Despite calling himself a car enthusiast, financial guru Dave Ramsey declares that cars are a major financial waste. Through a series of his TikTok videos, he highlights the pivotal decision to purchase a vehicle with cash and the financial drain that comes with paying for a vehicle.
Comparing a home that generally increases in value to a car that depreciates, Ramsey says, “I guarantee you that as long as you keep up your car payments, you’ll be broke for the rest of your life, because cars are the most expensive vehicle that depreciates in value.” Because it’s a thing.”
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He points out the irony of sacrificing important financial goals, such as college funding, to pay a high car price for a luxury item like a DVD player. Ramsey highlighted a shift in society that views minivans as status symbols and questioned the wisdom behind such spending, especially when cars like the Honda Odyssey command prices comparable to luxury brands. Throw.
Ramsey shares insights into billionaires’ spending habits when it comes to cars. “The average billionaire drives a car that’s four years old and has 41,000 miles on it,” he said in a TikTok video. “Of course they’re paying for it.” This habit is quite different from typical consumer behavior, where he now accepts car payments of more than $500 per month on average for 84 months.
He emphasizes that these people haven’t made a car payment in decades and attributes this to their financial success.
Ramsey calculates the opportunity cost of such payments and suggests that you could earn about $5 million in a Roth IRA if you invested the same amount from age 30 to age 70, offering short-term gratification and long-term benefits. It shows the trade-off between wealth. “We hope you like your car,” Ramsey joked, emphasizing the trade-off between immediate gratification and long-term economic growth.
Mr Ramsay’s advice extends to car purchases, warning against buying new cars as they depreciate rapidly in the first four years, losing 60-70% of their value. He suggests buying a quality used car as a financially sound alternative, except for individuals with a net worth of more than $1 million, who are less affected by the depreciation of a new car.
Through these observations, Ramsey’s message is clear. The path to financial well-being requires making informed and wise decisions about one of the most common but important expenses: automobiles. His emphasis on avoiding car payments and considering the financial impact of car depreciation is a guide for anyone looking to achieve financial success.
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In a Ramsay Show video, he offered advice that highlighted a common middle-class pitfall: owning two luxury cars with high monthly payments. “You can tell if someone remains middle class by whether they have two very nice cars that they obviously paid $500 to $700 for sitting in front of their middle class home,” Ramsey said. he explained. He said this scenario is a “huge indicator” that such people will remain in the middle class until they change this habit.
Ramsey addresses concerns about buying a used car and provides peace of mind about its reliability. “If you’re driving a car you bought two months ago, it’s a used car,” he argues, adding that modern cars can last between 200,000 and 300,000 miles if properly maintained. It pointed out. This durability should reduce anxiety when buying a used car, he suggests.
Ramsey’s advice resonates with a broader financial philosophy that prioritizes long-term wealth accumulation over immediate gratification. His perspective encourages individuals to consider the actual cost of a purchase and how the decision fits into their financial goals.
Consult a financial advisor You can further enhance the benefits of Ramsay’s approach to fleet expense management. A professional advisor can recommend a tailored investment strategy tailored to your personal financial situation and goals, potentially maximizing the return on the funds saved by avoiding a new car payment. These can help you deal with complex investment options, tax implications, and retirement planning, and ensure that decisions like buying a used car instead of a new one are made in line with your comprehensive financial plan. can do.
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*This information is not financial advice. To make informed decisions, we recommend individual guidance from a financial advisor.
Jeannine Mancini has been writing about personal finance and investing for the past 13 years for a variety of publications including Zacks, The Nest, and eHow. She is not a licensed financial advisor and the content herein is for informational purposes only and does not constitute, and is not intended to constitute, investment advice or investment services. She Mancini believes that the information contained herein is reliable and obtained from reliable sources, but makes no representations, express or implied, as to the accuracy or completeness of the information; There are no guarantees or promises.
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This article Dave Ramsey guarantees he’d be “bankrupt for the rest of his life” if he had a car payment, says the average millionaire drives a car that’s four years old and has 41,000 miles on it – without making the payments If you invest, you could earn $5 million instead. originally appeared Benzinga.com
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