America’s 5 Biggest Wealth Killers

Introduction – America’s Top Wealth Killers (0:00)

Bo: It’s not hard to find a YouTuber talking about America’s number one wealth killer. Graham Stephan, Humphrey Yang, George Kamel. It seems like almost every personal finance creator has one. But the fact is, there’s not just one thing keeping people broke. As a financial advisor, I see all kinds of financial traps out there that slowly drain people’s bank accounts. So, what are they? Are they holding you back right now? Guys, I am so excited because today we’re going to expose America’s top five wealth killers and how to avoid them so you can build real generational wealth.

Wealth Killer #1: Credit Card Debt (0:32)

Bo: The first wealth killer on the list is something that is all too common. It can make it nearly impossible to build wealth. I’m talking about credit card debt. Almost half of all credit card users are in debt. And the average American household with a credit card balance owes $6,270. If they’re paying the average interest rate of 24.2%, that means that they would be paying $1,517 per year in interest alone. And for many people, it’s much more than that, which is why this is such a huge wealth killer. Those monthly interest payments eat away your paycheck, leaving less money for saving and investing. If you have credit card debt, eliminate it as quickly as possible. Mathematically, it’s better to pay off all the debts with the highest interest rate first. But some people want to pay off their debts from smallest to largest, hoping it’ll give them some motivation to keep going. Whichever method you choose, get rid of that high interest debt and steer clear of it from now on.

Wealth Killer #2: Lifestyle Creep (1:29)

Bo: The next wealth killer on the list is dangerous because it can sneak up on you and you might not even realize it. And we see this one all the time. You get a raise, but instead of increasing your savings rate, you upgrade your car. You get a nicer apartment. Or maybe you just start eating out more. Your income goes up and your spending goes up right alongside it, sometimes even faster. This is what we call lifestyle creep and it’s our number two wealth killer on our list. This one affects people at every income, including those that even earn six figure salaries. According to a report from Goldman Sachs, 40% of those making over half a million dollars say they’re living paycheck to paycheck. How do you avoid falling into the trap of keeping up with the Joneses? Well, one way is to automate your investments so that a portion of each raise goes straight to your investment accounts before you even have a chance to spend it. Another practical tip we love is to follow the 60/40 rule. Whenever you receive an income boost, allocate 60% towards savings with another 40% going towards lifestyle. It’s a balanced approach that lets you enjoy the rewards of your hard work while still making progress toward your ultimate financial goals.

Wealth Killer #3: Buying Too Much House (2:36)

Bo: Next up, buying too much house. Home ownership can be a great wealth-building tool when it’s done right. But when you stretch beyond what you can afford, it can become a wealth killer. According to a Harvard study, one in three households are cost-burdened, spending over 30% of their income on housing. That is a record high. And 21.6 million are spending more than half of their income on housing. When housing eats that much of your income, there’s less to invest, there’s less for emergencies, and there’s less to live on. The house ends up owning you. So, here’s how to avoid this wealth killer. Follow our 25/3/5 rule for housing. On your first home, you should put down at least 3%. Plan to live in the home for at least 5 years to reduce the odds of ending up underwater on your mortgage. And lastly, keep your total monthly mortgage, that’s principal, interest, taxes, and insurance at or below 25% of your gross income. This might mean that you need to adjust the type of home you’re looking for. But remember, a starter home that keeps your finances healthy will always beat a dream home that leaves you broke.

Wealth Killer #4: Waiting to Invest (3:38)

Bo: The fourth wealth killer on our list is brutal because it isn’t something you do, it’s something you don’t do. And that is waiting to invest. There are all kinds of reasons this happens. You might think, “Okay, I’ll start investing once I get my raise.” Or maybe the market feels too uncertain right now. Or maybe I don’t know what to invest in, so I’ll just figure it out next year. But waiting to invest can be devastating to your retirement because of compound growth that you’re not taking advantage of. Our wealth multiplier shows that every dollar invested at age 20 has the potential to turn into $88 if left invested until retirement. By the time you get to 25, that wealth multiplier has been cut in half to 44 times. Every year you wait, you’re giving away compounding that you can never get back. So, no matter how old you are, get started as soon as you can. And let the Financial Order of Operations be your guide for when and where to invest. Even if all you can do right now is $50 or $100 a month, just do something because it will make a difference.

Wealth Killer #5: Get Rich Quick Schemes (4:39)

Bo: Wealth killer number five, get rich quick schemes. In 2024, Americans lost $5.7 billion to investment scams. And that’s a 24% increase over 2023 with the typical victim losing over $9,000. And that’s only what got reported. But it’s not just the illegal scams that cost people money. It’s pretty much anything that promises crazy high returns in a short amount of time with minimal effort. This might be meme stocks, crypto schemes, even online gambling or sports betting. These get-rich quick traps are one of the most reliable ways to destroy years of hard-earned wealth. So, don’t take on crazy amounts of risk to try to chase the hot dot. Instead, embrace the boring. Consistent investing over time is how most millionaires build wealth. And low-cost diversified index funds held over decades beat the vast majority of active strategies. Get rich slow is the way to go.

The Root Cause: Not Having a Plan (5:35)

Bo: But here’s the deal. In addition to those five wealth killers, there’s one more thing keeping people from building wealth. And you could argue it’s actually the root cause of everything on the list. Not having a plan. Think about it. People end up in high interest debt because they have no plan for their spending. They fall into lifestyle creep because they have no target savings rate. They buy too much home because they have no framework for what home they can afford. They wait to invest because they have no clear next step. And the data backs this up. Only 36% of US households had a long-term financial plan in 2024. This is exactly why we built the Financial Order of Operations. It is a step-by-step system that tells you exactly what to do with every dollar in the right order. So that way, you never have to wonder if you’re making the right call.

Closing (6:22)

Bo: For a deeper dive on the FOO, check out this video to learn more about the wealth-building plan that could change your life. And as always, keep building toward your great big beautiful tomorrow.