Avoiding Car Payments is Easier Said Than Done

By Reginald Kaigler (DEMCAD)


"Don't be a debt slave!" "Stop Being stupid!"

We've heard similar these lines from a myriad of self-help gurus. Dave Ramsey is one of the most well known financial gurus who offers people common sense advice on avoiding the dangers of debt.  And in a general sense, I agree with most of his message. Dave Ramsey is absolutely right when he states that car loans are wealth destroyers.

He advocates that most people should avoid car payments, because most people get trapped into paying on a loan that never ends.

Dave Ramey advises people to buy a cheap car and save money. You can invest it or use the money that you save to buy a better car.

But what if the cheap car isn't actually as cheap as you think? What happens when the $1,000 car turns out to be a costly nightmare?

I saw a Youtube video by Rachel Cruze in which he advises her views to buy a $1,000 car to avoid car payments. In principle, this strategy seems frugal and wise. In reality, this strategy carries risks that she and Ramey rarely mention.


What if the car dies?

My greatest concern about the cheap car strategy is reliability.

How much money you're going to waste trying to keep that cheap car running? There's a reason why the car is only $1000. Is it because the car is ugly?

Or is it because it's unreliable and a piece of junk.

A simply solution would be to take it to a mechanic and have it inspected.

Unfortunately, a mechanic is not a psychic and can't predict when the fuel pump will die. That $1000 or $2,000 car may require a significant amount of repairs. It's not uncommon for cheap cars to possess a number of mechanical failures within a short time frame. And when that happens, you'll be stuck with the repair bill.

But paying the repair bill will still be cheaper than buying $450 per month for a car that you can't afford. Unfortunately, money is not the only factor. Another major factor is employment,
Good luck holding on to a job when your car keeps dying on you. If you live in an urban area or have a lot of family in your area, you will have secondary methods of getting to work. If you car doesn't start, you can use mass transportation (in the city).

However, if you live in a rural area, the situation will be more complicated. You can't simply jump on the bus when you live in the middle of the sticks. As of 2017, I have been living in rural Kentucky for over 3 years and I can tell you that it is impossible to hold on to a job without a reliable car.

The Dave Ramsey strategy is financially sound, but it feels incomplete. Here are some things that you should keep in mind if you employ this strategy.

Easy Vehicle
Select a low cost used car that is known for being reliable, easy to work on and has a large market for parts. This will keep the cost of repairs at a reasonable level. Hook the car up to a reader and see if the codes have been recently cleared.

Good Owner
Find a private seller and take the vehicle to a mechanic. While you're at it, ask your friends if they know someone who is selling a vehicle. If you can, try to buy that old Buick from an elderly man who retired from GM. Retirees are more likely to take care of the vehicle.

Secondary Transportation
Develop a Backup plan before something goes wrong. How a way to work that doesn't involve the cheap (I mean, low cost) car. Learn the bus schedules or get the Uber app.  I recommend joining AAA. And get the premium member if you live in a rural location, because it offers 200 miles of towing.

If you're really interested in saving money, you may want to consider living close to your job site. You could even consider carpooling with family and/or friends.

Circumstances
In 2015, my piece of junk van died and I was forced to buy another vehicle. I put $1800 down on a 2004 Chevy Suburban Z71. I didn't take it to a mechanic, but I let a knowledgeable friend examine the vehicle.

After I bought the vehicle, I had a car payment of $230. But I didn't care. I pay $600 per paycheck ($1200 per month) and had the $7200 vehicle paid off in less than six months. I was able to do this, because I didn't have to pay rent. I didn't live with my parents, but I was able to avoid paying rent and utilities. I was in a very fortunate situation.

In the last two years, I have replaced a front end part, starter, front axle seal, alternator, four tires, water pump, thermostat, coolant hose, serpentine belt and front impact sensor.

I also replaced all four rotors and brakes. Some of these costs are necessary for any vehicle and others are the result of buying a vehicle with over 230,000 miles.

I prefer to avoid debt, but sometimes our circumstances limit our options.

