Money Expert Reacts to Finance TikToks

I'm the host of Netflix's Money show and the author of a money book with over a million copies sold. And today, I'm looking at more financial advice on TikTok. Now, some of the advice is good, and some of it's even great, but a lot of the advice is just plain wrong. In this video, my team put together some financial TikToks for me, and I have not seen any of these before. So let's take a look at which of this advice is good and which of this advice you should avoid at all costs. Let's see what's up first.

Car buying tips. Dropping bombs on dealerships. I'm going to tell you the number one tip of all time that's going to piss them off and save you a ton of headaches and a ton of money. My name is Bill. I was the top employee at the world's biggest Dodge Ram dealership for many years. Broke every single record the dealership ever had.

Okay, already. I have to say, I don't know if this advice is going to be good or bad, but I like this guy. I like people who used to work in sales. And car dealers actually have some very sophisticated tricks that they use to basically dazzle and confuse the average everyday buyer. And they make it really fun and folksy. They pull out their little pen, they jot down a couple of drawings, they slide the piece of paper across, they go, folks, don't you want to go home in this nice Dodge Ram? Wouldn't it be nice to drive that shiny thing, put it on your driveway and know that you can take a camping every single Saturday and Sunday whenever you want to, you know, you tell me, what do you want to pay per month? I can make it work, I'm here for you, blah, blah, blah. I love seeing some of the TikTok videos from former car salespeople because they really show how they do it. Now, I also love that this guy's like, let me show you how to screw over the car dealers. Car dealers are one of the biggest cartels in America. They actually have a huge amount of political power and they use it not to help consumers, but to screw consumers over. So anybody who has a chance to to take money out of a car dealer's pocket, you're my friend. Let's continue.

So many of you are going to be car shopping soon and you're going to go about it all wrong. You're probably going to wait for the weekend when you and your loved ones can go look at vehicles, test drive, and then Get a trade number when you're at the dealership. And let me tell you why that is just completely asinine. That's because the dealerships prey on people like you. There is guys standing in the window waiting for ups, waiting for people to drive through the lot. What does that tell you? We should do everything in our power to do everything electronically, over the phone, email, text, anyway, but in person. Because to be honest with you, it's a formality to test drive. Chances are good we're going to love that vehicle. Chances are good it's going to drive great. If it's a new vehicle, especially what's not to love? You'll talk yourself into it when you're at the dealership. You know it and I know it.

Okay, so many good things already. What he's doing is basically subverting the entire experience that car dealers have crafted for you. Think about it, most people go on the weekends, they drive up, someone's over there. How you doing, folks? Come on in, let me show you around. Got anything in mind? And you are basically put into a show. You don't realize it, but there are performers everywhere and you are now part of the show. Unfortunately, the show ends with you usually paying a huge amount for a car that you don't really need to. What he's doing is saying, no, let's change the entire experience and make it more customer focused. Don't do it electronically. Don't think of the test drive as convincing you whether the car is good or not. You already know it's probably going to be pretty great. Focus on taking power back and re scripting this movie to benefit you instead of the car dealers.

But when you're at home and you have some time to think and compare other prices, other fees, other dealerships, it's a little different. Number one tip I can give you, don't go to the dealership guys. Get your trade numbers. Get your out the door numbers on the vehicle you're purchasing. Find out what the financing is going to be for the rate. Find out what your aftermarket warranty is going to be. You can do all of that from home. How do I know? I do it for people every day from Montana, all over the United States. And I get them a better deal than they would have had they walked right into their local dealership. Number one tip, guys, stay home. Do your car shopping from home.

