The Personal Finance Podcast

9 Financial Rips Offs To You Need to Avoid (Do not Fall For These!)

In this episode of the Personal Finance Podcast, we’re gonna talk about nine financial rip-offs you need to avoid at all costs.

In this episode of the Personal Finance Podcast, we're gonna talk about nine financial rip-offs you need to avoid at all costs.


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On this episode of the Personal Finance Podcast, we're gonna talk about nine financial rip-offs you need to avoid at all costs.

Woo. What's up everybody? And welcome to the Personal Finance Podcast. I'm your host Andrew, founder of Master money.co. And today on the Personal Finance Podcast we are gonna talk about nine financial rip-offs. That you need to avoid at all costs. If you guys have any questions, make sure to hit us up on Instagram, TikTok or Twitter at Master Money Co.

And follow us on Spotify, apple Podcast or whatever podcast player you love listening to this podcast on. And if you want to help out the show, leave a five star rating and review on Apple Podcasts or Spotify. And if you wanna watch the show, you can watch us. At Androgen Cola on YouTube. So we've changed the Master Money YouTube name to Androgen Cola to my name, and we're combining the podcast and our YouTube content all on one channel.

I figured what we're gonna do is we're gonna combine all of this into one spot so that you guys just have one location that you can access all of our content on at the same time. So you're gonna see all of that content on the Andrew J Cola YouTube channel. So that you can go through that, see all the Master money YouTube content, you can watch the podcast on there.

And we have visuals of the podcast as you're listening to it where you can see what I'm talking about in a lot of situations. So making sure that you go through that is a really powerful thing and that it'll be the hub. For all of the content all in one location, so we just made it my name so that it's easier for everybody just to go one location instead of going from the Personal Finance podcast channel over the Master Money channel.

Instead, it just makes it too confusing. So just combining it all under my name is how we're gonna do that going forward. Now, today what we are going to be talking about is nine financial rip-offs that you need to avoid, and a lot of these are becoming more and more common, so we want you to avoid these mistakes as much as you possibly can.

There's a lot of them that we're gonna be going through. There's a lot of detailed information that we have today, so I don't wanna waste a bunch of time, but here on the interest, without further ado, let's get into it. So the number one is buy now, pay later. So this is as no surprise to most of us, but people love getting stuff without having to pay for it.

And buy now, pay later is something that has exploded in popularity specifically since 2020. And when you look at buy now, pay later, it is really, really accelerating. In fact, as of March of 2021, 61% of 18 to 24 year olds said they have used a buy now pay later service. Well, that's a very concern. Earning statistic because that means the younger generation is starting to think that buy now pay later is okay, and just one year before that, in 2020, that number was only at 38%.

So it's almost doubled in just one year. The buy now pay later market has now grown to about $132 billion. And by 2030, it is on pace to be 3.68 trillion. This is a massive amount of debt for people to have, and it's really, really accelerating fast. 3.68 trillion is massive, and there are a ton of different retailers that are now offering by now, pay later.

Even major retailers like Amazon, Lululemon, Nike, GameStop, all of these companies offer buy now, pay later, making it easy for people to buy things that they cannot afford and just pay it off. Over time. Now here's the issue here. There's a number of issues with buy now, pay later. We're gonna go through some of these, but they target individuals who may not have the cash to put the money down to buy now, pay later.

And this is going across all different industries from the medical industries. You can go out and get Botox right now and you can use buy now, pay later. You can get laser hair removal and use Buy now. Pay later. You can go buy your favorite Air Jordans and use Buy now. Pay later. This is where when it starts to happen too frequently and we get to this 3 trillion mark by 2030, it is really a difficult position to be in because instead what you should be doing is focusing on purchasing things that you can actually afford.

So here's a couple of reasons why I hate it. Number one is it takes away your financial discipline because if you can buy things at any point in time that you want to without saving up cash for them, what's gonna stop you from doing this? Over and over and over again. Number two, it creates bad financial habits because you're not putting the discipline in place to save up for things in cash.

