Mar 28, 2024
Personal finance YouTuber Caleb Hammer has seen it all — from models who just want to “spend, spend, spend” to 40-year-olds who outright refuse to work.
But one guest on his show, Financial Audit, may have been the most frustrating one yet for the host.
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Racso, a 24-year-old vedic astrologer from Austin, Texas had lost an immense amount of money trading cryptocurrencies and is now funding his lifestyle with credit cards.
Getting a regular job, he explained, is only for a “worst-case scenario,” but Hammer believes Racso’s current situation couldn’t get any worse.
“I’m borderline ready to kick you off,” he told him. “This is the angriest I’ve ever been.”
From “half-a-million” to broke
Racso started trading cryptocurrencies in 2020 with $40,000. He eventually turned that into $440,000. Unfortunately, his day trading was fueled by immense leverage as high as 17 times his equity.
That’s excessive by conventional metrics, but not unusual in the cryptocurrency industry, where platforms can offer leverage ratios as high as 125. However, excessive borrowing is a double-edged sword, as Racso eventually found out.
He said he lost 70% of his portfolio when the trading platform FTX and cryptocurrency Terra/Luna collapsed in 2022. Based on his own analysis done via vedic astrology (which focuses on karma over personality traits), the events that happened to Rocso were driven by the “eclipse of Taurus and Scorpio.”
The Bank for International Settlements (BIS) estimated that more than $450 billion in market value was destroyed when the Terra/Luna project collapsed, while FTX’s bankruptcy dissolved another $200 billion.
Altogether, the cryptocurrency industry lost $1.8 trillion that year, leaving three-quarters of retail investors (40% of whom were men under the age of 35) with significant losses.
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Undeterred by his failure to predict this market collapse, Racso now believes he can make a living as a vedic astrologer predicting the fortunes of others. He admitted, however, that he isn’t currently earning any income.
Meanwhile, his portfolio is down to pennies, so his monthly budget is fueled by credit cards.
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Unsustainable debt
Racso has several cards, some with outstanding balances as high as $4,373, and he admitted to using some to pay off others. Even his rent is paid with credit cards as he can only manage the minimum monthly payments.
He also has an auto loan for partial ownership of a car that he shares with his sister.
The consumer debt binge is a more enduring trend than cryptocurrency speculation. Non-housing debt had reached $4.9 trillion by the end of 2023, according to the Fed’s latest household debt and credit report. Credit cards alone account for $1.13 trillion in aggregate debt for Americans. Meanwhile, auto loans now outweigh student debt.
Racso justified his auto loan because he intends to use his car to generate income from ride sharing. Although he has signed up, he hasn’t started offering rides yet. His lack of income and monthly debt servicing has left him with just $2 in his checking account.
Hammer simply described him as a “ridiculous clown.”
However, Racso's situation, although dire, could potentially be salvaged with a robust source of income, tighter monthly budgets and weaning off the credit card addiction. The only problem is that he first has to acknowledge the issues to himself if he hopes to overcome them.
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Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
