When it comes to the relationship one has with their car, you come first; the car comes second.<\/p>\n
That\u2019s the advice financial guru Dave Ramsey offered Carl from New York when the 29-year-old father called into The Ramsey Show (1).<\/p>\n
Must Read <\/p>\n
\u201cLove yourself enough not to go into car debt,\u201d Ramsey told him. \u201cIf you want to be middle class, stay in car debt. You will never build wealth because it will suck the bone marrow out of your money.\u201d<\/p>\n
Carl added that he recently got a pay bump from $85,000 to a possible $95,000 after six months, and his current Honda isn\u2019t worth fixing. He has $20,000 in savings for a new car, but the one he wants costs $25,000.<\/p>\n
\u201cDon\u2019t celebrate your new job with a car payment. That\u2019s kind of dumb,\u201d Ramsey said. \u201cYou have $20,000 and an $85,000 job in New York City. You can go buy a $20,000 car and not a dime more,\u201d Ramsey said.<\/p>\n
He told Carl his budget is whatever he sells the Honda for, plus the $20,000. According to a recent study (2), $100,000 in Manhattan is equivalent to about $30,362 \u2014 the lowest purchasing power of any city on a list of 20.<\/p>\n
Nix the conspicuous consumption <\/p>\n
Ramsey linked the affordability crisis to high car payments. A Bank of America (3) report found that in 2025, nearly a quarter of households live paycheck to paycheck.<\/p>\n
\u201cFord Motor Company screwed you. Lexus and Toyota screwed you,\u201d he said. \u201cThey got you to go far in debt because you had to have something shiny with a toxic plastic smell.\u201d<\/p>\n
Ramsey used Carl\u2019s situation to make a broader point, citing internal research of more than 10,000 millionaires showing that 84% credited ditching car payments as key to building their wealth.<\/p>\n
Ramsey suggested that Carl stop caring about what people think and move away from seeing his car as a status symbol.<\/p>\n
Read More: Taxes are going to change under Trump\u2019s \u2018big beautiful bill\u2019 \u2014 4 reasons you can\u2019t afford to waste time<\/a><\/p>\n \u201cDecide who you want to impress. People you\u2019re likely never going to meet, or your grandchildren,\u201d he added. \u201cBecause you can change your family tree if you don\u2019t impress the people at the stoplight,\u201d Ramsey said.<\/p>\n \u201cYou are upgrading so far from the hooptie you\u2019ve been driving, you ought to be dancing in the streets with that $20,000, acting like you have got a new Porsche,\u201d Ramsey added.<\/p>\n Co-host Jade Warshaw chimed in, suggesting that buying a car in cash is \u201ccountercultural,\u201d to which Ramsey replied, \u201cwell the majority of Americans are broke.\u201d<\/p>\n Car debt draining pockets <\/p>\n According to CNBC (4), total auto debt hit $1.68 trillion at the end of 2025 \u2014 an increase of 37% since late 2018.<\/p>\n Over that period, the typical monthly auto loan payment rose from $506 to $680. Experian (5) data placed the average monthly payment for a new vehicle even higher at $770 as of the first quarter of 2026. About 37% of American households (6) have two cars, and one in four (4) carry car loan debt.<\/p>\n Ramit Sethi, another personal finance guru, echoed that sentiment and suggested following the 20\/4\/10 rule (7) to avoid going car poor. The strategy includes a 20% minimum down payment, a maximum loan term of four years to reduce interest, and no more than 10% of monthly income spent on vehicle expenses \u2014 including loan payments, insurance, gas and maintenance.<\/p>\n Ramsey, though, maintains that everyday Americans should avoid car loans altogether.<\/p>\n \u201cYou don\u2019t go into car debt ever if you want to build wealth,\u201d he said (8).<\/p>\n You May Also Like <\/p>\n Join 250,000+ readers and get Moneywise\u2019s best stories and exclusive interviews first \u2014 clear insights curated and delivered weekly. Subscribe now.<\/a><\/p>\n Article Sources <\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines<\/a>.<\/p>\n YouTube (1<\/a>); SmartAsset (2<\/a>); Bank of America (3<\/a>); CNBC (4<\/a>); Experian (5<\/a>); AutoInsurance (6<\/a>); I Will Teach You To Be Rich (7<\/a>); Instagram (8<\/a>)<\/p>\n This article originally appeared on Moneywise.com<\/a> under the title: \u2018Please don\u2019t do this\u2019: Dave Ramsey says ditch this household expense keeping Americans from acquiring wealth<\/a><\/p>\n This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n