I'm a fan. I like this guy. And I'm going to tell you why I did exactly this when I bought a car. Let me explain you need to understand your own strengths and weaknesses as human beings. When you walk into a dealership with that really good smell, the rubber everywhere, they hand you a cup of coffee and you get these beautiful brochures, and of course, the cars are all gleaming. You are susceptible to marketing just as I am. We all are. You need to admit it. Because as I always say, in order to live a rich life, you have to be honest. Honest with yourself and honest with the people around you. When you walk into a dealership, you are prey. Know that and do your homework before you walk in the room. I also tell people 80% of the work is done before you ever walk in the room. Now, typically when I say that I'm talking about a salary negotiation or a job interview, you do all the work ahead of time. So when you walk in, it's just a formality. That's also true of buying a car. Now, here's what happened with my own situation. I was just out of college. I was going to buy my first car. What did I do? I did a ton of research. And as a solid, sensible Indian young man, I bought a four door Honda Accord. Now, how did I do it? I did a huge amount of research online. I used a service kind of like what this guy probably offers. The service was called Fighting Chance. Okay. I don't have any affiliation with them. I think they're still around. They did a great job with me. I paid for something like 50 bucks for a report on that specific vehicle. And it told me a lot of proprietary details like, like dealer hold back, et cetera. How much a dealer is making off that car and how much I should pay for it. Then what I did was I followed their procedure. I sent faxes. I don't think I had used emails, faxes back then. This was around 2004. And I faxed multiple dealers. Now, I was doing this from Sacramento. I ended up getting the car in the Bay Area. Okay, this is what I told the dealers. I said, I'm looking for this car. This is the exact model I'm ready to buy immediately. Whoever gives me the best price is going to get my business. And I did this in December because I knew that they have quotas to hit at the end of the year. So basically, I flipped the power dynamic. Instead of me being prey, instead of me walking in and saying, oh, car dealer, please tell me what to do. I did my research ahead of time, offline. And then I went to them and I said, this is exactly what I want. Now this is such an important Lesson to learn to live a rich life. And that is for the important things in life. 80% of the work is done before you ever walk in the room. And you should craft the experience the way you want. Now, think about it. When it comes to an ice cream shop or something, you walk in, you go, hey, what's your favorite ice cream? They go, strawberry. You go, I'll try it. Who cares? It's strawberry ice cream. It's like three bucks, five bucks. But when it comes to a car or a house, you got to take that seriously. That means you actually need to become extremely fluent in how the game is played. If I was going to buy a house, I would never walk up to a realtor and say, hey, what do you think I should do? That is the worst possible thing you could do. Your prey, just like almost everybody who walks into that experience, it has been crafted so that you end up paying way more than you need to. On the other hand, what I would do when it comes to buying a car is exactly what this gentleman is saying. I would have my financing ready to go. I. I would know if I was going to trade in a vehicle or not. I would certainly have detailed information on how much I was willing to pay. And then I would make them compete against each other. And finally, of course, I would do it, if possible, at an opportune time, knowing that they have quotas to hit. So this is not just about a car. This is about life. This is about knowing when it's okay to just walk in and buy whatever, like an ice cream cone, and knowing when you have to do a ton of work ahead of time, because it can pay off by saving you thousands or even hundreds of thousands of dollars over the course of your lifetime. Great video. I like this guy. I'm gonna follow him myself. I hope everyone gets educated when it comes time to buy your next car. Okay, what's next?

What if I told you that investing in stocks was actually a bad idea?

Stop right there. What the. What if you told me that? All right. Well, I would say you probably don't know what you're talking about. You probably don't understand compound interest, probably don't understand asset allocation, probably don't understand diversification. But I definitely want to hear why investing in stocks is a bad idea.

Clearly hated the 9 to 5. I could not invest my extra money in stocks. That means I'd be stuck in the corporate life for, like, 10 years.

10 years. Oh. Oh, my.

Because you don't know what you're doing when it comes to investing like me, then you're not likely going to make any money from your stocks for at least another 10 years. You try to pull out earlier, you're going to lose a ton of money in the process. So I put all my extra money in a cd, which, if you didn't know, actually gives you a lot higher return than a regular high yield savings account.

Okay, hold on, hold on. Let me reveal the sleight of hand that's already happening in front of my eyes. First off, the idea that if you put money in stocks, it's going to take a long time to grow. Yeah, that's the way it works. That's like saying, I want to be a professional bodybuilder. Can you believe it's going to take years in order to sculpt my body? That's the way it works. Did you notice the magic trick she played? So I put my money in CDs because compared to a high yield savings account, you make more. Well, first of all, why are we talking about those two things when you just spent the first two minutes talking about stocks? These are three different things. Again, notice how subtle and quickly it moves on. And by the way, you don't really make that much more from CDs versus a high yield interest account. But then again, I'm only 27 seconds into this video.

But you can't pull your money out anywhere from six months to a year. It gives me the opportunity to responsibly quit my job because it can operate as an emergency fund while I'm not making an income. Because I know for sure that at any point I need that money, I can go and get it and it's going to be worth more than when it started.

What? What? Okay, again, I need to break this down. She says when I put my money in a cd, it is locked up for six months to a year. That is correct. You have illiquidity. Okay. And so she says, that can be my emergency fund. Well, don't you need liquidity for an emergency fund? Don't you need to be able to pull it out? What she doesn't mention is that if you pull it out early, you're going to pay penalties and fees also. Why? What does this have to do with stocks? Nothing. Your emergency fund should be kept in cash in a savings account somewhere. A cd. You can if you want to, but it's not some big advantage over it. I don't know what's going on. Let's keep.

