Can I Afford a $5,000 Watch?

Summary

The Ramsey Show Highlights: "Can I Afford a $5,000 Watch?"

Release Date: March 7, 2025
Host: Ramsey Network
Guests: Dave Ramsey, Rachel Cruze

---

Introduction

In the March 7, 2025 episode of The Ramsey Show Highlights, Christian reaches out with a financial dilemma: he's contemplating purchasing a luxury Tudor watch priced around $5,000 to $6,000, despite having no debt and a solid savings foundation. Hosted by Dave Ramsey and featuring insights from Rachel Cruze, the episode delves into the nuances of discretionary spending, the emotional motivations behind purchases, and maintaining financial discipline even when one is financially stable.

---

Christian's Financial Profile and Inquiry

Christian begins by outlining his financial standing:

• No Debt: Christian proudly states, "I have no debt at all." ([00:06])
• Net Worth: His net worth, influenced by market fluctuations, sits around $1.33 million.
• Income: Last year, he earned approximately $125,000.
• Savings: Beyond an emergency fund, he maintains around $35,000 in liquid cash, complemented by a 401(k), Roth IRA, and standard investment accounts.
• Current Assets: Owns a Rolex watch and is contemplating another luxury timepiece.

Christian poses a crucial question: "What is an appropriate amount of money to spend on a luxury watch? And if so, does this make sense for me as a want, not necessarily need, to spend this amount of money on a watch?" ([00:50])

---

Evaluating the Purchase: Financial and Emotional Considerations

Dave Ramsey initiates the discussion by affirming Christian's solid financial base, emphasizing the importance of his debt-free status and robust savings. He probes further into Christian's liquidity beyond the emergency fund to understand his disposable income.

Rachel Cruze's Perspective: Rachel introduces a thought-provoking approach to discretionary spending. She asks Christian, "What will this watch bring you like in your chest? Like, if you have your fist on your chest, what will this watch bring you?" ([01:21])

Christian reflects, admitting that while he appreciates the craftsmanship and aesthetic appeal of luxury watches, it doesn't offer him any substantial emotional fulfillment or commemorate a significant life event.

Rachel shares personal experiences, highlighting that expensive purchases like guitars and watches sometimes fail to fill emotional voids. She recounts observing someone confidently flaunting a modest Timex watch, contrasting societal expectations of status symbols ([02:55]).

---

Balancing Wants with Financial Wisdom

Rachel advises Christian to introspect deeply about his motivations:

"If you can light it on fire, if you could take that pile of cash, if you can take 5,000 bucks, set it on fire on your kitchen table and watch it burn to ash, and you're okay. And you're okay. It won't prohibit you." ([07:37])

This metaphor underscores the importance of detaching emotional value from material possessions. Rachel emphasizes that while it's perfectly acceptable to purchase luxury items when financially stable, one must ensure that such purchases don't impede long-term financial goals or personal satisfaction.

Dave echoes this sentiment, discussing the limited lasting joy that material possessions can provide. He references Arthur Brooks' philosophy on money management, highlighting the five key uses of money: giving, saving, buying time, investing in experiences, and purchasing items. Notably, he points out that "the one thing that does not bring lasting joy is stuff." ([04:24])

---

Establishing Spending Guidelines

Christian seeks concrete advice on setting spending limits:

"Is there, like, a rule or a percentage of a net worth that you'd be, you know, like a percentage of my net worth that I could spend on a want that wouldn't necessarily obviously break the bank, but it's like you're comfortable with just blowing." ([07:22])

Rachel reiterates Dave's earlier metaphor, emphasizing emotional comfort over strict percentages. She encourages Christian to evaluate his ability to part with the money without regret, suggesting that emotional detachment is a more reliable indicator than arbitrary financial metrics.

Dave adds practicality to the discussion, mentioning general guidelines such as keeping depreciating assets (like cars) within 50% of one's annual income. However, he notes that once individuals reach financial stability beyond foundational levels, personal comfort and emotional readiness should guide discretionary spending decisions ([07:37]).

