[JSH]

Originally Posted by Isaac Zachary

Going by the Dave Ramsey's budget (whoever that is, I just found his budget to be interesting when googling) a person should try to spend no more than 25% of income on housing and 10% on transportation. Others say to pay no more than 10% on your car payment and no more than 20% total on total transportation.

Dave Ramsey is a financial adviser popular in many evangelical churches. You could boil down his advice to two basic things - live within your means and debt is bad. ( Prov 22:7: “The rich rule over the poor, and the borrower is the slave of the lender.”) My wife and I used a modified version of his plan to get out of debt in our late 20's while my wife was also going to university full time. However, we never went full Dave cult - we kept our credit cards (we haven't paid a dime of interest since my college days) and we didn't sell our car even though he directly told me to sell it at a book signing.

Dave also says to give 10% off the top to your church so if you aren't one to do that you have 10% extra in your budget.

Originally Posted by Isaac Zachary

Per hour for 40 hours a week for 48 work weeks a year

A month off a year? Generally people are either paid for vacation and holidays or they don't take them.

Originally Posted by Isaac Zachary

Cheapest rent right now that I can find in area:
$1,500 per month (does not include utilities).

Which is the core of the problem that we have discussed before. Your area has gentrified and priced you and anyone making a median income out of it. There are places you could own a 1200 sq ft house for 1/2 of that. Look in the rust belt for reasonably priced homes.

https://www.zillow.com/homedetails/7...67224270_zpid/

Originally Posted by Isaac Zachary

But what if I wait, say, another 5 years after paying off the Avalon and save up $10,000 in that time by saving what I would have put in payments. The Avalon would be worth even less, maybe $5,000 or less. But I'd have that plus the $10,000 I saved. If I put $15,000 down on a 5 year old Avalon then, maybe they'd be a little cheaper than they are now and payments would be about the same as now, or I'd be making a little more then????

Sounds like a plan. You have a car, it is running well, why change anything - especially in today's horrible car market? Drive the Avalon, save some money for the next car or to replace the battery in another 7-8 years.

Personally I drove my VW TDI that Dave Ramsey told me to sell (at a large loss) for 10 years / 235K miles. The car was paid off after 5 years, I saved the money I would have spent on a payment and bought a 2009 Prius with cash.

Originally Posted by Isaac Zachary

Many people share their domicile with their spouse and children.

Yes, and it is expected that every adult in the family will work. Not too long ago the children were expected to work as well. I got my first job at 10 and in the 35 years since then I've had at least a part-time job all but 3 years.

Originally Posted by Isaac Zachary

For me, I put a monthly budget on how much I spend on transportation and try not to pass that budget. If I were to throw a new car or one that's 5 years-old right now, I'd blow that budget quite quickly, unless it were perhaps a small economy car. So I'm thinking I probably should keep my eyes on small economy cars or hope the economy will change for the better soon.

How is the economy going to change for the better? Unemployment is 3.5% - that is the reason that places like Taco Bell are paying people $18 an hour. Unemployment has only been lower than 3.5% for 1 month since the 60s.

Yes, inflation is high but wages - especially entry level wages are WAY up. They go hand in hand. In many parts of the country you can show up at a business and get hired on the spot. I was sitting at the bar in one of our favorite taphouses and the guy next to me told the bartender he was looking for work. The owner came out and talked to him on the spot. $20 an hour to start plus an even share of the tips - he could start the next day full-time or part-time. The guy said no thanks - he was looking for more. (This place serves normal pub food)

Originally Posted by Isaac Zachary

But even then, the question is, can a person really save money by avoiding old cars and sticking with a monthly payment?

Nobody is saying that having a continuous car payment is going to save money. What I'm saying (and redpoint says below) is that there comes a point where it is cheaper to find a new car than to keep dumping money into an old car.

When we first got married and in the early years my wife had the newer / reliable car I drove old junkers. In our first 6 years of marriage I went through 5 cars. The newest was 12 years old when I got it the oldest was 45 years old. My wife got tired of me constantly working on junkers and finally said - "enough- we are going to forget what Dave Ramsey says and buy you a reliable car". This was the 2nd best car decision we ever made. We found a 3 year old Prius off lease, bought it with a 5 year loan that we paid off in 3 and then kept it for 10 years. In that 10 years the only work I did on it that wasn't in the maintenance schedule was to change the 3-way valve for the coolant vacuum tank and replace the lead acid starting battery. All in that car cost us $270 a month (purchase, insurance, maintenance, fuel)

Originally Posted by redpoint5

There's some point in the vehicle depreciation curve where an older car just costs more to run than a newer vehicle. The very old car market is where people who can't get credit pay cash for a vehicle. A little bit newer car that would need to be financed eliminates those cash buyers and narrows the buying competition.

Personally, I wouldn't buy a vehicle more than about a decade old unless it had some nostalgic value or otherwise was priced well below market price. The sweet spot for me is around 5 years old where over half the depreciation has already occurred, but 3/4 of trouble-free life remains.

Excellent advice. To me the sweet spot is to buy a 3 year old car off lease and then keep it until it is 10 years old. Not the cheapest way to own a vehicle but I'm now at a point in life I don't have to focus on what is cheapest anymore.