6 Middle Class Money Traps to Avoid

Hey guys!
Have you ever looked at your bank account and thought, ‘Where did all my money go?’ It’s like every month your paycheck goes in, and it goes right back out because of bills and payments. 

As a financial coach, I want you to know it’s not your fault. There are corporations worth millions and billions of dollars that are working against you, to keep you in this cycle. That’s why, in this email, we’re going to expose these middle-class money traps that are made to take your hard-earned money. And guess what? They’re working. 

That’s why, as you keep reading to the end, each of these traps is going to get more and more surprising….because most of them are hiding in plain sight. 

DEFINITION
What are the 6 Traps?

1. Buy Now, Pay Later (BNPL)

This first trap gets a lot of us. You’re scrolling through Instagram, see something you want, and find that sweet little button that says, “Buy now, pay later!” It’s tempting, right? Instead of paying $100 for those shoes upfront, you’re paying $17.50 a month for 6 months. No big deal, right?

The truth is, the BNPL model (buy now, pay later) is growing fast. The dollar amount of BNPL loans in the U.S. went from $2 billion in 2019 to $24.2 billion in 2021, and it’s expected to hit $180 billion by 2025. Why is this a trap? Well, those easy payments can trick you into spending more than you can afford, and missing a payment can come with massive fees. For example, Afterpay charges up to 25% of your purchase in late fees if you miss a payment.

2. No Money Down

Ever heard “0% financing” or “No money down” while shopping for a couch or an appliance? It’s designed to get you to make a big purchase you’re not ready for. The problem with these deals is they can lead to higher costs in the long run due to higher interest rates or fees once the promo period ends.

Plus, you don’t actually own that item until the loan is paid off, which means you could lose it if you miss payments. Imagine losing a couch over a few missed payments—Operation Repo, anyone? The better route? Save up and pay in cash. You’ll avoid the debt and get the satisfaction of fully owning your purchase right from the start.

3. Credit Card Points

This one is super controversial, but we have to talk about it. Credit card companies want you to believe that using your card for points is a great way to get “free” stuff. But the truth is, they’re getting you to spend more than you would otherwise.

MIT researchers found that using credit cards activates the reward center in your brain, which makes spending feel less painful. That’s why it’s easy to justify swiping your card for dinner out or buying that extra pair of shoes. But when you spend less cautiously, those points aren’t really free—they’re costing you more in the long run.

4. Leasing a Car

Ah, the shiny new car. It’s so tempting to lease because it sounds like an affordable way to drive something fancy. But leasing is actually one of the most expensive ways to get around. Sure, you might only be paying a couple hundred bucks a month, but by the end of your lease, you’ve paid thousands of dollars with nothing to show for it.

Instead, save up and buy a reliable used car. It might not be as glamorous, but you’ll actually own it, and you won’t be trapped in a never-ending cycle of lease payments.

5. The Lottery Ticket Trap

We’ve all seen those shiny machines at gas stations and grocery stores offering the chance to win it big. You might think, “What’s a couple of bucks for a chance to change my life?” The problem is, most of the people buying lottery tickets are in lower-income brackets, spending hundreds of dollars a year on a pipe dream.

Instead of throwing your money away on lottery tickets, consider investing it. A $412 investment each year (the average spent on lottery tickets) at 12% interest would grow to over $7,000 after 10 years. The odds of seeing your money grow through investing are much higher than the 1 in 292 million odds of winning the Powerball.

6. Student Loan Trap

This final trap hits close to home for many of us. From a young age, we’re told that going to college is the only way to get a good job, and for many, that means taking out massive student loans. The problem? Student loan debt can weigh you down for decades.

The average college graduate leaves school with nearly $30,000 in debt, and with rising interest rates, that debt can balloon quickly. But here’s the good news—you don’t have to go this route. Consider alternatives like community college, scholarships, or working part-time to reduce the amount you borrow. The goal is to avoid a future where your hard-earned money goes toward debt payments for years to come.

PRACTICAL ADVICE
Now what?

• These six traps might seem small in the moment, but over time, they can have a huge impact on your financial health. Avoiding them takes discipline, patience, and a little planning, but trust me, it’s worth it. The more you avoid these traps, the more financial freedom you’ll have down the road.

  Want more tips? If you’re interested in learning how to live frugally and build wealth the smart way, check out my video [here]. You don’t want to miss it!

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