6 Money Traps You Seriously Must Avoid

Avoid these Money Traps in your 20s, 30s, and beyond! I've made all of these mistakes before, have you?
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Timestamps:
0:00 - Start Here
0:28 - Money Trap #6
2:42 - Money Trap #5
3:56 - Money Trap #4
5:31 - Money Trap #3
8:00 - Money Trap #2
9:22 - Money Trap #1

These money traps have gotten me into some trouble into the past. In fact, many Americans fall into these Money Traps on a daily basis.

The worst money trap in my opinion is getting into too much unnecessary debt. Especially car loans/auto loans or credit card debt.

A huge money trap is that dealers will often convince you that you CAN afford a car because of the monthly payments, and most dealers will get you to focus on the monthly payment number, rather than the overall cost of the car.

Auto loan debt accounts for 1.44 Trillion in the US, which is more than combined amount of ALL credit card debt... that’s crazy.

In order to not fall for this money trap, one of the rules you can follow is the 1/10th rule of buying a car, popularized by Financial Samurai.

This rule states that you should spend no more than 10% of your gross annual income on the purchase price of a car.

So if you make $50,000 dollars a year, try to keep your total annual car costs under $5,000.

Anyway, let me know what you think in the comments, thanks for watching as usual!

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PS: I am not a Financial Advisor, any investment commentary are my opinions only. Some of the links in this description are affiliate links that I do receive a commission for.

[humphrey]

Don't worry the money was PROP money. 😂

[eduardonajarrojr]

1. Buying Liabilties
2. Credit Card Debt
3. Falling for Sales
4. Expensive Car
5. Noy Buying in Bulk
6. Paying for Status

[Eweezy]

Careful with #6. It's easy to move from frugal to cheap. Enjoy life some, go on trips and vacations. You may not be here tomorrow.

[alexsteven.m]

Inflation, bank collapse, severe drought in the agricultural belt, recession, food shortages, diesel fuel and heating oil shortages, baby formula shortages, available automobile shortages and prices, the price of living place. <It's all coming together and it could lead to a real disaster towards the end of this year (or sooner). With inflation currently at about 6%, my primary concern is how to maximize my savings/retirement fund of about $300k which has been sitting duck since forever with zero to no gains.

[hazeldavis]

The last one is a great point. I grew up dirt poor in a rich part of town (was rural turned exurb) and was tortured by the other kids who had tons of nice things. So when I grew up I wanted all the fancy stuff to prove once and for all that I had value. That I wasn't the trash they treated me as.

Finally realized no matter how many designer things I bought, I would always feel like a fake anyway. Because I *wasn't* wealthy. I had credit, but not wealth. So I focus now on growing actual wealth and not letting the wounds of my past make me peacock around with fancy things.

[lanceareadbhar]

For me, not tracking small payments online was my biggest money trap. It's too easy to overspend when something is attached to a credit card and guilt can set in making the problem worse.

[wellingtonbruh]

Honestly, my crippling drug addiction is a very bad money trap. That and modifying cars. Mostly the car parts actually.

[trenthorton]

I bulk bought replacement water filters for our fridge at around $18/each which was the cheapest price I'd seen to that point on Amazon (they were $25/each the first time I bought them). I spent $150 on 8 filters which is a 4 year supply. I just checked the price again and they are now $14/each. The moral of the story is make sure you know what price is actually a good deal before buying in bulk.

[rabayl]

I would add to your list: "having too many quantities of the same thing"

I think most American closets and garages are filled with so many things that people do not need. I.E. 30 pairs of jeans, 100 shirts, 30 yeti mugs, room full of Christmas decor, ungodly amount of winter jackets, 10 80"LED TVs, etc.

I have a "good" amount of jackets/coats and wanted to buy a new one. But everytime I try to buy one, I always feel guilty knowing that I already have enough. This kind of goes hand in hand with a sense to go minimal. But I do not consider myself a minimalist. Haha

[JohnTurboz]

Whats up Senor Yang. I got my 14 year old son watching all your videos bro. Trying to get this kid off on the right track from an early age. Keep doing what you're doing and I wish you nothing but great success.

[chloeb]

Careful with #5 about food. it really works if you're a big family only! I grew up with my parents buying food in bulk but when I moved, I realized I was losing money because I was wasting food since we were only two trying to eat all that food. It totally works with non perishable items.

[godzilla]

Some of these were common sense to me, but the not buying in bulk is something I wasn’t aware of. Thanks Humphrey. 😊

[VincentChan]

brb while i call the cops for burning money 😂

[josephtaylor]

For #1, my workaround is to just buy knockoffs. I drive a BNW, have a Robex watch, use Taylor-Mode golf clubs, and wear only Hugo Ross suits. That way, I get the status look at a fraction of the price. 😂

[queenofpents]

I've been working on building my credit and I get so much mail about "hey we saw your credit is doing well, how about a $10, 000 business loan?" No thanks. I learned what credit card debt could do to you in my early 20's and almost being 30 I don't want more than 2 credit cards. Private loans are also a trap. Loved this practical advice video Humphrey! Keep them coming!

[daddyland]

The "sales" used to get me until my friend that worked at best buy told me their sales are not sales because it's always that price or products are cheaply made for those sales like black Friday... So it was better to save up to buy the expensive ones that would last you way longer than saving some cash if you were into those things

[Harry_]

Solid advice and polished presentation, Humphrey. I waited 20 years to buy my Rolex...not falling for that "status" money trap!

[Daniel_Braun]

Credit card debt is so crazy. Wild to thing about the trap of only paying the minimum payment and how much that costs!

[Nocturna.]

I do believe that its important to buy quality items, and not cheap items that you will end up buying 3-4 times. Also, if you like something, have a hobby, etc, its nice to have good quality stuff that will make you enjoy it more. For example, a good quality bike, good clothes that make you more confident

[MiikeFaber]

Currently I'm just being smart and frugal with my money, I'm in the green 47% over the last 15 months and l've accumulated over $700K in pure profits from DCA’ing into stocks, ETFs, dividends and futures. However I’ve been in the red for a month now. I work hard for my money, so investing is making me a nervous sad wreck. I don’t know if I should sell everything, sit and just wait.