Smart Money Happy Hour with Rachel Cruze and George Kamel - Scroll With Caution! How to Spot Bad Money Advice on Social

Episode Date: November 3, 2022

Social media money advice? It can get a little sus. 🤨 Join Rachel and George as they sip, scroll and share candid reactions to the wild world of #FinTok (Financial TikTok)! Plus, they’ll share pro tips for sorting the good advice from the bad.    In This Episode:   🚩 Red flags to look for when influencers and celebs share “financial advice” 🚩 The product Kim Kardashian can’t promote for the next three years 🚩 George’s hot take on who should have sung “Listen to Your Heart”   Helpful Resources:   ·     Be entered to win a $100 Visa gift card when you take our listener survey! Click here to let us know what you think.    ·      Get your finances organized, make a plan, build up your confidence, and kick money stress out of your life for good with the EveryDollar budgeting app. Click here to get started today! ·     Do you have a Guilty As Charged question for Rachel and George? Send a DM to @rachelcruze or @georgekamel on Instagram! Be sure to type “GUILTY?” at the top of your message so we don’t miss it.   ·     Learn more about your ad choices. https://www.megaphone.fm/adchoices ·     Ramsey Solutions Privacy Policy   This Week’s Happy Hour Special:    Espresso Marti-No ·     2 ounces Seedlip Spice 94 (nonalcoholic spirit) ·     2 ounces cold brew concentrate ·     1/2 ounce simple syrup Pour Spice 94, cold brew and simple syrup over ice in a shaker. Shake for 20 seconds. Strain into a fancy glass (#KamelCoupeClub) and enjoy! Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey guys, I'm Rachel Cruz. I'm George Camel. And this is Smart Money Happy Hour. So, Jen. That was a very light. These are airloom glasses. And so we have to be very careful in today's episode. Yes.

Because our friend Michael Reddish, a team member here at Ramsey Solutions, our director of event experiences and amateur mixologist, has generously made the drink in his great grandmother's coop glasses. Can you believe that right now? How special is that? I mean, just like an heirloom. It adds a whole vibe to it. It does.

So we're going to be careful about these glasses. is very, very gentle. But in this podcast, we are just two friends who happen to be money experts talking about what you're talking about. So pop culture, current events, and money. And today's episode is a spicy one because we're talking about money advice from influencers and celebrities. That's right. So we are going to just sip slow and enjoy this because, again, this is a non-alcoholic drink. It's a mocktail that we have today. People have been asking for it and we decided, well, let's make it a really good one. And so if you want to make this at home and you don't drink, this is a great one to make, an espresso martino. So wait till the end of the

episode and we'll give you the recipe. All right. So today, George, we're going to talk about so much advice out there, Rachel. Well, there's just a lot of social media. There's a lot of social media. A lot of people who are money experts these days. We're not the only ones with opinions, it turns out. Who knew? Tick-Tac, Instagram, Reddit, so many personal finance experts that are all telling us what to do with our money. And we're just letting them, we're just letting them tell us. That's right. And Gen Z investors say that. They're more likely to get financial advice. You're ready for this, George.

Take a big old sip of that, express no. Do you say express no? Is that what it's called? It's not exp— Oh, no. All right. Espresso. There's no X.

This is a PSA for everyone listening. Espresno was the drink— You said express. Okay. Espresso, Martino. So take a big old sip of— Is that what it's gone? Just take a sip of your mom's tail, George.

Because I want you to prepare yourself for this stat. Are you ready? Okay. The easy investors are more likely to get financial advice from TikTok or YouTube influencers than from a financial advisor. Jeez. Yikes. 34% they would get advice from TikTok. 33% said YouTube.

And only 24% said they would get advice from a financial advisor. We are on YouTube and TikTok. So let's just say, let's just disarm the comments. If you're listening to this show. We are there. But we definitely recommend sitting down with a financial. investor. A financial pro who does this day and day out. So please

please listen to us. We believe in the advice we're giving you, but also, oh, sit down. But also don't believe everything you heard on a 40 second TikTok. No, it gets bad, George, is bad. And this isn't just influencers out there. Celebrities are also starting to endorse financial products and trends all the times. We're going to talk about those later in the episode. But for now, Rachel, let's do what the kids do during happy hour, I think, and scroll some

TikTok and see what advice is out there. Okay. All right, George, Okay, between friends, though. I don't want to say people's names because I don't want them to be maddenance. You want to protect the innocent personal finance folks out there? I want to go after the advice, not the people. Well, you're a better person than I am. Can we agree on that? Fine.

