The Rachel Cruze Show - 7 Financial Habits You’re Neglecting (Costing You Thousands!)

Starting point is 00:00:05 When it comes to money, lots of people feel like they have a general understanding of the basics, but there are some subtle, small, daily habits that could be costing you thousands of dollars. So here are seven financial habits that you might be neglecting. Make sure to like, subscribe, and share this episode with a friend. All right, financial habit number one, juggling minimum payments. So just because you can maintain or pay the minimum payment doesn't mean you should. Okay? And what I mean by this is people feel like if I can afford the payment, then I can afford the item.

Starting point is 00:00:37 And it's not true because over the course of time, you guys, if you add on so much debt to your life and you're just paying the minimum payments, you're not, number one, getting ahead, but you're paying interest, sometimes even fees if you're late. Like, all the things happen. So getting out of debt and freeing up those minimum payments and having no debt in your life is going to make your income go so much further. Now, I would say as you're getting out of debt, which I tell people to list their debts smallest to large. largest, regardless of the interest rate, then you're going to pay minimum payments on everything while you pay off the smallest debt first. So that makes sense. But over time, those minimum payments and living that life, it's going to slowly drain your budget. All right, number two, having tons of savings, but also tons of debt. So we talk to people all the time on the Ramsey show, and they

Starting point is 00:01:23 call in and they're like, oh, yeah, we have $14,000 in savings, but we have $23,000 in debt. And we're like, What? Like throw that savings and get rid of your debt because your debt you are paying interest on. And yes, could you be making interest on the money that's saved, maybe in a high-yield savings account? Yes. But it's usually way lower of an interest that you're gaining in that way, making versus what you're paying out. And the level of risk is huge because some people feel like that having a lot of savings and a lot of debt, they're okay because it kind of cancels each other out. but the truth is, if something happens and you lose your job or whatever, and that savings dwindles, then you're going to have the risk of all of this debt and all of these bills that have to be paid every month. So getting to a point where you can erase the debt and then be able to build up your savings, that's the way to go.

Starting point is 00:02:11 Number three, taking on a mortgage payment before you're ready. Oh, this is so hard because a house is something that like every, it's a big, it's a big step for people. And they really want it for a lot of people. Like, I want to own a home, which I totally get. and I'm 100% for. I think owning a home needs to be part of your entire financial picture and your game plan long term. But people rush into it.

Starting point is 00:02:34 And what happens is it not only adds stress, but you realize how expensive it is to be a homeowner. Like when things break and you have to take care of things and upkeep and all of it, it's all on you. And if you don't have a place where you are financially, like if you're not in a good place with your money, it's going to cause so much stress and more of a burden than a blessing. So I want you to be debt-free. I want you to have a fully funded emergency fund. And then I want you to have a good down payment. If you're a first-time home buyer, five percent is fine. But if you get up to 20 percent, which would be amazing, you can avoid PMI, which means you're not paying out as much in insurance, which is wonderful. But all of these things, I think, are really crucial to have a solid foundation for you as you become a homeowner as otherwise, it just becomes honestly kind of like a barrel of fish hooks where you just are leaking money everywhere because owning a home is expensive. And if you don't have the money for, you for it, it's going to stress you out. All right, number four, not staying on top of your insurance

Starting point is 00:03:29 plan. So here's the deal. Insurance is one of these things that either you may not have enough and that's going to cost you, or maybe you have too much, or maybe you bought it and you never went and re-evaluated, like, where you're at in life. So here's the deal. You could be overpaying when it comes to insurance, and we find that this is really common. And you could be paying and overpaying like hundreds of dollars a month. Like, it's pretty wild because there's packages and bundles and all of it. There's an efficient way to have the insurance that you need at a good rates. And so if you want to re-look at all of this, make sure to check out Ramsey Trusted, because there's a Ramsey trusted agent near you that can actually go in and look at all of your insurance

Starting point is 00:04:09 and make sure that you are exactly where you need to be from a coverage perspective, but also what you're paying. So if you want to check it out, you can go to Ramsey Solutions.com slash insurance, or I'll put a link down below if you want to get connected. So it's scary how common this next one is, but first, I do want to tell you about one of our sponsors, Fairwin's Credit Union. The holiday season should be about peace and not payments, and that is a big reason why I love Fairwin's credit union, because they help you reach your money goals without debts. With Fairwin's Smart Bundle, there is a no-feet checking account, high-yield savings to grow your emergency fund, and the exclusive Ramsey B-Weird debit card. I have mine, and it's my favorite to put

