Dave Ramsey rarely gets overly enthusiastic for long about a topic. But that was precisely what he did on a recent occasion.
Certainly, the best-selling author and radio host has strong opinions on personal finance topics and doesn't dampen his emotions when he goes on air. However, this was something different.
Related: Dave Ramsey explains how you can buy the car you want right now
The crux of Ramsey's speech was, as is often the case, his objection to seeing people paying unnecessarily large amounts of money on car payments.
He recommends buying used cars in good condition and paying cash for them. He's frustrated with people who think they need to buy new cars that depreciate in value as soon as they leave the dealership.
Ramsey, broadcast from his desk on Jan. 12, said for the first time that he wanted his listeners to be much more careful about what they do with the money they earn at work.
“Your number one tool for building wealth is your income,” Ramsey said. “All the millionaires we interviewed, unless they inherited the money, which are very few (less than 10% of them inherited the money), did so by saving and investing their income.”
“They didn't give their income to Sallie Mae. They didn't give their income to Best Buy (BBY) – Get a free report. They don't let themselves be screwed and give their income to Lexus and Toyota M.T. and ford (F) – Get a free report and general engines (GM) – Get a free report and American Express and MasterCard.”
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Car payments are “stupid and on steroids”
Ramsey chastised people for the financial hole they were in dealing with massive car payments.
“The car payment is bigger than the house payment. The average car payment in America is now $499, which is suspiciously equal to $500,” he said. “If you take $500 a month and invest it from age 30 to age 70, you'll have $5 million, and you'll scratch your head and wonder why you're broke.”
“It's no wonder your kids have student loans, because you drive a million-dollar, two-million-dollar, three-million-dollar car,” Ramsey continued. “That's what it's costing you with your stupid car payment to impress someone at a stoplight you'll never meet. And the value of the thing is dropping like a rock. We've got to stop and think, America. You've got to think about instead of sitting around eating Skittles and watching Oprah reruns.
Ramsey urged people to make smarter decisions with their money.
“Think, think, think,” he said. “Seriously, credit cards are stupid, stupid. Student loans are stupid. Car payments are stupid on steroids. Borrowing money on your house to put granite countertops…someone should slap you. That's stupid “You have to stop and think: because you are killing yourself.”
“We're fat and broke because we don't have the ability to do critical thinking and we don't stop to look at what we're putting into our lives. It's completely out of control,” Ramsey continued. “The number of people I've talked to today who are owed $25,000 and $30,000 for their stupid car. It's a car, my God, it's a car. What does it do? It takes you from here to there.”
Your income is your most important tool for building wealth. And when your money is tied up in monthly debt payments, you're working hard to make everyone else rich.
You work too hard to get to the end of your life and you have nothing to show for it! 2024 is your year and TODAY is the… pic.twitter.com/yC8N57DueD
– Dave Ramsey (@DaveRamsey) January 12, 2024
Student loans and airline miles
Ramsey also included credit card points and student loan payments in the discussion.
“It's a mathematical question,” he said. “When you give your income to someone else, you no longer have it. And when you give your income, you've given up your financial future, all for shit. For a stinking flat screen.”
“You know, of the number of people who start college, how many graduate?” she asked. “Fifty-two percent. 'That's an investment in my future,' said the other 48% who are sitting at home without a damn degree. But, by God, they got the student loan debt. And you know how to get rid of it.” her. Sallie Mae? Either you pay her in full or you die.
(Note the National Center for Educational Statistics It is estimated that, as of 2020, 60% of those enrolled in 4-year colleges eventually graduate, but it takes six years to earn their degrees).
“The borrower is a slave to the lender,” Ramsey continued. “That's what this math says when you give up your income. When you give up your income, you have nothing. All the money in, all the money out.”
The bestselling author also directed his ire at credit card points and airline miles.
“Jesus Christ, we're sitting there counting our Discover points,” Ramsey said. “Let's do the math. You know, to get $1,000 back from Discover, you spend $100,000. How can spending $100,000 to get $1,000 back make you rich? Where did you take your math class?”
“Everyone is counting their points and everyone is trying to find some way to beat Chase,” he added. “Chase is kicking your ass. His building is bigger than yours and his furniture is nicer than yours. You should have the idea by now.”
“Stop being children walking around in adult bodies. Make a plan and follow it. We have to stop this.”