That is a staple when it comes to personal finance. Now we are all for you spending your dollars. I want you to make it rain on the things that you love, but at the same time, you gotta have the cash available to make it rain on those things that you love. So I want you spinning on your values. I don't want you going into debt for discretionary spinning.

That is not an essential. Number three, you are robbing your future self by going deeper into debt. The more debt that you go into, the more that it's going to take away from your future self and your future wealth building ability. You wanna be able to build as much wealth as you possibly can. Buy now, pay later, robs you of debt because instead of just saving up the cash, having that cash available to you, then being able to invest some of those dollars in the future, you are actually just taking on another piece of debt.

And if you have multiple of these going on at the same time, really you're. Ary income is going to get eaten up over time. Number four is the interest rate and fees. So if you don't pay off your balance by the promotional period, you're gonna hit interest rates and fees. And there is actually a large percentage of people who do not pay off the balance by the promotional period.

So all of a sudden now they're in true high interest debt and you have these high interest debt rates and you have these fees in place and you have not paid this off. Meaning it is not a priority for you. You've already got. The stuff in hand, and maybe it just feels a little less enticing to pay that off.

You bought those brand new shoes with buy now, pay later, and all of a sudden no shoes are now worn and dirty six months later. So you don't want to have to go out and continue paying this thing down, so you just hit that interest rate debt. This is all the psychology behind Buy now, pay later hidden costs.

So some. Providers have hidden costs that most people don't see until they actually sign up for buy now, pay later. Imagine paying an extra 50 to a hundred dollars for a pair of shoes when you could have just bought it in cash for that same exact price. This is the problem with buy now, pay later. Then you have debt accumulation.

So the problem I see for a lot of people, Is that they would do this over and over and over again, meaning that all of a sudden, first they do buy now, pay later on something small. Maybe they need a new microwave and they do a buy now pay later situation on the new microwave. But then all of a sudden they see some clothes that they absolutely love over at Lululemon.

Your boy loves Lululemon. Your boy has too much Lululemon. His wife makes fun of 'em all the time. But at the same time, if you don't have the cash available to go, Buy that stuff, then you can't just go out there and use buy now, pay later, and then pay it off later. Why? Because the stuff gets old. You're not going to want to pay that off in the future.

And instead you could be taking those extra dollars and putting 'em towards your investments. Only buy stuff that you have available in cash. Ball out 'em, the stuff that you love, but utilize it in cash. So let's say then you're buying these clothes. You already utilize money on the microwave, and then in addition you go out and it starts to snowball.

Maybe you do it for the latest TV and then you go out and buy additional electronics or a speaker with buy now pay later, and all of a sudden you have all these buy now pay later payments that never seem to end because you keep on adding on more. This is how people get into massive amounts of debt, and when it gets way too overwhelming, boom, those interest rates are gonna hit because you miss one or two payments.

Number seven is the credit score. Impact. Credit scores will be impacted when you open new lines of credit. They will every single time. Secondly, if you are late on a payment, on anything whatsoever, it can impact your interest rates to buy a new car. It can impact your interest rates to buy a new house and a mortgage, and those can cost you over six figures.

In fact, it is a million dollar impact when you factor in opportunity costs of those. Interest rate adjustments. So you gotta look at this and say, am I really going to want to take a hundred thousand dollars impact over the course of a 30 year loan just because I missed a couple of payments on my new j's?

This is the issue when it comes to you buy now, pay later, overspending. So overspending is another huge problem with buy now, pay later, because like we said, this can snowball and you can start to spend on certain things and think you can afford it, but when in reality you're just making a bunch of minimum payments on a bunch of debts that you cannot afford and you are overspending.

The last one is the temptation to buy more because with buy now, pay later, you're gonna be tempted to throw in the. $400 pillows when it comes to buying that $5,000 cloud couch, for example. This is a problem because all of a sudden this magic money seems like it's not even really there. It's just out there in thin air somewhere, and you're just adding things onto your orders without even thinking about it.