Simply put, you have to assess your situation, add in the variables and make the best decision that you can make.

Don't buy a new car that you can't afford, but avoid buying a used car that is unreliable. Good luck finding the happy median.

When Will the Economy Collapse?

By Reginald Kaigler (DEMCAD)

Every once in awhile a stranger pops up in the comment section of my youtube channel and asks, "When will the collapse happen?" It always strikes me as a very strange question to ask given the current economic environment. After all, Rome wasn't built in one day and it didn't collapse in one day either. It was process that spanned over decades. Granted, I thought we would have entered the final phrase much sooner, but history is our best guide.

Many of the same problems that plagued the British Empire, Roman Empire and the Soviet Union are present in the current American Empire. Over-expansion, unnecessary (and damaging) wars, excessive spending, devaluation of the currency, rising poverty, over-the-top cronyism, extreme corruption in government, breakdown in law, lack of respect for leadership and decaying infrastructure are all classic signs of empire decline.

There are plenty of examples of these issues in the U.S. We currently have a record 90.6 million Americans not working, 47.7 million of food stamps, the wars in Afghanistan and Iraq have cost us trillions without any meaningful results, both the TARP bailout, IRS scandal and bank scandals highlighted the increasing corruption and fraud, the income gap between the top 1% and the lower 50% is growing to record levels, we have no hope of paying back the $17 trillion federal debt, credit card debt is near $1 trillion dollars, student loan debt is even greater at $1.2 trillion, our mortgage debt is $7.78 trillion and total household debt in $13 trillion.

Detroit and Flint were among the wealthiest cities in America with vast industrial sectors that fueled the great American middle class. Now, Detroit is bankrupted, tens of thousands of good paying automotive and industrial jobs have left the cities and the country. We have major U.S. cities like Chicago and New Orleans with less than 10 days of cash on hand. New York City and Philadelphia have dangerously low reserves.

The NSA's increasing, obsessive, expansive, paranoid surveillance programs just shows how desperate the U.S. government has become. The American leadership (if you want to come it that) has become so incompetent that the mainstream media can't even attempt to protect it without losing all credibility. The Affordable Care Act is being exposed as anything but affordable.

The law is fundamentally flawed because it is created with a series of unsupported assumptions. The plan requires more Americans to get a government approved health insurance plan. The problem is that many Americans don't want health insurance, others can't afford it and the law actually encourages the very people the system needs most to withdraw from the system.

Why would a young, healthy adult pay high premiums for a health insurance plan they will not likely use? They could save money by avoiding insurance and simply get insurance when they get sick. Young and healthy Americans will simply take the 1% fine and avoid paying for the pricy government plans, which means many of the new health insurance users will be the older and less healthy Americans. As a result, there will be less people contributing to the system and more users using more services. This will destroy both state and federal deficits. But don't worry, the federal government will just have the Federal Reserve create more money. This will cause the current record $17 trillion federal debt and the $50 trillion debt in liabilities to grow at an even faster rate.

The employee mandate forces businesses to provide insurance for all employees who work over 30 hours. So how will businesses respond? They will layoff full-time workers and replace them with part-time workers. No surprise here.

So by this point is should be obvious that the system is collapsing. The Federal Reserve's money pumping scheme clearly didn't help the economy recover. Existing home sales for Sept 2013 when down 1.3%. The unemployment rate is down, but that's because millions of Americans have given up and dropped out of the workforce. Is that a sign of an economic recovery? In September 2013, the labor-force participation hits 35-year low. Sure, many of the record 90.6 million Americans not working are high schoolers, college students and retired folks, but let's get real. The jobs are not there.

So this brings us back to the question: When Will the Economy Collapse?

A friend of mine had a cabin in Northern Michigan. We went up north and discovered a huge tree with a massive crack leaning over his cabin. Now, anyone who looked up could tell that the tree was going to collapse and slash the cabin. Nobody knew the exact hour and minute, but it was clear that it was going to happen. Needless to say, we hired someone to safely cut the tree down before it collapsed and destroyed the house.

