1 00:00:00,120 --> 00:00:02,880 Speaker 1: Welcome to How the Money. I'm Joel and I am Matt, 2 00:00:02,960 --> 00:00:06,160 Speaker 1: and today we're discussing the nasty debt comeback and how 3 00:00:06,200 --> 00:00:29,800 Speaker 1: to counter it. You did that title nasty. Nasty is 4 00:00:29,800 --> 00:00:32,680 Speaker 1: such a good word. It's incredibly like it's a very 5 00:00:32,760 --> 00:00:34,879 Speaker 1: visceral word, you know, like when I hear nasty, I 6 00:00:34,880 --> 00:00:37,760 Speaker 1: felt it when I said it, Like I feel a 7 00:00:37,800 --> 00:00:40,479 Speaker 1: little dirty right now just having said that title. But 8 00:00:40,520 --> 00:00:43,520 Speaker 1: we're talking all about debt during this episode, and specifically 9 00:00:43,560 --> 00:00:47,080 Speaker 1: some ways that you can avoid falling into this trap debt, 10 00:00:47,640 --> 00:00:50,479 Speaker 1: personal loans, credit cards that like they've all seen a 11 00:00:50,520 --> 00:00:52,840 Speaker 1: decline over the past couple of years, the numbers have 12 00:00:52,840 --> 00:00:55,040 Speaker 1: have changed. It is back as an irritant. There's a 13 00:00:55,080 --> 00:00:57,920 Speaker 1: neutron iner side, yeah, when it comes to debt, and 14 00:00:58,000 --> 00:01:01,160 Speaker 1: so it's important to talk about what those numbers look like, 15 00:01:01,280 --> 00:01:03,560 Speaker 1: what they mean for you, and then some kind of 16 00:01:03,640 --> 00:01:06,360 Speaker 1: rules for you that we're going to give um when 17 00:01:06,400 --> 00:01:08,720 Speaker 1: it comes to how you should be approaching debt in 18 00:01:08,720 --> 00:01:12,000 Speaker 1: this current environment, especially as interest rates are going up. 19 00:01:12,000 --> 00:01:13,959 Speaker 1: So we'll talk about that here in just a second. 20 00:01:13,959 --> 00:01:15,960 Speaker 1: About Matt. Before we get there, I just wanted to 21 00:01:16,000 --> 00:01:20,040 Speaker 1: mention that we love talking about free stuff on the show, 22 00:01:20,440 --> 00:01:23,200 Speaker 1: and it's good to have good neighbors. Okay, did you 23 00:01:23,200 --> 00:01:26,720 Speaker 1: get a curb alert set? Well, a text directly from 24 00:01:26,760 --> 00:01:29,200 Speaker 1: a neighbor. It wasn't some Facebook market place or anything 25 00:01:29,240 --> 00:01:31,760 Speaker 1: like that. Curb alert to order. It's right, yes, there 26 00:01:31,760 --> 00:01:34,640 Speaker 1: across the street even better, digging up some old plants, like, hey, 27 00:01:34,640 --> 00:01:36,280 Speaker 1: do you want these? And we have just we have 28 00:01:36,440 --> 00:01:39,160 Speaker 1: like massive landscaping needs in our yard. We need new 29 00:01:39,200 --> 00:01:41,920 Speaker 1: bushes and new flowers and really we just need to 30 00:01:42,120 --> 00:01:44,160 Speaker 1: start and digging in the dirt and planting some stuff. 31 00:01:44,280 --> 00:01:47,360 Speaker 1: And so yeah, these bushes were welcome, welcomed addition to 32 00:01:47,440 --> 00:01:50,640 Speaker 1: our backyard, and all from the generosity of our neighbors. 33 00:01:50,680 --> 00:01:54,280 Speaker 1: We've got multiple different flowers and plants in our yard 34 00:01:54,480 --> 00:01:57,240 Speaker 1: that different neighbors have given us through the years. And 35 00:01:57,320 --> 00:01:59,240 Speaker 1: so it's been like one of my neighbors has these 36 00:01:59,240 --> 00:02:02,760 Speaker 1: giant banana uh, banana plants banana trees have grown in 37 00:02:02,760 --> 00:02:05,320 Speaker 1: his front yard. Sounds tropical. Yeah, they're beautiful, they're really cool, 38 00:02:05,360 --> 00:02:08,000 Speaker 1: and they get really big, and so every year he's 39 00:02:08,000 --> 00:02:10,320 Speaker 1: always like chopping them down to size and he's like 40 00:02:10,600 --> 00:02:12,200 Speaker 1: digging up a bunch of them to give the neighbors 41 00:02:12,240 --> 00:02:14,480 Speaker 1: because they proliferate so much. I love it. So I'm 42 00:02:14,520 --> 00:02:16,040 Speaker 1: just saying, like, you get to know one of your 43 00:02:16,040 --> 00:02:18,760 Speaker 1: neighbors who's got kind of a green thumb, and maybe 44 00:02:18,760 --> 00:02:21,280 Speaker 1: you can trade them a beer for some plants and 45 00:02:22,320 --> 00:02:24,440 Speaker 1: then not have to go to you know, your local 46 00:02:24,680 --> 00:02:27,880 Speaker 1: nursery to yeah, pay a lot of money for him. Sure. Well, 47 00:02:27,919 --> 00:02:30,519 Speaker 1: Often times I was gonna say is when it comes 48 00:02:30,560 --> 00:02:33,160 Speaker 1: to plants that you've had outside and they've grown to 49 00:02:33,280 --> 00:02:36,679 Speaker 1: be quite large, you're looking even just for someone to 50 00:02:36,680 --> 00:02:39,280 Speaker 1: show up for free, just so that they don't have 51 00:02:39,320 --> 00:02:41,000 Speaker 1: to dig the plants out themselves. It's like, hey, you 52 00:02:41,000 --> 00:02:42,760 Speaker 1: can take this one and that one, just make sure 53 00:02:42,800 --> 00:02:45,200 Speaker 1: to not disturb the roots of that one. Um. But 54 00:02:45,280 --> 00:02:47,280 Speaker 1: the ability to have somebody else and do some of 55 00:02:47,280 --> 00:02:49,960 Speaker 1: your yard work for you, it's a win win situation 56 00:02:50,240 --> 00:02:52,640 Speaker 1: to me. Man. That sounds like a healthy market at work. 57 00:02:53,360 --> 00:02:55,840 Speaker 1: So good neighbors right there, and we will happily take 58 00:02:55,880 --> 00:02:57,679 Speaker 1: their bushes plant them in our own yard. Sorry, I 59 00:02:57,680 --> 00:03:01,120 Speaker 1: haven't contributed any to your your yard fund, that's right. 60 00:03:01,400 --> 00:03:03,160 Speaker 1: All of our plants are relatively new as well. I'm 61 00:03:03,160 --> 00:03:04,440 Speaker 1: gonna dig some years up in the middle of the 62 00:03:04,480 --> 00:03:06,760 Speaker 1: night without you knowing. You know, folks used to do 63 00:03:06,800 --> 00:03:08,440 Speaker 1: that back then. I don't know folks still do that, 64 00:03:08,480 --> 00:03:10,320 Speaker 1: but I know back in the day, we had some 65 00:03:10,360 --> 00:03:13,040 Speaker 1: neighbors and they were having plants dug up out of 66 00:03:13,040 --> 00:03:15,880 Speaker 1: your yard because you could return them to like lows 67 00:03:15,960 --> 00:03:18,919 Speaker 1: and home depot without a receipt. And I'm sure they've 68 00:03:19,000 --> 00:03:21,040 Speaker 1: changed their policy at this point, but I remember that 69 00:03:21,080 --> 00:03:23,680 Speaker 1: happening to some friends of ours, and I couldn't imagine 70 00:03:23,720 --> 00:03:26,680 Speaker 1: anything worse than that. Just seems like such a violation. 71 00:03:27,200 --> 00:03:28,880 Speaker 1: Not only have you stolen from me, but you you 72 00:03:28,919 --> 00:03:31,760 Speaker 1: came out of my property and you undid something that 73 00:03:31,800 --> 00:03:34,480 Speaker 1: I worked to do. It hits me in multiple spots. 74 00:03:34,480 --> 00:03:37,000 Speaker 1: That makes me feel bad. It makes me feel real nasty. Yeah, 75 00:03:37,000 --> 00:03:39,200 Speaker 1: I was gonna say, it feels nasty. Done it and 76 00:03:39,240 --> 00:03:41,160 Speaker 1: that's a nasty thing to do. Somebody else did something 77 00:03:41,160 --> 00:03:43,880 Speaker 1: really nasty. All right, Well, let's mention the beer that 78 00:03:43,880 --> 00:03:46,200 Speaker 1: we're gonna have this episode like this one is called 79 00:03:46,360 --> 00:03:50,240 Speaker 1: Modern Dance by Gester King. This is a wild ale 80 00:03:50,320 --> 00:03:52,520 Speaker 1: with cherry juice. Will give our thoughts on this one, 81 00:03:52,600 --> 00:03:55,680 Speaker 1: cannot We've already sipped it and it is phenomenal. I 82 00:03:55,720 --> 00:03:57,200 Speaker 1: can't wait to talk more about it at the end 83 00:03:57,200 --> 00:03:59,040 Speaker 1: of this episode and give complete thoughts in a minute. 84 00:03:59,080 --> 00:04:01,280 Speaker 1: But let's get onto the subject in hand, the nasty 85 00:04:01,320 --> 00:04:03,520 Speaker 1: debt comeback and how to counter it and Matt. It 86 00:04:03,560 --> 00:04:06,040 Speaker 1: made me think, as as debt is on the rise again, 87 00:04:06,400 --> 00:04:08,000 Speaker 1: what else is on the rise? What else is some 88 00:04:08,040 --> 00:04:11,520 Speaker 1: sort of nefarious comeback that we're seeing in our society. 89 00:04:11,920 --> 00:04:14,760 Speaker 1: And it made me think of mullets. Apparently mullets are 90 00:04:14,800 --> 00:04:18,680 Speaker 1: hot again, nasty. When I went up went to the 91 00:04:18,680 --> 00:04:22,039 Speaker 1: Masters with my buddy Rob, I realized, why do so 92 00:04:22,040 --> 00:04:25,040 Speaker 1: many golfers have mullets these days? Mullets are just kind 93 00:04:25,040 --> 00:04:26,880 Speaker 1: of They're back in a big way. Golfers got them, 94 00:04:26,920 --> 00:04:30,560 Speaker 1: baseball players got them. Yeah, everybody loves the mullets. Not everybody, though, 95 00:04:30,640 --> 00:04:33,480 Speaker 1: because some something like they're they're these blasts in the past. 96 00:04:33,520 --> 00:04:35,320 Speaker 1: You're gonna do it? That are cool again? No, not 97 00:04:35,400 --> 00:04:36,920 Speaker 1: at all. I could do it. My hair is long. Now. 98 00:04:36,960 --> 00:04:39,440 Speaker 1: What if I just cut everything except for except for 99 00:04:39,440 --> 00:04:42,240 Speaker 1: the hair on the back? I might end our best 100 00:04:42,279 --> 00:04:45,039 Speaker 1: friendship right there and then and there. And I've been 101 00:04:45,040 --> 00:04:47,560 Speaker 1: seeing more around the internet too. There's like articles that 102 00:04:47,680 --> 00:04:50,479 Speaker 1: are talking about how mullets are hip again and it 103 00:04:50,560 --> 00:04:54,080 Speaker 1: was the most searched hairstyle apparently, in which just it's 104 00:04:54,120 --> 00:04:56,239 Speaker 1: just kind of funny. You know, every once in a while, 105 00:04:56,279 --> 00:04:59,599 Speaker 1: something that's universally hated has some sort of comeback and 106 00:04:59,600 --> 00:05:01,080 Speaker 1: and comes back on the scene in a big way. 107 00:05:01,440 --> 00:05:03,280 Speaker 1: And and that's kind of the case with with our 108 00:05:03,360 --> 00:05:05,440 Speaker 1: tomic today with debt. You know, we're talking about the 109 00:05:05,520 --> 00:05:08,120 Speaker 1: rising levels of debt that we've been seeing and how 110 00:05:08,160 --> 00:05:11,120 Speaker 1: they're they're even worse than this mullet come back we're experiencing. 