​Dave Ramsey Breaks Down How A $40,000 Car Depreciates By $16,000 Over 5 Years, Says It’s Not A Path To Prosperity, Even On An $80,000 Salary 

When it comes to personal finance advice, Dave Ramsey speaks directly and to the point. He’s all about building wealth the right way – and according to him, buying a new car is not part of the plan. 
He took to the stage to address the top objections of his famous 7 Baby Steps System and one of the myths was that leasing a car is smart and that one can get a good deal on a new car. So, Ramsey broke down why leasing or financing a brand-new car can wreak havoc on your financial future.
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Many believe a new car is a good deal or an investment. Ramsey, however, disagrees. “Listen, honey,” he says bluntly, “if it has a motor or wheels, it goes down in value quickly.” He backs this up with hard numbers, pointing out that a new car loses about 60% of its value in the first five years, according to car sites like Carfax and Edmunds.
By his calculations, if you buy a car for $40,000, you’re looking at a loss of $24,000 over five years. That’s money straight out of your pocket for something worth significantly less when you drive it off the lot.
“When the tires clear the car dealer’s lot and go onto the road and you hear that sound, boom boom, that was $10,000,” he says.
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For someone earning $80,000 a year, losing $24,000 every five years on car depreciation isn’t a smart financial move. Ramsey points out the disconnect: You make $80,000 and you’re trying to prosper, but you’re going to lose $24,000 every five years? “Figure out how that’s going to lead to prosperity. It’s not,” he says.
Ramsey has studied the habits of millionaires extensively. He found that 82% of millionaires never had a car loan or lease. Instead, they pay cash for their vehicles, avoiding the financial traps of loans and leases. Ramsey’s advice is simple: “You want to be a millionaire? Do millionaire stuff. You want to be skinny? Do skinny people stuff.”
He says that even among the 18% of millionaires who did finance a car, many admitted it was a mistake. 
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Ramsey even shares his own experience to drive the point home. When he was younger, he bought a Jaguar for $39,000 and proudly drove it to his grandfather’s house. His grandfather, a cash millionaire, was less than impressed. “What the hell is that?” he asked.
When Ramsey explained it was a Jaguar, his grandfather asked what he paid. Upon hearing the $39,000 price tag, his response was brutal: “Oh my God, you’re stupid.” Ramsey defended his purchase, saying, “A car like this is an investment.” His grandfather’s retort? “Most of my investments go up.”
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