1 00:00:00,040 --> 00:00:01,680 Speaker 1: Congrats to everyone out there who made it through a 2 00:00:01,760 --> 00:00:04,080 Speaker 1: challenging Christmas with their extended family. 3 00:00:04,320 --> 00:00:06,680 Speaker 2: Yeah, either they're gone by now, or you're gone from 4 00:00:06,680 --> 00:00:09,000 Speaker 2: their house by now, maybe even right now you're on 5 00:00:09,039 --> 00:00:09,400 Speaker 2: the road. 6 00:00:09,720 --> 00:00:13,119 Speaker 1: But happy Friday everyone, Actually, does it even count as 7 00:00:13,160 --> 00:00:15,680 Speaker 1: a Friday? If you took all week off, if you've 8 00:00:15,680 --> 00:00:17,560 Speaker 1: been on a vacation, doesn't really feel like Friday? Yeah, 9 00:00:17,560 --> 00:00:19,320 Speaker 1: no it doesn't. Is it a Friday? Is it a 10 00:00:19,320 --> 00:00:22,119 Speaker 1: Friday without the Friday flights? All rhythms have been lost 11 00:00:22,160 --> 00:00:25,599 Speaker 1: at this point, right, No, we do have a besty 12 00:00:25,640 --> 00:00:28,600 Speaker 1: episode for you. This is an episode we recorded about 13 00:00:28,640 --> 00:00:31,280 Speaker 1: how it is that you can use debt to achieve 14 00:00:31,480 --> 00:00:33,800 Speaker 1: some of the different financial goals that you have. There's 15 00:00:33,800 --> 00:00:35,559 Speaker 1: a lot of folks out there who are hardliners when 16 00:00:35,600 --> 00:00:38,240 Speaker 1: it comes to how they view any type of debt. 17 00:00:38,280 --> 00:00:41,080 Speaker 1: But guess what, the thirty year mortgage, we're all about that. 18 00:00:41,479 --> 00:00:44,240 Speaker 1: A car loan, however, starts getting a little little the 19 00:00:44,320 --> 00:00:45,959 Speaker 1: he lock, It starts getting a little dice here. It's 20 00:00:45,960 --> 00:00:48,400 Speaker 1: a little more of a prickly sort of debt. 21 00:00:48,479 --> 00:00:50,680 Speaker 2: Yeah, if you've heard people like if you come from 22 00:00:50,720 --> 00:00:53,760 Speaker 2: a hardline background and you're like, I've heard that all 23 00:00:53,800 --> 00:00:55,840 Speaker 2: debt is bad. Well, we have a more nuanced take 24 00:00:55,880 --> 00:00:58,240 Speaker 2: on it and consumer debt. Yeah, overdoing it on that 25 00:00:58,320 --> 00:01:00,720 Speaker 2: front can be horrendous for you. But then there are 26 00:01:00,720 --> 00:01:02,920 Speaker 2: other types of debt that aren't nearly as bad can 27 00:01:02,960 --> 00:01:06,119 Speaker 2: actually help further you when it comes to your financial goals. 28 00:01:06,160 --> 00:01:08,080 Speaker 2: So that's what this episode was all about. 29 00:01:08,120 --> 00:01:10,280 Speaker 1: Mes's right, man, And by the way, this is gonna 30 00:01:10,280 --> 00:01:12,560 Speaker 1: be our last bestie. We'll be back here with fresh 31 00:01:12,680 --> 00:01:17,520 Speaker 1: content for you all on Monday, so without New Year's Day, 32 00:01:17,520 --> 00:01:19,679 Speaker 1: that's right, Yeah, New Years Day? All right, without further ado, 33 00:01:20,120 --> 00:01:22,920 Speaker 1: Welcome to How the Money. I'm Joel and I am Matt, 34 00:01:23,000 --> 00:01:46,720 Speaker 1: and today we're discussing strategic debt. Use to catapult your finances. Yeah, 35 00:01:46,840 --> 00:01:48,760 Speaker 1: not only are we gonna teach you how to catapult 36 00:01:48,800 --> 00:01:50,720 Speaker 1: your money, we're gonna teach you how to what it 37 00:01:50,800 --> 00:01:54,160 Speaker 1: is the tribute? Sha is that the like what you're 38 00:01:54,160 --> 00:01:55,960 Speaker 1: talking about? You don't know what I'm talking about? 39 00:01:55,960 --> 00:01:58,320 Speaker 2: No, that's is that just a fancy French word for catapult. 40 00:01:58,400 --> 00:02:01,320 Speaker 1: No, it's literally a advice. It's like a catapult, but 41 00:02:01,360 --> 00:02:04,440 Speaker 1: it's fancier in the sense that it is more it's stronger, 42 00:02:04,640 --> 00:02:08,000 Speaker 1: like you can catapult heavier objects with I think it's tributehae, 43 00:02:08,040 --> 00:02:10,280 Speaker 1: that's how you say it, Okay, but it is. All 44 00:02:10,320 --> 00:02:13,440 Speaker 1: tribute shays are a type of catapult, but not all 45 00:02:13,440 --> 00:02:17,359 Speaker 1: catapults are advanced enough to be called tribute shase. And actually, 46 00:02:17,480 --> 00:02:20,040 Speaker 1: as we are going, as I'm using this metaphor, we 47 00:02:20,080 --> 00:02:24,280 Speaker 1: don't want you to tribute shay. You your money. You 48 00:02:24,320 --> 00:02:26,320 Speaker 1: don't want to overdo it. And so that's what we're 49 00:02:26,320 --> 00:02:28,120 Speaker 1: going to talk about today. We are going to discuss 50 00:02:28,160 --> 00:02:29,880 Speaker 1: the different ways that you can use debt in a 51 00:02:29,880 --> 00:02:34,200 Speaker 1: strategic way to catapult your finances into a better place. 52 00:02:34,200 --> 00:02:35,320 Speaker 2: When you think about it, if you have you ever 53 00:02:35,360 --> 00:02:38,480 Speaker 2: seen those videos of people catapult thing like giant pumpkins 54 00:02:38,480 --> 00:02:41,079 Speaker 2: and stuff like that, think about how difficult. 55 00:02:40,639 --> 00:02:42,400 Speaker 1: Those are tribute shas. I've seen those videos. I know 56 00:02:42,400 --> 00:02:44,480 Speaker 1: what you're talking about, bay together, like launching them across 57 00:02:44,480 --> 00:02:45,960 Speaker 1: a field. Think about trying to carry one of those 58 00:02:45,960 --> 00:02:49,480 Speaker 1: pumpkins or just with your arm exactly, And it's going 59 00:02:49,560 --> 00:02:52,679 Speaker 1: to be a long, hard slog exactly. And what we're 60 00:02:52,680 --> 00:02:54,720 Speaker 1: saying is that there are ways that you can use 61 00:02:54,720 --> 00:02:58,680 Speaker 1: certain devices, certain tools to get you there in a 62 00:02:58,680 --> 00:03:01,720 Speaker 1: more efficient manner. But it also comes at a cost. 63 00:03:01,760 --> 00:03:03,760 Speaker 1: We're going to talk about some of those costs exact day. 64 00:03:03,800 --> 00:03:05,359 Speaker 2: If you're like, wait a second, Matt and Joe, they've 65 00:03:05,360 --> 00:03:06,640 Speaker 2: gone of the deep en. They're gonna talk about how 66 00:03:06,639 --> 00:03:09,360 Speaker 2: great debt is, and there is an element of that 67 00:03:09,400 --> 00:03:11,840 Speaker 2: to this episode. But as always, we're going to try 68 00:03:11,840 --> 00:03:14,280 Speaker 2: to be balanced at because that's. 69 00:03:14,120 --> 00:03:16,520 Speaker 1: What we do. We're going to take the extreme middle position, 70 00:03:16,760 --> 00:03:19,600 Speaker 1: which oftentimes it is the extreme position I know, which 71 00:03:19,840 --> 00:03:22,720 Speaker 1: don't come down on the fence where they're willing to 72 00:03:22,760 --> 00:03:25,280 Speaker 1: engage in conversation and talk about the nuances of the topic. 73 00:03:25,320 --> 00:03:26,640 Speaker 1: And it's just not that's what we love to do. 74 00:03:26,720 --> 00:03:29,359 Speaker 2: It's not as sexy in our current modern era where 75 00:03:29,400 --> 00:03:32,400 Speaker 2: people want the hot takes the shock shock, and that's 76 00:03:32,840 --> 00:03:34,760 Speaker 2: not what we do. That's not we're about. So if 77 00:03:34,760 --> 00:03:36,720 Speaker 2: you want to come here for kind of the the 78 00:03:36,760 --> 00:03:39,240 Speaker 2: well balanced way to think about debt, that's what this episode. 79 00:03:39,240 --> 00:03:40,120 Speaker 1: It's a better in the right place. 80 00:03:40,200 --> 00:03:41,480 Speaker 2: But before we get to that, Matt, I wanted to 81 00:03:41,480 --> 00:03:45,520 Speaker 2: mention that Emily, my wife, she just had fraudulent charge 82 00:03:45,920 --> 00:03:50,280 Speaker 2: on her credit card and yeah, for an airplane ticket 83 00:03:50,640 --> 00:03:51,840 Speaker 2: on Delta. 84 00:03:52,000 --> 00:03:54,800 Speaker 1: Somebody was trying to like it. 85 00:03:54,880 --> 00:03:57,400 Speaker 2: Yeah, no, not fun. It's one of those things you 86 00:03:57,400 --> 00:03:59,280 Speaker 2: gotta clean up. You got to report to the credit 87 00:03:59,280 --> 00:04:00,240 Speaker 2: card company, right way. 88 00:04:00,320 --> 00:04:02,880 Speaker 1: Yeah, I like it from the standpoint of, oh, somebody 89 00:04:02,880 --> 00:04:05,400 Speaker 1: wants to go somewhere, but oh, you are a criminal 90 00:04:05,400 --> 00:04:07,440 Speaker 1: and you're using somebody else's credit, that's right. 91 00:04:07,240 --> 00:04:09,440 Speaker 2: To do it well and start to hear THO. Just 92 00:04:09,480 --> 00:04:11,880 Speaker 2: recently I lost of pain. Yeah, I lost a credit 93 00:04:11,880 --> 00:04:14,280 Speaker 2: card at a water park with my kids. You did, yeah, 94 00:04:14,560 --> 00:04:15,840 Speaker 2: just like slipped out of my pocket. I was like, 95 00:04:15,920 --> 00:04:17,400 Speaker 2: dang it. So I had to cancel that, had to 96 00:04:17,400 --> 00:04:19,160 Speaker 2: get a new one, have to change all the credit card, 97 00:04:19,480 --> 00:04:21,080 Speaker 2: have to change all those automatic paintings that I have 98 00:04:21,120 --> 00:04:21,440 Speaker 2: set up. 99 00:04:21,560 --> 00:04:23,280 Speaker 1: So it wasn't very annoying. It wasn't that card. 100 00:04:23,320 --> 00:04:26,039 Speaker 2: It was a different card. So but just I want 101 00:04:26,040 --> 00:04:28,080 Speaker 2: to say this is well. I think it was like 102 00:04:28,160 --> 00:04:30,920 Speaker 2: twelve hundred dollars that this airline ticket costs. Someone's going 103 00:04:31,040 --> 00:04:32,920 Speaker 2: to New York and they got the fancy seat in 104 00:04:32,960 --> 00:04:34,360 Speaker 2: front of the planet, I guess, or something like that. 105 00:04:34,640 --> 00:04:37,120 Speaker 2: But the great thing about using credit cards instead of 106 00:04:37,120 --> 00:04:39,279 Speaker 2: debit cards is that she is not out this money 107 00:04:39,320 --> 00:04:41,680 Speaker 2: trying to call it back. It's money that has never 108 00:04:41,760 --> 00:04:44,880 Speaker 2: left her account, and by federal law, the credit card 109 00:04:44,960 --> 00:04:48,400 Speaker 2: company has to refund this money to us, which is great. 110 00:04:48,640 --> 00:04:51,560 Speaker 2: So I know we talk a lot about credit cards 111 00:04:51,640 --> 00:04:54,120 Speaker 2: on the show and smart usage of credit cards, but 112 00:04:54,200 --> 00:04:56,400 Speaker 2: case in point is just one of those reasons where 113 00:04:56,440 --> 00:04:58,799 Speaker 2: you go, it makes them great. But to offer then again, 114 00:04:59,080 --> 00:05:01,039 Speaker 2: account will we try to stay balanced here, right? We 115 00:05:01,200 --> 00:05:03,920 Speaker 2: to offer another side to that. You Have you ever 116 00:05:03,920 --> 00:05:06,680 Speaker 2: gotten those checks from a credit card company in the mail. 117 00:05:06,600 --> 00:05:08,440 Speaker 1: Like the like cash advanced checks. 118 00:05:08,440 --> 00:05:10,680 Speaker 2: So yeah, basically here's six checks, go use it for 119 00:05:10,680 --> 00:05:12,760 Speaker 2: whatever you want. Yeah, and when you look at the terms, 120 00:05:12,760 --> 00:05:14,200 Speaker 2: you're like, wait a second, well this is gonna cost 121 00:05:14,200 --> 00:05:14,560 Speaker 2: a lot of money. 122 00:05:14,640 --> 00:05:15,960 Speaker 1: Yeah, it's going to cost a lot of So there 123 00:05:15,960 --> 00:05:18,280 Speaker 1: are some credit cards who will also send you a 124 00:05:18,360 --> 00:05:20,000 Speaker 1: check for a certain amount of money. Have you seen 125 00:05:20,000 --> 00:05:23,279 Speaker 1: this no? Yeah, so literally some banks out there. And 126 00:05:23,320 --> 00:05:25,520 Speaker 1: so we're again, like you said, Jill, we're taking a 127 00:05:25,640 --> 00:05:27,680 Speaker 1: very balanced approach here. Credit cards are great in some ways, 128 00:05:27,680 --> 00:05:29,320 Speaker 1: but this is a way that some of the banks 129 00:05:29,320 --> 00:05:31,839 Speaker 1: out there are terrible. They are basically writing a check 130 00:05:31,880 --> 00:05:33,479 Speaker 1: to people and it's like, hey, this is a check 131 00:05:33,480 --> 00:05:36,440 Speaker 1: for you, but it's a check against your own account, 132 00:05:36,560 --> 00:05:39,440 Speaker 1: and so you like against your your credit limit, and 133 00:05:40,040 --> 00:05:42,120 Speaker 1: guess what the interest rates on those tend to be 134 00:05:42,160 --> 00:05:44,960 Speaker 1: probably something close to twenty percent exactly. And so that's 135 00:05:44,960 --> 00:05:47,480 Speaker 1: something that we also want to make sure folks are avoiding. 