The Ramsey Show Highlights: Episode Summary - "Buy My Dream Car?"
Episode Details
- Title: Buy My Dream Car?
- Host/Author: Ramsey Network
- Release Date: May 23, 2025
- Duration: Under ten minutes
Introduction to the Caller: Nathaniel's Dilemma
At 00:10, Nathaniel calls into "The Ramsey Show Highlights" to seek advice about a significant financial decision. He shares that he recently received a substantial raise at his job and has identified his dream car—a Volkswagen Golf GTI—as it is being discontinued this year. Nathaniel is torn between purchasing the car now or continuing to invest his money into savings.
Nathaniel (00:10): "I just got a pretty significant raise at my job, and I was made aware that the dream car I've always wanted to buy is getting discontinued this year. And I was just curious if it makes financial sense for me to buy the car or chuck it all into savings like I've been doing."
Initial Reactions and Clarifications
George expresses enthusiasm upon hearing about the car, assuming it might be a truck—his preference. Rachel questions the discontinuation specifics, leading Nathaniel to clarify that it's the manual transmission version of the Volkswagen Golf GTI that's being phased out.
Rachel (00:30): "What are they discontinuing these days?"
Nathaniel (00:33): "It's a. It's a Golf GTI. Volkswagen Golf, but they're stopping making it in a manual transmission and pull one up."
Financial Breakdown and Assessment
Nathaniel provides a financial snapshot: he earns approximately $125,000 annually, has no debt, rents his home, owns his current car outright valued between $13,000 and $15,000, and has $15,000 in savings. He estimates the new car, including taxes and fees, to cost around $35,000 to $36,000.
Nathaniel (00:55): "It'll be right in the neighborhood of probably after taxes and title and fees and everything, probably about 35 to $36,000."
Expert Analysis and Guidance
George commends Nathaniel's financial standing but raises concerns about taking on a loan, especially since Nathaniel plans to buy a house soon. He emphasizes that taking a loan for the car might not be the wisest decision given his financial goals.
George (01:02): "How much do you make a year, Nathaniel?"
Nathaniel (01:05): "I make about $125,000 a year."
Rachel reinforces the idea that incurring debt for the car undermines the notion of "easily affording" it.
Rachel (02:48): "Nathaniel, you have an incredible income and incredible future. I just want to change your language from I can afford meaning a payment to I can afford meaning in full, in cash."
Dave interjects humorously but underscores the practicality of Nathaniel's decision, highlighting the transient nature of such "dream" cars in the market.
Dave (03:25): "Nathaniel, I would get a different dream. I don't think this car is worthy of a dream."
Further Financial Considerations
George advises against purchasing a brand-new car unless one has a substantial net worth, suggesting instead that Nathaniel consider a used Volkswagen GTI. This approach would require Nathaniel to save an additional $10,000 to accommodate the purchase without compromising his emergency fund.
George (05:02): "We say not to buy a brand new car unless you have a million dollar net worth, which you do not have. So I would look at a used Golf GTI and figure out how to cash flow a used version, which would be probably what, maybe 25,000."
Nathaniel acknowledges the practicality of this advice, noting the rarity of the specific manual transmission model he desires.
Nathaniel (04:46): "Yeah, I mean, that would work."
Personal Insights and Broader Financial Habits
Nathaniel shares his frugal lifestyle, explaining that he prioritizes saving over typical leisure expenditures. He also touches upon past financial endeavors—flipping cars as a side hustle—which were hindered by familial disagreements affecting his net worth.
Nathaniel (08:12): "I like seeing the money I have in savings continue to go up. The reason that I don't have nearly as much in savings right now as I used to is because I used to flip cars as a side hustle when I was younger and I would put them in my parents' name. And recently my parents and I had a disagreement around my 18th birthday where they decided that they didn't enjoy interacting with me anymore and they refused to give me possession of the cars that I had."
Rachel commends Nathaniel for his financial discipline despite personal setbacks, encouraging him to reassess his spending habits to better align with his high income.
Rachel (08:11): "Well, here's the good news, Nathaniel. You have an incredible income and incredible future...with your income, you're going to be able to save up 50 grand a year if you keep on living less than you make."
Conclusion: Balanced Advice and Encouragement
The experts collectively advise Nathaniel against purchasing the new Golf GTI on loan, emphasizing the importance of maintaining his emergency fund and avoiding unnecessary debt. They encourage him to keep his dream alive by saving towards a used model, which aligns better with his financial goals and current situation.
George (06:06): "So keep the dream alive, Nathaniel. You need to buy a used one here in probably three years when someone's selling it and you need to pay cash for it. So those were our two no GOs. No brand new car for Nathaniel because you're not a multi-million."
Rachel (09:35): "Nathaniel, we're rooting for you, man."
Key Takeaways
- Assess Financial Readiness: Even with a high income, incurring debt for non-essential purchases can impede long-term financial goals.
- Prioritize Savings and Emergency Funds: Maintaining liquidity and savings is crucial before committing to large expenditures.
- Dreams vs. Practicality: It's important to balance personal aspirations with financial prudence to ensure sustainability.
- Consider Used Alternatives: Purchasing a pre-owned version of a desired item can offer financial relief without compromising on the dream.
Notable Quotes:
- Rachel (02:48): "You can't easily afford the car if you have to go into debt for it."
- George (05:02): "We say not to buy a brand new car unless you have a million dollar net worth, which you do not have."
- Rachel (08:11): "With your income, you're going to be able to save up 50 grand a year if you keep on living less than you make."
- Dave (03:25): "Nathaniel, I would get a different dream. I don't think this car is worthy of a dream."
This episode underscores the importance of thoughtful financial planning and making informed decisions that align with one's long-term objectives. Listeners are encouraged to evaluate their financial positions critically before pursuing expensive aspirations.