The Rachel Cruze Show - Smart Saving and Spending Tips to Try

Starting point is 00:00:04 What is something that you absolutely refuse to spend money on? Frugal people never spend their money on. Brand name foods at the grocery store. Whatever it is, everyone has something where they just draw the line, and I'm always fascinated to hear people's answers. Hi, you guys. Welcome to this episode of the Rachel Cruise Show podcast. I'm so glad that you're here.

Starting point is 00:00:27 Oh my gosh, I can't believe this week is here because my new kids book, I'm glad for where I am, launches this week on April 6th. Oh, I am so excited about this. So I wrote my first kids book about contentment, and this one is about gratitude, and the same sweet little animals just go on this precious little adventure to find gratitude and what's really important in life. And so I just cannot wait for your kids to read it, and I hope you guys enjoy it. It is so near and dear to my heart. So make sure to order your copy today at ramsysolutions.com slash store. All right, so in this episode, we're going to chat

Starting point is 00:01:04 about some things that frugal people avoid and whether or not they're actually a good idea. Then I'll talk through how to be intentional with your money and the two budget categories everyone must have. But first, let's discuss the top cars that you should never waste your money on. Take a listen. Well, hey, you guys. Okay, so we talk a lot about why you shouldn't have your identity wrapped up in the car that you drive because transportation is a basic need, right? We all know that. But when it comes to optics and ego, it's just not that serious. And 90% of the time, you and maybe a few members of your immediate family are the only people who really even see your car. So why throw away hundreds of dollars every month on a giant car payments?

Starting point is 00:01:49 So I will always recommend paying cash for your vehicle, which for most people means buying a reliable used car until you reach a certain place financially. But I don't recommend buying just any used car. So there's a little bit of strategy here, which is why I've done the research for you. Today, I'm sharing five cars that you should never waste your money on. But first, let's catch you up to speed on the basics when it comes to owning a car. Now, I'll be honest, this piece of advice tends to ruffle some feathers because I only recommend buying a brand new car once you've reached a million dollar net worth, which may sound a little drastic, but here's the deal. There's two main reasons why I say this. Number one, cars are a depreciating asset.

Starting point is 00:02:28 investing in an appreciating asset is like stocks or a home mortgage, right? So when you're actually putting money in something that's going up in value, it's going to earn you money over time as that investment increases. But on average, cars lose 9% of their value the minute you drive them off the lot and they only decrease in value. Keep going down. So going into debt for months or even years to pay off your car always will end up you losing money in the end. And also, Number two, car payments steal a huge chunk of your budget every single month. The average car payment in America is around $500. So that's $6,000 a year.

Starting point is 00:03:07 Just think about all the things you can be doing with that cash and where that could be going every month. And with that amount of margin, you could be saving up for a dream vacation, investing for retirement, doing so much with that money. And instead, it's being sent to the bank and payments. So for these two reasons, I recommend waiting to buy a new car until you're really financially able to throw away that. disposable income on that purchase.

Starting point is 00:03:30 Until then, used is the way to go. Now, let's get into the list of five cars that you should never waste your money on. And I'm a little shocked that this is the first one, but here we go. Because most people like me included tend to find that luxury cars are more reliable. And I mean, you must be paying good money for that reason, right? I mean, it should be reliable, but it's not. Because the first car on the list is a BMW X-1, X-3, and X-5, from 2012 to 2012 to 20, customers reported having significant maintenance issues in all three of these models.

Starting point is 00:04:04 I mean, that's almost a decade of car problems from the same company, you guys. No, thanks. All right, the second car you should avoid wasting your money on comes from a good old-fashioned American brands. I mean, I hate that the red, white, and blue is taking a hit, what it is. There were 15 different Chevy models that repeatedly gave out on their owners between 2011 and 2020. Oh, okay, so this is everything from the Chevy Equinox. Malibu, Impala, Silverado, Tahoe, Suburban, Traverse, and, wait for it, the Chevy Cruise. I wouldn't hit a little too close to home, you know?

