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Russian (RU) Marc Guberti
Mon, Jul 7, 2025, 12:32 PM 4 min read
Ramit Sethi is one of the few financial gurus who is okay with people spending their money on discretionary items. Some of these purchases may seem like a waste of money, and while he's okay with it, there are some caveats.
Sethi is only okay with people making those types of purchases if they can afford it, and there's one common mistake people make that convinces them that it's okay to bite more than they can chew. He's talking about people who take out long-term loans with monthly payments, and he's specifically pointing the finger at people who buy trucks.
"This is not a financial strategy. This is a trap," Sethi explains.
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Sethi went on to share that he's talked with many people who are struggling with their finances but somehow have a truck with a loan. There's a lot of pride involved in that truck, and monthly loan payments make it seem more affordable. Sethi breaks down why this type of thinking is flawed.
Sethi angled some of the discussion specifically to people who buy trucks. He mentioned someone who earns $65,000 per year and bought a $90,000 truck with a loan. Sethi said that the person can't afford the truck even though the monthly loan payments fit in the budget.
The issue with using monthly loan payments in this way is that it takes up space in your monthly budget for multiple years. That's several years of not being able to invest that money or use it to cover expenses. Sethi explained that he's had many conversations with people who are in financial trouble because of their trucks and SUVs, but he then pondered if those individuals really need those vehicles.
It's possible to rent the vehicles instead or downgrade to a used model. He also finds it ironic that some of the same people who criticize women who buy expensive handbags proceed to buy trucks that they cannot afford.
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Most people need loans to buy homes and cars, but considering how interest accumulates in lengthy loans can make you think twice before buying something that you can't afford. All loans are amortized so that the bulk of your initial payments go toward interest.
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