136 00:05:47,480 --> 00:05:49,360 Speaker 1: Don't be tempted into thinking, oh, yeah, this is a 137 00:05:49,440 --> 00:05:51,760 Speaker 1: check I can use if it's a blank check. Oh 138 00:05:51,800 --> 00:05:53,880 Speaker 1: this is a check I can use to pay for something, 139 00:05:53,920 --> 00:05:56,280 Speaker 1: maybe even pay off another credit card. Yeah, that's kind 140 00:05:56,279 --> 00:05:59,159 Speaker 1: of a bad strategy if you haven't addressed the underlying cause. 141 00:05:59,200 --> 00:06:02,120 Speaker 1: But also avoid seeing a check where there's already a 142 00:06:02,200 --> 00:06:03,880 Speaker 1: check and there's a dollar amount written out to you. 143 00:06:04,120 --> 00:06:06,320 Speaker 1: The surro I'm referring to it was for going back 144 00:06:06,360 --> 00:06:09,839 Speaker 1: to school expenses. And it's pretty smart because folks were 145 00:06:09,880 --> 00:06:12,560 Speaker 1: thinking it's good marketing. I am having to fork out 146 00:06:12,560 --> 00:06:15,000 Speaker 1: a lot of money on just all the costs associated 147 00:06:15,000 --> 00:06:17,120 Speaker 1: with sending my kid off to college, got it. You know, 148 00:06:17,279 --> 00:06:19,320 Speaker 1: he wanted to get a new laptop, So that's something 149 00:06:19,320 --> 00:06:22,159 Speaker 1: we did, just all of a mini fridge, although you 150 00:06:22,160 --> 00:06:25,520 Speaker 1: can get those for cheap these days evidently, and laptops too, honestly. Yeah, 151 00:06:25,520 --> 00:06:27,000 Speaker 1: And so all that to say, we want you to 152 00:06:27,320 --> 00:06:29,920 Speaker 1: use credit cards in a judicious type of way. 153 00:06:30,000 --> 00:06:34,360 Speaker 2: Yeah, and avoid this checks altogether exactly, so hopefully. Yeah, 154 00:06:34,720 --> 00:06:36,520 Speaker 2: this the way we just talked about credit cards, we 155 00:06:36,520 --> 00:06:38,640 Speaker 2: can be that nuanced with kind of the overall subject 156 00:06:38,720 --> 00:06:40,000 Speaker 2: of debt on today's episode. 157 00:06:40,000 --> 00:06:40,200 Speaker 1: Map. 158 00:06:40,240 --> 00:06:41,680 Speaker 2: But before we get to that, let's just mention the 159 00:06:41,680 --> 00:06:44,720 Speaker 2: beer word drinking. We always drink a beer on every 160 00:06:44,720 --> 00:06:47,200 Speaker 2: episode of How the Money, or most episodes, because we 161 00:06:47,400 --> 00:06:49,760 Speaker 2: light craft beer something Matt and I explore John while 162 00:06:49,800 --> 00:06:52,000 Speaker 2: we're being intentional with our money, while we're saving and 163 00:06:52,040 --> 00:06:54,400 Speaker 2: investing for the future. This one is called Milk and 164 00:06:54,440 --> 00:06:57,120 Speaker 2: Cookies and it's by Wicked Weed. It's a stout. We'll 165 00:06:57,120 --> 00:06:58,839 Speaker 2: give our thoughts on this at the end of the episode. 166 00:06:58,880 --> 00:07:01,719 Speaker 1: Yeah, this is another that's a part of that Guilty 167 00:07:01,760 --> 00:07:05,120 Speaker 1: Pleasures series from Wicked Weed. And I will say this 168 00:07:05,160 --> 00:07:07,520 Speaker 1: one already smells better than the one we had on Monday. Yes, 169 00:07:07,560 --> 00:07:09,240 Speaker 1: so so looking forward to this one. 170 00:07:09,400 --> 00:07:11,640 Speaker 2: I agreed, all right, we'll give our thoughts later on 171 00:07:11,640 --> 00:07:14,040 Speaker 2: in the show, but let's move on. Let's talk about 172 00:07:14,280 --> 00:07:18,360 Speaker 2: using debt to catapult your finances forward in a helpful way. 173 00:07:18,800 --> 00:07:20,960 Speaker 2: And just made me kind of think about when we're 174 00:07:21,000 --> 00:07:23,280 Speaker 2: trying to use something in a helpful way that can 175 00:07:23,320 --> 00:07:26,200 Speaker 2: also be used poorly. Maybe think of napping because some 176 00:07:26,240 --> 00:07:28,680 Speaker 2: folks will swear that napping is bad for them, right, 177 00:07:28,760 --> 00:07:30,600 Speaker 2: or it's bad for everyone, that it ruins your day, 178 00:07:30,880 --> 00:07:32,920 Speaker 2: it's going to upset your sleep for that evening, it's 179 00:07:32,960 --> 00:07:37,200 Speaker 2: gonna maybe throw off your circadian rhythm whatever that actually means. 180 00:07:37,240 --> 00:07:39,760 Speaker 1: But you nap occasionally, right, How often do you nap? 181 00:07:39,800 --> 00:07:41,720 Speaker 1: Like four times a year? Not very often? Yeah, I 182 00:07:41,720 --> 00:07:44,400 Speaker 1: feel like I'm like one or two. I tend to dude, 183 00:07:44,400 --> 00:07:45,960 Speaker 1: I hate napping because I love to lay down in 184 00:07:46,000 --> 00:07:48,560 Speaker 1: the evening and just fall right to sleep, you know, 185 00:07:48,640 --> 00:07:51,480 Speaker 1: Like I hate laying there and thinking, dang it, maybe 186 00:07:51,480 --> 00:07:53,000 Speaker 1: I had my coffee a little bit too late. Dang it, 187 00:07:53,040 --> 00:07:55,000 Speaker 1: I maybe I shouldn't have taken that nap. I kind 188 00:07:55,000 --> 00:07:57,480 Speaker 1: of almost need to be on my deathbed. Like if 189 00:07:57,480 --> 00:07:59,640 Speaker 1: I'm oftentimes it is getting over a sickness or something 190 00:07:59,680 --> 00:08:03,160 Speaker 1: like that. Okay, we've had a migraines a little, oh exactly, 191 00:08:03,560 --> 00:08:04,240 Speaker 1: I will nap then. 192 00:08:04,440 --> 00:08:06,560 Speaker 2: Well, yeah, I'm not much of an appert either. Like 193 00:08:06,800 --> 00:08:09,560 Speaker 2: every once in a while on a Sunday afternoon, that's 194 00:08:09,600 --> 00:08:10,000 Speaker 2: the best time. 195 00:08:10,040 --> 00:08:11,960 Speaker 1: Four times a year, You're probably once a quarter. Yeah, 196 00:08:11,960 --> 00:08:14,920 Speaker 1: this is like Q three nap exactly exactly. I don't know. 197 00:08:15,000 --> 00:08:16,640 Speaker 2: My mind is just kind of going during the day 198 00:08:16,680 --> 00:08:19,040 Speaker 2: and even though even though I might feel tired, my 199 00:08:19,080 --> 00:08:21,840 Speaker 2: brain won't shut down. But yeah, then I yeah, like 200 00:08:21,880 --> 00:08:23,800 Speaker 2: you said, I've got no problem going to bed at 201 00:08:23,920 --> 00:08:26,280 Speaker 2: night time. But the reality is based on kind of 202 00:08:26,360 --> 00:08:29,640 Speaker 2: all the all the studies out there, a well time 203 00:08:29,720 --> 00:08:31,760 Speaker 2: nap can bring a lot of benefits for a lot 204 00:08:31,760 --> 00:08:35,360 Speaker 2: of folks. And even though you and I don't necessarily participate, 205 00:08:35,360 --> 00:08:36,480 Speaker 2: I don't know. As I'm reading through this. 206 00:08:36,440 --> 00:08:38,360 Speaker 1: Epiorod, I'm like, maybe I should not more often ending 207 00:08:38,400 --> 00:08:40,200 Speaker 1: against there's a lot of smart, smart folks, a lot 208 00:08:40,200 --> 00:08:42,360 Speaker 1: of good thinkers out there who always include like a 209 00:08:42,360 --> 00:08:43,640 Speaker 1: little power nap in the afternoon. 210 00:08:43,679 --> 00:08:46,240 Speaker 2: Yeah, well, there's more employers, right, thoughtful employers who are 211 00:08:46,240 --> 00:08:48,480 Speaker 2: creating nap rooms and stuff like that for employees that 212 00:08:48,520 --> 00:08:51,720 Speaker 2: they pardon largely because it's going to that little bit 213 00:08:51,760 --> 00:08:53,880 Speaker 2: of rest is going to make you more productive, like 214 00:08:54,160 --> 00:08:56,920 Speaker 2: the experts say, can boost your memory, increase your job performance, 215 00:08:57,240 --> 00:08:59,520 Speaker 2: and ease stress levels. So I don't know, it's kind 216 00:08:59,520 --> 00:09:00,800 Speaker 2: of like wait or naps magic. 217 00:09:01,280 --> 00:09:03,080 Speaker 1: We should be doing this more often. 218 00:09:03,080 --> 00:09:05,960 Speaker 2: Maybe, so maybe I should increase the number of naps. 219 00:09:06,000 --> 00:09:07,800 Speaker 2: But I think in the ways that naps are misunderstood, 220 00:09:07,920 --> 00:09:11,400 Speaker 2: so is debt, Because if you were to indiscriminately use 221 00:09:11,520 --> 00:09:13,719 Speaker 2: naps or death is going to create a mess in 222 00:09:13,760 --> 00:09:16,080 Speaker 2: your life. Right if you're napping during an important meeting 223 00:09:16,080 --> 00:09:18,480 Speaker 2: with your boss, or maybe you're like, eh, I'm just 224 00:09:18,520 --> 00:09:20,880 Speaker 2: gonna like nose off here for thirty minutes during family dinner, 225 00:09:21,080 --> 00:09:23,920 Speaker 2: that's going to like really ruin your life in a 226 00:09:23,920 --> 00:09:26,080 Speaker 2: lot of ways. And the same is true with that 227 00:09:26,120 --> 00:09:29,480 Speaker 2: if you're just indiscriminately using debt for whatever you want, 228 00:09:29,520 --> 00:09:32,160 Speaker 2: whenever you want it. But how and when you use 229 00:09:32,200 --> 00:09:34,520 Speaker 2: those two things and then doing so with moderation and 230 00:09:34,559 --> 00:09:37,200 Speaker 2: wisdom can make them both I think beneficial parts of 231 00:09:37,200 --> 00:09:37,600 Speaker 2: your life. 232 00:09:37,600 --> 00:09:40,120 Speaker 1: Totally. Yeah, Basically, what we're saying here, what we're arguing 233 00:09:40,200 --> 00:09:42,520 Speaker 1: is that debt is not as black or white an 234 00:09:42,520 --> 00:09:45,920 Speaker 1: issue as many folks would have you believe. So, for instance, 235 00:09:46,080 --> 00:09:49,240 Speaker 1: if you listen to Dave Ramsey for any amount of time, 236 00:09:49,280 --> 00:09:50,960 Speaker 1: can you explain that this Matt never heard of him? 237 00:09:51,000 --> 00:09:54,520 Speaker 1: You probably didn't hear much nuance on this topic. If 238 00:09:54,559 --> 00:09:57,200 Speaker 1: you took out debt for any reason, you were a dunce. 239 00:09:57,679 --> 00:09:59,160 Speaker 1: And you know He's not the only one out there 240 00:09:59,200 --> 00:10:03,120 Speaker 1: who has based nothing positive to say about debt. There 241 00:10:03,120 --> 00:10:05,120 Speaker 1: are some folks out there who, you know, they teach 242 00:10:05,200 --> 00:10:07,560 Speaker 1: that all debt is bad, that you should avoid it 243 00:10:07,600 --> 00:10:10,240 Speaker 1: like the plague. But then you know, like on the 244 00:10:10,240 --> 00:10:13,280 Speaker 1: other side of the spectrum, there are others who are 245 00:10:13,320 --> 00:10:16,280 Speaker 1: just too comfortable with the amount of debt in their lives. 246 00:10:16,520 --> 00:10:18,080 Speaker 1: Going back to naps, that they're the kind of person 247 00:10:18,320 --> 00:10:21,040 Speaker 1: who loves to take two hour naps and just completely 248 00:10:21,120 --> 00:10:24,080 Speaker 1: ruin their day. Yeah. Yeah, so debt to them is 249 00:10:24,120 --> 00:10:26,600 Speaker 1: no big deal. But like most things in life, debt 250 00:10:26,720 --> 00:10:29,559 Speaker 1: is an incredibly nuanced topic and we're going to venture 251 00:10:29,640 --> 00:10:32,600 Speaker 1: into it today because the reality is that not all 252 00:10:32,640 --> 00:10:35,280 Speaker 1: debt is created equal. That's what we're going to discuss. 