We'll call that debt a stupid tax': Florida woman told Dave Ramsey of husband's 'horrible' choice to buy an EV for $72K — and falling gas prices mean charging it might cost more than fuel

Ashley from Jacksonville, Florida, faced a financial dilemma due to a “horrible, horrible decision,” made by her husband.

On an episode of “The Ramsey Show,” she described how her husband went from a fully paid-off modest car to an expensive electric vehicle (EV) that has changed their financial situation.

Dave Ramsey couldn’t believe how expensive the car was.

“$72,000 for a Kia?!” he gasped.

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The purchase has left the couple tens of thousands of dollars in debt.

And, according to a recent study from the Michigan-based consulting firm Anderson Econimic Group, the financial hole might be even bigger than first anticipated for the couple.

With the price of gasoline dropping, gas-powered vehicles just might prove to be more economical than an EV. As the study stated, gas-powered cars like the Honda Civic have an average fueling cost of $9.46 per 100 miles.

Compare that to the $12.55 per 100 miles it costs to load up an EV like the Nissan Leaf, which is based on energy cost data from the U.S. Energy Information Administration.

“With electricity prices steady and gas prices slightly down, we continued to see most traditional gas-powered vehicles as more economical to fuel than their EV counterparts," said Patrick Anderson, CEO and study author.

So what does this mean for Ashley and her husband?

'He's not good at this'

Despite having already paid off his car, Ashley revealed that her husband then decided to upgrade to an SUV for $32,000. However, the dealership convinced him to trade in that new set of wheels for an electric vehicle he wanted — a Kia EV6.

“We’re not in a financial place to be able to afford that car,” she said. “He’s currently the only one working.”

Ashley also said they still owed $62,000 on the auto loan and the dealership only offered $40,000 to buy the car back. In other words, the car has negative equity.

Meanwhile, the couple’s monthly car payments are $1,200, which is nearly as much as their rent of $1,500.

Auto loans and sinking car values are prominent trends. American consumers have raked up $1.61 trillion in auto loan debt as of the fourth quarter of 2023, according to the Federal Reserve Bank of New York.

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Meanwhile, electric vehicles have lost value faster than traditional used cars, according to analysis from iSeeCars.com. Used EVs lost 33.7% of their value, on average, between October 2022 and October 2023.

These trends imply that Ashely’s husband faces a real challenge. However, Ramsey believes other bad decisions have exacerbated the issue.

“He’s not good at this,” Ramsey said. “I think your husband called the same dealer that screwed him the first time and asked them what they can give him for it and they thought, ‘Oh, we're going to get this guy again.’”

Ramsey suggested Ashely and her husband sell the car privately. A glance at listing sites by Ramsey Show co-host George Kamel at the time revealed the car could sell for around $50,000.

'Stupid tax'

Ramsey recommended Ashely and her husband try to sell the car for $50,000. This would leave $12,000 in negative equity on the auto loan that they must cover. He also suggested taking out a personal loan to cover the rest.

Fortunately, the couple doesn’t have much debt besides the car loan. Ashley claimed their credit card debt is less than $2,000. Meanwhile, they have $4,000 to $5,000 in savings and her husband earns $90,000 a year.

Ramsey thinks this financial situation offers enough flexibility for them to take out a personal loan and buy a cheaper car to get rid of the expensive Kia.

“We'll call that debt ‘stupid tax,’” he said. “Which is what I have to pay when I do something stupid, [too].”

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.