Well, look at the economy as a large bridge severely damaged by an earthquake. Let's call the earthquake, the Federal Reserve. Although, there were many entities that damaged the bridge. Nevertheless, the mayor calls an engineer out to examine the bridge. After a few hours, the engineer's verdict is dire. he declares that the damage to structure of the bridge is catastrophic. He tells the mayor and his staff how they can put in some temporary structures to keep the bridge up.

The mayor then asks the engineer, "If we can't get the equipment, how long do we have until the bridge collapses?"

The engineer sighs, turns to the mayor with a heavy look and says,

"I can't tell you the exact second the bridge will collapse, but you need to call the fire department, alert the federal government and evacuate the area."



Not Looking for Work: Labor-Force Participation Hits 35-Year Low
September existing home sales fall 1.9%
The Ten US Cities With Less Than Ten Days Of Cash On Hand
It's back with a vengeance: Private debt
How the $1.2 Trillion College Debt crisis is Crippling Students, Parent and the Economy
American Household Credit Card Debt Statistics: 2013

Obama Drone Terror! U.S. Can't Pay off DEBT!

By Reginald Kaigler (DEMCAD)

Face Reality: U.S. Can't Pay off DEBT

I recently interviewed financial and precious metals expert Dr. Lee Warren and a viewer commented that the doctor was incorrect in claiming that the federal debt could not be paid off. The viewer claimed that if taxes were increased by 5% across the board, the deficit could be solved in 10 years.

Well, let's take a closer look at that claim. The United States has been running huge deficits since 2000. Essentially, the federal government is spending more money than what it is collecting from tax dollars.

If the gov had 2.4 trillion in revenue and 3.7 trillion in spending in 2012, how is a 5% tax increase going to help?

First, you would have to assume that a tax increase would lead to a significant inflow of cash for the federal government. You would have to assume that the big increase in taxes would have no effect on business activity and would only encourage growth. Two assumptions that are not backed by any evidence.

But let's say that raising taxes somehow lead to a huge tax increase.

Let's assume revenue doubled to 4.8 and spending remained at 3.7 trillion. That's 1.1 trillion surplus every year. We have 16 trillion in debt, if we had 1.1 trillion surplus years for 10 years, we would still owe near 5 trillion dollars and that doesn't  even include the medicare social security liabilities.

The real liabilities of the federal government are Social Security, Medicare, and federal employees' future retirement benefits, which already exceed $86.8 trillion, or 550% of GDP. That's 550% of the entire economy in one year. That's translates into five years of the total production and services of the entire economy just to pay off the debt.

What this means is that the entire system is insolvent and there is no way to save it. The sooner people face that reality, the easier it will be to start to prepare for the inevitable collapse.

Historical Federal Receipt and Outlay Summary
Cox and Archer: Why $16 Trillion Only Hints at the True U.S. Debt

 Obama Drone Terror

So not only is the empire crumbling, the emperor has gone mad. The Obama White House recently declared that it was legal for the federal government to use drone strikes to kill American citizens as long as the government believed the target was an operational leader within Al-Qaida or a related group even if there was no evidence or intelligence of an active plot against America.

Essentially, the White House is ignoring Due Process and declaring that it can kill anyone.

The Numbers

Last weeks unemployment claims stood at 366,000, while Nonfarm business sector labor productivity decreased at a 2.0 in the fourth quarter. Remember, the commerce Department claims that GDP only dropped 0.1% in the fourth quarter. Expect a revised number, the economy is contracting.

BLS: PRODUCTIVITY AND COSTS

Guns

I told my viewers to consider buying a rifle before the election. Before there was a crisis and the guns flew off the shelves and become unaffordable. Unfortunately, the day has come for millions of Americans. AK pattern rifles that sold for 600 bucks is now at 900. If you didn't prepare by storing guns and ammo, I don't know what to tell you. Hopefully, things claim down as more supplies arrive, but you can't afford to abandon your other emergency preparations. Good luck.