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Today, I'm breaking down the biggest traps waiting for you at every wealth level from broke to millionaire. And believe it or not, they get more dangerous the more your net worth grows. So before we head into the minefield, shout out to delete me for sponsoring this mission. Operation Epic Fury commence. Okay, first, let's talk about the traps. If your net worth is less than 10,000 or even negative. Now, quick reminder. Your net worth is simply what you own minus what you owe. The fancy version of that, assets minus liabilities. So, for example, let's say you have $50,000 in debt and you have $20,000 in a checking account, and you have nothing in retirement. Well, your net worth would be negative. $30,000, $50,000 in debt, that's a negative plus. $20,000 still in the negative. Now, if you want to crunch your own numbers and figure out your net worth, I can help you out with that. I got a net worth calculator. I will link down in the descri where you stand. So if your net worth is less than $10,000, you're likely broke. And look, zero shame here. That's where I started on my money journey. I was $40,000 in debt with not much to my name at 23 years old. But the traps you'll face in this category are cleverly designed to keep you broke. And trap number one is financial shortcuts. I'm talking about products like debt consolidation, debt settlement, debt relief, balance transfer, credit cards, payday loans. Basically, if it feels like a fast track to relief, it's usually just a fast track to more pain and suffering that's gonna make someone else wealthy. These kinds of services lure you in with the promise of lower monthly payments, one easy payment, or even wiping out your debt completely. But they conveniently downplay the extra fees. The longer terms, the higher interest you'll end up paying, the risk of damaging your credit or even getting sued. These products are wolves in sheep's clothing. And frankly, I don't trust any animal in any kind of clothing. Plus, these products don't address the real problem of debt, which is your behavior. The goal should always be to get out of debt, not move it around and fool you into thinking you're making progress. The next trap in this category is buy now, pay later. You know, nothing screams I'm fiscally responsible, like putting a Doritos Locos tacos combo on a payment plan. And I get it. It feels good to get what you want and deal with the cost later on down the road. But it's too Easy to lose track of the payments. Which, big surprise is exactly what companies like Klarna and afterpay and Affirm are crossing their fingers and hoping for. In fact, one in four people have missed a buy now, pay later payment. And that can trigger late fees, overdraft fees, and high interest rates. And before you know it, your paycheck gets eaten alive by a bunch of tiny payments that you just put on the tab, thinking it was no big deal. It is death by a thousand cuts. Which is precisely 999 more cuts than I'd like to be deathed by one cut. If you're gonna do it, make it quick. I mean, it had the word death in it. I don't know, I didn't come up with it. I'm not the guy who did a thousand cuts and then said, hey, let's make that a quote. And the last financial trap, if you have a net worth of less than $10,000, is not having an emergency fund. You see, when you're broke, it's easy to think you'll just figure it out if something goes wrong. But that kind of apathetic attitude will cost you eventually. Because emergencies don't care if you're broke. In fact, you're probably gonna have more when you're broke. Before you know it, you've got a flat tire, a fractured pinky toe, and to top it all off, some hairstylist named Laura Beth is gon mess up your bangs. I got my hair done. And if you don't have a cushion of cash saved up, you've got few options, which means you'll likely turn to more debt. Now, if I'm in your shoes, here's what I'm doing. I'm starting with a baby emergency fund of a thousand bucks that's going to cover most of the ankle biters on this journey as you try to get some better financial footing. So I'm selling stuff, doing side gigs, working overtime, doing whatever I can to get this done in 30 days. 1000 bucks in 30 days. Now, after getting out of debt, then I'd build that up to a fully funded emergency fund of 3 to 6 months of expenses that could be 15 to 20 to 30k just sitting there ready to protect you. That is your never go into debt again insurance plan. Okay, next up, let's talk about money traps to watch out for when your net worth is between 10,000 and $100,000. The number one wealth killing offender in this range, car loans. Once you start making a little extra money, you get to a Better place financially. The car is almost always the first thing to get an upgrade. And people justify it in all kinds of ways. I need a newer car because it's safer and more relia, which apparently translates to needing a Ford F450 Super Duty for dropping little Timmy off at the dojo for jujitsu practice. The reality is most people treat their cars like a flex. They would rather look rich than be rich. And it's why I always advise people to buy the car you can afford in cash and upgrade later on down the road. Cause these payments will crush you. Instead of investing and actually becoming wealthy, you trap a ton of money into something that's going down in value as you pay interest on it. And right now, the average new car payment is a mind boggling $767. Most people aren't even investing that much a month. Which if you did, by the way, it could grow to over $1.7 million after 30 years of compound growth. Well, I hope you like the heated and ventilated seats, Brad. Hope it's worth that payment. And I also hope you like this video and subscribe whilst you're at it, which I found out 73% of you watching are not subscribed. I'm