The Rachel Cruze Show - 9 Habits That Will Always Keep You Broke

Episode Date: October 3, 2022

Let’s talk about how to change our mindset and our habits when it comes to finances—so we can start making our money work for us instead of the other way around. We’ll go over nine money habits to break ASAP, the seven states with the highest credit card debt, and a mental trick that will shift your perspective on wealth. Don’t miss this one! In this episode: ·      9 Habits That Will Always Keep You Broke ·      7 Places With the Highest Credit Card Debt ·      This Changed My Entire Perspective on Wealth   Helpful Resources: Christian Healthcare Ministries Financial Peace University EveryDollar   Sponsors pay the producer of this show, The Lampo Group, LLC, advertising fees for mentioning their services or products during programming. Advertising fees are not based upon or otherwise tied to any product sale or business transacted between any consumer or sponsor. The following sponsors have paid for the programming you are viewing: Christian Healthcare Ministries.   Learn more about your ad choices. Visit megaphone.fm/adchoices

Debt is one of those things in life. It just makes people look like they're doing a whole lot better than they actually are. Debt, it steals your sleep at night. It creates this idea that if I don't have this income, I can't keep up this lifestyle versus having this peace when you don't owe anyone anything. Hey guys, welcome to this episode of the Rachel Crewe Show podcast. I'm so glad that you're here. So in this episode, we're going to talk about habits that keep you broke.

And then I'm going to tell you what changed my perspective on wealth. then I'm going to talk about the seven places with the highest credit card debt, and some of them may or may not surprise you. But first, let's talk about habits that will keep you broke. Take a listen. So we all want to save as much money as possible. But you have to realize that certain habits will help you win with money over the long term, and some habits will keep you broke. And some of those habits you don't even notice that you're doing them. So in this episode, I really want to talk about, okay, let's look at the habits that are going to keep you broke.

Let's look at the habits that are not good for your money long term. All right. First step, using credit cards. Yep. Everyone's like, oh, Rachel, it's not that big of a deal. I mean, I have this airline credit card or this because I get cashed back. I mean, it's not that big. I paid off every month.

I've heard everything in the book. Listen, here is my thoughts around credit cards. Number one, study should. you spend more when you spend with credit cards. Just the fact. Every study that is done around spending money, everyone spends more. It's close to 12 to 18% more when you swipe a credit card versus a debit card or using cash. Because you have no emotional attachment to the credit card.

So that's an issue. There's also an issue, too, that when you are playing this game that, oh, I'm getting airline miles, I'm getting points, it's so great, it's so great, I'm winning, I'm winning. you have to understand that these credit card companies aren't doing these points and these airline miles because they're like nice and they're like, oh yeah, we want you to win. No, it's because they're making billions and billions of dollars

off of other people who don't pay off their credit cards every month and pay interest, okay? So I don't like the idea of benefiting from something that I know is taking someone else out. And so the whole underbelly of this industry, it's disgusting. They just want to make money. That is all they're after. They don't care if you're in debt.

They don't care if you're struggling. They just want you to swipe, swipe, swipe, swipe. So I'm done with it. So those two things for me, I'm out. I can use a debit card. I can do everything that you can with a credit card except for going to debt. So debit cards, I'm telling you, is where it's at. And let me add this too because I just can't help myself.

But even talking to people that said, yeah, I did this plan, but I kind of kept one or two credit cards because I didn't think it was that big of a deal. And when we got to the point that I said, you know what, let's just get rid of them for a time and just see the difference. There was a difference, so much of a difference, so they didn't go back and get a credit card because they really realized what it meant

that you owe money to a credit card company at the end of every month, and you're paying for things that you've already done. There's a psychology about it, you guys. It's a big deal. So get rid of the credit cards. Number two, trying to get the perfect credit score. Oh, the FICO score.

The credit score. Everyone's like, I want a great credit score. listen, mathematically, how a credit score is calculated is all around debt. It's the types of debt you have, the new type of debt, how often you pay on your debt, your debt amount. It is all based on debt. And when that is the one thing that you are focused on is how to figure out how to play the debt game, it's going to leave you broke.

