1 00:00:00,080 --> 00:00:02,760 Speaker 1: Welcome to How the Money. I'm Joel and I am Matt, 2 00:00:02,880 --> 00:00:26,600 Speaker 1: and today we're discussing strategic debt use to catapult your finances. Yeah. 3 00:00:26,760 --> 00:00:28,680 Speaker 1: Not only are we're gonna teach you how to catapult 4 00:00:28,680 --> 00:00:30,680 Speaker 1: your money, We're gonna teach you how to what it 5 00:00:30,720 --> 00:00:33,240 Speaker 1: is the tribute shay, is that the like the super 6 00:00:33,920 --> 00:00:35,880 Speaker 1: you're talking about. You don't know what I'm talking about. 7 00:00:36,040 --> 00:00:38,400 Speaker 1: That's that's just a fancy French word for catapult. No, 8 00:00:38,560 --> 00:00:41,400 Speaker 1: it's literally a device. It's like a catapult, but it's 9 00:00:41,440 --> 00:00:44,280 Speaker 1: fancier in the sense that it is more, it's stronger, 10 00:00:44,479 --> 00:00:47,760 Speaker 1: like you can catapult heavier objects with I think it's tribute. 11 00:00:47,760 --> 00:00:49,680 Speaker 1: Sche that's how you say it, Okay, but it is. 12 00:00:50,000 --> 00:00:53,279 Speaker 1: All tributes are a type of catapult, but not all 13 00:00:53,360 --> 00:00:57,240 Speaker 1: catapults are advanced enough to be called tribute. And actually, 14 00:00:57,360 --> 00:00:59,840 Speaker 1: as we are going, as I'm using this metaphor, we 15 00:01:00,040 --> 00:01:04,160 Speaker 1: don't want you to tribute s your your money. You 16 00:01:04,240 --> 00:01:06,200 Speaker 1: don't want to overdo it. And so that's what we're 17 00:01:06,200 --> 00:01:08,120 Speaker 1: gonna talk about today. We are going to discuss the 18 00:01:08,120 --> 00:01:10,320 Speaker 1: different ways that you can use debt in a strategic 19 00:01:10,360 --> 00:01:14,240 Speaker 1: way to catapult your finances into a better place when 20 00:01:14,240 --> 00:01:15,440 Speaker 1: you think about it. If you have you ever seen 21 00:01:15,440 --> 00:01:18,440 Speaker 1: those videos of people catapult things like giant pumpkins and 22 00:01:18,480 --> 00:01:21,040 Speaker 1: stuff like that, think about how difficult are those are, 23 00:01:21,040 --> 00:01:22,479 Speaker 1: Tribute says, I've seen those videos. I know what you're 24 00:01:22,480 --> 00:01:24,720 Speaker 1: talking about. Together, they're like launching them across the field. 25 00:01:24,720 --> 00:01:26,360 Speaker 1: Think about trying to carry one of those pumpkins or 26 00:01:27,560 --> 00:01:30,639 Speaker 1: your arm exactly, and it's gonna be a long, hard 27 00:01:30,840 --> 00:01:33,400 Speaker 1: slog exactly. And what we're saying is that there are 28 00:01:33,440 --> 00:01:37,080 Speaker 1: ways that you can use certain devices, certain tools to 29 00:01:37,160 --> 00:01:39,720 Speaker 1: get you there in a more efficient manner, you know, 30 00:01:39,760 --> 00:01:42,160 Speaker 1: but it also comes at a cost. We're gonna talk 31 00:01:42,200 --> 00:01:44,360 Speaker 1: about some of those costs today. If you're like, wait 32 00:01:44,360 --> 00:01:45,760 Speaker 1: a second, Matt and Joe, they've gone off the deep end. 33 00:01:45,760 --> 00:01:48,040 Speaker 1: They're gonna talk about how great debt is, and there 34 00:01:48,120 --> 00:01:50,120 Speaker 1: there is an element of that to this episode. But 35 00:01:50,640 --> 00:01:53,680 Speaker 1: as always, we're gonna try to be balanced at because 36 00:01:53,880 --> 00:01:56,440 Speaker 1: that's what we do. We're gonna take the extreme middle position, 37 00:01:56,680 --> 00:01:59,480 Speaker 1: which oftentimes it is the extreme position I know, which 38 00:01:59,560 --> 00:02:02,520 Speaker 1: just don't come down on the fence where they're willing 39 00:02:02,520 --> 00:02:04,800 Speaker 1: to engage in conversation and talk about the nuances of 40 00:02:04,840 --> 00:02:06,320 Speaker 1: the topic. And it's just not that's what we love 41 00:02:06,360 --> 00:02:08,720 Speaker 1: to do. It's not as sexy in our current modern 42 00:02:08,760 --> 00:02:11,560 Speaker 1: era where people want the hot takes, the shock chock, 43 00:02:11,760 --> 00:02:14,080 Speaker 1: and that's that's not what we do. That's not we're about. 44 00:02:14,120 --> 00:02:15,960 Speaker 1: So So if you want to come here for kind 45 00:02:16,000 --> 00:02:18,560 Speaker 1: of the well balanced way to think about tet, that's 46 00:02:18,600 --> 00:02:20,200 Speaker 1: what this episode is better in the right place. But 47 00:02:20,240 --> 00:02:21,680 Speaker 1: before we get to that, Matt I wanted to mention 48 00:02:21,760 --> 00:02:25,920 Speaker 1: that Emily, my wife, she just had fraudulent charge on 49 00:02:25,960 --> 00:02:31,760 Speaker 1: her credit card and yeah, for an airplane ticket on Delta. 50 00:02:31,919 --> 00:02:36,200 Speaker 1: Somebody was trying to I like it. Yeah, it's not fun. 51 00:02:36,520 --> 00:02:38,240 Speaker 1: Is that one of the things you gotta clean up? 52 00:02:38,240 --> 00:02:40,440 Speaker 1: You gotta report to the credit card company right away. Yeah. 53 00:02:40,600 --> 00:02:42,960 Speaker 1: I like it from the standpoint of, oh, somebody wants 54 00:02:43,000 --> 00:02:45,400 Speaker 1: to go somewhere, but oh, you are a criminal and 55 00:02:45,400 --> 00:02:47,839 Speaker 1: you're using somebody else's credit card to do it. Well, 56 00:02:47,880 --> 00:02:50,160 Speaker 1: And started start to hear that just recently I lost 57 00:02:50,320 --> 00:02:52,360 Speaker 1: some pain. Yeah, I lost a credit card at a 58 00:02:52,400 --> 00:02:54,640 Speaker 1: water park with my kids. You didn't, Yeah, just like 59 00:02:54,639 --> 00:02:56,080 Speaker 1: slipped out of my pocket. I was like, dang it. 60 00:02:56,080 --> 00:02:57,520 Speaker 1: So I had to cancel that, had to get a 61 00:02:57,520 --> 00:02:59,360 Speaker 1: new one. Have to change all the credit card I 62 00:02:59,400 --> 00:03:00,919 Speaker 1: have to change all the is automatic paintings I have 63 00:03:01,000 --> 00:03:03,200 Speaker 1: set up. So it wasn't very annoying. It wasn't that card. 64 00:03:03,200 --> 00:03:05,720 Speaker 1: It's a defferent card. So um. But just just I 65 00:03:05,720 --> 00:03:07,960 Speaker 1: want to say this is I think it was like 66 00:03:09,040 --> 00:03:11,480 Speaker 1: that this airline ticket cost someone's going to New York 67 00:03:11,480 --> 00:03:13,160 Speaker 1: and they got the fancy seat in front of the 68 00:03:13,160 --> 00:03:15,040 Speaker 1: plan I guess, or something like that. But the great 69 00:03:15,080 --> 00:03:17,800 Speaker 1: thing about using credit cards instead of debit cards is 70 00:03:17,840 --> 00:03:19,640 Speaker 1: that she is not out this money trying to call 71 00:03:19,760 --> 00:03:22,440 Speaker 1: it back. It's money that has never left her account, 72 00:03:22,520 --> 00:03:25,760 Speaker 1: and by federal law, the credit card company has to 73 00:03:25,800 --> 00:03:28,800 Speaker 1: refund this money to to us, which is great. So 74 00:03:29,160 --> 00:03:31,480 Speaker 1: I know we we talk a lot about credit cards 75 00:03:31,520 --> 00:03:34,000 Speaker 1: on the show and smart usage of credit cards, but 76 00:03:34,080 --> 00:03:36,320 Speaker 1: case in point, it's just one of those reasons where 77 00:03:36,320 --> 00:03:38,120 Speaker 1: you go that makes them great. But to offer and 78 00:03:38,160 --> 00:03:40,840 Speaker 1: then again account we try to stay balanced here, right, 79 00:03:40,880 --> 00:03:43,600 Speaker 1: we to offer another side to that. Have you have 80 00:03:43,640 --> 00:03:45,600 Speaker 1: you ever gotten those those checks from a credit card 81 00:03:45,600 --> 00:03:48,360 Speaker 1: company in the mail, like the like cash advanced checks. 82 00:03:48,640 --> 00:03:51,200 Speaker 1: Basically here's six checks go using for whatever you want. 83 00:03:51,520 --> 00:03:53,400 Speaker 1: And when you look at the terms, like wait a second, 84 00:03:53,520 --> 00:03:54,840 Speaker 1: this is gonna cost a lot of money. Yeah, it's 85 00:03:54,840 --> 00:03:56,440 Speaker 1: gonna cost a lot of So there are some credit 86 00:03:56,480 --> 00:03:58,560 Speaker 1: cards who will also send you a check for a 87 00:03:58,560 --> 00:04:01,480 Speaker 1: certain amount of money. Have you seen this? Uh? So 88 00:04:01,520 --> 00:04:04,160 Speaker 1: literally some banks out there. And so we're again, like 89 00:04:04,200 --> 00:04:06,400 Speaker 1: you said, Joll, we're taking a very balanced approach here. 90 00:04:06,400 --> 00:04:08,000 Speaker 1: Credit cards are great in some ways, but this is 91 00:04:08,200 --> 00:04:10,000 Speaker 1: a way that some of the banks out there are terrible. 92 00:04:10,320 --> 00:04:12,800 Speaker 1: They are basically writing a check to people and it's like, hey, 93 00:04:12,800 --> 00:04:15,200 Speaker 1: this is a check for you, but it's a check 94 00:04:15,240 --> 00:04:17,640 Speaker 1: against your own account and so you like against your 95 00:04:17,640 --> 00:04:20,880 Speaker 1: your your credit limit and guess what the interest rates 96 00:04:20,920 --> 00:04:24,360 Speaker 1: on those tend to be probably something close exactly. Uh. 97 00:04:24,400 --> 00:04:26,280 Speaker 1: And so that's something that we also want to make 98 00:04:26,279 --> 00:04:28,920 Speaker 1: sure folks are avoiding. Don't be tempted into thinking, oh, yeah, 99 00:04:28,960 --> 00:04:30,560 Speaker 1: this is a check I can use if it's a 100 00:04:30,600 --> 00:04:32,680 Speaker 1: blank check, Oh this is a check I can use 101 00:04:32,720 --> 00:04:35,080 Speaker 1: to to pay for something, maybe even pay off another 102 00:04:35,080 --> 00:04:37,560 Speaker 1: credit card. That's kind of a bad strategy if you 103 00:04:37,560 --> 00:04:40,839 Speaker 1: haven't addressed the underlying cause. But also avoid seeing a 104 00:04:40,920 --> 00:04:42,800 Speaker 1: check where there's already a check and there's a dollar 105 00:04:42,839 --> 00:04:45,200 Speaker 1: amount written out to you. The surround referring to it 106 00:04:45,279 --> 00:04:48,919 Speaker 1: was for going back to school expenses. And it's pretty 107 00:04:48,920 --> 00:04:51,840 Speaker 1: smart because folks were thinking good marketing. I am having 108 00:04:51,880 --> 00:04:53,960 Speaker 1: to fork out a lot of money on just all 109 00:04:54,000 --> 00:04:56,159 Speaker 1: the costs associated with sending my kid off to college, 110 00:04:56,480 --> 00:04:58,640 Speaker 1: got it. You know, he wanted to get a new laptop, 111 00:04:58,720 --> 00:05:01,279 Speaker 1: So that's something we did, just all of a mini fridge, 112 00:05:01,520 --> 00:05:03,680 Speaker 1: although you can get those for cheap these days evidently, 113 00:05:03,920 --> 00:05:06,280 Speaker 1: and laptops two honestly. Yeah, And so all that to say, 114 00:05:06,320 --> 00:05:09,120 Speaker 1: we want you to use credit cards in a judicious 115 00:05:09,240 --> 00:05:13,320 Speaker 1: type of way and avoid this checks altogether exactly. So 116 00:05:13,320 --> 00:05:15,920 Speaker 1: so hopefully, yeah, this the way we just talked about 117 00:05:15,920 --> 00:05:17,600 Speaker 1: credit cards, we can be that nuanced with kind of 118 00:05:17,640 --> 00:05:20,200 Speaker 1: the overall subject of debt on today's episode, Matt. But 119 00:05:20,200 --> 00:05:22,400 Speaker 1: before we get that, let's just mention the beer word drinking. 120 00:05:23,000 --> 00:05:25,280 Speaker 1: We always drink a beer on every episode of How 121 00:05:25,279 --> 00:05:27,880 Speaker 1: the Money Are most episodes because we light craft here 122 00:05:28,000 --> 00:05:30,680 Speaker 1: something Matt and I explore John while we're being intentional 123 00:05:30,760 --> 00:05:32,880 Speaker 1: with our money, while we're saving and investing for the future. 