253 00:10:35,400 --> 00:10:37,840 Speaker 2: Yeah, if you do think that they're all created equal, 254 00:10:37,880 --> 00:10:40,440 Speaker 2: if you think that all debt is bad or that 255 00:10:40,600 --> 00:10:43,280 Speaker 2: most debt is good, you're in all likelihood going to 256 00:10:43,440 --> 00:10:45,480 Speaker 2: make mistakes when it comes to how you use it. 257 00:10:45,520 --> 00:10:47,959 Speaker 2: And the reality is that debt is actually kind of 258 00:10:48,000 --> 00:10:51,240 Speaker 2: a nifty invention. Without it, a lot of sand would 259 00:10:51,280 --> 00:10:53,959 Speaker 2: be thrown in the gears of the economy because taking 260 00:10:54,000 --> 00:10:56,160 Speaker 2: on debt allows us to do things like get a 261 00:10:56,200 --> 00:10:59,360 Speaker 2: higher education before we actually have any meaningful income to 262 00:10:59,360 --> 00:11:01,640 Speaker 2: show that we can pay those loans. There's a reason, 263 00:11:01,840 --> 00:11:04,679 Speaker 2: right that people are willing to lend you fifty sixty 264 00:11:04,720 --> 00:11:07,760 Speaker 2: seventy thousand dollars for a higher education, even though you 265 00:11:07,800 --> 00:11:11,920 Speaker 2: have shown that you have zero responsibility at this point 266 00:11:12,160 --> 00:11:14,920 Speaker 2: in your life. Debt can allow us to buy a 267 00:11:15,000 --> 00:11:17,880 Speaker 2: house right once we do have an income, without having 268 00:11:17,880 --> 00:11:21,360 Speaker 2: to save up for a decade or two in order 269 00:11:21,360 --> 00:11:24,200 Speaker 2: to fully purchase that house with cash. Because in Matt 270 00:11:24,200 --> 00:11:25,839 Speaker 2: how to Money listeners, they know how hard it is 271 00:11:25,880 --> 00:11:28,000 Speaker 2: just to save up a down payment. I mean, imagine 272 00:11:28,120 --> 00:11:30,679 Speaker 2: being forced to save up the full purchase price of 273 00:11:30,679 --> 00:11:32,480 Speaker 2: that house. You know, most of us would be living 274 00:11:32,760 --> 00:11:37,400 Speaker 2: intense that would be the reality with our parents, right yeah, 275 00:11:37,760 --> 00:11:41,320 Speaker 2: who also might be living intents. The truth is most 276 00:11:41,360 --> 00:11:44,800 Speaker 2: people can't afford to buy a house in cash, and 277 00:11:45,520 --> 00:11:48,480 Speaker 2: so debt is kind of this necessity in order to 278 00:11:48,520 --> 00:11:50,800 Speaker 2: achieve many of the goals that we have in life. 279 00:11:50,840 --> 00:11:53,439 Speaker 2: And I think a home and a college degree are 280 00:11:53,480 --> 00:11:56,719 Speaker 2: maybe the two best uses of taking on debt. And 281 00:11:57,120 --> 00:11:59,839 Speaker 2: the ideologues who might say that all debt is dumb, 282 00:12:00,160 --> 00:12:02,720 Speaker 2: they're just not grounded in reality. We'd say that these 283 00:12:02,760 --> 00:12:05,320 Speaker 2: forms of debt are actually they're kind of a societal good, 284 00:12:05,520 --> 00:12:08,319 Speaker 2: and they've they've actually allowed us to make more progress 285 00:12:08,559 --> 00:12:10,240 Speaker 2: because we don't have to pull the pay the full 286 00:12:10,280 --> 00:12:13,240 Speaker 2: freight in one fell swoop when we're unable to. 287 00:12:13,400 --> 00:12:15,920 Speaker 1: Yeah, exactly. Yeah. If you take any form of debt 288 00:12:15,920 --> 00:12:18,880 Speaker 1: that exists and then just completely isolate it from reality, 289 00:12:19,240 --> 00:12:21,240 Speaker 1: then it's going to be hard to argue that debt 290 00:12:21,280 --> 00:12:23,640 Speaker 1: is a good thing, right because debt, it means that 291 00:12:23,640 --> 00:12:26,720 Speaker 1: you're paying interest to someone, to a bank, paying interest 292 00:12:26,800 --> 00:12:29,840 Speaker 1: is bad. So therefore debt is bad. But taken this 293 00:12:29,920 --> 00:12:32,520 Speaker 1: view is failing to see the forest for the trees. 294 00:12:33,320 --> 00:12:36,600 Speaker 1: The individual debts that we're discussing here, those are the trees, 295 00:12:36,679 --> 00:12:38,280 Speaker 1: but you know, like what is going on with the 296 00:12:38,440 --> 00:12:41,319 Speaker 1: entire forest, Like that is the view that we want 297 00:12:41,360 --> 00:12:44,320 Speaker 1: you to have. It's important just to take a more 298 00:12:44,320 --> 00:12:48,440 Speaker 1: holistic approach to your finances. And so that's why what 299 00:12:48,640 --> 00:12:51,200 Speaker 1: it is that you do with the money that you 300 00:12:51,360 --> 00:12:53,960 Speaker 1: that you could have paid to avoid that debt is 301 00:12:54,040 --> 00:12:58,120 Speaker 1: so incredibly important. So, for instance, let's say that you've 302 00:12:58,160 --> 00:13:00,640 Speaker 1: taken out alone with a bank. They're willing to lend 303 00:13:00,640 --> 00:13:02,800 Speaker 1: you money at a rate of one percent, But then they. 304 00:13:02,640 --> 00:13:05,000 Speaker 2: Are definitely fictional because yeah, yeah. 305 00:13:04,840 --> 00:13:06,400 Speaker 1: That's not that's not long you can get today. Right, 306 00:13:06,760 --> 00:13:09,040 Speaker 1: But let's imagine that they are willing to pay you 307 00:13:09,080 --> 00:13:11,920 Speaker 1: two percent on money that you've got in a savings account. 308 00:13:12,320 --> 00:13:16,200 Speaker 1: And let's also assume that there's no funny terms. You know, 309 00:13:16,200 --> 00:13:18,679 Speaker 1: there's no like prepayment penalty or anything like that. It 310 00:13:18,720 --> 00:13:21,600 Speaker 1: would be silly to not take on that debt, right, 311 00:13:21,880 --> 00:13:24,360 Speaker 1: and so like this is kind of a silly example 312 00:13:24,360 --> 00:13:26,360 Speaker 1: as well, But I just want to give this to 313 00:13:26,440 --> 00:13:27,959 Speaker 1: highlight the fact that you have to look at the 314 00:13:28,000 --> 00:13:30,120 Speaker 1: whole picture. You have to be aware not only of 315 00:13:30,800 --> 00:13:33,079 Speaker 1: a specific debt and the interest that you're paying there, 316 00:13:33,120 --> 00:13:35,480 Speaker 1: but what else you can do with that money. You 317 00:13:35,480 --> 00:13:38,080 Speaker 1: have to pay attention to what you could potentially apply 318 00:13:38,200 --> 00:13:40,360 Speaker 1: that money for you to take on some of this 319 00:13:40,559 --> 00:13:42,120 Speaker 1: what we're calling strategic debt. 320 00:13:42,360 --> 00:13:45,040 Speaker 2: Yeah, the example you just gave is kind of like 321 00:13:45,040 --> 00:13:47,120 Speaker 2: a no dust slam dunk. Of course, I'm gonna take 322 00:13:47,120 --> 00:13:49,199 Speaker 2: on this debt and just pop that money in and 323 00:13:49,640 --> 00:13:53,000 Speaker 2: just make make money on the spread. Right, That's that's arbitrage, sure, right, 324 00:13:53,080 --> 00:13:55,959 Speaker 2: you're using debt in order to make more money because 325 00:13:56,000 --> 00:13:58,439 Speaker 2: of it, and that's kind of that that is what 326 00:13:58,480 --> 00:14:00,400 Speaker 2: we would say would be a strategic use of debt. 327 00:14:00,600 --> 00:14:03,400 Speaker 1: But simultaneously, it's not going to be that easy. It's 328 00:14:03,440 --> 00:14:06,360 Speaker 1: not that easy. It's not that much of a slam dunk, sure, 329 00:14:06,400 --> 00:14:07,840 Speaker 1: and so that's kind of what we're going to spend 330 00:14:07,880 --> 00:14:08,800 Speaker 1: the rest of the episode talking. 331 00:14:08,880 --> 00:14:11,800 Speaker 2: That's a simple example, but the reality is it's extreme 332 00:14:11,920 --> 00:14:13,040 Speaker 2: outlier example. 333 00:14:13,120 --> 00:14:14,760 Speaker 1: Yes, that you are not going to find in. 334 00:14:14,720 --> 00:14:17,120 Speaker 2: Reality exactly, So we will cover a bunch of specific 335 00:14:17,120 --> 00:14:21,000 Speaker 2: examples like that can help you make maybe better decisions 336 00:14:21,160 --> 00:14:23,240 Speaker 2: based on something you're actually more likely to experience in 337 00:14:23,280 --> 00:14:25,520 Speaker 2: your life as opposed to this fictional. 338 00:14:25,240 --> 00:14:28,600 Speaker 1: Example made up just made up bank that is giving 339 00:14:28,640 --> 00:14:32,880 Speaker 1: out one all right, that sounds nice. But of course though, 340 00:14:32,960 --> 00:14:35,000 Speaker 1: just because debt exists as a lever for you to 341 00:14:35,040 --> 00:14:36,920 Speaker 1: be able to get what you want before you have 342 00:14:36,960 --> 00:14:39,240 Speaker 1: the money, well that doesn't mean that you should just 343 00:14:39,520 --> 00:14:42,200 Speaker 1: need you be using it for that purpose. And the 344 00:14:42,240 --> 00:14:44,960 Speaker 1: sad reality is that a lot of folks use debt 345 00:14:44,960 --> 00:14:49,040 Speaker 1: as a crutch, particularly in our society. Right, instead of 346 00:14:49,040 --> 00:14:52,200 Speaker 1: thinking up a creative solution, we buy something to fix 347 00:14:52,240 --> 00:14:54,600 Speaker 1: a problem, and then we often the thing that we 348 00:14:54,920 --> 00:14:57,640 Speaker 1: bought will have to pay off over time by taking 349 00:14:57,680 --> 00:15:00,680 Speaker 1: on debt, which means paying interest to to a bank 350 00:15:00,800 --> 00:15:02,720 Speaker 1: or to a lender. And it makes me think mad 351 00:15:02,720 --> 00:15:04,960 Speaker 1: about our episode with Alan donnegan when he talked about 352 00:15:04,960 --> 00:15:08,440 Speaker 1: starting a business for zero dollars and trying to do that. 353 00:15:08,520 --> 00:15:10,800 Speaker 1: Trying to start a business with no money. It takes 354 00:15:10,840 --> 00:15:13,160 Speaker 1: some real creativity and I love that that's what he 355 00:15:13,200 --> 00:15:15,520 Speaker 1: was pushing people to do. You know, it's easy to 356 00:15:15,520 --> 00:15:17,520 Speaker 1: create a big list of necessities and then take out 357 00:15:17,520 --> 00:15:20,000 Speaker 1: a big loan to purchase those things. That's less creative, 358 00:15:20,000 --> 00:15:22,240 Speaker 1: but it also leads to more debt, and we chalk 359 00:15:22,280 --> 00:15:24,480 Speaker 1: it up to just like that's how business is done, right, 360 00:15:25,720 --> 00:15:27,600 Speaker 1: You obviously have to take on loads of debt to 361 00:15:27,600 --> 00:15:30,320 Speaker 1: start a business and then you work towards profitability. Well, 362 00:15:30,440 --> 00:15:33,200 Speaker 1: what Alan was suggesting was getting more creative on the 363 00:15:33,200 --> 00:15:35,560 Speaker 1: front end so you can be free of debt as 364 00:15:35,600 --> 00:15:38,120 Speaker 1: you're building your business. And yeah, it's not that debt 365 00:15:38,400 --> 00:15:41,840 Speaker 1: can't be helpful to finance some businesses, and then it's 366 00:15:41,840 --> 00:15:44,800 Speaker 1: not necessary in order to get some businesses off the ground, 367 00:15:44,800 --> 00:15:47,840 Speaker 1: and that would actually be potentially a strategic form of debt. Right, 368 00:15:47,840 --> 00:15:50,800 Speaker 1: if you're taking on debt in order to build something 369 00:15:50,800 --> 00:15:53,880 Speaker 1: that is going to create income to help feed your family. 370 00:15:54,040 --> 00:15:56,120 Speaker 1: Depending on the specific terms, that could be a really 371 00:15:56,120 --> 00:15:59,080 Speaker 1: smart use of debt. But still we're just saying, even 372 00:15:59,120 --> 00:16:00,760 Speaker 1: if it's a good use of debt, it can be 373 00:16:00,840 --> 00:16:03,440 Speaker 1: used improperly. It can be used as a crutch exactly. Yeah. 374 00:16:03,640 --> 00:16:05,480 Speaker 1: So you know, basically what we're saying here is that 375 00:16:05,520 --> 00:16:08,240 Speaker 1: there is a difference between what we're calling strategic and 376 00:16:08,360 --> 00:16:11,440 Speaker 1: non strategic debt. That's basically at the heart of our 377 00:16:11,440 --> 00:16:15,240 Speaker 1: conversation today. And we'd say that non strategic debt that 378 00:16:15,240 --> 00:16:18,600 Speaker 1: that should be avoided at all costs, unless maybe like 379 00:16:18,640 --> 00:16:20,920 Speaker 1: you're in some sort of like life threatening circumstance. 