Plus, there is no better way to hustle and get Your together when your money is locked away and difficult to spend.

Oh, kind of like putting it in stocks for say 25 or 30 years while it compounds doubling every seven years. That counts inflation. How about that? Does that count as being locked up? What? That's the end of the video. 49 seconds of my life with multiple mistakes, multiple obscuring of the way things work. Started off talking about stocks, now talking about cd. What the kind of video is this? You know, I'm hesitant to say, if you want to make a lot of Money, turn off TikTok for the rest of your godforsaken life. But this video may have changed my mind. If you watch this, not knowing the difference between CDs, high yield savings accounts and stocks, it all just floats right by and you go, yeah, I want to grind, I want to hustle. So I need a cd. Why would you have a cd? It doesn't make any sense for somebody who's young, needs liquidity in a savings account and certainly has decades for their money to grow. It troubles me that we have videos that are shot so casually, so breezy. Hey everybody, I quit my job. I'm an entrepreneur and I use CDs. First of all, if you understand investing, it doesn't really make sense, but that's beside the point. It feels really fun, like it's a friend talking to you. And I don't mind that. I like that I talk to you like a friend as well. But I really want you to apply some intellectual rigor when it comes to this stuff. This is important. This is more important than the hotel you're going to go to in Santorini. This is more important than the restaurant you're going to go to in the city. This is your rich life. This is literally millions of dollars if you invest correctly, especially as a young person. Can we do one last thing? Can I actually just look at the comments here? Oh my God. Okay, amazing. The first comment says that's bad advice. Correct, you guys. Another comment says, just buy treasury notes directly. And this creator says, what is that? So listen, I don't mind that not everybody knows the technical differences between all these financial instruments. I don't mind that. What I do mind is coming online and simply talking and giving advice as if you are correct. It does a disservice to people to read this. It actually makes me pretty mad. It's one thing like I joke around about CDs. They don't really make sense for a lot of people. But this video has 250 likes. That means A lot of people watch this video. Maybe one or two of them go off thinking, I need a cd. I don't need stocks. Can you imagine how much that costs them for their entire Life? If you're 25 years old watching this video and you decide because somebody posted that stocks are bad, it can cost you hundreds of thousands of dollars more than all the coffee, more than all the vacations you will ever take in your life. And that makes me mad. So what's my message? Be careful who you take advice from. As you can see, there's a bunch of unscrupulous advice that's out there and often it's not clear who to take advice from and who not to. Well, the good news is that you can figure out most of personal finance on your own. For example, you can get my book from the library and learn about investing in chapters six and seven. You'll learn about active versus passive management, asset allocation, stocks, all kinds of stuff. Those phrases might seem complicated, but money is a skill just like anything else. And you can get really good on your own. But what about if you are in a different situation? What about if you want a second set of eyes on your investment? Or you're getting older, you're approaching retirement and you want somebody to answer some specific questions about how much you can safely withdraw? Or what about passing on some money to your kids? What if you have a particularly complex situation? In those cases, it might make sense to work with a professional financial planner, one who charges a flat fee, never a percentage of your assets. I hate AUM now. This is actually something I did myself. I wrote a book on money and I myself hired a financial advisor to look over my investments. Give me a second set of eyes and tell me if I had any blind spots. If you feel like you want a second set of eyes on your finances, you should check out Facet, this video's sponsor. With Facet, you get flexible access to a team of financial planners, CFP professionals, and a team of professionals providing guidance across retirement planning, tax strategy, estate planning, and more. Instead of taking a percentage of your portfolio, which is a big no no, they charge an affordable flat membership fee. Check out their new membership options@free facet.com ramit or click the link in the description below. All right, now let's look at the next TikTok that my team pulled.

There are three things to uplevel your finances in 2024. Number three is probably the most important, but the hardest one to do. Number one is you're going to stop the dulu spending and we're going to start living within our means. It is okay if you don't go on that vacation. It is okay if you don't have the latest handbag. It is okay if you don't buy that latest skincare product. Take a look at how much money you bring home every single month and how much you owe every single month. Good baseline for you to start is 50% towards the sun essentials, 30% towards lifestyle, and 20% towards saving and debt.

