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Marie Alcober
Updated Sep 1, 2026
Dave Ramsey explains why having two nice cars with US$500 to US$700 payments is the clearest sign someone will never build real wealth.
Before adding a second car payment, check whether you're overpaying on the one you already have. You can compare rates in minutes with Rates.ca.
Once you trim your budget, put the savings to work. Consider investing in low-cost index funds with CIBC Investor's Edge.
Over the course of his long career, radio personality Dave Ramsey has noticed several key indicators of Americans’ financial status.
One of these metrics, he said on an episode of The Ramsey Show, might even predict whether a middle-class family could break out of their income bracket and become wealthy.
At least, that is what he told Micah, 24, from Washington, DC, when the military man called in during the episode looking for financial advice regarding a potential car purchase.
Micah said he earns US$80,000 a year. He already owns a car worth US$13,000, but is tempted to purchase a new sports car — a Nissan 370Z — for US$30,000 in cash. He admitted this is purely an indulgence and that the new car would be for “play.”
He called Ramsey to ask whether he should invest the money rather than spend it on a vehicle — and that’s when Ramsey let him in on a little secret.
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Middle-class indicator
Ramsey’s advice was simple: say no to the second car. As for his reasoning, the finance guru pointed to something he’s noticed over the years: “The way you know someone is going to stay middle class is when they have two very nice cars — that are obvious [sic] US$500, US$600, or US$700 payments — sitting in front of a middle-class house,” he said.
Americans borrow an average of US$42,332 for new vehicles and US$27,128 for used vehicles, according to data from Experian. The Ramsey Show hosts pointed out the obvious: more vehicles means more bills, and those bills add up fast.
So before you even think about a second car payment, it's worth checking whether you're overpaying on the car you already have. One of the easiest places to trim your budget is car insurance.
By using a comparison platform like Rates.ca, you could potentially save $500+ by comparing 20+ quotes from top-rated auto insurance providers to ensure you aren't paying a hidden ‘loyalty tax’ to your current insurer.
Just answer a few basic questions, and Rates.ca will show you the most affordable deals in your area in as little as 3 minutes.
Not only is the process 100% free, but you could also potentially save 20% by bundling your auto and home insurance together.
A better way to build wealth
“If you're going to build wealth, you have to keep as small an amount as possible going into things that go down in value,” Ramsey said. He says that someone trying to build wealth should have no more than 50% of their income in depreciating assets like cars.
What should they do with the rest of their income? Well, Ramsey is a big fan of the emergency savings account.
On a 2025 episode of The Ramsey Show, he said “I don’t care if you keep it in the sock drawer,” adding, “The emergency fund is not about making money. It’s insurance to keep you from cashing out or going into debt.”
An emergency fund can help you pay off debt and stay on track if you’re forced to face the unforeseeable — like a surprise job loss or a medical emergency.
Build your cash cushion
And even though an emergency account doesn’t have the potential to earn the level of returns you could get from investing in the stock market, you can still get a boost on your cash.
For example, open a personal account with EQ Bank in just a few minutes and you get access to the best features of a chequing account combined with a high interest savings rate.
When you fund your account, you’ll start earning 1.00% interest on every dollar right away. Set up a direct deposit, you can earn 2.75% on every dollar.
The account has $0 monthly fees and no minimum balances. Plus, you can withdraw from any ATM in Canada — for free.
Make investing a seamless routine
Once you have enough money to protect yourself, you should set up systems that make investing automatic and painless.
That’s where a platform like CIBC Investor’s Edge can make a real difference.
With a Regular Investment Plan, you can schedule automatic purchases of stocks, exchange traded funds (ETFs), or mutual funds at intervals that suit your budget. It’s a simple way to stay disciplined — investing a little at a time, without having to watch the market or stress over timing.
With a self-directed trading account, you can regularly invest in low-cost ETFs within tax-advantaged accounts like an RRSP, TFSA or FHSA.
Your money can grow more efficiently — and if you hold over $10,000 combined across registered and non-registered accounts, you’ll pay zero annual fees.
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Build your own investment portfolio and enjoy low commissionsInvest in alternative assets
Beyond investing in the market, you might want to consider alternative assets for your portfolio. For instance, nearly half of surveyed Americans with bank balances of $1 to $5 million said that real estate was a top factor behind their wealth, according to a survey by wealth manager Empower.
So, rather than spending your money on a depreciating asset like a car, you could consider putting that money into investment opportunities that will increase in value, diversify your portfolio and earn you passive income — all factors that can help you build wealth.
For investors who want real estate exposure without tying up large amounts of capital, you can invest in REITs and REIT ETFs within tax-advantaged accounts like a TFSA or RRSP with platforms such as CIBC Investor’s Edge.
Real estate isn't the only alternative asset worth a look.
Unlike a car, gold doesn't lose value the moment you drive it off the lot, and it's long been a go-to for investors trying to diversify away from stocks.
Platforms such as CIBC Investor’s Edge make it easy to purchase both gold e-certificates and gold ETFs directly from your trading dashboard — allowing you to invest in precious metals without having to worry about storing and protecting physical gold bars.
Enjoy low commission fees of C$6.95 per trade and no annual fees for the first year. Investors who make over 150 trades in a quarter fall in the active trader category — and can enjoy a discounted commission rate of C$4.95 per trade for stocks and ETFs.
Get 200 free trades when you open a CIBC Investor’s Edge account using promo code EDGE2026. Plus, enjoy unlimited commission-free trades on over 180 select ETFs. Terms and conditions apply. Offer ends September 30, 2026.
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Marie Alcober
Commercial Content Manager
Marie Alcober is a commercial content manager at Money.ca, where she develops branded content that helps readers make smarter money decisions.
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