The Rachel Cruze Show - 5 Common Money Practices Keeping You Broke

Starting point is 00:00:05 All right, hot take here, but when it comes to your money, there are some harmful habits that have become way too normal. So today we're going to talk about five common money practices that are really holding you back. Now, make sure to like, subscribe, and share this episode with a friend before we get started. All right, first and foremost, is believing that debt isn't a big deal. So there is this lie that debt is just normal. And honestly, that's the truth, because it is normal. But also, when we look at statistics, we know that normal is bad. broke. As of September 2025, 49% of Americans reported that they are living paycheck to paycheck.

Starting point is 00:00:43 So when something is just normal in life, and it's what everyone does with their money, you want to examine, okay, so where is normal? And if that is what the average person, literally half of America is doing, is living paycheck to paycheck, then we know we don't want to be normal. We want to be weird. We want to be different. We want to do something that people aren't doing, that it's keeping them in this normal cycle, and one of those is debt. So normalizing the idea that your paycheck comes in, and it goes back out eight different directions with student loans and credit cards and car loans and, like, personal loans. And that's just how life is. Then for years and decades of your working life, your hard-earned money is now going to other people and not you. So let's

Starting point is 00:01:23 normalize becoming debt-free and not living with payments. All right, number two, believing that debt will get you ahead. So there is a lot of this attitude that debt is a good thing, right? So some people are like, oh, student loans, that's a great thing because you're going to get a great education. Real estate investing when you look in that world. Oh, my gosh. Yeah, if you want to get ahead and you want to actually make tons of wealth, you have to own a bunch of real estate. And to do that, you don't have the cash for it. So you could put zero percent down.

Starting point is 00:01:51 And don't worry, because the renters will pay the mortgage and you're going to build up all this equity. And then you could sell it for millions of dollars later and you're going to become wealthy and rich. That's in that industry. And then you look a car and everyone's like, well, listen, you know, you don't want to drive a crappy car. That's not a fun experience. And, you know, depending on where you are in life, like, you want to be taken seriously. And so, you know, you can't have this, like, crappy junky car. People are going to judge you for it and not think that you are successful in what you're

Starting point is 00:02:16 doing and the type of career you're in. And so there is this persona, whether it's professional or personal, to keep up. So who can buy a $70,000 car in cash? Because it has to be a nice car. So might as well just take the payment and that's how you live, right? And so it is this, you guys, a debt somehow is going to get us ahead. And that is a constant, subtle message that we hear to use debt as a tool, again, to get you ahead financially and ultimately become wealthy.

Starting point is 00:02:44 Where the truth is that the borrower slaves the lender, like there is something to be said, not only financially and mathematically when you have debt, but also emotionally, when you are just keeping up this idea of, oh, my gosh, I have to owe someone something in order for me to get ahead. That changes your mindset versus saying, hey, what do I have in my power to get me ahead, just me. Not the banks, not the debt industry, but what do I need to do with the money that I have to be wise? And yes, investing is great. Driving a nice car is not bad. Those are not bad things, but the ways that we do it, the means we get there is really important. All right, number three,

Starting point is 00:03:21 maintaining debt isn't harmful. So again, kind of along these same lines that, listen, when you just have debt, if you just can pay the payment, you're fine. Just maintain debt for your life. And again, whether it's a car loan, a monthly credit card payment, like whatever it is, you just maintain it and stay at that baseline and you're fine. Well, the truth is that just because you can afford the payment doesn't mean you can afford it. And that's what broke average people think. If I can afford the payment, I can afford the item. Where wealthy people, they have this mindset, if I can't buy it straight out with cash, then I'm not going to buy it because they know that debt steals your income. And so for you to build wealth long term, again, not having these payments,

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Starting point is 00:04:50 Number four, you're losing money if you don't use miles or points. So this is the credit card game that everyone plays that, hey, I'm going to just swore. wipe all these different cards and get this cash back, get these airline miles, and I'm going to play this game. And if you don't do that, you're losing out, which is what we actually find is kind of the opposite of how much you actually tend to spend more when you spend with credit cards. And when you look at the average of what you're spending, that for sure would pay for an airline ticket. And then when you look at the cashback programs, you guys, I mean, that 1%, 2% cashback, like, you have to spend hundreds of thousands of dollars just to feel any level of like, oh,

Starting point is 00:05:28 amazing, I'm getting this back. So the truth is, you end up spending so much money for these programs, and it's not yours. It's not your money. You're spending the bank's money, and because of that, again, you overspend versus saying, hey, I'm going to just spend in the moment. The moment I swipe my debit card, my money's out of the account, and it's done. Psychologically, what that does is you don't tend to overspend when that's your mindset, and then you save up and you pay for the airline ticket. And so, again, playing this game, you end up losing on the other end of it, and the banks end up making so much money off of you. Number five, keeping your mortgage around for 30 years. So a lot of people take that 30-year mortgage, and I would suggest that the interest rates are good

Starting point is 00:06:10 to refinance it and do a 15 year, so you can definitely be out of debt in 15, and we find people are doing it even less, like nine years, which is great. But that 30-year mortgage, guys, if you just keep that and you just pay it every single year for 30 years, the math is insane. So let's run the numbers. So you get that 30-year mortgage on a $400,000 home with a 20% down payment at a 6.5% interest rate. Your monthly payment would be $2,023. Over the course of 30 years, you'll pay the bank more than $408,000 in interest alone. That is more than how much your home originally cost.

Starting point is 00:06:49 Like, isn't that wild? Now, if you just cut that in half and say you did a 15-year mortgage on that $400,000 loan at a 5.75% rates because you get better rates when you do a 15-year loan, your monthly payment will be about $2,657. So yes, it is more. You're going to be paying more on that payment than you would with a 30-year, but you only lose around $158,300 in interest over those 15 years. So $158,000 versus $400,000. That's what you're paying in interest. That's the difference, you guys. Isn't that wild? means that you're keeping $250,000 of your own money instead of sending it to the bank in interest payments. So it is wild. I mean, the math speaks for itself when you see that you are getting

Starting point is 00:07:36 a much better deal when you're doing a 15-year mortgage. And again, people that we study, that we have interviewed and looked at data on, they're paying their houses off on average nine years, which is amazing. Now, by the way, if you want to run your own real-life numbers, go to Ramsey's mortgage calculator. It's a really simple tool. And it helps you. you be able to plan for specific situations if you're looking to buy even and just to put in some numbers just to kind of know where you're at. So I'll leave a link down below. Now, unfortunately, the harmful money lies don't end here. So be sure to check out my episode, the worst ways to pay off your debt after this. You can click here. Or if you're listening on a podcast, I'll put a link

Starting point is 00:08:13 below. All right, you guys, remember to take control of your money and create a life you love.

The Rachel Cruze Show - 5 Common Money Practices Keeping You Broke

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