380 00:16:21,120 --> 00:16:22,800 Speaker 2: Yeah, give me your credit card. I'm going to put 381 00:16:22,800 --> 00:16:24,280 Speaker 2: ten thousand dollars on it and then I want to 382 00:16:24,320 --> 00:16:26,800 Speaker 2: kill you. Though otherwise I'll use a non strategic debt 383 00:16:26,840 --> 00:16:27,240 Speaker 2: to not die. 384 00:16:27,280 --> 00:16:29,440 Speaker 1: Yeah, So it's worth defining it as well, right, And 385 00:16:29,440 --> 00:16:33,320 Speaker 1: so non strategic debt is just basically we are referring 386 00:16:33,360 --> 00:16:36,280 Speaker 1: to all the different easy types of consumer debt that 387 00:16:36,320 --> 00:16:38,560 Speaker 1: we have access to. The worst forms of this are 388 00:16:38,560 --> 00:16:41,720 Speaker 1: going to be payday loans, title loans as well. But 389 00:16:41,760 --> 00:16:44,560 Speaker 1: then like the more socially acceptable varieties are going to 390 00:16:44,600 --> 00:16:47,520 Speaker 1: be credit cards, personal loans as well, And we want 391 00:16:47,560 --> 00:16:50,560 Speaker 1: you to avoid this type of debt, this non strategic debt, 392 00:16:50,560 --> 00:16:54,840 Speaker 1: because it allows us to consume more stuff. Now we're 393 00:16:54,880 --> 00:16:57,120 Speaker 1: just allowing our future selves to pay the bill. I 394 00:16:57,120 --> 00:16:58,880 Speaker 1: don't have to worry about that today, Matt doesn't have 395 00:16:58,880 --> 00:17:00,960 Speaker 1: to worry about that. That's a problem for tomorrow. 396 00:17:01,040 --> 00:17:04,280 Speaker 2: Mass stress future Matt out in order to alleviate that 397 00:17:04,280 --> 00:17:05,240 Speaker 2: stress of myself today. 398 00:17:05,280 --> 00:17:07,320 Speaker 1: And that's an entire sign. Have we talked about this 399 00:17:07,359 --> 00:17:10,600 Speaker 1: on the show Before the Seinfeld skits, there's future Jerry, 400 00:17:10,840 --> 00:17:13,160 Speaker 1: like it's about him going to bed early, and he's 401 00:17:13,200 --> 00:17:15,560 Speaker 1: just like, you know, I forget what he calls Like 402 00:17:15,560 --> 00:17:18,600 Speaker 1: today Jerry wants to stay up late and watch TV, 403 00:17:18,960 --> 00:17:21,160 Speaker 1: but I've got to get up early to go to work. Oh, 404 00:17:21,400 --> 00:17:24,120 Speaker 1: that's future Jerry's Bob. I don't have to worry about 405 00:17:24,160 --> 00:17:26,119 Speaker 1: that right now. That's yeah. I mean, that's a good 406 00:17:26,160 --> 00:17:29,080 Speaker 1: way of thinking about debt. But this is terrible because 407 00:17:29,080 --> 00:17:32,399 Speaker 1: it makes our purchases a lot more expensive. It impacts 408 00:17:32,480 --> 00:17:35,680 Speaker 1: our ability to become financially free. That's why we're discussing 409 00:17:35,680 --> 00:17:38,000 Speaker 1: that today. So actually, after the break we're gonna walk 410 00:17:38,000 --> 00:17:40,280 Speaker 1: you through some questions that you can ask yourself to 411 00:17:40,320 --> 00:17:42,879 Speaker 1: help you to determine whether or not some of this 412 00:17:42,960 --> 00:17:44,959 Speaker 1: debt that you might have in your life is strategic 413 00:17:45,160 --> 00:17:48,359 Speaker 1: or if it is dumb non strategic debt. And actually 414 00:17:48,440 --> 00:17:51,160 Speaker 1: it's not as clear cut, it's not as simple as 415 00:17:51,200 --> 00:17:53,399 Speaker 1: you might think. I can promise you that, and so 416 00:17:53,440 --> 00:17:55,600 Speaker 1: we will get to all of that plus more right 417 00:17:55,680 --> 00:17:56,160 Speaker 1: after this. 418 00:18:05,520 --> 00:18:07,400 Speaker 2: All right, man, let's keep going, Let's keep talking about debt. 419 00:18:07,480 --> 00:18:10,359 Speaker 2: Let's do it demystify a little bit, because when you 420 00:18:10,400 --> 00:18:10,960 Speaker 2: when you think. 421 00:18:10,800 --> 00:18:12,159 Speaker 1: That all debt is. 422 00:18:13,560 --> 00:18:17,680 Speaker 2: Demystifying, demystifying debt, debt, well there because there's the reality 423 00:18:17,720 --> 00:18:20,359 Speaker 2: that a lot of people, based on maybe some of 424 00:18:20,400 --> 00:18:23,680 Speaker 2: the loudest voices out there talking about debt, that they 425 00:18:23,680 --> 00:18:27,120 Speaker 2: think that every every single instance you might potentially take 426 00:18:27,160 --> 00:18:29,880 Speaker 2: on debt, that it's going to harm you, that's going 427 00:18:29,920 --> 00:18:31,840 Speaker 2: to be bad for your personal finances. And we would 428 00:18:31,840 --> 00:18:36,040 Speaker 2: say no, a nuanced approach to debt, using it strategically 429 00:18:36,320 --> 00:18:39,960 Speaker 2: could actually catapult you in the right direction. But there's 430 00:18:40,040 --> 00:18:41,480 Speaker 2: a lot to be said about that. And let's just 431 00:18:41,560 --> 00:18:44,440 Speaker 2: expound for just a second about non strategic debt, which 432 00:18:44,480 --> 00:18:46,200 Speaker 2: you kind of talked about just a little bit before 433 00:18:46,240 --> 00:18:50,280 Speaker 2: the break, And there's this like cool story of Frederick Smith, 434 00:18:50,280 --> 00:18:52,520 Speaker 2: who's the CEO of FedEx. I believe, I believe he 435 00:18:52,560 --> 00:18:54,040 Speaker 2: just announced that he's gonna step down, So I don't 436 00:18:54,040 --> 00:18:55,800 Speaker 2: know if he's already done that or not, but he's 437 00:18:55,800 --> 00:18:58,000 Speaker 2: been the CEO of fed X for decades and decades, 438 00:18:58,359 --> 00:19:01,000 Speaker 2: and in the very early days of the company, he 439 00:19:01,040 --> 00:19:03,960 Speaker 2: actually went to Vegas and took out a five thousand 440 00:19:04,000 --> 00:19:06,960 Speaker 2: dollars line of credit and he won twenty seven thousand 441 00:19:06,960 --> 00:19:10,400 Speaker 2: dollars gambling in order to cover a giant fuel bill, 442 00:19:10,640 --> 00:19:14,199 Speaker 2: twenty four thousand dollars fuel bill that FedEx had, And 443 00:19:14,240 --> 00:19:16,119 Speaker 2: if he had not done that, he literally like they 444 00:19:16,119 --> 00:19:17,919 Speaker 2: had no money to pay the fuel bill and the 445 00:19:17,960 --> 00:19:20,680 Speaker 2: company was going to crumble, as the story goes, if 446 00:19:20,720 --> 00:19:23,239 Speaker 2: he had not gone to extreme measures, so basically like, 447 00:19:23,320 --> 00:19:26,639 Speaker 2: if he had not taken the most dire tactic of 448 00:19:26,680 --> 00:19:29,359 Speaker 2: taking on debt in order to gamble, which is something 449 00:19:29,400 --> 00:19:32,639 Speaker 2: we don't suggest anybody out there, normal people do. Nope, 450 00:19:32,680 --> 00:19:34,840 Speaker 2: his company would have been gone by the wayside. So 451 00:19:34,920 --> 00:19:38,040 Speaker 2: I guess maybe there is the super occasional circumstance where 452 00:19:38,440 --> 00:19:41,320 Speaker 2: taking on non strategic debt can be the only the 453 00:19:41,560 --> 00:19:44,240 Speaker 2: course of last resort, right, and it might make sense 454 00:19:44,280 --> 00:19:47,359 Speaker 2: in the most extreme circumstances, But gambling to save your 455 00:19:47,400 --> 00:19:51,160 Speaker 2: company is it's typically a reckless decision. Taking on debt 456 00:19:51,200 --> 00:19:53,280 Speaker 2: in order to gamble in general would be a bad idea, 457 00:19:53,359 --> 00:19:56,439 Speaker 2: and they're just other options in ninety nine percent of cases. 458 00:19:56,800 --> 00:19:58,439 Speaker 2: But I guess not in that one based on how 459 00:19:58,440 --> 00:19:59,119 Speaker 2: the story goes. 460 00:19:59,200 --> 00:19:59,360 Speaker 1: Well. 461 00:19:59,520 --> 00:20:01,280 Speaker 2: The same as true when it comes to the worst 462 00:20:01,320 --> 00:20:03,359 Speaker 2: forms of consumer debt. Right. If you if you start 463 00:20:03,359 --> 00:20:05,800 Speaker 2: getting comfortable with running headlong into debt, when you get 464 00:20:05,800 --> 00:20:08,159 Speaker 2: in a pinch, if that's kind of your go to method, 465 00:20:08,600 --> 00:20:11,280 Speaker 2: when it becomes your lifeline, it's it's a bad habit 466 00:20:11,560 --> 00:20:13,240 Speaker 2: that's hard to break, and it's going to hamstring your 467 00:20:13,280 --> 00:20:16,159 Speaker 2: ability to grow wealth in a meaningful way. And by 468 00:20:16,160 --> 00:20:18,040 Speaker 2: the way, I thought this was interesting that the CEO 469 00:20:18,080 --> 00:20:20,280 Speaker 2: of fed X he's never gambled since, so it's not 470 00:20:20,320 --> 00:20:21,840 Speaker 2: like he was like, Yeah, this is just kind of 471 00:20:21,840 --> 00:20:24,320 Speaker 2: fun to do this. I do it for kicks, and 472 00:20:24,400 --> 00:20:26,800 Speaker 2: like I go to Vegas once a year anyway to 473 00:20:26,800 --> 00:20:28,720 Speaker 2: hear that. At least it was because I'm hesitant, Like 474 00:20:28,800 --> 00:20:30,800 Speaker 2: I say, one time thing Yeah, he was like, this 475 00:20:30,840 --> 00:20:31,840 Speaker 2: is this seems like the only. 476 00:20:31,720 --> 00:20:33,359 Speaker 1: Way that we share this story because this is a 477 00:20:33,400 --> 00:20:37,440 Speaker 1: success story of using the Fratici debt, of literally gambling, 478 00:20:37,520 --> 00:20:39,240 Speaker 1: Like I would say that many more failures. Yeah, I 479 00:20:39,240 --> 00:20:41,480 Speaker 1: would say that it's always reckless because you don't know 480 00:20:41,520 --> 00:20:43,480 Speaker 1: if you're going to come out on top, right, I mean, 481 00:20:43,560 --> 00:20:46,720 Speaker 1: it's literally the name of the game, gambling. Like there's 482 00:20:47,880 --> 00:20:49,960 Speaker 1: a far more likely chance that you're going to lose 483 00:20:49,960 --> 00:20:50,280 Speaker 1: at all. 484 00:20:50,480 --> 00:20:52,560 Speaker 2: But that's what he would have said, is I'm on 485 00:20:52,720 --> 00:20:55,080 Speaker 2: track to lose it all. Yeah, I don't take this 486 00:20:55,080 --> 00:20:57,800 Speaker 2: this small risk. The bigger risk is that my whole 487 00:20:57,800 --> 00:21:00,720 Speaker 2: company folds. Yeah, FedEx, isn't this success story that it 488 00:21:00,760 --> 00:21:01,359 Speaker 2: is today exactly. 489 00:21:01,400 --> 00:21:03,040 Speaker 1: I mean, like just before the break, we're talking about 490 00:21:03,160 --> 00:21:05,840 Speaker 1: using non strategic debt. I guess in that way, you 491 00:21:06,320 --> 00:21:08,320 Speaker 1: are using it in a strategic way at that point, 492 00:21:08,359 --> 00:21:11,400 Speaker 1: because like we were talking about how you should consider 493 00:21:11,400 --> 00:21:14,280 Speaker 1: it maybe only if you are in a life threatening situation. 494 00:21:14,560 --> 00:21:16,399 Speaker 1: And it's not that his physical life was being threatened, 495 00:21:16,440 --> 00:21:19,040 Speaker 1: but the life of that particular company definitely was. But 496 00:21:19,080 --> 00:21:21,399 Speaker 1: this is an instance where you know, getting comfortable with 497 00:21:21,480 --> 00:21:23,679 Speaker 1: debt can like it can sort of be like that 498 00:21:23,680 --> 00:21:27,119 Speaker 1: first sip of alcohol for somebody who has struggled with 499 00:21:27,160 --> 00:21:29,800 Speaker 1: alcoholism in the past. This maybe this is somebody who's 500 00:21:29,800 --> 00:21:32,640 Speaker 1: been sober for a bunch of years. It might seem harmless, 501 00:21:33,359 --> 00:21:36,360 Speaker 1: and depending on who you are, it could be completely harmless. 