Idaho dad wants to use a $200K inheritance to buy himself a Harley. Here’s why Dave Ramsey worries he’s beyond help

Alexander from Idaho called into The Ramsey Show with a wealth question surrounding a $200,000 inheritance, arsenic good arsenic a motorcycle he’s been eyeing to purchase. The motorcycle successful question is the Harley-Davidson Low Rider S, which would outgo astir $30,000 with each the bells and whistles (1).

Dave Ramsey agrees the motorcycle would beryllium fun. But helium doesn’t deliberation Alexander should leap into this purchase, particularly erstwhile helium learns much details astir the household finances.

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“Right now, we are spending much than we make,” said Alexander to The Ramsey Show hosts (2).

The mates brings location astir $85,000 per twelvemonth to enactment their household of four. But they presently walk astir $1,000 much than they marque each month. With a caller inheritance of astir $200,000 divided betwixt a savings relationship and a communal fund, Alexander plans to wage for the motorcycle successful cash.

To apical things off, the mates hasn’t paid disconnected their mortgage, adjacent though the funds from their inheritance could apt hitch retired their remaining balance.

After proceeding the communicative and realizing that Alexander seemed to beryllium explaining distant each the reasons they don’t request to wage disconnected the house, Dave Ramsey said, “I don’t deliberation we’re going to beryllium capable to assistance you, honey.”

Ramsey near the caller with nary uncertainty connected his opinion: It’s not a bully thought to bargain a motorcycle close now.

Like astir vehicles, motorcycles are depreciating assets, meaning they suffer worth implicit time. Some experts, including Premier Motorsports, estimation that motorcycles suffer 15% to 25% of their worth successful the archetypal twelvemonth alone, earlier going connected to suffer an estimated 7% to 10% successful worth for respective much years (3). With that, Alexander’s $30,000 motorcycle acquisition whitethorn beryllium worthy astir $22,500 aft conscionable 1 twelvemonth of enjoying it.

Beyond the acquisition terms of $30,000, different hidden costs spell into maintaining this motorcycle purchase. For starters, Alexander volition request to wage for insurance, which typically costs astir $164.23 for a 12-month argumentation successful Idaho, according to Progressive (4). Plus, state and attraction costs tin adhd up quickly.

In summation to the existent costs of owning the bike, there’s besides the accidental outgo of utilizing this wealth for a motorcycle acquisition alternatively of different fiscal goals. For example, let’s accidental they chose to put the $30,000, it could beryllium worthy $59,000 successful 10 years, assuming a 7% complaint of return.