George Kamel - America's Newest Wealth Killer No One Is Talking About

Episode Date: February 23, 2024

 💵 Sign up for EveryDollar today - Create a free Budget!  This video is all about the sneaky new wealth killer that’s costing Americans $24 billion (and counting!). Find out why so many people are falling face first for this money trap and as well as how to avoid it.   Next Steps 📗 Order George Kamel’s new book, Breaking Free From Broke.   Offers From Today's Sponsors  This episode is sponsored by DeleteMe. 🔒 Remove your personal information from the web at JoinDeleteMe.com/George and use code GEORGE for 20% off. 🙌   🎙️ The Ramsey Show   🍸 Smart Money Happy Hour 💡 The Rachel Cruze Show 💸 The Ramsey Show Highlights 🧠 The Dr. John Delony Show 💼 The Ken Coleman Show 📈 EntreLeadership   Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

If you've watched this channel for any length of time, you know I love talking about America's wealth killers. It's like true crime minus the actual murder. And today I'm uncovering the newest wealth killer that no one seems to be talking about. You see, most of us know that credit card debt or car loans aren't exactly ideal. Kind of like, we know that scrolling TikTok before bedtime isn't ideal. Or grabbing a baconator for lunch is not ideal, at least for your large intestine. But that doesn't necessarily stop you from doing it. But at least you're aware that there are better for you,

options out there. So what if I told you that there's a whole new kind of debt that's being sold to you as the better for you option, but really, it's just as bad as the rest? Well, it's real and it's costing Americans over $24 billion. That's Billy with the B. Now, before we talk about this silent killer, let's take a moment to acknowledge that this channel is one of the better for you options on YouTube. You're not just seeing random objects getting crushed in a hydraulic press or the horrors of Dr. Pimplepoper. No, don't like that. So hit that like and subscribe. and share this video with your friends who appreciate healthier entertainment options.

And remember, choosy moms, choose George. Chewsy moms, choose Jif. Okay, so to understand the sneaky new debt trick, go with me here. You're scrolling Instagram while waiting for Shark Tank to start, typical Friday night, when bam, you're hit with an ad for those exact shoes you've been wanting. Obviously, you click,

only to find out the shoes are rather pricey. But then you see it. Buy now, pay later. Only four easy payments of $19. $0.50. So you hit buy on those men's single Monkstrapped low for casual non-slip-slip-on party dance shoes that you can't afford, not realizing you have just fallen for a massive debt trap. Aha, he fell for my little trap. That's right.

These short-term payment plans are a debt trap, and companies just market it in a sneaky way so that they can make even more money off of you. I mean, check out some of their taglines. Afterpay. Shop now, pay better. Affirm. Pay at your own pace. Klarna. Get financial breathing room.

All of these companies are promising financial freedom when in reality they're chaining you to payments for months down the road. So how does that give you financial breathing room? Make it make sense, Clarnah. If that really is your name? Who names their kid Clarna? No, your name, Dub, Dub. But the fact is, millions are falling for it.

This last holiday season, online installment plans hit an all-time high of 14% year over year. Right now, these buy-now pay later companies, or as I like to call them, BINPOLs. have issued about 180 million loans to ill-informed impulsive shoppers. And the dollar value of these loans is expected to hit $180 billion by next year. So why is Binpuls such a problem? Well, remember those party dance shoes that you bought? I don't know what you're talking about.

You think the 1950 payment every two weeks is not going to be an issue for you. I mean, that's less than the cost of a Nerf Super Soaker Barrage. No big deal, right? But if you do happen to miss a payment, which, let's be honest, you probably will because data shows that half of people miss payments then you get hit with a late fee. Now, to be fair, not all companies will charge late fees. Instead, a lot of them charge interest, which is arguably worse.

Take Uplift, for example. Say you spend $1,000 on a flight to Poland for the annual street performers festival in Warsaw. See you at Festiva Stuka Olice at 2024, baby. Heard they have Polish hot dogs this year. Big upgrade. I am still there. So you choose buy now, pay later to pay it over one year

because $83 a month is so reasonable. Well, if you read the fine print on that checkout pay, you'll see that handy-dandy flexible payment option comes with 15% interest on average and can go up to 36%. So by the end of the year, you've paid at least 150 bucks extra. Think of all the Polish parogis

you could have enjoyed with that extra dough. And yes, I'm aware there's buy-now pay later companies offering interest-free loans, but they're not as honorable as they may seem. They still collect a huge percentage of sales from businesses that use the services, and the businesses are fine with that because they know shoppers will spend way more

when they use a buy-now pay later service. So to be clear, everyone is making sure they come out on top financially, except you, of course. Now, how do I know all of this? Well, these companies aren't exactly keeping this a secret. They're not gatekeeping with how they're screwing you. In fact, they're pretty proud of helping you blow your budget. Here's what I mean. Afterpay brags to retailers that shoppers who use Afterpay spend 40% more than shoppers who don't.