111 00:05:11,120 --> 00:05:12,920 Speaker 1: I can at least kind of block that out of 112 00:05:12,960 --> 00:05:15,000 Speaker 1: my my line of sight and kind of forget that 113 00:05:15,160 --> 00:05:17,680 Speaker 1: people are doing it. But when it comes to debt, man, 114 00:05:17,680 --> 00:05:20,559 Speaker 1: I'm seeing the headlines everywhere, and it's it's sad because 115 00:05:20,560 --> 00:05:22,520 Speaker 1: I know that this isn't just some sort of isolated thing. 116 00:05:22,920 --> 00:05:25,640 Speaker 1: Millions and millions of folks across our country are becoming 117 00:05:25,680 --> 00:05:28,240 Speaker 1: more indebted right now, reversing a trend that we've seen 118 00:05:28,240 --> 00:05:31,000 Speaker 1: for the past couple of years. Totally. Yeah, debt is 119 00:05:31,200 --> 00:05:34,360 Speaker 1: definitely back on the scene. Uh. And Americans have been 120 00:05:34,360 --> 00:05:37,000 Speaker 1: increasing their spending in a really big way, and more 121 00:05:37,120 --> 00:05:40,640 Speaker 1: of that spending is going onto plastic on the credit cards. Uh. 122 00:05:40,720 --> 00:05:44,359 Speaker 1: In February, American consumers increase their borrowing by a record 123 00:05:44,560 --> 00:05:48,159 Speaker 1: forty two billion dollars. Record levels of credit card usage 124 00:05:48,200 --> 00:05:52,080 Speaker 1: up in Q one alone, according to the major credit 125 00:05:52,080 --> 00:05:55,359 Speaker 1: card companies, but travel, entertainment, dining. These are all the 126 00:05:55,400 --> 00:06:00,240 Speaker 1: categories that saw the biggest spending bumps, and unfortunately, snow 127 00:06:00,320 --> 00:06:02,800 Speaker 1: loans are a part of this debt come back as well. 128 00:06:03,040 --> 00:06:07,040 Speaker 1: Folks borrow more in personal loan form last year than 129 00:06:07,120 --> 00:06:11,159 Speaker 1: in and savings rates, which were up basically in the 130 00:06:11,160 --> 00:06:14,479 Speaker 1: stratosphere much much of the pandemic, they are now back 131 00:06:14,720 --> 00:06:19,080 Speaker 1: below the tenure average. So basically normal spending patterns seem 132 00:06:19,120 --> 00:06:21,680 Speaker 1: to be back and are actually looking a little worse 133 00:06:21,800 --> 00:06:24,839 Speaker 1: than pre pandemic times. That's a that's a pretty big problem. 134 00:06:25,240 --> 00:06:27,800 Speaker 1: But there are also different kinds of debts, of course, 135 00:06:28,200 --> 00:06:30,640 Speaker 1: and so while we don't like the current trend, we 136 00:06:30,640 --> 00:06:33,160 Speaker 1: will do our best to offer some helpful thoughts on 137 00:06:33,200 --> 00:06:35,719 Speaker 1: how to think about the roles of debt in your life, 138 00:06:36,040 --> 00:06:38,640 Speaker 1: especially given the current environment that we that we find 139 00:06:38,640 --> 00:06:40,960 Speaker 1: ourselves in. That's right, Yeah, there is a lot of 140 00:06:41,040 --> 00:06:44,640 Speaker 1: nuance actually in the debt space, and some people treat 141 00:06:45,000 --> 00:06:47,960 Speaker 1: debt as a nail that needs to be hammered. Every 142 00:06:48,000 --> 00:06:51,160 Speaker 1: time a question pops up. It's like, oh, that's debt, 143 00:06:51,240 --> 00:06:53,320 Speaker 1: it's bad, get rid of it as quickly as possible. 144 00:06:53,320 --> 00:06:55,839 Speaker 1: And Matt and I we actually don't share that philosophy. 145 00:06:55,839 --> 00:06:58,200 Speaker 1: And so the rate you pay on your debt has 146 00:06:58,200 --> 00:07:01,280 Speaker 1: a massive influence on whether it's good or bad, right 147 00:07:01,680 --> 00:07:04,160 Speaker 1: and and uh and and we say good. We kind 148 00:07:04,160 --> 00:07:07,480 Speaker 1: of don't necessarily mean it in the sense that we 149 00:07:07,520 --> 00:07:09,880 Speaker 1: love it, but at least in the sense that it's 150 00:07:09,920 --> 00:07:12,600 Speaker 1: not horrific, it's not a terrible thing. And so yeah, 151 00:07:12,760 --> 00:07:15,600 Speaker 1: inherently good again, but depending on what you've got going 152 00:07:15,640 --> 00:07:18,920 Speaker 1: on in your life, it might be useful, exactly. And 153 00:07:18,960 --> 00:07:21,200 Speaker 1: so those like, let's say two and a half percent mortgages, 154 00:07:21,200 --> 00:07:25,160 Speaker 1: those are looking pretty golden right now. You're probably thrilled, actually, 155 00:07:25,240 --> 00:07:28,600 Speaker 1: in this current inflationary environment to have a mortgage under 156 00:07:28,600 --> 00:07:30,400 Speaker 1: three percent. Remember back when we were telling folks for 157 00:07:30,440 --> 00:07:33,840 Speaker 1: a year that they should be refined, we started refinancing 158 00:07:33,840 --> 00:07:36,160 Speaker 1: their mortgage. We started to sound like don Quixote pointing 159 00:07:36,240 --> 00:07:39,840 Speaker 1: at Windmillson. And for anybody who actually did listen and 160 00:07:39,880 --> 00:07:42,960 Speaker 1: took advantage, they're probably happy about that right now. But 161 00:07:43,200 --> 00:07:47,480 Speaker 1: it's important to note that context matters, right, the situational 162 00:07:47,840 --> 00:07:50,680 Speaker 1: nature of debt. It's different from household to household. But 163 00:07:50,760 --> 00:07:52,760 Speaker 1: here's the thing too, It's important to note that taking 164 00:07:52,760 --> 00:07:54,760 Speaker 1: on too much debt not only is it bad for 165 00:07:54,760 --> 00:07:56,880 Speaker 1: your finances, but it can be bad for your health. 166 00:07:57,160 --> 00:08:01,000 Speaker 1: A Northwestern study found that folks with higher debt asset ratios, 167 00:08:01,280 --> 00:08:04,000 Speaker 1: meaning that even if they sold all their assets they 168 00:08:04,000 --> 00:08:06,480 Speaker 1: couldn't afford to pay off their debt, they had poorer 169 00:08:06,480 --> 00:08:10,320 Speaker 1: health in general and higher blood pressure specifically. So we 170 00:08:10,360 --> 00:08:13,559 Speaker 1: have to take into account more than just what's happening 171 00:08:13,560 --> 00:08:16,280 Speaker 1: with our finances, but how those finances, how that debt 172 00:08:16,360 --> 00:08:19,720 Speaker 1: level is impacting our overall health and mat At the 173 00:08:19,720 --> 00:08:21,960 Speaker 1: same time, we've talked about the fact that overwhelming debt 174 00:08:22,360 --> 00:08:25,520 Speaker 1: can drop somebody's i Q by something like thirteen points, 175 00:08:25,960 --> 00:08:29,560 Speaker 1: and that just just making you generally, it's sucking up 176 00:08:29,560 --> 00:08:31,720 Speaker 1: some of that oxygen in your brain right that could 177 00:08:31,720 --> 00:08:33,880 Speaker 1: allow you to be effective in other areas of your life. 178 00:08:34,240 --> 00:08:36,840 Speaker 1: And so debt just leads to higher levels of anxiety 179 00:08:36,880 --> 00:08:40,520 Speaker 1: and depression. It can also lead to lower levels of immunity, 180 00:08:40,720 --> 00:08:42,880 Speaker 1: as some studies have found, because of the way that 181 00:08:42,960 --> 00:08:46,079 Speaker 1: stress impacts our body's chemical makeup, so it's not something 182 00:08:46,120 --> 00:08:48,360 Speaker 1: to be toyed with lightly. We want to give the 183 00:08:48,440 --> 00:08:50,880 Speaker 1: proper context for how to think about debt in the 184 00:08:50,920 --> 00:08:53,680 Speaker 1: in today's episode, but it's also important to note that 185 00:08:53,880 --> 00:08:57,199 Speaker 1: taking on too much debt can negatively impact your mind 186 00:08:57,280 --> 00:08:59,080 Speaker 1: and your body. Yeah, and so if you're the type 187 00:08:59,080 --> 00:09:01,560 Speaker 1: of person who does like debt, you may have heard 188 00:09:01,640 --> 00:09:04,080 Speaker 1: what Joel just said. You might feel a little vindicated. 189 00:09:04,480 --> 00:09:07,080 Speaker 1: You might be saying, yeah, all debt is dumb, so 190 00:09:07,240 --> 00:09:10,040 Speaker 1: don't be a dummy. But again, we don't necessarily feel 191 00:09:10,080 --> 00:09:13,200 Speaker 1: this way because overwhelming levels of debt are clearly bad. 192 00:09:13,240 --> 00:09:16,880 Speaker 1: They reflect a society why trend that has gone too far. 193 00:09:17,240 --> 00:09:20,040 Speaker 1: Those are signs that we have gotten far too comfortable 194 00:09:20,240 --> 00:09:23,240 Speaker 1: with these forms of debt that we basically despise. But 195 00:09:23,360 --> 00:09:24,880 Speaker 1: on the flip side of the coin, we think that 196 00:09:24,960 --> 00:09:28,760 Speaker 1: smart debt usage can play a helpful role in your life. 197 00:09:28,920 --> 00:09:31,760 Speaker 1: One of those reasons is because there are massive rewards 198 00:09:31,760 --> 00:09:34,280 Speaker 1: and benefits that we get to take advantage of when 199 00:09:34,320 --> 00:09:37,599 Speaker 1: we play by the rules and when we use debt efficiently. Specifically, 200 00:09:37,640 --> 00:09:41,000 Speaker 1: I'm talking about sign up bonuses or cash back the 201 00:09:41,040 --> 00:09:44,160 Speaker 1: different travel rewards points. The other delightful perks that you 202 00:09:44,160 --> 00:09:46,600 Speaker 1: can take advantage of. Lots of folks sign up for 203 00:09:46,640 --> 00:09:50,000 Speaker 1: a card with with visions of rewards dancing in their heads, 204 00:09:50,040 --> 00:09:52,880 Speaker 1: and then they end up paying interest. That is no good. 205 00:09:53,120 --> 00:09:55,160 Speaker 1: I've had rewards dancing in my head credit card rewards, 206 00:09:55,160 --> 00:09:57,559 Speaker 1: but never sugarplums. I don't know where those Where where 207 00:09:57,559 --> 00:09:59,320 Speaker 1: does that come from? Because I know it's a Christmas thing, 208 00:09:59,440 --> 00:10:04,240 Speaker 1: but it's tells you more about your heart than you realize. Um. 209 00:10:04,280 --> 00:10:06,079 Speaker 1: But what we're saying here is that if you can 210 00:10:06,120 --> 00:10:09,360 Speaker 1: use credit cards in an intelligent way, if you can 211 00:10:09,360 --> 00:10:11,640 Speaker 1: play the game the right way, those perks can really 212 00:10:11,640 --> 00:10:14,120 Speaker 1: add up. Makes me think back to to Scott Kay's 213 00:10:14,200 --> 00:10:16,880 Speaker 1: we talked with him a few weeks ago. We don't 214 00:10:16,880 --> 00:10:19,760 Speaker 1: think that you necessarily have to have a full binder 215 00:10:19,800 --> 00:10:23,120 Speaker 1: full like a baseball card collector edition binder with credit 216 00:10:23,160 --> 00:10:25,160 Speaker 1: cards in there, with everything slotted. You don't need to 217 00:10:25,160 --> 00:10:27,959 Speaker 1: take it that far necessarily, But we do think that 218 00:10:28,040 --> 00:10:30,880 Speaker 1: by paying attention to how you're using your credit cards, 219 00:10:31,280 --> 00:10:34,640 Speaker 1: so then those benefits could be well worth it. That's right, yeah, 220 00:10:34,720 --> 00:10:36,520 Speaker 1: of course. But but like you said, Matt, you have 221 00:10:36,559 --> 00:10:38,679 Speaker 1: to play by the rules, and if you're using credit 222 00:10:38,720 --> 00:10:41,120 Speaker 1: cards in a way that isn't healthy. If you're spending 223 00:10:41,559 --> 00:10:44,440 Speaker 1: more than you should and you're paying interest in every 224 00:10:44,440 --> 00:10:47,840 Speaker 1: single month because you're not paying off that balance in full, well, 225 00:10:47,880 --> 00:10:50,720 Speaker 1: then that desire to reap some of those benefits, to 226 00:10:50,800 --> 00:10:53,640 Speaker 1: get those sign up bonuses, to to get two percent 227 00:10:53,640 --> 00:10:56,200 Speaker 1: cash back on everything you're buying, well, um, it's not 228 00:10:56,200 --> 00:10:59,240 Speaker 1: actually working for you. We're paying the credit card company money. 