Feraz’s Car Debt Dilemma
This story shocked people and made many think about car debt.The old clip recently got attention on TikTok from new viewers. It showed a man whose car payments left viewers truly speechless. The borrower was a 27-year-old guy from Los Angeles called Feraz. His situation illustrated how quick a purchase turns into a major burden.
The old clip recently got attention on TikTok from new viewers. It showed a man whose car payments left viewers truly speechless. The borrower was a 27-year-old guy from Los Angeles called Feraz. His situation illustrated how quick a purchase turns into a major burden.
He told Dave Ramsey his monthly income was $1,200. His BMW payment took away a huge $600 of that money. This one expense consumed half his entire income each month. Little money was left for basic needs, let alone saving any cash.
Dave Ramsey’s Views and Advice
The clip from almost eight years ago did great on TikTok. It quickly gained over one million views the past week. Hashtags hinted the financial themes viewers saw. Users interested in money talk and debt advice was drawn in.
Dave Ramsey gives financial tips often rooted in faith. He reacted with obvious disbelief to Feraz’s words. His first response captured the shock many felt hearing the story. Are you kidding?” Ramsey asked, hearing the payment details.
Feraz tried giving some background context for his situation. He said his income was higher when he first got the car loan. But this fact did not lessen his current problem at all. It also did not excuse how the loan began in Ramsey’s eyes.
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Ramsey put significant blame on the car dealership’s loan section. He looked hard at the lending rules that allowed this event. Ramsey compared the car’s quality to the poor money sense of those who approved the loan. Their financial people aren’t as smart as the car builders,” he said clearly. He then used very strong language for the loan decision. “These people are smoking crack to give you this loan,” he stated.
Feraz was in a clearly bad money spot. Ramsey did not soften his words about what happens if things stayed this way. The situation was serious enough for personal worry from the money expert. “I’m scared for you, man,” Ramsey admitted, showing the path Feraz was on.
Existing debt also made his problems much worse. Feraz revealed he had $15,000 owed on his earlier BMW. This was not his first time dealing with much car debt. It suggested a pattern that now was at a very high level.
Feraz shared back in 2016 he studied aircraft mechanics. He was a full-time student expecting to finish school in 2017. An aircraft mechanic can make about $22 an hour, he mentioned. This showed future income possible that might help. But it was not nearly enough for his current debt amounts.
Ramsey pushed him on surviving with that big car payment each month. Feraz explained one helpful fact: he lived home with his parents. This meant he did not need to worry about rent payments. This helped with one major cost. Still, it did not stop the hard weight of his debts.
Feraz also said he carried $10,000 in credit card debt too. This debt layered on top of car loans painted a picture. It showed a young man financially underwater. This was true despite getting free housing benefit.
Feraz was honest about how hard it felt keeping up his money tasks. “I’m only able to barely make the minimum payments,” he told Ramsey. This shows he felt overwhelmed by debt. He could only cover interest and fees, not pay down what he owed.
Ramsey laid out a quick plan to handle the crisis. The first goal was most urgent and simple. He had to “tread water” until finishing school in May 2017. This meant surviving without going further into debt right then. He needed to hold steady until his expected better income.
The second main goal Ramsey set was getting more money soon. Feraz should seek extra ways to earn money while still studying hard. The goal is getting “any money to throw at this mess.” Ramsey stressed needing to attack the debt, not just pay minimums.
Feraz brought up maybe asking his uncles for cash. This was a possible way to get some funds. But Ramsey strongly advised against that idea. He pointed out the big dangers involved with family money. Taking money from relatives could truly change relationships, he warned. It would “turn that family member into your master.”
Ramsey explained why he felt a family loan was no answer. He put his view through caring deeply for Feraz. “If I were your uncle, I would love you enough to not do that,” he stated. He argued helping the debt would stop Feraz learning. It prevents him from fighting through the struggle himself. “I wouldn’t do that for you,” he said. “I would make you fight through this.” Ramsey believed Feraz likely wouldn’t pay them back. That would hurt the family relationship, he said.
Selling the car fast was the hardest but needed step. Getting rid of the costly BMW was the only way for the bleeding to stop. That $600 monthly cost had to go. But Ramsey knew a hard truth. Selling means Feraz likely still owes much money. The sale price would probably be less than the loan left to pay. Finding a lender after selling the car would prove a challenge.