The 50, 30, 20 approach is a classic approach that's been used for a long time. It's okay. I personally have a slightly different approach. I think it includes a little bit more. It's a little bit more nuanced. But if you want a really, really simple number, that's a fine place to start. I sometimes wonder, does telling people you're gonna have to live beneath your means actually work? One of the reasons when I started I will teach you to be rich in 2004 was I saw so many financial experts going around wagging their finger like, you really should stop spending on coffee. And it drove me insane. I was in college at the time. We liked to go out, we liked to buy a round of drinks. And I was just like, I don't want some old person telling me what I can't do with my money. That is why I really focused on what you can do with your money. And over the last 20 years, I really refined that with concepts like money dials, etc. I do think, obviously you can't buy everything. I do think you need constraints and you need to have limits. Of course, I just typically don't lead with that. Nobody wants to be told what they can't do. So my personal approach is simply to start off by talking about what you can do. But ultimately, at some point, you do need to talk about what you are going to spend on and what you are not.

Number two is you're going to pay your future self first. That means investing in your retirement, saving up for an emergency fund, or paying off debt. I know sometimes that you can look at your financial situation and be like, that's not fair. I work so hard. Why can't I see the money? You need to reframe the situation. It's not that you're not seeing the money you're paying your future self.

That's a good way to look at it.

I agree.

Paying your future self is great. That's why we talk about the phrase pay yourself first. On a practical level, that means that when your Money comes in, you have already set aside part of it for savings, part of it for investing, and then whatever's left over is what you spend on things like rent, car, etc. That's really quite opposite of how most people do their money. Most people, the money comes in, they spend it, and whatever's left, they try to save. Or more likely, they feel guilty about it, but don't really do it at all. And to be really good at money management, you got to flip that. As she's saying, you got to pay yourself first. I like her concept of paying your future self first. It's like watering a plant. That plant's not going to grow to six feet tall tomorrow, but you're watering it so that that future plant is strong and hardy. This is a good metaphor. I like it.

And your future self will thank you for laying the foundation. Now, number three, and I really believe this is the most important step, is that you need to rewire your brain and stop comparing yourself to other people. If you look around other people and are wondering, how the heck are they affording that lifestyle? I should be able to afford that lifestyle, too. 50% of credit card holders are in debt right now, and so that's how they're affording their lifestyle. Need to rewire your brain and to stop normalizing. Living beyond your means.

This concept of comparing yourself to others is a really important one, especially in a world of social media where it's totally normalized to be in Bora Bora on a Thursday and everyone's wondering, how do they do that? You see, the old American pastime for generations has been suburban couples go over to their neighbor's house for dinner and they come home and they sit there and go, how the hell can they take four vacations a year? How do they afford that house on a teacher's salary? And on and on and on. This is what couples have been doing for decades. If you don't believe me, go ask your parents. That's what they did after they came home from visiting their friends. But now it's even more amplified because you see them posting the highlights of their life on social media. You go, how the hell can they do that? What you don't see, of course, is that some people are in debt. Some people have family money, some people have extremely high salaries, and on and on and on. So while it is human nature to compare ourselves to other people, we are social animals. We will always compare ourselves to others. What I think is more important than simply telling people, stop comparing yourself to others. Is to actually develop your own unique vision of a rich life. Let me say it again. You're never going to stop comparing yourself to others. That's human nature. But it's much more effective to develop your own rich life vision. What's important to me, what's not, what am I going to spend extravagantly on? What do I not care about? And as you create your own rich life vision, almost like chipping away at rock to create this beautiful piece of art that's beneath it, you're going to discover that your choices will become confusing or even bewildering to other people. That is how it should be. Because when you really turn that dial on your rich life, when you really craft it to be uniquely yours, then other people don't get it. And that's okay. It should fit you like a glove. That's your rich life. And that is what I encourage everybody to do. Overall, I like this video. I think this creator is talking about some really important foundational concepts to taking control of your life. Great work and I appreciate the video. Let's move on to the next TikTok.

It is the most oppressed, suppressed, held down, lied to, tricked, naive group of people on planet Earth. The number one problem with the middle class is you guys bought the idea of a middle class.

Okay, before we even get past 11 seconds of this video, can I just say I've been in business for 20 years and I can tell you that probably as just a general guideline, it's not a good idea to be a multi millionaire and go around saying things like you guys, you poor folks who don't know any better, you bought the idea. I don't know, maybe it's just me, but I don't really think that engenders you to your audience. I'm not sure it really makes you likable, but then again, I'm just Ramit Sethi. I'm not sure I know what I'm talking about. Let's continue.

Oh, I'm good. I got me my job. I got me my house.

Ah, I'm not sure I would say that to the everyday person watching as you mock them for getting a house.

