7 Insane Ways Americans Waste Money | The Financial Diet

7 Insane Ways Americans Waste Money | The Financial Diet


Hey, guys. It’s Chelsea from
The Financial Diet, and this week’s video
was brought to you by Credit Repair. And today, we are going to
talk about how Americans specifically tend to waste our
money in very strange and kind of insane ways. We actually have a very
popular opinion essay on TFD about this very topic. And I spoke to the author
before I made this video, and she is, of course,
OK with us sharing it, but also with us exploring the
topic in an even deeper way. Because when it comes to
cultural spending, some of it is a matter of opinion and
perspective, but some of it also is a statistical reality
when we compare ourselves to the rest of the world. So I wanted to look into some
of these truly American spending phenomena. As Americans, we tend to
use credit more than most other nations, and
while some of that comes from systemic
issues that can push us to using credit card debt, such
as our lack of universal health care, a lot of it does
come from spending choices that we do not need to make. As a culture, we have a tendency
to live beyond our means, and to consume as
a default option. As many of you guys
know, I lived out of the country for about
four years, and in that time, I felt like almost every
spending habit and aspiration that I grew up with in America
was called into question. And not every American
spends in a wasteful way, and not all of these habits
are uniquely American, but often, we’re guilty
of at least one or two, and when it comes
to these phenomena, we are often leading
the charge as a culture. And my goal in pointing
out these habits is not to shame
anyone, especially because some of
these things tend to be a little bit
out of our control, but rather to point out to
us how much they are not normal on a global
scale, and not something that we have to opt
into in many cases. We can all be smarter
about the way we spend, be more conscientious
about noticing waste, and live a more financially and
environmentally balanced life. So let’s get right into it with
seven insane ways Americans waste money. Number one is eating
way too much meat. So too much meat consumption,
particularly red meat, isn’t just bad for our health,
although it is very much that. A recent National
Institutes of Health-AARP study of more than a half
million older Americans concluded that people
who eat the most read meat and processed meat
over a 10-year period were likely to die sooner than
those who eat smaller amounts. Those who ate about 4
ounces of red meat a day were more likely to die
of cancer or heart disease than those who ate the least,
about a half ounce a day. But it’s also bad
for us financially. Meat, especially meat
of the higher quality we should be opting
for whenever possible, tends to be the most expensive
items in our grocery basket. And the cost of eating meat on
a daily or multi-daily basis is even less justifiable
when you consider that there are many less
expensive sources of protein that we could all be opting
for at least once a day. And we’ll link you guys to
some more affordable protein alternatives in the description. But yet, despite the
financial and medical costs of eating so much meat,
Americans simply love it. In a list of countries that
the Organization for Economic Cooperation and
Development has data for, the US is ranked number two in
the world for meat consumption. And despite increasingly being
aware of the potential health risks, America’s meat obsession
seems to only be growing. When it comes to
cultural habits that are relatively easy to swap
out and can save us a ton, not just in our wallets,
but in our health, meat is one of the
most obvious choices. Eat less of it. Number two is fast
fashion obsession. So like it or not, Americans
simply love fast fashion. And it’s not that Americans
have always been this way, as we tend to be with
other consumer habits. This is something that’s changed
pretty rapidly over time. In 1930, the average American
woman owned nine outfits, and today, that
figure is 30 outfits, one for every single
day of the month. And it’s not just explicitly
fast fashion retailers who are selling these
kinds of products anymore. More traditionally,
slow retailers, like department stores, have had
to totally change their supply chains, as well as their
stocking strategies, to keep up with Americans’
demand for constantly turning over fashion. According to one
article, “the stakes are high to make
fast fashion work. A rapidly changing
assortment of trendy clothes helps drive
customers into stores and potentially stave off the
encroachment of Amazon.com.” And this phenomenon is not
just driving how we dress. It’s also driving
how we store things and how much stuff we need
to store, which is creating its own sub-phenomenon. “The Self Storage
Association reports that Americans spend
$24 billion each year to store their stuff in
2.3 billion square feet of these units,
an industry which has proven to be the
fastest growing segment of the commercial real estate
industry over the past four decades. The Wall Street Journal
calls the industry ‘recession resistant’.” we are
accumulating clothes that we simply don’t need at a rate
that is simply historically unprecedented, and changing
the face of American retail in the process. And while it may not be
feasible to totally opt out of fast fashion, we can
at least be more conscious about how many
items we own and how that pushes us to drive down
the cost of individual items. Number three is things
we don’t or can’t use. So when it comes
to spending habits, Americans often have eyes that
are bigger than our stomachs. And I don’t just mean
about all of the meat that we’re eating, although
that is also a thing. We often sign up
for things that seem on the surface like
a good deal, but when broken down into cost per
use, often tend not to be. And there are many
spending areas from the cheap to the
life-changingly expensive where we’re making these
