Posted on 05/12/2010 5:24:30 AM PDT by CSM
The free dinner that wasn't!
Dear Dave,
How do you feel about the free trips and dinners timeshare communities offer as part of their sales pitches? Isn’t it a little like playing with fire?
Diane
Dear Diane,
You’re close. I think it’s more like playing with fire while you’re sitting in a puddle of gasoline!
Listen, there’s nothing good about a timeshare. They have no redeeming qualities whatsoever. Besides, in most of these deals the food is bad and they’ll stick you in a room that’s not so hot, either. Timeshares are one of the few consumer products that have a 97 percent dissatisfaction rate. It’s virtually impossible to find someone who’s glad they bought in to one of these things!
I know people play games with this scenario. They think they’ll get lots of free stuff by just sitting through a sales pitch and then saying no. But why in the world would you want to waste vacation time or even one weekend of your life letting some salesperson twist your arm?
Plus, you’ve got the added problem that most folks aren’t as tough a sell as they think they are. If you’re not careful, you’ll end up agreeing with the guy on a couple of silly things, zoning out while the presentation wears on, and next thing you know, you’re driving away as a timeshare owner!
Don’t take a chance on getting stuck with one of those things, Diane. It’s a dumb idea!
—Dave
Car leasing is 100 percent stupid!
Dear Dave,
Do you have any advice on vehicle leasing for business purposes? I’ve heard that the expense is 100 percent deductible.
Anonymous
Dear Anonymous,
Yeah, and it’s 100 percent stupid, too! “Fleecing” is absolutely the most expensive way to operate a vehicle. What you’re talking about is rationalizing the fact that you want a vehicle you can’t afford. It’s a bad idea.
Dr. Tom Stanley interviewed tons of millionaires while he was writing his book, “Stop Acting Rich.” In the process, he found out that 80 percent of them had never leased a vehicle. What does that tell you? It tells me if you want to be rich, you need to do what rich people do—and they don’t lease their vehicles! Plus, I really don’t care if it’s 100 percent deductible. Guess what? I get deductions on the vehicles owned by my company. It’s called straight-line depreciation.
Never lease a vehicle for business purposes. If you don’t have the cash to pay for it outright, then you can’t afford the thing. It’s just that simple!
—Dave
Can stay-at-home moms be insured?
Dear Dave,
Do stay-at-home moms need disability insurance?
Sarah
Dear Sarah,
Yes, they do. Unfortunately, they can’t get it right now. Under current law, you must have an earned income in order to receive disability insurance.
Now, it’s possible to get disability insurance if you have a business at home. In that case, you’d need to show two years worth of tax returns to prove that your self-employment was actually generating an earned income.
My wife’s been a full-time mom for 25 years, and I know how hard she works and how much she does every day. Believe me, if she could get disability insurance, we’d buy it in a second!
—Dave
Enjoy this weeks article.
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Interesting about the disability insurance.
I’d like to be added to the “Live like no one else...” list please. Thanks
I just started “listening” Dave Ramsey this past year.
Dave is great.
His advice never gets outdated.
I disagree on the timeshare pitch as a waste of time, as well as on the quality of the free room and the free food. I’ve done three of these pitches and plan to do at least two more (when my kids are the right age, I bring them along for the sales pitch after doing the numbers with them and explaining how the sales people will try to pitch the timeshare. My kids come out with an appreciation for high-pressure sales (today only or you lose the $3000 value “bonus”, and other lines that I predict). They come out with an understanding of finance, present value of money, and hidden costs. These sales vacations are among the best teaching vacations that you can take. Besides, the rooms and the amenities have always been quite nice when I have done these.
about the time share;
Got an offer a few years ago for a couple of nights at the Smokey mountains. The motel was free if we sat through the sales pitch. We needed a vacation anyway so my wife and I enjoyed our stay. After the hard sell personal sales pitch I quietly laid out the financial stupidity of it all and our salesman immediately changed his tune to; “Obviously you guys don’t qualify” and moved on to his next victim.
I have never bought a new car. I have never leased a car. Our home is almost paid for. I have a couple of credit cards which are immediately paid before the 30 days. I have no other debts. I have developed other incomes besides my day job.
I filed bankruptcy more than 20 years ago because of foolishness. I wish Dave Ramsey was around then, I learned most of my financial skill by learning from my mistakes :-)
Hilarious! Guess Dave didn’t consider it as a teaching moment aspect for your kids. I can’t imagine doing it but once though....
It's a question of the ages of your kids. They have to be old enough to appreciate the canned sales talk. Mine have all enjoyed it, but that's because we bring them at the right age (13-14). I've got lots of kids, so we need a few more trips than most families to get the proper experience at the right age.
Thanks, I was not aware Dr. Stanley had a new(?) book, but I will have to look into it.
If you don’t have the cash to pay for it outright, then you can’t afford the thing. It’s just that simple!
If you need a vehicle for business and it will make you money, then I have no problem with financing it. Would it be better to pay cash if you have it to avoid financing? Probably. But unlike a lot of other business purchases it is easier to get financing for a vehicle (because it can be repossessed), so that frees up cash for other business expenses.
On the other hand, leasing is a trap. Expenses to get into it, and even more expenses to get out because I have never known anyone to just leave at the end of a lease without having a thousand or so dollars of "excess damage" fees. They could have kept the car hidden in a garage for three years and it would still have excess damage.
Highly recommended. I even gave a copy to my broker.
That’s good to hear - I ordered it from Amazon.
I read The Millionaire Next Door at least 4-5 times!
Keep in mind that debt=risk. The more “financing” one does for his business, the greater the chance for failure.
I’ve listened to Dave for several years. I think what he means, is don’t go out and buy a brand new 40 thousand dollar work truck when you can just get a used one for 5-6 grand and pay cash for it.
Then when your business becomes successful after a few years, you can buy the new truck with cash.
A former acquaintance of mine did something like that - his truck needed (IIRC) new brakes, so he traded it in on a new truck. I buy beaters and drive them till the wheels fall off. Right now there are no decent beaters (thanks to Cash-for-Clunkers) so I may end up with a payment if the current beater croaks. I'm packratting extra cash to make the best downpayment I can, though.
Hey Nina:
I haven’t noticed a shortage of ‘dave cars’ in this area.
I just checked autotrader.com and found over 250 vehicles within 50 miles of my house under 6K.
I drive beaters, too. But have a problem parting with them because a repair here and there is still less than buying another car or making a car payment.
Good luck!
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