It's this idea that, man, I'm playing for someone else versus saying, screw all of that. And I want to see my bank account. I want to see my number in my bank account begin to grow. and in my savings account and actually have real money and not worry about a score. So you can actually live life without a credit score.

You can even buy a house through manual underwriting without a credit score. So stop trying to play the credit score game. It's not worth it. Next is not budgeting or tracking your expenses.

So this will keep you broke. When you are not intentional with where your money's going, you're going to look up, I'm telling you every year when you do taxes and be like, oh, wow, I made that much. I have no clue where it's.

all went. It's this idea of not being in control, that you're just, your, you know, your money is the one that is controlling you versus you controlling your money. So the budget gives you guidance and it gives you direction. Do a budget. Also, something that will keep you broke, this habit of impulse buying. Listen, we're all guilty for it, okay? It happens all the time. But when this becomes a habit and if it is something that you're doing consistently, you're going to keep spending money that you don't need to spend. And, And some people spend money that they don't have and charge it to the credit card. So it's this vicious cycle.

So stop impulse buying. Actually, stop before you make a purchase. Ask yourself some questions like, do I need this? How long have I known that this has been around? Let me sleep on it for a night or two. Give yourself some time with purchases, especially big purchases, to know if you really still want it. All right.

Another habit. It's buying lottery tickets. You guys. I know it's being like, oh, it's fun, the scratch-offs, all of this. So listen, when it comes to gambling and the lottery and all of it, you just kind of have to be in the mindset that you're going to lose. That it's not a way that you're going to be wealthy. And there's been, for some people, this idea, this lie that in order to build wealth,

it has to be something magical like a lottery ticket. And so people spend so much money on this stuff chasing the stream when you could be using that money to invest and actually keep it and actually let your money work for you. versus spending it on lottery tickets. So if that's a habit, get it out of here. All right, another habit that you need it to break is if you live on more than what you make. That's going to be the definition of being broke.

Yep. When you spend more money than what you make, which means you have to fix that equation. You either have to bring more money in or you need to cut expenses or both for the time being. So some people do this because literally their expenses is to put food on the table versus their income, it just doesn't pair up.

And if you live like that for a long enough period of time, you guys, you have to go into debt because you have to make up that interest and it's going to leave you in a huge mess. And so you want to be really, really intentional with both sides of that equation, looking at your income. Does that mean switching careers?

Does that mean getting a side hustle? Does that mean asking for a raise? Like, what does it mean on this side to generate an income that will support your lifestyle? And your lifestyle, is it too much? Are you, do you have things, you really don't need. Are there things that you can cut for the time being to get these things to balance out? So living on more than what you make will keep you broke. Also, trying to keep up

with everyone else. Yep, when you're looking at your house, how it's decorated, your car, your vacations, your clothes, your kids, everything. And you're comparing your life to everyone else. And you're looking around and saying, oh, well, look what they're doing. We've got to do the same thing. If they're doing that, I should be doing that. And that comparison, living will leave you broke. Because here's the truth, statistically speaking, seven out of 10 houses in America are living paycheck to paycheck. And so when you look at the stats, you're like, okay, majority, more than half of people are living paycheck to paycheck, which means if there is not a paycheck that comes in, they don't have enough money to pay their bills. They're that tight.

So when you're comparing your life to that equation, you don't want to look like them. You wouldn't be able to say, hey, we're actually going to pull back a little bit, fix our life, actually save up and pay for things, you don't want to look like everyone else, because the truth is, Joneses are broke. All right, another habit is having a house payment that is more than half of your take-home pay. Houses are a gift. They are a blessing. They are an intimate part of our lives. It's where we raise our families. It's where we go home after work. I mean, this is the place that is ours. So it is a very sacred thing. I understand that. but you don't want it to be a curse.

