Millionaire Reacts To: Terrible Money Advice On TikTok
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Remember this video?

I hope you do. Because it turned 21 this year and we're celebrating the simpler times of the internet. And the internet's come a long way and not necessarily in a good way because there's a lot of crazy stuff out there these days, including crazy money advice. And so today we're going to react to some of those videos because for some reason you guys love it. But before we get to it, hit those like and subscribe buttons because I'm legally obligated to ask. I don't know why they make me do it. So you should do it too. All right, let's get to it.

Paying off debt is the same thing as investing. You're guaranteed a rate of return of whatever the interest rate of that debt is. So for example, let's say you have a student loan and it's a 6% interest rate. If you put $1,000 into that student loan to pay off that debt, you've got 6% return on your money. Why?

Because if you didn't put the $1,000 in and you put it somewhere else, you'd pay 6% on the $1,000. Whatever you pay in debt is the same as investing. Let's say that you've got some student loans here. You've got some credit card debt, an opportunity to invest in some real estate, and you have a mortgage payment. And you're like, what should I do with this $1,000? All you got to do is say, what gives me the highest return? If you have a credit card debt and that credit card interest rate is 19%, bingo. Here's the thing with student loans. If you have a student loan, that's 3%. And you can invest in a dividend-paying...

stock that pays you 4%, you're arbitraging. It's an arbitrage of 1%. You're making money off of the government's money. It doesn't make sense to pay off that loan. Just to be clear, anytime someone says arbitrage on the internet, a puppy stops wagging its tail. So just can we stop? It doesn't make you sound smart. It just makes you sound...

vaguely French. Arbitrage. I'm French! Why do you think I have this outrageous accent, you silly king? Now our buddies over at Merriam-Webster, we don't have buddies there, I don't know why I'm saying that, here's what they define this as. Arbitrage is the nearly simultaneous purchase and sale of securities in different markets in order to profit from price discrepancies.

Very helpful, Miriam. So basically, it would be like buying something at Goodwill for $5 and turning around and selling it on Facebook Marketplace for $10. Now you're arbitraging. So cool. So this guy is basically saying you could take out a 5% loan to invest in a 10% rate of return and somehow you're a mathematical wizard. But you're not.

Now, I will say I love his idea that we should pay off debt because there is a guaranteed rate of return, the interest rate. That's great. But let's not act like it's the same as investing. And I don't think you should be focused on what gives you the best rate of return. You should be focused on getting rid of your debt to free up the payments so that you can use that to build wealth for your future. So stop playing cute with your debt and pay it off.

All right, moving on. If you have a 15-year mortgage, a 30-year mortgage, a 20-year payment plan to pay off the student loans, usually the millionaires will create a life insurance policy to pay off that debt. So therefore, if something happens to you, the mortgage is paid off. The student loan debt

So therefore, if you had a cosigner like a parent or somebody else in your family, they're no longer saddled with that debt after you paid off. One of the worst things that can happen is if you co-sign with somebody on a piece of property, you co-sign with somebody on a car loan, you co-sign with somebody on student loan debt, if something were to happen to the other person, you, since you're the co-signer, you are still responsible for repayment of that debt. That's true. Not a fan of co-signing. So it's sad to pass away too soon. It's sadder to pass away too soon and still leave somebody else behind.

Okay, he did not know where he was going with that at all. But I respect the hustle and he clearly works out. And I think half of the videos where the guy's at the whiteboard, you just have to be in shape and wear a tight shirt and you look like you know what you're talking about. And that's why I don't stand at whiteboards in tight shirts. Ooh, self-burn. Those are rare.

I appreciate this guy saying that you don't want to leave your family in a lurch, leaving them with debt after you pass. But there's a better way to do this, and that is to have term life insurance in place. And I did a little digging into this guy. He happens to be a partner at a life insurance agency. So clearly he's steering you toward life insurance, telling you this is what rich people do. It's not what rich people do. Rich people know that whole life insurance is a really crappy product that makes sense for almost nobody.

So here's the money hack to solve this problem. Pay off your debt, don't take on any more debt, never co-sign on someone else's debt, and get term life insurance in place. 10 to 12 times your annual income on a 15 to 20 or 25-year term. It's going to be very affordable, and it will cover your family and replace your income in case something ever happens to you. But by then, by the time the 20 or 25 years is up, you should be self-insured, meaning they don't need the income anymore because you've created enough assets and enough investments to be able to live a life of self-insurance.

to cover them for the rest of their life. Let's see if these get any better. Let's see if there's less guys in front of whiteboards. - So here's a trick to pay off your mortgage seven years faster. Now I know you won't believe it. - Now we're talking. - So let me show it to you. Come on down here. - Oh, that was a cool camera trick. - So if you purchase a house that is $300,000, the principal and interest per month on it is 1347. Now instead of 1347, pay $1,600 a month. That is $252,000 more.