229 00:10:59,520 --> 00:11:02,160 Speaker 1: And so you have to be disciplined if you're going 230 00:11:02,240 --> 00:11:04,839 Speaker 1: to try to go this route. And so if you're 231 00:11:04,880 --> 00:11:06,680 Speaker 1: that kind of person who hasn't been able to handle 232 00:11:06,720 --> 00:11:09,080 Speaker 1: credit cards effectively, it's it's trying to make a change 233 00:11:09,120 --> 00:11:13,080 Speaker 1: and to rededicate yourself to paying that debt off completely. Matt. 234 00:11:13,120 --> 00:11:16,080 Speaker 1: There obviously multiple ways that you can approach that. There's 235 00:11:16,080 --> 00:11:19,280 Speaker 1: the snowball, there's the avalanche method. We've talked about the 236 00:11:19,280 --> 00:11:22,200 Speaker 1: merits of both, and then to prevent yourself from ending 237 00:11:22,240 --> 00:11:24,200 Speaker 1: up in that ditch in the future. The rules of 238 00:11:24,240 --> 00:11:27,480 Speaker 1: the game are actually pretty simple, right, don't carry a 239 00:11:27,480 --> 00:11:30,560 Speaker 1: balance with your credit card, which means you're regularly paying 240 00:11:30,600 --> 00:11:34,200 Speaker 1: off that balance every single month using whatever system is 241 00:11:34,200 --> 00:11:36,400 Speaker 1: going to work best for you. Like you don't even 242 00:11:36,440 --> 00:11:38,240 Speaker 1: have to subscribe to one or the other. There's even 243 00:11:38,280 --> 00:11:40,839 Speaker 1: a hybrid approach that you can that you can choose 244 00:11:40,840 --> 00:11:42,960 Speaker 1: to use if that works best for you. And so yeah, 245 00:11:43,000 --> 00:11:45,480 Speaker 1: some folks hate the idea of putting too many charges 246 00:11:45,520 --> 00:11:48,440 Speaker 1: on their card to where their current balance starts to swell, 247 00:11:48,520 --> 00:11:51,320 Speaker 1: and they're paying it off at the end of every week, 248 00:11:51,640 --> 00:11:54,000 Speaker 1: let's say, in order to make more payments and to 249 00:11:54,040 --> 00:11:55,959 Speaker 1: make sure that their balance doesn't get out of control. 250 00:11:56,200 --> 00:11:58,520 Speaker 1: Some folks literally pay off their credit card balance after 251 00:11:58,600 --> 00:12:01,200 Speaker 1: every purchase so that it it is in fact kind 252 00:12:01,240 --> 00:12:03,280 Speaker 1: of working like a debit card, even though they're getting 253 00:12:03,280 --> 00:12:06,200 Speaker 1: the benefits of the credit card. You know, it's it's 254 00:12:06,240 --> 00:12:09,320 Speaker 1: not necessary, but really, to each their own, however, it 255 00:12:09,360 --> 00:12:12,240 Speaker 1: makes sense for you as long as you're paying everything 256 00:12:12,280 --> 00:12:15,040 Speaker 1: off without accruing interest and penalties. But at the very least, 257 00:12:15,040 --> 00:12:17,080 Speaker 1: like I've said, paying off your your statement balance in 258 00:12:17,120 --> 00:12:19,640 Speaker 1: full at the end of every month is the number 259 00:12:19,640 --> 00:12:21,520 Speaker 1: one rule when it comes to using credit cards. And 260 00:12:21,559 --> 00:12:23,120 Speaker 1: if you're not going to do that, if you're not 261 00:12:23,160 --> 00:12:25,360 Speaker 1: going to take that tact, then you shouldn't be using 262 00:12:25,440 --> 00:12:28,240 Speaker 1: them in the first place. Because these credit card benefits 263 00:12:28,240 --> 00:12:30,880 Speaker 1: aren't worth it, there they They they're a mirage. They 264 00:12:30,920 --> 00:12:32,959 Speaker 1: look good, but in the end you get there and 265 00:12:33,080 --> 00:12:36,480 Speaker 1: your suck dry. You're still in the desert, parched for 266 00:12:36,559 --> 00:12:40,160 Speaker 1: thirst because you were led astray by these false illusions. Yeah, 267 00:12:40,160 --> 00:12:42,719 Speaker 1: there are these overarching rules that we have to abide 268 00:12:42,760 --> 00:12:45,680 Speaker 1: by in order to make sure that we're not paying interest, 269 00:12:45,800 --> 00:12:49,360 Speaker 1: whether that's paying your balance off weekly or waiting until 270 00:12:49,400 --> 00:12:52,960 Speaker 1: the actual statement shows up in your inbox. For me, personally, 271 00:12:53,120 --> 00:12:54,560 Speaker 1: I like to pay it off at the end of 272 00:12:54,559 --> 00:12:57,880 Speaker 1: the month. Specifically, I keep it on that calendar cycle because, 273 00:12:58,640 --> 00:13:00,560 Speaker 1: first of all, I mean, it helps with budget, but 274 00:13:00,640 --> 00:13:03,640 Speaker 1: I also don't like having to pay for purchases that 275 00:13:03,679 --> 00:13:06,319 Speaker 1: I made the prior month, sometimes like a month and 276 00:13:06,360 --> 00:13:09,000 Speaker 1: a half prior. I just don't like the idea of 277 00:13:09,200 --> 00:13:12,959 Speaker 1: like feeling richer wealthier than I am when I'm going 278 00:13:13,000 --> 00:13:14,520 Speaker 1: into that new month and I think, oh, man, I've 279 00:13:14,520 --> 00:13:16,800 Speaker 1: got all this money in the account, as opposed to 280 00:13:17,040 --> 00:13:19,680 Speaker 1: scheduling that payment so it's set to to actually get 281 00:13:19,679 --> 00:13:21,800 Speaker 1: paid because in reality, some of that money is spoken 282 00:13:21,840 --> 00:13:24,280 Speaker 1: for because of those prior purchases exactly. Yeah, and then 283 00:13:24,360 --> 00:13:25,760 Speaker 1: the same thing. You know, we were just talking about 284 00:13:25,800 --> 00:13:28,160 Speaker 1: Scott and how many cards he has. You and I 285 00:13:28,280 --> 00:13:30,280 Speaker 1: we like taking advantage of the different benefits, but we 286 00:13:30,320 --> 00:13:33,280 Speaker 1: are not nearly as dedicated as him. I've got three 287 00:13:33,320 --> 00:13:36,160 Speaker 1: cards in my wallet and actually will link to an 288 00:13:36,240 --> 00:13:38,720 Speaker 1: article where we talk about the specific credit cards that 289 00:13:38,760 --> 00:13:40,960 Speaker 1: we like to use, but I don't Again, I don't 290 00:13:40,960 --> 00:13:42,600 Speaker 1: share this because I think that you should also have 291 00:13:42,640 --> 00:13:45,240 Speaker 1: the exact number of credit cards that that Joel and 292 00:13:45,280 --> 00:13:47,839 Speaker 1: I have. But I mentioned this because you need to 293 00:13:47,880 --> 00:13:50,960 Speaker 1: consider whatever system that you'll be able to maintain, and 294 00:13:50,960 --> 00:13:53,200 Speaker 1: I should probably include when you pay that balance, how 295 00:13:53,280 --> 00:13:55,440 Speaker 1: many cards you have, or it could even be limiting 296 00:13:55,480 --> 00:13:58,680 Speaker 1: the types of purchases or the types of situations when 297 00:13:58,800 --> 00:14:00,760 Speaker 1: you're going to use that credit card. We want you 298 00:14:00,840 --> 00:14:03,520 Speaker 1: to keep all of those aspects in mind because we 299 00:14:03,600 --> 00:14:05,760 Speaker 1: do not want you paying interest. Yeah, so now that 300 00:14:05,800 --> 00:14:08,120 Speaker 1: we've got that said, we don't want you paying interests 301 00:14:08,120 --> 00:14:11,600 Speaker 1: in particular to the credit card companies. There are some instances, Matt, 302 00:14:11,600 --> 00:14:15,080 Speaker 1: where taking on debt makes sense. We're paying interest actually 303 00:14:15,200 --> 00:14:18,439 Speaker 1: makes sense, but so much of it depends on your 304 00:14:18,480 --> 00:14:21,440 Speaker 1: personal financial situation. But we want to talk about maybe 305 00:14:21,440 --> 00:14:23,720 Speaker 1: some of the nuances involved and how you can determine 306 00:14:24,000 --> 00:14:27,280 Speaker 1: whether keeping debt around makes sense in your life, even 307 00:14:27,320 --> 00:14:29,720 Speaker 1: in light of all the negative things we've already said 308 00:14:29,720 --> 00:14:32,000 Speaker 1: about debt in this episode so far. Well, we'll get 309 00:14:32,040 --> 00:14:43,280 Speaker 1: to our thoughts on that right after this. Alright, we're 310 00:14:43,320 --> 00:14:47,080 Speaker 1: back to the break talking about debts. Are you sick? Uh? 311 00:14:47,880 --> 00:14:49,200 Speaker 1: I think we both dound a little time. We're not 312 00:14:49,200 --> 00:14:52,200 Speaker 1: talking about that. We're talking about sickness, speaking of maybe 313 00:14:52,240 --> 00:14:55,240 Speaker 1: we've taken on too much, too much, too much ourselves now. 314 00:14:55,360 --> 00:14:57,440 Speaker 1: I think I am, like I've got something going on 315 00:14:57,440 --> 00:14:59,480 Speaker 1: going on. Yeah, well, okay, we're talking I blame the 316 00:14:59,480 --> 00:15:01,280 Speaker 1: fact that I have to three children. I catch whatever 317 00:15:01,280 --> 00:15:04,000 Speaker 1: they get. That means you're gonna be That means you're 318 00:15:04,000 --> 00:15:05,640 Speaker 1: gonna be stronger in the long run. Though I get 319 00:15:05,640 --> 00:15:07,720 Speaker 1: sick actually less than anyone else in my household, So 320 00:15:08,280 --> 00:15:11,320 Speaker 1: I'm healthy as an ox. But occasionally I get taken down. Uh. 321 00:15:11,360 --> 00:15:14,600 Speaker 1: But yeah, we are talking about debt here, and again 322 00:15:14,640 --> 00:15:17,840 Speaker 1: it's crucial to reiterate that not all debt is this 323 00:15:17,960 --> 00:15:22,480 Speaker 1: bad evil thing, despite what maybe some loud dudes on 324 00:15:22,520 --> 00:15:26,160 Speaker 1: the radio might say. Debt can allow you