Can I Afford a $80K Tesla?

Summary

Podcast Summary: Ramsey Everyday Millionaires Episode: Can I Afford a $80K Tesla? Release Date: March 10, 2025

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Introduction

In this episode of Ramsey Everyday Millionaires, the Ramsey Network hosts delve into the financial considerations of purchasing a high-end vehicle, specifically an $80,000 Tesla Model S. The discussion centers around whether such a significant investment aligns with prudent financial management, even for individuals with substantial income and net worth. Hosted by Dave Ramsey, Ken Coleman, Rachel Cruze, George Kamel, Jade Warshaw, and Dr. John Delony, the episode features a guest appearance by Brian from SmartVestor, who seeks advice on his potential Tesla purchase.

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Guest Profile: Brian from SmartVestor

Timestamp: [00:22]

Brian introduces himself as a professional from SmartVestor based in San Antonio, Texas. With an impressive annual income of $360,000, Brian presents his financial scenario to the Ramsey team. He discloses a net worth of $1.2 million, excluding his house, and indicates that he has the cash to purchase the Tesla outright. Brian's query is straightforward: Is investing $80,000 in a new Tesla Model S a financially sound decision?

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Ken Coleman's Financial Assessment

Timestamp: [00:35 - 02:53]

Ken Coleman takes the lead in evaluating Brian's situation. He begins by reaffirming Brian's eligibility based on his income and net worth. Ken states:

“We tell people not to buy a brand new car unless they've got at least a million dollar net worth.” [00:59]

This rule of thumb emphasizes financial stability before making large, depreciating purchases. Ken highlights that new cars, including Teslas, typically depreciate once they leave the dealership. He explains:

“New cars go down in value, including Teslas. They don't go up, they go down.” [00:59]

Ken reassures Brian that spending $80,000, which is less than a quarter of his annual income, is manageable within his financial framework. He contrasts this with a hypothetical scenario of an individual earning significantly more, stressing that the percentage of income dedicated to such purchases remains the crucial factor.

“You made 360, you can afford a $80,000 car.” [02:15]

Ken also addresses the importance of avoiding debt, noting that Brian plans to pay for the Tesla in cash, which further solidifies the financial prudence of the purchase.

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Depreciation and Asset Considerations

A significant portion of the discussion revolves around the depreciation of luxury vehicles. Ken emphasizes that:

“You can't afford a depreciating asset that's brand new when you drive it off the lot. That sound blump, blump.” [00:59]

He advises that only those with a net worth exceeding $1 million should consider purchasing new luxury cars, as they can absorb the initial depreciation without jeopardizing their overall financial health.

Furthermore, Ken compares Brian's situation to that of a high-earner, illustrating that the absolute amount spent is less important than the proportion of income allocated:

“If you made 15 million last year, you can afford a $400,000 car.” [02:10]

This perspective reinforces the idea that financial decisions should be relative to one's income and net worth, rather than being viewed in isolation.

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Hosts' Banter and Perspectives on Teslas

The conversation transitions into a lighthearted exchange between Ken Coleman and Dave Ramsey regarding Tesla vehicles. Ken humorously remarks on his preference for traditional car sounds:

“I need like an app for it. Make some muffler sound. Because a redneck needs a loud muffler and that's just all there is to.” [03:15]

Dave responds with skepticism about the auditory experience of Teslas:

“You like the hint of petrol in the air you drive.” [03:35]

Despite the banter, there's an acknowledgment of the growing popularity and appeal of electric vehicles among the hosts, as seen with Rachel and George using Teslas.

“Rachel are on the air with their little Teslas.” [02:55]

This segment adds a relatable touch, showcasing that even financial experts have personal preferences and humor when discussing lifestyle choices.

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Conclusion and Key Takeaways

Ken Coleman wraps up the discussion by affirming that Brian's plan to purchase the Tesla is financially sound given his substantial income and net worth. The key takeaways from this episode include:

1. Assess Your Financial Position: Before making significant purchases, evaluate your income, net worth, and whether the expense aligns with your financial goals.

2. Understand Depreciation: Recognize that new luxury vehicles depreciate rapidly. Ensure that such assets do not constitute a disproportionate part of your investment portfolio.

3. Affordability Relative to Income: The affordability of large purchases should be measured against your annual income rather than the absolute price tag.

4. Avoid Debt: Paying for expensive items in cash can prevent debt accumulation and maintain financial stability.

Brian's case exemplifies how individuals with high earnings and substantial net worth can make luxury purchases responsibly without compromising their financial well-being.

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Notable Quotes

• Ken Coleman: “We tell people not to buy a brand new car unless they've got at least a million dollar net worth.” [00:59]

• Ken Coleman: “You made 360, you can afford a $80,000 car.” [02:15]

• Ken Coleman: “If you made 15 million last year, you can afford a $400,000 car.” [02:10]

• Ken Coleman: “I need like an app for it. Make some muffler sound. Because a redneck needs a loud muffler and that's just all there is to.” [03:15]

• Dave Ramsey: “You like the hint of petrol in the air you drive.” [03:35]

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Final Thoughts

This episode of Ramsey Everyday Millionaires offers a nuanced perspective on high-value purchases, balancing financial wisdom with personal lifestyle choices. It underscores the importance of contextual financial decision-making and provides listeners with actionable insights on managing significant expenditures responsibly.

