A caller to the Dave Ramsey Show recently set off a pointed conversation about cars, wealth-building, and what it really means to earn a good income. The caller, a 24-year-old named Micah, earns $80,000 per year, maxes out both his 401(k) and IRA, and carries zero debt. His question was simple: he has $30,000 in cash that he wants to put toward a 2019 Nissan 370Z as a weekend play car, and he is not sure whether he should invest the money instead.
Ramsey’s response was blunt. He offered one guiding principle for anyone who wants to accumulate real wealth rather than just appear to have it.
What Ramsey Says Will Stop You From Building Wealth
Ramsey told Micah straight out that buying the sports car was a poor choice for anyone serious about getting rich. He acknowledged his own love of cars, mentioning he had driven to the studio in his Raptor that morning, before landing on his core point: “If you’re going to build wealth, you have to keep as small an amount as possible going into things that go down in value.” In Ramsey’s framework, cars are the textbook example of a wealth-eroding purchase.
The depreciation math supports him. According to Kelley Blue Book, most vehicles lose roughly 20% of their original value in the first year alone, and close to 60% within five years. Applied to a $30,000 purchase, that puts the car’s value as low as $12,000 just five years down the road. Ramsey also uses a practical rule of thumb: the combined value of all vehicles you own should not exceed half your annual take-home pay. For someone earning $80,000, that ceiling sits at $40,000 total, including any car Micah already drives.
Read: Are you ahead, or behind on retirement? SmartAsset’s free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don’t waste another minute; learn more here.
Ongoing ownership costs add further pressure. According to AAA’s 2025 “Your Driving Costs” study, the average annual cost of owning and operating a new vehicle is $11,577, once fuel, maintenance, insurance, depreciation, and financing are all included. Financed buyers face an even heavier burden. The average new-car payment reached $767 per month in Q4 2025, according to Experian, while Edmunds put the figure slightly higher at $772. More striking, Edmunds data for Q4 2025 shows that 20.3% of new-car buyers committed to monthly payments of $1,000 or more, a new record. For anyone trying to build long-term wealth, chaining a large monthly payment to a depreciating asset is one of the fastest ways to undercut that goal.
Ramsey’s standing advice is to avoid car loans entirely and to buy reliable used vehicles with cash whenever possible. His logic is straightforward: paying interest on something that loses value every month is a double loss, and the longer the loan term, the deeper that hole becomes.
Is It Ever OK to Splurge?
contrastaddict / iStock Unreleased via Getty Images
Ramsey’s core argument about cars eroding wealth is well-founded. A sports car is an expense, not an asset, and any financial plan that treats it otherwise is built on shaky ground. But Micah’s specific situation is worth examining on its own terms, because the details here matter quite a bit.
Micah is already doing things that most people in their twenties are not. He maxes out his retirement accounts, carries no debt, and has saved $30,000 in cash to cover the purchase outright. He has no plans to finance anything. That profile is a far cry from the average American locked into a $767 monthly car payment on a loan that stretches past five years.
Is the sports car the best possible use of that $30,000? On a pure numbers basis, probably not. Investing the money for compound growth or applying it to a home down payment would likely produce more wealth over time. Even so, there is a meaningful difference between advising someone who is piling up debt on a car they cannot afford and counseling someone who has already built a disciplined financial foundation. The real question for Micah is whether he can sustain all his good habits after the purchase.
If he can keep funding his retirement accounts, stay out of debt, and comfortably cover the insurance and maintenance costs on a sports car, buying it in cash is a defensible call. Wealth-building is a long game, and treating every spending decision as a moral failure is a reliable path to burnout. The approach that keeps people on track is simpler: save first, invest consistently, and pay cash for the things you enjoy without breaking the plan that got you there.
Editor’s note: This article was updated to reflect AAA’s 2025 “Your Driving Costs” study, which puts the average annual cost of owning and operating a new vehicle at $11,577, and to incorporate Edmunds’ Q4 2025 data showing that 20.3% of new-car buyers committed to monthly payments of $1,000 or more, a new record.
If You’ve Been Thinking About Retirement, Pay Attention (sponsor)
Retirement planning doesn’t have to feel overwhelming. The key is finding expert guidance, and SmartAsset’s simple quiz makes it easier than ever for you to connect with a vetted financial advisor. Here’s how:
Answer a Few Simple Questions.
Get Matched with Vetted Advisors
Choose Your Fit
Why wait? Start building the retirement you’ve always dreamed of. Get started today! (sponsor)
