So the average transaction price for a new vehicle is just shy of $48000. It blows my mind that people are buying such expensive vehicles and then complaining they can’t afford them. We bought a new vehicle 3 months ago and its price is only half that amount. Yet it comfortably seats two adults and two kids.

There are plenty of vehicles for sale under $30k. But the people are choosing not to buy them. 🤷‍♂️

With a 0.03% difference, it doesn’t make a lot of difference. That being said, it depends on your financial situation. Some things to consider:

• Repaying the loan early or investing the money into cds such that the cash flow from the cds matches the cash flow to the loan repayment is almost equivalent. In the corporate world, this would probably even qualify for accounting defeasance, which would allow you to keep the debt but removing it from your balance sheet. This is just an illustration of how accounting wise, both situations are pretty equivalent
• keeping the loan outstanding and the cash invested vs repaying early gives you option. If you do the former, you always have the options to do the latter later. Whereas if you repay the loan early, it is a definitive action. So there is an advantage to not repay early. You can always wait and see. If you invested in bonds instead of CDs, you could even potentially benefit from movements in interest rates.
• your return on investments might be 5% at your current level of assets, but your marginal return might be different. As an example, someone with only 10k to invest might not be able to bear much risk and only be limited to bonds. 100k and it opens the door to a diversified portfolio of stocks and bonds. At 1M they are qualified investors and have access to more options. So even though your whole portfolio might give 5% return now, every dollar you add on top opens the door for potentially more returns. If you use money to repay loans, you are shaving off the dollars that would have brought you the highest expected marginal return.

Agreed, cash advance is generally bad. I have thought about doing it in the past for obtaining foreign currency when travelling abroad and needing to pay cash.

Yes, you get very high interest, but overall, if you compare with alternatives:

• withdraw $1000 using a debit card, you get the standard 3% fee with most banks, end up paying $30 of fees
• withdraw $1000 using a travel credit card that waives foreign currency exchange fees, and pay it back immediately. Maybe the transaction posts within 3 days and you pay 3 days worth of 30% interest. That is still only about $2 or $3 worth of interest depending on their day count convention. Better than the first option.
• exchange cash at a foreign currency kiosk: ouch. Fees are extremely high.

I think the travel credit cards that waive the foreign transaction fee still apply it for cash advance? In the grand scheme of things it is not a huge difference

If you know about finance, you realize a lot of what he says is dumb. However, if you consider his audience, it makes more sense. According to the S&P Global FinLit Survey, only 57% of Americans can answer at least 3 out of 5 basic financial literacy questions (other countries range from 13% to 71%). Dave Ramsey is targeting people who are not financially literate and need very simple rules.

For example: He says to avoid debt, when we know debt can sometimes be good or bad. But for someone who doesn’t grasp the concept of interest rate in the first place, the simple rule of avoiding debt works for them. It is simple.

Kinda like when you learn that the square of a number is always positive. Then you learn about ‘i’ in the next grade. And so forth. Dave targets the people who are still in the 1st grade of financial class, and opinions may differ but arguably he does a pretty good job if his students are learning something useful?

Excellent ! This is the quality content this community needs.

Note on interest: if you use the “cash advance” feature, and withdraw cash with a credit card, interest will accrue from the first day.

On credit cards not being for everyone: I like to see it as a metaphorical Stanford marshmallow experiment. If you belong to the group who would would eat the first marshmallow right away, credit cards are not for you.

Credit cards are objectively better than debit cards if you can play the game right. They have better protection, cash back, etc… But they do have traps, and you have to be the type of person who can avoid those traps. They are designed to make you want to spend more. Examples: no interest for the first 18 months on some, cash back on most, some are even made of metal and shiny which boosts your ego when you pay at the cash register.

Also this most is mostly relevant for the US, probably Canada and a few other countries. Rules might differ elsewhere.

Once the property is fully depreciated, the trick is to do a 1031 exchange to buy a new one, and then you can depreciate the new one.

We use some sort of holistic approach. We don’t have specific envelopes or accounts for saving. We do have specific accounts for asset allocation although it’s not relevant for budgeting.

1. sometimes in January, I look at our yearly income, input that through a model along with other things such as discount rate, net worth etc. The model shows us the projected time it will take to reach the table flipping point* (TFP) based on what we decide to spend.
2. Generally, as with most people, income increases over the years as our career progresses so we usually have three options: increase spending and keep the TFP the same, keep spending the same and reach TFP sooner, or a mix in between. I show that to my wife and we decide which option we want.
3. We now have a target spending for the year. I allocate it into categories in our budgeting app. I try to predict bills based on previous years. For example I try to account for likely increases in housing, etc.
4. every couple months, I look back and adjust the categories based on actual spending. Reallocate between under budget categories and over budget categories. I look at the ratio year-to-date spending / year-to-date projected spending. It generally fluctuates between 90% and 110%, because actual expenses are not linear throughout the year. Vacations are discrete events for instance. If it goes over 110%, we start slowing down on lifestyle. Maybe eat out slightly less, etc.
5. next year, repeat the process

With practical numbers: in 2023 for instance, we set our target spending to about 25% - 30% of our income at the time. Money comes in, and as long as we control what money goes out, the rest is bound to stay saved.

• Table flipping point: the point in time at which the amount of income provided from your portfolio becomes equal to the amount you are spending. From this point in time you have the constant option of flipping the table in your boss’s face, say I quit, and live from your investments from now on. It is usually called early retirement, but I don’t like that word because it assumes that you plan to retire when you reach it. Table flipping point means you keep working, but you do it because you enjoy your work, not because you need the money. You don’t have to take crap from your boss, you don’t have to worry about AI replacing you, etc…

I started wearing ear plugs and an eye mask every day. Eventually I got so used to it to the point that 1) it feels comfortable and 2) my body associates those things with sleep.

When on a plane I just put the ear plugs and eye mask on, and my brain just knows it’s sleep time.

Also, not all neck pillows are created equal. I found the biggest factor is the pillow having straps to secure it to the head rest. It will do the work of holding your head and you won’t drift sideways as you fall asleep.

Vegemite