6 Money Traps the Middle Class Is Falling For
09:41 Share

What's up guys, I'm George Camel and today we're talking about six traps keeping you stuck in the middle class. And no, we're not talking about New Balance 608s or Skillet Queso from Chili's or Kohl's Cash or air fryers. We get it, you love your air fryer. Ooh, that is so fire! Although all of those things arguably do have a chokehold on middle income earners in America, I'm talking about the traps that the middle class thinks makes us look wealthy

but really just keeps us up to our eyeballs in debt. So let's get to these middle-class money traps. But before we do, you know the drill, give us a like and subscribe if you want to continue. I'm not going to continue with this video until you do it.

I got all day. How long you got? Okay, I'll do it. That a boy. I'll do it. I promise. Thank you. It wasn't that hard. So let's start with where it all begins for a lot of us, student loans. Or more importantly, waiting on the government to forgive them. Listen, I hate false hopes more than anyone. I have more faith in the McRib coming back than the government forgiving student loans. We know what's coming back, McDonald's. Who are you trying to kid?

All right, don't tease us like that. Is this about the McRib? It's gone, dude. Let it go. Right now, the total amount of student loan debt in the U.S. is over $1.58 trillion, spread out over 45 million borrowers. And while there's some ways to have your student loans canceled, they're just not reliable options. And the middle class is especially impacted by student loan debt. Not to mention the federal forgiveness program that Biden promised last year is still on hold until the Supreme Court decides if Biden's

Biden even has the authority to cancel student loan debt in the first place. And normally, I don't mind a good hold. It's a chance to take a deep breath, refresh myself on some mid-2000s soft rock ballads. That part hits hard. They did not need to go that hard. I can't believe I waited a half hour on hold just for you to hear that music.

And we're looking at June of 2023 before we get any kind of update on this federal loan forgiveness, which is giving scumburger companies like SoFi plenty of time to lobby Congress against debt forgiveness. That's right. They want their money and they need it now. It's my money and I need it now!

And in the unlikely chance it manages to pass, student loan debt won't even be completely wiped out for most of us who have an average loan amount of $38,000. So why keep playing the will they, won't they game? Just pay them off and move on with your life. The second trap the middle class is falling into, car loans. Today, the average monthly payment for a used car is over $500. And for a new car, it's over $700.

No, no. You're going into debt with interest while your car plummets in value every single day. Get this, in the first five years, a car loses 60% of its value. Just buy a used, reliable car, get it inspected by a mechanic,

and pay cash. Not necessarily actual cash, like in a briefcase, unless you're Mr. Beast, at which point you can use a wheelbarrow full of pennies. Moving on, middle class trap number three, buying a house you can't afford. The US now has close to 500 cities where the average cost of a home is a million dollars. And in some of those cities, a million dollars gets you a condemned ranch home already occupied by a raccoon that you've nicknamed George Cooney.

to make the situation less distressing. And even though homeowners are still sitting on more equity than ever before, 69% still say they feel house poor, which means the house is way too much of their income and they're feeling the pinch. So if you're part of that struggle, I'm gonna guess a big reason is because you're spending more than 25% of your take-home pay on your costs of home ownership. And that 25% doesn't just mean your mortgage, it needs to include your principal, interest, property taxes, homeowners insurance, and HOA fees.

Plus, if your down payment is lower than 20%, you're paying PMI, private mortgage insurance, which is a few extra hundred bucks that you're throwing to the lender to protect them, not you. Oh, those are our hidden fees. That's how we getcha. To give you an idea of what 25% looks like, let's look at a take-home pay of $6,600 a month. Your monthly payment for housing should be no more than $1,650.

If you make four grand a month after taxes, it should be closer to $1,000. You'll also want to make sure that your mortgage is a 15-year fixed rate conventional loan. And listen, I know this sounds crazy. Most people go for the 30-year because it makes your monthly payment lower. But trust me, a 15-year is going to help you get out of debt faster, which is the goal, and save you potentially hundreds of thousands of dollars in interest and fees. Now, if you're doing the math at home and you're already yelling at me through the screen, George, that's some

possible. With my numbers, it'd be more like 35, 40, 50% of my take-home pay. Press pause, save up a bigger down payment, and build your patience muscle. Renting can be a great option. I know rent keeps going up and you're going, well, why wouldn't I just get the mortgage? Listen, home ownership has some insane costs associated with it as opposed to renting where someone else has to deal with all those problems. Middle class trap number four, trying to game the credit card system.