spending decisions. One example is gym
memberships, which tend to run Americans
about $696 a year on average, which wouldn’t be
such a shocking number if gyms did not report that they
typically expect about 18% of their clients to use their
membership consistently. Another strikingly American
phenomenon in the genre is timeshares. Timeshares are essentially when
you buy a partial ownership in a property that
allows you to use that property for a
certain period of the year. As the name implies, you share
it with many other people. And this is an extremely
American concept which provides essentially all
of the downsides of property ownership with none
of the upsides. Like a car, they depreciate
enormously essentially the second you buy them, many
times up to 50% after signing. They must be paid
for whether you can afford to take a
vacation that year or not. And despite their
enormous downsides, with 85% of timeshare
owners expressing regret over their purchase,
they continue to be a very popular phenomenon
in America, about $10 billion in sales per year, because of
incredibly aggressive, and even predatory sales tactics. The average cost of a
timeshare is around $20,000, with annual maintenance
costs of around $660. And if you’re
asking yourself, why would anyone buy a timeshare? I recommend you watch the
documentary, The Queen of Versailles, which gives
you an inside look at just how scammy and scuzzy the sales
tactics of these things are. Another eyes bigger
than our stomachs situation are those nifty
subscription boxes, which I myself have fallen prey to. It’s one of those things where
a $10 a month or whatever subscription can seem like
a great deal on the surface, until you break it out into
what it actually gets you and what you would otherwise
be spending on those items. “While a subscription
box usually costs less than buying all
the items in it separately, there’s a good
chance you wouldn’t buy all those items if they
didn’t come in your box. For instance, a $29 a
month Bark Box subscription works out to $350 a year. Chances are that’s a lot
more than you would normally spend for dog toys and treats. And over the long-term,
it could add significantly to the cost of owning a dog.” But when it comes to these
things we buy and don’t really get our money’s worth
on, perhaps no example is bigger or more
American than college. “According to the College
Board, the average cost of tuition and fees for the
2017 to 2018 school year was $34,740 at private
colleges, $9,970 for state residents
at public colleges, and $25,620 for
out-of-state residents attending public universities.” And these numbers are
shocking on their own terms, but even more insane
when you consider just how deceptive the value
of a college degree can be. Multiple colleges,
even law schools, have faced class action
lawsuits from alumni who felt completely
misled by the statistics their school gave out around
employment after graduation. Un and underemployment
rates amongst college grads are at the highest
they’ve ever been. And even 10 years
after graduation, one in five college
students is still not working a degree-demanding job. The point of all
of these things? Decide what you actually need,
what will be worth your money, and be honest with yourself. Number four is huge houses. Now, this is something that
we’ve touched on before on TFD, but it bears repeating
because it is not only such an enormously
American phenomenon, it’s also one that’s
really destructive, both financially, and
even for mental health. The average single
unit family home built in the ’60s or before
was under 1,500 square feet. But by 2016, the median size
for a single family home had almost doubled to just
under 2,500 square feet. In comparison, the average
home sold in England at that same period of time
was under half the size. And as of 2012, four
in 10 family homes were built with four or more
bedrooms, which is hilarious when you consider that the
average size of a family is rapidly shrinking over
that same period of time. Right now, it’s evening out
to about 1,000 square feet per person on average per home. And when you make
the home bigger, it’s not just the home
itself that goes up in size, and therefore, cost,
it’s also everything it takes to heat, chill,
light, and generally keep that house running, as
well as any garden or yard you might have along with it. And studies have shown that the
increasing space between homes, space between neighborhoods,
and even space between you and the other
people in your home leads to increased social
isolation and anxiety among Americans
in suburban areas. We are essentially
paying much more to get farther and farther
away from each other. And while a lot of this has
increased over time in America, the same can’t be said
for many other countries. The dream of owning
a single family home that could comfortably
fit a baseball team is still pretty American. Number five is keeping
things ice cold. Now, I will fully
admit that I am very guilty about loving ice cubes. I love to fill a glass entirely
to the brim with ice cubes before putting my drink in it. And it was like the
number one thing that pissed me off
living in France, was how you would
order a Coke, and get like a literal single
ice cube in your Coke that would immediately
melt. I get it. I’m guilty. But on a national
scale, whether we’re talking about ourselves
physically or the things that we’re eating,
Americans love shit to be really, really cold. And that costs us
enormously, both financially and environmentally. About 3/4 of American
homes use air conditioning, and nationally, air
conditioners represent 6% of our overall electricity
consumption, which is about $29 billion a year to homeowners. And when we look at our
numbers at the global scale, it’s pretty damn shocking. “A nation with 318 million
people accounting for just 4.5% of world population
consumes more energy for air conditioning than the
rest of the world combined. It uses more
electricity for cooling than Africa, population 1.1