124 00:05:32,960 --> 00:05:35,160 Speaker 1: This one is called Milk and Cookies and it's by 125 00:05:35,160 --> 00:05:37,320 Speaker 1: Wicked Weed. It's a it's a stout. We'll give our 126 00:05:37,360 --> 00:05:39,080 Speaker 1: thoughts on this at the end of the episode. This 127 00:05:39,120 --> 00:05:42,200 Speaker 1: is another beer that's a part of that Guilty Pleasures 128 00:05:42,600 --> 00:05:45,160 Speaker 1: series from Wicked Weed, And I will say this one 129 00:05:45,160 --> 00:05:47,360 Speaker 1: already smells better than the one we had on Monday. Yes, 130 00:05:47,440 --> 00:05:50,120 Speaker 1: so so looking forward to this one. I agreed, all right, Well, 131 00:05:50,120 --> 00:05:52,159 Speaker 1: we'll give our thoughts later on in the show, but 132 00:05:52,240 --> 00:05:54,680 Speaker 1: let's move on. My lest talk about using debt to 133 00:05:54,760 --> 00:05:59,440 Speaker 1: catapulture finances forward in a helpful way. And it just 134 00:05:59,480 --> 00:06:01,159 Speaker 1: made me kind of think about when we're trying to 135 00:06:01,240 --> 00:06:03,520 Speaker 1: use something in a helpful way that can also be 136 00:06:03,600 --> 00:06:06,640 Speaker 1: used poorly. Maybe think of napping, because some folks will 137 00:06:06,680 --> 00:06:08,840 Speaker 1: swear that napping is bad for them, right, or it's 138 00:06:08,880 --> 00:06:11,160 Speaker 1: bad for everyone, that it ruins your day, that's gonna 139 00:06:11,240 --> 00:06:13,760 Speaker 1: upset your sleep for that evening, it's gonna maybe throw 140 00:06:13,800 --> 00:06:18,840 Speaker 1: off your circadian rhythm whatever whatever that actually means. But yeah, occasionally, right, 141 00:06:18,920 --> 00:06:20,360 Speaker 1: how often do you? Not? Like four times a year? 142 00:06:20,480 --> 00:06:22,360 Speaker 1: Not very often? Yeah, I feel like I'm like one 143 00:06:22,480 --> 00:06:25,000 Speaker 1: or two. I tend to dude, I hate nothing because 144 00:06:25,040 --> 00:06:26,520 Speaker 1: I love to lay down in the evening and just 145 00:06:26,600 --> 00:06:29,479 Speaker 1: fall right to sleep, you know, Like I hate laying 146 00:06:29,520 --> 00:06:32,000 Speaker 1: there and thinking, dang it. Maybe I had my coffee 147 00:06:32,040 --> 00:06:33,360 Speaker 1: a little bit too late. Dang it, I should Maybe 148 00:06:33,360 --> 00:06:35,200 Speaker 1: I shouldn't have taken that nap. I kind of almost 149 00:06:35,240 --> 00:06:38,160 Speaker 1: need to be on my deathbed, like if i'm oftentimes 150 00:06:38,200 --> 00:06:43,039 Speaker 1: it is getting over a sickness or something like I'm like, okay, exactly, 151 00:06:43,480 --> 00:06:45,360 Speaker 1: I will nap. Then well, yeah, I'm not much of 152 00:06:45,400 --> 00:06:48,400 Speaker 1: a napper either, Like every once in a while on 153 00:06:48,440 --> 00:06:50,560 Speaker 1: a Sunday afternoon, that's the best time. Four times a year, 154 00:06:50,640 --> 00:06:54,800 Speaker 1: You're liken't like you three nap exactly exactly. I don't know. 155 00:06:54,880 --> 00:06:56,520 Speaker 1: My mind is just kind of going during the day 156 00:06:56,600 --> 00:06:58,640 Speaker 1: and and even though even though I might feel tired, 157 00:06:58,839 --> 00:07:02,039 Speaker 1: my brain won't shut down. But then yeah, like you said, 158 00:07:02,080 --> 00:07:04,479 Speaker 1: I've got no problem going to bed at nighttime. But 159 00:07:04,520 --> 00:07:07,200 Speaker 1: the reality is based on kind of all the all 160 00:07:07,240 --> 00:07:10,280 Speaker 1: the studies out there. Uh, A well timed nap can 161 00:07:10,480 --> 00:07:12,040 Speaker 1: bring a lot of benefits for a lot of folks. 162 00:07:12,400 --> 00:07:15,280 Speaker 1: And even though you and I don't necessarily participate, I 163 00:07:15,280 --> 00:07:17,000 Speaker 1: don't know. As I'm reading through this evidence, I'm like, 164 00:07:17,040 --> 00:07:18,960 Speaker 1: maybe I should nap more offending against there's a lot 165 00:07:19,000 --> 00:07:20,760 Speaker 1: of smart, smart folks, a lot of good thinkers out 166 00:07:20,800 --> 00:07:23,040 Speaker 1: there who always include like a little power nap in 167 00:07:23,040 --> 00:07:25,880 Speaker 1: the afternoon. Yeah, Well, there's more employers, right, thoughtful employers 168 00:07:25,920 --> 00:07:27,840 Speaker 1: who are creating nap rooms and stuff like that for 169 00:07:27,880 --> 00:07:31,120 Speaker 1: employees that they pardon largely because it's going to that 170 00:07:31,240 --> 00:07:33,640 Speaker 1: little bit of rest is gonna make you more productive, 171 00:07:33,720 --> 00:07:36,040 Speaker 1: like the experts say, can boost your memory, increase your 172 00:07:36,120 --> 00:07:39,080 Speaker 1: job performance, and ease stress levels. So, I don't know, 173 00:07:39,120 --> 00:07:41,560 Speaker 1: it's kind of like, wait our naps magic. We should 174 00:07:41,560 --> 00:07:44,480 Speaker 1: be doing this more often? Maybe maybe so maybe I 175 00:07:44,520 --> 00:07:46,240 Speaker 1: should increase the number of naps. But I think in 176 00:07:46,240 --> 00:07:49,160 Speaker 1: the ways that naps or misunderstood, so is debt, because 177 00:07:49,600 --> 00:07:52,840 Speaker 1: if you were to indiscriminately use naps or debt is 178 00:07:52,840 --> 00:07:54,200 Speaker 1: going to create a mess in your life. Right if 179 00:07:54,200 --> 00:07:56,920 Speaker 1: you're napping during an important meeting with your boss, or 180 00:07:57,200 --> 00:07:59,320 Speaker 1: maybe you're like, I'm just gonna like those off here 181 00:07:59,360 --> 00:08:02,240 Speaker 1: for thirty minutes to family dinner. That's gonna like really 182 00:08:02,680 --> 00:08:04,840 Speaker 1: ruin your life in a lot of ways. Uh. And 183 00:08:04,960 --> 00:08:06,400 Speaker 1: in the same is true with that if you're just 184 00:08:06,520 --> 00:08:10,200 Speaker 1: indiscriminately using debt for whatever you want, whenever you want it. 185 00:08:10,600 --> 00:08:13,120 Speaker 1: But how and when you use those two things and 186 00:08:13,120 --> 00:08:15,720 Speaker 1: then doing so with moderation and wisdom can make them 187 00:08:15,720 --> 00:08:18,560 Speaker 1: both I think beneficial parts of your life totally. Yeah, Basically, 188 00:08:18,560 --> 00:08:20,640 Speaker 1: what we're saying here, what we're arguing is that debt 189 00:08:20,800 --> 00:08:23,080 Speaker 1: is not as black or white an issue as many 190 00:08:23,080 --> 00:08:26,200 Speaker 1: folks would have you believe. So, for instance, if you 191 00:08:26,240 --> 00:08:29,160 Speaker 1: listen to to Dave Ramsey for any amount of time, 192 00:08:29,160 --> 00:08:30,560 Speaker 1: can you explain to you that, as Matt never heard 193 00:08:30,560 --> 00:08:33,440 Speaker 1: of him, you you probably didn't hear much nuance on 194 00:08:33,440 --> 00:08:35,760 Speaker 1: this topic. If you took out debt for any reason, 195 00:08:36,000 --> 00:08:38,240 Speaker 1: you were a dunce. Uh. And you know, he's not 196 00:08:38,280 --> 00:08:41,240 Speaker 1: the only one out there who has basically nothing positive 197 00:08:41,280 --> 00:08:44,160 Speaker 1: to say about debt. There are some folks out there who, 198 00:08:44,280 --> 00:08:46,720 Speaker 1: you know, they teach that all debt is bad, that 199 00:08:46,720 --> 00:08:49,800 Speaker 1: you should avoid it like the plague. But then you know, 200 00:08:49,840 --> 00:08:52,040 Speaker 1: like on the other side of the spectrum, there are 201 00:08:52,200 --> 00:08:55,280 Speaker 1: others who are just too comfortable with the amount of 202 00:08:55,280 --> 00:08:57,400 Speaker 1: debt in their lives. Going back to naps, that they're 203 00:08:57,400 --> 00:08:59,439 Speaker 1: the kind of person who who loves to take two 204 00:08:59,440 --> 00:09:02,920 Speaker 1: hour naps just completely ruin their day. Yeah. Yeah, so 205 00:09:03,080 --> 00:09:05,440 Speaker 1: debt to them, it's no big deal. But like most 206 00:09:05,480 --> 00:09:08,520 Speaker 1: things in life, debt is an incredibly nuanced topic and 207 00:09:08,559 --> 00:09:11,600 Speaker 1: we're gonna venture into it today because the reality is 208 00:09:11,679 --> 00:09:14,400 Speaker 1: that not all debt is created equal. That's what we're 209 00:09:14,400 --> 00:09:17,000 Speaker 1: going to discuss. Yeah, if you do think that are 210 00:09:17,000 --> 00:09:19,600 Speaker 1: all created equal, if you think that all that is 211 00:09:19,640 --> 00:09:22,199 Speaker 1: bad or that most debt is good, you're in all 212 00:09:22,240 --> 00:09:24,880 Speaker 1: likelihood going to make mistakes when it comes to how 213 00:09:24,920 --> 00:09:26,920 Speaker 1: you use it. And the reality is that debt is 214 00:09:26,960 --> 00:09:30,439 Speaker 1: actually kind of a nifty invention. Without it, a lot 215 00:09:30,480 --> 00:09:32,120 Speaker 1: of sand would be thrown in the gears of the 216 00:09:32,120 --> 00:09:35,640 Speaker 1: economy because taking on debt allows us to do things 217 00:09:35,640 --> 00:09:38,400 Speaker 1: like get a higher education before we actually have any 218 00:09:38,440 --> 00:09:40,600 Speaker 1: meaningful income, to show that we can pay off those loans. 219 00:09:40,840 --> 00:09:43,400 Speaker 1: There's a reason, right the people are willing to lend 220 00:09:43,440 --> 00:09:47,640 Speaker 1: you fifty dollars for a higher education, even though you 221 00:09:47,679 --> 00:09:51,760 Speaker 1: have shown that you have zero responsibility at this point 222 00:09:52,040 --> 00:09:54,840 Speaker 1: in your life. Debt can allow us to buy a 223 00:09:54,880 --> 00:09:57,760 Speaker 1: house right once we do have an income, without having 224 00:09:57,760 --> 00:10:01,240 Speaker 1: to save up for a decade or to in order 225 00:10:01,240 --> 00:10:04,120 Speaker 1: to fully purchase that house with cash. Because and Matt 226 00:10:04,120 --> 00:10:05,680 Speaker 1: how the money listeners, they know how hard it is 227 00:10:05,720 --> 00:10:07,880 Speaker 1: just to save up a down payment. I mean, imagine 228 00:10:08,000 --> 00:10:10,560 Speaker 1: being forced to save up the full purchase price of 229 00:10:10,600 --> 00:10:12,360 Speaker 1: that house. You know, most of us would be living 230 00:10:12,640 --> 00:10:17,200 Speaker 1: intents that would be the reality if with our parents, right, Yeah, 231 00:10:17,679 --> 00:10:20,720 Speaker 1: who also might be living intense Like, the truth is 232 00:10:21,000 --> 00:10:24,280 Speaker 1: most people can't afford to buy a house in cash, 233 00:10:24,679 --> 00:10:27,920 Speaker 1: and and so debt is kind of this necessity in 234 00:10:28,000 --> 00:10:29,920 Speaker 1: order to achieve many of the goals that we have 235 00:10:30,160 --> 00:10:32,480 Speaker 1: in life. And I think a home and a college 236 00:10:32,480 --> 00:10:36,120 Speaker 1: degree are maybe the two best uses of taking on debt. 237 00:10:36,440 --> 00:10:38,880 Speaker 1: And uh, the ideal logs who might say that all 238 00:10:38,960 --> 00:10:41,760 Speaker 1: debt is dumb, they're just not grounded in reality. We'd 239 00:10:41,760 --> 00:10:44,000 Speaker 1: say that these forms of debt are actually they're kind 240 00:10:44,040 --> 00:10:47,120 Speaker 1: of a societal good and they've they've actually allowed us 241 00:10:47,160 --> 00:10:49,480 Speaker 1: to make more progress because we don't have to pull 242 00:10:49,480 --> 00:10:52,120 Speaker 1: the pay the full freight in one fell swoop when 243 00:10:52,240 --> 00:10:54,920 Speaker 1: we're unable to. Yeah, exactly. Yeah. If if you take 244 00:10:54,960 --> 00:10:57,240 Speaker 1: any form of debt that exists and then just completely 245 00:10:57,240 --> 00:11:00,720 Speaker 1: isolated from reality, then it's gonna be hard to argue 246 00:11:00,800 --> 00:11:03,200 Speaker 1: that debt is a good thing, right because debt it 247 00:11:03,240 --> 00:11:06,040 Speaker 1: means that you're paying interest to someone, to a bank, 248 00:11:06,080 --> 00:11:09,200 Speaker 1: paying interest is bad, so therefore debt is bad. But 249 00:11:09,320 --> 00:11:11,920 Speaker 1: taking this view is failing to see the forest for 250 00:11:11,960 --> 00:11:15,360 Speaker 1: the trees. Uh, the individual debts that we're discussing here, 251 00:11:15,440 --> 00:11:17,520 Speaker 1: those are the trees, but you know, like what is 252 00:11:17,559 --> 00:11:20,240 Speaker 1: going on with the entire forest, Like that is the 253 00:11:20,360 --> 00:11:23,520 Speaker 1: view that we want you to have. It's important just 254 00:11:23,520 --> 00:11:26,880 Speaker 1: just to take a more holistic approach to your finances. Uh. 255 00:11:26,920 --> 00:11:29,400 Speaker 1: And so that's why what it is that you do 256 00:11:29,520 --> 00:11:32,240 Speaker 1: with the money that you that you could have paid 257 00:11:32,360 --> 00:11:35,760 Speaker 1: to avoid that debt is so incredibly important. So for 258 00:11:35,760 --> 00:11:38,880 Speaker 1: for instance, let's say that you've taken out alone with 259 00:11:38,920 --> 00:11:41,040 Speaker 1: a bank. They were willing to lend you money at 260 00:11:41,040 --> 00:11:43,160 Speaker 1: a rate of one percent, but then they are definitely 261 00:11:43,640 --> 00:11:45,600 Speaker 1: because yeah, yeah that's not that's not alone you can 262 00:11:45,600 --> 00:11:48,560 Speaker 1: get today. But but let's imagine that they are willing 263 00:11:48,600 --> 00:11:50,800 Speaker 1: to pay you two percent on money that you've got 264 00:11:50,800 --> 