A 401(Dave) Plan Works
Dan on Twitter asks how Dave feels about paying for the first car for a teenager. Dave explains the 401(Dave) plan.
QUESTION: Dan on Twitter asks how Dave feels about paying for the first car for a teenager. Dave explains the 401(Dave) plan.
ANSWER: It is okay. We chose not to buy the first car. We bought the second car, but we did not buy the first car. The first car is symbolic of years of work at the Ramsey household. We did agree to match. We had 401(Dave), so whatever you saved up, I matched it, and then you got to buy a car. For those of you starting that program, I’d recommend you put a cap on that, because it got out of hand after a while. Kids will work their butts off when they figure out every dollar equals two. I wanted to teach them to work, save, and hit a goal. I used the car as one of the big goals to hit because our kids were highly motivated by cars.
We saved up and paid for college. The trick with this is that you cannot even get a hint of the stink of entitlement on you. If you start acting like you are entitled to something, you will have a problem with me. These kids worked, they saved, they were good kids in the sense of being morally good, they’re in church, they were making good grades, they’re good citizens—not perfect. They had to do all of those things, and they had to work, save, spend, and give. They had to pay for half of their first car, and then I paid for college. But if they’re screwing off, they’re not getting any of that. If they’re going to go crazy on me, I can fix that. I’ll cut you off.