84% of Millionaires Told Dave Ramsey This One Move Built Their Wealth

Dave Ramsey says 84% of the millionaires surveyed by Ramsey Solutions identified avoiding car payments as a significant factor in building their wealth. The company questioned more than 10,000 U.S. millionaires about the habits that helped them reach a seven-figure net worth.

That finding matters when the average new-car payment reached $770 in early 2026, according to Experian. Avoiding a large payment could help drivers keep more cash in their pockets and invest the rest. Here's why Ramsey considers car debt such a major barrier to building wealth.

The 84% figure comes from Ramsey's own research

Ramsey Solutions' National Study of Millionaires surveyed more than 10,000 millionaires between November 2017 and January 2018 using a third-party panel and the company's own research panel.

This was internal company research, not an independent academic study. Ramsey's publicly available report also doesn't show the underlying question or full data for the 84% figure, so the finding should be understood in that context.

Avoiding a payment leaves more money to invest

A car payment doesn't just include the vehicle's purchase price. Borrowers also pay interest, and every dollar sent to a lender is money that isn't being invested.

That doesn't prove car payments prevent people from becoming millionaires. However, the principle behind Ramsey's argument is straightforward: Reducing debt obligations creates more room in the budget for retirement contributions, emergency savings, and other long-term goals.

Lifestyle inflation keeps the cycle going

Ramsey also sees vehicles as a common source of lifestyle inflation. A raise arrives, an older car suddenly feels embarrassing, and the driver upgrades because the new payment appears manageable.

The trouble is that affordable isn't the same as helpful. A household may be able to make the payment while reducing how much it saves each month. Repeating the upgrade cycle every few years could keep a permanent claim on future income.

Car payments carry a large opportunity cost

Ramsey illustrates the trade-off with a young couple spending about $1,000 per month on two car payments. If that same amount were invested for decades, it could grow into a seven-figure portfolio.

For example, investing $1,000 monthly for 30 years at a hypothetical 7% annual return would grow to roughly $1.2 million. That result isn't guaranteed, and actual returns could be higher or lower. Still, it shows why the payment's true cost extends beyond interest.

Ramsey recommends buying a boring used car

Ramsey's preferred approach is to save money and purchase a reliable used vehicle with cash. In one example, he recommended inexpensive, unglamorous cars with a reputation for reliability rather than vehicles chosen to impress other drivers.

Ramsey's car-buying guidance also says the combined value of all household vehicles should stay below half of annual income. He advises avoiding new cars until reaching a net worth of at least $1 million.

Look at more than the monthly payment

Dealers frequently frame affordability around the monthly payment, but extending a loan could make an expensive vehicle look deceptively manageable. Nearly 36% of new-car loans in the first quarter of 2026 ran longer than six years, according to Experian.

Drivers should compare the purchase price, interest, loan length, depreciation, insurance, fuel, maintenance, registration, and taxes. Those all-in costs reveal what the car actually demands from the household budget.

Use 10% to 15% as a warning light

A common budgeting benchmark is to keep total transportation costs within roughly 10% to 15% of monthly take-home pay. That includes the payment, insurance, fuel, maintenance, and other routine vehicle expenses.

This percentage isn't Ramsey's central prescription; he favors having no car loan at all. Still, the range gives drivers a useful warning light. If transportation consumes substantially more, the vehicle could be crowding out other priorities.

Redirect the old payment immediately

Paying off a vehicle doesn't build wealth automatically. If the former payment simply disappears into restaurant meals, shopping, or another car upgrade, the household hasn't gained much ground.

Once the loan is gone, drivers could automate an equivalent contribution to a workplace retirement plan or IRA. Those who haven't built an emergency fund might split the money between investing and cash reserves, which could make the next repair or car purchase easier to handle.

A modest loan isn't automatically disastrous

Ramsey's no-debt position is firm, but paying cash isn't realistic for every household. Someone whose vehicle breaks down may need reliable transportation before there is time to save the full purchase price.

A modest loan for a reasonably priced car isn't automatically ruinous, particularly if the borrower chooses a short term and continues investing. The broader lesson is to avoid overextending on a depreciating asset, not to treat every borrower as financially irresponsible.

Bottom line

Ramsey's larger point is that an expensive vehicle could absorb income that might otherwise build long-term wealth. Avoiding oversized car payments and investing the difference may help lower your financial stress while making steadier progress toward retirement.

After paying off a car, consider creating a separate vehicle-replacement fund alongside retirement contributions. Saving even part of the old payment for the next purchase could reduce the chance of falling back into another costly loan when the current car eventually needs replacing.

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