00:11:54,040 Speaker 1: in a savings account. And let's also assume that there's 265 00:11:54,120 --> 00:11:57,440 Speaker 1: no funny terms. You know, there's no like prepayment penalty 266 00:11:57,480 --> 00:12:00,560 Speaker 1: or anything like that. It would be silly to take 267 00:12:00,600 --> 00:12:03,079 Speaker 1: on that debt, right, and so like this is a 268 00:12:03,160 --> 00:12:04,880 Speaker 1: kind of a silly example as well. But I just 269 00:12:05,080 --> 00:12:07,240 Speaker 1: want to give this to highlight the fact that you 270 00:12:07,280 --> 00:12:08,680 Speaker 1: have to look at the whole picture. You have to 271 00:12:08,720 --> 00:12:12,040 Speaker 1: be aware not only of a specific debt and the 272 00:12:12,040 --> 00:12:14,120 Speaker 1: interest that you're paying there. But what else you can 273 00:12:14,160 --> 00:12:16,280 Speaker 1: do with that money. You have to pay attention to 274 00:12:16,679 --> 00:12:19,120 Speaker 1: what you could potentially apply that money for you to 275 00:12:19,240 --> 00:12:22,480 Speaker 1: take on some of this what we're calling strategic debt. Yeah, 276 00:12:22,480 --> 00:12:25,040 Speaker 1: the example you just gave is kind of like a 277 00:12:25,160 --> 00:12:27,079 Speaker 1: no dust slam dunk. Of course, I'm gonna take on 278 00:12:27,120 --> 00:12:29,439 Speaker 1: this debt and just pop that money in and and 279 00:12:29,480 --> 00:12:32,960 Speaker 1: just make make money on the spread. Right, That's that's arbitrage. Sure, right, 280 00:12:32,960 --> 00:12:35,880 Speaker 1: you're using debt in order to make more money because 281 00:12:35,880 --> 00:12:38,360 Speaker 1: of it, And that's kind of that. That is what 282 00:12:38,400 --> 00:12:40,280 Speaker 1: we would say, it would be a strategic use of debt. 283 00:12:40,480 --> 00:12:43,120 Speaker 1: But simultaneously, it's not going to be that easy. It's 284 00:12:42,960 --> 00:12:44,880 Speaker 1: it's it's not that that easy, but it's not that 285 00:12:45,080 --> 00:12:47,040 Speaker 1: much of a slam dunk. And so that's kind of 286 00:12:47,080 --> 00:12:48,680 Speaker 1: what we're gonna spend the rest of the episode talking. 287 00:12:48,760 --> 00:12:51,680 Speaker 1: That's a simple example, but the reality is it's extreme 288 00:12:51,840 --> 00:12:54,560 Speaker 1: outlier example that you are not going to find in 289 00:12:54,640 --> 00:12:57,000 Speaker 1: reality exactly. So we will cover a bunch of specific 290 00:12:57,000 --> 00:13:00,320 Speaker 1: examples like that that can help you make maybe better 291 00:13:00,320 --> 00:13:03,079 Speaker 1: decisions based on something you're actually more likely to experience 292 00:13:03,080 --> 00:13:05,760 Speaker 1: in your life as supposed to this fictional example made 293 00:13:05,840 --> 00:13:11,920 Speaker 1: up giving out one. All right, that sounds nice, But 294 00:13:12,200 --> 00:13:14,480 Speaker 1: of course though, just because debt exists as a lever 295 00:13:14,559 --> 00:13:15,920 Speaker 1: for you to be able to get what you want 296 00:13:16,280 --> 00:13:18,520 Speaker 1: before you have the money, well that doesn't mean that 297 00:13:18,559 --> 00:13:21,720 Speaker 1: you should just need you be using it for that purpose. 298 00:13:21,760 --> 00:13:24,320 Speaker 1: And the sad reality is that a lot of folks 299 00:13:24,440 --> 00:13:27,520 Speaker 1: used debt as a crutch, particularly in our society. Right 300 00:13:28,520 --> 00:13:31,760 Speaker 1: instead of thinking up a creative solution, we buy something 301 00:13:31,800 --> 00:13:34,280 Speaker 1: to fix a problem, and then we often the thing 302 00:13:34,360 --> 00:13:36,320 Speaker 1: that we we bought will have to pay off over 303 00:13:36,440 --> 00:13:39,960 Speaker 1: time by taking on debt, which means paying interest to 304 00:13:39,960 --> 00:13:42,160 Speaker 1: to a bank or to a lender. And it makes 305 00:13:42,160 --> 00:13:44,280 Speaker 1: me think mad about our episode with Alan donnegan when 306 00:13:44,320 --> 00:13:47,079 Speaker 1: he talked about starting a business for zero dollars and 307 00:13:47,480 --> 00:13:49,520 Speaker 1: trying to do that, trying to start a business with 308 00:13:49,559 --> 00:13:52,560 Speaker 1: no money. It takes some real creativity and I love 309 00:13:52,600 --> 00:13:54,320 Speaker 1: that that's what he was pushing people to do. You know, 310 00:13:54,600 --> 00:13:56,839 Speaker 1: it's it's easy to create a big list of necessities 311 00:13:56,880 --> 00:13:58,800 Speaker 1: and then take out a big loan to purchase those things. 312 00:13:59,000 --> 00:14:01,120 Speaker 1: That's less creative, but it also leads to more debt, 313 00:14:01,480 --> 00:14:03,199 Speaker 1: and we chalk it up to just like that's how 314 00:14:03,240 --> 00:14:06,440 Speaker 1: business is done, right, uh. We you you obviously have 315 00:14:06,520 --> 00:14:08,160 Speaker 1: to take on loads of debt to start a business, 316 00:14:08,360 --> 00:14:10,920 Speaker 1: and then you work towards profitability. Well, what Alan was 317 00:14:10,960 --> 00:14:13,840 Speaker 1: suggesting was getting more creative on the front end, so 318 00:14:13,880 --> 00:14:16,480 Speaker 1: you can be free of debt as you're building your business. 319 00:14:16,760 --> 00:14:19,440 Speaker 1: And yeah, it's not that debt can't be helpful to 320 00:14:19,560 --> 00:14:21,840 Speaker 1: finance some businesses, and it's not, and then it's not 321 00:14:21,920 --> 00:14:24,640 Speaker 1: necessary in order to get some businesses off the ground. 322 00:14:24,680 --> 00:14:27,720 Speaker 1: And that would actually be potentially a strategic form of debt, right, 323 00:14:27,760 --> 00:14:30,680 Speaker 1: if you're taking on debt in order to build something 324 00:14:30,720 --> 00:14:33,720 Speaker 1: that is going to create income to help feed your family. 325 00:14:33,960 --> 00:14:36,000 Speaker 1: Depending on the specific terms, that could be a really 326 00:14:36,040 --> 00:14:38,720 Speaker 1: smart use of debt. But still, we're just saying, even 327 00:14:38,760 --> 00:14:40,560 Speaker 1: even if it's a good use of debt, it can 328 00:14:40,600 --> 00:14:43,360 Speaker 1: be used improperly. It can be used as a crutch exactly. Yeah, 329 00:14:43,360 --> 00:14:45,160 Speaker 1: that's so you know, basically, what we're saying here is 330 00:14:45,200 --> 00:14:48,000 Speaker 1: that there is a difference between what we're calling strategic 331 00:14:48,040 --> 00:14:51,200 Speaker 1: and non strategic debt. That's basically at the heart of 332 00:14:51,200 --> 00:14:54,680 Speaker 1: our conversation today. And we'd say that non strategic debt 333 00:14:55,000 --> 00:14:58,400 Speaker 1: that that should be avoided at all costs, unless maybe 334 00:14:58,400 --> 00:15:01,400 Speaker 1: like you're in some sort of like life circumstance said 335 00:15:01,440 --> 00:15:03,080 Speaker 1: give me your credit card. I'm gonna put ten thousand 336 00:15:03,120 --> 00:15:04,480 Speaker 1: dollars on it, and then I won't to kill you. 337 00:15:04,800 --> 00:15:07,440 Speaker 1: Otherwise I'll use no strategic debt to not die. So 338 00:15:07,480 --> 00:15:09,680 Speaker 1: it's worth defining it as well, right, and so non 339 00:15:09,680 --> 00:15:13,200 Speaker 1: strategic debt it's just basically, well, we're we are referring 340 00:15:13,240 --> 00:15:16,200 Speaker 1: to all the different easy types of consumer debt that 341 00:15:16,240 --> 00:15:18,440 Speaker 1: we have access to, the worst forms of us are 342 00:15:18,440 --> 00:15:21,280 Speaker 1: going to be paid a loans, title loans as well, 343 00:15:21,520 --> 00:15:24,240 Speaker 1: but then the like the more socially acceptable varieties are 344 00:15:24,240 --> 00:15:26,840 Speaker 1: going to be credit cards, uh, personal loans as well. 345 00:15:27,000 --> 00:15:29,280 Speaker 1: And we want you to avoid this type of debt, 346 00:15:29,280 --> 00:15:31,840 Speaker 1: this non strategic debt, because it allows us to consume 347 00:15:32,200 --> 00:15:35,720 Speaker 1: more stuff. Now, uh, we're we're just allowing our future 348 00:15:35,720 --> 00:15:37,560 Speaker 1: selves to pay the bill. I don't have to worry 349 00:15:37,600 --> 00:15:39,400 Speaker 1: about that today, Matt doesn't have to worry about that. That 350 00:15:39,280 --> 00:15:42,080 Speaker 1: That that's a problem for tomorrow. Map stress future Matt 351 00:15:42,120 --> 00:15:45,120 Speaker 1: out in order to alleviate that stress on myself today. 352 00:15:45,160 --> 00:15:47,240 Speaker 1: And that's an entire sign. Have we talked about this 353 00:15:47,280 --> 00:15:50,480 Speaker 1: on the show before the Seinfeld skit. There's there's future Jerry, 354 00:15:50,760 --> 00:15:53,040 Speaker 1: like it's about him going to bed early, and he's 355 00:15:53,080 --> 00:15:55,400 Speaker 1: just like, you know, I forget what he calls Like 356 00:15:55,440 --> 00:15:58,480 Speaker 1: today Jerry wants to stay up late and and watch TV, 357 00:15:58,880 --> 00:16:01,000 Speaker 1: but I've got to get up early to go to work. Oh, 358 00:16:01,280 --> 00:16:04,040 Speaker 1: that's future Jerry's problem. I don't have to worry about 359 00:16:04,040 --> 00:16:05,880 Speaker 1: that right now. That's yeah, I mean, that's that's a 360 00:16:05,880 --> 00:16:08,720 Speaker 1: good way of thinking about debt. But this is terrible 361 00:16:08,760 --> 00:16:11,640 Speaker 1: because it makes our purchases a lot more expensive. It 362 00:16:11,720 --> 00:16:15,120 Speaker 1: impacts our ability to become financially free. That's why we're 363 00:16:15,120 --> 00:16:17,680 Speaker 1: discussing that today. So actually, after the break, we're gonna 364 00:16:17,680 --> 00:16:19,920 Speaker 1: walk you through some questions that you can ask yourself 365 00:16:20,080 --> 00:16:22,680 Speaker 1: to help you to determine whether or not some of 366 00:16:22,680 --> 00:16:24,240 Speaker 1: this debt that you might have in your life is 367 00:16:24,240 --> 00:16:27,800 Speaker 1: strategic or if it is dumb non strategic debt. And 368 00:16:27,800 --> 00:16:30,480 Speaker 1: it actually it's not as clear cut, it's not as 369 00:16:30,520 --> 00:16:32,920 Speaker 1: simple as you might think. I can promise you that, 370 00:16:33,080 --> 00:16:34,800 Speaker 1: and so we will get to all of that plus 371 00:16:34,840 --> 00:16:46,720 Speaker 1: more right after this. Alright, let's keep going, let's keep 372 00:16:46,720 --> 00:16:49,360 Speaker 1: talking about debt. Let's do it demystify a little bit 373 00:16:49,360 --> 00:16:51,840 Speaker 1: because when you when you think that all debt is 374 00:16:52,000 --> 00:16:56,480 Speaker 1: we shouldn't name the demystifying demystifying debt debt well there, 375 00:16:56,560 --> 00:16:58,800 Speaker 1: because there's the reality that a lot of people, based 376 00:16:58,880 --> 00:17:02,520 Speaker 1: on maybe some of the loudest voices out there talking 377 00:17:02,520 --> 00:17:05,439 Speaker 1: about debt, that they think that every every single instance 378 00:17:05,480 --> 00:17:08,399 Speaker 1: you might potentially take on debt, that it's going to 379 00:17:08,640 --> 00:17:10,520 Speaker 1: harm you, that it's going to be bad for your 380 00:17:10,520 --> 00:17:13,439 Speaker 1: personal finances. And we would say no, a nuanced approach 381 00:17:13,520 --> 00:17:17,760 Speaker 1: to debt, using it strategically could actually catapult you in 382 00:17:17,760 --> 00:17:20,560 Speaker 1: the right direction. But there's a lot to be said 383 00:17:20,560 --> 00:17:22,520 Speaker 1: about that. And let's just expound for just a second 384 00:17:22,640 --> 00:17:25,080 Speaker 1: um about non strategic debt, which you kind of talked 385 00:17:25,080 --> 00:17:27,560 Speaker 1: about just a little bit before the break. And there's 386 00:17:27,560 --> 00:17:30,840 Speaker 1: this like cool story of Frederick Smith, who's the CEO 387 00:17:30,960 --> 00:17:32,920 Speaker 1: of FedEx. I believe, I believe he just announced that 388 00:17:32,920 --> 00:17:34,320 Speaker 1: he's gonna step down, So I don't know if he's 389 00:17:34,320 --> 00:17:36,200 Speaker 1: already done that or not, but he's been the CEO 390 00:17:36,240 --> 00:17:38,880 Speaker 1: of FedEx for decades and decades, and in the very 391 00:17:38,920 --> 00:17:42,000 Speaker 1: early days of the company, he he actually went to 392 00:17:42,119 --> 00:17:44,399 Speaker 1: Vegas and took out a five thousand dollar line of 393 00:17:44,440 --> 00:17:48,520 Speaker 1: credit and he won seven dollars gambling in order to 394 00:17:48,560 --> 00:17:52,359 Speaker 1: cover a giant fuel bill twenty four thousand dollar fuel 395 00:17:52,359 --> 00:17:55,000 Speaker 1: bill that FedEx had, And if he had not done that, 396 00:17:55,160 --> 00:17:56,760 Speaker 1: he literally like they had no money to pay the 397 00:17:56,800 --> 00:17:59,480 Speaker 1: fuel bill and the company was going to crumble, as 398 00:17:59,480 --> 00:18:02,040 Speaker 1: the story goes, if he had not gone to extreme measures, 399 00:18:02,080 --> 00:18:05,000 Speaker 1: So basically like, if he had not taken the most 400 00:18:05,320 --> 00:18:08,159 Speaker 1: dire tactic of taking on debt in order to gamble, 401 00:18:08,440 --> 00:18:11,560 Speaker 1: which is something we don't suggest anybody out there, normal 402 00:18:11,560 --> 00:18:14,400 Speaker 1: people do, his company would have gone by the wayside. 