I hate this part about buy now, pay later when it comes to that. So should you ever use buy now, pay later, and 99% of circumstances, it's just not worth the risk. You're risking your credit score, you're risking late fees. You're risking a massive 30% interest rate if you start to get to the point where interest kicks in.

And it's a stressful return process. So if you have never returned something and you paid for it and buy now, pay later. That is a whole ordeal that you do not wanna deal with. And then if you accidentally buy something that you can't afford and all of a sudden you realize it after the fact, you can't go back.

I mean, you are locked into this Buy now, pay later. And so this is the issue here. What do you do instead of utilizing Buy Now? Pay later, step one, set up a high yield savings account. The best for these types of purchases is something like a ally high yield savings account. Now, they're not sponsored. I'm not affiliated with them whatsoever.

But what I do like about Ally is that they have what are called savings buckets. And inside these savings buckets, you can set up a goal for how much you want to save for something and just start contributing automatically to that savings bucket. So say for example, you want a brand new flat screen TV for next year's football season.

And so you look to find the best TV that is out there. You're waiting for the sale, you're waiting for the deals. Well, you can start saving right now towards that TV and all of a sudden, by the time football season rolls around, you got the cash just there and there's power in just having the money there so that you can pay cash for that tv.

How much better would you feel knowing you don't have these payments lingering over your head and said you paid? Full on cash for something like that. And so saving up inside of a high yield savings account. Reason why it's a high yield savings account, cause you get higher interest inside of that high yield savings account and then saving up and paying for that money in cash.

So that is what you should do instead. Number two is high fee mutual funds and actively managed funds now. You've heard me talk about this a number of times if you, if you listened to this podcast for any period of time. But if you have high fee managed mutual funds, you are losing money every single year.

Why? Because there are other funds out there with way lower costs that actually outperform actively managed mutual funds. Enter the index funds and index funds are what we absolutely love here at the Personal Finance Podcast. Because index funds have lower costs and historically have outperformed actively managed mutual funds.

In fact, about a decade or so ago, Warren Buffett made a bet with a bunch of mutual fund managers and said, I'm gonna buy the s and p 500 index fund, and over the course of the next 10 years, let's see who wins. Let's see who can make more money. The mutual fund managers took that bet on so incredibly fast.

And at the beginning, the mutual fund managers were winning. The first couple of years people were mocking Warren Buffet for this million dollar bet that he made with these mutual fund managers. And they had this bet in place. And after the first couple of years, the mutual fund managers were winning.

And this is a great lesson. First of all, is that year to year, it doesn't matter what the market is doing. What matters is over the course of long term, because by year 10, Warren Buffet blew them out of the water. Why? Because their fees were so high and they underperformed the s and p 500 and his.

Historically mutual funds always underperform the s and p 500. In fact, 90% of mutual funds underperform the s and p 500 year in and year out. And of the 10% that do outperform it, they are not the same year in and year out. If there's not a statistic that makes you want to invest in index funds instead of actively managed mutual funds, that is one of the best ones out there.

Secondly, actively managed mutual funds have these higher expenses. Fees will destroy your wealth building ability because they have massive amount of expenses. So there's things like the expense ratio is number one. Then they have sales loads, which are fees that are charged when you're buying and selling a mutual fund.

Then they have trading costs. Their costs associated with buying and selling securities within the mutual fund. And then if you have advisors or you have an actively managed advisor, that's a charging advisor fees, this is a massive, massive expense. You can eat away into your portfolio with just a one to 2% fee.

30, 40, 50% of your portfolio can get eaten away. So say for example, you have a million dollars into a mutual fund with a 2% expense ratio, and let's say that mutual fund got a 7% rate of return. Now let's say you invested in something that's lower cost, a half a percent in fees. Now that's still really high fees.

