Stupid Financial Trap Middle Class People Fall Into

Kind: captions Language: en From insurance scams to credit cards, people are trying to rip you off every day. Want to avoid ending up broke? Pay close attention. I'm Josh, and on today's episode of the Infographic Show, we're revealing the 30 stupidest financial traps that middle-class people fall into. Number 30, according to YouGov back in 2022, the insurance industry ranks an impressive fourth in [music] the rankings of America's most hated industries, behind only tobacco, news media, and cable. [music] And one of those literally gives people cancer. Part of the reason that people hate the insurance industry so much is finance-ruining grifts like whole life insurance, which can utterly destroy even well-off white-collar professionals. A whole life insurance package, unlike term life, which only covers you for a set number of years, lasts from the moment you purchase it until you die. That's when it pays out a death benefit and maybe even some cash value along the way. It seems like a stable long-term investment. Nope, that's what they want you to think. You're signing up to pay insurance premiums for your entire life, which often ends up costing you eight to 10 times more than a term life policy, while paying out less when you kick the bucket, presumably from a heart attack after looking at your bank account. And that is just the beginning. Number 29, according to Pew Research Center's 24% of Americans think having a lot of money is the most fulfilling thing in life. Rising living costs and [music] the push to save more have forced Americans to delay retirement and work longer than ever. At least you'll bolster your savings just a little bit more, right? Well, that's another nasty trap the money men are setting for you. The average life expectancy of a person in the US is 79. Work until 65 or later, and you may only have a decade to actually enjoy retirement. Even worse, those years are statistically the most likely to be spent [music] frail and battling serious illnesses. But at least you'll be driving something nice to that job that you can't retire from, right? Well, not if you fall for this next one. Number 28, it's the kind of thing that you dream about as a kid, swaggering into the dealership, buying a new car, and rolling right off the lot. But, it is one of the worst things you can do, and it's all because of one word that sends a chill down the spine of anyone interested in finance, depreciation. In your first year of buying a new car, its value will depreciate by 20%, and it keeps on falling as time goes on. It's only considered a new car while it's still on the lot, but the second you drive it off, it is used and priced as such. All that extra money you paid will vanish into thin air. And the worst part, everyone says buying a used car means inheriting someone else's headaches, but a new car, with all the latest tech and high replacement value, it hits you with an even bigger insurance premium. And just like that, your dream car is now a nightmare. This next trend convinced millions they were getting rich while draining their pockets. Number 27, NFTs, or non-fungible tokens, are little illustrations designed to be unique and randomized. People bought them as speculative investments, hoping that rarity would drive their value up. They were all the rage during the early 2020s crypto craze. But, next time you see NFT, it'll save you a lot of heartache if you think of it as meaning not financially tenable. Around 23 million people didn't know this, and they're now sitting on worthless blockchain JPEGs. According to NFT Scan and CoinMarketCap, almost 69,800 out of 73,000 NFT collections have lost all their value, leaving everyone who bought in financially devastated. A perfect example is the NFT of the first-ever tweet by founder Jack Dorsey. It sold for 2.3 million pounds in 2021 and reduced to a mere 1,200 in 2023. That is less than 2,000 bucks. And if you want to keep your money, maybe hang back the next time you see a crazy speculative investment trend that everybody else is hyping. This next trap is something most Americans are already carrying in their pockets. Number 26, because everything is so expensive and wages are stagnant, it's not uncommon for people to use credit cards. [music] In fact, 82% of adult Americans have one, often several. And in 2025, America's total credit card debt hit around 1.28 trillion dollars. Many struggle to keep up and just make the minimum payments to avoid late fees, >> [music] >> and that is exactly how they get you. The minimum repayment is often only 2 to 3% of the total you owe, but all the while, the interest is still accruing. That means you'll pay more money over time. One source, My Budget, gives this example. If you owe $5,000 on a credit card at 18% interest, and you only pay the $100 minimum each month, it could take more than 30 years to clear the debt, by which time you'll have paid over $12,000 