Dave Ramsey Says Your Car Could Cost $10 Million — And He Might Be Right

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Is a car in a driveway worth the opportunity cost?

Key Point

• Many people pay for their car, and the average car payment costs hundreds of dollars a month.
• Dave Ramsey says he could be missing out on millions of dollars to build his wealth because he has to make monthly car payments.
• You can save money on a car purchase by buying an affordable used car with cash rather than taking out a loan over several years.

Is the car in your driveway worth $10 million? The answer to that question is definitely no. Unfortunately, many people give up that much money for cars. At least according to financial expert Dave Ramsey.

How does your car cost millions? As to why your car is so expensive, Ramsey says:

How Your Car Costs $10 Million

Ramsey warned that your car could cost you millions of dollars as a result of the opportunity costs associated with paying for it all the time.

“This ‘always pay for the car’ cycle is deterring people from actually spending their money to move forward,” said Ramsey. “With a shift in mindset (and where car payments are really going), you may be able to build considerable wealth in retirement.”

Ramsey explained that while most people see car payments as “a part of life,” spending hundreds of dollars each month on a car is wasting money that could be better invested elsewhere. did. Since most people only have a limited amount of money, this becomes a big problem.

The average monthly payment for a new car is $577, so Ramsey did the math and found that if he invested that amount every month and earned an annual return of 11%, he would have just under $10 million by age 67. rice field.

But obviously, if you’re using that money to buy cars instead of putting that money in a brokerage firm and putting it in the stock market, you’re going to be driving a lot of cars on the track. of your life instead of the $10 million you might have had.

Ramsey gave some questionable financial advice, but his opinion of investing $577 a month is completely correct. can This would be a much better outcome than paying for a large car and having little to show for effort over time.

Here’s what Ramsey suggests to finally get $10 million riches

Ramsey’s solution to this problem is to avoid car payments altogether. can Invest the $577 a month you might spend on a car and become a millionaire instead.

“It’s worth avoiding car loans,” he said. “So budget, save money for your car, and build your wealth!”

Ramsey recommends buying affordable used cars, ideally at the end of the month, the end of the quarter, or during holiday sales when prices are lower. He suggests bargaining at the time of purchase, especially if you’re buying with cash, and advises, “The amount you can buy is based on how much cash you can pay upfront.”

Saving money for a car and avoiding car payments may seem difficult, but it’s worth trying to make it happen if you can. That way, you can heed Ramsey’s advice and finally point your car payments at the billionaire.