Index funds have lower fees, but I'm doing this example for a reason. So this is a one and a half percent differential between these two. So 1.5% differential with a 7% annual rate of return after 30 years. One with a 2% fee would be worth 4.322 million, whereas the lower fund fee would be worth 5.743 million.

This is a different of $1.421 million that are just going into fees. Because you are paying these mutual fund fees. You're paying for their high-rise building. You're paying for their massive staff that they have in place. You're paying for the fund manager's, 20 million a year salary. These are all the things that you're paying for when you pay high fund, mutual fund fees.

In addition, if you have an advisor in place, there is no reason to have an advisor that charges you a fee. For investing your money. Now having a hourly rate certified financial professional, cfp, that's a different story. Who can put a financial plan together for you? But having someone charging you a 1% or 2% fee on your investments is a absolute no go.

Do not get this rip off going. Instead, make sure that you understand that. Certified financial planners, there's a place and time for them to put together complex situations. They are amazing for that. At an hourly rate, not at a fee-based rate. So that's what I want you to understand when it comes to getting these fees together, what to do instead?

Buy low cost index funds, kick up your feet and understand that automatically investing into those every single month is gonna save you so much money. In fact, millions and millions and millions of dollars, I cannot stress this enough. Number three is cash value life insurance policies. Now, this one frustrates me more than almost anything else in the world.

Why? Because insurance agents are preying on people who do not understand these policies, and they're taking complex policies and positioning them to look like they are investments. Cash value, life insurance. Is not an investment. Let me say it again for the people in the back. Cash value life insurance is not an investment, and if anybody is trying to sell you life insurance as an investment, you have an insurance salesman who is trying to get commissions off of you.

I get $0 for telling you this. The insurance salesman gets thousands and thousands and thousands of dollars, if not hundreds of thousands of dollars depending on what type of policy that you have. Now, what is cash value? Life insurance, it goes under a bunch of different names. I'm gonna list a couple of them here.

We have whole life insurance, one of my least favorites out there. We have universal life insurance, variable life insurance. Sometimes you'll see people call them IOLs. Infinite Banking is another name that they use. And then a latest one is mpi. There are people on TikTok who are selling this stuff, who are making millions of dollars per month selling this to you as an investment, and they make you believe that you are actually getting a deal and investing your dollars and all the, the cash value's gonna grow for you.

And you get this life insurance, you get the double whammy there with this magical account. This is not true. I'm telling you this. This is not true. If you look at anybody in personal finance who has any idea of what is going on when it comes to this stuff, they will tell you exactly the same. Do not fall for this.

Let me show you how this works. So say for example, you buy a cash value life insurance policies. Most companies that sell whole life, for example, it'll break down like this per a hundred dollars that you have of insurance, you can get the same amount of insurance. For $5 if you get to term insurance, meaning it is almost 20 x more expensive to buy it through like a whole life policy, for example.

Now what they're gonna argue is that there's something inside of these whole life policies called cash value, and inside of this cash value. You can build this up over time. It's like a savings account, but you can also invest the money in there. And there's so many cool things that you can do with this.

That's what happens with the other $95 that's available to you. So you got $5 that you were trying to build up for this actual life insurance, what it was intended to do, and then you have an additional $95 that builds up a cash value. But guess what? For the first three years, your cash value for most policies builds up to $0.

$0. So you're plugging away hundreds of dollars every single month, and the cash value goes to $0. If you get a term policy for around the same amount, you can get a term policy for half a million dollars for 30 bucks a month. So hundreds of dollars per month turns out to $0 after the first three years.

Then once you start to build up a little bit, then you're gonna get that cash value in there of that $95 with average of a 1.2% rate of return. That's the problem inside of some of these, they don't even keep up with inflation. Now, some of them are gonna say inside, like the IOLs, For example, that they're using index funds, it's gonna grow over time.

The fees eat away at this. There's an incredible amount of fees inside of these policies that they eat away at your investment returns. So doing this over time, let's just get generous and say they got a three or 4% rate of return. This is still absolutely terrible. You can get that in a high yield savings account, which is why people say put money in term and invest the rest, or save the rest somewhere else.