---

Concluding Insights and Final Recommendations

As the conversation wraps up, Rachel provides a blend of encouragement and caution:

"If at 25, you can wrap your head around this idea because you have chosen to live the way you live, you have the opportunity. (...) You're going to have the opportunity to spend some more, but also be having that generosity muscle as well, because that is joy within money." ([08:04])

She commends Christian for his financial discipline and suggests maintaining a balanced approach that includes saving, spending, and giving. Rachel also touches upon diversifying investments and avoiding risky ventures like crypto, advocating for tangible assets such as real estate that offer stability.

Dave reinforces the trio's emphasis on balance, highlighting the joy and freedom that comes from integrating saving, spending, and giving into one's financial life. He concludes by encouraging Christian to enjoy his potential purchase but remain mindful of its long-term impact ([08:04]).

---

Key Takeaways

1. Assess Emotional Drivers: Before making significant purchases, evaluate the emotional motivations behind them. Ensure that buying a luxury item aligns with personal values and doesn't stem from societal pressures or fleeting desires.

2. Maintain Financial Discipline: Even when financially stable, it's essential to balance spending with saving and giving. Discretionary purchases should not compromise long-term financial goals.

3. Embrace a Balanced Financial Life: Integrating saving, spending, and giving fosters a sense of fulfillment and financial well-being. This balance is crucial for sustained happiness and financial security.

4. Invest in Lasting Assets: Prioritize investments in assets that offer long-term value and stability over depreciating or purely aesthetic items.

---

Notable Quotes

• "What will this watch bring you like in your chest?" – Rachel Cruze ([01:21])
• "If you can light it on fire... and you're okay. It won't prohibit you." – Rachel Cruze ([07:37])
• "The one thing that does not bring lasting joy is stuff." – Dave Ramsey ([04:24])
• "With money that you can spend it, you can save it, you can give it." – Dave Ramsey ([08:24])

---

Conclusion

In this episode, The Ramsey Show Highlights offers a comprehensive exploration of responsible discretionary spending. Through Christian's inquiry and the hosts' expert advice, listeners gain valuable insights into balancing financial prudence with personal desires. The discussion underscores the importance of emotional intelligence in financial decisions, advocating for a harmonious blend of saving, spending, and giving to achieve lasting financial and personal fulfillment.

Transcript

[Dave Ramsey]

Brought to you by the EveryDollar app. Start budgeting for free today.

[Christian]

25. I have no debt at all. My net worth, I guess with investments in cash sits around 1:33 depending on how the market is. And last year I took around 125,000 home and I want to buy a watch, a luxury watch, a Tudor. It's, it will range probably with tax around 5 to 6k. I already have a Rolex and so I guess my question is with my finances, no debt, nothing. What is an appropriate amount of money to spend on a luxury watch? And if so, you know, does this make sense for me as a want, not necessarily need to spend, you know, this amount of money on a watch?

[Dave Ramsey]

Yeah, I mean I think just a couple like tactical money questions. Do you, so you got, you have no debt?

[Christian]

None.

[Dave Ramsey]

And you have savings and emergency funds?

[Christian]

Yep.

[Dave Ramsey]

Okay.

[Christian]

Yeah.

[Dave Ramsey]

How much liquid cash do you have beyond your emergency fund?

[Christian]

Beyond my emergency fund, probably 35, 35,000 I have. Yeah. And then I have obviously 401k, my Roth and then standard investment account.

[Dave Ramsey]

Yeah.

[Rachel Cruze]

What will this watch bring you like in your chest? Like, like if you have your fist on your chest, what will this watch bring you?

[Christian]

I don't know. I kind of appreciate I guess, the craftsmanship. It's a nice watch. It looks cool. It doesn't do anything different than my phone, you know, flipping it over.