in repayments, over double the original debt. Think about this next time you're making a repayment. And that slow bleed is nothing compared to what's coming. Number 25, the number one commodity in the 21st century is convenience, and companies have realized that they can take advantage of this. What could be a better example of this than food delivery services like DoorDash and Uber Eats. It feels even more practical if you live out in the suburbs. But much like credit card repayments, it's a financial death of a thousand cuts when you look just a little bit closer. [music] You might think nothing of DoorDashing in your meal when you're tired after work on a Friday night, until you realize that items can be as much as 39% more expensive on these delivery services. And that is before you get the added delivery charge and driver tip. A meal that might cost you 40 bucks if you buy it in the store would be as high as $54 over the app. So if you're ordering in multiple times a week, you are bleeding out and you don't even know it. But that is nothing compared to our next financial trap. Number 24, ah, the lottery. It's like being struck by lightning, except it pushes you into a new tax bracket. Americans are paying big to play a game they're almost guaranteed to lose. Your chances of getting killed in a lightning strike are around 1 in 187,000. Your chance of winning the Powerball are 1 in 292.2 million. It's not even close. According to CNBC, half of Americans play the [music] state lottery and depending on the specific source, the average American spends between $300 and $1,000 on lottery tickets every single year. That's money you might as well just toss into a wishing well. >> [music] >> Needless to say, it is far better left in your pocket. And speaking of dreams, the American dream itself might be one of the most expensive traps [music] of all. Number 23, it's the middle-class dream to actually own your own home rather than renting. And in 2024, mortgage repayments actually were cheaper than rent, which probably has a lot of us considering a call to the Samaritans. However, this comes with another financial trap for owners and it's one that seems to be getting worse every year along with inflation, maintenance costs. According to Forbes, the annual maintenance cost for a single-family home is approximately [music] $10,400 per annum with a 5.9% year-over-year increase. Isn't life just absolutely relentless? Even when you've got a dream situation, there are insanely expensive caveats. But homes aren't the only heartwarming purchase that can quietly wreck your finances. Number 22, you may think that pets add a little extra meaning to your life, but they can just as easily be like an anchor around your neck dragging you down into financial oblivion. Let's look at the most popular pet in America. There are currently 48.3 million dogs living in American households. While the dividends of owning a dog are largely seen as love and companionship, you can't buy a Lamborghini with either of those. So, let's look at the real costs of owning one of these four-legged freeloaders. According to the Wall Street Journal, upfront costs for obtaining a dog vary from $1,100 to $4,400, but that is just where it all starts. You've also got spaying and neutering, vaccinations, training, food, routine checkups, grooming, and physical supplies. That adds up to between 3,000 and 9,500. And then it's time for pet insurance. And if you're hoping for more than one pet, feel free to add the appropriate multipliers to all of the numbers here. Now, we're about to talk about lifetime damage. Number 21, are you a millionaire? We're going to guess [music] probably not. But did you know that if you're a committed smoker, you might spend as much as 1.6 million dollars on cigarettes over the course of your life. [music] And that stat came out in 2016. Adjusting for inflation over the past decade, you might be looking at as much as 2 million dollars by now. But if alcohol is your legal take the edge off option of choice, that's also going to financially bleed you. The pandemic supercharged alcohol consumption, seeing jumps as large as 20% [music] to 40% in some US states. So, business is booming if you happen to be selling it. In 2022, the average American spent $583 on alcohol each year. Even if you shrug off the upfront costs of cigarettes and alcohol, the true price comes later as their health toll adds up to a staggering global health care bill. Better to curb your habits now for [music] your finances and your future, no matter how cool you think you look with that cigar and glass of scotch. This next one locks you in without realizing. Number 20, Netflix, Amazon Prime, Disney Plus, Hulu, HBO Max, Peacock, and that is still just a fraction of the streaming services that entertainment is spread across these days. And it's all getting more expensive. In fact, [music] Forbes found that streaming packages got 44% more expensive across 2025. The