This will not help anybody build wealth, but the bad part is this gets worse. Because when you have that build up over time, say that extra $95, you're trying to build up into the cash value of this policies, and what you would think is that when you passed away, your beneficiaries would get that cash value right, wrong.

When you pass away. The cash value also goes to the insurance company. And all your beneficiaries get is the value of life insurance that you purchased. This is absolutely sickening to me, and it is one of the worst things that is out there and available for people because of the way that it's getting sold.

Now, here's the other side of this is what I'm gonna tell you is by term life insurance, because it is significantly cheaper, you're gonna save way more money. You could take those extra dollars and you can invest them in like a low cost index fund, for example, or you can invest it in a high yield.

Savings account if you don't want to put it into an index fund, if you're just trying to save it as a big, giant emergency fund. So it depends on what you wanna do with the money. I would buy term and then invest the difference. That's exactly what I do personally, because the other side of this is term insurance ends at a certain point in time.

So say you buy term insurance at 30 and you plan on. It ending, it terming. That's why the word term is in there at age 60. Well, if it terms at age 60, you're gonna have your investment portfolio built up. So you don't need that life insurance anymore because your dependents are taken care of. So once your dependents are taken care of, that's all life insurance is for, is making sure that if something happens to you, people who depend on your income, whether it's a spouse, whether it's children, whether you have a business partner who depends on your income, whether it's a person like your aging parents who depend on your income, those are reasons to have life insurance.

Otherwise, if you don't have dependents or people who depend on your income, you don't need it whatsoever at all. So looking at this is one of the most important things to understand when it comes to your finances. I want you to avoid this at all costs. Term life insurance is the way to go. It's way less expenses, and you can just invest the difference.

Between the two. Number four is variable annuities with high fees and surrender charges. Your boy's not a huge fan of annuities in a lot of situations, and here is a bunch of reasons why. Number one is variable annuities have massive fees that can significantly impact your investment return. So these have massive fees all over the place.

They're filled with fees that are eating away at your investment returns. We just showed you the power of investment fees of a 2% fee. Sometimes these have even more fees. Inside of these accounts. Number two, surrender charges. So if you don't know what a surrender charge is, many variable annuities have these, which are fees that are charged to you when you withdraw money from the annuity during the surrender period, which is typically five to 10 years after you purchase it.

So say for example, you buy an annuity and realize that this is not for me. Well, they're gonna hit you with a massive amount of surrender charge that is going to take away from the entire value of that annuity. Five to 10% is typically what it's around, and it can limit. Your flexibility, and as we know in personal finance, we love flexibility and we wanna be as flexible as we possibly can with our money.

Number three is annuities are really complex. Even when I read some of these, sometimes I'm like, what the heck are they talking about it? They make it complex for a specific reason, and it can be difficult for some investors to. Fully understand the product. Sometimes I have to really dive deep into some of these for me to fully understand them.

And for a lot of people who don't think about and talk about and learn about finance all day long, this can be even more of a difficult situation for them. Number four, limited investment options. You know, we want as many options as we possibly can, and inside of these annuities, you don't have that flexibility to invest in what you want to.

Maybe you want some index funds and ETFs. You want some specific income producing assets. You cannot do that inside of these annuities. Another one is tax implications. Annuities have a massive amount of tax implications when it comes to withdrawals and often deferred growth. So withdrawals are actually taxed like your ordinary income, which you know, we invest our dollars because it reduces our tax liability in a lot of situations among a bunch of other features, but it reduces our tax liability to long-term capital gains tax.

Well, this is taxes. Ordinary income when it comes to annuities, so you might be taxed at a higher capital gain rate, which can lead to a higher tax burden for you in the long run. Then there's no step up basis. So if you heard our episode or we talked about the powerful benefits of a brokerage account, we talked about how great the step up basis is when it comes to inheriting something like a taxable brokerage account.

