How to Make Your Money Work for You

Debt Impact

High-interest debts, such as credit cards and loans, can significantly hinder financial growth. Rachel Cruze highlights how the average credit card debt of $5,910 can balloon to nearly $8,000 due to a 20% interest rate, trapping individuals in a cycle of minimum payments 1. This cycle often leads to paying much more than the original purchase price, enriching banks instead of individuals.

You'll end up paying way more than the original cost of the thing that you bought using credit.

--- Rachel Cruze

Rachel advises against all forms of debt except mortgages, as they are typically not investments and result in financial loss over time 2.

   

Compound Growth

Compound interest is a powerful tool for growing wealth, transforming savings into substantial assets over time. Rachel explains that while interest can be a burden when borrowing, it becomes beneficial when saving or investing 2. By allowing banks to use your money, you earn interest, which can significantly increase your savings.

Compound interest is a magical thing when it comes to your money.

--- Rachel Cruze

Investing is crucial for financial growth, and Rachel emphasizes starting as soon as you're financially stable, as even small contributions can lead to significant wealth accumulation through the power of compound interest 3.