403 00:18:14,600 --> 00:18:17,960 Speaker 1: So I guess maybe there's the super occasional circumstance where 404 00:18:18,320 --> 00:18:21,200 Speaker 1: taking on non strategic debt can be the only the 405 00:18:21,440 --> 00:18:24,160 Speaker 1: course of last resort, right, and it might make sense 406 00:18:24,200 --> 00:18:27,280 Speaker 1: in the most extreme circumstances, But gambling to save your 407 00:18:27,280 --> 00:18:30,879 Speaker 1: company is it's typically a reckless decision. Taking Taking on 408 00:18:30,920 --> 00:18:32,560 Speaker 1: debt in order to gamble in general would be a 409 00:18:32,560 --> 00:18:36,760 Speaker 1: bad idea, and and there are just other options, but 410 00:18:36,800 --> 00:18:38,399 Speaker 1: I guess not in that one based on how the 411 00:18:38,440 --> 00:18:40,560 Speaker 1: story goes. Well, the same is true when it comes 412 00:18:40,560 --> 00:18:42,639 Speaker 1: to the worst forms of consumer debt. Right. If you 413 00:18:42,800 --> 00:18:45,240 Speaker 1: if you start getting comfortable with running headlong into debt. 414 00:18:45,280 --> 00:18:46,959 Speaker 1: When you get in a pinch, if that's kind of 415 00:18:47,000 --> 00:18:49,840 Speaker 1: your go to method, when it becomes your lifeline, it's 416 00:18:49,920 --> 00:18:52,320 Speaker 1: it's a bad habit that's hard to break, and it's 417 00:18:52,359 --> 00:18:55,600 Speaker 1: gonna hamstring your ability to grow wealth in a meaningful way. 418 00:18:55,840 --> 00:18:57,240 Speaker 1: And by the way, I thought this was interesting that 419 00:18:57,400 --> 00:18:59,560 Speaker 1: that the CEO of fed X he's never gambled since, 420 00:18:59,720 --> 00:19:01,359 Speaker 1: so it's not like he was like, yeah, this is 421 00:19:01,400 --> 00:19:04,440 Speaker 1: just kind of fun to do for kicks, and like 422 00:19:04,600 --> 00:19:06,679 Speaker 1: I I go to Vegas once a year, anyway to 423 00:19:06,720 --> 00:19:08,639 Speaker 1: hear that at least it was because I'm has like 424 00:19:08,680 --> 00:19:10,879 Speaker 1: it was a one time thing. He was like, this, 425 00:19:10,880 --> 00:19:12,359 Speaker 1: this seems like the only way that we share this 426 00:19:12,400 --> 00:19:15,520 Speaker 1: story because this is a success story of using nor 427 00:19:16,160 --> 00:19:19,080 Speaker 1: of literally gambling. Like I would say that many more failures. Yeah, 428 00:19:19,119 --> 00:19:21,240 Speaker 1: I would say that it's always reckless because you don't 429 00:19:21,240 --> 00:19:23,040 Speaker 1: know if you're going to come out on top, right, 430 00:19:23,080 --> 00:19:25,720 Speaker 1: I mean it's literally the name of the game gambling. 431 00:19:26,280 --> 00:19:29,240 Speaker 1: Like there's uh a far like more likely chance that 432 00:19:29,240 --> 00:19:31,320 Speaker 1: you're gonna lose it all. But that's what he would 433 00:19:31,320 --> 00:19:33,720 Speaker 1: have said, is I'm on track to lose it all. Yeah, 434 00:19:33,720 --> 00:19:36,119 Speaker 1: because if I don't take this this small risk. The 435 00:19:36,119 --> 00:19:39,280 Speaker 1: bigger risk is that my whole company folds. Yeah, FedEx, 436 00:19:39,320 --> 00:19:41,240 Speaker 1: isn't this success story that it is to that exactly. 437 00:19:41,280 --> 00:19:42,680 Speaker 1: I mean, it's like just before the break, we're talking 438 00:19:42,720 --> 00:19:45,560 Speaker 1: about using non strategic debt. I guess in that way 439 00:19:45,680 --> 00:19:47,800 Speaker 1: you're you are using it in a strategic way at 440 00:19:47,840 --> 00:19:50,399 Speaker 1: that point, because, like we were talking about how you 441 00:19:50,440 --> 00:19:52,840 Speaker 1: should consider it maybe only if you are in a 442 00:19:53,000 --> 00:19:55,680 Speaker 1: life threatening situation. And it's not that his physical life 443 00:19:55,720 --> 00:19:57,840 Speaker 1: was being threatened, but the life of that particular company 444 00:19:57,920 --> 00:20:00,359 Speaker 1: definitely was. But this is an instance where you know, 445 00:20:00,359 --> 00:20:03,280 Speaker 1: getting comfortable with debt can like it can sort of 446 00:20:03,280 --> 00:20:05,399 Speaker 1: be like that first sip of alcohol for somebody who 447 00:20:06,040 --> 00:20:08,560 Speaker 1: has struggled with alcoholism in the past. You know this 448 00:20:08,720 --> 00:20:10,760 Speaker 1: maybe this is somebody who's been sober for a bunch 449 00:20:10,760 --> 00:20:13,840 Speaker 1: of years. It might seem harmless. Uh. And depending on 450 00:20:13,880 --> 00:20:17,080 Speaker 1: who you are, it could be completely harmless. But for 451 00:20:17,119 --> 00:20:19,760 Speaker 1: somebody else it could lead them, you know, it could 452 00:20:19,760 --> 00:20:22,639 Speaker 1: send them spiraling downwards. Uh. And that's why we are 453 00:20:22,680 --> 00:20:25,520 Speaker 1: so adamant about the need to build up some savings, 454 00:20:25,680 --> 00:20:27,800 Speaker 1: to have some cash on hand. Uh. Starting with a 455 00:20:27,840 --> 00:20:31,160 Speaker 1: bare minimum of having a basic emergency fund in the bank, 456 00:20:31,280 --> 00:20:34,000 Speaker 1: two thousand, four and sixty seven dollars. It's our first 457 00:20:34,080 --> 00:20:37,199 Speaker 1: money gear. But just having that amount stashed in your 458 00:20:37,240 --> 00:20:40,920 Speaker 1: bank account will make a lot of debt options completely 459 00:20:41,000 --> 00:20:43,840 Speaker 1: unnecessary for you because you've got that money in the bank. 460 00:20:44,160 --> 00:20:46,080 Speaker 1: We want you to have more than that, of course, 461 00:20:46,160 --> 00:20:49,080 Speaker 1: more than the the initial emergency fund, but uh, that's 462 00:20:49,080 --> 00:20:51,720 Speaker 1: a necessary place to start if you want to avoid 463 00:20:51,880 --> 00:20:55,359 Speaker 1: the nasty thing that is non strategic debt. Yeah, so 464 00:20:55,440 --> 00:20:58,520 Speaker 1: let's talk about maybe how people can decipher which kind 465 00:20:58,560 --> 00:21:01,160 Speaker 1: of debt they're using. You mentioned some of the specific 466 00:21:01,680 --> 00:21:04,680 Speaker 1: non strategic forms of debt. You talked about title loans 467 00:21:04,960 --> 00:21:07,439 Speaker 1: and and payday loans is being the worst kind, but 468 00:21:07,480 --> 00:21:09,240 Speaker 1: that credit cards and personal loans are ones that have 469 00:21:09,320 --> 00:21:11,600 Speaker 1: kind of been normalized, but they're still we would say, 470 00:21:11,600 --> 00:21:14,440 Speaker 1: non strategic forms of debt. They're not they're not good 471 00:21:14,520 --> 00:21:17,600 Speaker 1: or smart ways to catapult yourself forward. Typically you're hamstering 472 00:21:17,600 --> 00:21:21,440 Speaker 1: yourself by by getting into debt via one of those avenues. 473 00:21:21,760 --> 00:21:23,720 Speaker 1: And so yeah, let's offer maybe a few questions to 474 00:21:23,760 --> 00:21:26,600 Speaker 1: help you understand which one you're taking on. And one 475 00:21:26,720 --> 00:21:28,800 Speaker 1: question to ask yourself is is this debt going to 476 00:21:28,880 --> 00:21:31,280 Speaker 1: help grow your income or will it help you grow 477 00:21:31,320 --> 00:21:33,680 Speaker 1: your net worth. We would say this is the first 478 00:21:33,720 --> 00:21:36,080 Speaker 1: litmus test to run your debt through your debt your 479 00:21:36,119 --> 00:21:39,200 Speaker 1: decision about which debt to take on through that will 480 00:21:39,240 --> 00:21:41,600 Speaker 1: help you determine whether it's ultimately good or bad fear. 481 00:21:41,640 --> 00:21:44,440 Speaker 1: Bottom line, um it's It basically helps you separate the 482 00:21:44,480 --> 00:21:48,800 Speaker 1: wheat from the chaff using using biblical terminology. Basically, by 483 00:21:48,880 --> 00:21:51,480 Speaker 1: asking yourself this question, you're gonna be able to determine 484 00:21:51,960 --> 00:21:56,920 Speaker 1: if you're financing, appreciating, or depreciating assets. And of course 485 00:21:56,960 --> 00:21:59,920 Speaker 1: we want you to have more appreciating assets and fewer 486 00:22:00,119 --> 00:22:02,639 Speaker 1: depreciating assets. That is the name of the game when 487 00:22:02,680 --> 00:22:05,119 Speaker 1: it comes to building wealth and getting ahead of with 488 00:22:05,160 --> 00:22:07,800 Speaker 1: your money. If you have debt for an asset, that's 489 00:22:07,840 --> 00:22:11,800 Speaker 1: appreciating the congratulations that debt can actually help you in 490 00:22:11,840 --> 00:22:14,280 Speaker 1: your wealth building efforts. And I think Matt probably the 491 00:22:14,280 --> 00:22:16,520 Speaker 1: best example of that is taking on debt to buy 492 00:22:16,520 --> 00:22:18,920 Speaker 1: a rental property, because yes, you are taking on debt, 493 00:22:19,160 --> 00:22:21,280 Speaker 1: but that debt is also kind of a known quantity 494 00:22:21,400 --> 00:22:23,720 Speaker 1: and you can lock it in for a fixed rate 495 00:22:23,760 --> 00:22:27,399 Speaker 1: of time, typically thirty years, and you also can have 496 00:22:27,440 --> 00:22:30,399 Speaker 1: a pretty good idea of how much that debt is 497 00:22:30,400 --> 00:22:32,680 Speaker 1: going to cash flow for you, and so that that 498 00:22:32,760 --> 00:22:34,960 Speaker 1: debt then becomes something that is not really a liability, 499 00:22:35,000 --> 00:22:37,600 Speaker 1: it's an asset because it's producing cash flow for you 500 00:22:37,760 --> 00:22:39,879 Speaker 1: every month. If you buy the right property and you 501 00:22:40,080 --> 00:22:42,159 Speaker 1: structure that debt, well, right, yeah, there could be a 502 00:22:42,240 --> 00:22:44,240 Speaker 1: net positive. But I like what you said if you 503 00:22:44,280 --> 00:22:46,399 Speaker 1: buy the right property, because at the same time, you 504 00:22:46,440 --> 00:22:48,639 Speaker 1: don't want to overdo it because you can even take uh, 505 00:22:48,720 --> 00:22:52,040 Speaker 1: not all investment properties are going to be smart like 506 00:22:52,040 --> 00:22:54,719 Speaker 1: like not all investment property quote unquote investment properties are 507 00:22:54,720 --> 00:22:57,199 Speaker 1: going to be strategic uses of debt because there are 508 00:22:57,200 --> 00:22:59,000 Speaker 1: a lot of people who don't know what they're doing 509 00:22:59,560 --> 00:23:02,440 Speaker 1: and who buy properties willy nilly because they haven't done 510 00:23:02,440 --> 00:23:05,000 Speaker 1: the research. And yeah, what was when we talked with 511 00:23:05,240 --> 00:23:07,439 Speaker 1: with Brandon's Turner, he we talked about that exactly, like 512 00:23:07,760 --> 00:23:11,239 Speaker 1: most properties aren't a goodbye. You have to find and 513 00:23:11,280 --> 00:23:13,800 Speaker 1: wait and find the one that's actually that makes sense 514 00:23:14,080 --> 00:23:15,800 Speaker 1: numbers last exactly, And the same thing can be true 515 00:23:15,840 --> 00:23:18,439 Speaker 1: when it comes to investing money into the stock market 516 00:23:18,520 --> 00:23:21,320 Speaker 1: as well. Right, you could potentially take on debt to 517 00:23:21,600 --> 00:23:24,960 Speaker 1: buy even more stocks, considering it a smart investment in 518 00:23:24,960 --> 00:23:28,280 Speaker 1: your future. But that's called buying on margin, and the 519 00:23:28,320 --> 00:23:31,840 Speaker 1: problem is, if your investments aren't performing all that well, 520 00:23:31,880 --> 00:23:34,480 Speaker 1: you might be subject to a margin call, forcing you 521 00:23:34,520 --> 00:23:37,400 Speaker 1: to come up with even more money that, by the way, 522 00:23:37,560 --> 00:23:39,840 Speaker 1: you don't have. And so that would be a much 523 00:23:40,119 --> 00:23:43,480 Speaker 1: much riskier form of financing and appreciating asset. And so again, 524 00:23:43,480 --> 00:23:44,639 Speaker 1: you don't want to overdo it. You don't want to 525 00:23:44,640 --> 00:23:47,359 Speaker 1: push the envelip too far. And again, even with real estate, 526 00:23:47,480 --> 00:23:49,640 Speaker 1: you know the reality is that even when you opt 527 00:23:49,640 --> 00:23:51,639 Speaker 1: to do it with the rental property, you still need 528 00:23:51,680 --> 00:23:53,440 Speaker 1: to have cash on hand to get you through those 529 00:23:53,520 --> 00:23:57,320 Speaker 1: leaner months, to get you through periods of vacancy or 530 00:23:57,440 --> 00:24:01,280 Speaker 1: higher than expected repair bills. Uh. No, matter what the 531 00:24:01,359 --> 00:24:04,199 Speaker 1: quote unquote strategic debt is that you're taking on, you 532 00:24:04,200 --> 00:24:06,520 Speaker 1: still need to be judicious. Yeah. I mean, think about 533 00:24:06,720 --> 00:24:09,240 Speaker 1: the episode that we just released on Monday with Budget 534 00:24:09,240 --> 00:24:12,240 Speaker 1: Girl with Sarah, and she talks about the duplex that 535 00:24:12,280 --> 00:24:15,080 Speaker 1: she bought. She financed it, but guess what, it also 536 00:24:15,680 --> 00:24:18,240 Speaker 1: makes her money most months. But she also, on top 537 00:24:18,320 --> 00:24:22,160 Speaker 1: of that, has the cash reserves to deal with those 538 00:24:22,280 --> 00:24:25,240 Speaker 1: bigger things that can and have gone wrong in her house. 