a matter of life and death, but it’s just a game. Your life and your financial future are not games, and they’re not things to be taken lightly. First things first, Greg. There will be plenty of time for that kind of fun when you can afford it! — Dave