Advice from Nashville's Financial Guru Dave Ramsey
Dave Says
By Dave Ramsey
Author of Financial Peace and The Total Money Makeover
5/28/2006
"Fix old car or buy a new one?"
Dear Dave,
I just finished paying off my car, a 2000 sedan at $250 a month, and now I’m having problems with it. A computer chip shorted out last week, and now I’m having transmission problems. My friends have looked the car over and tell me it’s falling apart. They say I should buy another one. Should I just fix the one I have instead?
Kathy
Dear Kathy,
First, instead of just friends I’d have a real mechanic take a look at this vehicle. Your friends probably aren’t trained mechanics and are encouraging you to do something silly like THEY might do – running out to buy a new car just because the radio knob falls off in the old one.
This car has still got several good years left in it. If your options are go into debt or fix this car repeatedly – fix it repeatedly! You just freed up a big chunk of cash when you finally finished paying for the car. If you allocate even half that amount each month toward maintenance and upkeep, that’s $1500 a year and more than enough to keep a good car up and running.
Fix the car, Kathy. Don’t go back into debt!
- Dave
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