Dave Ramsey Says Your Car Could Cost You $10 Million -- and He May Be Right

Is the car in your driveway worth the opportunity cost?

Is the car in your driveway worth $10 million? The answer to that question is definitely no. Unfortunately, many people are giving up that much money, thanks to their vehicles -- at least according to finance expert Dave Ramsey.

How could your car cost you millions? Here's what Ramsey has to say about why your vehicle could come at such a steep price.

How your car could cost you $10 million

Ramsey warned that your vehicle could cost you millions of dollars as a result of the opportunity cost associated with always having a car payment.

"This 'always have a car payment' cycle is holding people back from really moving forward with their money," Ramsey said. "A shift in mindset (and in where that car payment is actually going) could set you up for some serious riches in retirement."

Ramsey explained that most people view car payments as "just part of life," but when you spend hundreds of dollars every single month on your vehicle, you are using up money that could be better invested elsewhere. And since most people have a limited amount of money, that becomes a huge problem.

Since the average payment on a new car is $577 per month, Ramsey did the math and figured out that if you invested that amount of money every month and earned 11% annual returns, you would end up with just under $10 million by age 67.

But, obviously, if you are using that money to buy a vehicle instead of depositing it with a brokerage firm and putting it into the stock market where you could earn those returns, you will end up with a bunch of cars you drive over the course of your life instead of the $10 million that you could have had.

While Ramsey has given some questionable financial advice, he is absolutely right that investing $577 a month could leave you with millions -- and that this would be a far better outcome than making hefty car payments and ending up with very little to show for your efforts over time.

Here's what Ramsey suggests to end up $10 million richer

Ramsey's solution to this problem is simply to avoid car payments altogether so you can invest the $577 per month you might be spending on your vehicle and thus end up a multimillionaire instead.

"Avoiding car loans is worth it," he said. "So, get on a budget, save up cash for your car, and build wealth!"

Ramsey recommends buying an affordable used car and ideally purchasing at the end of the month, the end of the quarter, or during a holiday sale, when prices will be lower. He suggests negotiating when you make your purchase -- especially if you are a cash buyer -- and advises that "what you can afford is based on the amount of cash you can pay up front."

While it may seem like a challenge to save up for a car and avoid car payments, it's worth trying to make that happen if you can. That way, you can listen to Ramsey's advice and redirect your car payment money toward eventually becoming a millionaire.