Dave Ramsey says there’s one way to tell if someone is going to ‘stay middle class.’ Here’s how you can break the cycle

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Over the course of his long career, radio personality and bestselling author 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.

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At least, that’s 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 (1).

Micah said he earns $80,000 a year. He already owns a car worth $13,000, but he is tempted to purchase a new sports car — a Nissan 370Z — for $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 so that he doesn’t “stay in middle class” for the rest of his life.

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] $500, $600 or $700 payments — sitting in front of a middle-class house.”

In this way, the host The Ramsey Show pointed out the obvious: More vehicles means more bills.

As for the size of those bills, Americans borrow an average of $43,582 for new vehicles and $27,528 for used vehicles in Q4 2025, according to data from Experian (2).

That’s money that could be better spent elsewhere.

Consolidate your debt

If, unlike Micah, you need to take out a loan to buy a car, then that’s an even bigger reason to reconsider your purchase. Why buy another car and add an additional monthly bill to your plate when you’re still struggling to pay the old car off?

If you’re feeling squeezed by high monthly payments, refinancing may offer some relief.

Drivers who refinance their car loans save about $142 a month on average, according to LendingTree. And borrowers who switch to a shorter loan term can save an average of $6,291 over the life of the loan (3).

LendingTree lets you shop around and compare rates offered on auto loans by reputable lenders near you.

You can find rates as low as 5.03% APR in just three simple steps. Once you fill out their form with some basic information about yourself and the vehicle you’d like to refinance, LendingTree will match you with up to five lenders that best fit your financial profile. From there, you can choose which offer you’d like to proceed with.

The best part? This process is completely free, and it only takes a few minutes.

Cut costs where you can

Beyond paring back your monthly car payment, it’s also worth cutting down on your monthly insurance costs.

According to Forbes, the national average cost for full-coverage car insurance in 2025 was $2,149 per year (or $179 per month). However, rates can vary widely depending on your state, driving history and vehicle type.

By using OfficialCarInsurance.com, you can easily compare quotes from multiple insurers, such as Progressive, Allstate and GEICO, to ensure you’re getting the best deal.

In just two minutes, you could find rates as low as $29 per month.

A better way to build wealth

If you’re looking for ways to grow your wealth, Ramsey has some advice for you, too.

“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,” he said. He also says that someone trying to build wealth should have no more than 50% of their income in depreciating assets like cars.

But what could 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 (4).”

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.

A high-yield account like a Wealthfront Cash Account can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your money when you need it.

A Wealthfront Cash Account currently offers a base APY of 3.30% through program banks, and new clients can get an extra 0.75% boost during their first three months on up to $150,000 for a total variable APY of 4.05%.

That’s ten times the national deposit savings rate, according to the FDIC’s March report.

Additionally, Wealthfront is offering new clients who enable direct deposit ($1,000/mo minimum) to their Cash Account and open and fund a new investment account an additional 0.25% APY increase with no expiration date or balance limit, meaning your APY could be as high as 4.30%.

With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, you get access to up to $8M FDIC Insurance eligibility through program banks.

Make investing a seamless routine

Once you have enough money to protect yourself, you might want to set up systems that make investing automatic and painless. With Acorns, you can invest while making the most of your daily purchases.

It works like this: Whenever you make a purchase with your linked debit or credit card, the app automatically rounds up the total cost to the nearest dollar and invests the change in a diversified portfolio of ETFs managed by experts at leading investment firms like Vanguard and BlackRock.

For instance, if you buy a donut for $3.25, Acorns will round up the purchase to $4 and invest the change in a smart investment portfolio. So a $3.25 purchase automatically becomes a 75-cent investment in your future.

Invest 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 (5).

So, rather than spending your money on a depreciating asset like a car, you might want to consider putting that money into investment opportunities like real estate, which will increase in value, diversify your portfolio and earn you passive income — all factors that can help you build wealth.

These days, though, you don’t need to buy a property outright to tap into this asset class. You can now tap into this market by investing in shares of vacation homes or rental properties through Arrived.

Backed by world-class investors, including Jeff Bezos, Arrived allows you to invest in shares of vacation and rental properties, earning a passive income stream without the extra work that comes with being a landlord of your own rental property.

To get started, simply browse through their selection of vetted properties, each picked for their potential appreciation and income generation. Once you choose a property, you can start investing with as little as $100, potentially earning monthly dividends.

For a limited time, when you open an account and add $1,000 or more, Arrived will credit your account with a 1% match.