to make 325 00:15:26,160 --> 00:15:28,920 Speaker 1: purchases that you wouldn't otherwise be able to make, like 326 00:15:29,040 --> 00:15:32,040 Speaker 1: getting an education or buying a home. Just think about 327 00:15:32,080 --> 00:15:33,960 Speaker 1: how long it would have taken you to save up 328 00:15:34,000 --> 00:15:37,480 Speaker 1: cash for either of those those life milestones. Uh. Debt 329 00:15:37,640 --> 00:15:41,000 Speaker 1: allows you to have today what you would otherwise have 330 00:15:41,200 --> 00:15:44,720 Speaker 1: had to postpone. And I say that I immediately catch 331 00:15:44,800 --> 00:15:46,760 Speaker 1: myself because that works for good and it works for 332 00:15:46,840 --> 00:15:49,240 Speaker 1: bad because it also means that you could potentially make 333 00:15:49,320 --> 00:15:53,720 Speaker 1: terrible consumer expenditures without needing to actually have that cash 334 00:15:53,760 --> 00:15:56,480 Speaker 1: saved up. So, whether we're talking about a new item 335 00:15:56,560 --> 00:15:59,280 Speaker 1: for your wardrobe, whether we're talking about buying a boat, 336 00:15:59,760 --> 00:16:01,880 Speaker 1: go going into debt can break that up into easy 337 00:16:01,920 --> 00:16:04,840 Speaker 1: installments over the months or years for you. But that 338 00:16:05,000 --> 00:16:08,120 Speaker 1: is not necessarily a good thing in those examples that 339 00:16:08,120 --> 00:16:11,160 Speaker 1: that I just mentioned, it's a horrendous idea. Uh. And 340 00:16:11,200 --> 00:16:13,800 Speaker 1: so let's let's talk about a few debt basics that 341 00:16:13,800 --> 00:16:15,800 Speaker 1: that we want to mention that can help give you 342 00:16:15,880 --> 00:16:18,920 Speaker 1: a better sense of how to proceed. Yeah, not all 343 00:16:19,040 --> 00:16:24,359 Speaker 1: debt is created equal, and not everyone's personal debt situation 344 00:16:24,440 --> 00:16:25,840 Speaker 1: is not created equal. So we're going to kind of 345 00:16:25,840 --> 00:16:28,320 Speaker 1: get into some of that nuance now. And so different 346 00:16:28,360 --> 00:16:31,760 Speaker 1: kinds of debt are going to need different responses based 347 00:16:31,800 --> 00:16:34,640 Speaker 1: on what what levels you're at and what kind of 348 00:16:34,640 --> 00:16:37,640 Speaker 1: debt you've taken on. And let's talk about matt revolving 349 00:16:37,720 --> 00:16:40,520 Speaker 1: verse installment debt here for a second, because, especially since 350 00:16:40,560 --> 00:16:43,280 Speaker 1: we're in the midst of a climbing interest rate environment 351 00:16:43,360 --> 00:16:47,640 Speaker 1: right now, knowing your particular variety of debt is is crucial. 352 00:16:47,880 --> 00:16:49,760 Speaker 1: You know, you'll want to know if it's revolving or 353 00:16:49,800 --> 00:16:52,720 Speaker 1: an installment debt, because that's helpful when you're zeroing in 354 00:16:52,880 --> 00:16:56,160 Speaker 1: on which ones to target for elimination first. And so, 355 00:16:56,480 --> 00:16:59,320 Speaker 1: for instance, your mortgage, if you have one, is an 356 00:16:59,360 --> 00:17:03,120 Speaker 1: installment own hopefully hopefully with a fixed interest rate. But 357 00:17:03,240 --> 00:17:06,440 Speaker 1: your credit card debt, if you have some, is revolving debt, 358 00:17:06,760 --> 00:17:09,800 Speaker 1: and that interest rate is not fixed, and so as 359 00:17:09,920 --> 00:17:13,720 Speaker 1: the Fed is hiking rates, it is more immediately impacting 360 00:17:13,800 --> 00:17:16,480 Speaker 1: how much of your credit card payment each month is 361 00:17:16,520 --> 00:17:20,760 Speaker 1: going towards interest versus principle, and so paying down your 362 00:17:20,800 --> 00:17:23,080 Speaker 1: revolving debts is going to make a bigger impact for 363 00:17:23,119 --> 00:17:26,080 Speaker 1: you when it comes to eliminating the worst culprits of 364 00:17:26,280 --> 00:17:29,320 Speaker 1: high interest debt. And the good thing is, on top 365 00:17:29,320 --> 00:17:31,800 Speaker 1: of that, it boost your credit score at the same time. 366 00:17:31,880 --> 00:17:34,360 Speaker 1: That's right, Yeah, the the debt to income ratio that's 367 00:17:34,359 --> 00:17:37,520 Speaker 1: also a crucial factor in the decision of whether to 368 00:17:37,640 --> 00:17:40,720 Speaker 1: increase your debt load or not to. For instance, fifty 369 00:17:41,280 --> 00:17:44,320 Speaker 1: in debt that sounds pretty awful, right, But let's say 370 00:17:44,400 --> 00:17:46,600 Speaker 1: you make five million dollars a year. Well, if that's 371 00:17:46,640 --> 00:17:49,040 Speaker 1: the case, then it's just gonna be a pittance. You 372 00:17:49,080 --> 00:17:51,880 Speaker 1: could pay it off in full with just one pay check, 373 00:17:51,960 --> 00:17:54,080 Speaker 1: no sweat off your back. But that being said, no 374 00:17:54,160 --> 00:17:58,199 Speaker 1: matter what your income is, it's possible to spend more 375 00:17:58,240 --> 00:18:00,760 Speaker 1: than you make. You can always based you know, move 376 00:18:00,840 --> 00:18:03,080 Speaker 1: those goalposts. And especially we've seen this more and more 377 00:18:03,160 --> 00:18:05,520 Speaker 1: where something like for people who make more than a 378 00:18:05,560 --> 00:18:09,280 Speaker 1: hundred thousand dollars in this country say that they live 379 00:18:09,280 --> 00:18:12,720 Speaker 1: paycheck to paycheck, and so, yeah, you're right, Matt. Even 380 00:18:12,800 --> 00:18:16,760 Speaker 1: people who have high incomes, it doesn't necessarily reflect that 381 00:18:16,840 --> 00:18:19,119 Speaker 1: they have the best judgment when it comes to how 382 00:18:19,119 --> 00:18:21,399 Speaker 1: they're spending. Yeah, So if you're doing that with an 383 00:18:21,440 --> 00:18:24,040 Speaker 1: income that's that's that incredibly high, you should probably be 384 00:18:24,119 --> 00:18:26,560 Speaker 1: making some changes as soon as possible, because it's not 385 00:18:26,600 --> 00:18:29,200 Speaker 1: like you there's like some sort of baseline to living 386 00:18:29,280 --> 00:18:31,119 Speaker 1: where you're just trying to get food on the table. 387 00:18:31,400 --> 00:18:33,920 Speaker 1: But generally speaking, knowing your debt to income ratio can 388 00:18:34,000 --> 00:18:37,400 Speaker 1: help individuals decide whether or not that you know whether 389 00:18:37,440 --> 00:18:39,560 Speaker 1: or not it makes sense for you to even consider 390 00:18:39,920 --> 00:18:43,160 Speaker 1: taking out additional debts. It can help you to decide 391 00:18:43,160 --> 00:18:45,200 Speaker 1: whether or not you should take out another loan or not. Yeah, 392 00:18:45,200 --> 00:18:47,479 Speaker 1: knowing your debt to income ratio can be really helpful 393 00:18:47,480 --> 00:18:50,600 Speaker 1: when it comes to assessing your own personal debt situation. 394 00:18:50,720 --> 00:18:53,720 Speaker 1: Right because you're not even gonna be considered for a 395 00:18:53,760 --> 00:18:57,080 Speaker 1: home loan from traditional lenders in most cases if your 396 00:18:57,160 --> 00:18:59,200 Speaker 1: d t I your debt to income ratio is more 397 00:18:59,520 --> 00:19:03,520 Speaker 1: than four. Basically, it's this foreboding sign that you aren't 398 00:19:03,520 --> 00:19:05,679 Speaker 1: going to be able to afford the payments on that 399 00:19:05,720 --> 00:19:08,000 Speaker 1: new house. And so we would say that your overall 400 00:19:08,080 --> 00:19:11,560 Speaker 1: debt load actually matters less than what your d t 401 00:19:11,720 --> 00:19:14,800 Speaker 1: I is. So, for example, rental properties, they often come 402 00:19:14,840 --> 00:19:17,240 Speaker 1: with a lot of debt. Not many folks can or 403 00:19:17,280 --> 00:19:20,679 Speaker 1: do buy that home in cash. Yeah, we don't write. 404 00:19:20,760 --> 00:19:23,359 Speaker 1: We we take on mortgages for all of the rental 405 00:19:23,359 --> 00:19:25,440 Speaker 1: properties that we have. And so here's the thing. They 406 00:19:25,480 --> 00:19:28,000 Speaker 1: can also produce a monthly return in the form of 407 00:19:28,080 --> 00:19:31,680 Speaker 1: rent paid. So, yeah, your debt load might look scary 408 00:19:31,680 --> 00:19:33,679 Speaker 1: on paper if you're only looking at that side of 409 00:19:33,840 --> 00:19:36,640 Speaker 1: the ledger. But it can still be smart debt if 410 00:19:36,640 --> 00:19:39,439 Speaker 1: the rents on that property outweigh the monthly note by 411 00:19:39,440 --> 00:19:41,720 Speaker 1: a decent margin, and so you can live your life 412 00:19:41,880 --> 00:19:45,320 Speaker 1: however you want. You can choose not to think of 413 00:19:45,400 --> 00:19:47,240 Speaker 1: debt the way we think of debt, but debt is 414 00:19:47,280 --> 00:19:51,959 Speaker 1: basically a necessity for of real estate investors, and so 415 00:19:52,000 --> 00:19:55,440 Speaker 1: it's important to mention that debt inside of the context. 416 00:19:55,560 --> 00:19:59,520 Speaker 1: Is that debt attached to an asset that is throwing 417 00:19:59,520 --> 00:20:01,600 Speaker 1: off money, throwing off cash into your life every month. 418 00:20:01,640 --> 00:20:03,640 Speaker 1: If so, I think that I think of that debt 419 00:20:03,680 --> 00:20:06,119 Speaker 1: as much less nasty, much less nefarious. That's right now. 420 00:20:06,240 --> 00:20:08,959 Speaker 1: That's why the debt income ratio is important. Basically, what 421 00:20:08,960 --> 00:20:11,240 Speaker 1: we're saying here is that it is important to consider 422 00:20:11,280 --> 00:20:14,120 Speaker 1: what you're using that debt for, because on the flip 423 00:20:14,119 --> 00:20:16,080 Speaker 1: side of the coin, you know, you're talking about investing 424 00:20:16,080 --> 00:20:18,680 Speaker 1: in real estate. On the other side of the equation, 425 00:20:18,880 --> 00:20:22,040 Speaker 1: imagine going into debt for consumption. That is something that 426 00:20:22,160 --> 00:20:25,120 Speaker 1: we don't recommend financing a car. That's a normal quote 427 00:20:25,160 --> 00:20:27,320 Speaker 1: unquote normal example of going into debt that we wish 428 00:20:27,680 --> 00:20:31,200 Speaker 1: was actually more abnormal. Aside from the past two years. 