Rachel Cruze: The 1 Thing Keeping Many People Broke
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Laura Beck
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Molly Sullivan
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Financial expert Rachel Cruze doesn’t mince words about what destroys most Americans’ wealth-building potential. In her recent podcast episode, she identified the single biggest financial mistake people make.
It’s not credit cards. It’s not student loans. It’s car payments.
The Car Payment Crisis
“The number one thing keeping you broke are car payments,” Cruze said. She pointed to current market reality: “The average car payment now for a new car is close to $700 a month.”
For families with two car payments, that’s $1,400 monthly. “It’s $1,400 going to the bank, going to the car dealership, and not going to you versus if you had invested that,” she explained.
The worst part? Unlike mortgage payments on homes that appreciate over time, car payments fund rapidly depreciating assets. “If you pay that in a mortgage, your home over time is going to go up in value as we’ve seen,” she noted. “But it’s a thing that I’m like, it just sucks.”
Why Americans Fall Into the Car Payment Trap
Cruze said there’s a psychological driver behind expensive car purchases: status signaling.
“Our cars have become a status symbol. It’s become our value,” she said. “When you drive a car, people see your car and automatically make judgments about you. And we have taken that on.”
She questioned whether the validation justifies the cost. “It’s for like two minutes or two seconds at a stoplight, right, that you feel really great in this, you know, and that’s it. Or for your friends or whatever. And I’m like, what are we chasing here? Like, what are we doing?”
The consequences extend beyond monthly budgets into retirement security. “People are throwing away their retirement for it. And that makes me sick,” Cruze said. “It’s not worth it cause it’s a car. I’m like, it’s literally supposed to get you from point A to point B, but yet we are all wrapped up in it as Americans.”
How Dealerships Exploit Parents
Cruze called out specific marketing tactics targeting parents’ fears and emotions.
“They know how to get all the moms, though,” she said. “They’re like, ‘This is the safest car or like this.’ And it’s like, ‘OK, well, what mom is going to be like, well, I don’t want my kids to be in an unsafe vehicle.’ Like, and they know how to get you.”
She labeled this approach predatory. “Oh, they prey on the fear.”
The New Baby Car Payment Mistake
Cruze shared a story about a friend facing a common scenario: a growing family considering upgrading vehicles.
The couple had one car that could technically hold their two kids but only had two rows. They were close to paying off their existing car payment when they decided to trade it in for a brand new three-row vehicle, taking on a fresh car payment.
“Talking through the situation made me so sad,” Cruze said, describing the couple’s decision to abandon their almost-paid-off vehicle for a brand-new model instead of a 3- to 4-year-old option.
Questioning the ‘Brand New’ Requirement
When asked how to navigate spousal disagreements where one partner insists on buying brand new, Cruze recommended being super direct.
“I mean I would ask why. What is it in you that has to have the brand new one? Because it’s not safety,” she said. “Like, we were laughing about it, but I’m like, but genuinely, like other cars that are two, three years old, those are safe.”
She dismissed superficial justifications. “Like what is it? Is it the smell? Probably not. Like, it’s great. We love a new car smell, but we could buy spray and like fix that, right?”
Cruze suggested the real issue is often ego. “There’s like an I would say there’s probably an ego play happening there in my opinion. If you have to have the brand-new thing, I would question like, OK, so what’s going on in you that’s causing that? What insecurity is happening?”
She connected car-buying psychology to broader character patterns. “If that’s the spouse, I would guarantee that there’s probably other areas of their life that they really care what people think about them, too. So, I think again, it kind of comes to like a character, identity, person issue, and it comes out with wanting to buy a brand-new car.”
The Payment Mindset Trap
Cruze shared that dealerships exploit how most people think about purchases.
“That’s how they get you though because a lot of people live in payment mindsets,” she explained. People focus on whether they can afford the monthly payment rather than the total cost or opportunity cost of the purchase.
This payment-focused thinking allows $700 monthly car payments to feel acceptable when the total amount ($8,400 annually or potentially hundreds of thousands in lost investment returns over decades!) would shock most buyers.
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