Dave Ramsey explains why your car payment is ‘stupid on steroids’

Rarely does Dave Ramsey get excessively hyped up for long on one topic. But he did just that on a recent occasion. 

Certainly, the bestselling author and radio host has strong opinions about personal finance issues, and he does not turn his emotions off when he goes on the air. However, this was something different. 

Related: Dave Ramsey explains how you can buy the car you want right now

The heart of Ramsey’s rant was, as is often the case, his objection to seeing people pay unnecessarily large amounts of money on car payments.

He recommends buying serviceable used cars and paying cash for them. He gets frustrated with people who believe they need to buy new cars that depreciate in value as soon as they are driven off the car lot. 

Ramsey, in a broadcast from his desk on Jan. 12, first said he wanted his listeners to be far more careful about what they do with the money they earn at work.

“Your number one wealth building tool is your income,” Ramsey said. “All of the millionaires that we interview, unless they inherited the money, which is very few of them — less than 10% of them inherited the money — did it by saving and investing their income.”

“They did not give their income to Sallie Mae. They did not give their income to Best Buy  (BBY) – Get Free Report. They don’t get screwed around and give their income to Lexus and Toyota TM and Ford  (F) – Get Free Report and General Motors  (GM) – Get Free Report and American Express and MasterCard.”

A couple is seen at a car dealership choosing a new vehicle. Personal finance personality Dave Ramsey urges car purchasers to avoid excessive car payments by buying used cars and paying for them with cash.


Car payments are ‘stupid on steroids’

Ramsey took people to task for the financial hole they put themselves in as they contend with massive car payments.

“You’ve got a car payment bigger than your house payment. The average car payment in America now is $499 — that’s suspiciously like 500 bucks,” he said. “If you take $500 a month and invest it from age 30 to age 70 you’re going to have $5 million, and you scratch your head and wonder why you’re freaking broke.”

“No wonder your children have student loans, because you’re driving a dadgum one million dollar car, two million, three million dollar car,” Ramsey continued. “That’s what it’s costing you with your stupid car payment to impress somebody at a stop light that you will never meet. And the thing’s going down in value like a rock. We have to stop and think, America. You have to think instead of sitting around eating Skittles and watching Oprah reruns.”

Ramsey urged people to make smarter decisions with their money.

“Think, think, think,” he said. “Seriously, so credit cards — stupid, stupid. Student loans — stupid. Car payments — stupid on steroids. Borrowing money on your house to put granite countertops in — somebody ought to smack you. That’s stupid. You have to stop and think, because you’re killing yourself.”

“We’re fat, and we’re broke because we have no ability to do critical thought, and we don’t stop and look at what we’re putting into our lives. It’s completely out of control,” Ramsey continued. “The number of people I’ve talked to just today with $25,000 and $30,000 owed on their stupid car. It’s a car, good god, it’s a car. What does it do? It takes you from here to there.” 

Your income is your most important wealth-building tool. And when your money is tied up in monthly debt payments, you’re working hard to make everyone else rich.

You work too hard to get to the end of your life and have nothing to show for it! 2024 is your year and TODAY is the… pic.twitter.com/yC8N57DueD

— Dave Ramsey (@DaveRamsey) January 12, 2024

Student loans and airline miles

Ramsey also brought credit card points and student loan payments into the discussion.

“It’s a mathematical thing,” he said. “When you give your income to someone else, you don’t have it any more. And when you give your income away, you have given up your economic future, all for crap. For a stinking flat screen.”

“You know, of the number of people who start college, how many graduate?” he asked. “Fifty-two percent. ‘That’s an investment in my future,’ said the other 48% that are sitting at home with no freaking degree. But, by god, they got the student loan debt. And you know how you get rid of Sallie Mae? You either pay her off in full or you die.”

(Note: The National Center for Educational Statistics estimated that, as of 2020, 60% of enrollees in 4-year colleges ultimately graduate but take six years getting their degrees.)

“The borrower is slave to the lender,” Ramsey continued. “That’s what this math says when you give up your income. When you give your income away you have nothing. All the money comes in, all the money goes out.”

The bestselling author also turned his ire toward credit card points and airline miles.

“By god, we’re sitting around counting our Discover points,” Ramsey said. “Let’s do the math. You know, to get $1,000 back from Discover, you spend $100,000. How does spending $100,000 to get $1,000 back ever make you rich? Where did you take your math class??

“Everybody’s counting their dadgum points, and everybody’s trying to figure out some way to beat up on Chase,” he added. “Chase is kicking your butt. Their building’s bigger than yours, and their furniture is nicer than yours. You ought to have a clue by now.”

“Quit being children walking around in grown up bodies. Devise a plan and follow it. We’ve got to stop this.”

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