The Rachel Cruze Show - Are Your Habits Broke, Average or Wealthy?

Episode Date: February 3, 2025

📈 Are you on track with the Baby Steps? Get a Free Personalized Plan   Would your money habits say you’re broke, average or wealthy? In this episode, find out where you currently fall and how to adopt “wealthy” habits that will lead to lasting peace.   Next Steps:  💵 Start your free budget today. Download the EveryDollar app! 🎥 Watch my video What Is Stealth Wealth (and Do You Have It?)   Connect With Our Sponsors:  🏥 Learn more about Christian Healthcare Ministries.  🔒 Get 20% off when you join DeleteMe. Listen to More From Ramsey Network:  🍸 Smart Money Happy Hour  🎙️ The Ramsey Show    💸 The Ramsey Show Highlights  🧠 The Dr. John Delony Show  💰 George Kamel  🪑 Front Row Seat with Ken Coleman 📈 EntreLeadership    Ramsey Solutions Privacy Policy  Learn more about your ad choices. Visit megaphone.fm/adchoices

So at Ramsey, we joke that we've been teaching these same principles for 30 years because people keep making these same mistakes with their money. So today I want to go over a few reoccurring habits of broke, average, and wealthy people. And if some of these sound like you, and maybe you're not satisfied with where you fall in the financial spectrum, stick around to hear the wealthy habits to help you move up the ladder financially. But first, make sure to subscribe to this channel and share this episode with a friend. All right, first I want to be clear that I'm not here to roast anyone, right? So if you have fallen for any of these traps, this is not a shame session by any means. Because times are really difficult. And I do know if you

don't have the knowledge of what to do with your money, sometimes you do fall for these habits or you do get into these systems that are just not great because you don't know another way. So if you feel discouraged in that way, just know that I am on your team. I believe in you. We can do this together. But let's talk about some of these traps and habits that people fall into when money is scarce. So first and foremost is payday loans. We see this a lot with people in lower income areas when you drive through and you see that payday loans, it's because they really do prey on people that are in a level of crisis financially. And what this is is short-term high-interest loans. And these loans, the interest on them is astronomical. Like some of them is beyond 100%

interest. Like it's just, it is crazy. And they really do prey on people that are desperate. And what happens is you get stuck in the system, and because the interest is so high, it is so hard then to pay off that loan and to get out of that cycle. And so if you are in something like this, always remember to avoid payday loans because they are so difficult to get out of. They are not there to help you. They're there to make a lot of money. Next is the lottery. So lottery tickets are disproportionately advertised and sold in low-income areas, and the odds of anyone winning the lottery is one in three hundred. million. And what this does is it takes advantages of people's hope. I mean, people, you know,

believe, oh, it's going to be me. I'm going to win it all. And my life is going to be different because I bought this ticket. And they pray on that. And people spend so much money believing that they're going to win when the reality is, you're not. You're not going to win. You're not going to win. You're not going to be the one wins the lottery. But what you can do with that money instead of buying lottery tickets is actually use it to advance your own personal finances, right? In your own world, of saying, yeah, you could use that to pay off debt or to save that money instead of spending it on this false hope marketing. There's also cash advance. And this is short-term loans or advance on expected income or even a credit card with high interest rates. So what this is, is again, the short-term

ideas of saying, okay, I'm going to advance my check and I'm going to go ahead and borrow on the money that I haven't gotten yet. But again, the interest rates on these, you guys, is so high. And it's back to the system kind of like payday loans where it keeps you. shoe in. So it is never wise to spend money that you don't have yet. Next is rent to own. So this is an agreement to rent something. This could be a refrigerator or a couch with the option to buy it later. And this typically comes with a lot of hidden fees. And overall, the price is going to be higher. You're going to have high payments. And what you end up spending at the end of all of us, even if you end up buying it, you're going to spend more doing it this way than just saving up and

buying something, the traditional way. And so they make it feel like, yeah, we're here to help you, but they end up, you know, taking some of your money is what it ends up being. You pay more for the item than what it was originally. Now, before I rant about airline miles here in a second, I do want to tell you about one of our sponsors, delete me. I saw a headline recently that really caught my attention that one-third of the U.S. population's background info is now public. So for 115 million of us, data breaches mean that our info is out there for anyone to find. And this is stuff like our names and addresses and phone numbers and more. and that is why I love and use Delete Me because they find and remove information from hundreds

