Should I Finance a Car and Then Live in It?

Summary

Podcast Summary: The Ramsey Show Highlights – "Should I Finance a Car and Then Live in It?"

Release Date: April 24, 2025
Host: Ramsey Network featuring Dave Ramsey and Chris Hogan

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Introduction

In this episode of The Ramsey Show Highlights, a concerned caller seeks advice on managing finances as a new immigrant in the United States. The caller, recently arrived in West Haven, Connecticut, is grappling with low income and contemplating drastic measures to improve his financial situation, including the idea of living in an SUV to save on rent. Hosting the conversation are financial experts Dave Ramsey and Chris Hogan, who provide insightful guidance to help the caller navigate his financial challenges without falling into debt.

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Caller’s Financial Dilemma

At the outset (00:02), the caller explains his predicament:

Caller ([00:02]): "I have found myself like in 14 months that I've been to say, United States. I've been into this loop and my income is very low and I can't seem to bring it any higher because I don't have any experience. I'm a server at a restaurant. Like I make about 3k per month. So I was thinking like, should I avoid rent and then buy like an SUV and I kind of live in it until I save up some money and get some skills or is it a stupid idea?"

He continues to detail his living situation:

Caller ([00:47]): "Renting apartment is what, it's about like 650 per month. It's not much. But my income is also very low."

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Expert Advice: Avoiding Debt and Smart Financial Planning

Dave Ramsey begins by assessing the caller's situation:

Dave Ramsey ([00:56]): "Okay. No, 650 sounds very reasonable."

Chris Hogan adds:

Chris Hogan ([00:59]): "Yeah."

Ramsey probes further to understand the caller's current living arrangements and financial obligations.

The caller reveals he has saved $4,000 intended for a car down payment and is considering using it to finance a vehicle, potentially using the car payment to cover rent.

Caller ([01:06]): "...should be stuck in this situation for like very long. That's what I'm thinking."

Ramsey warns against the allure of financing a car:

Dave Ramsey ([01:34]): "Don't fall for the American trap of debt. No country in the world makes it so easy and so attractive to take on payments like the US."

Chris Hogan reinforces this stance, sharing personal experiences:

Chris Hogan ([02:50]): "Anybody who tells you otherwise isn't telling you the truth. I was a dean of students at a law school and I drove a $3,500 truck."

Hogan emphasizes the importance of focusing on education and minimizing expenses:

Chris Hogan ([04:00]): "Go buy yourself a $5,000 car, man. It's going to be an old Camry. Find yourself an old truck. It's not going to be sexy, it's not going to look great. It will get you to and from."

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Strategies for Financial Stability

Ramsey and Hogan advocate for purchasing a reliable, used vehicle with cash rather than financing:

Dave Ramsey ([05:15]): "Instead of seeing that as a down payment, see it as this is my car budget right now, total."

They suggest the caller save an additional $2,000 over the next three months to increase his car budget to $6,000, allowing for a more reliable purchase.

Dave Ramsey ([05:35]): "You might. Let's say you could save up another $2,000 over the next three months."

The experts highlight the benefits of owning a depreciating asset outright:

Dave Ramsey ([06:03]): "The moment you drive it off the lot, it has lost money. And every day it loses money, it just becomes worth less and less and less, but your payment never changes."

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Emphasizing Education and Resource Utilization

Chris Hogan underscores the importance of leveraging available resources to minimize expenses during education:

Chris Hogan ([03:26]): "There are students in the United States who borrow everything and live high on the hog for four years and then they end up calling this show because they have run their life into the ground."

Ramsey recommends educational resources to empower the caller with financial management skills:

Dave Ramsey ([05:26]): "I'm going to send you, we're going to send you Financial Peace University."

He also suggests reading his book for comprehensive guidance on car loans and financial planning:

Dave Ramsey ([06:33]): "Read the car loans chapter specifically and I walk you through the right way to buy a car."

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Key Takeaways and Notable Quotes

1. Avoid Financing Unnecessary Debt:

   Dave Ramsey ([01:34]): "Don't fall for the American trap of debt."

2. Opt for Affordable, Reliable Vehicles:

   Chris Hogan ([04:00]): "Find yourself an old truck. It's not going to be sexy, it's not going to look great. It will get you to and from."

