Dear Dave,

My husband and I are following your plan, and we’re in the middle of saving up our emergency fund. When do you recommend buying a new car in the process? Do we have to wait until we’ve finished all the Baby Steps?

Alanna

Dear Alanna,

I never advise buying a brand new car, unless you have a net worth of at least $1 million. At that point, you’ve got enough assets that you won’t get rocked by the ridiculous depreciation that comes with buying a new vehicle.

Now, you don’t have to drive a beater until you pay off your house or anything like that. I advise people to drive the minimum they can in terms of a car until they complete my first three steps. Baby Step 1 is a beginner emergency fund of $1,000. Baby Step 2 is paying off all debt except for your home. Baby Step 3 is fully funding your emergency fund with three to six months of expenses.

After you’ve accomplished these first three steps, then you can move up to a nicer car. Notice that I didn’t say move up to a new car. I want you to save up cash, and get a really nice used car. That’s what the typical millionaire does, and I want you to model your financial behavior after people who are in the position you want to be in some day!

—Dave

* Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 15 million listeners each week on 600 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.