So what should we do? It's fine. We won't mention the names. Okay. And it's terrible advice anyways for the most part. I know. And I'm okay going at the advice. I just feel bad.

And a lot of them are good people. They mean well. They just also have bad advice. Okay, so let's go for the. Okay, let's do the first one. Here we go. Let's hear it. Personal finance tip, if you're in your 20s, you should never cancel an old credit card.

The reason is, is that 35% of your credit score is made up of your credit history. So if you cancel an old credit card, all your credit history is gone. And your credit score will go down severely. So don't ever cancel your credit cards. Thank me later. Oh, wow. Okay. Hot take.

Never cancel your credit cards, is what the advice was. And not just for the heck of it, but for the credit score, George, this is a big myth out there, that the credit score is like the end-all-be-all-to-life. And your credit score is not an indication that you're winning with money. It's an indication that you have money. It's an indication that you have debt and that you're playing with debt

and that you have debt and you pay it back and you don't. And the history, all of it mathematically, what is calculated through the credit score is all around debt. So this guy is saying, hey, to stay in debt, you need a credit score, so make sure your credit score's good so you keep going into debt.

And he's partially right in that your score could go down if you don't play their game perfectly. And so our advice is stop playing the freaking game. That's right. Get out of the game. And your life will be fine. I've done everything without a credit score.

You can buy a car with cash. You can get a mortgage through manual underwriting. So there's ways all around this that you don't have to hang on to your credit score for dear life. Yeah, because the main reason to have a credit score is to go into debt. But if you live a life debt-free, then you don't need it. And you can get a house through manual underwriting. You can rent apartments without a credit score. Yes, your insurance, yourself, everything.

You can live a life without a credit score. So if you're keep playing the debt game, you're going to keep getting that result, which is just continuing to have the bank on you and owing people money. No thanks, Tomlinks. And for us, George, at the end of the day, let's just sip our little espresso martino

and say, yes, don't owe anyone anything. There's freedom in that. So sorry, TikToker. Cut up the cards. And cancel them. Get out. Don't be at the mercy of the credit score. It's not worth it. Not worth it.

So as you're watching these videos on what's affectionately called FinTalk. Wait, I'm sorry, what? FinTalk, financial TikTok. Wow, there's a subculture. Wow, all right. I'm in. I'm in with the kids.

But ask yourself these questions, Rachel. Are they encouraging me to go into debt? And number two, are they encouraging me to measure my financial success by my FICO score? Because here's the truth. I could hand you a million dollars right now and your score would not be affected. Boo.

It's not a measure of wealth. Don't play the game, people. Come on. Exactly. All right. Up next. Here we go. I'm a licensed agent, and I got a life insurance policy on my daughter when she was 14 days old.

It's called Children's Whole Life. Now, many think of life insurance and say, well, if I pass away, the death benefit goes to my family. When we're talking about children's whole life, this is about teaching your children the importance of creating generational wealth. I got her a $50,000 policy, and it was only $9 per month. but the part that was most important the part that was most important was that she gets to keep this $9 price point for the rest of her life

it's locked in so now when she lives a long life and she passes away my grandchildren are also going to get a tax-free life insurance check because I did this for her early and I'm teaching her the importance of life insurance while she is young so I encourage everybody have a children's whole life insurance policy

for your children if they're under the age of 18 years old. Only takes 15 minutes. Okay, best part of that video, the cute baby. I mean, sweet thing. The rest of it? Let me just quote my mother-in-law. Can I just jump through the phone right now? And hold that baby because that is a cute baby.

Did she say that? Yeah, she does. We FaceTime on because they're out of town. So she'll be like, I just want to jump through the phone right now. I know. How sweet. Okay, man, okay, so life insurance, y'all. Can we just break this down real quick?

