Jan 29, 2025
Leon from San Francisco, California has always had a dream car. But unlike most Americans, he may actually be able to afford it.
The 39-year-old called into The Ramsey Show to get a gut check on whether he should purchase a Lamborghini Huracan worth $250,000.
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After years of working hard and some “nicely-timed company acquisitions” he says he’s managed to boost his annual salary to $300,000, not including a 30% bonus, and his net worth to $3.66 million.
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With these impressive numbers, Dave Ramsey was open to the idea.
“You can afford the car if you want it,” he told Leon. However, co-host Ken Coleman was much less enthusiastic, warning against the purchase and consequent steep car payments.
Coleman and Ramsey’s different perspectives shed light on the struggle of deciding whether it ever makes sense to knowingly indulge in frivolous spending.
Different perspectives
Although he’s a millionaire, Leon’s dream car is still an indulgence. An Experian Automotive study covered by Ramsey Solutions found that 61% of millionaires actually drive average cars like Hondas, Toyotas and Fords. So it seems many wealthy Americans choose to steer clear of supercars.
Ramsey explains that a good rule of thumb is that vehicles should not cost more than 50% of your annual income. Leon’s $250,000 purchase would violate this rule. Nevertheless, Ramsey understands his temptation, given his own passion for luxury cars.
“I got a 1960 Corvette,” he confessed.
Dreaming about luxury cars is not uncommon. A Carvana survey found that 12% of drivers dream about getting behind the wheel of an Aston Martin DB5 from “James Bond,” while another 11% would love to take the Ford Mustang GT 390 from “Bullitt” for a spin.
Respondents also showed a preference for dream cars that have advanced technology (26%) and performance capabilities (25%) over other characteristics like fuel efficiency and comfort (20%). But that’s what can make it more of a dream than a functional lifestyle match.
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There’s another rule of thumb Ramsey suggests using when considering large purchases.
“If I took this money and set fire to it, does my life change? If the answer’s yes, then it’s too expensive,” he tells Leon. “I think you can lose 8% of your net worth and probably not miss it.”
Coleman, however, disagrees. Given the Lambo’s hefty price tag, exposure to depreciation and Leon’s outstanding mortgage of $739,000, he believes the dream car could turn into a nightmare.
“In this current situation, I would say no,” he said. “I wouldn’t do it, personally.”
His concerns reflect the fact that many car enthusiasts can regret their luxury purchases.
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Buyer’s remorse
Many car buyers end up regretting their decision, according to a 2022 survey by Kelley Blue Book.
A staggering 47% of respondents who purchased a vehicle had some regrets about the decision within the first year.
Despite this risk, some drivers stretch their budgets for their dream cars. Roughly 8% of people who earn less than $100,000 a year own a luxury model, according to the Experian Automotive study Ramsey Solutions covered.
To minimize this risk, Leon could consider waiting a few more years to pay off his mortgage, targeting a slightly more affordable or older version of his dream car or temporarily renting the car to indulge in his fantasy without the financial strain.
However, he could also take Ramsey’s approach and consider the money part of his entertainment budget. After all, the $250,000 price tag is between 6.8% and 6.9% of his total net worth — even lower than what Ramsey thinks he can get away with. But he may want to bank on getting his full bonus for a few years after to help with the payments.
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Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