[Rachel Cruze]

Sure.

[Christian]

It's more or less just kind of like a want, you know, it's not like I'm buying it for some sort of, you know, to commemorate something. You know, I turned 26 this month. Like if you really want to call it. I'm buying it for something. I'm getting kicked off my parents life insurance. Like that. That's what I'm buying.

[Rachel Cruze]

Right, right. It's yeah. I, I, I, I, I would guess this. So Rachel, tell me Rachel is better at this than me. I have bought guitars that are really expensive that I've thought were going to fill a hole in my heart and they didn't. I love them and I told people like, no, no, they, they have a kind of tone or they put. I needed this guitar to make myself feel better. So there was that. I'll also tell you just as a 25 year old and I'm in my 40s, the single greatest flex I've ever seen when it comes to watches was doing an event with Jocko. Like and dude rolls up with a Timex and we were talking about his watch and, and the way he said it and you know, Jocko like from, from, you know, like Internet. But the way he said it tells the same time that everybody else other watch tells. I just remember thinking like, you're the baddest dude I've ever met. Not to mention, you know, he's Jaco. But it was a, it's almost a.

[Dave Ramsey]

Flex not to have it kind of thing.

[Rachel Cruze]

Yeah, I rem just. And I guess that would be my warning to you as a 25 year old is if you want nice things and you got cash and like, whatever.

[Dave Ramsey]

Yes.

[Rachel Cruze]

Yeah, you can afford it, fine. The thing is, is I think sometimes I remember being 25, I remember being 35 and thinking I needed a pair of jeans, I needed a car that said I needed sho that said X, Y and Z. And now that I'm older and I've hired a bunch of people in my life and I'm meeting people over the country, I was actually completely opposite. Wrong. The eyebrow gets raised when somebody walks into somewhere nice and they've got jeans on because you think, oh, that guy knows something. I don't know. Or when they pull out their Timex and you know they're worth millions and millions of dollars, you end up going, that's kind of awesome actually. Right. And so, but, but you. I think cash to cash, you can afford it. It's a nice thing.

[Dave Ramsey]

Totally. And I think what John's saying, I think the sentiment of stuff. Stuff is always just like, just I think it's an awareness within you. Christian and I do the same. I mean, like, I mean, I think there's just something to be said of when I want something. Asking the questions, you know, if nobody sees this, do I still want it? How much of my motivation is for other people? How much of it is for my own ego to feel something? And even from a joy perspective, Arthur Brooks talks about this, that we can do five things with money. We can give it, save it, buy our time back, buy experiences with who we love and buy stuff. And the one thing that does not bring lasting joy is stuff. So again, this whole kind of concept of I'm buying this watch because I love it because I have like, I bought a purse for my birthday last year and it was a nice purse and it was like, okay, think like.

[Rachel Cruze]

Whatever car you want that nice of a purse.

[Dave Ramsey]

Like, no, no, do not. No, not that nice. There are levels of purses. There's not that kind of purse. But, but it wasn't from Target. And so it was just this idea of like, okay, if I have this purse, if I don't have this purse. What does Rachel say about herself? How. How is she feeling when she walks in a room? Like, there's just a lot of introspect ness I would have for myself. The higher dollar amount you spend on something, I think the more it's just kind of good to explore some of that. And maybe it's more of a, you know, you can buy it and you're totally fine if you buy. We are not against stuff. Go get some nice stuff. Christian, you have set yourself up very well. You make great money. You don't have debt. You've lived below your means. Like, you are doing great. You can buy this watch. I just don't. John. And I think our biggest caution with stuff is don't be under the illusion that it's going to fulfill you long term and that it's going to bring some level of satisfaction. Because the way that things are marketed to us and the belief in that and what we wear, I mean, it. It is crazy. The status symbols that are out there and what we believe. And the thing is, people get in trouble with that. So again, I'm not worried about you from a money perspective at all. I think you could probably buy two of these and you would be fine. But it's more about you long term and who you are. Christian, you should ask John and Rachel what kind of watches and how much did they pay for theirs that we currently have, huh?