Starting point is 00:04:39 So at this point, maybe all you car nerds are thinking, yes, but this is why I always buy Japanese brands, Rachel. Well, not to get a little too confident, because number three may surprise you, too. The 2020 Toyota Tundra and the 2020 Toyota Sequoia ranked in the list of cars to avoid buying in 2023. So apparently Toyota has made some improvements to these models in the last few years, but in classic 2020 fashion, you'll want to stay clear of the 2020s. And just when you think Honda was in the clear, we've made it to number four. Now, this one isn't the make and model of a specific car. Sadly, the damage was a little bit more widespread. The fourth thing you should avoid when it

Starting point is 00:05:19 comes to purchasing a vehicle is an airbag system that was recalled over the span of two decades. So from 1995 until they declared bankruptcy in 2017, a Japanese airbag company recalled more than 65 million vehicles. They supplied countless Honda cars with their airbags and the loss was devastating. So if you're considering buying a Honda in the future, make sure you do your research and make sure that you don't pick a car that use the Takata parts. Stay away from that. Now, just in case you forgot about the luxury BMW at the top of our list, number five is also a bougie vehicle. I hate to break it to you, though. The fifth car on this list that you should never waste money on is an Audi or Audi, however you want to say it, A4 from either 2011 or 2014.

Starting point is 00:06:09 Customers reported being dissatisfied in their vehicles from those two years specifically. Now, let's just think about it for a minute because a lot of people who are in a solid place financially still chose to buy used and could save some money. My friend George Camel was a net worth millionaire and still bought a used Tesla. So again, regardless of where you are financially, these are important years to remember. Because if this is your plan, you want to be careful that you're sticking with a good quality version of the car that you're looking for. And now that you know the handful of cars to avoid, you need to check out my list of 10 good quality used cars under $10,000. I will leave a link in the description. And did you know, the Ramsey Car Guide? It's a thing.

Starting point is 00:06:52 and it's the best resource out there when it comes to buying and owning a car. All right off the bat, what is something that you absolutely refuse to spend money on? Maybe it's something that you kicked out of your budget a long time ago when you were in a different season financially, or maybe it's something that you just can never justify. But whatever it is, everyone has something where they just draw the line, and I'm always fascinated to hear people's answers. There's always a lot to learn from the way other people prioritize their spending. So today, I'm going to be reacting to 10 things frugal people avoid at all costs.

Starting point is 00:07:29 And I'll share with you whether I agree or disagree. And at the end, I'll reveal one thing that I personally can never bring myself to spend money on. So the first thing that is on the list that frugal people avoid buying is bottled water. Because the way they see it, you know, why spend $5 on something you can get from free in the sink? Now, I'll have to admit, this one's a little tough for me. My team knows, my husband knows, like, I don't know. a good bottle water to have on hands, it is something that I will, I will spend money on. You know, because I go to Costco and you can get like 40 in like this like massive thing for like

Starting point is 00:08:02 six bucks. So I'm like, I don't know, it's always so tempting. And I get it. To save money, to be eco-friendly, like all of it, ditching the plastic bottle waters probably is a better choice. The second thing, frugal people rarely spend money on is books. Book covers, you know, they've gotten really cute lately and it's just really tough to resist for me. I love. a good book. I love a physical book. And for a lot of people, though, they go the audio book route, which I totally get, or they go to their library. They do really smart stuff. My mom is one of these people. She, like, will use the library still to the stay. Hi-bye books, y'all. I'm already, like, two-for-two on this list. I love having a physical book in my hand. And I guess since I've written

Starting point is 00:08:44 books, a part of me, like, is great buying, I'm in supporting the author or whatever it is. I don't know. I know that's me justifying, but I do. I buy books. Okay. The third thing, saying that frugal people never spend their money on is new cars. Oh, man, this is a tough list. Okay, listen, until you are a net worth millionaire and you have the disposable income to spend on a asset like a car that's going down in value, you don't need to buy a new car. Because generally, you guys, new cars, I'm like, it's not worth the money. It's really, really not. So I'm all about used cars. That's a good one. The fourth thing that frugal people never spend their money on is cable TV. Now, I get it. I mean, these days, just,

Starting point is 00:09:23 just having internet and then saying, yeah, I'm going to do internet and cable. I mean, it can run you $300 a month. Like, it is crazy. And if you are in a really tight budget, this is a great place to save hundreds of dollars. I mean, again, you could have one streaming service and just spend $9.99 a month. So I'm all about that. The fifth thing that frugal people never buy is dry, clean, only clothes because it was it wastes time, money, and gas.

Starting point is 00:09:50 So now, if you are in a career that requires more of a formal business attire, especially men's clothes, like it's kind of hard to skip out on the dry cleaning. But in general, for me, I guess I have a few pieces that I need to dry clean, but I don't do it a lot because those are usually really nice pieces and I usually dress rather casually, I would say. So again, I could see how this is a frugal thing that people save money on. Just don't buy dry clean only clothes. So I'm all about that. All right, The sixth thing that frugal people avoid buying is brand name foods at the grocery store. So, listen, I love Publix. That's where my family shops.

