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Well, it's that time of year again where you gain a couple pounds, return a third of your gifts, and really phone it in at the office. He's on a sales call.
It's also a great time to reflect on the past year, the ups and downs, the wins and losses, the good decisions and the not so good decisions. And based on the stats we've seen this year about things like student loans and credit cards, it seems like a lot of Americans made some not so good decisions in 2023 when it comes to their money. Maybe you're one of them. Steve, who drains their 401k to start a business breeding lizards?
Anyway, the new year is upon us and it's a great time for a fresh start. So in today's video, we'll take a look at some of the biggest money mistakes people made this year so you can steer clear of these financial fails in 2024. But first, let's start off strong. Don't fail me now. Subscribe to this channel, like this video, and share it with your friends like Steve who are thinking about raising reptiles for fun and profit. Huge mistake. Although newts are kind of cute. I could see that one working. She turned me into a newt.
All right, let's get to our first big money mistake. According to the Federal Reserve Bank of New York, Americans' credit card debt is the highest it's ever been. In fact, this year, it surpassed $1 trillion. And for reference,
that means that's 1,000 billions. And to make matters worse, that debt has become harder to pay off thanks to insane interest rates, which right now average around 22% APR. The only kind of debt with higher interest than that are those scum-of-the-earth payday loans. You know, the ones in the old Pizza Hut locations. And you know who benefits from all that credit card debt?
You guessed it, the people handing out the credit cards. Now we don't have numbers for this year, but we know in 2021, banks made $106.7 billion off credit card interest and fees.
So if your household is one of the 55 million with credit card debt, stop doing the banks a favor and instead do yourself a favor by quitting the game that's designed for them to win. Pay that junk off, cut up the cards, and never look back. Your future self will be glad you did. And while you're doing things for your future self, lay off the Funyuns. Three packs a day, it's a little excessive. That's all I'm saying.
It's a line you get that Funyun breath. You know the one. The next big money mistake people made last year was taking out student loans. Yep, even after seeing how so many people are struggling to pay their student loan debt years and even decades after graduation, people continue to take out these bad boys. And according to Federal Student Aid, the total number of people receiving federal student loans has reached almost 44 million.
That's 44 million young adults entering the workforce with a 600-pound gorilla on their backs. And if you do the math, that's 26 billion 400 million pounds of metaphorical monkey. And the worst part is, banks and colleges are still pushing student loans onto high schoolers and allowing them to borrow exorbitant amounts of money. How can they do this with a clean conscience? Who knows? Maybe it's dirty. There are some questions I don't have the answer to. Like, why was the show Two and a Half Men so popular? Who's the target demo there?
Charlie Sheen fans, do those exist? - Well, look at what I do, duh. - And while we're talking student loans, another mistake people made was waiting on student loan forgiveness from the government instead of making payments during the pause when they could have been chipping away at that loan balance interest-free. So if you're considering taking out student loans, don't do it. - Not today. - Despite what you may have heard, it really is possible to go to college debt-free.
And if you already have student loans and you're struggling to pay, hang in there. You can pay them off. It will be worth it. And I cover just how scummy the student loan industry is, and I give you a plan to go to college debt-free in Chapter 4 of my new book, Breaking Free From Broke. It's available now for presale, and you can get your copy with the link in the description below. All right, next money mistake people made last year was taking out car loans. According to the New York Fed, auto loan debt has surpassed student loan debt for the first time ever.
There are currently 107.8 million auto loans in the US right now. And the total debt amount for all of those loans adds up to $1.55 trillion. And get this, one in five Gen Zers says that an auto loan cost them over 20% of their after-tax income every month.
So don't be surprised if your 22 year old cousin Madison says she can't afford to contribute financially to grandma's 99th birthday gift, but then rolls up to the party in her matte space gray Bronco. And what this means is 20% of Gen Z is squandering a massive chunk of their biggest wealth building tool, their income, on assets that are actively going down in value, all during their most pivotal wealth building years. Let me tell you, Gen Z, that do not be bustin'. That's a big L from Lil G.
Howdy new fellow kids. And guys, there's a rather simple solution to this that for some reason people think is impossible, but I assure you it can be done. You ready for it? Buy an affordable used car that you can pay for in cash.
And before you jump in the comments going, "George, have you seen the car prices?" Yeah, I have @skaterboy24, so can it. Now, the days of the $1,000 beater car may be gone, but if you can save up four, five, six, seven, eight grand, you can buy a solid, reliable used car that gets you from A to B and play CDs. Digitally recorded, read by a laser, and it's called the Compact Disc. Okay, it's the moment you've been waiting for, the next money mistake, and it's HELOX. That means Home Equity Line of Credit.
And this is a type of home equity loan that allows you to borrow cash against the current value of your home. Basically, you take away money from the portion of your home you own outright and then use that money kind of like a credit card. Now, a lot of people use HELOCs to pay for home renovations that they don't have enough cash for. Maybe a pool shaped like an ice cream cone?
You know, normal people things. And according to the Mortgage Bankers Association, originations of home equity lines of credit and home equity loans increased 50% in 2022 compared to two years earlier. But despite what the yuppies on Instagram make it sound like, a HELOC is not the stress-free answer to your cash flow problem.
Here's why. A HELOC is secured debt, and that means the lender can use your home as collateral. So if you can't pay back the HELOC for some reason, your lender can foreclose on your home, which means you wouldn't even have a house, much less an ice cream cone-shaped pool. Now, HELOCs are good at making people think they've solved the problem when all they did was move debt from one pile to another and move backwards in their financial journey.
And to add insult to ice cream injury, most HELOCs have a variable interest rate, which means the rate can go up over time, like it has been, making your payments even more unaffordable. So if you need some extra cash or you want to make renovations to your home, but you don't have enough cash to cover it, here's a wild idea. Wait until you have enough money saved to pay cash for it. I know, I know, I know. That's why they pay me the big bucks. Solutions like this. It's what America needs right now.
Look, I know saving up and paying cash takes a little more time and a whole lot more discipline, but it is way more peaceful and way smarter in the long run. So those are some of the big money mistakes Americans made last year. And did you notice something? They're all just different kinds of debt. And taking on debt of any kind robs you of options and robs you of true financial peace.
You see, debt is not a tool to be leveraged, despite what you hear from social media and your broke friend Steve, who now raises lizards. Debt steals from your paycheck. Debt robs from your future by demanding that you pay for the past. Debt is a thief, like Swiper the Fox from Dora the Explorer. Swiper, no swiping! Swiper, no swiping! Don't you wish there was a book that could help you avoid all these debt traps and live a life without the stress of debt payments?
Oh wait, there is. It's my new book, Breaking Free from Broke, and it's available for pre-sale right now, and you can get your copy with the link in the description below. Hope you guys enjoyed today's video. Don't forget to hit like on it, subscribe to the channel, and share this video with all of your friends who watch Two and a Half Men, and ask them, why? Is it Charlie Sheen? Are they the target demo? Did we find them? I don't understand. Thanks for watching. We'll see you next time.