I hate to be the one to break it to you, but when it comes to gaming the rewards, the only thing getting played here is you. Congratulations, you played yourself. But I pay off my card every month, George. What's the big deal? Well, the reality is that 40% of Americans don't, and you could eventually fall into that trap. These companies do thousands of experiments every year to get you to spend more and make you think the rewards are all worth it.

It reminds me of going to Chuck E. Cheese as a kid, right? I get 10 bucks, I get my little tokens, and I play for eight minutes, and it all disappears, and I get 30 tickets to show for it. And I go to redeem those tickets. I can only afford sticky hands and a Chinese finger trap. And three minutes later,

It's not even sticky. As long as you think you're winning, they've got you in a death trap. Middle class trap number five, get rich quick trends. Things like crypto and drop shipping and house flipping and house hacking and anything that ends with the word arbitrage. We so badly want to believe that all we got to do is punch the magic question block and coins will pop out for the taking. Getting rich doesn't work like that.

I mean, sure, you'll occasionally see someone strike gold and make a million bucks off a garlic coin, which is somehow actually a real cryptocurrency started by a community on Reddit inspired by garlic bread. Garlic bread is my favorite food. I could honestly eat it for every meal.

Or just eat it all the time without even stopping. Now, I like to go to the Bible for my financial advice. And here's what Proverbs 13, 11 says. Wealth gained hastily will dwindle, but whoever gathers little by little will increase it. What does that tell me? You got to be the tortoise instead of the hare. Plus, look how cute those tortoises are. You can do it, buddy. That's a big strawberry for a little guy. How is he going to get a bite of that? Oh my gosh. It's like me trying to eat one of those hipster hamburgers that's just like four feet tall.

Oh, look at, he's going for it. He's clawing at that thing. That thing's the size of him. How big is this? Is that a giant strawberry or a tiny turtle? Actual millionaires, like real life ones, they have no illusions of getting rich quick. Instead, here's what they do. They pay off their debt, they save for emergencies, they invest at least 15% of their income into a 401k or an IRA, and they live on less than they make. It's that simple, and it's that hard. Finally, middle class trap number six,

Keeping up with the Joneses. They throw the best tailgates. They drive the nicest cars. They have kitchen islands the size of actual islands. And they vacation in the most aesthetic Airbnbs on planet Earth. But you guys, the Joneses are broke with a capital B.

You're broke! Here's the facts. 78% of Americans are living paycheck to paycheck. That means eight out of 10 Joneses probably can't even afford the home they're living in and the car they're driving. They probably don't even have cash to cover their next emergency, which means they're turning to the credit card at 25% interest to stay afloat. People who are content with what they have actually win with money. They're willing to live on less than they make. They're willing to sacrifice their lifestyle and avoid debt. Not caring about what other people think is a superpower when it comes to wealth building.

If you can get a handle on that, you can start to build real wealth. Okay, so we covered a lot here, but all you really need to remember to avoid being a sad, trapped, middle-class American is to live on less than you make, see through the rewards and get-rich-quick trends, lose this I-deserve mindset, and run far away from debt. That is the best way to graduate from middle class to a life of margin, options, and

freedom and generosity. And despite what the news or social media or your bitter old manager from Foot Locker told you, middle class Americans can still build wealth and become millionaires in America today. Now, if you've seen other traps the middle class is falling for, let me know in the comments. I'd love to hear them. And as always, make sure to like and subscribe to get more content like this and hit that share button. Send it to a friend who might be middle class fancy.

or maybe an enemy even. They'll know what it means. They'll know. Thanks for watching. I'll see you next time. This has 15 million views. My videos have, like, not that. Maybe I should eat strawberries.