gonna be sick. I'm gonna be sick. I've got one goal here with this channel. To help as many people as I can avoid these terrible financial traps so that they can build wealth and liking commenting, subscribing and helps me reach even more of them. All right, next up for this category, trendy wealth building scams. Think index, Universal life insurance options trading, crypto box spreads. There's a metric butt ton of these out there. And they're almost always marketed as a secret strategy of the ultra rich or the wealth hack banks don't want you to know about. And coincidentally, it's almost always pushed by some guy in his mid-20s wearing a tank top and a gold chain. So here's a little life lesson for you. If you follow the trends, you will fall for the traps. And if you follow guys with tank tops and gold chains, God help you. All of these trends are risky. You almost always lose more money than you gain. And the best way to build wealth is pretty boring. Just run of the mill, consistently investing in index funds and mutual funds every single month. That's it. It's that boring and that simple. And that's all you need to build lasting wealth. Okay, the last trap in this net worth range is chasing a high credit score. Now, most of us were conditioned early on that. A high credit score means you're good with money. And who did all that conditioning? Well, surprising absolutely no one. The credit industry. What? Oh, my God. Which is the greatest bait and switch ever. If you wanted that perfect 850 credit score, here's what you'd have to do. You have to borrow a lot of money for a really long time and never miss a payment. That is a crazy game to play. All for the joy of a lifetime of more debt and potentially paying interest on said debt. And the sad reality is a lot of people have a great credit score, do all the right things, and they're still living paycheck to paycheck, making little to no progress on their wealth building. So a credit score is nothing but a debt whirlpool. And anything that keeps you trapped in debt is not your financial friend. And unfortunately, the financial traps designed to screw you over don't stop there. I break down even more of these traps in painstaking yet playful detail in my book, Breaking Free from Broke, which I bookmark with $100 bill. Cause that's how much wealth you're gonna have. Where $100 bills will be so prevalent in your life, you'll use them as bookmarks. So if you wanna check out the book or the audiobook, I will drop a link into the description below. And yes, it's fake play money. Don't tell anyone. All right, moving on. What if your net worth is between $100,000 and $500,000? Well, the first trap here is lifestyle creep. At this point, you've started to build some legitimate wealth. Your income has probably gone up. And all that extra income brings extra temptation. Think bigger houses, nicer vacations, maybe even a car lease. God forbid. Date nights at Ruth's. Chris, instead of the questionable buffet at Shoney's. That one I can go for. Now the devil on your shoulder will say, hey, you've worked hard. You can afford it. You deserve it. But here's a sobering stat. 40% of households who make $300,000 a year or more say they are living paycheck to paycheck. That is insane. That's a lot of money going down the drain when you should be building major wealth. Most of you are going, oh, my gosh, if I made $300,000, I'd be building so much wealth. Or you could stay paycheck to paycheck because of lifestyle creep. So like any good Southern grandma would say, don't get too big for your britches. Or as my Arabic grandma used to say, and let me tell you, your britches were full after she yelled that one. Gross, but fine. And for the love of all that is good and holy, do not let your desire for a more lavish lifestyle lead to this next trap. HELOCs and 401k loans slash withdrawals. By this stage, you've probably built up some equity in your home or you've got a decent retirement nest egg. And that's exactly when your mailbox and inbox get stuffed with letters tempting you to pull out tens of thousands of dollars for things like home renovations. Doesn't sound so bad. After all, it's technically your wealth you worked so hard to build. That is, until you get torpedoed with crushing penalties and interest rates. Not to mention, you unplug all of that money from an asset that was growing and that can take years to build back up. If you can build it back up at all. And worst of all, you put your home and retirement at risk. All for a custom backyard wood burning pizza oven you will use. Exactly. Never. Just. Just go get some Papa John's and call it a day. I've had over 40 pizzas in the last 30 days. Okay, here's one more bonus trap for this stage. Not protecting your personal information. The more wealth you build, more scammers who will gladly take it off your hands. And we make it easy for them when we rarely think about how our data is getting used online. So don't let that happen. Instead, get Delete Me, one of today's sponsors. They monitor and remove your data from hundreds of data broker sites, helping keep spammers grubby little paws off your info and ergo, your wealth. They handle it all so you don't have to. And they even send you reports of what they found. And that peace of mind is always worth it, no matter your net worth. Right now you can get 20% off their annual plans@joindeleteme.com George and speaking of things we rarely think about, that I shall now force you to think about. May I present your phone bill. Good. Sir, Chances are you're vastly overpaying. And that's not great. And it's not necessary when you could just pay 25 bucks a month with Boost Mobile, another one of today's sponsors. That's no intro price. That's 25 bucks a month for their unlimited plan, now and forever. And I know switching carriers can feel like it'll be a hassle, but