Although he’s certainly not alone in this, 27-year-old Bryson from Lake Charles, Louisiana, made the most quintessential American financial mistake: buying a car he couldn’t afford.

During an episode of personal finance expert Caleb Hammer’s podcast, Financial Audit, Bryson — an operations manager making $48,000 annually — confessed that the interest rate on his auto loan was a whopping 12.75%.

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To break this down further: he’s spending $1,275 a month for his RAM 2500 diesel truck, while only earning around $3,333 per month. “Who the f*ck drives a RAM?” Hammer asked. “A third of your income goes to this truck.”

Making the situation even worse is the fact that Bryson’s wife is on maternity leave. The couple share a one-month-old daughter, and his wife — who chose not to participate in the episode — is currently only making 60% of her $44,000 salary as a leasing agent.

Unfortunately, overspending on vehicles is one of the key reasons why many Americans are living paycheck to paycheck.

The true wealth killer

According to CNBC and SurveyMonkey’s financial security survey, a whopping 65% of American adults admitted that they were living paycheck to paycheck as of 2024.

One of reasons: oversized car payments. “The car you drive can destroy your chance of building true wealth,” financial expert Ramit Sethi said during an episode of his podcast, I Will Teach You To Be Rich. “Car payments are one of the true wealth killers of today that nobody wants to talk about.”

As of the first quarter of 2024, the average monthly car payment is $735, according to Edmunds.

Like Bryson, 4.2% of all auto loan borrowers were paying more than $1,000 a month in payments, revealed data from Experian. That ratio has jumped significantly from 2020 when it was just 1.1%.

If this sounds unsustainable, that’s because it probably is for most people.

During the second quarter of 2024, one in four new vehicle sales with a trade-in had negative equity, according to Edmunds. That means a significant number of drivers on the road are upside down on their auto loans.

Borrowers like Bryson, who are clearly overburdened by their auto loan, often have reasons to justify the purchase. “I do a lot of driving,” he told Hammer, while overlooking the fact that the issue isn’t how much he’s driving, but how much he’s paying.