The Rachel Cruze Show - 6 Money Hacks You Should Never Trust (They're Traps!)

Starting point is 00:00:05 So there are so many theories and strategies out there when it comes to handling money that are actually risky and unreliable. So today I'm going to be sharing six habits or traps that you should never trust. But more importantly, I'm sharing what you should do instead. So be sure to like, subscribe, and share this episode with a friend. All right, first up is using buy now, pay later methods. These are things like after pay or Klarna. And whenever you are checking out now, there's always this option to be like, hey, do you want to break up this purchase? in payments. And the thing is, is it doesn't feel like a big deal, but what that is is debt. You're not paying for something in full. And so you can actually tend to overspend, and that is what

Starting point is 00:00:46 they have found time and time again, is that people end up spending so much more money and overspending when using these products. So not only are you having to, gosh, pay freaking like for four months for a sweater when you choose this option, but also you look at the payment, you're like, oh, it's not that much. I'll add on a little bit more. I was playing on spending $70. but now it's like, oh, that's not too bad. It's only like, you know, $15, $18. I'll just add a little bit more. So don't do this, okay?

Starting point is 00:01:14 Pay for everything in full. Do not spread out your purchases in payments. So what you want to do instead is save up and pay cash. Keep a monthly budget and understand, okay, here are my expenses. And when you save up for something, you spend it. If you need a monthly budget that is going to help you so much to know where your money's going, because it really takes your income. And when you're budgeting, you're like, okay, where do I want my income to go?

Starting point is 00:01:38 It's really you telling your money what to do. If you need a great budgeting app, check out every dollar because it is fantastic. All right, number two is opening store credit cards to get a discount. Yes, this is a trap where it's like, hey, you want to save 10%, 15%, 20%, well, that turns into 25% interest, really, really fast and it's not worth taking on additional debt for. So no. Say no to the store credit cards. Instead, again, budgeting, saving up for things you want, and really have this mindset that you're not

Starting point is 00:02:09 trading short-term moments of like, ooh, this feels good, I want to do this, it feels like I'm getting a deal for your long-term goals, right? So you're actually taking and thinking through the long-term when you're saying no to debt, even store credit cards. All right, number three, lease a car to avoid big payments. So a lot of people will do this because if you go and take out a traditional loan for a car, your payment is going to be higher than it is if you go and lease one. But leasing is basically like renting a car instead of owning it. And there's so many restrictions. Even if you want to get out of the lease, it can be very difficult. You know, if there's too many miles on it, you know, wear and tear on the car, like all of this stuff, it ends up being very

Starting point is 00:02:49 expensive. In fact, Money Magazine talks about how leasing a car is the most expensive way to finance a car. So stay away from it. Instead, buy a reliable car, a used car. And cash. Yeah. So listen, if you have a car payment right now and you can't pay it off in 18 to 24 months, if you cannot pay off this car that you have currently with a loan on it, in less than two years, you need to sell it. And what you'll do, even if you're underwater, let's say you, maybe you owe $30,000 and you can only sell it for $25,000. We'll go take a $10,000 loan from the bank, $5,000 to make up the difference to get rid of it, and then $5,000 to buy a used car, a crappy car, right, but at least it'll get you through.

Starting point is 00:03:32 Pay that off. Pay off the loan, the $10,000 loan, and then keep saving up, and then you can move up in car slowly and gradually. Do not go and fall for the idea of leasing and even taking on debt for a car. It's just not worth it. All right, one thing I cannot live without,

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Starting point is 00:04:36 All right, another bad habit. Number four is only making minimum payments to keep cash flow open. So this is a trap because you're actually paying thousands more than what you actually owe because of interest. But a lot of people will say, well, I need this cash flow over here. And so if my debt is there, I'll just keep the minimum payment going and it's no big deal. But the amount of interest that are its own credit cards now, you guys, it is so high. I feel like it keeps getting up and up and up and up. And you're continuing to pay for stuff that you've already done and already experienced

Starting point is 00:05:08 and food you already ate and all the things. So looking and saying, okay, you know what, I'm going to get out of debt as quickly as possible. So you want $1,000 in the bank. That's going to be your starter emergency fund. And then you're going to start paying off all of your debt, including those credit cards from smallest to the largest. And that is going to help get you out of debt quickly and get out of this mental. minimum payment cycle. So you will pay minimum payments for some of the debt while you're paying

Starting point is 00:05:32 off the smallest. But man, once you get to it, you keep knocking it off and knocking it off because I want you debt free, including those minimum payments. All right, number five is skip insurance to save money. So one emergency room visit or car wreck or a home repair can honestly wipe you out financially. And so knowing that things are going to happen in life and you don't want to completely derail your financial progress, you want the right insurance in place. The Ramsey coverage check up will walk you through a process to know exactly what insurances that you need. Because yes, you also don't want to pay for insurances you don't need. And some out there are a scam and you end up wasting so much money on them and you don't even need them. So the idea is getting the insurance that

Starting point is 00:06:13 you actually need. But to see what you need, I'll put a link down below and check that out to go through kind of your life and knowing, okay, are we fully covered? Do we have everything that we need when it comes to insurances? Because life is expensive. And insurance, it's great because it's there when something happens. All right, number six is invest in trendy, get rich, quick schemes. So there are so many things out there, you guys. And it's not even like ones that are recent. Like there's other ones that are just not great. Like I was talking to a guy's like, I'm investing in gold. I'm like, don't invest in a commodity because it goes up and down, depending on the fear of what's going on in the culture. No, invest and put your money in something

Starting point is 00:06:52 that has a long-term track record. So even things like gold, crypto, and I would say even single stocks in this because it can be very, very risky. So the thing is, you want something that is pretty much bulletproof for the long haul, and that is going to be putting it in the market. I mean, so whether it's an index fund or a mutual fund, but putting something that you can see long term, it's going to be great, right? There may be dips for sure, but long term, it keeps going up, and that is what we want. And so contributing 15% of your income and to retirement, So this is things like your Roth IRA or your 401K, be doing this after you are out of debt. And it is boring.

Starting point is 00:07:33 It is not exciting. It is not flashy. But man, can I just tell you, it works. It works every time. Talk to a couple that's been doing it. You know, they're 60 years old and they've been doing it since they were 25. They will retire millionaires. Like they will.

Starting point is 00:07:46 If you consistently invest, you guys, especially 15% of your income, it is amazing what can happen over the long term. But it's not get rich quick. It's not flashy, not exciting, but your wealth will grow. All right, when it comes to financial traps, some are more obvious than others. So to steer clear of one of the biggest and worst money traps, check out the billion-dollar scheme you didn't know you were a part of. Click here to watch it or if you're listening on podcast. I'll leave a link below. All right, you guys, remember to take control of your money and create a life you love.

The Rachel Cruze Show - 6 Money Hacks You Should Never Trust (They're Traps!)

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