average American is spending just over $42 a month on streaming, working out to just over $500 a year. And are you even regularly watching half of the services you have? It's yet another reason to scale all that back and watch more free infographic show videos here on YouTube. Number 19, gambling apps are currently causing a financial and health crisis across the US thanks to relaxed gambling laws. People bet on sports, elections, and even random world events, sometimes spending thousands of dollars every year to little or no return. The National Council on Problem Gambling estimates that about 2 and 1/2 million adults in the US have severe problems. Another 5 to 8 million have significant issues. If you find yourself as one of those people, [music] it might just cost you everything. And just when you think you've avoided the obvious traps, there are contracts waiting for you dressed up as opportunity. Number 18, a rare method of getting a foot on the property ladder is a rent-to-own deal. This lets you build equity with each rent payment until you fully own the home. But while it seems like a sweet deal, there are some major financial traps that you need to watch out for. With a shady seller, your payments could be pocketed or used to cover their taxes and mortgage, passing [music] the debt on to you. In extreme cases, they might even rent or sublet the property, pocketing extra money while you're getting nothing. If you enter a rent-to-own deal, do your homework first. It couldn't get worse, could it? You bet it could. Number 17, what's more middle class than having a boat in your driveway? While it's a status symbol for many, it can also become a major financial sinkhole. Not only do boats depreciate in value just as bad as [music] cars, it can be an expensive hobby. Boat insurance can be costly and maintenance costs can be considerable. And if you feel like keeping it at the harbor rather than on your trailer outside of your garage, renting a berth will be an ongoing cost, too. [music] And how much are you actually going to use it? Really. Now for one of the biggest scams for hopeless romantics. Number 16, it's a tradition as old as time, spending 2 months of your salary on a big old diamond ring to propose to your beloved. Except [music] it's not as old as time, it's only as old as 1947 when the DeBeers diamond company made this the new tradition. Before the 1940s, only 10% of brides were getting diamond rings. By the 1990s, it was 80%. Instead of blowing two months salary on a generic diamond ring, spend a bit less on something personal and don't bankrupt yourself over a rock. And the debt keeps on coming. Number 15, middle-class people are careerists. They want to get their foot in the door even if it means being financially abused. It's why one of the biggest scams out there is signing up for an unpaid internship. People tell you it's a valuable way to earn experience and build your connections in the industry, but if time is money, you deserve to get paid for your time and hard work. >> [music] >> Now for something that shouldn't surprise you. Number 14, everyone knows they're getting ripped off at the hospital. It's a staple of every hack joke in the universe. Even routine procedures can come with a shockingly high cost long before major medical debt hits. Here's a little infographic show life hack for you. Ask for an itemized list of charges on your bill where they'll have to tell you each thing they're charging for and then you'll see a lot of that bill disappear like magic. And the bills keep on racking up. Number 13, fashion moves fast and constantly changing cheap trendy clothes can cost more than investing in a few quality staples that last for years. Clothes are getting more expensive with average items costing as much as $17 or more and that is a problem. New clothes make up 2.3% of the average American's yearly spending. Buy reliable, [music] save money, and reduce clothes waste in the process. Everyone wins. And that's [music] just your wardrobe. Wait until we talk about spending that can haunt you for decades. Number 12, would you spend $33,000 on a vacation that lasts a single day? Probably not, but people regularly go into debt funding weddings with that as the average cost, 40% of which is just the cost of the reception venue and the catering. Is it really worth it? We're not saying you shouldn't get married, just that instead maybe you should go in with a more reasonable budget if you don't want your wallet to be haunted by a matrimonial ghost for years to come, all of that debt will be with you until death do you part. And even then, you can't escape. Number 11, one of the darkest financial traps that people fall into is dying. And as it turns out, death is insanely expensive. According to the University of Pennsylvania, if you or a loved one died of a long illness, the last month of your life in hospital can already cost as much as $32,400. Actual burial costs can be around [music] 7,800. And you'll save a little bit of money with cremation at 7,000. And when it comes [music] to settling the legal matters of the deceased's property, you're also looking at a few thousand more. Even death can't help you escape [music] from capitalism. But check out what's happening when you're alive. Number 10, buy now, pay later plans allow you to finance purchases and pay them in installments. It seems like a pretty sweet deal. You can even do it on PayPal. But there is some darkness [music] beneath the surface. Some of these legal services offer credit limits of $30,000. And that money is easy to abstract. [music] Even if you manage to get an interest-free deal, if you miss a payment, you'll find yourself in a world of financial hurt until you're old. And when you're old, new financial traps await. Number nine, age comes for all of us eventually and it leaves us supporting ourselves or supporting elderly relatives. And in this predator system we call America, that can lead to a pretty brutal financial trap. At the high-end retirement homes, the median cost of care is $5,900 per month. But ancillary services can make that rise to $20,000 per month. And even this doesn't necessarily guarantee you a good standard of care. It can be a brutal industry. And aside [music] of the fact that our productivity-obsessed society casts away the elderly on our dime. Most people won't see this one coming until it's too late. Number eight, health insurance is another one of those traps that you sadly can't really avoid, given that your life and well-being is being leveraged against [music] you for it, you'll be paying monthly premiums for health insurance in case you get sick or injured, but a [music] lot of the time you're actually paying more and getting less. Health care providers negotiate higher prices with insurers than if you were just paying in cash. Isn't the system wonderful? Number seven, call it a cliché, but if a deal looks a little too good to be true, it almost definitely [music] is. Throw in some cash and someone promises to quadruple it quickly? Well, you might just be staring down the barrel of what experts call a high-yield investment program or HYIP. These unregistered investments will offer shocking payouts, the kind [music] that would scare away any savvy investors and leave only the juiciest of rubes. And soon they'll be parted from what little money they can spare. If someone's offering you a once-in-a-lifetime investment opportunity, do your due diligence or you might never invest again. Think you're safe from fraud? Think again. Number six, as the economy worsens, people look for ways to ease the pinch, and that is when payday lenders creep in. Increasingly, middle- and upper-income individuals seeking quick cash end up leaping straight into this financial blender. Even with a loan of $500 to $1,000 with a 300% annual interest rate compared to the 15% APR you'd get with an average credit card, you are soon going to be in some real trouble. Avoid payday lenders at all costs. Number five, at the risk of sounding like your drunk uncle at Christmas, you really want to be careful who you're married to. It could be the worst decision of your life. Divorce is a booming industry raking in around $50 billion every year. How much you could get annihilated for in a divorce will depend on your personal net worth and the peculiarities of the split. >> [music] >> That's not our business. But in general, the median cost is 7,000 and the average cost is between 15,000 to 20,000. And that is before you even get into property disputes and child custody. But, there's another seemingly innocent and quintessentially middle-class decision that can financially haunt you for the rest of your life. >> [music] >> Number four, going to college was once a rite of passage for everyone in the middle class, but these days with a population more educated than ever, a degree isn't worth what it used to be. In a metaphorical sense, anyway, because in a financial sense, it is more expensive than [music] ever. According to the Education Data Initiative, the average US cost for attending university is just under $38,300 per student per year, including books, supplies, and daily living expenses. Kind of like owning 10 pets with severe health problems all at once. And then comes the student loan debt. 42.3 million Americans are shouldering a total of $1.81 trillion in debt. The average loan debt works out at almost $39,400, but thanks to the beauty of compound interest, you might just be paying it off until your whole life insurance plan pays out. Still, there are three financial traps that are even stupider and even worse. Number three, take every financial trap of traditional college, double it, and then add the risk of a near worthless degree, and that's the reality of for-profit colleges. These private [music] institutions cut costs on teaching because the proceeds go straight to the owners. Students at these schools