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.
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