[Christian]

You guys got on?

[Dave Ramsey]

Oh, okay. Christian, I've got an Amazon watch for $15. John, what kind of watch do you have? This is such a flip of the script, which I love.

[Rachel Cruze]

I've got this dope Garmin watch. I love Garmin watches. A free ad for Garmin. They're the best. I love them. While we're on this topic, Rachel, tell us about how much your car that you've rolled into the parking lot costs. Because mine costs $4,000. You. Anyways, we love, we love nice stuff. I'll also say this. If at 25, you can wrap your head around this idea because you have chosen to live the way you live, you have the opportunity. And I didn't find this out until I was old, you can buy it once really nice if you buy with cash. If you buy a super nice pair of Wolverine thousand mile boots, you can resole them and you can take care of them and you can give them to your grandkids. But they're really expensive out of the gate, right? And so if you say, I'm gonna buy a couple of really nice watches, I love them. I'M kind of a watch guy, and that's cool and awesome. And. No, this will fill no gap in my soul. I won't feel any better about myself. In fact, I'll feel a little bit weird because I'm gonna see somebody who needs money the net following day or whatever. I know some people who have a rule that if they buy something really nice, they give that amount away or a percentage of that amount away just to balance her own soul out. Whatever. But I love the idea of buying once and. And letting that just be that.

[Dave Ramsey]

Right.

[Rachel Cruze]

I'm gonna buy a nice. Go ahead.

[Christian]

I don't mean to extend this con, like, the question over, but is there, like, a rule or a percentage of a net worth that you'd be, you know, like a percentage of my net worth that I could spend on a want that wouldn't necessarily obviously break the bank, but it's like you're comfortable with just blowing.

[Rachel Cruze]

I love Dave saying, like, if. If you can light it on fire, if you could take that pile of cash, if you can take 5,000 bucks, set it on fire on your kitchen table and watch it burn to ash, and you're okay. And you're okay. It won't. It won't prohibit you. Yeah, yeah, yeah.

[Dave Ramsey]

That's it. I mean, there's not really this, like, percentage. I mean, we say things like with cars, like, we always say, like, things with motors and wheels. Right. Cars can't.

[Rachel Cruze]

Yeah.

[Dave Ramsey]

Depreciating asset. Yeah. No more than 50 of your annual income. Like, there's some things around that. But when you get to the point where you are. Yeah. Of. I mean. Yeah. You're. You're Beyond Baby Step 3, and you just have extra cash that you want to spend. So it just. You emotionally have to detach from that money. And if you can really do that and it doesn't keep you up at night, then you're good to go.

[Rachel Cruze]

Well. And it could be pathological. I. I would love for you to also, like, get a nice watch. Dude, you sound like you got a level head, man. Get a nice watch and also start laying the groundwork to get your money out of crypto. Whatever nonsense you have it in and buy yourself a house that nobody can ever take from you. Right. Some of those more stable.

[Dave Ramsey]

Yeah.

[Rachel Cruze]

Assets that you can anchor into.

[Dave Ramsey]

Yeah. And. And to, you know, a well balanced. And you're learning this early, Christian. I mean, honestly. I mean, this is stuff that it's like, so good to have because. Where you are financially. But always remember, with money that you can spend it, you can save it, you can give it. And we say on the show we are fans of all three. So as you continue to become more successful and continue to live below your means, you're going to continue to build wealth. You're going to have more and more savings. You're going have the opportunity to spend some more, but also be having that generosity muscle as well, because that is joy within money. And if you can get that early and live with it, there's a there's a freedom and a joy there. That's unbelievable. So giving, saving, spending, doing all three. All right, Christian, have fun with your new watch. This is the Ramsey Show. Create your free every dollar budget today, the simplest way to budget for your life.