Despite the bad current picture, Ramsey gave some hope. He reminded Feraz he was only 27 years old. Much of his adult life was still ahead for him. The hard time could serve as a crucial lesson learned early. The “good news,” Ramsey said, was the rest of life left. “You’ll never do something this stupid again,” he told the caller.
Ramsey felt sure Feraz could get past this hard time. The experience would change how he saw car loans forever. “You’ll get out of this and you will never, ever look at a car payment the same way again,” he thought. He followed up with a direct statement on the lesson learned. “I hope you’ve learned your lesson,” Ramsey said clearly.
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The talk happened near eight years ago, yet the lessons are still valid now. In fact, Feraz’s warning might be more important currently. Interest rates went up a lot starting in 2022. This makes borrowing money cost even more.
Context shows more than just Feraz’s case. His fight is like wider issues in US car money. Data shows car loans increased a lot. Finder says they went up 29% the past ten years. This means more people take on car debt than ever before, you see.
With more loans, paying them back is harder for some. Loans over 90 days late have gone up steadily since 2013. This suggests more borrowers struggle keeping up. They mirror Feraz’s issues. Maybe on a smaller scale for many, though.
Widespread Car Debt Issues and Warnings
Also, Bloomberg has recent news showing vehicles cost more. This makes loan payments go up too. Their data shows a striking number now pay big amounts. Two out of every 13 borrowers pay $1,000 or more monthly. This statistic highlights how often big car payments happen. Feraz’s $600 payment, while half his income, seems less unusual in dollar value now.
Money experts and online creators discuss the problem too. YouTuber Caleb Hammer talks to people about their debts. He often meets guests whose money troubles link to car loans. These loans often have very high interest attached. He told one story about a 20-year-old. That guy spent half his income on a large $64,000 electric Mustang. This scenario is like Feraz’s in money terms. Vehicle and loan size was different but the income part was similar.
Viewers reacted strongly to the TikTok clip that went viral. Many said they could not believe Feraz’s financial state. Commenters questioned how he ever got approved for that big loan. The place that gave him the money got sharp words online.
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One commenter captured the public’s shock very well. They said, “If I lived at home at 27 and drove home a BMW my dad would throw me out.” This reflected a common idea. Living free at home should be for getting money straight. Not for buying fancy things that eat half your small income.
Another person criticized the lender directly. “That’s some irresponsible lending. Shame on BMW for that,” they stated. (Note: the comment meant the dealer’s finance team, not BMW company. But blaming the lender was clear feeling.)
Maybe strangely, some watching found comfort in the extreme debt. Seeing Feraz’s big money strain gave them perspective. One person said, “These videos make me feel great about myself.” They felt alarmed but seeing it helped them. It made their own much smaller debts feel okay.
This story is a powerful, though very big, example. It shows a basic personal finance rule many miss. There is a big difference between affording a monthly payment versus truly affording the car itself. Many focus only on if the monthly note fits their budget. They ignore the total cost, interest, how fast the car loses value. They also ignore how the payment stacks up against income. Feraz’s situation forces people to face this key difference.
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Financial Strategies for Rational Car Buying
Experts like Ramsey often say focusing on payment only is dangerous. It lets lenders make loan terms longer and charge more interest. This makes you buy a car too costly for your income, they say. The point is moving focus. Look at the asset’s total value compared to your money picture.
Knowing how to own a car and build money stability is needed. Not own a car in a way that hurts your money. The next part talks about useful advice. It outlines clear steps for anyone. It shows how to truly know how much car they can afford. It explores smart ways to buy cars matching good money ideas.
Feraz’s large car payment offers a serious warning for all of us. It shows a common problem people face when buying cars. Many consumers gets trapped by poor vehicle buying decisions like this too easy. Focusing only on the immediate monthly cost is a big mistake. Financial experts always warn against this limited perspective alone.
This narrow view lets lenders stretch out loan terms longer. They can add a lot more interest over the years too. People end up buying cars far more expensive than they can afford. This hurts they financial situation quite a bit eventually. Understanding the true cost involves more than just the payment number.
You must look at your entire financial picture carefully. A car is a quickly losing value asset over time anyway. See how that investment fits within your whole budget structure. Feraz’s situation shows the big gap clearly now. Covering the monthly bill is not the same as truly affording the car price.