502 00:21:36,760 --> 00:21:39,600 Speaker 1: But for somebody else it could lead them, you know, 503 00:21:39,640 --> 00:21:42,560 Speaker 1: it could send them spiraling downwards. And that's why we 504 00:21:42,640 --> 00:21:45,680 Speaker 1: are so adamant about the need to build up some savings, 505 00:21:45,800 --> 00:21:48,120 Speaker 1: to have some cash on hand, starting with the bare 506 00:21:48,160 --> 00:21:51,280 Speaker 1: minimum of having a basic emergency fund in the bank 507 00:21:52,080 --> 00:21:54,800 Speaker 1: four hundred and sixty seven dollars. It's our first money gear. 508 00:21:55,119 --> 00:21:57,879 Speaker 1: But just having that amount stashed in your bank account 509 00:21:57,920 --> 00:22:01,800 Speaker 1: will make a lot of debt option is completely unnecessary 510 00:22:01,800 --> 00:22:04,040 Speaker 1: for you because you've got that money in the bank. 511 00:22:04,240 --> 00:22:06,200 Speaker 1: We want you to have more than that, of course, 512 00:22:06,280 --> 00:22:09,800 Speaker 1: more than the initial emergency fund, but that's a necessary 513 00:22:09,840 --> 00:22:12,919 Speaker 1: place to start if you want to avoid the nasty 514 00:22:12,960 --> 00:22:14,960 Speaker 1: thing that is non strategic debt. 515 00:22:15,040 --> 00:22:18,000 Speaker 2: Yeah, so let's talk about maybe how people can decipher 516 00:22:18,240 --> 00:22:20,679 Speaker 2: which kind of debt they're using. You mentioned some of 517 00:22:20,720 --> 00:22:23,720 Speaker 2: the specific non strategic forms of debt. You talked about 518 00:22:24,040 --> 00:22:27,440 Speaker 2: title loans and payday loans as being the worst kind, 519 00:22:27,480 --> 00:22:29,240 Speaker 2: but that credit cards and personal loans are ones that 520 00:22:29,280 --> 00:22:31,680 Speaker 2: have kind of been normalized, but they're still we would say, 521 00:22:31,720 --> 00:22:34,720 Speaker 2: non strategic forms of debt. They're they're not good or 522 00:22:34,760 --> 00:22:38,040 Speaker 2: smart ways to catapult yourself forward. Typically you're hamstring yourself 523 00:22:38,320 --> 00:22:41,919 Speaker 2: by getting into debt via one of those avenues. And 524 00:22:42,000 --> 00:22:44,000 Speaker 2: so yeah, let's offer maybe a few questions to help 525 00:22:44,040 --> 00:22:47,119 Speaker 2: you understand which one you're taking on. And one question 526 00:22:47,200 --> 00:22:49,200 Speaker 2: to ask yourself is is this debt going to help 527 00:22:49,320 --> 00:22:51,560 Speaker 2: grow your income or will it help you grow your 528 00:22:51,560 --> 00:22:54,159 Speaker 2: net worth? We would say this is the first litmus 529 00:22:54,240 --> 00:22:56,600 Speaker 2: test to run your debt through your debt your decision 530 00:22:56,600 --> 00:22:59,480 Speaker 2: about which debt to take on through that will help 531 00:22:59,520 --> 00:23:01,560 Speaker 2: you determine and whether it's ultimately good or bad for 532 00:23:01,600 --> 00:23:04,800 Speaker 2: your bottom line. It basically helps you separate the wheat 533 00:23:04,840 --> 00:23:09,600 Speaker 2: from the chaff using biblical terminology. Basically, by asking yourself 534 00:23:09,640 --> 00:23:12,640 Speaker 2: this question, you're gonna be able to determine if you're 535 00:23:12,840 --> 00:23:17,400 Speaker 2: financing appreciating or depreciating assets. And of course we want 536 00:23:17,480 --> 00:23:21,360 Speaker 2: you to have more appreciating assets and fewer depreciating assets. 537 00:23:21,600 --> 00:23:23,160 Speaker 2: That is the name of the game when it comes 538 00:23:23,200 --> 00:23:26,120 Speaker 2: to building wealth and getting ahead with your money. If 539 00:23:26,400 --> 00:23:29,840 Speaker 2: you have debt for an asset that's appreciating, then congratulations. 540 00:23:30,160 --> 00:23:33,080 Speaker 2: That debt can actually help you in your wealth building efforts. 541 00:23:33,240 --> 00:23:35,440 Speaker 2: And I think Matt probably the best example of that 542 00:23:35,720 --> 00:23:38,160 Speaker 2: is taking on debt to buy a rental property, because yes, 543 00:23:38,160 --> 00:23:40,080 Speaker 2: you are taking on debt, but that debt is also 544 00:23:40,160 --> 00:23:42,639 Speaker 2: kind of a known quantity and you can lock it 545 00:23:42,680 --> 00:23:45,480 Speaker 2: in for a fixed rate of time, typically thirty years, 546 00:23:45,680 --> 00:23:49,280 Speaker 2: and you also can have a pretty good idea of 547 00:23:49,400 --> 00:23:51,960 Speaker 2: how much that debt is going to cash flow for you, 548 00:23:52,280 --> 00:23:54,320 Speaker 2: And so that debt then becomes something that is not 549 00:23:54,359 --> 00:23:57,040 Speaker 2: really a liability, it's an asset because it's producing cash 550 00:23:57,080 --> 00:23:59,800 Speaker 2: flow for you every month. If you buy the right property, 551 00:23:59,880 --> 00:24:02,080 Speaker 2: you structure that debt well, right, yeah, there could be 552 00:24:02,200 --> 00:24:04,240 Speaker 2: a net positive. But I like what you said if 553 00:24:04,280 --> 00:24:06,480 Speaker 2: you buy the right property, because at the same time, 554 00:24:06,480 --> 00:24:08,040 Speaker 2: you don't want to overdo it, because you can even 555 00:24:08,040 --> 00:24:11,960 Speaker 2: take not all investment properties are going to be smart like, 556 00:24:12,320 --> 00:24:15,000 Speaker 2: not all investment property quote unquote investment properties are going 557 00:24:15,040 --> 00:24:17,359 Speaker 2: to be strategic uses of debt because there are a 558 00:24:17,400 --> 00:24:19,480 Speaker 2: lot of people who don't know what they're doing yea, 559 00:24:19,640 --> 00:24:22,520 Speaker 2: and who buy properties willy nilly because they haven't done 560 00:24:22,520 --> 00:24:25,040 Speaker 2: the research, and yeah, what was when we talked with 561 00:24:25,480 --> 00:24:28,760 Speaker 2: Brandon's turner, we talked about that exactly, like most properties 562 00:24:28,800 --> 00:24:31,680 Speaker 2: aren't a goodbye. You have to find and wait and 563 00:24:31,760 --> 00:24:35,040 Speaker 2: find the one that's actually that it makes sense numbers wise, exactly. 564 00:24:35,080 --> 00:24:36,320 Speaker 1: And the same thing can be true when it comes 565 00:24:36,400 --> 00:24:39,159 Speaker 1: to investing money into the stock market as well. Right, 566 00:24:39,840 --> 00:24:43,200 Speaker 1: you could potentially take on debt to buy even more stocks, 567 00:24:43,440 --> 00:24:46,480 Speaker 1: considering it a smart investment in your future, but that's 568 00:24:46,560 --> 00:24:49,600 Speaker 1: called buying on margin. And the problem is, if your 569 00:24:49,720 --> 00:24:52,880 Speaker 1: investments aren't performing all that well, you might be subject 570 00:24:52,920 --> 00:24:55,080 Speaker 1: to a margin call, forcing you to come up with 571 00:24:55,200 --> 00:24:58,119 Speaker 1: even more money that, by the way, you don't have. 572 00:24:59,000 --> 00:25:01,280 Speaker 1: So that would be a much much riskier form of 573 00:25:01,359 --> 00:25:03,959 Speaker 1: financing and appreciating asset. And so again, you don't want 574 00:25:03,960 --> 00:25:05,399 Speaker 1: to overdo it. You don't want to push the envelope 575 00:25:05,440 --> 00:25:07,680 Speaker 1: too far. And again, even with real estate, you know 576 00:25:07,800 --> 00:25:09,879 Speaker 1: the reality is that even when you opt to do 577 00:25:09,920 --> 00:25:11,879 Speaker 1: it with a rental property, you still need to have 578 00:25:12,040 --> 00:25:14,120 Speaker 1: cash on hand to get you through those leaner months, 579 00:25:14,520 --> 00:25:18,120 Speaker 1: to get you through periods of vacancy or higher than 580 00:25:18,160 --> 00:25:22,879 Speaker 1: expected repair bills. No matter what the quote unquote strategic 581 00:25:23,080 --> 00:25:24,920 Speaker 1: debt is that you're taking on, you still need to 582 00:25:25,000 --> 00:25:25,680 Speaker 1: be judicious. 583 00:25:25,760 --> 00:25:27,879 Speaker 2: Yeah, I mean, think about the episode that we just 584 00:25:27,920 --> 00:25:30,720 Speaker 2: released on Monday with Budget Girl with Sarah, and she 585 00:25:30,880 --> 00:25:33,560 Speaker 2: talks about the duplex that she bought. She financed it, 586 00:25:33,800 --> 00:25:36,960 Speaker 2: but guess what, it also makes her money most months. 587 00:25:37,119 --> 00:25:39,879 Speaker 2: But she also, on top of that, has the cash 588 00:25:39,960 --> 00:25:43,520 Speaker 2: reserves to deal with those bigger things that can and 589 00:25:43,680 --> 00:25:46,960 Speaker 2: have gone wrong in her house. And that is a 590 00:25:47,119 --> 00:25:50,360 Speaker 2: pattern that people can follow to build wealth on their own. 591 00:25:50,520 --> 00:25:53,360 Speaker 2: It does involve taking on debt, but it's strategic debt 592 00:25:54,000 --> 00:25:57,160 Speaker 2: that for the person who is financially savvy and has 593 00:25:57,240 --> 00:25:59,400 Speaker 2: cash on hand to back them up. If things don't 594 00:25:59,440 --> 00:26:01,200 Speaker 2: go your way, even for months on end, right, and 595 00:26:01,320 --> 00:26:04,520 Speaker 2: you've got plumbing issues and roof issues and HVAC issues, 596 00:26:04,720 --> 00:26:06,800 Speaker 2: then you can still cover the payments. And you have 597 00:26:06,840 --> 00:26:08,919 Speaker 2: to have that long term perspective at the same time totally. 598 00:26:09,119 --> 00:26:10,280 Speaker 2: And so yeah, when it comes down to it, mat 599 00:26:10,320 --> 00:26:11,920 Speaker 2: I guess what we're kind of saying is that debt 600 00:26:12,119 --> 00:26:14,920 Speaker 2: is it's a tool, absolutely, and so another way to 601 00:26:14,960 --> 00:26:17,520 Speaker 2: maybe figure out if you're using debt strategically is to 602 00:26:17,640 --> 00:26:20,199 Speaker 2: ask yourself if you're using the tool that you've been 603 00:26:20,240 --> 00:26:23,600 Speaker 2: given properly, right. And credit cards are a perfect example, 604 00:26:23,880 --> 00:26:26,200 Speaker 2: because yeah, you mentioned them as a non strategic form 605 00:26:26,240 --> 00:26:28,320 Speaker 2: of debt, so that what you mean by that is 606 00:26:28,359 --> 00:26:30,600 Speaker 2: if you're taking on credit card debt and you're not 607 00:26:31,160 --> 00:26:32,520 Speaker 2: paying it off on time and and fol at the 608 00:26:32,600 --> 00:26:35,199 Speaker 2: end of the month, that is a really bad use 609 00:26:35,240 --> 00:26:37,320 Speaker 2: of debt because you're paying something like eighteen nineteen or 610 00:26:37,359 --> 00:26:40,720 Speaker 2: twenty percent to the credit card companies just to be 611 00:26:40,760 --> 00:26:43,120 Speaker 2: able to finance things that you probably don't even need. 612 00:26:43,400 --> 00:26:45,200 Speaker 2: And so if that's the case, you know, having a 613 00:26:45,280 --> 00:26:47,440 Speaker 2: credit card in your life, it's doing more more harm 614 00:26:47,520 --> 00:26:49,679 Speaker 2: than good. It's a tool that you're using poorly. Instead 615 00:26:49,680 --> 00:26:52,399 Speaker 2: of using the hammer to like put a nail on 616 00:26:52,440 --> 00:26:54,439 Speaker 2: the wall, you're using it to like bash your own toes, right, 617 00:26:54,880 --> 00:26:56,680 Speaker 2: And you don't want to do that. But if you're 618 00:26:56,720 --> 00:27:00,159 Speaker 2: using a credit card as a delayed payment mechanism, right, 619 00:27:00,200 --> 00:27:02,120 Speaker 2: if you have cash in the bank account to pay 620 00:27:02,160 --> 00:27:04,520 Speaker 2: off that credit card balance no matter what else comes along, 621 00:27:04,840 --> 00:27:08,040 Speaker 2: and you're making the full payment on autopilot every single month, 622 00:27:08,480 --> 00:27:12,000 Speaker 2: that ensures that you're using that particular method of debt 623 00:27:12,359 --> 00:27:14,720 Speaker 2: as a means of payment that comes with some side 624 00:27:14,760 --> 00:27:17,520 Speaker 2: perks instead of relying it on this in such an 625 00:27:17,600 --> 00:27:21,040 Speaker 2: unhealthy way. So, yeah, the debt is basically a tool, 626 00:27:21,080 --> 00:27:22,680 Speaker 2: and it can be used for good, it can be 627 00:27:22,760 --> 00:27:25,120 Speaker 2: used poorly, but so much of it depends on who's 628 00:27:25,160 --> 00:27:26,400 Speaker 2: hands it's in and how. 629 00:27:26,359 --> 00:27:28,560 Speaker 1: They're using it exactly. Like, it reminds me a lot 630 00:27:28,600 --> 00:27:31,000 Speaker 1: of cash, right Like, sometimes folks are like, oh, cash 631 00:27:31,160 --> 00:27:33,639 Speaker 1: is this terrible thing, or you know money in general, 632 00:27:34,000 --> 00:27:36,640 Speaker 1: money is evil, and it's like, yeah, not really. Money 633 00:27:36,720 --> 00:27:38,720 Speaker 1: is fairly neutral. It's a neutral tool. It depends on 634 00:27:38,800 --> 00:27:40,720 Speaker 1: how you use it. And I think the same thing 635 00:27:41,160 --> 00:27:42,640 Speaker 1: is true when it comes to debt. I think it's 636 00:27:42,640 --> 00:27:46,879 Speaker 1: a fairly neutral thing. It is more divisive though, right 637 00:27:46,960 --> 00:27:49,280 Speaker 1: because I feel like money can just be this neutral 638 00:27:49,320 --> 00:27:51,200 Speaker 1: thing that sits out there, whereas debt you're either on 639 00:27:51,280 --> 00:27:53,040 Speaker 1: one side of it or the other, and so you 640 00:27:53,160 --> 00:27:54,480 Speaker 1: just want to make sure that you're on the right 641 00:27:54,560 --> 00:27:56,840 Speaker 1: side of debts, or if you are on the wrong 642 00:27:56,880 --> 00:27:58,560 Speaker 1: side of it, that you are on the right side 643 00:27:58,600 --> 00:28:00,920 Speaker 1: of it in another area of life, right Like, maybe 644 00:28:01,040 --> 00:28:03,159 Speaker 1: when it comes to investing it, it makes me think of. 645 00:28:03,160 --> 00:28:05,600 Speaker 2: Like a chainsaw, and a chainsaw in the hands of 646 00:28:05,840 --> 00:28:08,400 Speaker 2: my three year old son, not a good idea, right, Yeah, 647 00:28:08,440 --> 00:28:11,200 Speaker 2: a chainsaw in my hands, it's okay, like, yeah. 648 00:28:11,200 --> 00:28:14,200 Speaker 1: Safe enough, probably not what most folks would want to be, Like, 649 00:28:14,320 --> 00:28:15,960 Speaker 1: I'm not gonna want to stand around you. I don't 650 00:28:15,960 --> 00:28:17,399 Speaker 1: want to be on the receiving end of Joel with 651 00:28:17,440 --> 00:28:21,080 Speaker 1: a chainslaw exactly. I would rather be holding the chainsaw myself. 