billion, uses for everything.” And US air conditioning
releases about 100 million tons of carbon dioxide into
the atmosphere every year. But it’s not just our obsession
with physically staying cool. The stuff we eat needs
to be very cool too. One huge phenomenon
is our constant demand for out-of-season
fruits and vegetables. We’ve become accustomed to
expecting all produce at all times of year, which
demands an enormous supply chain of national and even
international refrigerated delivery. We should feel as a
nation a lot weirder than we do about biting
into a fresh, juicy peach in the middle of
February in Boston. And it’s not just
out-of-season foods. We also refrigerate basic daily
staples, like milk and eggs, which other countries
do not refrigerate because our pasteurization
processes are different. If you’ve ever been to
Europe, for example, and noticed that their
eggs and milk are kept on just regular
shelves instead of a refrigerated
section, that’s why. We also just generally have
really big-ass refrigerators, about 17.5 cubic feet
on average, which is, you guessed it, the
biggest in the world. And here’s the best part,
although we ostensibly have these huge-ass
refrigerators to keep perishable
foods good for longer, we actually don’t shop less
frequently than countries with smaller refrigerators. If you’re looking for another
easy area in your life to make a mental switch that
could mean enormous differences financially and
environmentally, not being obsessed with everything
being freezing fucking cold is a good place to start. Number six is not cooking. On average, Americans eat a
commercially prepared meal about 18.2 times a month, or
more than once every other day. In dollar terms, that
translates to an average of $232 spent eating outside
the home every single month. As the years pass, fewer
and fewer Americans are being taught really good,
sustainable cooking practices in the home. But it’s not just eating out. Americans also eat an enormous
amount of prepackaged foods. We actually eat 31%
more packaged food than we do fresh food,
and we consume more packaged food per person than
nearly every other country. We bang the drum
all the time on TFD about how important
it is to learn to cook for yourself using
basic, inexpensive ingredients. And it’s not just because
I personally love to cook, although that’s
a big part of it. It’s also because it’s such
a huge, huge part of how we spend. For the average
person, food and dining is the second biggest
budget category every month after living costs,
like rent or mortgage. Learning to cook and
starting with more basic essential ingredients that
almost always cost less than prepared or packaged
foods is a huge game changer for how we spend overall. Setting a goal to reduce the
number of times we eat out or order in per
month by half can be the difference of
thousands of dollars a year for the average American. And number seven is
always needing new things. About 60% of young people 18 to
35 globally have a smartphone, and in America, that
number rises to about 90%. And these increasing
numbers are based on an increasingly
unsustainable throwaway culture. Almost 80% of phone sales
correspond to people replacing their phones, even
though their phones are still in good working order,
according to Greenpeace. And if you’ve ever suspected
that a manufacturer might be actively slowing
down or messing up your phone to convince you to
get a new one, you are right. You are totally right. And in fact, Apple has
faced several lawsuits about this exact phenomenon. But it’s not just phones. When it comes to
cars, “motorists who buy a brand
new car typically keep it for about
six years, which is up from about
four years in 2006.” And yes, that is
definitely an improvement, but it’s still
hugely wasteful when you consider that
most new cars are designed to run for well over
10 years or 200,000 miles. “New cars also have
the newest technology, which comes with a price. Built-in Bluetooth, a
standard feature in new cars, was much less
common 10 years ago. The average price of all new
vehicles is about $35,000, and that expense contributes
to the overall debt load of the average American. Americans owe
about $1.2 trillion in outstanding auto debt.” But it’s not just
phones or cars. Americans tend to throw
everything away now. And because of this, the entire
appliance repair industry has been vanishing. The number of appliance
repair workers are down from an all-time high
of 180,000 to just over 30,000 in 2016. Culturally, we have become about
what is bigger, shinier, newer, better, quicker, and cooler. But all is not lost. So many of these instincts
are easy to fight at the individual level when we
remember that they’re just not normal when it comes
to the global scale. And some of these things can be
difficult to avoid in practice, or they may already be decisions
that you’ve made in a big way, but we can all
challenge ourselves to be more conscious
and thoughtful about our individual
spending cues. We can be critical about where
our consumer desires are coming from, and get over
this assumption that bigger or colder
is always better. But if you’ve already
gotten yourself in serious trouble
with spending and need help repairing
your credit score, a great option to
checkout is Credit Repair. Basically, creditrepair.com
is your own personal mentor for repairing, building,
and maintaining your credit. They help you build
a customized strategy for improving your score,
work directly with the credit bureaus to dispute any
dings on your report, and teach you how to
understand both your own score, and the rating system. If you feel like you’re
struggling to build or rebuild good credit and want someone
to guide and advocate for you the whole way, check
out creditrepair.com at the link in our
description to learn more. As always, guys, thank
you for watching, and don’t forget to hit
the Subscribe button, and to come back every
Tuesday and Thursday for new and awesome videos. Bye. [MUSIC PLAYING]