3. Leverage Financial Education Resources:

   Dave Ramsey ([05:26]): "Financial Peace University... teach them just what, what you're experiencing is how do we manage this money?"

4. Focus on Education and Minimizing Expenses:

   Chris Hogan ([03:16]): "There are millions and millions of students scratch and claw their way through and they work as waiters and then they get up in the morning and drive Uber and they live in the cheapest apartment they can safely live in."

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Conclusion

In this episode, Dave Ramsey and Chris Hogan effectively guide the caller away from the potential financial pitfalls of financing a car to alleviate his low-income situation. By emphasizing the importance of avoiding debt, making prudent financial decisions, and focusing on education, they provide a clear roadmap for achieving financial stability. The experts' compassionate advice highlights that with disciplined budgeting and strategic planning, the caller can navigate his challenges without compromising his financial future.

For listeners facing similar dilemmas, this episode serves as a valuable reminder to prioritize financial health over short-term fixes and to utilize available resources to build a secure and prosperous future.

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For more daily financial insights and advice, tune into The Ramsey Show Highlights on the Ramsey Network, available seven days a week.

Transcript

[Caller]

Brought to you by the EveryDollar app. Start budgeting for free today. I have found myself like in 14 months that I've been to say, United States. I've been into this loop and my income is very low and I can't seem to bring it any higher because I don't have any experience. I'm server at restaurant. Like I make about 3k per month. So I was thinking like, should I avoid rent and then buy like a SUV and I kind of live in it until I save up some money and get some, some, some skills or is it a stupid idea?

[Dave Ramsey]

Where are you living now?

[Caller]

West Haven, Connecticut.

[Dave Ramsey]

No, where like are you renting an apartment? Are you living with family friends?

[Caller]

Renting apartment is what, it's about like 650 per month. It's not much. But my income is also very low.

[Dave Ramsey]

Okay. No, 650 sounds very reasonable.

[Chris Hogan]

Yeah.

[Dave Ramsey]

So what's wrong with that?

[Chris Hogan]

Yeah, well how are you having trouble keeping it together?

[Dave Ramsey]

Did you take on death?

[Caller]

I have like 4k for down payment. Then yeah, I was thinking about financing one and then putting the rent on the, on the finance car. And that way I could go to school like easier and everything. But if I can, I can buy a car and be, and rent a room but I, I won't be able to save a penny. And like I would be stuck in this situation for like very long. That's what I'm thinking.

[Dave Ramsey]

Can I give you a pro tip for being a new immigrant to the States? And if you can avoid this thing, you will have such a wonderful life of opportunity. And it's this, don't fall for the American trap of debt. No country in the world makes it so easy and so attractive to take on payments like the US And I'm scared that you're already getting starry eyed going ooh, could finance a car. And they're saying they can get the payment down to $300 a month and so I might as well get a nicer newer car. Do you have any debt currently?

[Caller]

No.

[Chris Hogan]

Yeah. Please, please, please, please, please take it from two guys who've been down that road. Don't do that. I would rather see you go four years and get out of school scratching and clawing and barely making it every month. And you get out and you have a degree and you don't owe anybody anything other than having a car that is now worth 35 or 40% of what you bought it for and being stuck. You got a good deal. You live in one of the most expensive places to Live. It's very expensive. Like a cost of living in West Haven, Connecticut is very expensive. Why did you pick that place?

[Caller]

I just chose this school back there from my country and then I got accepted and I was like, okay, let's, let's try. It wasn't my plan to come here. And then I got into school for free and everything was good. But, but I'm thinking that because I've never paid rent, never worked before, never had like money to manage it and this whole thing is new for me.

[Chris Hogan]

Excellent.

[Caller]

Kind of like.

[Chris Hogan]

So let me tell you this.

[Caller]

There's a 50 on rent and it's going like away like 7k. You say 7k per year. I mean, I know it's reasonable, but.