Break it down. So it is not an investment. Okay, insurance is insurance. Your investments and insurance need to be separate. Don't mix them. No. And so if you have no one dependent upon you, upon your income, right? If no one is dependent upon your income, you do not need life insurance.

Let's be clear. You're not dependent on your baby's income. No, and you're not. I know. And I love the fact that he's like, we got to teach our kids financial responsibility. So I love the motivation. But you're not teaching them that through having a whole life insurance policy that's kind of crappy. No. And truthfully, Rachel, a lot of people that are peddling these Whole Life Insurance videos, guess what they sell?

Whole Life Insurance. I know. Not a trustworthy source there. So the reason is we don't like to mix insurance and investment. You can do way better investing in the open market in mutual funds and index funds. And don't mix these together. Get term life instead, which is way cheaper than Whole Life. And the insurance company wins 99% of the time when it comes to these products. So whole life insurance, yes. They actually take a huge cut. If not even the savings, sometimes the investment, depending on the policy, when you die anyways, like they take the money. So it doesn't make sense. So again, yes, we are all about having life insurance. That's very important.

So when someone has depended upon your income, get term life, it's very inexpensive, and then take what you would have paid at whole life, take the remaining even, right, what you would have paid and invest it. And you're going to come out a whole lot better investing your money and an actual investment versus insurance. Yeah, don't fall for this, especially children's whole life. You don't need that. No, Gerber had a whole thing. Did you remember that? Oh, yeah. Gerber life insurance, all this stuff. So listen. Stick to baby food, Gerber. God, Gerber. Unbelievable. All right. You're really riling me up here. Here we go. Let's see what

we got next one. I'd like to buy this bag, please. I'll be paying American Express. Oh, a credit card. Not to be nosy, but are you sure you can afford it? Why? Because I'm paying with a credit card. Yes, dear, there's no reason to go into debt for a purse. Oh, I'm not going into debt. I'm getting 60,000 points for flights and hotels, so that's about $1,200. The bag's paying for itself. Then I'll be paying off my card in full, which means I'll be keeping my credit utilization low, which is building me a great credit score, earning me lower interest rates on cars, houses, and everything else I go to buy. Oh my, what are you saying? I'm saying a credit card goes a lot further than cash or debit, as long as you know how to use it.

This is it, the number one thing we hear about credit cards. You get the airline points, the miles. And I pay it off every month, Rachel. Less than half Americans, too. Yeah, study shows you're going to spend more when you swipe that card versus using hard-earned cash. So that's number one. You're going to overspend.

And even a debit card, because psychologically you know it's your money coming out of an account, right? Versus swiping a credit card, you're using someone else's money. And here's the deal, too. Like, when you get the credit card bill and you're paying your money for stuff that's already happened in the past, it just feels different versus paying for something in the moment. You're going to second guess. You're going to think through your purchases so much more if it's in the moment. And after you purchase it, you're done.

You never have to think about it again. You're done. And with a credit card, you get that bill at the end of the month. And again, technically you are in debt until you pay it. And there's delayed gratification. When you wait, you save up. And a lot of the times you realize that was impulsive. I don't even want it anymore.

Yeah. And then it also pointed it back to, well, and it helps your credit score, which we've already talked about. We have, George. It's a useless measure of actual wealth and success. Rewind this podcast if you forgot about it. Let me tell you that. That was me rewinding.

I love it. Okay, here's the other thing that we, people get the airline miles, the points, all of that because other people don't pay their credit cards off every month. And they pay the interest, they pay the fees. and that's how banks make their money. They're making money off of people going into debt. We're struggling. So I'm like, I just want to be part of the system.

I'm like, listen, I will pay for my Southwest flight. I will pay. I don't need Discover to give me like cash back 1% whatever thing is. Like I'm good. I don't need the industry. I'll skip the first class flight. That's almost how to or pay for it with cash, George. That's true.