So unlike other investments, annuities do not receive a step up basis upon the owner's death. This means that any gains inside of the annuity will be taxable to you, the beneficiary when you withdraw funds, and it results in a larger tax liability to any of your beneficiaries. And then also the last one is annuities have early withdrawal penalties like a Roth ira, which has way more flexibility or a 401k have you usually cannot withdraw from an annuity.

Until age 59 and a half, and you may be subject to a 10% federal tax penalty. In addition to surrender charges of ordinary income on any other withdrawal. That's a lot of stuff that's not flexible, hard to understand and takes a ton of your money with fees. Avoid these at all costs. If you're looking to what to do instead of annuities.

Look towards retirement accounts. Your Roth ira. Roth 401k, traditional 401k, traditional IRA, or hsa. These are the core accounts that we talk about all the time on this podcast where you can go through and actually have tax savings. You can save a significant amount of income. You can buy low cost index funds and ETFs.

You can buy stocks inside of there, and you can even do self-directed IRAs if you wanna buy real estate or something else inside of these accounts, there's so much more that you can do instead of having to work through this stuff. Number five. Is payday loans and other high interest loans. Payday loans are one of the most predatory things in financial history.

In fact, most of these loans come with extremely high interest rates. Now I understand if your back is up against a wall, sometimes it's. All you can do. I understand that, but my goal here at the Personal Finance Podcast is to take you from that situation. And part of my dream when I first started this podcast was I visualized someone who was in the middle of a very poor area, was stuck pulling payday loan after payday loan.

They thought, this is all life is. And then all of a sudden they found this podcast and they realized, I can change my family's financial trajectory. I can change my family's tree. All I have to do is make the right decisions with the small amount of money that I'm making now so that I can change the trajectory.

The problem is most people, when you don't make a lot of money, you're stuck in this cycle with these payday loans. I understand how difficult that can be. I get it. I truly do. And sometimes when you're someone like me and you get to the point where you've started to accumulate wealth over time, A lot of people in that situation can forget what it was like when you first started, but what I want you to understand is if you make these small decisions to make a difference in your financial life, if you start to work towards this and get closer and closer to getting debt free, getting rid of these payday loans, and then obviously getting to a surplus where you can get to the next day.

It is going to change your trajectory. I know you can't even think a week ahead. You're trying to get through each and every single day, but that is why we want you to learn about this stuff and learn how it impacts your money. So let's go through some of the reasons why I absolutely hate payday loans.

Number one, high interest rates. The interest rate is going to destroy your wealth building ability, and in fact, you're gonna be paying way more than you think you are by getting these payday loans. So if you can get by in some way, shape, or form, Bare minimum getting by without these payday loans so that you can try to just scrape by and get to that point where you don't need 'em.

I would do that as much as you possibly can. Number two is they have a short repayment period, meaning that it's gonna put you in a worse situation than you originally started because of that short repayment period. Number three, they have interest rates that are super high and they have fees all over the place that they're just taking away from your hard earned dollars that you have been working for.

Number four, they trap you into debt because once you do this, the cycle is going to start because they have those short repayment windows. You have to pay them back quickly. You're outta money or you have to go into more debt just to repay them, and then you gotta go get another payday loan over and over and over again, so they trap you into debt.

Next one is, it's a negative impact on your credit score. If you do not repay the loan on time, that's the last thing you want for your long-term wealth building ability. And then they have predatory lending practices. They target low income people who do not make much money because that's where all their business comes from.

And so they have predatory lending practices. Really high interest rates, really high fees, not a fan whatsoever. So what to do instead is try to get to the point where you can build up some sort of cash buffer. That may sound like an impossible thing to do if you're in this situation. I get it. But if you can find a way.

To scrape a few hundred dollars, which will turn into maybe a thousand dollars, which will maybe turn into $1,500, and over time, get to the point where you can have a couple thousand dollars in place for a cash buffer so that if something happens like this where you need a payday loan, you can pay yourself outta your emergency fund.

