Originally Posted by Out back
Originally Posted by UncleHuck

I don't think I am smarter than Dave Ramsey, but I don't understand his recommendation to pay off or avoid zero percent or low percent loans, and instead buying or moving from your savings. I use other people's money as much as I can. I could pay off both our vehicles if I wanted to do so, but both loans are at 1.6%. The worst account I have right now is double that return year to date, even with the lousy market performance this year.

I know a couple who had a Kubota loan at zero percent, and they took his recommendation to get rid of the payment. Pulled $15,000 out of savings to eliminate a $300 payment. That makes no sense to me, as the payoff was the same as the sum of the payments.

Another guy I know wanted a new truck, not a used truck. To avoid dealer/Ford financing at ZERO percent, he took over $50,000 from savings to buy the truck. Said he couldn't stand the thought of having a payment. Just thinking about him doing that made me a little nauseous, but to each their own.

Other things he recommends, like paying off credit cards and avoiding high interest loans are spot on.

Dave's philosophy is to avoid debt. His idea is that any debt is bad debt. I sort of agree in that line of thinking, but I'm with you on zero interest loans.
I can get zero interest on practically anything from John deere and I take advantage of that. Even if my money is only earning 1% that's 1% that I'm making instead of spending.
So I can't see the downside of zero interest loans, unless you're just buying something you don't need.



Avoiding debt is the thing.
He speaks against 0% loans to people that don't have the money to buy that item in the first place.
It would be foolish if you had money to buy an item to take the money out of any interest making account and not go to a 0% loan.
Always be able to pay it off though.
He is trying to get people from gaining another payment on something they don't have the money to buy at the time.

"Hate is an acid that does more damage to the vessel in which it is stored, than the victim on which it is poured."

"Ego is the anesthesia that deadens the pain of stupidity."