I still don't think it's worth it. I think first class is a scam. Oh, really? It's a whole other hot take. Wow. I need to come back to that. It's all about points and vacations that they otherwise couldn't afford, which makes me go, well, there's a better way to do that instead of hoping you have

enough credit card points at the end of the year. Yeah, silliness. Do a budget. Get out of debt. All right, last but not least, our favorite, George. Is it? Cryptos. I thought we could end on a high note, but I don't know. I haven't seen the video. Let's just see what happens. Brove, I'm literally broke. I have $10. Tell me which I should throw them in forever. So you're going to put your $10 in a cryptocurrency and wait forever. to make money? No. If you have $10 and you're broke, get a job. Don't look to crypto to make you money. We love him. I was waiting for the bad advice and instead I'm a huge fan. What a guy. This is amazing. I'll take it. I'll take it. I mean, crypto, it's not the way to build wealth.

It's straight up gambling. It has gone down, gone down the tubes as they'd say, gone down the drain. Yeah. How would you say it? Tubes, drain. I think it's all the same. All of it. I think we're good there. And, yeah, again, not mad at it. Just don't think it's a very sturdy investment, if you know. Yeah, if you're going to invest in crypto, be completely out of debt, have a fully funded emergency fund, be investing 15% into actual retirement into your 401k into IRAs. And then if you want to use some of your fund money to throw into crypto, literally like throwing it out the window, that's fine. But don't let this be a big part of your world or your investment strategy.

Crypto George has been a thing, even among like celebrities. People, I mean, the amount of money spent on marketing and advertising for cryptocurrency is fascinating. It's insane. I mean, yeah, so you have like... And a lot of celebs have been coming under fire for just like taking a check and then saying, you should totally invest in crypto. I totally endorse it. No, Matt Damon, Tom Brady, Kim Kay.

Oh, Kim Kardashian gotten some heat. I know. With a lot of zeros on the end. This is fascinating. So she made a $1.26 million crypto ad mistake. So she was paid $250,000 to put an ad for crypto for a crypto token on her Instagram story. But crypto tokens are considered securities by the SEC. So she was supposed to disclose how much she was paid.

And she did include hashtag ad in the post. Not good enough for the SEC. But not the dollar amount. Fascinating. So she ended up having to cough up. $1.26 million to settle the charges. And she also agreed not to promote any crypto assets for three years. Wow. Sorry, Kim. You're going to have to find money some other way. I wish you the best. Kim is probably really, really sad about this, you know, really ringing her hands.

She's going to be fine, everyone, if you're wondering, if a million dollars is a big number to her, it's not. That's a Tuesday for Kim. She's fine. But in the spirit of crypto, Jay-Z. also stepped into this world and started a 12-week class open to the residents of a public housing complex that he grew up in, which is really cool. The motivation is so great, though. I appreciate the motivation. He wants to bring financial education to, you know, some of those folks who are in, you know, cycles of poverty, who are in lower-income housing, trying to get them out of this. And so the heart seems to be in the right place for financial literacy and education. But here's the problem. He's teaching them about crypto.

Yeah. largely. And so I wish there was something else other than crypto involved. Like he was teaching them how to get on a budget, how to get out of debt, the dangers of debt. But instead, it's like, here's the way out. You should get into Bitcoin. Yeah, that's the hard thing about crypto. I'm like, it's this get rich quick feel, right?

Like, if you get this, you're going to be fine. And I'm like, honestly, building wealth and winning with money long term. It's just, it's hard work. It's the long game. You're playing the long game here. So whether you're a, wait, what did you call it earlier? George. Finta.

A fin talker? I don't know if they call themselves that, but I'm into it. Is that the thing? Give it a shot. Or a celebrity, yeah, the crypto thing. And residents who are eligible for the class are also concerned because they're like, I don't have any money to lose. They've said this out loud.

Yeah. And they even know, like, uh. Is it still happening? Do you know? I don't know where it's at. Yeah. But some said they would rather have infrastructure upgrades to the property than a Bitcoin Academy, which I totally agree with, Jay-Z.

But I know. I know his heart behind it, though, because he does. He wants people, yeah, to build wealth. But the hard thing is in today's society, building wealth, everyone wants a shortcut. So, all right. So after going over all of this, from influencers to celebrities, here are some red flags to be thinking about when you hear financial advice. So proceed with caution if you hear any of the following. That's right.