539 00:24:25,320 --> 00:24:27,920 Speaker 1: And that is that is a pattern that people can 540 00:24:27,960 --> 00:24:31,080 Speaker 1: follow to build wealth on their own. It does involve 541 00:24:31,080 --> 00:24:34,840 Speaker 1: taking on debt, but it's strategic debt that for the 542 00:24:34,880 --> 00:24:37,720 Speaker 1: person who is financially savvy and has cash on hand 543 00:24:37,760 --> 00:24:39,800 Speaker 1: to back them up if things don't go your way 544 00:24:39,840 --> 00:24:42,160 Speaker 1: even for months on end, right, and you've got plumbing 545 00:24:42,160 --> 00:24:44,840 Speaker 1: issues and roof issues and h vac issues, that you 546 00:24:44,880 --> 00:24:46,879 Speaker 1: can still cover the payments and you have to have 547 00:24:46,920 --> 00:24:49,400 Speaker 1: that long term perspective at the same time. And so yeah, 548 00:24:49,440 --> 00:24:50,520 Speaker 1: when it comes down to a man, I guess what 549 00:24:50,560 --> 00:24:53,280 Speaker 1: we're kind of saying is that debt is it's a tool. 550 00:24:53,640 --> 00:24:55,760 Speaker 1: And so another way to maybe figure out if you're 551 00:24:55,800 --> 00:24:58,960 Speaker 1: using debt strategically is to ask yourself if you're using 552 00:24:59,080 --> 00:25:02,040 Speaker 1: the tool that you being given properly, right, And credit 553 00:25:02,080 --> 00:25:04,800 Speaker 1: cards are are a perfect example, because yeah, you mentioned 554 00:25:04,800 --> 00:25:06,800 Speaker 1: them as a non strategic form of debt. So what 555 00:25:06,840 --> 00:25:08,879 Speaker 1: that What you mean by that is if you're taking 556 00:25:08,920 --> 00:25:11,560 Speaker 1: on credit card debt and you're not paying it off 557 00:25:11,600 --> 00:25:13,000 Speaker 1: on time and full at the end of the month, 558 00:25:13,480 --> 00:25:15,760 Speaker 1: that is a really bad use of debt because you're 559 00:25:15,760 --> 00:25:18,760 Speaker 1: paying something like eighteen nineteen or to the credit card 560 00:25:18,800 --> 00:25:22,119 Speaker 1: companies just to be able to finance things that you 561 00:25:22,119 --> 00:25:24,200 Speaker 1: probably don't even need. And so if that's the case, 562 00:25:24,359 --> 00:25:26,240 Speaker 1: you know, having a credit card in your life, it's 563 00:25:26,240 --> 00:25:28,280 Speaker 1: doing more more harm than good. It's a tool that 564 00:25:28,320 --> 00:25:31,440 Speaker 1: you're using poorly. Instead of using the hammer to like 565 00:25:31,720 --> 00:25:33,119 Speaker 1: put a nail on the wall, you're using it to 566 00:25:33,200 --> 00:25:35,320 Speaker 1: like bash your own toes, right, and you don't want 567 00:25:35,320 --> 00:25:37,200 Speaker 1: to do that. So, but if you're using a credit 568 00:25:37,240 --> 00:25:40,520 Speaker 1: card as a delayed payment mechanism, right, if you have 569 00:25:40,560 --> 00:25:42,520 Speaker 1: cash in the bank account to pay off that credit 570 00:25:42,560 --> 00:25:45,000 Speaker 1: card balance no matter what else comes along, and you're 571 00:25:45,040 --> 00:25:48,439 Speaker 1: making the full payment on autopilot every single month, that 572 00:25:48,600 --> 00:25:52,640 Speaker 1: ensures that you're using that particular method of debt as 573 00:25:52,680 --> 00:25:54,960 Speaker 1: a means of payment that comes with some side perks, 574 00:25:55,040 --> 00:25:59,000 Speaker 1: instead of relying it on this in such an unhealthy way. So, yeah, 575 00:25:59,040 --> 00:26:01,359 Speaker 1: the debt is basically a tool, and it can be 576 00:26:01,440 --> 00:26:03,560 Speaker 1: used for good, it can be used poorly, but so 577 00:26:03,680 --> 00:26:05,879 Speaker 1: much of it depends on whose hands it's in and 578 00:26:06,119 --> 00:26:08,320 Speaker 1: how they're using it exactly. Like it reminds me a 579 00:26:08,320 --> 00:26:10,640 Speaker 1: lot of cash, right, Like sometimes folks are like, oh, 580 00:26:10,680 --> 00:26:13,080 Speaker 1: cash is this terrible thing, like or you know, money 581 00:26:13,080 --> 00:26:16,200 Speaker 1: in general, money is evil, and it's like, yeah, not really, 582 00:26:16,280 --> 00:26:18,520 Speaker 1: money is fairly neutral. It's a neutral tool. It depends 583 00:26:18,560 --> 00:26:20,400 Speaker 1: on how you use it. And I think the same 584 00:26:20,440 --> 00:26:22,400 Speaker 1: thing is true when it comes to debt. I think 585 00:26:22,400 --> 00:26:25,560 Speaker 1: it's a fairly neutral thing. It just it is more 586 00:26:25,640 --> 00:26:28,480 Speaker 1: divisive though, right because like I feel like money can 587 00:26:28,480 --> 00:26:30,560 Speaker 1: just be this neutral thing that sits out there, whereas debt, 588 00:26:30,640 --> 00:26:32,240 Speaker 1: you're either on one side of it or the other, 589 00:26:32,560 --> 00:26:34,000 Speaker 1: and so you just want to make sure that you're 590 00:26:34,000 --> 00:26:36,320 Speaker 1: on the right side of debts, or if you are 591 00:26:36,359 --> 00:26:37,879 Speaker 1: on the wrong side of it, that you are on 592 00:26:37,920 --> 00:26:40,560 Speaker 1: the right side of it in another area of life. Right, Like, 593 00:26:40,600 --> 00:26:42,919 Speaker 1: maybe when it comes to investing, it makes me think 594 00:26:42,960 --> 00:26:45,440 Speaker 1: of like a chainsaw and a chainsaw in the hands 595 00:26:45,480 --> 00:26:48,119 Speaker 1: of my three year old son. Not a good idea, right, 596 00:26:48,320 --> 00:26:52,199 Speaker 1: A chainsaw in my hands, it's okay, safe enough, probably 597 00:26:52,200 --> 00:26:54,320 Speaker 1: not what most folks would want to be, Like, I'm 598 00:26:54,320 --> 00:26:56,000 Speaker 1: not gonna want to stand around you. I don't want 599 00:26:56,000 --> 00:26:57,399 Speaker 1: to be on the receiving end of Joel with a 600 00:26:57,480 --> 00:27:01,040 Speaker 1: chains exactly. I would rather be holding the chainsaw myself. 601 00:27:01,040 --> 00:27:02,359 Speaker 1: But if it's let's say it's in the hands of 602 00:27:02,400 --> 00:27:06,560 Speaker 1: one of those lumberjack competitors on ESPN, then it's this 603 00:27:06,720 --> 00:27:10,080 Speaker 1: tool that's used impeccably well, And you know, I think 604 00:27:10,080 --> 00:27:13,159 Speaker 1: maybe that's how we think debt can be used. So 605 00:27:13,240 --> 00:27:15,960 Speaker 1: much of it depends on whose hands its end. Yeah, well, 606 00:27:16,000 --> 00:27:18,000 Speaker 1: and it's just device. It's like this, it's kind of 607 00:27:18,040 --> 00:27:19,320 Speaker 1: more of a combat of things. I like what you 608 00:27:19,359 --> 00:27:22,440 Speaker 1: said earlier about using a hammer, like using a hammer 609 00:27:22,480 --> 00:27:25,320 Speaker 1: to put something like hang up a picture. Like that's 610 00:27:25,320 --> 00:27:27,320 Speaker 1: more like cash, right, or it feels a little more neutral. 611 00:27:27,520 --> 00:27:29,760 Speaker 1: But debt is like using a hammer, either for good 612 00:27:29,840 --> 00:27:31,480 Speaker 1: or like it's either one or the other. It's either 613 00:27:31,520 --> 00:27:33,919 Speaker 1: good or bad, either hanging the picture or you're smashing 614 00:27:33,960 --> 00:27:36,840 Speaker 1: yourself on the toe causing yourself harm. But what we're 615 00:27:36,840 --> 00:27:39,639 Speaker 1: saying here, though, is is the net gain that you receive. 616 00:27:39,800 --> 00:27:41,560 Speaker 1: Is there a gain or is there a net loss? 617 00:27:41,800 --> 00:27:43,359 Speaker 1: As you are able to step back and look at 618 00:27:43,400 --> 00:27:45,159 Speaker 1: the whole forest. As you're looking at the whole picture, 619 00:27:45,400 --> 00:27:46,760 Speaker 1: you just want to make sure again that you're on 620 00:27:46,800 --> 00:27:49,000 Speaker 1: the right side of the equation, that you are on 621 00:27:49,480 --> 00:27:53,120 Speaker 1: the UH money is owed to me side of the equation, 622 00:27:53,200 --> 00:27:56,480 Speaker 1: not on the side of IO money. But even if 623 00:27:56,560 --> 00:27:59,840 Speaker 1: your debt levels are reasonable, we think that it pays 624 00:27:59,880 --> 00:28:03,480 Speaker 1: to know yourself. So for instance, maybe you find yourself 625 00:28:03,520 --> 00:28:06,040 Speaker 1: stressed out because you've taken out a mortgage on a house, right, 626 00:28:06,119 --> 00:28:07,880 Speaker 1: A lot of folks might be in that position right now, 627 00:28:08,440 --> 00:28:10,640 Speaker 1: a house that, according to the lender, you can most 628 00:28:10,680 --> 00:28:13,840 Speaker 1: definitely afford, but it turns out that that debt just 629 00:28:14,000 --> 00:28:17,320 Speaker 1: isn't for you. Well, this is when knowing your personal 630 00:28:17,359 --> 00:28:20,760 Speaker 1: debt tolerance level is going to really pay off. Particularly 631 00:28:20,760 --> 00:28:23,080 Speaker 1: it's going to pay off in non monetary ways. So, 632 00:28:23,119 --> 00:28:25,480 Speaker 1: for example, maybe you just recently had your student loans 633 00:28:25,480 --> 00:28:29,000 Speaker 1: wiped out and you are experiencing such an improved level 634 00:28:29,080 --> 00:28:32,080 Speaker 1: of mental health that you're now like you're just now 635 00:28:32,119 --> 00:28:34,760 Speaker 1: realizing the toll that it was previously taking on you. 636 00:28:35,240 --> 00:28:40,120 Speaker 1: The psychological reality of monthly payments and a giant, outstanding 637 00:28:40,200 --> 00:28:43,880 Speaker 1: level of debt is it's real, right, The potentially positive 638 00:28:43,880 --> 00:28:47,560 Speaker 1: financial benefits of taking on more debt can most definitely 639 00:28:47,720 --> 00:28:52,400 Speaker 1: be outweighed by the negative psychological ones. And so basically 640 00:28:52,480 --> 00:28:54,440 Speaker 1: what we're saying here is that just because a debt 641 00:28:54,480 --> 00:28:57,760 Speaker 1: quote unquote is strategic, that doesn't give you license just 642 00:28:57,800 --> 00:28:59,880 Speaker 1: to take out as much of that debt as possible. 