And for a lot of people, man, their house payment takes so much of their income. And what's hard is when so much of your income is going straight to a mortgage or straight to rent, you don't have a lot left then to pay the bills you need to pay, pay extra on your debt, do the things that you want to do, save, invest, give. It does not leave room. So that's why we always recommend your rent or mortgage payment be no more than 25% of your take-home pay. The last habit is not having anything in savings. This is big.

When you don't have money saved for emergencies, you end up using debt to cover them. So you have a car problem. You fix the car problem with a credit card. Now you have a money problem. The problems continue to escalate. And so having money saved is so important. That's why we always say I have a starter emergency fund of $1,000.

And then once you're completely debt-free, bump that up to three to six months of, expenses. All right, so those are some of the habits, you guys, that can leave you broke. If that is how you're dealing with your money, it is going to be so hard to gain traction. So some of these are big habits to break. Some of them are smaller. But really, it's looking at the individual thoughts that you have around money, your actions towards money, and what becomes habits, and what you really start to believe is just normal. And this is how I function with my money. It is so important to look at all of those habits. And if you have one of them, just for like

days. Do the opposite. Do what I say, and see if it works, and if you like it. Because still, you can always go back to the bad habits if you want, no one's stopping you. But try for these new habits, these good habits that actually give you progress with your money. All right, make sure to share this with a friend who is making it their goal to be wise with money. Give them this list. Talk to them about it. And remember how one of the habits to avoid is not budgeting and not keeping track of your expenses. Well, one of the best ways to do that is every dollar. This is my favorite budgeting app. It makes it so easy, so simple to do a budget and track your transactions. And you can find that in the app store or at Ramsey'solutions.com

slash every dollar. So people are going into debts more than ever. The debt levels are going up. And I would say mostly because of inflation. You know, the cost of living today keeps doing this, this, this. gas prices have kind of settled out, gone down a little bit, but everything else is still up. And if you had no margin, when it came to your budget and your finances up to this point, and then all of this hits the last, you know, 12 months, you're going to feel all of your money tighten up and everything going out that much faster. So I thought it would be interesting. Today, let's look at the states that have the highest levels of credit card debts.

And this is fascinating. There were some states on this list that I thought would be there that are not. And one's that I thought, surely, no, but they are there. So we're going to talk about the seven states with the highest median credit card balance. And I'd be curious if your state is on here. All right, first up, we have Alaska. Median credit card debt for Alaska is $3,206. Man, I don't know why.

Alaska would not be on my mind. All right. Number two. The District of Columbia. Not quite estates, but this one doesn't shock me. I saw that. I was like, that makes sense. Median credit card debt is $2,788. Next up, we have Washington.

Median credit card debt, $2,471. Vermont, median credit card debt, $2,471. $181. Wyoming. Uh-huh. Wyoming, man. Would not have put you on the list, Wyoming, but here you are. Median credit card debt, $2,324.

All right. Next step, number six on the list. Oregon and the median credit card debt for someone in Oregon is $2,208. Montana. Man, Montana would not have put you here, but here you are. median credit card debt $2,227. I would have thought California. There were other places I totally would have thought

would be on that list and they're not. So, listen, regardless of whether your state was on here or not, you don't have to be part of this statistic. So listen, you can pay off your debt and avoid going into debt in the future. So I know credit card debt, man, this is a slippery slope because people have their credit card and they think, oh, I'm just going to use it just in case there's an emergency.

And then all hell breaks loose with the economy and inflation skyrockets. And you're like, my groceries cost, what? To fill up my car is what? We don't have that extra money here in our account. So you go and charge it to your credit card. Or it's this idea of just living with credit card debt that, yeah, if you want something, the idea of saving up and paying for it is out the window these days. it's just this idea I can just swipe it and go.

So whether you're in a situation that, man, you're using it because out of dire need to actually pay your bills, or you're doing it because your lifestyle has gotten a little out of control. Either way, you guys, it's time to stop. It's time to say, I am sick and tired of letting this fear of not having enough money causing me to swipe this credit card because the money's not there. I'm done living this life. I'm done doing this.