Just paying this much amount actually saves you $50,000 in interest and cuts your mortgage by seven years. I feel like we were cut from the same cloth here, Adnan. Appreciate that.

We should stick together.

I don't mean to one-up you, Adnan, but there's a better way. His plan had him paying $252 extra a month, or in his case, he said $252,000, which would knock out the loan pretty dang quick if you did that. And he was saying you could save $50,000 in interest, you could pay off the mortgage in 23 years instead of 30. Here's the deal. You could pay this thing off like a 15-year mortgage or even like a 10-year mortgage by adding $300 or $400 or $500 consistently to the principal. So the premise...

Absolutely works. But I think you could do even better and pay it off even faster. And if you want to know my recommendation when it comes to a mortgage, it's to get a 15-year fixed rate mortgage so that worst case, it's paid off in 15 years. And you're automatically going to save likely six figures in interest over the 30-year mortgage. And what happens for most people is they end up paying off the 15-year mortgage even earlier, like in 13 years or 10 years or seven years, or in my case, less than three years. Why don't you brag about it?

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Homie needs better friends. He just let him just get ambushed while he explained investing, which maybe that's how people feel about me.

You know, they're out there struggling and I'm going like, well, if you invest that amount in a Roth IRA with a 10% return. And everyone's like, dude, I'm dying out here, man. Very accurate. And I love his energy. I love the personality. I think the accent just adds a rich layer of depth. And I hope this blows up. And it has 386,000 likes. So what am I doing wrong? When a realtor...

is getting that kind of love. CEO of Obel and Bear Properties, everything Dubai real estate. He's on a different level. I don't have that Dubai money. You're selling real estate in Dubai? You're doing okay. You got time to make content like that. Hope your buddy's okay. All right, my producer Alex says I'm gonna love this one. Let's check it out. See if he's right. Initiate errand. Approach. No, no, not the Tesla car club.

- Neil. - Oh my gosh, what in the Comic Con is happening right now? - By the right of council, by the will of the force, I name you Jedi Apprentice. Rise and speak your name. - Rilo Stormchaser. - Rilo Stormchaser! - Oh man. - All right.

Oh, are you not embarrassed? Is this how people feel about Tesla owners? Is this what I look like when I'm driving around? Unfortunately, yes. My favorite comment on here is from Rolo, who said, I can smell this video, which I

which I feel like is very appropriate. And I get 637,000 likes. Like, you can't, you don't mess with that. And I hope I get invited to the next Dungeons & Dragons Tesla inauguration or whatever the heck is actually happening here with the lightsabers. I'm really, I'm praying for America. How are we doing, guys? Not great. All right, I told the team I need some levity with these clips, and I hope they delivered with this guy, Marshall Patrick. Let's check it out. Hey, did you see my new truck? Is that yours?

You jealous, ain't you? I saw that out there this morning. Boy, that's a sharp looking truck. Had to be about $80,000, $85,000, ain't it? 2024. Denali. This is too real. Denali. I feel like I know this guy. $2,500. You jealous, ain't you? That's a lot of money. Good for you. Can't hide money, can you? I don't try to. That wasn't enough. I don't try to. I got it. I got it. That's just something people say. You saw that booster I got too, didn't you?

That don't make you have... Just saying. I got it, bro. It's like a different language. I mean, we work at the same place. I know about what you make. Yeah, I know we work at the same place. I just got more money than you. I mean, I don't know what to tell you. I don't know what to tell you, bro. Well, you got a lot of debt.

I love this guy. Marshall Patrick.

I don't know like what his content's about, but I hope it's more of this. This is what the internet needs right now. And I think we've all met someone that tries to look fake rich. And it's a good reminder that most of them are real broke. And this guy's trying to impress. That's all this is about. The only thing Mr. Denali has is an insane car payment.

Boom. Roasted. But I love the angle here that Marshall's taken. I think using humor as a tool to show just how stupid something is is very powerful. And in this case, it's buying things that we don't need with money we don't have to impress people we don't really like. And if you're not convinced that car loans are one of the stupidest things Americans do, well, just check out this next video where I show you why they're America's number one wealth killer. Or click the link in the description below. Thanks for watching. We'll see you next time.