This is so important to have cash available to you and just working toward this. I don't care if you can only save $10 per month, it is going to help you along this journey so that you can get to that point. So just take a small amount of money every single month and try to grow that over time so that you can the long run.

Number six is credit card cash advances with high interest rates and fees. So when you get credit card cash advances, a lot of times these will come with higher interest rates than regular purchases just made with a credit card. You do not wanna have these massive interest rates because these are really hard to pay off with a 25% interest rate.

In fact. Compound interest is working against you instead of for you. So you want to avoid these cash advances from credit cards as much as you possibly can. Number two is they come with a bunch of fees that in addition to these high interest rates, they may come with additional fees. So for example, you may take a fee for taking out the cash advance as well as at t m fees if you have an out-of-network machine.

If you can't pay these cash advances back number three is they have a negative impact on your credit score. So it. Will negatively impact your credit score if you roll that balance over. So you definitely do not want to be doing that, and your debt is going to snowball, meaning there's a massive debt accumulation if you take these credit card cash advances.

Instead, what you wanna do is have cash available and pay in cash for some of these things that you have enough. It's your only option, but at the same time, I really, really want you to avoid that as much as you possibly can. Number seven is extended warranties for appliances and electronics. And there are a bunch of other extended warranties out there that you should avoid as well.

We're just gonna use appliances and electronics for this example. So these warranties are often sold by a bunch of realtor retailers out there as an add-on manufacturer's warranty. They can be expensive and in a lot of situations they duplicate the exact same coverage that you already have. For the item that you are purchasing.

So what is better to do? It is much better to save money and self-insure by setting aside funds for replacement if necessary. Now, here's why I hate 'em. Number one, cost. These extended warranties can be really, really, really costly, and so, With that same amount of cost for the amount of money that you paid over time for that extended warranty.

It could be the same amount that you could just use to repair that. There's overlapping coverage, meaning that you already have this coverage in a lot of different areas. Maybe your manufacturer already has that coverage. In addition, if you paid with a specific credit card, a lot of. Credit cards, have a manufacturer warranty baked into those cards.

Things like the Chase Sapphire, for example, has that as a benefit of the card. So there's a bunch of credit cards out there that if you pay with a credit card, you can get that warranty. And that's the way I would go instead of giving that extended warranty. Number three is limited coverage. They don't cover that much.

So if something happens and all of a sudden you're like, let me pull out my warranty, see if this is covered. And if it's not covered, you're still paying out of pocket for that. They have limited coverage in what they can actually go through. They also try to pressure you to buy these all the time. So you're in a buying situation, you're not sure exactly what to do, and the retailers are pressuring you to buy these because they get additional commissions if you actually buy these extended warranties, and in many cases there's already consumer protections baked into these, and so consumers are protected by specific laws that you already are protected for, and then this is just double coverage.

That's you. Do not need. So instead, look for a credit card that maybe has this coverage already. Number two is just save up for the repairs yourself so you have those repairs available. Put it aside in a high yield savings account, you can put it in a savings bucket and ally. You can put it in something like C I T Bank, which is a great high yield savings account.

Another one that we love, and you can just get those rolling and ready to go. So just save the extra cash, have the cash available. Now you can see in a lot of these situations, especially when it's coming to consumer spending, we want you to have cash available. So cash is very, very powerful in these situations and you really need cash available and start to save up some cash for these types of things.

Number eight is debt relief scams. So these are programs that are out there. Where people are gonna promise you debt relief, they're gonna reduce your debt. They're going to have debt replacement available to you so that you don't have to pay your entire debt back. But there's a lot of cons to these that you really need out to look for.

Number one is they have really high fees. That are out there. We've talked about fees a number of times already in this episode, but those fees will eat away into how much you are actually spending on this debt, and maybe you're even spending the same amount as the debt was originally because these fees are so high.