[Chris Hogan]

650 is very good deal. But listen, there is a, there's, there's it kind of barbells, right? It kind of is an either or. There are students in the United States who borrow everything and live high on the hog for four years and then they end up calling this show because they are, have run their life into the ground. The other part of the culture that doesn't get much media play is millions and millions of students scratch and claw their way through and they, they work as waiters and then they get up in the morning and they drive Uber and they live in a crump, the cheapest apartment they can safely live in. And then they just bide their time for four years and they take advantage of the school health clinic and they take advantage of the school counseling system and they take advantage of the school gym and they keep their expenses low. So if you've free tuition in the US you're already way far ahead. Don't make it worse by borrowing money. I would much rather you're on the right path. I'm going to send you, we're going to send you Financial Peace University. And it's a class that 10 million plus people have gone through to teach them just what, what you're experiencing is how do we manage this money? Okay? And if you'll watch these lessons, it will give you a play by play on how to do it, okay? But man, you're ahead of the game. You're ahead of the game. You're ahead of the game. I know you feel like you're not. I'm telling you, you are. And you're gonna look up in four years and have a US degree, you're gonna have learned some great skills. And please don't owe anybody any money when it's over, especially not on a depreciating asset. What I mean by that is when you buy a car, the moment you drive it off the lot, it has lost money. And every day it loses money, it just becomes worth less and less and less, but your payment never changes. Okay.

[Caller]

Okay.

[Dave Ramsey]

You said you have $4,000 saved up.

[Caller]

Yes.

[Dave Ramsey]

Way to go. So instead of seeing that as a down payment, see it as this is my car budget right now, total. Right.

[Caller]

But can I get like a reliable car for 4000?

[Dave Ramsey]

Well, you might. Let's say you could. You could save up another $2,000 over the next three months. Right.

[Chris Hogan]

Right now your car budget's $6,000 and yes, absolutely, 100%.

[Dave Ramsey]

Yeah. And it's not going to be the nicest, it's not going to be anything like the new cars that they show you on the lot. But you're not driving this car for 20 years. You're going to drive it for maybe two years until you can save up and be in a better place and upgrade the car. You'll sell that one for probably what you paid for it and then upgrade with the money you have saved up. Do you see that kind of slow burn by using cash and how it slows you down to make better decisions?

[Caller]

Yes. Yes.

[Chris Hogan]

And here's the other thing. Anybody who tells you otherwise isn't telling you the truth. I was a dean of students at a law school and I drove a $3,500 truck. Cuz me and my wife trying to get out of debt and she was a professor and she drove. It was probably a $4,000 Corolla and nobody cared. They just wanted to know, are you showing up and doing a great job at your job? And so when you're young, people are like, no, dude, they won't take you seriously if you don't have this car.

[Dave Ramsey]

Dude, they don't pay your bills.

[Chris Hogan]

Show up, do a great job at school and be able to focus on school. And dude, you need, you need as little stress as possible trying to figure out a new culture, new languages, new schooling, st. You don't need to add financial stress to a bank on there. So yeah, go buy yourself a $5,000 car, man. It's going to be an old Camry. Find yourself an old truck. It's not going to be sexy, it's not going to look great. It will get you to and from.

[Dave Ramsey]

And let me advise you, get a pre purchase inspection. It's going to cost you 100, 150 bucks. It's going to be worth every penny so that you don't go, oh my gosh, I got a $5,000 car. It needs 3,000 repairs the week after I bought it. Get a pre purchase inspection from a mechanic that you trust, an independent one that can look it over and go, all right, this car is not going to have a bunch of issues. It's in solid condition. This will get you another fifty thousand, a hundred thousand miles. And that will put you in a place to then save up because you free up that payment now you can save that money and upgrading car. And I'm going to also send you my book, Breaking free from broke on top of financial peace. Read the car loans chapter specifically and I walk you through the right way to buy a car. Every single step from the payment to the research, the negotiating, all of that to give you some confidence and clarity. And the one thing you're not going to do is walk away with a payment. You're 14 months in. You're doing really?

[Chris Hogan]

Yeah. We're on your side, my man.

[Dave Ramsey]

We're rooting for you.

[Chris Hogan]

Glad you're here. Go to school and get a great degree, man.

[Dave Ramsey]

And don't be tempted by American stupidity. I know they make it look so cool, but everyone is miserable and broke and anxious and I don't want you to become that. Yeah, there's too much opportunity for you. So hang on the line. We're going to send you financial peace University and breaking free from broken. I hope you can avoid the traps that America has created for you. Create your free every dollar budget today.

[Caller]

The simplest way to budget for your life.