Starting point is 00:10:27 And I'm all about this. I really do. I am all about buying the generic brand that is from the grocery store, almost everything. Because I don't want to get into like the conspiracy theories on all of this. But usually it's made from the same factory, same warehouse, just a different label. So generic, it's the way to go. The seventh thing frugal people never spend their money on is the latest technology. So they are content with their iPhone 5S.

Starting point is 00:10:54 And listen, I love that for them because as long as it's in working condition, keep the old laptop. It's fine. And again, I do think, not to blame companies, I do think that some of them purposefully slowed down so that you have to continue to buy new ones, right? So listen, if you need to buy a newer model, there are places even like eBay that you can still get good quality items even that are used. So it's great.

Starting point is 00:11:16 The eighth frugal thing people never buy is pets. Oh my gosh. Well, I can't confirm this is 100% true because George Camel is one of the most frugal people that I know, and he treats his two dogs like they are the king and queen of England. So listen, there are some exceptions, but I know a lot of people that are frugal and they still have pets. Because, yes, they are in an added expense for sure, something you need to consider. But I don't know. They're part of the family.

Starting point is 00:11:42 The ninth thing that frugal people never buy is impulsive purchases in the check. checkout line. So if you ever go with kids, man, you go to Target, home goods, it's just like candy, gum, candles, anything you can grab last minute as you're going down to checkout. Listen, that stuff adds up. So I am in full agreement with this. Just say no. Now, the tent thing that frugal people never spend their money on is warranties. So I see how some people kind of are difference of opinion on this one. But for the most part, it's one of those things of like, oh my gosh, protect my furniture messages that pops up on Amazon. on when you order a $30 lamp and you're like, no, I do not need that. But for some people,

Starting point is 00:12:20 they really do justify, yes, having insurance for technology, like an iPad, especially if you have kids or your phone, whatever it is. Again, some people will buy into the warranties, but I don't and I just save my money and then have some money saved over here that if something happens, I have the cash for it. So that's kind of my opinion when it comes to this. And now it's time for me to come clean about the one thing that I will never spend my money on. Even if I have room in my shopping category in the budget, one thing I just cannot do you guys is expensive sunglasses. So designer sunglasses, again, I'm sure they're very nice and really great and like polarized lenses and like all the things. But my Amazon shades, they do the job because, listen, my sunglasses,

Starting point is 00:13:04 I get thrown in pool bags, purses, they're stepped on, they're in the van. I mean, it is just a place I'm like, I don't want to spend hundreds of dollars on something that again is going to break. And I'm just like, oh my gosh, I can't get that back. So Amazon, it's where I buy my sunglasses. So if this list has inspired you to trim up your monthly spending, then I would recommend sitting down with our budgeting app every dollar. It is an amazing app that really helps you budget. So I will leave a link in the description to help you when it comes to creating your first budget

Starting point is 00:13:32 and finding margin that you need no matter where you are financially. And don't forget to snag a copy of my money. kids' book because I know you're going to love it as much as me and my kids do. So the power of handling your money with intentionality and being so, so specific, it's real. Because you will have everything from checking to saving to giving to investing. I mean, there's so many different types of accounts that can help you build wealth. But again, you need to be really, really intentional with these. But when it comes to saving, it's really important to be strategic and specific.

Starting point is 00:14:11 So today I want to talk through a couple of things. things that you need to know when it comes to sinking funds versus an emergency fund. And if you have no clue what either of those are, that's okay. You're in the right place. But be sure to stay around to the end because I'm responding to your most common questions of what classifies as an emergency and what doesn't. So first off, let's talk about where savings should fall in terms of your priorities when it comes to your financial goals. So if you don't have any savings, the number one thing you want to do is a starter emergency fund of $1,000. Then you want to pay off all of your debts, and then you're going to bump up that starter emergency fund to three to six months of

Starting point is 00:14:47 expenses. And you want to do those things in that order. Okay, next, let's go over where we should keep that emergency funds. So when it comes to having three to six months of expenses or even $1,000, I recommend a high yield savings account. This is one of the best places that you can put your money in because you can get to it when you need it. It's not like a checking account, so you can't just keep like taking money out, but keeping it in there. And there's a high rate of of interest that you're going to be earning compared to a traditional savings account. But once you shift all of your cash over to an emergency fund, then your savings doesn't necessarily stop because you have goals that you want to prioritize.