643 00:29:00,000 --> 00:29:02,800 Speaker 1: Need to take into account the other ways that that 644 00:29:02,840 --> 00:29:05,720 Speaker 1: debt is going to impact you in particular your stress levels. Yeah, 645 00:29:05,720 --> 00:29:08,760 Speaker 1: I mean we we interviewed Andy Hill from Marriage, Kids 646 00:29:08,760 --> 00:29:10,880 Speaker 1: and Money back in the day Matt and he chose 647 00:29:10,880 --> 00:29:12,720 Speaker 1: to pay off a three percent mortgage and a lot 648 00:29:12,760 --> 00:29:15,720 Speaker 1: of people have given him crap on the twitter verse, 649 00:29:15,720 --> 00:29:18,080 Speaker 1: in the Twitter verse over over the years, saying like, 650 00:29:18,160 --> 00:29:20,080 Speaker 1: that's a dumb money move, and when you look at 651 00:29:20,120 --> 00:29:22,479 Speaker 1: like what the market has done over the past decade, 652 00:29:22,560 --> 00:29:24,480 Speaker 1: right or whatever, as he could have been investing that 653 00:29:24,520 --> 00:29:26,960 Speaker 1: money instead of paying down his mortgage more quickly. It 654 00:29:27,000 --> 00:29:29,200 Speaker 1: doesn't make the most sense from a dollars and cent standpoint, 655 00:29:29,480 --> 00:29:32,560 Speaker 1: But for the way Andy explains it, I see a 656 00:29:32,560 --> 00:29:34,280 Speaker 1: lot of wisdom in it. It was the best move 657 00:29:34,320 --> 00:29:37,320 Speaker 1: for he in his family because they didn't want that 658 00:29:37,320 --> 00:29:39,600 Speaker 1: debt hanging over their heads. And so yes, there is 659 00:29:39,720 --> 00:29:41,720 Speaker 1: we we well, I mean the same thing with our 660 00:29:42,080 --> 00:29:44,080 Speaker 1: friend of the show, Morgan Housel, who came on paid 661 00:29:44,120 --> 00:29:46,240 Speaker 1: off his mortgage, but he invests a hundred percent in 662 00:29:46,320 --> 00:29:48,920 Speaker 1: stocks and he's he's he you know, he invests a 663 00:29:48,960 --> 00:29:51,040 Speaker 1: lot of his money. Yeah, he's a super smart guy, 664 00:29:51,440 --> 00:29:53,200 Speaker 1: maybe one of the smartest guys we've had on the show. 665 00:29:53,360 --> 00:29:55,320 Speaker 1: And if you're just looking at the numbers, yeah, It 666 00:29:55,360 --> 00:29:58,320 Speaker 1: does not financially make sense to pay off your house, 667 00:29:58,320 --> 00:30:00,640 Speaker 1: but it's something that he chose to do because now 668 00:30:00,680 --> 00:30:02,640 Speaker 1: he knows that I will never lose my house. It's 669 00:30:02,680 --> 00:30:04,680 Speaker 1: not I own it. It's not the most strategic thing, 670 00:30:04,840 --> 00:30:07,400 Speaker 1: but it's the best thing for you from mental perspective, 671 00:30:07,440 --> 00:30:09,360 Speaker 1: and that matters, right, And you have to take that 672 00:30:09,360 --> 00:30:11,760 Speaker 1: into account to you can you know you can. You 673 00:30:11,800 --> 00:30:14,160 Speaker 1: can go crazy trying to be the most strategic person 674 00:30:14,200 --> 00:30:16,040 Speaker 1: on the face of the earth and ultimately end up 675 00:30:16,040 --> 00:30:18,120 Speaker 1: harming yourself in the process. And you might, even in 676 00:30:18,120 --> 00:30:20,400 Speaker 1: your attempts to be strategic, try to do things that 677 00:30:20,440 --> 00:30:22,720 Speaker 1: are more complex and you're able to pull off. And 678 00:30:22,800 --> 00:30:25,960 Speaker 1: so yeah, that matters too. We want to stress that 679 00:30:26,200 --> 00:30:29,200 Speaker 1: it's okay to use debt strategically, and it's okay to 680 00:30:29,280 --> 00:30:32,600 Speaker 1: take on debt to further your ability to earn or 681 00:30:32,640 --> 00:30:34,680 Speaker 1: to grow your net worth, but if you attempt to 682 00:30:34,680 --> 00:30:36,880 Speaker 1: get too cute with it, you might find yourself in 683 00:30:37,360 --> 00:30:39,600 Speaker 1: a pickle. And I think we've given a stat Matt 684 00:30:39,680 --> 00:30:43,040 Speaker 1: something about like people that have debt hanging over their heads, 685 00:30:43,320 --> 00:30:46,120 Speaker 1: it feels to them like their their i Q has 686 00:30:46,160 --> 00:30:48,720 Speaker 1: basically dropped twelve points. They're walking through this world a 687 00:30:48,800 --> 00:30:51,040 Speaker 1: little bit dumber because of the debt that hangs around 688 00:30:51,040 --> 00:30:52,640 Speaker 1: their necks. And I think there's a reality to that 689 00:30:52,680 --> 00:30:56,120 Speaker 1: as well. If that debt is is casting a shadow, 690 00:30:56,200 --> 00:30:59,560 Speaker 1: it's it's causing creating like a mental weight around your neck, 691 00:30:59,560 --> 00:31:01,840 Speaker 1: then we would say it's better to get rid of 692 00:31:01,880 --> 00:31:03,720 Speaker 1: it than it is to keep it around, just because 693 00:31:03,720 --> 00:31:06,560 Speaker 1: it's quote unquote strategic. But that makes said, let's keep 694 00:31:06,560 --> 00:31:09,240 Speaker 1: talking about strategic dead because and then I think another 695 00:31:09,360 --> 00:31:12,400 Speaker 1: way that you could use that strategically is maybe borrowing 696 00:31:12,400 --> 00:31:14,760 Speaker 1: on items. So we would typically tell you not to 697 00:31:14,800 --> 00:31:17,360 Speaker 1: borrow for which, by the way, I mean obviously it 698 00:31:17,360 --> 00:31:18,840 Speaker 1: sounds like we're kind of talking out of both sides 699 00:31:18,880 --> 00:31:20,640 Speaker 1: of our mouth. He sounds like a mind vendor um, 700 00:31:20,680 --> 00:31:23,760 Speaker 1: and we kind of are. But the nuance is important here. So, 701 00:31:23,800 --> 00:31:27,040 Speaker 1: for instance, I'm thinking about car loans, and the reality 702 00:31:27,320 --> 00:31:29,960 Speaker 1: is that car loans are a major problem in our country, 703 00:31:30,520 --> 00:31:33,680 Speaker 1: largely because people finance really expensive vehicle that they could 704 00:31:33,720 --> 00:31:36,600 Speaker 1: never afford if they weren't able to take out like 705 00:31:36,640 --> 00:31:39,280 Speaker 1: a seven or even eight year loan. Uh, they're basically 706 00:31:39,360 --> 00:31:42,240 Speaker 1: upside down for for most of that loan term. That's 707 00:31:42,280 --> 00:31:45,400 Speaker 1: a bad financial position. To be in. But what if 708 00:31:45,440 --> 00:31:47,720 Speaker 1: you have the money on hand, but you still opt 709 00:31:47,760 --> 00:31:50,760 Speaker 1: to take out a loan anyway, Because for instance, let's 710 00:31:50,760 --> 00:31:54,400 Speaker 1: say you get financing maybe at like two from your 711 00:31:54,440 --> 00:31:57,600 Speaker 1: local credit union, and then you opt instead to keep 712 00:31:57,640 --> 00:32:00,640 Speaker 1: that money invested instead of pulling your cash out in 713 00:32:00,760 --> 00:32:03,959 Speaker 1: order to pay for that car. We one believe that 714 00:32:03,960 --> 00:32:06,720 Speaker 1: that is a smart use of your money. So it 715 00:32:06,760 --> 00:32:08,880 Speaker 1: comes down to that opportunity costs. You have to be 716 00:32:08,960 --> 00:32:10,920 Speaker 1: able to look at the whole picture. Uh, you have 717 00:32:11,040 --> 00:32:13,800 Speaker 1: to be disciplined as well to take that money and 718 00:32:13,880 --> 00:32:15,960 Speaker 1: do something like invested. Because if you just take out 719 00:32:15,960 --> 00:32:18,640 Speaker 1: that loan and then you're like, well, no, I've got 720 00:32:18,640 --> 00:32:21,040 Speaker 1: this money. Uh, that that that I haven't parted ways with, 721 00:32:21,160 --> 00:32:23,640 Speaker 1: I can use that to buy other stuff, other crap 722 00:32:23,680 --> 00:32:25,440 Speaker 1: that's going to depreciate and go down to value. Well, 723 00:32:25,440 --> 00:32:27,000 Speaker 1: then that is going to be a big mistake. But 724 00:32:27,440 --> 00:32:29,800 Speaker 1: that's why it's it's so important what you do with 725 00:32:29,920 --> 00:32:32,480 Speaker 1: the money that you are not using to pay for 726 00:32:32,560 --> 00:32:34,640 Speaker 1: that item. And then the terms of your debt are important. 727 00:32:34,720 --> 00:32:36,680 Speaker 1: Let's talk about that, and let's also talk about how 728 00:32:36,840 --> 00:32:40,640 Speaker 1: the reality of higher inflation plays into your decision to 729 00:32:40,760 --> 00:32:44,000 Speaker 1: keep strategic debt around longer or not, And we'll get 730 00:32:44,000 --> 00:32:55,000 Speaker 1: to that right after this. All right, we are back 731 00:32:55,120 --> 00:32:59,000 Speaker 1: from the break, Joel. You you mentioned inflation. That's obviously 732 00:32:59,080 --> 00:33:01,360 Speaker 1: something that is in the news, is something we are 733 00:33:01,400 --> 00:33:04,360 Speaker 1: all dealing with, and that has definitely changed the strategic 734 00:33:04,360 --> 00:33:07,959 Speaker 1: debt question because the three percent mortgage, it's looking a 735 00:33:08,000 --> 00:33:10,560 Speaker 1: lot better than it did even even just a few 736 00:33:10,640 --> 00:33:12,720 Speaker 1: years ago, even just these right year ago rates are 737 00:33:12,760 --> 00:33:15,440 Speaker 1: close to six inflations, close to nine percent, and it's like, wow, 738 00:33:15,520 --> 00:33:18,320 Speaker 1: three percent mortgage feels like a slammed on keeper. Yeah, 739 00:33:18,320 --> 00:33:20,160 Speaker 1: the same thing, same thing with a car loan. Uh. 740 00:33:20,200 --> 00:33:22,320 Speaker 1: And so should you rush to pay those debts off 741 00:33:22,320 --> 00:33:24,480 Speaker 1: when you have extra cash on hand? Well, so much 742 00:33:24,520 --> 00:33:28,080 Speaker 1: depends on what your goals are. But the reality of 743 00:33:28,320 --> 00:33:30,520 Speaker 1: you know, inflation close to ten percent like that leads 744 00:33:30,600 --> 00:33:33,440 Speaker 1: us to believe that getting rid of low interest rate 745 00:33:33,640 --> 00:33:36,640 Speaker 1: strategic debts is going to be less appealing to us. 746 00:33:36,720 --> 00:33:38,960 Speaker 1: Right now, we want you to, you know, consider holding 747 00:33:38,960 --> 00:33:41,480 Speaker 1: on to that strategic debt and then funnel your dollars 748 00:33:41,520 --> 00:33:45,400 Speaker 1: towards more productive ends. So essentially, you are paying down 749 00:33:45,440 --> 00:33:48,040 Speaker 1: that loan, You're either paying down that car note or 750 00:33:48,080 --> 00:33:50,880 Speaker 1: that mortgage or hopefully not car note, just i'm gonna, 751 00:33:50,880 --> 00:33:52,720 Speaker 1: I'm gonna, I'm gonna go ahead and nix that. Let's 752 00:33:52,720 --> 00:33:55,080 Speaker 1: say mortgage and student loans, hopefully the reality of some 753 00:33:55,160 --> 00:33:57,720 Speaker 1: people do have car notes and they're at reasonable rates. It. 754 00:33:58,000 --> 00:34:01,080 Speaker 1: We still hate financing depreciating assets, want to encourage it. Yeah, 755 00:34:02,520 --> 00:34:04,680 Speaker 1: but basically, like the dollars that you are using to 756 00:34:04,720 --> 00:34:07,120 Speaker 1: pay down that loan with, they're worth less than the 757 00:34:07,160 --> 00:34:09,200 Speaker 1: dollars that you had on hand when you first took 758 00:34:09,239 --> 00:34:12,359 Speaker 1: out that loan. Yeah, the reality of inflation does kind 759 00:34:12,360 --> 00:34:15,640 Speaker 1: of make that debt look less bad, right and more 760 00:34:15,640 --> 00:34:18,839 Speaker 1: strategic than it was even a couple of years ago. 761 00:34:18,920 --> 00:34:20,520 Speaker 1: Like we would have said a three percent mortgage then, 762 00:34:20,520 --> 00:34:22,399 Speaker 1: which just wasn't a high priority. It feels like even 763 00:34:22,480 --> 00:34:24,879 Speaker 1: less of a priority today totally. But we should also 764 00:34:24,920 --> 00:34:28,200 Speaker 1: mention that when we're talking about using debt strategically, that 765 00:34:28,239 --> 00:34:31,560 Speaker 1: means setting reasonable limits, because even when we're talking about 766 00:34:31,640 --> 00:34:34,799 Speaker 1: a debt that could be considered good or strategic, an 767 00:34:34,800 --> 00:34:37,680 Speaker 1: abundance of strategic debt can quickly put like a chokehold 768 00:34:37,719 --> 00:34:41,399 Speaker 1: on your personal finances. So basically, even good debt can 769 00:34:41,400 --> 00:34:44,800 Speaker 1: become toxic. You can't just continue to take on higher 770 00:34:44,840 --> 00:34:47,839 Speaker 1: and higher levels of debt completely unchecked, even if it's 771 00:34:47,840 --> 00:34:51,200 Speaker 1: the quote unquote good kind uh And student loans, for example, 772 00:34:51,600 --> 00:34:53,799 Speaker 1: we've seen this in spades, Matt right, that it can 773 00:34:53,840 --> 00:34:56,680 Speaker 1: be a strategic form of debt. It can be, although 774 00:34:57,200 --> 00:34:59,879 Speaker 1: with student loans being immune to bankruptcy, they're not quite 775 00:34:59,880 --> 00:35:01,680 Speaker 1: a good as they seem. And even aside from that, 776 00:35:02,000 --> 00:35:04,960 Speaker 1: you know, we've also seen the downsides clearly of taking 777 00:35:04,960 --> 00:35:07,280 Speaker 1: on copious amounts of debt in order to get a degree, 778 00:35:07,800 --> 00:35:10,040 Speaker 1: especially when we're not thinking about it, we're not thinking 779 00:35:10,040 --> 00:35:13,600 Speaker 1: about the value proposition that that degree can bring. But 780 00:35:13,680 --> 00:35:15,360 Speaker 1: if you opt to get that degree, let's say, and 781 00:35:15,400 --> 00:35:17,360 Speaker 1: you seek to minimize that debt by going to a 782 00:35:17,400 --> 00:35:19,959 Speaker 1: cheaper school or by like let's say, working ten hours 783 00:35:19,960 --> 00:35:22,680 Speaker 1: a week in order to borrow less, having that job 784 00:35:23,440 --> 00:35:27,280 Speaker 1: while you're going through school can lead to smaller college 785 00:35:27,280 --> 