The Rachel Cruze Show - Why Trying to Look Rich Will Actually Make You Broke

Episode Date: November 8, 2024

💵 Start your free budget today. Download the EveryDollar app! Blowing your savings on that designer purse may feel good in the moment, but in the end, trying to look rich will leave you stressed (and in debt)! In this episode, find out what living above your means is really costing you. Next Steps: 🎥 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 💼 The Ken Coleman Show 📈 The EntreLeadership Podcast   Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

All right, you guys, as we approach the holidays, we all just need to prepare our hearts a little bit. Because you're going to picture, you know, all the who's in Whoville, just holding hands, circled up around the Christmas tree, just singing and happy. Like, that's the vibe that we're going to be seeing soon in the world. Yep, because we're approaching the holidays, which isn't all bad. But it also can take us into a spiral of thinking that we're doing something wrong because we may not feel very who-like all the time, and that's okay. So we're going to talk about why trying to look rich will actually make you broke.

But before we jump in, be sure to subscribe so you don't miss a future episode. All right, so I want to offer just a little friendly reminder that what you see isn't always the whole picture. So we are going to get, here in the holidays, lots of pictures in social media, right? And some of them may be true. Maybe that person really is laughing as they're with their children in the fall leaves or the Christmas tree, you know, which is great. Like, I'm not bashing that. But you have to remember always, you guys, always, always, always. You are not seeing the full picture of someone's life.

You are seeing a quick snapshot and what they are choosing to put out into the world, which again, I don't blame them. When my kids are cray-cray and I'm going cray-cray, I'm not putting that up there because I don't have time to grab my phone and film everything, right? So, like, I'm not like feeling, oh, my gosh, everything, you know. Online is a lie. It's not always a lie. But also, the truth is you are not seeing that whole person's life.

and everyone, everyone in the world struggles, okay? Everyone has a story. Everyone is dealing with different things and different stresses. Like, just know that that is the emotional side of that picture that you're seeing. And also, what you may be seeing, whether it's the vacation or the car or, like, the new bag, like fill in whatever level of consumer that you're seeing in that picture, that again, sometimes what you see isn't always what you get. There is a truth behind that a lot of Americans are still living paycheck to paycheck.

And debt is at an all-time high, specifically credit card debt. So as of August of 2024, Americans owe a record $1.14 trillion to credit card companies. And that is according to a report from the Federal Reserve Bank of New York. So again, I feel like sometimes we can all get numb by like the national debt and trillions and But just let that number seek it, okay? Everyday people charging $1.14 trillion, you guys. And some of that is charging to keep the lights on and to keep food on the table. And some of that is a lifestyle that has exceeded what they are earning. So, again, when debt is in the picture, it allows people to look better than they actually

are financially. And I'm not even just talking about the social media influencers or like the big celebrities or something. I mean, these could just be your friends, honestly. And if you don't know the context of their world completely, you may know nothing about their financial situation. So maybe it's neighbors, friends, people in your small group, people that you work with and you're seeing these pictures and these lifestyles. But the truth is when we look at the data, that there is a good chance that a lot of people are living with debt. So I don't want you to get in this spiral of thinking, oh my gosh, everyone is winning and I am losing, especially if you are living a budget for,

friendly lifestyle, okay? So don't be comparing yourself against what other people have and what they're doing. Because again, also, I want to remind you that people are not thinking about you as much as you think they're thinking about you as well. So you're like, oh my gosh, you know, if you're worried about a level of, am I fitting in? You know, am I doing what I'm supposed to be doing or wearing what I should be wearing? Like any of that, just take that out the window. Throw that out the window. Now, our understanding of money and wealth, it can be so skewed because, what can happen is that what we have is a measuring stick to who we are. And the truth is, you have to separate those things. Like the income you make, the lifestyle you live, that is not who you

are. And so making sure that your net worth is not your self-worth. So let's get a little level set going here when it comes to specifically spending habits. All right, now it's time to run some numbers. So you can kind of get an idea of where people stand in America when it comes to their money and debt, because if you get in that spiral that everyone else is, you know, doing well financially, let's just level set with some actual numbers, okay? The average car payment in America. Let's look at car payments here. As of May of 2024, customers were paying on average $760 a month in new car loans,

according to Moody's analytics. So it's also worth noting that 17% of people are paying over $1,000 a month. All right. So if you pull up, you see that nice SUV that that mom's driving or that nice car that guy has, like, whatever it is. Again, on average, they are dragging a $700 a month car payment behind it on average. So it is wild to think about that, again, anyone can go get a loan. Like, the truth is, now, that's a lot of money per month that's going out, but they may not own the whole car, but they, you know, own a little bit of it as they pay

payments. So remember that. All right, let's look at the median salary of Americans. So as early is 2024, the median salary was around $59,000, according to the U.S. Bureau of Labor Statistics. Now, I tell you that because, again, I think it can get this idea that maybe people are making a ton or they're not making a lot, like whatever it is. But at least comparing your salary to the average is always helpful. It's like, okay, where am I running in the pack? It's just always good to know. So in 2024, that was the median salary. All right, the average student loan debt that is owed. in 2024, borrowers had an average of $37,853 in federal student loan debt and $40,681 in private student loan debt. Overall, the student loan debt has reached $1.74 trillion, according to the Federal Reserve.