652 00:28:21,160 --> 00:28:22,440 Speaker 2: But if it's let's say it's in the hands of 653 00:28:22,520 --> 00:28:26,480 Speaker 2: one of those lumberjack competitors on ESPN, then it's this 654 00:28:26,880 --> 00:28:30,119 Speaker 2: tool that's used impeccably well. And you know, I think 655 00:28:30,200 --> 00:28:33,200 Speaker 2: maybe that's how we think debt can be used. So 656 00:28:33,359 --> 00:28:35,520 Speaker 2: much of it depends on whose hands it's end. 657 00:28:35,640 --> 00:28:37,760 Speaker 1: Yeah, well, and it's just device. It's like this, it's 658 00:28:37,880 --> 00:28:39,360 Speaker 1: kind of more of a combative thing. I like what 659 00:28:39,400 --> 00:28:41,880 Speaker 1: you said earlier about using a hammer, Like using a 660 00:28:41,960 --> 00:28:45,080 Speaker 1: hammer to put something like hang up a picture, Like 661 00:28:45,200 --> 00:28:46,920 Speaker 1: that's more like cash right where it feels a little 662 00:28:46,920 --> 00:28:49,440 Speaker 1: more neutral. But debt is like using a hammer, either 663 00:28:49,520 --> 00:28:51,200 Speaker 1: for good or like it's either one or the other. 664 00:28:51,240 --> 00:28:53,160 Speaker 1: It's either good or bad. You're either hanging the picture 665 00:28:53,280 --> 00:28:56,120 Speaker 1: or you're smashing yourself in the toe causing yourself harm. 666 00:28:56,400 --> 00:28:59,080 Speaker 1: But what we're saying here, though, is the net gain 667 00:28:59,160 --> 00:29:01,000 Speaker 1: that you receive. Is there a gain or is there 668 00:29:01,000 --> 00:29:03,120 Speaker 1: a net loss? As you are able to step back 669 00:29:03,120 --> 00:29:04,640 Speaker 1: and look at the whole forest. As you're looking at 670 00:29:04,680 --> 00:29:06,520 Speaker 1: the whole picture, you just want to make sure again 671 00:29:06,560 --> 00:29:08,240 Speaker 1: that you're on the right side of the equation that 672 00:29:08,400 --> 00:29:12,640 Speaker 1: you are on the money is owed to me side 673 00:29:12,680 --> 00:29:14,960 Speaker 1: of the equation, not on the side of I owe money. 674 00:29:15,600 --> 00:29:19,200 Speaker 1: But even if your debt levels are reasonable, we think 675 00:29:19,480 --> 00:29:22,680 Speaker 1: that it pays to know yourself. So, for instance, maybe 676 00:29:22,920 --> 00:29:25,080 Speaker 1: you find yourself stressed out because you've taken out a 677 00:29:25,120 --> 00:29:26,959 Speaker 1: mortgage on a house right A lot of folks might 678 00:29:26,960 --> 00:29:29,520 Speaker 1: be in that position right now, a house that, according 679 00:29:29,560 --> 00:29:32,360 Speaker 1: to the lender, you can most definitely afford, but it 680 00:29:32,440 --> 00:29:35,400 Speaker 1: turns out that that debt just isn't for you. Well, 681 00:29:35,520 --> 00:29:38,960 Speaker 1: this is when knowing your personal debt tolerance level is 682 00:29:39,040 --> 00:29:41,400 Speaker 1: going to really pay off. Particularly it's going to pay 683 00:29:41,400 --> 00:29:43,960 Speaker 1: off in non monetary ways. So, for example, maybe you 684 00:29:44,080 --> 00:29:46,840 Speaker 1: just recently had your student loans wiped out and you 685 00:29:47,000 --> 00:29:50,240 Speaker 1: are experiencing such an improved level of mental health that 686 00:29:50,400 --> 00:29:53,240 Speaker 1: you're now like you're just now realizing the toll that 687 00:29:53,360 --> 00:29:57,160 Speaker 1: it was previously taking on you. The psychological reality of 688 00:29:57,360 --> 00:30:01,120 Speaker 1: monthly payments and a giant outstand level of debt. Is 689 00:30:01,240 --> 00:30:05,520 Speaker 1: It's real, right, The potentially positive financial benefits of taking 690 00:30:05,560 --> 00:30:09,400 Speaker 1: on more debt can most definitely be outweighed by the 691 00:30:09,520 --> 00:30:13,280 Speaker 1: negative psychological ones. So basically what we're saying here is 692 00:30:13,360 --> 00:30:16,360 Speaker 1: that just because a debt quote unquote is strategic, that 693 00:30:16,480 --> 00:30:18,760 Speaker 1: doesn't give you license just to take out as much 694 00:30:18,760 --> 00:30:20,680 Speaker 1: of that debt as possible. You need to take into 695 00:30:20,720 --> 00:30:23,480 Speaker 1: account the other ways that that debt is going to 696 00:30:23,520 --> 00:30:25,800 Speaker 1: impact you, in particular your stress levels. Yeah. 697 00:30:25,800 --> 00:30:28,920 Speaker 2: I mean, we interviewed Andy Hill from Marriage, Kids and 698 00:30:28,960 --> 00:30:31,040 Speaker 2: Money back in the day Matt and he chose to 699 00:30:31,040 --> 00:30:32,880 Speaker 2: pay off a three percent mortgage and a lot of 700 00:30:32,920 --> 00:30:35,880 Speaker 2: people have given him crap on the Twitter verse in 701 00:30:35,920 --> 00:30:38,520 Speaker 2: the Twitter verse over the years, saying like, that's a 702 00:30:38,600 --> 00:30:40,360 Speaker 2: dumb money move, and when you look at like what 703 00:30:40,480 --> 00:30:43,200 Speaker 2: the market has done over the past decade, right or whatever, 704 00:30:43,280 --> 00:30:45,200 Speaker 2: as he could have been investing that money instead of 705 00:30:45,200 --> 00:30:47,600 Speaker 2: paying down his mortgage more quickly, it doesn't make the 706 00:30:47,600 --> 00:30:50,320 Speaker 2: most sense fum a dollars and cent standpoint, But for 707 00:30:50,800 --> 00:30:52,840 Speaker 2: the way Andy explains it, I see a lot of 708 00:30:52,880 --> 00:30:54,600 Speaker 2: wisdom in it. It was the best move for he 709 00:30:55,040 --> 00:30:58,040 Speaker 2: and his family because they didn't want that debt hanging. 710 00:30:57,880 --> 00:30:58,440 Speaker 1: Over their heads. 711 00:30:58,720 --> 00:31:01,160 Speaker 2: And so yes, there is well, I mean, same thing 712 00:31:01,240 --> 00:31:03,640 Speaker 2: with our friend of the show, Morgan Housel, who came 713 00:31:03,680 --> 00:31:06,120 Speaker 2: on paid off his mortgage, but he invests one hundred 714 00:31:06,120 --> 00:31:08,920 Speaker 2: percent in stocks and he's he's you know, he invests 715 00:31:08,960 --> 00:31:09,720 Speaker 2: a lot of his money. 716 00:31:09,960 --> 00:31:12,040 Speaker 1: Yeah, he's a super smart guy, maybe one of the 717 00:31:12,080 --> 00:31:13,840 Speaker 1: smartest guys we've had on the show. And if you're 718 00:31:13,840 --> 00:31:16,520 Speaker 1: just looking at the numbers, yeah, it does not financially 719 00:31:16,920 --> 00:31:18,920 Speaker 1: make sense to pay off your house, but it's something 720 00:31:19,000 --> 00:31:21,240 Speaker 1: that he chose to do because now he knows that 721 00:31:21,400 --> 00:31:23,360 Speaker 1: I will never lose my house. It's not I own it. 722 00:31:23,440 --> 00:31:25,800 Speaker 2: It's not the most strategic thing, but it's the best 723 00:31:25,840 --> 00:31:28,640 Speaker 2: thing for you from a mental perspective, and that matters, right, 724 00:31:28,680 --> 00:31:30,360 Speaker 2: And you have to take that into account too. You 725 00:31:30,840 --> 00:31:33,120 Speaker 2: you know, you can you can go crazy trying to 726 00:31:33,160 --> 00:31:34,800 Speaker 2: be the most strategic person on the face of the 727 00:31:34,880 --> 00:31:37,200 Speaker 2: earth and ultimately end up harming yourself in the process. 728 00:31:37,240 --> 00:31:39,320 Speaker 2: And you might, even in your attempts to be strategic, 729 00:31:39,760 --> 00:31:41,880 Speaker 2: try to do things that are more complex than you're 730 00:31:41,880 --> 00:31:45,040 Speaker 2: able to pull off. And so yeah, that matters too. 731 00:31:45,160 --> 00:31:48,040 Speaker 2: We want to stress that it's okay to use debt strategically, 732 00:31:48,160 --> 00:31:51,080 Speaker 2: and it's okay to take on debt to further your 733 00:31:51,120 --> 00:31:54,000 Speaker 2: ability to earn or to grow your net worth, but 734 00:31:54,080 --> 00:31:55,880 Speaker 2: if you attempt to get too cute with it, you 735 00:31:55,960 --> 00:31:58,920 Speaker 2: might find yourself in a pickle. And I think we've 736 00:31:58,960 --> 00:32:01,000 Speaker 2: given a stat mat something about like people that have 737 00:32:01,120 --> 00:32:05,160 Speaker 2: debt hanging over their heads, it feels to them like 738 00:32:05,360 --> 00:32:08,360 Speaker 2: their IQ has basically dropped twelve points. They're walking through 739 00:32:08,360 --> 00:32:10,360 Speaker 2: this world a little bit dumber because of the debt 740 00:32:10,520 --> 00:32:12,000 Speaker 2: that hangs around their necks. And I think there's a 741 00:32:12,080 --> 00:32:15,360 Speaker 2: reality to that as well. If that debt is casting 742 00:32:15,720 --> 00:32:19,640 Speaker 2: a shadow, it's creating like a mental weight around your neck, 743 00:32:19,720 --> 00:32:21,920 Speaker 2: then we would say it's better to get rid of 744 00:32:21,960 --> 00:32:23,800 Speaker 2: it than it is to keep it around, just because 745 00:32:23,840 --> 00:32:26,680 Speaker 2: it's quote unquote strategic. But that being said, let's keep 746 00:32:26,680 --> 00:32:29,720 Speaker 2: talking about strategic debt because I think another way that 747 00:32:29,760 --> 00:32:33,040 Speaker 2: you could use debt strategically is maybe borrowing on items 748 00:32:33,080 --> 00:32:35,320 Speaker 2: that we would typically tell you not to borrow for. 749 00:32:35,480 --> 00:32:37,760 Speaker 1: Which, by the way, I mean obviously it sounds like 750 00:32:37,760 --> 00:32:39,080 Speaker 1: we're kind of talking out of both sides of our 751 00:32:39,120 --> 00:32:41,239 Speaker 1: mouth here. Sounds like a mind bender, and we kind 752 00:32:41,280 --> 00:32:44,440 Speaker 1: of are. But the nuance is important here. So, for instance, 753 00:32:44,520 --> 00:32:47,600 Speaker 1: I'm thinking about car loans, and the reality is that 754 00:32:47,720 --> 00:32:51,000 Speaker 1: car loans are a major problem in our country, largely 755 00:32:51,120 --> 00:32:53,959 Speaker 1: because people finance really expensive vehicle that they could never 756 00:32:54,040 --> 00:32:56,800 Speaker 1: afford if they weren't able to take out like a 757 00:32:56,920 --> 00:32:59,920 Speaker 1: seven or even eight year loan. They're basically upside down 758 00:33:00,120 --> 00:33:03,120 Speaker 1: for most of that loan term. That's a bad financial 759 00:33:03,240 --> 00:33:06,160 Speaker 1: position to be in. But what if you have the 760 00:33:06,240 --> 00:33:08,280 Speaker 1: money on hand, but you still opt to take out 761 00:33:08,320 --> 00:33:11,239 Speaker 1: a loan anyway, Because for instance, let's say you get 762 00:33:11,280 --> 00:33:15,520 Speaker 1: financing maybe at like two percent from your local credit union, 763 00:33:16,000 --> 00:33:18,720 Speaker 1: and then you opt instead to keep that money invested 764 00:33:19,040 --> 00:33:21,360 Speaker 1: instead of pulling your cash out in order to pay 765 00:33:21,400 --> 00:33:24,520 Speaker 1: for that car. One percent believe that that is a 766 00:33:24,760 --> 00:33:27,560 Speaker 1: smart use of your money. So it comes down to 767 00:33:27,680 --> 00:33:29,440 Speaker 1: that opportunity cost. You have to be able to look 768 00:33:29,480 --> 00:33:32,200 Speaker 1: at the whole picture. You have to be disciplined as 769 00:33:32,280 --> 00:33:35,120 Speaker 1: well to take that money and do something like invest it, 770 00:33:35,160 --> 00:33:37,240 Speaker 1: because if you just take out that loan and then 771 00:33:37,360 --> 00:33:40,160 Speaker 1: you're like, well, no, I've got those money that I 772 00:33:40,240 --> 00:33:42,080 Speaker 1: haven't parted ways with, I can use that to buy 773 00:33:42,120 --> 00:33:44,840 Speaker 1: other stuff, other crap. That's going to depreciate and go 774 00:33:44,880 --> 00:33:46,320 Speaker 1: down and value. Well, then that is going to be 775 00:33:46,360 --> 00:33:48,880 Speaker 1: a big mistake. But that's why it's so important what 776 00:33:49,200 --> 00:33:51,520 Speaker 1: you do with the money that you are not using 777 00:33:51,600 --> 00:33:53,320 Speaker 1: to pay for that item. 778 00:33:53,160 --> 00:33:55,040 Speaker 2: And then the terms of your debt are important. Let's 779 00:33:55,040 --> 00:33:57,000 Speaker 2: talk about that, and let's also talk about how the 780 00:33:57,080 --> 00:34:01,520 Speaker 2: reality of higher inflation plays into decision to keep strategic 781 00:34:01,600 --> 00:34:03,320 Speaker 2: debt around longer or not. 782 00:34:03,640 --> 00:34:14,440 Speaker 1: And we'll get to that right after this. All right, 783 00:34:14,520 --> 00:34:18,200 Speaker 1: we are back from the break, Joel. You you mentioned inflation. 