Transcript

[Dave Ramsey]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor Brian is with us.

[Ken Coleman]

In San Antonio, Texas. Hey, Brian. Welcome to the Ramsey show.

[Brian]

Hello, Ramsey team. It's a pleasure.

[Ken Coleman]

Pleasure, sir. How can we help?

[Brian]

Well, I just wanted yalls take on making sure I'm not crazy and considering an $80,000 new car. A Tesla model S. Cool.

[Ken Coleman]

Nice car.

[Brian]

Yes, sir.

[Ken Coleman]

All right, so what do you make?

[Brian]

Well, I make $360,000 a year.

[Ken Coleman]

Cool. What's your net worth?

[Brian]

I've got. Without the house included.

[Ken Coleman]

No house is part of your net worth. What's your net worth?

[Brian]

Okay. About 1.2. Okay.

[Ken Coleman]

All right. You got the cash to pay cash for it?

[Brian]

I do.

[Ken Coleman]

Okay. Buy it.

[Brian]

Okay.

[Ken Coleman]

Let me tell you what. Let me tell you the rule of thumb I use on this, okay? The reason I ask you those questions. We tell people not to buy a brand new car unless they've got at least a million dollar net worth. Ding. Checkbox. Okay. Because new cars go down in value, including Teslas. They don't go up, they go down. And you can't afford a depreciating asset that's brand new when you drive it off the lot. That sound blump, blump. When you go over the curb was 10,000 bucks. Okay.

[Brian]

Right.

[Ken Coleman]

That's what it is. You got to be able to. You got to be able to choke that down. And you can choke it down. And you don't buy new unless you got a million dollar net worth. You do. Okay. Second thing is, don't buy depreciating assets. Things with motors and wheels. In your case, wheels all added together that equal more than half your annual income. You make 360. We're buying 80. That's less than half your annual income. I'm assuming the other car, if there is one, is not, you know, not a $200,000 car. So you're probably okay.

[Brian]

Yes, sir.

[Ken Coleman]

Okay. So because you don't want too much of too much as a percentage of your income invested in things that are going down in value again, same thing. So, like, I got a friend that made 15 million last year, and he bought a $428,000 car. That kind of blows my redneck mind. I have my head. I have a hard time getting my head around that. But it's a very small percentage of his income. It's like most people buying a biscuit. Right. And so, yeah, not going to hurt his finances at all. Even though, you know, we. You Know, jealous people say stuff like, well, no one should ever write you. That's what jealous people say. No one should ever. So you got. If you made 15 million last year, you can afford a $400,000 car. It's that simple. You made 360, you can afford a $80,000 car, you got a million dollar plus net worth, you can afford to buy a brand new car. That's how I just. And you're paying cash. You're not going to borrow money. That's the three things I was looking for. You. You checked all three boxes? Yeah.

[Dave Ramsey]

And hey, he's done it the right way. And so this is.

[Ken Coleman]

He's.

[Dave Ramsey]

He's had to wait. That's the other thing that when, when, when Dave walks through those Glad George.

[Ken Coleman]

And Rachel are on the air with their little Teslas. Yeah, because I would have had to put up with the Tesla stuff. Telling a guy to buy a Tesla because there's no chance I'm doing that. But those two both are Tesla drivers. So you just. Batteries.

[Dave Ramsey]

Even if they came out with a really cool looking one.

[Ken Coleman]

They're. They are. They actually are a cool car. I just, I need.

[Dave Ramsey]

You want to see?

[Ken Coleman]

I need like an app for it. Make some muffler sound.

[Dave Ramsey]

Right.

[Ken Coleman]

Because a redneck needs a loud muffler and that's just all there is to.

[Dave Ramsey]

They do that. You know, they have these cars.

[Ken Coleman]

Really?

[Dave Ramsey]

Yes, absolutely. But I don't think it's enough for you.

[Ken Coleman]

No, it's not.

[Dave Ramsey]

I think you want to still know.

[Ken Coleman]

I'm sitting on a battery.

[Dave Ramsey]

You like the hint of petrol in the air.

[Ken Coleman]

That's it.

[Dave Ramsey]

That's. You want to smell that? You're driving.

[Ken Coleman]

It's actually, I'm trying to help the planet. Well, I mean, the planet gets destroyed by making those batteries more than me driving my raptor, I can tell you that.

[Dave Ramsey]

Oh, so you're green.

[Ken Coleman]

That's it, man. I'm. I'm totally okay. I'm down with the green. Right? Not at all.

[Dave Ramsey]

But yeah, it's very exciting.

[Ken Coleman]

It's funny. I don't care what you say.