6 Money Lessons From Rachel Cruze That People Hate the Most
Written by
Nicole Spector
Edited by
Molly Sullivan
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“The truth hurts!” is the kind of puerile retort we’re used to hearing in elementary school scrimmages and on trashy daytime talk shows. Yet, sometimes, this is a pretty spot-on sentiment. Scientific research has found that hearing the truth really can be hurtful. But it’s also usually necessary for growth. And this applies to our financial lives as much as, if not more than, anything else.
In her more than 15 years of working in the personal finance space, Rachel Cruze has found that there are some money truths, or lessons, that especially rub people the wrong way. Here are the six things that Cruze teaches about money that folks hate to hear about the most.
Don’t Buy a New Car Until You’re a Millionaire
No financial expert wants you to go out and buy a new car if you can’t afford it, but Cruze runs extra conservative here. She disapproves of anybody buying a new car if they have a net worth under $1 million. Many people don’t like her take, but it’s worth hearing out. New cars depreciate rapidly the instant you drive them off the lot. And they just keep plummeting in value over time.
“If you have the margin to be able to take that financial hit and it’s not a big deal in your world overall, then that’s OK to do,” Cruze said.
Eliminate Credit Cards From Your Life
We all know that credit cards can hurt us if we’re not careful, but we may not recognize just how careful we need to be. And we may not realize that credit card companies are constantly coming up with ways to seduce us into spending more. Think travel points and cash-back rewards. Cruze advises people to stay away from credit cards entirely — advice people tend to find is unrealistic or overly aggressive. But honestly, most people aren’t paying off their credit cards every month, even though they know they should be. Additionally, a no-credit-card life is a pretty peaceful one.
“When you choose a life without debt, not only mathematically are you not sending your income to banks instead of keeping your income and investing it for yourself, there’s also an emotional aspect:When you have autonomy over your money completely … there is a level of peace that comes with that,” Cruze said.
Combine Checking Accounts With Your Spouse
We all know that money problems or differences can bring irreparable damage to a marriage. Some people feel that maintaining fairly independent financial lives in a marital union is the best move to keep the peace, maintain order and stay in their own lane as best they can. Cruze thinks this is a bad idea and advocates for combining checking accounts with your spouse. Those who are in favor of keeping things separate are not fans of Cruze’s input here.
“This is the one thing I’ll put out on social media and get the most hate for,” Cruze said. “Now, there are situations, if you are in a toxic situation in your marriage … and you feel like you need to protect yourself financially: absolutely. But for everyone else out there that’s just run of the mill married, what we have found is the benefits of managing your money together, combining things and just saying, ‘We are one’ … there’s just this incredible teamwork that happens.”
Focus Your Investing Strategy 100% Around Retirement
Cruze champions her father Dave Ramsey’s investing strategy. The philosophy here is to consistently (regardless of what the market is doing) invest 15% of your income into traditional, tax-advantaged retirement accounts. Once you pay off your mortgage and have no debt, you can get more aggressive, but until then, this ultra-conservative approach is, in the opinion of Ramsey and Cruze, the savviest route to take. And it turns some people off because it doesn’t carve out room for alternative (and more volatile) investments like crypto.
“There’s something important about putting your money in something that is 100% going to work long term,” Cruze said. “And that is what investing in retirement does.”
Use This Ultra-Conservative Formula for Buying a Home
Many people rush into homeownership because they’ve been taught that it’s always better to own than to rent, from a broad financial standpoint. Cruze and Ramsey adamantly oppose buying a home unless you can do the following: Put at least 5% down; take out a 15-year-fixed rate mortgage (as opposed to the more popular 30-year term) and ensure that your annual mortgage payments do not exceed 25% of your annual income. This ultra-conservative formula just isn’t the norm in the U.S., which is probably why people hate hearing Cruze preach it, but it’s one that will keep you financially safe and able to build wealth.
Live Below Your Means
Though this one is “basic,” as Cruze described it, the money lesson of living below your means gets big reactions whenever Cruze talks about it. Given that this is incredibly popular advice and a lesson the vast majority of financial experts swear by, it’s pretty weird that people find it controversial or alarming.
Living below your means, whether you’re a minimum wage employee or a self-made billionaire, is critical if you want to stay afloat and seize wealth building opportunities. So, we get that some of Cruze’s most prized money lessons can feel a bit much in that they are conservative and, at times, old-fashioned, but this one really is nonnegotiable.
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