How to Become Financially Smarter Than the Average American

Credit & Loans

Credit cards and car loans are significant financial burdens for many Americans. Rachel Cruze highlights that the average credit card debt is $6,500, with interest rates reaching up to 22.6% APR, making it a costly financial trap 1. She argues that while some people justify credit card use for rewards, the reality is that many end up paying interest, enriching banks rather than themselves. Car loans are another area of concern, with 35% of households having an average car loan debt of $36,357 1.

The one thing that is consistent across the board of majority of people out there teaching about personal finance is that the car loan is a ripoff to the average American.

--- Rachel Cruze

Rachel advises against car loans, suggesting that if a car loan cannot be paid off in 18 to 24 months, it might be time to sell the car 2.

   

Student Loans

Student loans are the fastest-growing debt in America, with the average borrower owing $38,290. Rachel Cruze explains that this debt often delays major life decisions like investing, buying a home, or getting married 3. She emphasizes the importance of paying off student loans to avoid them lingering for years, impacting financial freedom.

Many young adults say, because of the weight of student loans, that they are not making basic financial life decisions.

--- Rachel Cruze

Rachel encourages listeners to tackle their student loans as part of a broader financial strategy, which includes building an emergency fund and investing for the future 3.