I'm in control. I got two kids that hate my guts. They're stuck in a 17 year old prison system called schools and we got two BMWs that we can barely pay for. That ain't freedom, man. Why are you making sense of it? You're in the middle like a pickle on a hamburger. Bam. Just slammed in between two pieces of bread.

Okay, I don't understand this sandwich analogy or whatever, but I do want to point out that there is a systematic effort to mock the middle class from some of these influencers online. The idea that if you're in the middle class, you're somehow a failure at life. And I think that actually is for me automatically disqualifying. I don't think there's anything wrong with being in the middle class. In fact, I celebrate it. My parents grew up working in the middle class, right? My dad went to work, my mom stayed home with us. And that is something to be celebrated. In fact, the American middle class is one of the powerhouses of the entire world. When you have people coming out here, especially incredibly wealthy people who say things like ugh, you're stuck in the middle class, you poor bastard. To me that really reveals a lot about the way they view the world. For me, I would love to have a strong middle class in America. That means the wealthy are taking taxed more, including me. That means we have strong social services. That means we create a robust base for our country which will provide for many, many future generations. Instead, what we have are people like this who basically believe you're either incredibly wealthy or you're a loser. Two different ways of looking at the world. I'll tell you which one I believe.

Don't even know who you are, you're being hoodwinked. Get a college degree, go to jail for four years, buy a house, 30 years, save your money. JP Morgan, Morgan Stanley, Goldman Sachs. Get rich. Cuz you save money that is worth nothing by the way. While you save it, they lend it.

It's actually really offensive to hear stuff like this. The idea that going to college is going to prison. This isn't a joke, this is serious. A lot of people believe this. First of all, we have a massive prison industrial complex in this country where people have been rounded up for decades, generations and put into prison. I don't think that's something to make light of. I think that's actually despicable, something we should work on removing. And then to go and tell the everyday person watching this that college is prison. When in reality we see that college degree holders have much higher lifetime earnings than non college degree earners. I think that's not only irresponsible, but it's extremely condescending. Now there are some things in this video that I actually agree with conceptually. I don't think you should buy a BMW if you can't afford it. I don't think you should buy a BMW at all those cars. I don't think everybody should go to college. And I don't think you should just buy a house blindly without running the numbers. But do you see how two people can actually believe similar things but can present them in totally different ways? One is saying, if you do this, you are poor and stupid and you are stuck in prison for the rest of your life. And another person can say, hey, let's learn how money works so that we can design our own individually unique rich life. Which one are you going to listen to? Which one is more appealing to you and which one inspires you?

The way to get out is study the people that are at the top of the food chain. Warren Buffett, study every single interview that he's ever done.

Warren Buffett will tell you to live beneath your means and invest in index funds. I think that's good, but I don't think that's what Grant is talking about.

And do not listen to what he says. Match that with what he does and then you'll know what to do.

Oh, so we just end on a conspiracy theory? Don't just do what he says, do what he does. Should I buy a private jet company? Should I buy seas candy? What is this? I have a real problem with advice like this. I have a real problem with people who also say racist online and then try to delete it using SEO reputation firms. But that's a separate issue.

If I'm out in public and I see a 55 year old white man or a 25 year old black kid, the black kid knows who I am. Now, the reason is because we go after that audience and we're talking to them in very street terms, if you will, very not big nomenclature, vocabularies.

I have a problem with people who think that by being wealthy you are morally good. I don't agree with that. There are lots of people I know who are not wealthy, who are morally amazing. Just having money alone does not make you morally good. It does not make you closer to God.

What?

Or going to heaven. It simply means you have money. That's it. Okay? It doesn't make you smarter, doesn't make you better. It just means you have money. Money is a small but important part of a rich life. But there's so much more. I think Grant has more money than I do. Would I trade my moral values for his to get more money? No. Now, I like that there are different voices online talking about money in different ways. I love it. As you learn from different folks, their books, their social media, et CETERA I want you to ask yourself, do I admire this person? Do they live the kind of life that I want to live? Do they exhibit the kind of values that I want to exhibit? If so, great. You should keep following them if they're giving you good advice. But I really want to challenge you that just because someone has money does not mean they are worth listening to. And I think this video is a prime example of that. Grant, you should be ashamed of yourself. All right. I hope you learned something from this video and it gets you to start questioning a lot of the advice that's surrounding you when it comes to money. Make sure you click that subscribe button and turn on notifications so you don't miss any of my new videos. Now check out this video popping up on screen to watch more.