Dave Ramsey Says $500 Car Payments Keep Households Middle Class

1 articles · Updated · YourTango · May 27

Dave Ramsey argued that two "very nice" cars carrying $500 to $700 monthly payments outside a middle-class home are a clear sign a family will stay middle class.
His rule of thumb is to keep no more than half of annual income tied up in vehicles and to avoid buying a brand-new car until net worth reaches $1 million.
Used cars are the better choice for most households, he said, because new vehicles become unaffordable "toys" when buyers must budget tightly to keep them.
U.S. consumers are already under strain: 27% rate their finances as poor or worse, 26% say income cannot cover expenses even with careful budgeting, and auto-loan balances rose by $11 billion in late 2024.

With repair costs rising, could buying a cheap used car be a bigger financial trap than a modest new one?

Is expensive car debt a personal failure, or a trap built by America's car-dependent infrastructure?

Your luxury car loses 85% of its value. What is the shocking opportunity cost of that purchase?