So whether that means that you up your income and you cut expenses or you do both, figuring out a way to live debt-free does so much for you. And Dr. John Deloney talks about this, but how your brain is wired to know that you're not safe. When someone else owns your money, when you are in debt, when Toyota Motor Company owns part of your paycheck and MasterCard owns it, and all this stuff, you guys, your student loan, everything, like when you have people that own part of your life

and dictate your future and say you have to pay us or else, and there's consequences of fees and penalties and interest and all that, like functioning in that, you know you're not safe. And there is something about this piece, this financial piece, when you don't owe anyone anything. And here's the deal. You can do this. You can get out.

We talk about this a lot on this show, but paying off your debt smallest to largest, regardless of the interest rate, pay minimum payments on everything, and attack that smallest debt first and working your way out of debt. Yes, it's a journey. Yes, it's a process.

It doesn't happen overnight like that. It's going to take effort. It's going to take sacrifice. But man, when you get to the end of it and you have no payments and no one is telling your paycheck where to go, you're the one that decides what I want to do with this, it gives control back to you in your life. It does so much, you guys, not only financially,

but also mentally and spiritually. something just has this level of peace, again, when you don't owe anyone anything. All right, make sure to share this with someone that you know needs a little bit of encouragement when it comes to paying off debt. Maybe it's someone that you think, yeah, I've heard them say, oh yeah, you just have to live with debt and debt is a part of your life. Something that believes that send them this episode and encourage them and tell them there is a different way. You actually can live life debt-free.

So today we're going to talk about a mental trick that will change, how you think about wealth. And this is a good one. This is something that I can struggle with at times. But when I kind of got this, like, dialed in, I was like, man, this just helps. It gave me just a new breath of fresh air. So I hope it does the same to you.

Because many of us, many of us struggle with comparison when it comes to money. And it's fascinating because you may have this goal. And then once you reach this goal, whether it's to have a certain thing, to make a certain amount of money, to maybe pay off debt, like whatever it is. Like it's this goal.

and then once you get there, the line moves. And then you get there, and the line moves, and moves, and moves. And it's like this finish line constantly moves. And what's interesting is, like, that's not a factual thing, right? Like, if you think this is all I need to live off of and you're doing things like paying off debt or funding your emergency fund, that's what you have. And then once you get it, it's like, well, I can move this and this and this.

And I blame all of that. That and other things when it comes to money and building wealth. So much on comparison. I really do. When you start looking at what other people have, what other people are doing when it comes to money, it is so easy to compare. Whether it's, gosh, I should be doing better.

Look at them over there. We're not doing that well, but look at them. Maybe we should be doing that well. Or this or this is, I mean, you just start comparing. And social media, love it, hate it. We all have a love-hate relationship with it. But it is. It's the place that we see people, we see other people.

whether they have more things or nicer things than we do, you start to just feel dissatisfied with your life. And it could be stuff, it could even just be kids of like, man, she seems like this mom thing is so easy for her. Or it seems like, you know, this family, the dad is always around and he's so fun and helping out. Like whatever the thing is. And it's like, man, you can like plug in your own life to all these scenarios,

whether it's about marriage, parenting, stuff, money, all of it. And you start to compare your life and slowly, surely you guys, it eats away at our souls. So what I want you to remember is that when you compare your life to someone else, unless they are a great friend that you know everything about their life, other than those people, you have no clue what's going on. On the other side of that picture, on the other side of that situation, you have no idea. And on the financial side, what's fascinating is that 77% of American households have at least some type of debt. Okay? So when you look at four people, three of them, three of them have some kind of debt that they're carrying with them.