Are they encouraging you to go into debt? Huge red flag. Stay away. Are they encouraging you to leverage debt to? to build wealth. Even worse. Risk, risk, risk. Are they encouraging you to find ways to improve your FICO score?

Boo. Also, red flag. A too good to be true promise to retire early or get rich quick. Again, never works. No shortcuts to any place worth going. Encouraging you to gamble, bet, or invest more than you can afford. Not worth that you guys. Not worth a common sense.

Just plugging their common sense. And anytime they're recommending a specific financial product like an account, a certain credit card, certain type of crypto. That is also a red flag that they are making money off that specific product. So proceed with caution. It may be a good product, but recognize they're making this video to promote this thing. That's right. And again, there's some good financial advice and products out there that really can help you, but make sure that it truly does. Don't let it defy common sense. And so that's what ends up happening with a lot of this stuff. It's like, yeah, my common sense is telling me that probably sounds too good to be true. Guys, listen to that because it probably is.

I was saying listen to your heart sing it I can't hear the musician between us George but that's why I wanted you to sing it Listen to your heart Listen to your heart You said it's your favorite artist of all time That's not Celine Dion

Stop that George Camel Stay seated, don't get set Stay seated, I'm not getting up I can't Oh my gosh, who sings that? Unbelievable, unbelievable Tell me it doesn't feel like a Celine song, though. Listen to your...

No, it sounds more like a techno. Okay, never mind. Oh, my gosh. Listen to your heart. When they're going. All right, it's almost the end of the episode, and we like to close out every episode with... Guilty as Charged.

So this is where our producer gives us a new guilty-as-charged question every week, and we have to drink if we are guilty. Okay. And give context behind our answer. All right. Kimberly asked, have you ever hoarded something in response to fear of unforeseen events? Oh. If so, what was it and why? I thought this was a good one. I'm curious.

That's an interesting one. Rachel, you're a lot more paranoid than me and a conspiracy theorist at heart. Yeah, I know. I'm a conspiracy. Yeah, okay, I'll say this. When COVID, when we were like June, July, August of 2020, I, I, I, I, I, I'm a conspiracy. I was like, you know what, I believe we're going to be okay. But I wouldn't, I was not going to make a major purchase during that time. I was like, I'm going to hold my cash.

I'm going to hold tight. Because it was weird. That was a weird time. We just didn't know how long was going to last, what was going to happen. Yeah, that was like kind of my first as an adult, you know, paying bills and taxes and have the, you know, living in an adulthood. That, yes, that was probably like the most fear I've had around the economy, the world. my money, not knowing like, oh my gosh, are we really going to be okay? So yeah, there's about three months there where I thought in and out of like,

okay, all right, we got to get through this. We got to get through this. That song? I got to get through this. Okay, so one time I bought like an industrial level amount of bars of soap because I thought they were going to, they were like going to stop making them. And so I was like, well, I love this bar of soap. I need to just get like 50 bars so it will last me forever.

Okay, I'm confused. Will you reread the guiltiest charge question? Yeah. Have you ever hoarded something in response to fear of unforeseen events? Wow. I went straight COVID and like conspiracy theorists out the wazoo and you went to soap, George. George just on a regular day. I just really needed to.

I will say this. In the line of your thinking, during COVID, I was worried about toilet paper. It was a major concern for me. But on a normal day, it's barmsome. Normal day. But like when I rolled up the target and the shelves were completely empty, like my heart was like, what if I never see toilet paper again? I'm not kidding.

That was a weird time. Can we reflect on that for a second? I couldn't hoard it. But like, there was neighbors that I was like, I'm texting them going like, hey, do you have a, can you spare square? Like, it was scary. It was a scary time for all of us. And so that was the only time where I was like, I get it. Like, I get why.

But then I'm like, I don't want to be that guy. I don't want to be selfish. I know. And get 17 rolls of toilet paper when someone else needs it. So I didn't do it, but there was a legitimate fear. Yeah. I think we may have, I think we may have hoard a little toilet paper during that time. I do.

You could have served a square. Hand sanitizer. Do you remember that? That was a whole thing. Even masks. Like masks were kind of hard to come by for a little while. Man. That was a crazy time.

