The Rachel Cruze Show - What America’s #1 Wealth Killer Is Actually Costing You

Episode Date: June 16, 2025

📈 Are you on track with the Baby Steps? Get a free personalized plan. Could the #1 wealth killer in your life be parked in your garage? In this episode, find out why your car could be keeping you broke, plus the right way to own one instead. Next Steps: 🎥 Watch my video 10 Things Quickly Becoming Too Expensive for the Middle Class. 💰 Find out your earning potential with the Investment Calculator.  🚙 Get our free Ramsey Car Guide. 💵 The simplest way to budget. Download the EveryDollar app for free!   Connect With Our Sponsors: Learn more about Christian Healthcare Ministries. Get 20% off when you join DeleteMe. Explore More From Ramsey Network: 🍸 Smart Money Happy Hour 🎙️ The Ramsey Show   💸 The Ramsey Show Highlights 🧠 The Dr. John Delony Show 💰 George Kamel 🪑 Front Row Seat with Ken Coleman  📈 EntreLeadership   Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

All right, spoiler alert. Your ego is probably not going to like this episode, but we're going to get real because it's good for all of us. So we're going to break down what America's number one wealth killer is actually costing you. And to keep things interesting at the end, I'll share my one exception to avoiding this wealth killer. So stay tuned. Make sure to like, subscribe, and share this episode with a friend. So there's a lot of conflicting financial opinions out there, but I really do believe the number one wealth killer is something that almost. else all of us can agree on when it comes to financial experts, and that is car loans. So there are plenty of other countries around the world where they use cars for utility. Like it gets them to point A to point B, right? But for us, it's become part of our identity to the point that it's like we will go

into debt and financially we will not make smart decisions because of our car. So listen, I get it. Our cars, they say a lot about us. And I remember, you know, being like, I'll never drive a minivan because I just felt like they're ugly. And that just says, like, I'm not cool anymore. And like, no, I'm not going to be that. I'm not going to be that mom. And then what happened? Except my ego and pride is Josh.

And I've been driving a minivan for five years. So again, I don't love it. Like, it's not like this is like my dream car ever. Like, it's very functional. I do love it. I don't like how it looks, but I love it. So I get it. I get that like it becomes your identity a little bit.

But we want to get over that. Because, again, I would take a paid off car all day. over a car with a lot of debt that looks great. So let's talk about why this is the number one wealth killer. So number one is that immediate money is lost. When you buy a brand new car, okay, the moment you drive it off the parking lot of that dealership, it loses 9% of its value.

It is the most expensive purchase that we make that goes down in value. And research shows that new cars lose the most value within the first year of ownership, which means your car is worth about 20% less than what you paid for it, 12 months earlier. And that's for a brand new car. So again, when you buy a car, you're basically buying a depreciating asset. I am against using debt of any kind when it comes

to your financial life, but especially with this one, because again, you are borrowing money and then paying interest on top of that for something that's going down in value. Again, something if we can remind ourselves that's supposed to just get us from point A to point B. It wasn't supposed to be all about our identity and who we are. And if we're successful, if we're not, if we look cool, if we don't. No, it was supposed to like literally drive us to where we need to go. And now we are going into debt and paying car loans every month with high interest. And it's just insane.

Absolutely insane. Number two, it's an embarrassing way to waste your money. Because again, like we were just saying, it is just a car. It's a car, you guys. I mean, in Europe, people are walking around. They're taking trains. They're driving tiny cars. I mean, they're doing all of this.

But here, for some reason, in America, it has become something of like the status. And what I would say around the world, maybe that is true. But again, do not make a bad financial decision by going into debt for something that is supposed to get you

from point A to point B. So remember that. Another embarrassing and potentially dangerous way to lose your money and your ownership of your personal info is by not protecting your data from online scammers, which is why I love and use delete me.

So if you don't remove your personal data from the internet. It's basically like a billboard with your name, your address, your email, even your kids' names, and they're out there on sketchy data broker websites. And those data brokers collect your data and then sell it to other companies and puts you

at risk for scams and fraud. But the great news is that Delete Me goes in and will remove your data to help protect you from fishing, harassment, and other online threats. Winston and I, we use Delete Me. We love it and it saves us so much time and worry. So you guys, your family's

and financial security, they're way too important to leave exposed. So sign up for Delete Me and take control. Go to join DeleteMe.com slash Rachel for 20% off, bringing your monthly cost to under $9. So click the link down in the description to check out Delete Me. All right. Number three is Opportunity Cost. So today, the average monthly payments on a new car is somewhere around $734. So that is a lot of money to be going out.

every single month. So instead, let's say you bought a used car, you know, for a couple thousand bucks that you saved up. And instead of paying $734 to the car dealership or to the bank, let's say you actually took that and you invested that. And let's say you did that from age 39 to age 65. And over the course of those years, with compound interest, you will have just over $1 million. Isn't that crazy? if you paid yourself a car payment versus the bank, you would keep all that money, and when it's invested, it is growing. In compound interest does its beautiful work.

So it's incredible what can happen. So the opportunity cost of a car loan is so, so real. I will leave a link to Ramsey's investment calculator so you can plug in your own numbers and see for yourself. I'll put that down below. All right, number four, the right way. So if you currently have a car loan

and you do want to pivot, here's what I would recommend. So I would look and see, okay, can you pay this car off completely in about 18-ish months? If it's going to take you longer than that, sell the car. It's too expensive. And if you're underwater on it, so let's say you have a $34,000 car loan, but you can only sell it for $30,000.

Then go take a small loan of like $6,000 to $7,000, buy a really crappy car with some of that, pay off the rest, sell it, get rid of it. I would rather have a $7,000 loan than a $34,000 loan, right? So you can do it even if you're underwater, look at your options because again most of the time it is it is dragging you down and what that payment could do then if you kept that money instead of sending it to the bank how faster you could get out of other debt that you're potentially in so selling the car is usually the answer for a lot of people now if you never want to have a car loan again make sure to check out ramses car guide

and it's everything from buying and selling the car maintenance all of it i'll put a link down for you to check out now let's talk about the one exception i have to the no buying new cars rule. When we talk about it goes down in value so much. We always say if you have a net worth of a million dollars, then you can afford to take the hit financially. There's almost like this idea of, you know, could you see a pile of money in the middle of the room,

light it on fire, and does that affect you? Right? And for a lot of people, as they're getting out of debt, they're trying to save money. Yes, that would affect them. They want that money that's right in the center of the room. Instead of burning it, I need it. But when you hit around that millionaire status,

then you have enough bandwidth, you have enough margin in your money that if you, you know, take the 9% loss or the 20% loss in the first year, financially, dollar to dollar, usually is not going to affect you as much. So once you hit that net worth millionaire status, that is when you can buy a brand new car. So wasting money on car loans again, it's kind of just like this classic middle class habit that a lot of people have and get rid of it. Stop. Don't do that.

Pay yourself that money versus the bank. again, on a depreciating asset. So if you want more info when it comes to the new middle class, make sure to check out my episode of 10 things quickly becoming too expensive for the middle class. You can click here, or if you're listening on podcast, I'll put a link below. All right, you guys, remember take control of your money and create a life you love.