And here's a little splash of tea for you. In an interview, an EVP for Afterpay admitted, quote, Instead of adding three items to a cart, when customers use digital installments, they add seven items to their cart, and the basket size changes from 50 bucks to over 100 bucks. End quote. That's insane. And listen, after pay isn't the only brazen buy-now pay later, Clara tells businesses that they can boost the average order price by 41%. And not to be shown up, a firm boasts a 60% increase in upgrades, bundling, and add-ons when customers use their service. Whoopi.

Now, just to reiterate, everyone is coming out on top here, except you. You're at the bottom. And what makes this even more depressing is that people who use these services said they did so because they either couldn't fit the purchase into their budget in the first place or they didn't want to pay interest on a credit card. Meaning these companies are making bank getting broke people to overspend while marketing it as the better for you option. And here's some more sad facts for you.

50% of Buy Now Pay Later customers said they regret their purchases. Another study found that 32% of these customers had to skip or delay paying a necessary bill in order to make a payment on one of these Buy Now Pay Later plans. And these BinPol companies also use your data to try to sell you even more debt products, which don't get me started on companies that sell your data. You know what? I'm already started. Here we are.

I mean, the internet is great and all. Don't get me wrong. But data brokers out there will sell your info who knows where online. Next thing you know, someone clicks the wrong link and suddenly a Nigerian prince has stolen your identity. And that's why I use a service called Delete Me. They'll find and remove data about you from hundreds of websites. Plus, they're super affordable, especially if you use my special link.

So go to Join DeleteMe.com slash George for 20% off, which makes a one-year plan less than $9 a month. That's join deleteme.com slash George. Okay, rant over. Where were we? Oh, yeah. Sad facts about installment payment plans. Here we go. Last thing I'll mention is that people have even started using Buy Now Pay Later for essential purchases like groceries,

or utilities. The same just for impulse buying Jinko's you can't afford anymore, and frankly can't pull off, Chase. It's a little thing called style. Look it up sometime. You can now head to the grocery store and get a case of squirt for three easy payments of $199. And a quick message to the people of PepsiCo.

Was there really no other name for a soda than squirt? That was your best effort? Take a hint from Coke. You have power names like Vault or Surge. Not squirt. Have I convinced you yet that these buy-and-out pay-later companies are not your friends? They don't want to swoop in and save the day so you can buy what you want when you want it.

They want to swoop in so they can take your money. They're not making purchases more affordable for you. They're just betting against you and cashing in on your psychology. The inner machinations of my mind are an enigma. And listen, even if you do make your payments on time perfectly, the bigger problem it plays that buy now, pay later, numbs you to the reality of how much you're really spending. Because instead of feeling the sticker shock,

these installment plans are just feeding your, I want it now mentality and hiding the true cost of what you're buying. And trust me, no matter what your financial situation is, humans are more tempted to buy things when they see a lower number, which is what Buy Now Pay Later does. And as smart as I'm sure you are, Zachary, even you are not immune to stupid. So say no to drugs, to ugs,

and to online installment plans like Buy Now Pay Later. Just say no. And I promise, if you avoid them and you develop some self-discipline, you get on a budget, and you start being intentional about building healthy money habits, your future self will love you for it. I love picturing future George. Give me a high-five for abandoning my cart.

How do you high-five yourself? Oh, that's pretty good. So don't fall into the buy-now pay-later trap. It's a short-term convenience with a long-term cost. You want to the real better-for-you option? Buy-now. Pay-now. With money that you actually have that you budgeted for

because you have healthy spending and saving habits that make Uncle George and future George proud. So what are the healthy habits you need to build a better future for yourself and how do you even know if it will work? We'll stick around for my next video on the seven proven habits that make people millionaires. And as always, don't forget to share this video with your friends

who need a friendly reminder to say no to drugs, to ugs, and buy now, pay later. Thanks for watching. We'll see you guys next time.