Number two, a lot of them have false promises. They say that they can remove a ton of money off of your debt, and they have all these. False promises in place that you need to avoid. Number three is a lot of times these have very negative impacts on your credit score if you do not do it right, so some debt relief companies and scams may advise you to even stop making payments.

This is one of the worst things that you can do because it negatively impacts your credit score. Number five is a lot of them will promise you that it's gonna be a really quick process, really quick turnaround. You're gonna be done. This is actually typically a lengthy process to have to go through this.

And so you don't wanna believe those who say stuff like that. And then number six is there is a lot of fraud. This industry, there's a lot of folks who are fraudulently trying to help people. They just keep your money. They do not put it towards your debt. So there's a bunch of warning signs that I want you to look for if you need this debt relief.

So if they ask for fees up front before it settles any types of debt whatsoever. Avoid that at all costs. If they guarantee that they can eliminate your debt or reduce it by a particular amount in a set period of time, that is not possible for them to know that he not have a crystal ball, do not go for that.

If they advise you to cut off communication with creditors, that is not good advice. Do not go for that if they won't send your information about services. Unless you provide financial information. This is another reason why you wanna avoid them at all costs and you wanna protect yourself when it comes to this.

So don't believe their guarantees or what they're going to promise you. Instead, you wanna find a reputable company. Do your research online if you have to go this route. Now, if you are in debt and you're thinking about this, we have a free debt course that helps you put together a debt repayment plan.

The course takes like an hour total, and you can have a debt repayment plan put into place. Very, very. Quickly, so make sure you check that out. It's at master money.co/debt course, and you can check that out there. Number nine, this is the last one is multi-level marketing schemes or MLMs. So a lot of people fall prey to MLMs early on because they want to increase their income.

And I'm all for you, increasing your income. Obviously it is the number one thing that I want you to do when it comes to building wealth, but avoiding MLMs at all costs is what you absolutely need to do. Here's why. Number one is most people do not make money at MLMs. In fact, there's really low earning potential and a lot of times you gotta hit up your friends and family to even make a single dollar whatsoever.

This is going to cause friction in your relationships. It's going to make you feel awkward all the time, and you're not gonna make much money doing this. Number two is they are recruitment focused, meaning MLMs make all the money and they are just trying to get you to recruit more people so that you can get this pyramid going and you can make way more money because the people underneath you on that pyramid are gonna make you all this additional income.

So you gotta recruit them to sell the same products you are. Well, if you recruit all your friends and family, who are you gonna sell it to? Cuz they know all the same people that you know. And so your recruitment focus is not gonna do well. They have really high costs in MLMs. They give you pressure to buy all of the products, so you have to buy their products and they make all the money.

And then you gotta figure out a way to get rid of those products. They have misleading marketing and they can strain your relationships. Avoid MLMs. At all costs. Instead, what you want to do is look for traditional side hustles that are going to help you actually make money. If it sounds too good to be true, it is.

So do not go for this instead look for some of the side hustles that we have. So we have actually a bunch of videos on the Androgen Cola Master Money YouTube channel where we talk about a bunch of side hustles that I like. Right now. We just did three or four different side hustle videos recently talking about them.

So you can go check those videos out. We will link some of them down below in the show notes for you to check out some of the side hustle videos so that you can see. Hey, maybe these, some of these will work for you, but do not go for an M mlm. They never end. Well, listen, I hope you guys learned a ton in this episode about financial rip-offs that you need to avoid.

If you guys have any questions, make sure to hit me up on socials at Master Money Co. And don't forget to leave that five star rating and review on Apple Podcast or Spotify if you have not done so. And if you got value outta this episode, share it with a family member or a friend. I truly, truly appreciate that and I appreciate each and every one of you.

We created this episode cause I want you to be protected against these ripoffs. I wanna protect you from having to fall prey to some of these things that are going about right now and making sure that you maximize your wealth building potential. We wanna bring you as much value as we possibly can, and by avoiding these ripoffs, you can truly, truly build way more.


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