784 00:34:18,400 --> 00:34:20,920 Speaker 1: That's obviously something that is in the news, that is 785 00:34:20,920 --> 00:34:23,280 Speaker 1: something we are all dealing with, and that has definitely 786 00:34:23,400 --> 00:34:26,800 Speaker 1: changed the strategic debt question because the three percent mortgage, 787 00:34:27,080 --> 00:34:30,400 Speaker 1: it's looking a lot better than it did even just 788 00:34:30,440 --> 00:34:31,080 Speaker 1: a few years ago. 789 00:34:31,520 --> 00:34:34,080 Speaker 2: The year ago rates are close to six inflation is 790 00:34:34,080 --> 00:34:36,000 Speaker 2: close to nine percent, and it's like, wow, three percent 791 00:34:36,080 --> 00:34:38,160 Speaker 2: mortgage feels like a slammed on keeper. 792 00:34:38,239 --> 00:34:40,440 Speaker 1: Yeah, same same thing with a car loan. And so 793 00:34:40,560 --> 00:34:42,640 Speaker 1: should you rush to pay those debts off when you 794 00:34:42,760 --> 00:34:45,160 Speaker 1: have extra cash on hand, Well, so much depends on 795 00:34:45,280 --> 00:34:48,560 Speaker 1: what your goals are. But the reality of you know, 796 00:34:48,719 --> 00:34:50,880 Speaker 1: inflation close to ten percent like that leads us to 797 00:34:50,960 --> 00:34:54,720 Speaker 1: believe that getting rid of low interest rate strategic debts 798 00:34:55,200 --> 00:34:57,040 Speaker 1: is going to be less appealing to us right now. 799 00:34:57,360 --> 00:34:59,360 Speaker 1: We want you to, you know, consider holding on to 800 00:34:59,480 --> 00:35:02,359 Speaker 1: that strategy debt and then funnel your dollars towards more 801 00:35:02,600 --> 00:35:05,879 Speaker 1: productive ends. So essentially, you are paying down that loan, 802 00:35:06,160 --> 00:35:09,040 Speaker 1: you're either paying down that car note or that mortgage 803 00:35:09,200 --> 00:35:11,319 Speaker 1: or hopefully not car note. Just I'm gonna, I'm gonna. 804 00:35:11,440 --> 00:35:13,400 Speaker 1: I'm gonna go ahead and nix that, let's say mortgage 805 00:35:13,480 --> 00:35:14,360 Speaker 1: and student loans. 806 00:35:14,160 --> 00:35:16,120 Speaker 2: Hopefully the reality of some people do have car notes 807 00:35:16,160 --> 00:35:19,160 Speaker 2: and they're yes, at reasonable rates. We still hate financing 808 00:35:19,200 --> 00:35:20,000 Speaker 2: depreciating assets. 809 00:35:20,000 --> 00:35:23,400 Speaker 1: I don't want to encourage it. Yeah, but basically, like 810 00:35:23,480 --> 00:35:25,400 Speaker 1: the dollars that you are using to pay down that 811 00:35:25,560 --> 00:35:27,800 Speaker 1: loan with, they're worth less than the dollars that you 812 00:35:27,880 --> 00:35:29,960 Speaker 1: had on hand when you first took out that loan. 813 00:35:30,280 --> 00:35:32,800 Speaker 2: Yeah, the reality of inflation does kind of make that 814 00:35:32,960 --> 00:35:36,880 Speaker 2: debt look less bad, right and more strategic than it 815 00:35:37,080 --> 00:35:39,400 Speaker 2: was even a couple of years ago. We would have 816 00:35:39,400 --> 00:35:41,680 Speaker 2: said a three percent mortgage then, which wasn't a high priority. 817 00:35:41,920 --> 00:35:44,240 Speaker 2: It feels like even less of a priority today totally. 818 00:35:44,320 --> 00:35:46,600 Speaker 2: But we should also mention that When we're talking about 819 00:35:46,760 --> 00:35:50,879 Speaker 2: using debt strategically, that means setting reasonable limits, because even 820 00:35:50,880 --> 00:35:53,000 Speaker 2: when we're talking about a debt that could be considered 821 00:35:53,120 --> 00:35:56,920 Speaker 2: good or strategic, an abundance of strategic debt can quickly 822 00:35:56,960 --> 00:36:00,560 Speaker 2: put like a choke hold on your personal finances. So basically, 823 00:36:00,640 --> 00:36:03,800 Speaker 2: even good debt can become toxic. You can't just continue 824 00:36:03,840 --> 00:36:07,080 Speaker 2: to take on higher and higher levels of debt completely unchecked, 825 00:36:07,400 --> 00:36:10,719 Speaker 2: even if it's the quote unquote good kind. Student loans, 826 00:36:10,760 --> 00:36:13,680 Speaker 2: for example, We've seen this in spades, Matt right. It 827 00:36:13,760 --> 00:36:16,040 Speaker 2: can be a strategic form of debt. It can be, 828 00:36:16,400 --> 00:36:19,719 Speaker 2: although with student loans being immune to bankruptcy, they're not 829 00:36:19,800 --> 00:36:21,640 Speaker 2: quite as good as they seem. And even aside from that, 830 00:36:22,320 --> 00:36:25,680 Speaker 2: we've also seen the downsides clearly of taking on copious 831 00:36:25,680 --> 00:36:28,320 Speaker 2: amounts of debt in order to get a degree, especially 832 00:36:28,480 --> 00:36:30,359 Speaker 2: when we're not thinking about it, we're not thinking about 833 00:36:30,360 --> 00:36:33,880 Speaker 2: the value proposition that that degree can bring. But if 834 00:36:33,920 --> 00:36:35,560 Speaker 2: you opt to get that degree, let's say, and you 835 00:36:35,600 --> 00:36:37,800 Speaker 2: seek to minimize that debt by going to a cheaper 836 00:36:37,840 --> 00:36:40,120 Speaker 2: school or by like let's say, working ten hours a 837 00:36:40,160 --> 00:36:43,759 Speaker 2: week in order to borrow less having that job while 838 00:36:43,800 --> 00:36:47,720 Speaker 2: you're going through school, can lead to smaller college loans, 839 00:36:48,200 --> 00:36:51,040 Speaker 2: borrowing less against that degree, and of course that degree 840 00:36:51,080 --> 00:36:53,840 Speaker 2: can boost your income and your job prospects for decades 841 00:36:53,880 --> 00:36:57,120 Speaker 2: to come. But stats continue to show that the average 842 00:36:57,160 --> 00:37:01,600 Speaker 2: college graduate boosts their lifetime earnings significantly. But basically, what 843 00:37:01,600 --> 00:37:04,160 Speaker 2: we're trying to say here is, even when we're talking 844 00:37:04,160 --> 00:37:06,200 Speaker 2: about the strategic use of debt, you have to be 845 00:37:06,320 --> 00:37:08,759 Speaker 2: smart because it can be overdone and it can lead 846 00:37:08,800 --> 00:37:12,719 Speaker 2: to perpetual payments that you don't want to sign up for, 847 00:37:13,400 --> 00:37:16,000 Speaker 2: and you just we just weren't thoughtful enough in the beginning, 848 00:37:16,320 --> 00:37:18,919 Speaker 2: and we didn't think creatively enough, like we talked about 849 00:37:18,920 --> 00:37:21,080 Speaker 2: earlier to minimize that debtload exactly. 850 00:37:21,160 --> 00:37:23,800 Speaker 1: Yeah, you do not want perpetual payments. That sounds like 851 00:37:24,120 --> 00:37:26,960 Speaker 1: a horror film when it comes to personal finance, the. 852 00:37:26,920 --> 00:37:29,239 Speaker 2: Personal finance version of a horror film. And I think 853 00:37:29,280 --> 00:37:30,600 Speaker 2: we can get like Jordan Peele to direct it. 854 00:37:32,680 --> 00:37:34,960 Speaker 1: Like, So, what you're talking about here are reasonable limits, right, 855 00:37:35,000 --> 00:37:37,080 Speaker 1: And oftentimes that comes down to the limits that we 856 00:37:37,239 --> 00:37:40,680 Speaker 1: place upon ourselves, because unfortunately the limits that lenders will 857 00:37:40,719 --> 00:37:44,360 Speaker 1: place on us aren't The threshold is much higher typically 858 00:37:44,480 --> 00:37:46,680 Speaker 1: to what they will allow than what we should get 859 00:37:46,719 --> 00:37:49,080 Speaker 1: ourselves allow ourselves to get into right. And so there 860 00:37:49,120 --> 00:37:52,239 Speaker 1: are debts to income ratios out there that student loan 861 00:37:52,360 --> 00:37:55,520 Speaker 1: lenders and banks and mortgage lenders that they will allow 862 00:37:55,600 --> 00:37:58,200 Speaker 1: you like I mean, some banks will allow you to 863 00:37:58,320 --> 00:38:00,800 Speaker 1: borrow up to like a sixty percent in CAM ratio, 864 00:38:01,719 --> 00:38:04,319 Speaker 1: whereas others who are like a little more conservative are 865 00:38:04,440 --> 00:38:06,920 Speaker 1: wanting to see you closer to thirty percent. Either way, 866 00:38:07,160 --> 00:38:10,000 Speaker 1: we don't want you anywhere near those levels. We want 867 00:38:10,040 --> 00:38:11,440 Speaker 1: you to have a much lower threshold. 868 00:38:11,520 --> 00:38:13,759 Speaker 2: We want you to think about post tax income and 869 00:38:13,840 --> 00:38:16,560 Speaker 2: how much you can actually reasonably afford when you're borrowing 870 00:38:16,600 --> 00:38:18,200 Speaker 2: a house, not just what the lender. 871 00:38:18,080 --> 00:38:20,680 Speaker 1: Says you can afford. Because if you automatically approve, if 872 00:38:20,719 --> 00:38:23,319 Speaker 1: you take out to those those limits, you're gonna feel 873 00:38:23,440 --> 00:38:25,640 Speaker 1: the financial pressure in a meaningful way, be totally screwed. 874 00:38:25,640 --> 00:38:27,520 Speaker 1: You're gonna end up like the average American. And that's 875 00:38:27,560 --> 00:38:29,640 Speaker 1: what we're trying to avoid right now. And you know 876 00:38:29,920 --> 00:38:31,480 Speaker 1: one other thing too. When we're talking about how to 877 00:38:31,560 --> 00:38:34,480 Speaker 1: think about debt payoff, the things that we'll want to 878 00:38:34,560 --> 00:38:37,520 Speaker 1: consider most closely are the other terms like the interest rate, 879 00:38:37,920 --> 00:38:39,600 Speaker 1: how long it'll take you to pay off that debt, 880 00:38:40,200 --> 00:38:42,959 Speaker 1: and The cool thing is that you can often turn 881 00:38:43,120 --> 00:38:46,480 Speaker 1: a debt that's not so great into a more strategic 882 00:38:46,640 --> 00:38:49,839 Speaker 1: form of debt just by changing those terms. So refinancing 883 00:38:50,120 --> 00:38:53,200 Speaker 1: a mortgage right like that doesn't look all that smart today, 884 00:38:53,520 --> 00:38:55,640 Speaker 1: But making that reef I happen, say a year ago, 885 00:38:55,800 --> 00:38:58,800 Speaker 1: to lower your rate by like one or more percentage 886 00:38:58,840 --> 00:39:01,760 Speaker 1: points like that is an example of getting more favorable 887 00:39:01,880 --> 00:39:05,160 Speaker 1: terms that allows you to essentially like recast that debt 888 00:39:05,239 --> 00:39:07,240 Speaker 1: in a new lights, allowing you to make some financial 889 00:39:07,320 --> 00:39:09,960 Speaker 1: progress that is going to be much better for your 890 00:39:10,000 --> 00:39:12,440 Speaker 1: bottom line. Same thing is true when it comes to 891 00:39:12,520 --> 00:39:17,200 Speaker 1: refinancing a car actually Caribou for instance, this is a site. 892 00:39:17,280 --> 00:39:19,600 Speaker 1: This is a company that will allow you to refinance 893 00:39:19,640 --> 00:39:22,520 Speaker 1: a car loan if you've got one, or consolidating like 894 00:39:22,640 --> 00:39:25,080 Speaker 1: your own debts, let's say, by using like a zero 895 00:39:25,120 --> 00:39:28,640 Speaker 1: percent balance trainsfer card or even helock funds to pay 896 00:39:28,680 --> 00:39:31,279 Speaker 1: off the remaining portion of your credit card debt in 897 00:39:31,440 --> 00:39:34,600 Speaker 1: order to lower that interest rate significantly. These are some 898 00:39:34,680 --> 00:39:36,719 Speaker 1: of the different ways that you can use some of 899 00:39:36,800 --> 00:39:38,640 Speaker 1: the mechanics or you know, some of the terms of 900 00:39:38,800 --> 00:39:41,160 Speaker 1: these loans and these debts that you might have to 901 00:39:42,040 --> 00:39:44,640 Speaker 1: transform them to kind of like shape them and massage 902 00:39:44,680 --> 00:39:48,200 Speaker 1: them into debts that could be viewed a little more strategically. 