Starting point is 00:04:52 out, like if we're out to eat, you know, you're throwing on, it's great. It's so great. So every time you swipe and you pull out that card, it is a reminder that you are doing your money differently. So go to fair wins.org slash Ramsey today to open up a smart bundle and grab your exclusive Ramsey be weird debit card. That's fairwins.org slash Ramsey. All right, another company that's doing amazing things on your behalf is delete me because those holiday promos can be great, but with every newsletter sign up or coupon code that you fill out, you're giving your data away. And that personal info can easily end up on data broker websites, and that can add to the scammers and the spammers that are out there, and you don't want your info out there like that.

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Starting point is 00:06:17 in case of your death, but we all die. So I guess when you die, now obviously, the more things you have, the more things you own, the more people in your life that you're responsible for, then it is much more important. I mean, honestly, having a will is so necessary. It's not fun. You can actually do one at mama bearlegal forms.com, and it's a state-specific will, but please do this, because when you do it, it frees up, again, for your loved ones, of what to do, the direction of what they need to do at your death, but also it puts the government not in the center of all of it because there's so much that can be involved and we don't want them making decisions about your stuff. You want to take care of that for your loved ones. All right, habit number six is keeping a car payment in the budget.

Starting point is 00:07:00 So we mentioned this a little bit earlier, but this idea, if I can afford the payment, I can afford the item. And people do this all the time with cars. The average new car payment is over $700 a month, you guys. So if you think about that, if there's two new cars and you're getting on average $700 payments, that's $1,400 leaving, going to a car that's going down in value. It's one of the worst financial moves people can make. And people do it a lot, obviously out of necessity. Like I understand you need a car, most people in America that they use it as a form of transportation. But making sure that you are driving a car that you can afford. Even if it's a $5,000 car and it's a crappy car, at least it's getting you from point A to

Starting point is 00:07:40 to point B and you can save up on the side, sell that, and then move up in car. But this idea of going and just, you know, taking a loan out. Because what happens is over, you know, the next five years, even if you pay it off, once it's paid off, then it's like, okay, it's time for a new car, and you just go back into the payment cycle. And so don't do that because it is costing you so much money. Because if you actually invested that money from age 18 to age 60, an average car payment, it's millions of dollars, you guys. It's crazy. So get rid of the car payments. Don't do car payments. Number seven, the last one, and a very important one, is sitting out of stock market. So we get calls a lot on the Ramsey show of a lot of fear where people being like,

Starting point is 00:08:19 okay, you know, I'm scared to get in because I don't know what's going to happen. So this is an area you guys, you have to educate yourself because when you actually look at the stats, you actually look at the numbers, you look at the track record of if you put money into the market. And it's money that you have that you don't, you know, you have an emergency fund and then I tell you to invest. So it's money that's out there for long-term gain. You're going to make so much money. You really are from the interest rates and also the compound growth beyond that. And so don't just have your money sitting in a high-yield savings account doing nothing. Have money in the market.

Starting point is 00:08:52 And how to do that really is with retirement. So after you have paid off debt and you have a fully funded emergency fund, invest 15% of your income into retirement. And so that's your 401k, Roth IRAs. And within those accounts is where you're investing in good mutual funds or index funds to be able to get that growth. So sitting out of the market is a big mistake. So when the time is right for you financially, get in. Now, if you need to actually understand some of your numbers, because it can be kind of confusing, I would say to use Ramsey's investment calculator because you can plug in some numbers, and it's really fascinating. So if you did this and you said, okay, I'm going to start at age 35,

Starting point is 00:09:30 and if you took $600, which again is like basically a car payment for most people, and you invested it over time until you're 65 years old, again, it comes out to $1.3 million. And that's at, that's at 35. What if you did this at 25? I mean, it's crazy. So you're missing out if you are not investing. So remember, when you get out of debt, you stop paying interest. And when you start investing your own money, you're earning interest.

Starting point is 00:09:56 And that's what we want. All right, small habits, you guys. These are small tweaks going along your financial journey. But it is so crucial to start with these small habits. Now make sure to check out my episode, Why Being Boring is the best way to build. wealth. You can click right here to check it out, or if you're listening on podcast, I'll put a link below. All right, you guys, remember to take control of your money and create a life you love.

The Rachel Cruze Show - 7 Financial Habits You’re Neglecting (Costing You Thousands!)

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