if you have an ESIM on your smartphone, which you likely do, the entire process can happen from the comfiest spot in your home. So don't leave money on the table. Switch today@boost mobile.com Ramsey $25 forever requires customers to remain active on Boost Mobile unlimited plan. All right, back to the traps. Next, let's talk about this level. $500,000 to a million dollar net worth. From here, the traps get even trappier. They won't just keep you from building wealth, they can cause you to lose it. And the first trap here is leverage and arbitrage. Two words I would love to see removed from the English language altogether, like synergy or unprecedented or delulu. Are you crazy? Basically, both. Leverage and arbitrage are ways to try and speedrun to massive wealth. You borrow lots of money to reinvest it elsewhere, like a property, hoping to cash in on the growth. Some call it sophisticated. I like to call it by its more accurate name, stupid. Ultimately, it comes down to getting overconfident, prideful and greedy. Only now the risk is far greater because you're taking on tens or hundreds of thousands of dollars in debt to hoping it pays off. And occasionally it does. But far more often, it blows up and blows up spectacularly. The next trap is being uninsured. This one is all about protecting what you've built. Too many people are playing offense and they forget about defense. Because here's the thing. The more wealth you build, the bigger the target on your back. All it takes is one little fender bender and people will come after you for everything you've got. Especially in a world where you can sue Red Bull for not in fact, giving you wings. Oh, look, he's flying. So what kind of insurance am I talking about? Well, for starters, umbrella insurance. You need an umbrella policy after your net worth hits $500,000. That's where you start to become more of a target. It'll give you extra protection for those crazy scenarios where your car or home insurance wouldn't be enough. It sits on top of that, hence an umbrella. And it's not that expensive either, just a couple of hundred extra bucks a year. And that is a small price to pay for a huge amount of peace of mind. The last trap to worry about here is not having a will or estate plan. I've got some bad news. I've pulled the mortality rates in your area, and I don't know how to tell you this, but you're not gonna make it. Look, I realize talking about death is uncomfortable. It feels eons away for some of you, and estate planning sounds like something only ultra rich people do. But the last thing you want, after spending years and years building a financial legacy, is for your family to be fighting over your money, confused about who gets what, or for it to get picked apart in probate court. Making a will is one of the best and simplest things you can do to make sure you leave the right kind of legacy. It doesn't take a lot of time, and it's not that expensive. And you will sleep better tonight. And in the hereafter, knowing your wealth is going exactly where you want it to. And finally, we've made it to the elusive million dollar plus net worth. The first big trap here is over concentrating. Financially speaking, over concentration means you have too much money tied up in one asset, one stock, or one company. And that can be incredibly risky. For every meme stock that goes to the moon, there's about 100 others that are crashing and burning. So diversification is the name of the game. And it's why I love mutual funds and index funds. Your money is spread out across tons of different companies with partial ownership to help make sure that if one company goes down, your investments don't go down with it. And beyond that, I like to diversify across mutual funds. So I got large cap, which is growth, and income mid cap, which is your growth funds. Then you've got aggressive growth, which is your small cap funds, and international. That helps me sleep better at night knowing that if one sector or one bunch of companies goes down, my investments will still be just fine. The next trap here is obsessing over taxes. Look, if you're gonna obsess over something, at least make it something interesting. Like the influence of the Olsen twins on American culture. It is kind of creepy, isn't it? But taxes? Taxes? Really? Okay, I can see why. You make a lot more money, you pay a lot more in taxes. Not ideal. And there are plenty of legal, reasonable things you can do to avoid an unnecessary tax burden. The problem here is making decisions entirely on avoiding taxes. That's how you end up falling for risky tax strategies like buy, borrow, die, or buying a G wagon for the write off. And if you're not extremely careful with this, you can get into big trouble with the irs. Or at the very least, you spend so much energy trying to beautiful mind every loophole and tax advantage that you completely miss the point enjoying the wealth that you've built. Which leads me to the final trap of the episode. And this one might just be the saddest, scariest of them all. Using your net worth as a scoreboard. Once you've made your first million, it's tempting to go well, now I want 2 million, 10 million. Because the goalpost of success never stops moving. There's always someone richer, someone doing better, and suddenly money stops being a tool and becomes the goal itself. The danger here is becoming financially rich and still being emotionally broke. Making money just to make money is a pretty sad way to go through life. But building wealth to become generous, to leave a legacy for your family, to live out your values. And that is a goal worthy of working toward. So if you want to know what I did to become a net worth millionaire by the time I was 32, check out this next video. Click right here to watch it or use the link in the description. Thanks for watching. We'll see you next time.