of data broker websites that buy, sell, and trade your personal data. So take control of your online privacy with Delete Me. Individual DeleteMe plans start as low as $9 a month. So sign up today at join deleteme.com slash Rachel and you can get 20% off or click the link in the description. All right, here are a few financial habits that the average income earner. might fall into. First up, airline miles. That's right. The credit card game. Yeah, they really, really have convinced Americans that like this is the smartest thing to do with your money is to have a credit card, charge it up because you get free stuff like airline miles. But the truth is, you end up spending more when you're using a credit card and not your own money. So for you to get

these airline miles, oh, I saved, you know, unless a $200 ticket, well, the course that it took for you to spend that amount of money to get that free $200 ticket, you spent more than that on the credit card versus if you had just saved up and paid for the ticket on your own, it would have been a cheaper way to go. So it feels like you're winning, but ultimately it's not. And remember, credit card companies are not going to waste their time giving you rewards if it doesn't make them richer.

So they know what they're doing. They're making a lot of money. Okay. Next is car loans, especially when it comes to new cars and leasing a car. So driving a brand new car and taking a brand new car and taking a loan out on that is something that across the board, people in the personal finance industry say it is not a smart move. But as a car goes down in value. And when you spend money and you have a loan and you're paying interest on something that's going down in value, it is not a smart, quote unquote, investment.

It's not an investment. But it's not a smart purchase. And so brand new cars overall or even leasing, which is a more expensive way to finance a vehicle, It's not a smart system to be in. And again, a lot of people get into the cycle that they, you know, get a car, get the loan, which loans paid off, and they go get another car, and they just keep going back and forth, keeping with loans for their entire life. And so a car loan can be anywhere from 400 all the way up to $800, $900 a month.

So it is not a wise thing to do financially. So get out of that whole system. So if you're drowning in payments, sell that car. Next are HELOCs, home equity lines of credit. And that means you are borrowing from the future. your value of your home or even taking out equity that's in your home and using it for other things. So never a wise thing to do because, again, it's just more debt. You're adding more debt onto a home. And if you have a mortgage, then you're adding on more debt on top of the debt, not wise.

There's also buy now, pay later. And this kind of can seem harmless, I feel like at first, because you're like, oh yeah, when I go to checkout online, I can just break this up into four payments. And while that feels harmless, we see time and time again, stats are showing. is that people are spending so much money, more money than they originally would have because of this. Because when you break out a $40 sweater into four payments, it's $10. So you've got to pay right there. You're like, oh, well, I have some more money. I can add some more things.

And then you end up spending more money. And again, this is a form of debt because you have payments. You're not buying the item. But when you spend your money and buy an item outright, you're going to think differently about that purchase versus if it's spread out and it doesn't hurt as bad. So don't fall for buy now, pay later. Now here are some habits that wealthy people are using, and I think they're a great ones to look at because they're going to give you some financial peace, which is what we all want.

So living below your means, this is a really crucial one. Doing a budget is going to help you with that. I love every dollar our budgeting app. Make sure to check that out. But living below your means where you actually have margin and money to save and invest is what wealthy people do. We also found that they drive used cars. So used hondas or Toyotas are the most common cars driven by millionaires, according to the

national study of millionaires. And you may have heard of like quiet luxury or stealth wealth where it doesn't look like this person is wealthy, but actually they are. They're really wealthy. And even the items they have on may not have tons of logos, but they're high quality and they're great. So that's the same idea with the car. Have a high quality item. Great car that's reliable and amazing.

And you're good to go. Next is paying your house off early. When you don't have a mortgage payment, you can use that money to give it, to spend it, to invest it, and it continues to increase your net worth. Also, investing in the future, according to the National Study of Millionaires, 8 out of 10 millionaires invested into their companies, 401K, and so that was a big key to their success. Three out of four of them invested in something outside of their company plans as well. So investing 15% of your income is so crucial, you guys, when it comes to this. They also are very generous people, people that are wealthy, not all of them, but we do see that people that are generous at any stage of their financial picture is huge because that generosity

peace is what gives you joy as you continue to build wealth. All right, we've looked at a lot of financial habits today, but no matter which one you've identified with most, remember that you're not stuck in a category, right? You can change your habits, you can change your outlook with money and continue to build wealth and find peace and control over your money. Now, to learn more wise wealth building habits, check out my episode, What is Stealth Wealth and Do You Have It? You can click here or if you're listening on podcasts, click the link in the show notes. All right, you guys remember to take control of your money and create a life you love.