So student loans, y'all, they are still so, so real. And I actually just read an article today from CNBC, and they're saying that 88% of people that have student loans are saying that it wasn't worth the college degree. So again, I am awful college. This is not bashing college, but it is getting in perspective of what is actually going on in America today. And people are taking out loans at 18 years old of, you know, 50, 60, 70, 30,000 dollars, tens of thousands of dollars to get a degree where if you had this mindset, which is kind of what this whole video is about, about living on less than you make, then it may mean that there's going to have to be other alternatives there, right? Going to a community college, taking a gap year,

applying for more scholarships and grants, getting a job. Like, there's going to be other ways to do this. But the key here is to live below your means, even with a college degree, which, again, will look different. But man, not having that payment every month, is so helpful. All right, let's look at the average credit card debt. So again, collectively, it's $1.14 trillion. But Gen X has the highest credit card debt on average, and they are owing around $9,000 per person. So when you look at credit card debt in America, credit cards, man, they are like the cigarette of the financial industry. It's like, oh, yeah, it's like this habit. And it's no big deal. I'm fine, I'm fine, I'm fine, until you're not. And so many people rack up so much credit card debt by just living month to month.

And so, again, understanding that what you're seeing isn't always the picture of reality. And the reality is credit card debt has become a huge issue for Americans today. So here's the deal, you guys. A lot of people feel like that they can afford a lifestyle, a certain level of lifestyle, because they can afford the debt payments. But those are two totally different things because, yeah, you can scrape by life and survive on payment after payment after payment. But that's not the best way to take control of your money.

It's just not. The idea of saying, actually, I'm going to flip that. And instead of giving the car companies and the banks my money, I'm going to keep my money, and I'm going to invest it and make my money work for me and not for everyone else by getting out of debt, which means you will be living below your means, which again means you'll probably have to adjust your lifestyle and adjust expectations of life. But there is so much more peace in living that way, control of your money, having that control of your money, versus your money controlling you.

And one of the best ways to do this, you guys, just starting out is a monthly budget. And every dollar has been an absolute lifeline for so many people who are in a tight season financially to get them on the right path and give them something tactical that can help with the reality of their life. And including me, this is an app that I use

and it is fantastic. So make sure to click the link in the description to get started right away for free. All right you guys, listen, I am not saying to be looking at all your friends and neighbors if they drive a nice car, they're going on a great vacation, or they have cute clothes,

and be like debt, debt, debt. That's not the point. Because honestly, I've gotten to a point that you don't even, you don't even need to know. Maybe they have car payment, maybe they don't. I don't know, and I don't care, because it's not your business, right? But what's important is how it starts affecting you, and you have to take ownership of that, okay? You have to be the one to say, yeah, I'm not going to police Sarah Kate a church about her new Mercedes. That's not my job. No, your job is taking care of yourself. My job is taking care of me. My parents would say that all the time growing up. It's a full-time job, Rachel, taking care of yourself. Because knowing me, I was trying to take care of other people. Not my job. So taking care of yourself. So regardless of what anyone else is doing and how they're doing it,

how are you affected by looking at them, looking at their pictures on social media, looking at their life in real life, whatever it is, your contentment, your happiness, where you place your value is what's important. That's what you can control. And so, yes, is it important to have data like this just to know the reality of what's going on in the world? Absolutely, because I think it can help for sure. to know that, yeah, you're not losing. But if you are living below your means, you are on more of a budget-friendly lifestyle,

you're investing money into retirement, you're doing these things that are wise for you and your future to give you peace. That, my friends, is priceless. No Louis Vuitton bag is going to give you that. It's not. So be working hard, stay in control, be happy for others, celebrate what they're doing,

no need to judge, but focus on you in your family. All right, if this was an encouragement, to you when it comes to comparison culture and money, make sure to share it maybe with a good friend that you have. Share the info, share the love. And if you want more info on how to actually build wealth and not just look like it, make sure to check out my episode called What is Stealth Wealth and Do You Have It? I'll put a link below and if you're listening on podcasts, make sure to click the link in the show notes. All right, you guys, remember to take control of your money and create

a life you love.