429 00:20:31,200 --> 00:20:34,440 Speaker 1: Where cars have oddly gone up in value, they typically 430 00:20:34,480 --> 00:20:37,280 Speaker 1: lose value, and they do so quickly, as as soon 431 00:20:37,320 --> 00:20:39,040 Speaker 1: as you drive it off a lot. That's why we 432 00:20:39,040 --> 00:20:42,159 Speaker 1: would prefer to see people save and pay cash for 433 00:20:42,200 --> 00:20:44,840 Speaker 1: any car that they decide to buy. But let's say 434 00:20:44,880 --> 00:20:47,640 Speaker 1: that you're using that loan instead to buy an asset 435 00:20:47,840 --> 00:20:50,919 Speaker 1: that will likely appreciate in value, like real estate like 436 00:20:50,960 --> 00:20:53,960 Speaker 1: a home, then we think that debt makes way more sense. 437 00:20:54,200 --> 00:20:57,560 Speaker 1: The same is true for of student loans. In this case, 438 00:20:57,640 --> 00:21:01,000 Speaker 1: that debt is providing future opportunity, is p autting better 439 00:21:01,119 --> 00:21:04,439 Speaker 1: job prospects, it's providing a more lucrative career. And so 440 00:21:04,520 --> 00:21:06,720 Speaker 1: as a general rule of thumb, we're okay with using 441 00:21:06,760 --> 00:21:10,000 Speaker 1: debt if that's going to allow you to increase your 442 00:21:10,040 --> 00:21:13,040 Speaker 1: net worth over time. That's when it's being used as 443 00:21:13,040 --> 00:21:16,240 Speaker 1: a tool for growth. But we're not okay with using 444 00:21:16,280 --> 00:21:18,600 Speaker 1: debt if it causes a decrease in your net worth, 445 00:21:18,920 --> 00:21:22,200 Speaker 1: because that's when it's being used as a tool for consumption. Yeah, 446 00:21:22,280 --> 00:21:25,280 Speaker 1: mat debt, it's kind of like an accelerant, right, and 447 00:21:25,320 --> 00:21:28,040 Speaker 1: you can use it to accelerate purchases that you want 448 00:21:28,040 --> 00:21:31,600 Speaker 1: to make that are lifestyle oriented. Consumeristic in nature, and 449 00:21:31,680 --> 00:21:34,600 Speaker 1: that can have a negative effect over the months and 450 00:21:34,720 --> 00:21:37,159 Speaker 1: years when it comes to your net worth and your 451 00:21:37,200 --> 00:21:39,959 Speaker 1: personal financial standing. Or you can kind of use it 452 00:21:40,400 --> 00:21:42,960 Speaker 1: as a way to grow your net worth when it 453 00:21:42,960 --> 00:21:45,680 Speaker 1: comes to something like investing in real estate or when 454 00:21:45,720 --> 00:21:48,639 Speaker 1: you do buy that home, like it's we we you know, 455 00:21:48,640 --> 00:21:50,200 Speaker 1: we've talked about this too. There's a lot of nuance 456 00:21:50,240 --> 00:21:52,200 Speaker 1: even when it comes to to buying a home. It's 457 00:21:52,200 --> 00:21:54,960 Speaker 1: not like buying a home and taking on outrageous sums 458 00:21:54,960 --> 00:21:57,920 Speaker 1: of debt for that or for a college education is smart. 459 00:21:58,000 --> 00:22:00,240 Speaker 1: Even still, you have to take a balanced approach not 460 00:22:00,359 --> 00:22:03,920 Speaker 1: overdo it. Those are different scenarios and and that has 461 00:22:03,960 --> 00:22:06,359 Speaker 1: to be pointed out because you can use debt wisely 462 00:22:06,359 --> 00:22:08,440 Speaker 1: and you can use it poorly. Yeah, before we hit recorded, 463 00:22:08,440 --> 00:22:10,679 Speaker 1: we're talking about how much coffee we've been drinking. It 464 00:22:10,680 --> 00:22:13,520 Speaker 1: makes me think of caffeine because you can have the 465 00:22:13,600 --> 00:22:15,600 Speaker 1: right amount of caffeine at the right time in the 466 00:22:15,720 --> 00:22:17,479 Speaker 1: day and it can be a good thing for you. 467 00:22:17,520 --> 00:22:19,520 Speaker 1: But you know, if you're drinking like way too much 468 00:22:19,520 --> 00:22:22,040 Speaker 1: of it, especially if you're taking it. For most people, 469 00:22:22,080 --> 00:22:23,920 Speaker 1: if you're drinking it before like you go to bed, 470 00:22:24,400 --> 00:22:26,720 Speaker 1: then it could be counterproductive. And not only that, but 471 00:22:26,760 --> 00:22:29,080 Speaker 1: you could even see your health decline, which is, you know, 472 00:22:29,160 --> 00:22:31,640 Speaker 1: obviously the opposite of what you want to see happen, right, Yeah, 473 00:22:31,720 --> 00:22:34,160 Speaker 1: And so basically you can take debt too far, even 474 00:22:34,160 --> 00:22:36,880 Speaker 1: when it's a good thing, right, And so it's caffeine 475 00:22:37,160 --> 00:22:39,119 Speaker 1: generally speaking, I feel like a good thing, but you 476 00:22:39,119 --> 00:22:42,480 Speaker 1: can definitely take it too far. Same with beer, right, Yeah, 477 00:22:42,680 --> 00:22:45,560 Speaker 1: one beer is great. Ten beers is not great, and 478 00:22:45,640 --> 00:22:48,480 Speaker 1: that's bad. Yeah, I don't overdo it, but so it's yeah. 479 00:22:48,640 --> 00:22:51,119 Speaker 1: On that note, it makes me think of back in 480 00:22:51,160 --> 00:22:53,600 Speaker 1: two thousand eight, Matt, when when so many folks borrowed 481 00:22:53,600 --> 00:22:56,200 Speaker 1: money that they never should have in order to flip 482 00:22:56,240 --> 00:22:58,920 Speaker 1: a home. Because remember how many TV shows there were 483 00:22:59,000 --> 00:23:02,320 Speaker 1: back on HDTV, your other channels about home flipping. I 484 00:23:02,320 --> 00:23:04,920 Speaker 1: remember watching some of them and being kind of enthralled 485 00:23:05,000 --> 00:23:07,480 Speaker 1: by how they were able to make money so easily 486 00:23:07,760 --> 00:23:10,840 Speaker 1: by flipping homes in their neighborhood. And but here's the thing, 487 00:23:10,960 --> 00:23:12,800 Speaker 1: I remember a friend of ours on one of those shows, 488 00:23:13,160 --> 00:23:15,000 Speaker 1: really not the flipping show, but like it was like 489 00:23:15,040 --> 00:23:17,840 Speaker 1: the house Hunters. Okay, yeah, but like it was a 490 00:23:18,080 --> 00:23:21,719 Speaker 1: it was a huge cultural thing that just like engulfed 491 00:23:21,880 --> 00:23:24,800 Speaker 1: the imagination of Americans when it came to home ownership. 492 00:23:24,840 --> 00:23:26,399 Speaker 1: And people still love the house shows, but it was 493 00:23:26,480 --> 00:23:28,960 Speaker 1: all the flipping shows in particulars like Flip this house 494 00:23:28,960 --> 00:23:31,320 Speaker 1: and Flip that house and blah blah blah. But here's 495 00:23:31,359 --> 00:23:34,320 Speaker 1: what happened. People got into too much debt, they overleveraged, 496 00:23:34,359 --> 00:23:38,240 Speaker 1: and it led to some nasty consequences. And right, there's 497 00:23:38,240 --> 00:23:41,040 Speaker 1: that nasty again the word of the day, like sesame street. 498 00:23:41,240 --> 00:23:45,879 Speaker 1: And there's there's also just where it is nasty, right kids, 499 00:23:46,920 --> 00:23:49,159 Speaker 1: And there's just also this reason, Matt, that student loan 500 00:23:49,240 --> 00:23:51,040 Speaker 1: debt is out of hand in this country, right, because 501 00:23:51,280 --> 00:23:54,399 Speaker 1: what can be a good thing borrowing small amounts of 502 00:23:54,400 --> 00:23:59,399 Speaker 1: money to ensure brighter career prospects, Well, you can also 503 00:23:59,760 --> 00:24:01,800 Speaker 1: leave orge up to the hilt and borrow so much 504 00:24:01,880 --> 00:24:03,920 Speaker 1: money that you can never pay it back, and that 505 00:24:04,160 --> 00:24:07,439 Speaker 1: is a bad thing. So yeah, we were of the 506 00:24:07,480 --> 00:24:08,800 Speaker 1: mind where of the opinion that you can go to 507 00:24:08,840 --> 00:24:11,720 Speaker 1: college on any budget in most states, most kids can 508 00:24:12,040 --> 00:24:14,399 Speaker 1: go to college, especially in what thirty states around the 509 00:24:14,800 --> 00:24:19,280 Speaker 1: around our nation offer free community college for or or 510 00:24:19,400 --> 00:24:22,919 Speaker 1: mostly free for most folks. And so yeah, way too 511 00:24:23,000 --> 00:24:26,760 Speaker 1: many folks stretch themselves, or don't consider the price of 512 00:24:26,800 --> 00:24:29,360 Speaker 1: the education before they sign on the dotted line. They're 513 00:24:29,359 --> 00:24:31,080 Speaker 1: just thinking about four years down the road having that 514 00:24:31,119 --> 00:24:33,200 Speaker 1: degree and what it's going to do for them. But 515 00:24:33,200 --> 00:24:35,520 Speaker 1: but guess what, the same was true of the folks 516 00:24:35,560 --> 00:24:38,320 Speaker 1: who overleveraged in order to buy a home to flip 517 00:24:38,359 --> 00:24:40,480 Speaker 1: because everybody was doing it and it was easy money, 518 00:24:40,640 --> 00:24:42,600 Speaker 1: and a lot of those folks got burned. But really, 519 00:24:42,640 --> 00:24:45,639 Speaker 1: there's actually a lot of hope in this debt discussion. 520 00:24:45,760 --> 00:24:47,440 Speaker 1: I don't know if we've touched on that enough, Matt. 521 00:24:47,480 --> 00:24:49,600 Speaker 1: I think we've mostly been focusing on the bad news. 522 00:24:49,680 --> 00:24:52,600 Speaker 1: But we're optimistic fellas. So let's talk about why we 523 00:24:52,680 --> 00:24:55,679 Speaker 1: are hopeful still, Matt, in the midst of a nasty 524 00:24:55,840 --> 00:24:58,840 Speaker 1: debt comeback, and maybe like a few steps that people 525 00:24:58,960 --> 00:25:02,000 Speaker 1: can take and and think through before they actually go 526 00:25:02,040 --> 00:25:04,760 Speaker 1: out there and do take on more debt into their lives, 527 00:25:04,800 --> 00:25:06,359 Speaker 1: Like how how to think about it. It's trying to 528 00:25:06,400 --> 00:25:09,080 Speaker 1: make a wise choice moving forward. Well, we'll talk about 529 00:25:09,080 --> 00:25:20,080 Speaker 1: that right after this. All right, we are back from 530 00:25:20,119 --> 00:25:22,720 Speaker 1: the break. We're talking about some nasty debt out there 531 00:25:22,760 --> 00:25:25,520 Speaker 1: is and it's true, generally speaking, I feel like we've 532 00:25:25,520 --> 00:25:29,080 Speaker 1: been focusing on the more than negative aspects of debt, 533 00:25:29,119 --> 00:25:31,160 Speaker 1: how it's rearing its ugly head, how we're seeing more 534 00:25:31,160 --> 00:25:33,199 Speaker 1: of it in our lives. And you know, based on 535 00:25:33,240 --> 00:25:36,359 Speaker 1: the headlines, you might think that American consumers that we're 536 00:25:36,400 --> 00:25:39,199 Speaker 1: all doomed, right like that we're in debt up to 537 00:25:39,240 --> 00:25:42,520 Speaker 1: our eyeballs and there's no fix except for like, like 538 00:25:42,560 --> 00:25:44,960 Speaker 1: a brilliant hacker to attack the main frame of all 539 00:25:45,000 --> 00:25:47,640 Speaker 1: the banks and lenders around the world, to erase all 540 00:25:47,640 --> 00:25:49,760 Speaker 1: the data so we can just start over. What's you know, 541 00:25:49,760 --> 00:25:52,560 Speaker 1: what's that pigilante