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Moneywise
Updated Aug 17, 2026
Dave Ramsey explains why having two nice cars with $500 to $700 payments is the clearest sign someone will never build real wealth.
Before adding a second car payment, check whether you're overpaying on the one you already have. You can compare rates in minutes with Insurify.
Once you trim your budget, put the savings to work. Vanguard Digital Advisor builds a low-cost, personalized portfolio for you, starting with just $100.
Over the course of his long career, radio personality Dave Ramsey has noticed several key indicators of Americans’ financial status.
One of these metrics, he said on an episode of The Ramsey Show, might even predict whether a middle-class family could break out of their income bracket and become wealthy.
At least, that is what he told Micah, 24, from Washington, DC, when the military man called in during the episode looking for financial advice regarding a potential car purchase.
Micah said he earns $80,000 a year. He already owns a car worth $13,000, but is tempted to purchase a new sports car — a Nissan 370Z — for $30,000 in cash. He admitted this is purely an indulgence and that the new car would be for “play.”
He called Ramsey to ask whether he should invest the money rather than spend it on a vehicle — and that’s when Ramsey let him in on a little secret.
Middle-class indicator
Ramsey’s advice was simple: say no to the second car. As for his reasoning, the finance 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 very nice cars — that are obvious [sic] $500, $600, or $700 payments — sitting in front of a middle-class house,” he said.
Americans borrow an average of $42,332 for new vehicles and $27,128 for used vehicles, according to data from Experian. The Ramsey Show hosts pointed out the obvious: more vehicles means more bills, and those bills add up fast.
So before you even think about a second car payment, it's worth checking whether you're overpaying on the car you already have. One of the easiest places to trim your budget is car insurance.
Platforms like Insurify make it easy for you to compare insurance offers with just a few clicks.
It's free to use, and drivers who bundle home and auto coverage can save up to 15%. That freed-up cash can go straight into a savings or investment account.
Enter some basic information about yourself and your vehicle, and Insurify will show you rates from top providers so you can compare and switch to a cheaper policy in minutes.
A better way to build wealth
“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,” Ramsey said. He says that someone trying to build wealth should have no more than 50% of their income in depreciating assets like cars.
What should they do with the rest of their income? Well, Ramsey is a big fan of the emergency savings account.
On a 2025 episode of The Ramsey Show, he said “I don’t care if you keep it in the sock drawer,” adding, “The emergency fund is not about making money. It’s insurance to keep you from cashing out or going into debt.”
An emergency fund can help you pay off debt and stay on track if you’re forced to face the unforeseeable — like a surprise job loss or a medical emergency.
Build your cash cushion
And even though an emergency account doesn’t have the potential to earn the level of returns you could get from investing in the stock market, you can still get a boost on your cash.
A high-yield account like a Wealthfront Cash Account can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your money when you need it.
A Wealthfront Cash Account currently offers a base APY of 3.30% through program banks, and new clients can get an extra 0.75% boost during their first three months on up to $150,000 for a total variable APY of 4.05%³.
That's ten times the national deposit savings rate, according to the FDIC's March report⁴.
Additionally, Wealthfront is offering new clients who enable direct deposit ($1,000/mo minimum) to their Cash Account and open and fund a new investment account an additional 0.25% APY increase⁵ with no expiration date or balance limit, meaning your APY could be as high as 4.30%.
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, you get access to up to $8M FDIC Insurance eligibility through program banks.
Make investing a seamless routine
Once you have enough money to protect yourself, you should set up systems that make investing automatic and painless.
For instance, a robo-advisor like Vanguard’s Digital Advisor puts the investing expertise of one of the world’s largest asset managers right at your fingertips.
It takes the guesswork out of investing by building a personalized portfolio for you using Vanguard’s well-known low-cost ETFs and mutual funds — then keeps things running smoothly with automatic rebalancing.
The platform also offers guidance on saving for retirement and lets you set additional goals as your life evolves.
It can even help you think through debt repayment strategies, potentially freeing up more cash to invest toward your long-term plans.
With a minimum investment of just $100, it’s an easy way to get started with professionally guided investing.
For every $10,000 in an all-index portfolio, you'll pay approximately $15 to $16 per year.*
You can even test-drive the Vanguard experience with no advisory fees for the first 90 days.
Another option is Acorns, a micro-investing app that allows you to make the most of your daily purchases.
Whenever you make a purchase with your linked debit or credit card, the app automatically rounds up 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’re maximizing your retirement savings with every purchase you make.
As a Moneywise reader, you get $20 when you set up a recurring deposit.
Invest in alternative assets
Beyond investing in the market, you might want to consider alternative assets for your portfolio. For instance, nearly half of surveyed Americans with bank balances of $1 to $5 million said that real estate was a top factor behind their wealth, according to a survey by wealth manager Empower.
So, rather than spending your money on a depreciating asset like a car, you could consider putting that money into investment opportunities that will increase in value, diversify your portfolio and earn you passive income — all factors that can help you build wealth.
You don’t need to buy a property outright to tap into this asset class though. You could invest in shares of vacation homes or rental properties through Arrived.
Backed by billionaire investor Jeff Bezos, Arrived is an online platform that allows you to invest in shares of rental homes and vacation rentals without the hassle of property management for as little as $100.
100% Funded
The Vanzant
Single Family Residential$415K
Invested1,294
Investors 100% Funded
The Smokey
Vacation Rental$983K
Invested1,748
Investors 100% Funded
The SuiteSpot
Vacation Rental$1.2M
Invested1,672
InvestorsThese are a few examples of properties from Arrived. Check out the full list of single family residential homes and vacation rentals currently available.
To get started, simply browse through their selection of vetted properties, each picked for its potential appreciation and income generation. Once you choose a property, you can start investing with as little as $100.
Real estate isn't the only alternative asset worth a look.
Unlike a car, gold doesn't lose value the moment you drive it off the lot, and it's long been a go-to for investors trying to diversify away from stocks.
A gold IRA allows you to directly invest in physical gold or gold-related assets within your retirement portfolio, pairing the tax advantages of an IRA with gold’s track record as a long-term store of value.
There are specific rules around gold IRAs, and some states have different tax structures for the sale of gold and silver. It’s important to choose the right dealer and custodian to help you navigate regulatory and taxation hurdles.
Some companies also offer incentives, such as free IRA rollovers or free precious metals. Goldco, for instance, can match up to 10% of qualified purchases in free silver.
If you’re curious whether this is the right investment to diversify your portfolio, you can download a free gold IRA information guide.
- *All investing is subject to risk, including the possible loss of the money you invest.
Moneywise
Moneywise Editorial Team
The Moneywise Editorial Team is a group of passionate financial experts, seasoned journalists, and content creators who are deeply committed to providing unbiased, relevant, and accurate financial information. With years of combined industry experience, our team is dedicated to maintaining the highest journalistic standards and delivering informative and engaging content. From personal finance and investing to retirement planning and business finance, we cover a broad range of topics to suit the financial needs of our diverse readership. You can trust the Moneywise Editorial Team to empower you with the knowledge and tools necessary to make wise financial decisions.
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