And I mean, the truth is, debt is one of those things in life. It just makes people look like they're doing a whole lot better than they actually are. It looks like, man, the cars are driving, the vacations they're taking, the house they live in, anything and everything that they have, it just feels like, man, they are killing it, killing it when the truth is, statistically speaking, majority of them are carrying around debt on the other side. We talk about debt a lot on this show, but it's the truth. It seals your sleep at night. It seals your peace of mind. It creates this idea that if I don't have this income, I can't keep up this lifestyle. You know, we can't pay our bills. And I mean, someone else owns

my future. It creates all of this anxiety versus having this peace when you don't owe anyone anything. And so I want to encourage you that there is more than one way to achieve a great lifestyle. And some of that is paying with cash, actually saving up and paying for those things. For some people, it's going into debt. But there's multiple ways to live a great life, but you have to pick the path that's best for you. And you want to pick the path, in my opinion, of saying, I'm not going to let my stuff own me. Because the truth is, it's okay to have nice stuff, but don't let your nice stuff have you. And so ask yourself the question, like, is it worth it? Is it worth me going into debt

to have that type of lifestyle immediately? Or is it worth working and saving and actually having goals and working within my means to go this way? And this way will bring you a whole lot more peace than the other way. And it is hard. I mean, comparisons everywhere. I mean, I do this, you guys, again, whether it's with kids, whether it's with vacations, whatever it may be, it's like you see someone, you're like, man, that would be so nice. That would be so nice to have. I really wish I could have that. And for a while, I'll be honest, I would see something I wanted and someone else had it.

And I would immediately be like, I bet they're in so much debt. I bet they charge out on a credit card. I bet they took out that car loan. And I realized doing that, but I'm like, I can't be judgmental. I have no clue. So on one flip said, you have no clue what's going on behind the scenes, whether they are stressed out living paycheck to paycheck and have debt, or on the other side, maybe they worked really hard, really hard to have what they have.

And they cash-loaded it, and they saved up, and that's great. So what I learned in general is just don't compare. Don't compare. Craig Rochelle says that comparison, the game of comparison, you either coming out feeling superior or inferior, and neither one honors God. And so there's a sense of just don't play the game. And I know it's hard because we live in this world, you guys, and it's constantly in our faces.

But I'm telling you, if you can put the blinders on and focus on your life and your money, let's be honest, just mind your own business. That's part of it too, right? It's like, we want to get in. I'm like, hmm, I wonder what they're doing over here, here. Who cares?

You have a full-time job taking care of you. I have a full-time job taking care of me. And when you kind of like let go of that and release that, suddenly you have margin in your life, just to worry about you. That's a great thing. That's a great thing. So if you need to take a break from social media,

if you need to create boundaries, even with the people you hang out with, like if there are things that you need to put in place to start this new habit of living a non-comparative lifestyle by choosing to be content, which means a lot of gratitude, a lot of humility, and to live in that peace, it is going to be worth it. And then I would encourage you to work the baby steps.

Work the baby steps, the seven Ramsey baby steps. This helps you, in a tactical sense, get out of debt, build an emergency fund, and actually get you to a place of a strong financial foundation, which on the flip side, yeah, that's all tactical. But man, it gives you such peace, such peace. Now, if you have been staying on track with your money goals by using a budgeting app or our every dollar app,

which is a budgeting app, which is amazing, you're using your debit card more and more these days. Well, we've teamed up with Join, again, to create the Rachel Cruz Slim, Slim, wallet. And I'm really excited about this. So this is a smaller wallet than the big envelope system that I have. The Rachel Cruz wallet, this is a smaller one. So it's great for things that are on the go if you're traveling because it has a lot of card holders that you can carry, whether it's gift cards or debit cards or license, insurance, everything. And then there's

one envelope when you zip it open that you can put money in. So you still want to carry cash around to have on hand. This is perfect. So if you want to check out the Rachel Cruz Slim wallet, I will put a link in the description. Uh, comparison, man, it'll, it'll kill you. People say it's the thief of joy, but it's also a thief in your bank account and your paycheck, spending money. Sometimes money you don't have to keep up a lifestyle that you think everyone else is living and you're missing out on.

So again, put those blinders on you guys. It is so crucial when it comes to building wealth. Well, thanks you guys so much for listening to this episode. It was so fun. It was so much good stuff in here. And if you have not subscribed to the podcast, make sure to hit that follow button. And if the spirit leads, you can leave a review. And as always, make sure to take control of your money and create a life you love.