organization called math that wears masks and 542 00:25:52,600 --> 00:25:56,760 Speaker 1: stuff like that? Oh v from Vendetta. Those guys would 543 00:25:56,800 --> 00:25:58,360 Speaker 1: just step up to the plate. Maybe we can all 544 00:25:58,359 --> 00:26:00,560 Speaker 1: have all of our debts wiped away. Well. Actually, actually 545 00:26:00,600 --> 00:26:02,680 Speaker 1: this kind of reminds me of how the Jewish people 546 00:26:02,760 --> 00:26:04,639 Speaker 1: used to handle debt. The the is it the year 547 00:26:04,680 --> 00:26:07,639 Speaker 1: of Jubilee? I think it was. It's when like every 548 00:26:07,680 --> 00:26:10,480 Speaker 1: after seven sets of seven years, so seven times seven 549 00:26:10,480 --> 00:26:12,320 Speaker 1: forty nine, Like I think it was the fiftieth year 550 00:26:12,440 --> 00:26:15,560 Speaker 1: when all debts were forgiven. That's one way to handle it. Uh, 551 00:26:16,440 --> 00:26:18,840 Speaker 1: though I don't see us moving to anything like that 552 00:26:18,920 --> 00:26:21,280 Speaker 1: here in our culture. I've not seen that proposed by 553 00:26:21,320 --> 00:26:23,960 Speaker 1: anyone in the federal government. Yeah, I haven't either, um, 554 00:26:24,040 --> 00:26:25,840 Speaker 1: but I mean that being said, like, we don't think 555 00:26:26,240 --> 00:26:29,359 Speaker 1: like superhuman hacker skills are gonna be necessary here given 556 00:26:29,440 --> 00:26:33,120 Speaker 1: the current nationwide debt situation, where we're somewhat encouraged actually 557 00:26:33,440 --> 00:26:36,240 Speaker 1: by the fact that the credit scores of borrowers are 558 00:26:36,280 --> 00:26:40,000 Speaker 1: actually quite high. Uh, an overwhelming majority of folks are 559 00:26:40,280 --> 00:26:43,359 Speaker 1: current on their debt payments, and so even though folks 560 00:26:43,400 --> 00:26:45,840 Speaker 1: are taking on more debt, it's not like we're in 561 00:26:45,920 --> 00:26:48,840 Speaker 1: some sort of like society wide debt crisis, at least 562 00:26:48,840 --> 00:26:52,120 Speaker 1: not yet. We're not excited about the fact that more 563 00:26:52,119 --> 00:26:55,639 Speaker 1: folks are taking on additional debt. It's still alarming to see, 564 00:26:56,240 --> 00:26:58,240 Speaker 1: you know, what was a nice little pandemic trend of 565 00:26:58,359 --> 00:27:02,320 Speaker 1: rising savings account balances and lower debt levels. We it's 566 00:27:02,320 --> 00:27:04,240 Speaker 1: allowed me to see that these are trending back in 567 00:27:04,280 --> 00:27:07,080 Speaker 1: the wrong direction, but simultaneously we don't see it being 568 00:27:07,119 --> 00:27:08,840 Speaker 1: the end of the world. Yeah, I agree, man, I 569 00:27:08,880 --> 00:27:11,040 Speaker 1: think we're not in a crisis, but you alluded to 570 00:27:11,040 --> 00:27:13,320 Speaker 1: the fact that we might be at some point, and 571 00:27:13,720 --> 00:27:17,000 Speaker 1: you will see, I'm here some sort of economic contraction 572 00:27:17,080 --> 00:27:20,560 Speaker 1: could actually really hurt people who are continuing to take 573 00:27:20,600 --> 00:27:23,480 Speaker 1: on debt assuming that things will stay the same. That's 574 00:27:23,520 --> 00:27:25,080 Speaker 1: never a good thing. You've got to have some margin. 575 00:27:25,480 --> 00:27:27,720 Speaker 1: And the fact that credit scores are high and that 576 00:27:27,800 --> 00:27:29,960 Speaker 1: folks are current on their payments, I think it is 577 00:27:30,119 --> 00:27:32,440 Speaker 1: a great sign, right, It's a fantastic sign. But it's 578 00:27:32,480 --> 00:27:36,520 Speaker 1: also important to mention that it's not the definitive measure 579 00:27:36,680 --> 00:27:39,160 Speaker 1: to how well you might be doing financially. That is true, 580 00:27:39,240 --> 00:27:41,920 Speaker 1: just bare bones being able to meet your obligations is 581 00:27:42,080 --> 00:27:45,200 Speaker 1: not a sign that you're thriving, because it's totally possible 582 00:27:45,400 --> 00:27:48,160 Speaker 1: to make only the minimum payments on your credit card 583 00:27:48,560 --> 00:27:51,560 Speaker 1: where you're paying interests every single month, and maybe on 584 00:27:51,600 --> 00:27:53,280 Speaker 1: your credit card statement it says it's going to take 585 00:27:53,280 --> 00:27:54,840 Speaker 1: you thirty or four years to pay it off if 586 00:27:54,840 --> 00:27:56,719 Speaker 1: you keep doing it this way, which means you're going 587 00:27:56,720 --> 00:27:59,399 Speaker 1: to pay a boatload in interest over the years. And 588 00:27:59,440 --> 00:28:02,280 Speaker 1: you might still have a nice, shiny, decent credit score 589 00:28:02,440 --> 00:28:06,080 Speaker 1: that you're proud to tell your friends about, but in reality, 590 00:28:06,280 --> 00:28:09,160 Speaker 1: your personal financial situation is not looking so good because 591 00:28:09,160 --> 00:28:12,280 Speaker 1: you haven't been able to make any DBT against that debt. 592 00:28:12,320 --> 00:28:15,440 Speaker 1: And so yeah, when it's important to determine your own 593 00:28:15,560 --> 00:28:17,600 Speaker 1: rules when it comes to debt, and and not just 594 00:28:17,640 --> 00:28:19,960 Speaker 1: to play along with the rules set by FICO, Matt 595 00:28:20,000 --> 00:28:21,720 Speaker 1: and I. We think it's important to have a good 596 00:28:21,720 --> 00:28:24,160 Speaker 1: credit score and important to play by those rules too, 597 00:28:24,240 --> 00:28:26,760 Speaker 1: But some of those rules actually encourage you to have 598 00:28:26,840 --> 00:28:29,280 Speaker 1: more debt in your life, right, and to not finish 599 00:28:29,320 --> 00:28:31,320 Speaker 1: paying it off and that and it's not worth it 600 00:28:31,320 --> 00:28:34,320 Speaker 1: to build up your credit score at that expense. Yeah, 601 00:28:34,359 --> 00:28:35,919 Speaker 1: you can be following the rules of the game that 602 00:28:35,960 --> 00:28:39,280 Speaker 1: you ultimately don't want to be playing, and we definitely 603 00:28:39,320 --> 00:28:42,280 Speaker 1: don't want to see you joining the throngs of folks 604 00:28:42,280 --> 00:28:44,600 Speaker 1: who are seeing debt make a comeback in their lives. 605 00:28:44,840 --> 00:28:47,000 Speaker 1: You still need to be careful, and even more so 606 00:28:47,080 --> 00:28:50,880 Speaker 1: as rates continued to pick up, raising the cost of borrowing. Uh. 607 00:28:50,920 --> 00:28:52,600 Speaker 1: And so we think that the most important question that 608 00:28:52,640 --> 00:28:55,560 Speaker 1: you can ask yourself is whether or not you're going 609 00:28:55,600 --> 00:28:58,360 Speaker 1: into debt for consumption purposes. We we kind of just 610 00:28:58,360 --> 00:29:00,400 Speaker 1: touched on this before the break. But if the answer 611 00:29:00,440 --> 00:29:03,320 Speaker 1: is yes, then debt is a no go in your life. 612 00:29:03,320 --> 00:29:04,920 Speaker 1: We want you to limit this kind of debt as 613 00:29:04,960 --> 00:29:09,000 Speaker 1: much as humanly possible, because debt for these items often 614 00:29:09,040 --> 00:29:11,360 Speaker 1: comes with higher rates because you're often using your credit 615 00:29:11,400 --> 00:29:13,640 Speaker 1: cards or or a personal loan in order to be 616 00:29:13,680 --> 00:29:16,400 Speaker 1: able to get that item. Funding a vacation, you know, 617 00:29:16,520 --> 00:29:18,720 Speaker 1: or even just a dinner out with money that you 618 00:29:18,760 --> 00:29:22,480 Speaker 1: don't have is ill advised that that twenty dollar meal 619 00:29:22,840 --> 00:29:25,120 Speaker 1: or that twelfhonded dollar vacation is going to cost a 620 00:29:25,200 --> 00:29:27,719 Speaker 1: whole lot more when you factor in the interest that 621 00:29:27,760 --> 00:29:29,880 Speaker 1: you're paying. Yeah, I think, yeah, you look at that 622 00:29:29,920 --> 00:29:33,240 Speaker 1: bottom line price before interest, it's gonna look completely different 623 00:29:33,280 --> 00:29:35,040 Speaker 1: after the interest you've paid if you're putting it on 624 00:29:35,040 --> 00:29:37,239 Speaker 1: credit or if you're taking on a personal loan in 625 00:29:37,480 --> 00:29:40,680 Speaker 1: order to be able to partake in that experience, and 626 00:29:40,720 --> 00:29:43,160 Speaker 1: it's just not healthy, it's just not wise. It's going 627 00:29:43,240 --> 00:29:45,480 Speaker 1: to lead you into a place where you're over your 628 00:29:45,480 --> 00:29:48,640 Speaker 1: head in debt because you're front loading too many things. 629 00:29:48,800 --> 00:29:53,160 Speaker 1: Frontloading experiences and consumer purchases is a bad idea. Frontloading consumption, 630 00:29:53,280 --> 00:29:56,160 Speaker 1: frontloading investments or things that are gonna advance your career opportunities. 631 00:29:56,360 --> 00:29:58,600 Speaker 1: That's a different thing. That's a different way to look 632 00:29:58,600 --> 00:30:01,120 Speaker 1: at debt. You're essentially paying and I want it now, 633 00:30:01,480 --> 00:30:04,160 Speaker 1: I want it now premium, and that's no way to 634 00:30:04,200 --> 00:30:07,120 Speaker 1: live a successful and happy life. And this isn't to 635 00:30:07,160 --> 00:30:09,480 Speaker 1: say that there shouldn't be areas in your life or 636 00:30:09,640 --> 00:30:11,720 Speaker 1: items that you're willing to pay a little extra for. 637 00:30:12,120 --> 00:30:15,520 Speaker 1: We're all about, you know, narrowing in on affordable splurges. 