00:35:30,640 Speaker 1: loans borrowing less against that degree. And of course that 786 00:35:30,680 --> 00:35:33,239 Speaker 1: degree can boost your income and your job prospects for 787 00:35:33,320 --> 00:35:36,480 Speaker 1: decades to come. But the stats continue to show that 788 00:35:36,520 --> 00:35:41,400 Speaker 1: the average college graduate boost their lifetime earnings significantly. But basically, 789 00:35:41,440 --> 00:35:43,839 Speaker 1: what we're trying to say here is, even when we're 790 00:35:43,840 --> 00:35:46,040 Speaker 1: talking about the strategic use of debt. You have to 791 00:35:46,040 --> 00:35:48,440 Speaker 1: be smart because it can be overdone and it can 792 00:35:48,520 --> 00:35:52,359 Speaker 1: lead to perpetual payments that you don't want to sign 793 00:35:52,440 --> 00:35:54,680 Speaker 1: up for. Uh. And you just we we just weren't 794 00:35:54,680 --> 00:35:58,160 Speaker 1: thoughtful enough in the beginning and we didn't think creatively enough, 795 00:35:58,200 --> 00:36:01,279 Speaker 1: like we talked about earlier to minimize debtload. Exactly. Yeah, 796 00:36:01,280 --> 00:36:04,040 Speaker 1: you do not want perpetual payments. That sounds like the 797 00:36:04,120 --> 00:36:06,800 Speaker 1: horror film when when it comes to personal finance, the 798 00:36:06,800 --> 00:36:09,239 Speaker 1: personal finance version of a horror film, and think we 799 00:36:09,320 --> 00:36:12,880 Speaker 1: get like Jordan people to direct him. Uh. Like. So, 800 00:36:13,040 --> 00:36:14,960 Speaker 1: what you're talking about here are reasonable limits, right, And 801 00:36:15,040 --> 00:36:17,319 Speaker 1: oftentimes that comes down to the limits that we place 802 00:36:17,440 --> 00:36:20,839 Speaker 1: upon ourselves, because unfortunately the limits that lenders will place 803 00:36:20,960 --> 00:36:24,400 Speaker 1: on us aren't. The threshold is much higher typically to 804 00:36:24,520 --> 00:36:27,000 Speaker 1: what they will allow than what we should get ourselves 805 00:36:27,160 --> 00:36:29,080 Speaker 1: allow ourselves to get into. Right. And so they're they're 806 00:36:29,160 --> 00:36:32,600 Speaker 1: debt to income ratios out there that student loan lenders 807 00:36:32,680 --> 00:36:36,040 Speaker 1: and banks and mortgage lenders that they will allow you, like, 808 00:36:36,360 --> 00:36:38,600 Speaker 1: I mean, some banks will allow you to borrow up 809 00:36:38,640 --> 00:36:42,440 Speaker 1: to like a sibt to income ratio, whereas others who 810 00:36:42,440 --> 00:36:44,839 Speaker 1: are like a little more conservative are wanting to see 811 00:36:44,840 --> 00:36:48,120 Speaker 1: you closer to either way, we don't want you anywhere 812 00:36:48,200 --> 00:36:50,640 Speaker 1: near those levels. We want you to have a much 813 00:36:50,680 --> 00:36:52,719 Speaker 1: lower threshold. We want you to think about be about 814 00:36:52,760 --> 00:36:55,520 Speaker 1: post tax income and how much you can actually reasonably 815 00:36:55,560 --> 00:36:57,560 Speaker 1: afford when you're borrowing a house, not just what the 816 00:36:57,640 --> 00:37:00,480 Speaker 1: lender says you can afford, Because if you automatic really approved, 817 00:37:00,480 --> 00:37:02,719 Speaker 1: if you take out to those those limits, you're you're 818 00:37:02,719 --> 00:37:04,920 Speaker 1: gonna feel the financial pressure in a meaningful way to 819 00:37:04,920 --> 00:37:07,040 Speaker 1: be totally screwed. You're gonna end up like the average American. 820 00:37:07,120 --> 00:37:09,120 Speaker 1: And that's what we're trying to avoid right now. Uh. 821 00:37:09,200 --> 00:37:10,919 Speaker 1: And you know one other thing too. When we're talking 822 00:37:10,920 --> 00:37:13,960 Speaker 1: about how to think about debt payoff, the things that 823 00:37:14,000 --> 00:37:16,239 Speaker 1: will want to consider most closely are the other terms, 824 00:37:16,400 --> 00:37:18,759 Speaker 1: like the interest rate, how long it'll take you to 825 00:37:18,800 --> 00:37:21,320 Speaker 1: pay off that debt. Uh. Then the cool thing is 826 00:37:21,640 --> 00:37:24,320 Speaker 1: that you can often turn a debt that's not so 827 00:37:24,440 --> 00:37:27,560 Speaker 1: great into a more strategic form of debt just by 828 00:37:27,640 --> 00:37:30,880 Speaker 1: changing those terms. So refinancing a mortgage right like that 829 00:37:30,920 --> 00:37:34,680 Speaker 1: doesn't look all that smart today, but making that refly happen, 830 00:37:34,800 --> 00:37:37,080 Speaker 1: say a year ago, to lower your rate by like 831 00:37:37,280 --> 00:37:40,240 Speaker 1: one or more percentage points. Like that is an example 832 00:37:40,280 --> 00:37:43,960 Speaker 1: of getting more favorable terms that allows you to essentially 833 00:37:44,080 --> 00:37:46,279 Speaker 1: like recast that debt in the new lights, allowing you 834 00:37:46,360 --> 00:37:48,840 Speaker 1: to make some financial progress that is going to be 835 00:37:49,080 --> 00:37:51,680 Speaker 1: much better for your bottom line. The same thing is 836 00:37:51,680 --> 00:37:54,240 Speaker 1: sure you when it comes to refinancing a car actually 837 00:37:54,680 --> 00:37:57,480 Speaker 1: Caribou for instance, this is a site, this is a 838 00:37:57,520 --> 00:38:00,040 Speaker 1: company that will allow you to refinance a carlo and 839 00:38:00,080 --> 00:38:03,440 Speaker 1: if you've got one, or consolidating like your own debts. Uh, 840 00:38:03,560 --> 00:38:06,000 Speaker 1: let's say by using like a zero percent balance transfer 841 00:38:06,040 --> 00:38:09,200 Speaker 1: card or even helock funds to pay off the remaining 842 00:38:09,239 --> 00:38:12,040 Speaker 1: portion of your credit card debt in order to lower 843 00:38:12,239 --> 00:38:15,000 Speaker 1: that interest rate significantly. These are some of the different 844 00:38:15,040 --> 00:38:17,560 Speaker 1: ways that you can use some of the mechanics or 845 00:38:17,640 --> 00:38:19,360 Speaker 1: you know, some of the terms of these loans and 846 00:38:19,440 --> 00:38:22,680 Speaker 1: these debts that you might have to like transform them 847 00:38:22,719 --> 00:38:24,919 Speaker 1: to kind of like shape them and massage them into 848 00:38:25,440 --> 00:38:28,640 Speaker 1: debts that could be viewed a little more strategically. Uh. 849 00:38:28,800 --> 00:38:30,160 Speaker 1: These are some of the ways to turn your your 850 00:38:30,200 --> 00:38:32,960 Speaker 1: bad debts into something that's going to be far less offensive. Yeah, 851 00:38:33,000 --> 00:38:35,440 Speaker 1: maybe you're a reform spender and you're like, listen, I've 852 00:38:35,480 --> 00:38:37,520 Speaker 1: still got eight thousand dollars worth of the credit card 853 00:38:37,560 --> 00:38:39,480 Speaker 1: debt hanging out. But I also have this helock over here, 854 00:38:39,800 --> 00:38:42,080 Speaker 1: and I can pay off my credit card debt with 855 00:38:42,120 --> 00:38:43,920 Speaker 1: my helock. And guess what my helock is at five 856 00:38:43,920 --> 00:38:47,080 Speaker 1: percent my credit cards at boom, You've just been able 857 00:38:47,080 --> 00:38:48,879 Speaker 1: to help your big old spread in a big way. 858 00:38:48,960 --> 00:38:51,040 Speaker 1: That's a big spread, turning that debt into a more 859 00:38:51,040 --> 00:38:53,320 Speaker 1: strategic form. But here's the caveat, because we have to 860 00:38:53,360 --> 00:38:56,440 Speaker 1: throw this in there, because using debt strategically it's it's 861 00:38:56,560 --> 00:38:59,160 Speaker 1: less about shuffling the debt chairs on the Titanic. Let's 862 00:38:59,160 --> 00:39:00,839 Speaker 1: say you're not a reform spending and you're like, I'll 863 00:39:00,840 --> 00:39:02,799 Speaker 1: take the heatlock money if you'll stay off my credit 864 00:39:02,840 --> 00:39:04,839 Speaker 1: card debt, and then I'll run up that credit card 865 00:39:04,880 --> 00:39:07,960 Speaker 1: bill again. Well, you're setting yourself up for more pain 866 00:39:08,000 --> 00:39:09,840 Speaker 1: in the future. If the boats still thinking no matter what, 867 00:39:10,040 --> 00:39:12,600 Speaker 1: then it doesn't make any sense, like you're just you're 868 00:39:12,640 --> 00:39:15,320 Speaker 1: literally wasting time and energy in some of these pursuits 869 00:39:15,360 --> 00:39:17,680 Speaker 1: when instead you just need a I guess in the 870 00:39:17,719 --> 00:39:20,040 Speaker 1: case of the Titanic, just get on a lifeboat. Bail 871 00:39:20,120 --> 00:39:23,120 Speaker 1: completely if you can write. But there are all sorts 872 00:39:23,160 --> 00:39:25,800 Speaker 1: of ways that the people get tricked into thinking that 873 00:39:25,960 --> 00:39:28,680 Speaker 1: dumb debt can be modified in order to be not 874 00:39:28,800 --> 00:39:31,000 Speaker 1: so bad. But if paying off your credit card with 875 00:39:31,120 --> 00:39:33,320 Speaker 1: that healock, If it just lowers the balance so that 876 00:39:33,440 --> 00:39:36,319 Speaker 1: you can spend more and more, then you you've got 877 00:39:36,400 --> 00:39:39,320 Speaker 1: you find yourself in double trouble. You've got double the problem, 878 00:39:39,600 --> 00:39:42,200 Speaker 1: and you're just increasing your overall amount of debt in 879 00:39:42,360 --> 00:39:45,080 Speaker 1: order to spend more money that you don't have. Doing 880 00:39:45,160 --> 00:39:48,800 Speaker 1: that strategically, it just really requires the financial discipline to 881 00:39:48,960 --> 00:39:52,680 Speaker 1: avoid those bad debts moving forward. If you shuffle debts around, 882 00:39:52,719 --> 00:39:55,840 Speaker 1: you find better terms, but then the behavior never changes, 883 00:39:56,160 --> 00:39:59,040 Speaker 1: then you're you're going to basically be putting yourself in 884 00:39:59,200 --> 00:40:01,360 Speaker 1: a much worse POSI. You've got to get to the 885 00:40:01,480 --> 00:40:03,279 Speaker 1: root of issue. But let's say that you are in 886 00:40:03,320 --> 00:40:05,320 Speaker 1: fact going to get disciplined with your finances. You do 887 00:40:05,480 --> 00:40:09,160 Speaker 1: have some debt that we'd classify as non strategic. Uh. 888 00:40:09,520 --> 00:40:11,480 Speaker 1: You know, if you do, then modifying the terms like 889 00:40:11,560 --> 00:40:13,239 Speaker 1: it can always be helpful. But at the end of 890 00:40:13,239 --> 00:40:15,480 Speaker 1: the day, like you just need to eliminate it from 891 00:40:15,520 --> 00:40:18,479 Speaker 1: your life altogether. Uh, And to do that as quickly 892 00:40:18,520 --> 00:40:21,960 Speaker 1: as possible. We're big fans of you using this free 893 00:40:22,239 --> 00:40:26,480 Speaker 1: site uh undebt dot it undebt uh in order to 894 00:40:26,520 --> 00:40:29,120 Speaker 1: come up with a payoff plan that you think will 895 00:40:29,200 --> 00:40:31,560 Speaker 1: work best for you. This is especially helpfully if you 896 00:40:31,640 --> 00:40:35,560 Speaker 1: have multiple balances with a with different interest rates um 897 00:40:35,600 --> 00:40:37,560 Speaker 1: and so after you enter in your information the software, 898 00:40:37,560 --> 00:40:40,520 Speaker 1: it'll tell you which balance to focus on. If you 899 00:40:40,640 --> 00:40:43,239 Speaker 1: think either the debt snowball approach is gonna work best 900 00:40:43,280 --> 00:40:45,800 Speaker 1: for you, that's where you eliminate debts that have the 901 00:40:45,880 --> 00:40:48,960 Speaker 1: largest balance, or if the debt avalanche is going to 902 00:40:49,040 --> 00:40:50,400 Speaker 1: work best for you, that's when you go after the 903 00:40:50,480 --> 00:40:53,960 Speaker 1: debts that have the highest interest rates uh not balances 904 00:40:54,239 --> 00:40:55,960 Speaker 1: and so, yeah, definitely check that out. Or you know, 905 00:40:56,000 --> 00:40:57,840 Speaker 1: you might even find that like more of a hybrid 906 00:40:57,880 --> 00:40:59,120 Speaker 1: approach is going to work for you. They have a 907 00:40:59,160 --> 00:41:00,680 Speaker 1: bunch of different approach is that you can take on 908 00:41:00,760 --> 00:41:02,759 Speaker 1: that website. Yeah, it's not just black or white. Yeah, 909 00:41:02,800 --> 00:41:06,080 Speaker 1: they will help you formulate that plan again for free. 910 00:41:06,440 --> 00:41:10,360 Speaker 1: Which if we're talking about strategic debt, well, the strategic 911 00:41:10,440 --> 00:41:13,920 Speaker 1: move is to eliminate them as swiftly as possible, preferably 912 00:41:13,920 --> 00:41:17,320 Speaker 1: while paying the least amount of interest possible, and using 913 00:41:17,480 --> 00:41:19,920 Speaker 1: a tool like undebt, it can be helpful in that regard, 914 00:41:20,239 --> 00:41:22,120 Speaker 1: and at the end of the day, we would say 915 00:41:22,200 --> 00:41:26,320 Speaker 1: it's important to know your specific tolerance towards debt because 916 00:41:26,760 --> 00:41:31,400 Speaker 1: some folks they think maybe climbing everest or skydiving. They're like, oh, 917 00:41:31,520 --> 00:41:33,320 Speaker 1: that sounds super fun. I totally want to do that. 918 00:41:33,880 --> 00:41:37,440 Speaker 1: Other people say that's insane, it's utterly reckless to go 919 00:41:37,600 --> 00:41:41,520 Speaker 1: climb a mountain and stand at twenty feet above sea level. Well, 920 00:41:42,200 --> 00:41:44,239 Speaker 1: we all kind of think about risk differently, and we 921 00:41:44,280 --> 00:41:47,160 Speaker 1: actually talked about that with economist Alison Sregar back back 922 00:41:47,200 --> 00:41:50,320 Speaker 1: in episode five three. Uh so that that is just 923 00:41:50,400 --> 00:41:53,440 Speaker 1: kind of part of the game. We all have different tendencies. 