Consider its total value, the interest paid back, and also value loss. How does that recurring payment measure up against consistent income you got? Taking control starts with being honest about your money available now. Evaluate your current financial resources dedicated specifically for a car. Inventory every dollar you have ready to put towards buying a car today.
This includes cash you’ve diligently saved for this specific purpose. Also, estimate trade-in value for your existing vehicle if replacing it soon. Knowing your initial cash position is absolutely vital for your plan. It forms the bedrock where you can build a responsible car purchase plan.
A guiding principle helps with responsible car ownership decisions here. The total value of your vehicles shouldn’t exceed half your annual household income. This rule isn’t just made up; it has sound financial logic behind it all. The main reason is preventing tying up wealth in assets that loses value fast. Cars are notorious for this kind of depreciation occurring quickly always.
If you earn $60,000 per year, you have a budget number. Say you own a car bought for $20,000 previously before this. Applying this rule means another car budget should be no more than $10,000 now. This simple calculation keeps your depreciating assets in perspective relative to income.
Financing a car with a loan is the default path for many people today. It seems like the only realistic way to acquire a vehicle for life. However, these car payments contribute significantly to financial strain on Americans. A large, multi-year loan feels like a financial chain restricting cash flow from you. It hinders progress towards other important financial goals you have too.
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So, what is widely considered the financially healthiest way to buy a car? The answer is perhaps surprising to some individuals out there. The most responsible way is with cash directly you got saved up. Buying a car outright with cash is possible and highly beneficial now.
This approach instantly saves thousands of dollars usually spent on interest. Interest charges on a loan add up significantly over the years for everyone. Paying cash prevents buying a car that is simply too expensive for income level. When paying the full price upfront, you face the total cost directly instead.
This avoids hiding the true expense in smaller monthly chunks that look manageable. Paying cash also avoids being perpetually chained to a giant car payment each month. That payment looms over your budget for five, six, or even seven years sometimes. Instead of asking the misleading question about the monthly payment amount only. The more responsible question becomes if you can afford to buy this car with cash.
This shift in perspective transforms your thinking and actions too much. It forces a realistic look at the actual cost of the vehicle asset you want. This requires discipline and maybe delaying gratification for a bit of time. But the long-term financial benefits are absolutely immense eventually anyway.
Embracing a cash-first approach often means narrowing your search choices down. You will look at more affordable car options available to you now. This often translates to considering used cars rather than brand-new ones easily. While a new car allure is understandable, used cars have numerous advantages too. This is especially true from a financial standpoint point of view.
There is a large and diverse market of good, reliable used cars today. It offers plenty of choices to meet various needs and preferences you possess. Crucially, used cars generally keep their value much better over time too. A significant portion of a new car’s depreciation happens in the first year quickly.
By purchasing a used vehicle, you avoid that initial steep drop in value. Your investment holds its worth more effectively over its lifespan ownership. This slower rate of depreciation reinforces the financial prudence of buying used. Especially when paying with cash you got saved, it makes more sense always. It lets you acquire a necessary asset without sacrificing too much accumulated wealth. Rapid value loss is something you want to avoid if possible usually.
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Considering rising car loan amounts makes practical strategies more critical today. Recent data and stories like Feraz’s highlight the increasing payment struggles now too. The pressure to take larger loans for expensive vehicles is quite evident recently. Two out of every 13 borrowers now face payments of $1,000 or more, data shows.
This makes focusing only on the payment a dangerous path in current economy conditions. Remember the fundamental principle when facing a car buying decision for self. The price tag is total cost and that should be evaluated against your financial health. Not just against your ability to meet a single monthly obligation stretched thin.
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Carefully assess your current money available before deciding to buy now. Adhere to sensible guidelines like keeping total vehicle value under half annual income. Prioritize paying cash whenever possible for maximum savings over time. This approach gives you control over vehicle purchase process better today. It transforms the car from a potential burden into a tool for transportation needs now. This happens without undermining your journey towards financial stability and security too. It is about making informed choices that protect your wealth always. Providing peace of mind on the road ahead is very important for everyone driving.
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People are shocked by the story of a man spending half his income on car payments for his BMW who asked Dave Ramsey for help
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