638 00:30:15,680 --> 00:30:18,280 Speaker 1: You know, your your craftier equivalent, Matt Night. We spend 639 00:30:18,520 --> 00:30:21,000 Speaker 1: more money than most people think is healthy on on 640 00:30:21,120 --> 00:30:23,959 Speaker 1: delicious beers, and you should have something like that in 641 00:30:24,000 --> 00:30:26,560 Speaker 1: your life too. You know, we're not advocating for all 642 00:30:26,560 --> 00:30:29,479 Speaker 1: out deprivation, which I think some people in the personal 643 00:30:29,480 --> 00:30:32,440 Speaker 1: finance space tend to do. But when you're paying this 644 00:30:32,520 --> 00:30:34,960 Speaker 1: like immediacy premium is what we're gonna call it, you're 645 00:30:34,960 --> 00:30:39,360 Speaker 1: not actually splurging on something because it's making you happy. Instead, 646 00:30:39,400 --> 00:30:42,640 Speaker 1: you're paying extra because waiting to pay with cash it 647 00:30:42,680 --> 00:30:46,440 Speaker 1: makes you unhappy. Maybe your expectations are too high, You're 648 00:30:46,480 --> 00:30:49,160 Speaker 1: wanting things that you just aren't ready for yet, and 649 00:30:49,160 --> 00:30:51,680 Speaker 1: and it takes time to save and wait for that 650 00:30:51,760 --> 00:30:54,320 Speaker 1: item or that experience. But I will say I think 651 00:30:54,360 --> 00:30:56,280 Speaker 1: it makes it even more sweeter when you know you 652 00:30:56,320 --> 00:30:58,720 Speaker 1: actually have the money to pay for that item, to 653 00:30:58,720 --> 00:31:00,880 Speaker 1: pay for that trip. Then if you're putting on a 654 00:31:00,920 --> 00:31:03,360 Speaker 1: credit card without any means to pay that ballot. I dude, 655 00:31:03,360 --> 00:31:05,920 Speaker 1: I totally agree. I think there's there's absolutely a higher 656 00:31:06,000 --> 00:31:09,040 Speaker 1: level of enjoyment when you know that you've were able 657 00:31:09,080 --> 00:31:11,000 Speaker 1: to pay for that thing outright, or that you're not 658 00:31:11,040 --> 00:31:13,200 Speaker 1: making payments on it. And I agree, like I think 659 00:31:13,240 --> 00:31:15,280 Speaker 1: it's okay to reward yourself with some of the things 660 00:31:15,280 --> 00:31:17,720 Speaker 1: that you love while you are paying down your debt. 661 00:31:18,000 --> 00:31:21,040 Speaker 1: But we also want folks to avoid the subtle, the 662 00:31:21,240 --> 00:31:25,080 Speaker 1: more insidious ability for lifestyle inflation. It's hard not to 663 00:31:25,160 --> 00:31:27,080 Speaker 1: move the goalposts as we get older and as we 664 00:31:27,120 --> 00:31:29,560 Speaker 1: see friends and families spending in ways that we would 665 00:31:29,640 --> 00:31:31,800 Speaker 1: also love to spend our money. But the thing is 666 00:31:32,080 --> 00:31:34,480 Speaker 1: they might also be spending money that they don't have. 667 00:31:34,720 --> 00:31:37,000 Speaker 1: It is impossible to tell whether or not they're paying 668 00:31:37,040 --> 00:31:40,680 Speaker 1: that immediacy premium. Generally speaking, we believe that having less 669 00:31:40,680 --> 00:31:43,560 Speaker 1: debt and having financial peace of mind is worth a 670 00:31:43,680 --> 00:31:46,920 Speaker 1: whole lot more than what you're planning on buying. And 671 00:31:46,960 --> 00:31:49,240 Speaker 1: the funny thing is, when it comes to asking that question, 672 00:31:49,320 --> 00:31:51,760 Speaker 1: am I taking on this debt in order to consume 673 00:31:51,800 --> 00:31:54,440 Speaker 1: it right now? I think what's key there isn't the 674 00:31:54,480 --> 00:31:56,640 Speaker 1: fact that we're consuming it, because what's interesting about money 675 00:31:56,680 --> 00:31:59,800 Speaker 1: that we invest at some point, that is money that 676 00:32:00,200 --> 00:32:03,480 Speaker 1: we're planning to consume, and so in both cases, we 677 00:32:03,520 --> 00:32:05,000 Speaker 1: are going to be consuming that money, or at least 678 00:32:05,000 --> 00:32:06,560 Speaker 1: that's the goal, right, Like why do we invest money, 679 00:32:06,600 --> 00:32:08,280 Speaker 1: It's because we save that money up so that it 680 00:32:08,320 --> 00:32:12,000 Speaker 1: can grow, it can compound, and eventually that is money 681 00:32:12,000 --> 00:32:14,280 Speaker 1: that you're going to consume again. It can either fund 682 00:32:14,640 --> 00:32:18,320 Speaker 1: future years of not working or can fund future purchases 683 00:32:18,760 --> 00:32:21,520 Speaker 1: that either way. Either way, though, you're consuming it. And 684 00:32:21,520 --> 00:32:24,720 Speaker 1: so it's almost less about the consumption part of the question, 685 00:32:24,760 --> 00:32:26,800 Speaker 1: and it's more about the time frame. Uh, and so 686 00:32:26,920 --> 00:32:29,800 Speaker 1: on one hand, is it more about the immediacy of 687 00:32:29,840 --> 00:32:32,800 Speaker 1: like having something here right now in the present moment, 688 00:32:33,080 --> 00:32:35,080 Speaker 1: or are we talking about the potential for that to 689 00:32:35,160 --> 00:32:37,640 Speaker 1: grow and then you can consume it way off into 690 00:32:37,680 --> 00:32:40,000 Speaker 1: the future. What we're trying to avoid here is taking 691 00:32:40,000 --> 00:32:42,920 Speaker 1: on additional debt for the here and now, for the 692 00:32:42,920 --> 00:32:46,880 Speaker 1: present purchases as opposed to planning and saving for the future. 693 00:32:46,920 --> 00:32:49,480 Speaker 1: Those are the type of consumption purchases that we want 694 00:32:49,520 --> 00:32:51,640 Speaker 1: you to be working towards. Either way, you're basically time 695 00:32:51,640 --> 00:32:55,880 Speaker 1: traveling and you're either stealing from your future self, or 696 00:32:55,960 --> 00:32:58,320 Speaker 1: you're for now for now, or you're helping helping to 697 00:32:58,320 --> 00:33:01,120 Speaker 1: fund your future self by driving yourself at least a 698 00:33:01,160 --> 00:33:03,600 Speaker 1: little bit. And so we think that that is the 699 00:33:03,640 --> 00:33:05,400 Speaker 1: best way to go because it creates more margin, It 700 00:33:05,400 --> 00:33:09,240 Speaker 1: creates more ability for future freedom and choice, whereas you're 701 00:33:09,280 --> 00:33:12,720 Speaker 1: restricting your future freedom and choice if you're taking on 702 00:33:12,840 --> 00:33:16,480 Speaker 1: copious debt levels now, and if you're smart, if you're 703 00:33:16,520 --> 00:33:18,600 Speaker 1: wise with the way you take on debt, it doesn't 704 00:33:18,600 --> 00:33:20,440 Speaker 1: have to be that way if you're keeping that d 705 00:33:20,520 --> 00:33:22,480 Speaker 1: T I in check and you're making sure that you're 706 00:33:22,520 --> 00:33:24,920 Speaker 1: not taking out the most egregious forms of debt that 707 00:33:25,000 --> 00:33:27,240 Speaker 1: come with the highest interest rates in order to fund 708 00:33:27,280 --> 00:33:29,880 Speaker 1: things experiences that you want to that you want to 709 00:33:29,920 --> 00:33:32,440 Speaker 1: enjoy now as opposed to later. That is actually something 710 00:33:32,480 --> 00:33:34,080 Speaker 1: that can take years to get over if you haven't 711 00:33:34,440 --> 00:33:36,560 Speaker 1: learned from from some of our how to Money interviews, Matt, 712 00:33:36,560 --> 00:33:38,000 Speaker 1: We've talked to a lot of people who have been 713 00:33:38,040 --> 00:33:39,800 Speaker 1: in copious amounts of debt, and in so many of 714 00:33:39,800 --> 00:33:42,760 Speaker 1: those conversations, it takes years to overcome some of the 715 00:33:42,800 --> 00:33:45,200 Speaker 1: damage that was done from living in the here now 716 00:33:45,480 --> 00:33:48,120 Speaker 1: and taking on debt in order to finance that well, 717 00:33:48,320 --> 00:33:50,760 Speaker 1: and and let's talk Matt specifically too for a second. 718 00:33:50,760 --> 00:33:53,480 Speaker 1: To folks who do find themselves they're listening and they're like, great, 719 00:33:53,880 --> 00:33:56,760 Speaker 1: I've actually had multiple years where I have had a 720 00:33:56,800 --> 00:33:58,640 Speaker 1: bad approach to that. I hear what you're saying, but 721 00:33:58,680 --> 00:34:00,560 Speaker 1: it turns out I'm one of those folks you're talking 722 00:34:00,560 --> 00:34:04,400 Speaker 1: about who has been eating into my future earnings by 723 00:34:04,440 --> 00:34:06,880 Speaker 1: taking on too much debt and bad kinds of debt. Well, 724 00:34:07,760 --> 00:34:10,240 Speaker 1: it's really important if you're in that situation to formulate 725 00:34:10,280 --> 00:34:13,239 Speaker 1: a plan to pay it off, and so we would 726 00:34:13,280 --> 00:34:15,640 Speaker 1: suggest there's a tool online that that we really like. 727 00:34:15,760 --> 00:34:18,600 Speaker 1: It's called n debt dot i T and it's it's 728 00:34:18,640 --> 00:34:21,800 Speaker 1: one of our favorite sites that makes it really easy 729 00:34:21,960 --> 00:34:24,359 Speaker 1: to create a debt payoff plan and it's completely free, 730 00:34:24,440 --> 00:34:26,360 Speaker 1: by the way. But it's also important to mention that 731 00:34:26,400 --> 00:34:28,600 Speaker 1: if you're overwhelmed to the point where you you can't 732 00:34:28,600 --> 00:34:30,600 Speaker 1: see any way that you'll actually be able to pay 733 00:34:30,600 --> 00:34:33,560 Speaker 1: off the debt obligations you have here you're underwater, then 734 00:34:33,600 --> 00:34:35,919 Speaker 1: it's important to go see someone who can help. Money 735 00:34:35,960 --> 00:34:39,440 Speaker 1: Management International and nfcc are are two of the best 736 00:34:39,440 --> 00:34:41,719 Speaker 1: places to turn if you find yourself in a debt 737 00:34:41,760 --> 00:34:45,560 Speaker 1: situation that dire, and these are nonprofits that can provide 738 00:34:45,560 --> 00:34:48,520 Speaker 1: a ton of help for either just a few dollars 739 00:34:48,640 --> 00:34:51,680 Speaker 1: or sometimes it's even free of charge, and through something 740 00:34:51,680 --> 00:34:53,920 Speaker 1: like a debt management plan, they can help you get 741 00:34:53,920 --> 00:34:56,200 Speaker 1: out of debt way more quickly than you'd be able 742 00:34:56,239 --> 00:34:58,640 Speaker 1: to going in alone. Sometimes you just need the right 743 00:34:58,680 --> 00:35:02,760 Speaker 1: person or organization in your corner, and those nonprofit companies 744 00:35:02,800 --> 00:35:04,560 Speaker 1: are are the place to turn if you're one of 745 00:35:04,560 --> 00:35:07,120 Speaker 1: those folks who is just overwhelmed by the amount of 746 00:35:07,120 --> 00:35:09,640 Speaker 1: that they have. Yeah, that's right. And generally speaking, throughout 747 00:35:09,680 --> 00:35:11,320 Speaker 1: this episode, I feel like we're trying to thread a 748 00:35:11,400 --> 00:35:14,680 Speaker 1: needle here because we believe that too much debt, especially 749 00:35:14,840 --> 00:35:17,560 Speaker 1: the wrong kinds of debt, can put folks in perpetually 750 00:35:17,560 --> 00:35:21,719 Speaker 1: difficult financial circumstances. On the other hand, some folks choose 751 00:35:21,760 --> 00:35:23,960 Speaker 1: to eliminate all of their debts as quickly as possible 752 00:35:24,000 --> 00:35:27,279 Speaker 1: because there it seems like that they're allergic to any 753 00:35:27,400 --> 00:35:30,440 Speaker 1: kind of loan that comes with interest. I definitely understand 754 00:35:30,440 --> 00:35:34,960 Speaker 1: that aversion that that that desire to avoid debt completely. 