Do you guys have any friends that had crazy, like, stories of that? Oh, I got friends doing crazy stuff. I got some people. What they want. I love the conspiracy. I hope they're not listening. But a friend of ours, their parents were a little bit paranoid. And this is Y2K.

So it's 1999. We're about to hit 2000. It was a scary time. Yes, I remember that. We didn't know what was going to happen. They thought banks would shut down, like, things were going to explode. And so they got industrial levels of beans, like dry beans, to last through like an apocalyptic situation.

And Y2K happened, and it was a non-event. And they forced them. to eat the beans for many years. For years, they had to eat these beans until they were gone. Stop it. Yeah. It's borderline. I'm like, is that like abuse?

Like, that's scary. Yeah, to actually follow through. And what does that do to your stomach? That's just a lot of fiber. That's a lot of stuff right there. Unbelievable. But that one's stuck in my head when you're talking about hoarding things for unforeseen events. All right, Kimberly, there you have it.

There you go, Kimberly. Hey, keep sending these guilty as charge questions. They're fun. We love them. All right, who's finished? You? I'm much closer. Yeah, you are, George.

It's delicious, though. Okay, so what would you rate the espresso martino, the mocktail? I mean, I went 10 out of 10 last time. I feel like I should, uh... I'm going to go 8 out of 10. Okay. There's a little sour... It's a little acidic for your taste.

I don't know what's a sour in it. There's a little bit of sour, but it's delicious. Okay. What did you rate it? I would give it... I'm going to say 9 out of 10, because I love... cold brew. There's nothing I love more than a cold brew. This is up your alley. This is right up my alley. And it's in a coop glass, which if you've been listening, you know I love a coop glass.

And so I'll tell you what's in it. I'll tell you how much it costs. So this is a non-alcoholic spirit. The brand is called seed lip and it's the spice 75 flavor. And it also has some stirring simple syrup in it and Stumptown Cold Brew Concentrate. And so all of that comes out to per drink, 387 per glass. So it depends on what kind of spirit you're using, what kind of cold brew. Stump Town is pretty fancy, I guess. But it's still 387 a glass. It's not bad for a non-alcoholic mocktail. And if you want to make this drink alcoholic, you can add two ounces of vodka and one ounce of Kaluah in place of that non-alcoholic spirit. But still a very affordable drink that feels very upscale, especially in the coop glass. So bonus points if you make it in a coop.

Do you think it's worth the non-alcoholic? alcoholic liquor. I would say it's better than not having it. If it was just cold brew and simple syrup, it'd be a little bit strange. And so I think it's worth it, but just don't expect it to taste like alcohol. But I would say it makes a decent cocktail. So if you don't drink, this is a great option for you. I love it.

So you can find the recipe in the show notes and make it this weekend. If you do, tag us in your photos, we always love to see it. And send us again a great cocktail or mocktail recipe that you want us to try in our DMs at George Camel with a K, at Rachel Cruz. And it's closing time. Closing time. Sing it. How did you miss the key?

I gave you the key in anything. I don't know what keys are, George. I'm not a musician. All right. I've actually been waiting for you guys to sing this for so long. I can't see y'all. Why would you do this to me? Why are you torturing me?

It's just fun for me. I'm sorry. Okay. All right. If you liked this episode, do you don't want to miss a future one? Make sure to follow us and hit the subscribe button. Follow us on social as well.

And if the spirit leads, leave a nice review. And if you don't have anything nice to say, don't say anything at all. Like Sharon Ramsey would say. Does she say that? Don't, but do you know who texted us? Who? Side note. Oh, that's right.

Before we go, this was the best part of my entire week. Sharon Ramsey sent me a text. She asked Rachel for my number, put us in a group text, and said she loves smart money happy hour. And so then George texts me, separately and says, who's this number that just texted us? And I said, it's my mom. It was like the honor of a lifetime. It was like a, I told Rachel, I was like, if Kim Kardashian text you. Like, that is the emotion I felt. No other review matters.

Like, I don't care what you have to say because the goat, Sharon Ramsey loves it. When your mom is for you, who can be against you? Let's just say that. Big Sharon Ramsey fan. Unbelievable. Every Thursday, new episodes. We'll see you next week for Smart Money Happy Hour.