924 00:41:53,880 --> 00:41:56,160 Speaker 1: But for some folks, you know, that three percent mortgage 925 00:41:56,200 --> 00:41:58,560 Speaker 1: is something they want off their mind altogether. I get it, 926 00:41:58,840 --> 00:42:00,040 Speaker 1: you know, even though Matt and I we think of 927 00:42:00,120 --> 00:42:03,080 Speaker 1: that as a strategic debt that you could easily justify 928 00:42:03,160 --> 00:42:04,880 Speaker 1: taking your sweet time to pay off, you know, allowing 929 00:42:04,920 --> 00:42:08,920 Speaker 1: yourself to accomplish other financial goals a lot more quickly 930 00:42:09,600 --> 00:42:11,359 Speaker 1: because you're not rushing to be done with it. Well, 931 00:42:11,480 --> 00:42:13,280 Speaker 1: that doesn't mean that it's the best course of action 932 00:42:13,360 --> 00:42:17,440 Speaker 1: for you, because we ultimately we recognize the psychological reality 933 00:42:17,560 --> 00:42:19,920 Speaker 1: that lingering debt. It could be doing more harm than 934 00:42:20,000 --> 00:42:22,320 Speaker 1: good for some folks. But let'slet's say you're the opposite 935 00:42:22,320 --> 00:42:24,319 Speaker 1: type of person, Matt. Let's say you are the person 936 00:42:24,400 --> 00:42:26,600 Speaker 1: who would go hang glauding on a whim not think 937 00:42:26,640 --> 00:42:29,800 Speaker 1: twice about it, or you like base jumping something like that, 938 00:42:30,200 --> 00:42:33,920 Speaker 1: jumping from skyscrapers in major cities. Well, we we want 939 00:42:34,000 --> 00:42:35,759 Speaker 1: those kind of people to be careful not to let 940 00:42:35,800 --> 00:42:40,120 Speaker 1: their exuberance uh extend into their money decisions, because it's 941 00:42:40,160 --> 00:42:43,160 Speaker 1: easy to say, no, I'm I'm super risky, I'm willing 942 00:42:43,200 --> 00:42:46,120 Speaker 1: to take these thoughts on strategic debt use to like 943 00:42:46,400 --> 00:42:49,760 Speaker 1: the furthest degree possible. Yeah, well, you might find yourself 944 00:42:49,920 --> 00:42:52,520 Speaker 1: overextended in the position you don't want to find yourself in. 945 00:42:52,640 --> 00:42:54,880 Speaker 1: And so both sides of the coin, the people who 946 00:42:54,920 --> 00:42:57,839 Speaker 1: are are risk averse and the people who are all 947 00:42:57,880 --> 00:43:00,640 Speaker 1: about taking on greater levels of risks, they both need 948 00:43:00,719 --> 00:43:02,719 Speaker 1: to Maybe maybe we can all be brought to the 949 00:43:02,800 --> 00:43:04,720 Speaker 1: center a little bit as we kind of talk about 950 00:43:04,760 --> 00:43:07,760 Speaker 1: the strategic use of debt. Even that can be overdone, 951 00:43:07,960 --> 00:43:09,480 Speaker 1: I think so. I think a lot of us, a 952 00:43:09,520 --> 00:43:11,399 Speaker 1: lot of folks out there could probably use a little 953 00:43:11,440 --> 00:43:13,719 Speaker 1: more balance when it comes to how they viewed debt. 954 00:43:13,800 --> 00:43:15,880 Speaker 1: And eventually, the thing is too even if you have 955 00:43:15,960 --> 00:43:18,680 Speaker 1: strategic debt in your life, you're gonna want to eradicate 956 00:43:18,760 --> 00:43:20,120 Speaker 1: that as well. You know, like who wants to have 957 00:43:20,520 --> 00:43:24,759 Speaker 1: their student loans haunt them into retirement? Nobody. But the 958 00:43:24,840 --> 00:43:27,600 Speaker 1: truth is that engineering your personal finances to include the 959 00:43:27,800 --> 00:43:30,040 Speaker 1: use of some strategic debt can help you to make 960 00:43:30,120 --> 00:43:32,960 Speaker 1: progress more quickly. It allows you to use your dollars 961 00:43:33,040 --> 00:43:35,279 Speaker 1: in like the in the most efficient manner. But so 962 00:43:35,360 --> 00:43:38,640 Speaker 1: many of us have just been warned so severely about 963 00:43:38,680 --> 00:43:41,080 Speaker 1: the dangers of debt that we have refused to believe 964 00:43:41,120 --> 00:43:42,880 Speaker 1: that it can be any good. And the truth is, 965 00:43:42,960 --> 00:43:45,239 Speaker 1: you know that debt it's used improperly more often than 966 00:43:45,280 --> 00:43:47,200 Speaker 1: it's used smartly in in a wise way. But that 967 00:43:47,280 --> 00:43:50,520 Speaker 1: doesn't mean that it is not possible or even desirable 968 00:43:50,760 --> 00:43:53,040 Speaker 1: to use debt in an intelligent manner. We want you 969 00:43:53,120 --> 00:43:55,399 Speaker 1: to kind of. It's a pendulum that swings back and forth, 970 00:43:55,600 --> 00:43:58,400 Speaker 1: and depending on where you are in life, and depending 971 00:43:58,440 --> 00:44:01,600 Speaker 1: on your your personal risk tolerance, you're gonna find yourself 972 00:44:01,640 --> 00:44:03,680 Speaker 1: swinging one way or the other. And I don't know, 973 00:44:03,800 --> 00:44:05,480 Speaker 1: like there might be tons in your life when you 974 00:44:05,520 --> 00:44:08,040 Speaker 1: do need to eliminate it completely. It just depends on 975 00:44:08,280 --> 00:44:10,720 Speaker 1: what you've got going on. But we we want folks 976 00:44:10,800 --> 00:44:12,919 Speaker 1: to approach it with a little bit more nuanced because 977 00:44:12,960 --> 00:44:15,640 Speaker 1: we think that it can serve you well well, especially 978 00:44:15,719 --> 00:44:18,759 Speaker 1: in our in a modern society right where to take 979 00:44:18,840 --> 00:44:20,799 Speaker 1: on debt to go get a higher education, if it's 980 00:44:20,840 --> 00:44:24,680 Speaker 1: done smartly, can result in hundreds of thousands of dollars 981 00:44:24,960 --> 00:44:27,279 Speaker 1: more income during the rest of your life. And if 982 00:44:27,320 --> 00:44:30,520 Speaker 1: you take the debt is dumb approach, you're potentially pushing 983 00:44:30,560 --> 00:44:34,279 Speaker 1: aside future income. Or you might be saying, you know what, 984 00:44:34,440 --> 00:44:35,839 Speaker 1: I only want to buy a house if it's cash, 985 00:44:35,920 --> 00:44:38,440 Speaker 1: because I think that is the devil. And if you 986 00:44:38,520 --> 00:44:40,799 Speaker 1: do that, you might be waiting a decade or longer 987 00:44:40,880 --> 00:44:43,040 Speaker 1: in order to buy them home. It's tough easily to 988 00:44:43,160 --> 00:44:45,640 Speaker 1: save up to bate to buy a house in cash. 989 00:44:46,080 --> 00:44:48,160 Speaker 1: Or you might say rental property is not for me 990 00:44:48,239 --> 00:44:49,800 Speaker 1: because it means I have to take on debt, and 991 00:44:49,960 --> 00:44:51,960 Speaker 1: that's that's a scary thing. But if you run the 992 00:44:52,040 --> 00:44:53,680 Speaker 1: numbers and you're like, man, I can use that debt 993 00:44:53,719 --> 00:44:57,240 Speaker 1: strategically to increase my cash flow, to further my income, 994 00:44:57,600 --> 00:45:00,400 Speaker 1: to build wealth, suddenly it becomes more or of like 995 00:45:00,600 --> 00:45:03,839 Speaker 1: a jumping stone than it does hindrance, and so yeah, 996 00:45:03,920 --> 00:45:06,359 Speaker 1: it's it's not that debt can't be used poorly most 997 00:45:06,360 --> 00:45:07,880 Speaker 1: of the time it is, but we think it can 998 00:45:07,880 --> 00:45:10,600 Speaker 1: also be used strategically and can help you reach your 999 00:45:10,719 --> 00:45:14,239 Speaker 1: financial goals more quickly if you're smart about it. That's right, 1000 00:45:14,320 --> 00:45:15,600 Speaker 1: all right, Now, let's get back to the beer that 1001 00:45:15,640 --> 00:45:18,040 Speaker 1: we had on this episode. This is called Milk and Cookies. 1002 00:45:18,080 --> 00:45:21,399 Speaker 1: It's by Wicked Weed Brewing. What were your thoughts on this? Stout, man, 1003 00:45:21,760 --> 00:45:23,480 Speaker 1: I wish I had some more. I really like this one. 1004 00:45:23,600 --> 00:45:25,480 Speaker 1: Although it says milk and cookies, it made me think 1005 00:45:25,520 --> 00:45:27,000 Speaker 1: that this is going to be a milks Is it 1006 00:45:27,040 --> 00:45:28,920 Speaker 1: a milkstop? It doesn't say on here if it is 1007 00:45:28,960 --> 00:45:31,760 Speaker 1: a milk stop, but it definitely had the cookies flavor 1008 00:45:31,840 --> 00:45:35,680 Speaker 1: going on. It says says it was brewed with golden raisins, cinnamon, 1009 00:45:35,800 --> 00:45:39,240 Speaker 1: and vanilla, picking up the cinnamon like it was almost 1010 00:45:39,360 --> 00:45:42,480 Speaker 1: the first thing I noticed. It tastes like uh, eating 1011 00:45:42,480 --> 00:45:44,399 Speaker 1: a stick or doole basically, but I did not feel 1012 00:45:44,440 --> 00:45:46,120 Speaker 1: that it was too much. It was like borderline too 1013 00:45:46,200 --> 00:45:48,040 Speaker 1: much like the kind of the the spiciness that it 1014 00:45:48,080 --> 00:45:50,440 Speaker 1: had going on, but it had enough sweetness from the 1015 00:45:50,520 --> 00:45:53,280 Speaker 1: vanilla some maybe some of the sweetness from those golden 1016 00:45:53,360 --> 00:45:56,239 Speaker 1: raisins as well to balance it out. But I really 1017 00:45:56,280 --> 00:45:59,640 Speaker 1: I dug this one for a late summer imperial stout, 1018 00:45:59,760 --> 00:46:02,600 Speaker 1: not typically a style that you go for this time 1019 00:46:02,600 --> 00:46:04,560 Speaker 1: of the year, but I definitely enjoyed it. Yeah, I agree, 1020 00:46:04,560 --> 00:46:05,680 Speaker 1: I think it as well. I thought this was a 1021 00:46:05,719 --> 00:46:08,000 Speaker 1: lot better than the one we had on Monday. I 1022 00:46:08,960 --> 00:46:11,560 Speaker 1: liked it at Brownie not so good, not so good. 1023 00:46:11,640 --> 00:46:13,440 Speaker 1: Milk and cookies, Yeah, this is pretty good. I supposed 1024 00:46:13,440 --> 00:46:15,279 Speaker 1: to be like hem brownies too, and I guess I 1025 00:46:15,320 --> 00:46:16,759 Speaker 1: just want to pick it up what they were putting down. 1026 00:46:17,040 --> 00:46:20,160 Speaker 1: But milk and cookies, man that and especially I don't 1027 00:46:20,160 --> 00:46:23,000 Speaker 1: know cinnamon in a beer in the stalia, it's it's 1028 00:46:23,320 --> 00:46:25,920 Speaker 1: usually good vibe if it's not ever done, good combination 1029 00:46:26,320 --> 00:46:29,040 Speaker 1: and pluses, I mean with the golden raisins like it's 1030 00:46:29,040 --> 00:46:32,080 Speaker 1: got me thinking of oatmeal raisin cookies, which are one 1031 00:46:32,080 --> 00:46:35,520 Speaker 1: of my favorite types of cookies, highly underrated cookies oatmeal 1032 00:46:35,600 --> 00:46:39,759 Speaker 1: raisin cookies. Although there's there's no oatmeal in this. This 1033 00:46:39,920 --> 00:46:42,160 Speaker 1: is not an oatmeal style, but it was a great 1034 00:46:42,320 --> 00:46:45,680 Speaker 1: imperial stout. Again, this is from Wicked Weed up there 1035 00:46:45,760 --> 00:46:48,680 Speaker 1: in Asheville, North Carolina. Definitely check them out if you 1036 00:46:48,760 --> 00:46:50,600 Speaker 1: happen to be in the area for sure. All right, 1037 00:46:50,640 --> 00:46:52,640 Speaker 1: that's gonna do it for this episode. We will put 1038 00:46:52,800 --> 00:46:56,200 Speaker 1: links to everything we mentioned, including that tool that will 1039 00:46:56,239 --> 00:46:58,200 Speaker 1: help you formulate a plan to pay off your debt. 1040 00:46:58,719 --> 00:47:00,640 Speaker 1: We'll we'll have all those links up on our site 1041 00:47:00,680 --> 00:47:02,800 Speaker 1: at how to money dot com. That's right, so, buddy, 1042 00:47:02,840 --> 00:47:04,520 Speaker 1: that is going to be it for this episode until 1043 00:47:04,560 --> 00:47:06,879 Speaker 1: next time. Best Friends Out, Best Friends Out.