755 00:35:35,360 --> 00:35:38,319 Speaker 1: And while we don't like seeing these headline rates of 756 00:35:38,360 --> 00:35:41,960 Speaker 1: credit card debt and personal loans soaring, the concept of 757 00:35:42,239 --> 00:35:44,360 Speaker 1: too much debt. It's it's actually going to be a 758 00:35:44,400 --> 00:35:47,120 Speaker 1: situational one. It depends on so many things, like your 759 00:35:47,160 --> 00:35:49,680 Speaker 1: income depends on how much other debt you have, It 760 00:35:49,719 --> 00:35:52,760 Speaker 1: depends on how comfortable you are with that. Just generally speaking, 761 00:35:53,520 --> 00:35:57,400 Speaker 1: life is going is inherently risky, and debt it adds 762 00:35:57,600 --> 00:36:00,399 Speaker 1: this additional element of risk to your person of life, 763 00:36:00,400 --> 00:36:02,879 Speaker 1: and so you need to be careful with the debts 764 00:36:02,920 --> 00:36:05,600 Speaker 1: that you will allow into your life. But the effective 765 00:36:05,719 --> 00:36:08,480 Speaker 1: use of debt, using small amounts wisely on the right things, 766 00:36:08,840 --> 00:36:11,400 Speaker 1: we believe it's it's no different than just using a 767 00:36:11,480 --> 00:36:14,360 Speaker 1: tool for its intended purpose. Makes me think of like 768 00:36:14,360 --> 00:36:16,560 Speaker 1: an Alan wrench. I can use that tool properly in 769 00:36:16,640 --> 00:36:19,120 Speaker 1: order to tighten down, you know, something on a on 770 00:36:19,200 --> 00:36:21,399 Speaker 1: a bike keeps me from crashing. That is a good 771 00:36:21,520 --> 00:36:23,520 Speaker 1: use of that tool. But I can use that same 772 00:36:23,520 --> 00:36:25,600 Speaker 1: tool and I can take it inside. And if I 773 00:36:25,640 --> 00:36:28,439 Speaker 1: try to cut up some carrots with an Alan wrench 774 00:36:28,680 --> 00:36:29,920 Speaker 1: or a hex wrench or whatever you call it, I 775 00:36:29,920 --> 00:36:31,920 Speaker 1: would like to see you try. Uh, that's not gonna work, 776 00:36:31,920 --> 00:36:33,840 Speaker 1: and it's gonna leave me frustrated. We should do that 777 00:36:33,840 --> 00:36:36,359 Speaker 1: how to Money video on our Instagram. It's gonna leave 778 00:36:36,400 --> 00:36:39,359 Speaker 1: me with like some greasy carrots and kids who are 779 00:36:39,400 --> 00:36:41,520 Speaker 1: not happy that their snacks not ready. Uh. And so 780 00:36:41,719 --> 00:36:43,759 Speaker 1: just think about debt in that way. We want to 781 00:36:43,760 --> 00:36:47,080 Speaker 1: take a measured, sane approach when it comes to it. 782 00:36:47,120 --> 00:36:48,799 Speaker 1: We we don't want to go off the deep end 783 00:36:48,840 --> 00:36:50,440 Speaker 1: on one side of the other. We want to take 784 00:36:50,600 --> 00:36:53,960 Speaker 1: a nuanced, thoughtful approach towards debt. Yeah. Last thing it 785 00:36:53,960 --> 00:36:56,000 Speaker 1: makes me think about debt, Matt is is maybe that 786 00:36:56,080 --> 00:36:57,919 Speaker 1: d T I, that debt to income ratio is something 787 00:36:57,920 --> 00:37:00,080 Speaker 1: that we should be kind of tracking. Kind of we 788 00:37:00,120 --> 00:37:02,919 Speaker 1: do our net worth right because that net worth helps 789 00:37:03,000 --> 00:37:05,520 Speaker 1: us see the progress that we're making in in In 790 00:37:05,600 --> 00:37:08,200 Speaker 1: one particular year, you might see a slight setback in 791 00:37:08,400 --> 00:37:11,120 Speaker 1: your net worth because the stock market is having a 792 00:37:11,160 --> 00:37:13,600 Speaker 1: rough year or something like that. But following knowing your 793 00:37:13,640 --> 00:37:15,160 Speaker 1: d T I and making sure you keep it in 794 00:37:15,200 --> 00:37:18,440 Speaker 1: a comfortable place is is probably a really smart thing 795 00:37:18,480 --> 00:37:20,719 Speaker 1: to do because that's going to be the most informative 796 00:37:20,800 --> 00:37:23,439 Speaker 1: number to letting you know whether you've waited too deep 797 00:37:23,440 --> 00:37:25,279 Speaker 1: into the debt waters or not. Yeah. And there are 798 00:37:25,280 --> 00:37:26,879 Speaker 1: a lot of different resources out there on the web, 799 00:37:26,920 --> 00:37:28,920 Speaker 1: and we can link to a very useful debt to 800 00:37:28,920 --> 00:37:32,160 Speaker 1: income ratio calculator where you can figure out your own ratio. 801 00:37:32,440 --> 00:37:35,600 Speaker 1: And I'll mention as well, we mentioned earlier how that's 802 00:37:35,600 --> 00:37:38,000 Speaker 1: oftentimes the sort of the there's a line in the 803 00:37:38,120 --> 00:37:41,280 Speaker 1: sand that mortgage lenders aren't out willing to let you cross. 804 00:37:41,640 --> 00:37:43,239 Speaker 1: But the fact is that doesn't mean that you should 805 00:37:43,320 --> 00:37:46,480 Speaker 1: go up to that line. I think it could be 806 00:37:46,520 --> 00:37:49,880 Speaker 1: a very noble goal of yours to personally maintain a 807 00:37:49,960 --> 00:37:53,000 Speaker 1: much lower debt to income ratio. Just because lenders are 808 00:37:53,000 --> 00:37:55,839 Speaker 1: willing to take that chance on you doesn't necessarily mean 809 00:37:55,840 --> 00:37:58,560 Speaker 1: that that is the type of position that you want 810 00:37:58,560 --> 00:38:00,719 Speaker 1: to put yourself in financially, And so keep that in 811 00:38:00,760 --> 00:38:02,440 Speaker 1: mind as well. I don't know, maybe a thirty five 812 00:38:02,480 --> 00:38:06,319 Speaker 1: percent debt income ratio or even maybe even twenty those 813 00:38:06,320 --> 00:38:09,480 Speaker 1: could potentially be higher standards that you would hold yourself 814 00:38:09,520 --> 00:38:12,480 Speaker 1: to safer levels of debt by by eliminating more of it, 815 00:38:12,640 --> 00:38:15,359 Speaker 1: especially the most nefarious kinds. Totally. All right, now, let's 816 00:38:15,360 --> 00:38:17,160 Speaker 1: get back to the beer that we had on this episode. 817 00:38:17,200 --> 00:38:20,680 Speaker 1: This one is called Modern Dance and it is by 818 00:38:20,760 --> 00:38:23,879 Speaker 1: Gesture King, and this is a cherry sour and maybe 819 00:38:24,040 --> 00:38:27,480 Speaker 1: Danish cherry juice and barrel aged farmhouse sales. So yeah, 820 00:38:27,520 --> 00:38:29,759 Speaker 1: what wer thoughts on this beer? I almost feel that 821 00:38:29,800 --> 00:38:31,560 Speaker 1: this beer could replace any other beer I've ever had 822 00:38:31,560 --> 00:38:34,600 Speaker 1: in my entire life, and I would almost not miss 823 00:38:34,640 --> 00:38:36,239 Speaker 1: those other beers. Okay, so this is one of your 824 00:38:36,280 --> 00:38:38,480 Speaker 1: favorite beers of all times? What we're saying? So good man? 825 00:38:38,520 --> 00:38:41,719 Speaker 1: It was perfectly balanced. It was perfectly balanced between like 826 00:38:41,719 --> 00:38:44,880 Speaker 1: the sweetness and the tartness, perfectly balanced between the the 827 00:38:44,880 --> 00:38:47,920 Speaker 1: acidity that you got with this being a sour versus 828 00:38:48,000 --> 00:38:51,440 Speaker 1: kind of the smooth barrel aged nature that you got, 829 00:38:51,560 --> 00:38:53,839 Speaker 1: you know, with this beer having been aged, it's the 830 00:38:53,920 --> 00:38:56,919 Speaker 1: perfect balance between it having the fruity cherry notes going 831 00:38:56,920 --> 00:38:59,359 Speaker 1: on with a little bit of funkiness that it picked 832 00:38:59,440 --> 00:39:02,240 Speaker 1: up maybe from that barrel. This was a phenomenal fruited 833 00:39:02,280 --> 00:39:05,359 Speaker 1: sour ale Jester King. They do a lot of things right, 834 00:39:05,360 --> 00:39:07,480 Speaker 1: but anytime we're able to get some of their fruited 835 00:39:07,480 --> 00:39:09,879 Speaker 1: sours like this that have been barrel aged, they're pretty 836 00:39:09,960 --> 00:39:12,160 Speaker 1: much top notched. Honestly, this is kind of up there 837 00:39:12,200 --> 00:39:15,080 Speaker 1: with what was we had that Monday Night raspberry uh, 838 00:39:15,200 --> 00:39:17,640 Speaker 1: barrel aged faithful instruction. I think I would love for 839 00:39:17,680 --> 00:39:20,719 Speaker 1: Monday nights to make that take that beer but then 840 00:39:20,760 --> 00:39:22,960 Speaker 1: aged with cherries. I bet it would be something very 841 00:39:23,000 --> 00:39:26,360 Speaker 1: similar to this, but just generally speaking, a fantastic style. 842 00:39:26,600 --> 00:39:29,480 Speaker 1: They did an incredible job. But what about you, I'm 843 00:39:29,480 --> 00:39:32,640 Speaker 1: assuming that you hated this beer, not at all. I 844 00:39:32,680 --> 00:39:35,080 Speaker 1: thoroughly enjoyed it, and I love a good cherry sour. 845 00:39:35,600 --> 00:39:37,160 Speaker 1: The thing is, though, I think it was almost too 846 00:39:37,200 --> 00:39:40,319 Speaker 1: much cherry constanrat because it was cherry juice and it 847 00:39:40,360 --> 00:39:42,840 Speaker 1: wasn't aged on, and so it provided maybe a little 848 00:39:43,000 --> 00:39:45,040 Speaker 1: a little too much cherry concentrate vibe going on. And 849 00:39:45,120 --> 00:39:47,319 Speaker 1: I loved it. I still really enjoyed it. But the 850 00:39:47,320 --> 00:39:49,840 Speaker 1: Atro Rubicite, which is just aged on raspberries, not the 851 00:39:49,920 --> 00:39:53,000 Speaker 1: raspberry juice itself, I think it's a slightly better beer. 852 00:39:53,360 --> 00:39:55,560 Speaker 1: But this is still good, man. This is still really 853 00:39:55,560 --> 00:39:57,759 Speaker 1: really good up there, and that the excellent range for sure. 854 00:39:57,840 --> 00:40:00,320 Speaker 1: But I'm really glad we got to enjoy this one together, 855 00:40:00,520 --> 00:40:03,319 Speaker 1: and hopefully we get more fruited sours from Gesture King 856 00:40:03,360 --> 00:40:05,040 Speaker 1: here in the A T L. Soon. That's right, But 857 00:40:05,440 --> 00:40:06,839 Speaker 1: the other next one we'll pick up. I'll just drink 858 00:40:06,880 --> 00:40:08,839 Speaker 1: the whole things. Since she didn't like you, no, I 859 00:40:08,880 --> 00:40:11,200 Speaker 1: loved it. I loved it. But all right, that's gonna 860 00:40:11,200 --> 00:40:13,520 Speaker 1: do it for this episode. For folks who want show 861 00:40:13,520 --> 00:40:16,040 Speaker 1: notes for this episode, links to that calculator match just 862 00:40:16,160 --> 00:40:19,040 Speaker 1: mentioned and some of the other resources we discussed in 863 00:40:19,080 --> 00:40:21,359 Speaker 1: today's episode, those will be in our show notes up 864 00:40:21,360 --> 00:40:23,719 Speaker 1: on our site at how to money dot com. That's right, 865 00:40:23,760 --> 00:40:26,200 Speaker 1: So that's gonna be it until next time. Best Friends Out, 866 00:40:26,280 --> 00:40:27,439 Speaker 1: Best Friends Out.