Moneywise and Yahoo Finance LLC may earn commission or revenue from the links below.
Over the course of his long career, radio personality Dave Ramsey has noticed several key indicators of Americans’ financial well-being.
He said in an episode that one of the indicators is ramsay show, It can even predict whether a middle-class family can break through their income bracket and become wealthy.
At least, that’s what the 24-year-old military man from Washington, D.C., told him when he called in on the show for financial advice about a possible car purchase (1).
Micah said he makes $80,000 a year. He already owns a car worth $13,000, but wants to buy a new sports car, a Nissan 370Z, for $30,000 cash. He admitted it was purely an indulgence and that the new car was for “play”.
He called Ramsay to ask if he should invest the money instead of spending it on a car – and that’s when Ramsay revealed a little secret to him.
Ramsey’s advice is simple: Say no to the second car. As for his reasoning, the financial guru pointed to something he’s noticed over the years: “The way you know someone is going to stay middle class is when they have two really nice cars — that’s a no-brainer [sic] A $500, $600 or $700 payment — sitting in front of a middle-class house,” he said.
According to Experian data(2), Americans borrow an average of $42,332 for a new car and $27,128 for a used car.
ramsay show The host points out the obvious: more vehicles means more bills.
If, unlike Micah, you need a loan to buy a car, that’s even more reason to reconsider your purchase. If you’re still struggling to pay off your old car, why buy another car and rack up extra bills each month?
If you already have a car loan and want to continue paying off multiple debts, consider applying for a personal loan through Credible.
Credible makes it easy and affordable to pay off your debt. Their online marketplace of vetted lenders offers debt consolidation loan offers personalized to your needs, allowing you to pay off your debt more efficiently at a fixed interest rate without having to deal with multiple bills or another new car loan.
Read more: Nearing retirement but no savings? Don’t panic, you’re not alone. Here are 6 easy ways you can catch up (and fast)
In addition to lowering your monthly car payment, it’s also worth lowering your monthly insurance costs.
Official Car Insurance makes the process easy.
Here’s how it works: Enter some basic information about yourself and the vehicle you drive, and OfficialCarInsurance will show you rates from leading insurance companies like GEICO, Allstate, and Progressive.
“If you want to build wealth, you have to put as little money as possible into things that are declining in value,” Ramsey said. People trying to build wealth should not spend more than 50% of their income on depreciating assets like cars, he said.
What should they do with the remaining income? Ramsey is a big fan of emergency savings accounts.
In an episode in 2025 ramsay show, “I don’t care if you keep it in your sock drawer,” he says, adding, “An emergency fund isn’t about making money. It’s insurance against cashing out or going into debt (3).”
If you’re forced to face unforeseen circumstances, such as an unexpected job loss or a medical emergency, an emergency fund can help you pay off your debt and stay on track.
Although an emergency account won’t get the level of returns you can get from investing in the stock market, you can still grow your cash.
For example, a high-yield account like the Wealthfront Cash Account can be a great place to grow your emergency fund, offering both competitive interest rates and easy access to cash when you need it.
The Wealthfront Cash Account offers a base variable APR of 3.25%, but new customers can get a 0.65% boost for the first three months, for a total APR of 3.90% offered by the bank on your uninvested cash. That’s 10 times the national deposit savings rate, according to the FDIC’s December report.
With no minimum balance or account fees, along with 24/7 withdrawals and free domestic wire transfers, you can be sure your funds are always available. In addition, the FDIC insures Wealthfront cash account balances up to $8 million through program banks.
Once you have enough money to protect yourself, you should set up a system that makes investing automatic and painless.
With Acorns, you can invest while making the most of your everyday purchases.
Whenever you make a purchase using your linked debit or credit card, the app automatically rounds the total cost to the nearest dollar and invests the change in a diversified portfolio. You can also link these investments to your IRA, ensuring you maximize your retirement savings with every purchase.
In addition to investing in the markets, you may also want to consider alternative assets for your portfolio. For example, according to a survey by wealth management firm Empower, nearly half of Americans surveyed with $1 to $5 million in bank balances said real estate was the top factor behind their wealth(4).
So instead of spending your money on depreciating assets like cars, you should consider investing your money in investment opportunities that add value, diversify your portfolio and earn you passive income – all factors that can help you build wealth.
However, you don’t need to purchase the property outright to take advantage of this type of asset. You can invest in shares of a vacation home or rental property through Arrived.
Backed by world-class investors including Jeff Bezos, Arrived allows you to invest in shares of vacation and rental properties and earn a passive income stream without the additional work of being a landlord of your own rental property.
To get started, simply browse their selection of vetted properties, each chosen based on their potential appreciation and income-generating capabilities. Once you select a property, you can start investing with as little as $100, potentially earning quarterly dividends.
We rely only on vetted sources and reliable third-party reports. For more information, see our Editorial Ethics and Principles.
Dave Ramsey(1); Experian(2); (3) YouTube, The Dave Ramsey Show; Empower(4)
This article provides information only and should not be considered advice. It is provided without any warranty of any kind.