Starting point is 00:15:25 And this can be long-term goals like investing in retirement or saving for your kids' college. But again, you're going to have other things that you want to save for, smaller, more specific goals like maybe a home renovation or a family vacation or cash flow Christmas coming up. And so what those funds are called are sinking funds. So a sinking fund is just a savings fund for a specific need that you have in the near future. So instead of channeling all of your extra margin into one big savings goal, like an emergency fund, sinking funds allow you to tuck away smaller amounts of money to say, okay, yeah, when that time comes for that vacation or Christmas, I have the right amount of money for what I need.

Starting point is 00:16:04 So again, this is anything from routine car repairs that come around every year to maybe an anniversary gift, whatever it is, whatever is out on the horizon, a sinking fund is a great way to prepare for something slowly and making sure you have the money. And you also have options when it comes to the number of seeking funds that you have. So I know people that have different ones for every single thing that they're saving up for, all these different kinds of accounts that are not emergency funds, but all these other accounts. And I don't know, that sounds a little stressful to me personally, but it's great. So again, it's a non-emergency category, but it's all these other funds. So one thing that I do myself, though, is we just have one big account that we save for, knowing that's part of this money

Starting point is 00:16:45 is divvied up into the things that we are saving for. Now, one question I get a lot that makes sense is, again, where to keep your sinking funds. So we keep ours in a high-yield savings account. So we have one account for our emergency fund, and then one for short-term savings. And in that savings, we know vacations are coming out of this, car repairs are coming out of this, but we just keep putting money into that short-term savings. All right, now that we've covered all of that, let's do some rapid fire because there are eight potential emergencies that are out there, and I'm going to go over each one and see if they actually qualify for an emergency funds. Some of them may have a little gray area, a little nuance, but we'll talk about it, okay? We'll figure out if you're in

Starting point is 00:17:27 this situation. First and foremost, a vacation. Yeah, this is for sure more of a sinking fund versus an emergency fund. You know it's coming, you plan for it, you save up for it. Next, new tires. This is probably, you know, probably more on the emergency fund side. But again, it could be a nuance because you could know, hey, my tires are getting bald. So I know within three to four months we're going to have to replace them. Or sometimes it's a flat tire. So this one could go either way.

Starting point is 00:17:54 An ER visit for sure in emergency funds. A flooded basement in emergency fund. Concert tickets. Ah, yeah, I see you. Yeah, that's going to be sinking fund. You're going to know the concert's coming and save a pay for it. VAC replacement. Okay, again, this is one. Did you see it coming? Did you know, yeah, we're probably going to need to change some filters out or do some stuff to it coming up, or was it a fluke and it just died on

Starting point is 00:18:18 you? So again, if it's urgent, it's going to be probably more of that emergency fund. But if you know it's coming, sinking fund. Roof repair. Again, same thing. It's nuanced. If something happened unexpectedly, the roof is damaged, emergency fund. But if you know it's 15 years old, yeah, we're going to replace it soon? Sinking fund. A new car. So the question is, are you replacing a car that you've driven for 10 years, or were you in a sudden accident? Again, that urgency leans more emergency funds, planning and knowing it's coming, definitely a sinking fund. Plain tickets. All right, here we go. Bachelorette trip. Sinking funds. If you have to go and travel to see someone who is sick in its last minute, emergency funds. So, again, this idea,

Starting point is 00:19:04 of is it urgent, is it immediate, and was it unexpected? Those things lean towards emergency fund. Things you can plan out are sinking funds. So if there's one thing I want you to take away from this episode, it's that saving has to be a lifelong habit. I mean, this is something that takes discipline and over time, but once you've created the habit, you guys, it's amazing how it just becomes part of your overall money picture. It's something you don't even question anymore. It's just what you do. And if you're ready to start your first sinking funds, go to every dollar.com and start your budget today because within every dollar, you can put sticking funds in there and plan them out, and it's fabulous. All right, you guys, thank you so much for listening to this episode. And if you love

Starting point is 00:19:42 the show, make sure to leave a review, your feedback. It helps us out so much. And subscribe to the podcast so you don't miss an episode, share it with your friends and your family. And again, make sure to check out my new kids book. I'm glad for where I am. So thanks again, you guys, for listening. And remember to take control of your money and create a life you love.

The Rachel Cruze Show - Smart Saving and Spending Tips to Try

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