903 00:39:48,880 --> 00:39:50,440 Speaker 1: These are some of the ways to turn your bad 904 00:39:50,520 --> 00:39:52,800 Speaker 1: debts into something that's going to be far less offensive. 905 00:39:52,920 --> 00:39:55,319 Speaker 2: Yeah, maybe you're a reform spender and you're like, listen, 906 00:39:55,400 --> 00:39:57,640 Speaker 2: I've still got eight thousand dollars worth of credit card 907 00:39:57,640 --> 00:39:59,560 Speaker 2: debt hanging out, but I also have this helock over here, 908 00:40:00,000 --> 00:40:02,160 Speaker 2: and I can pay off my credit card debt with 909 00:40:02,239 --> 00:40:04,279 Speaker 2: my helock. And guess what my helock is at five percent, 910 00:40:04,360 --> 00:40:05,560 Speaker 2: my credit cards at eighteen percent. 911 00:40:05,960 --> 00:40:06,280 Speaker 1: Boom. 912 00:40:06,520 --> 00:40:08,400 Speaker 2: You've just been able to help your big goal spread 913 00:40:08,480 --> 00:40:10,279 Speaker 2: in a big way. That's a big spread, turning that 914 00:40:10,400 --> 00:40:12,920 Speaker 2: debt into a more strategic form. But here's the caveat, 915 00:40:12,960 --> 00:40:15,040 Speaker 2: because we have to throw this in there, because using 916 00:40:15,160 --> 00:40:18,160 Speaker 2: debt strategically it's it's less about shuffling the debt chairs 917 00:40:18,200 --> 00:40:20,400 Speaker 2: on the Titanic. Let's say you're not a reform spender 918 00:40:20,400 --> 00:40:22,120 Speaker 2: and you're like, I'll take the helock money. Yeah, if 919 00:40:22,160 --> 00:40:23,799 Speaker 2: you'll pay off my credit card debt and then I'll 920 00:40:24,040 --> 00:40:27,000 Speaker 2: run up that credit card bill again. Well, you're setting 921 00:40:27,040 --> 00:40:28,479 Speaker 2: yourself up for more pain in the future. 922 00:40:28,560 --> 00:40:30,319 Speaker 1: Yeah, if the boat's still sinking no matter what. Then 923 00:40:30,760 --> 00:40:33,000 Speaker 1: it doesn't make any sense, like you're just you're literally 924 00:40:33,080 --> 00:40:35,640 Speaker 1: wasting time and energy in some of these pursuits when 925 00:40:35,680 --> 00:40:37,960 Speaker 1: instead you just need to, I guess in the case 926 00:40:38,000 --> 00:40:39,759 Speaker 1: of the Titanic, just get on a life boat and 927 00:40:39,880 --> 00:40:41,200 Speaker 1: bail completely if you can. 928 00:40:41,400 --> 00:40:43,960 Speaker 2: Right, But there are all sorts of ways that the 929 00:40:44,080 --> 00:40:46,719 Speaker 2: people get tricked into thinking that dumb debt can be 930 00:40:46,840 --> 00:40:49,960 Speaker 2: modified in order to be not so bad. But if 931 00:40:50,000 --> 00:40:51,960 Speaker 2: paying off your credit card with that helock, if it 932 00:40:52,080 --> 00:40:54,640 Speaker 2: just lowers the balance so that you can spend more 933 00:40:54,719 --> 00:40:57,800 Speaker 2: and more, then you've got you find yourself in double trouble. 934 00:40:57,960 --> 00:41:00,839 Speaker 2: You've got double the problem, and you're just increasing your 935 00:41:00,880 --> 00:41:04,000 Speaker 2: overall amount of debt in order to spend more money that. 936 00:41:04,040 --> 00:41:04,480 Speaker 1: You don't have. 937 00:41:05,000 --> 00:41:08,480 Speaker 2: Doing that strategically, it just really requires the financial discipline 938 00:41:08,880 --> 00:41:12,240 Speaker 2: to avoid those bad debts moving forward. If you shuffle 939 00:41:12,320 --> 00:41:15,320 Speaker 2: debts around, you find better terms, but then the behavior 940 00:41:15,400 --> 00:41:19,000 Speaker 2: never changes, then you're going to basically be putting yourself 941 00:41:19,120 --> 00:41:20,240 Speaker 2: in a much worse position. 942 00:41:20,320 --> 00:41:22,240 Speaker 1: Yeah, you've got to get to the root of the issue. 943 00:41:22,280 --> 00:41:23,920 Speaker 1: But let's say that you are in fact going to 944 00:41:23,960 --> 00:41:26,640 Speaker 1: get disciplined with your finances. You do have some debt 945 00:41:26,880 --> 00:41:30,560 Speaker 1: that we'd classify as non strategic. If you do, then 946 00:41:30,640 --> 00:41:32,800 Speaker 1: modifying the terms like it can always be helpful. But 947 00:41:32,920 --> 00:41:34,279 Speaker 1: at the end of the day, like you just need 948 00:41:34,320 --> 00:41:37,960 Speaker 1: to eliminate it from your life altogether, and to do 949 00:41:38,040 --> 00:41:40,200 Speaker 1: that as quickly as possible. We're big fans of you 950 00:41:40,680 --> 00:41:46,480 Speaker 1: using this free sitedebt dot it undebt it in order 951 00:41:46,560 --> 00:41:49,000 Speaker 1: to come up with a payoff plan that you think 952 00:41:49,080 --> 00:41:51,600 Speaker 1: will work best for you. This is especially helpful if 953 00:41:51,600 --> 00:41:55,840 Speaker 1: you have multiple balances with different interest rates, and so 954 00:41:55,960 --> 00:41:58,080 Speaker 1: after you enter in your information the software, it'll tell 955 00:41:58,120 --> 00:42:01,359 Speaker 1: you which balance to focus on. If you think either 956 00:42:01,440 --> 00:42:03,520 Speaker 1: the debt snowball approach is going to work best for you, 957 00:42:03,680 --> 00:42:06,640 Speaker 1: that's where you eliminate debts that have the largest balance, 958 00:42:07,280 --> 00:42:09,520 Speaker 1: or if the debt avalanche is going to work best 959 00:42:09,520 --> 00:42:11,040 Speaker 1: for you, that's when you go after the debts that 960 00:42:11,239 --> 00:42:14,839 Speaker 1: have the highest interest rates, not balances. And so, yeah, 961 00:42:14,880 --> 00:42:16,520 Speaker 1: definitely check that out, or you know, you might even 962 00:42:16,560 --> 00:42:18,279 Speaker 1: find that like more of a hybrid. 963 00:42:18,000 --> 00:42:19,279 Speaker 2: Approach is going to work for you. They have a 964 00:42:19,320 --> 00:42:21,240 Speaker 2: bunch of different approaches that you can take on that website. 965 00:42:21,600 --> 00:42:22,640 Speaker 1: Yeah, it's not just black or white. 966 00:42:22,680 --> 00:42:26,160 Speaker 2: Yeah, they will help you formulate that plan again for free, 967 00:42:26,560 --> 00:42:30,480 Speaker 2: which if we're talking about strategic debt, well, the strategic 968 00:42:30,560 --> 00:42:34,000 Speaker 2: move is to eliminate them as swiftly as possible, preferably 969 00:42:34,040 --> 00:42:37,440 Speaker 2: while paying the least amount of interest possible and using 970 00:42:37,600 --> 00:42:40,040 Speaker 2: a tool like undebt. It can be helpful in that regard. 971 00:42:40,320 --> 00:42:42,239 Speaker 2: And at the end of the day, we would say 972 00:42:42,280 --> 00:42:46,440 Speaker 2: it's important to know your specific tolerance towards debt because 973 00:42:46,840 --> 00:42:51,520 Speaker 2: some folks they think maybe climbing everest or skydiving. They're like, oh, 974 00:42:51,600 --> 00:42:53,440 Speaker 2: that sounds super fun. I totally want to do that. 975 00:42:54,000 --> 00:42:57,600 Speaker 2: Other people say that's insane, it's utterly reckless to go 976 00:42:57,760 --> 00:43:00,000 Speaker 2: climb a mountain and stand at twenty nine thousand feet 977 00:43:00,360 --> 00:43:03,239 Speaker 2: above sea level. Well, we all kind of think about 978 00:43:03,320 --> 00:43:06,160 Speaker 2: risk differently, and we actually talked about that with economist 979 00:43:06,200 --> 00:43:08,520 Speaker 2: Alison Schreeger back back in episode five point fifty three. 980 00:43:09,719 --> 00:43:11,359 Speaker 2: So that is just kind of part of the game. 981 00:43:11,760 --> 00:43:15,120 Speaker 2: We all have different tendencies. But for some folks, you know, 982 00:43:15,239 --> 00:43:17,440 Speaker 2: that three percent mortgage is something they want off their 983 00:43:17,480 --> 00:43:19,680 Speaker 2: mind altogether. I get it, you know, even though Matt 984 00:43:19,680 --> 00:43:21,480 Speaker 2: and I we think of that as a strategic debt 985 00:43:21,520 --> 00:43:24,080 Speaker 2: that you could easily justify taking your sweet time to 986 00:43:24,080 --> 00:43:27,400 Speaker 2: pay off, you know, allowing yourself to accomplish other financial 987 00:43:27,480 --> 00:43:30,640 Speaker 2: goals a lot more quickly because you're not rushing to 988 00:43:30,680 --> 00:43:32,440 Speaker 2: be done with it. Well, that doesn't mean that it's 989 00:43:32,480 --> 00:43:35,240 Speaker 2: the best course of action for you, because we ultimately 990 00:43:35,280 --> 00:43:39,080 Speaker 2: we recognize the psychological reality that lingering debt it could 991 00:43:39,080 --> 00:43:41,239 Speaker 2: be doing more harm than good for some folks. But 992 00:43:41,560 --> 00:43:43,399 Speaker 2: let's say you're the opposite type of person, Matt. Let's 993 00:43:43,400 --> 00:43:45,959 Speaker 2: say you are the person who would go hang outing 994 00:43:46,000 --> 00:43:48,440 Speaker 2: on a whim not think twice about it, or you 995 00:43:48,600 --> 00:43:51,920 Speaker 2: like base jumping something like that, jumping from skyscrapers in 996 00:43:52,239 --> 00:43:54,920 Speaker 2: major cities. Well, we want those kind of people to 997 00:43:54,960 --> 00:43:58,319 Speaker 2: be careful not to let their exuberance extend into their 998 00:43:58,360 --> 00:44:02,720 Speaker 2: money decisions, because it's easy to say, now I'm super risky, 999 00:44:02,880 --> 00:44:05,560 Speaker 2: I'm willing to take these thoughts on strategic debt use 1000 00:44:05,719 --> 00:44:08,799 Speaker 2: to like the furthest degree possible, the max. Yeah, well, 1001 00:44:08,840 --> 00:44:11,480 Speaker 2: you might find yourself over extended in the position you 1002 00:44:11,560 --> 00:44:14,040 Speaker 2: don't want to find yourself in. And so both sides 1003 00:44:14,080 --> 00:44:16,320 Speaker 2: of the coin, the people who are are risk averse 1004 00:44:16,360 --> 00:44:19,279 Speaker 2: and the people who are all about taking on greater 1005 00:44:19,440 --> 00:44:22,080 Speaker 2: levels of risk, they both need to maybe we can 1006 00:44:22,160 --> 00:44:23,960 Speaker 2: all be brought to the center a little bit as 1007 00:44:24,000 --> 00:44:26,040 Speaker 2: we kind of talk about this strategic use of debt. 1008 00:44:26,760 --> 00:44:28,440 Speaker 2: Even that can be overdone, I think so. 1009 00:44:28,680 --> 00:44:30,560 Speaker 1: I think us a lot of folks out there could 1010 00:44:30,560 --> 00:44:32,800 Speaker 1: probably use a little more balance when it comes to 1011 00:44:33,040 --> 00:44:35,400 Speaker 1: how they viewed debt. And eventually the thing is to 1012 00:44:35,480 --> 00:44:37,680 Speaker 1: even if you have strategic debt in your life, you're 1013 00:44:37,680 --> 00:44:39,480 Speaker 1: going to want to eradicate that as well. You know, 1014 00:44:39,600 --> 00:44:42,359 Speaker 1: like who wants to have their student loans hunt them 1015 00:44:42,400 --> 00:44:46,200 Speaker 1: into retirement? Nobody. But the truth is that engineering your 1016 00:44:46,239 --> 00:44:49,480 Speaker 1: personal finances to include the use of some strategic debt 1017 00:44:49,520 --> 00:44:51,960 Speaker 1: can help you to make progress more quickly. It allows 1018 00:44:52,000 --> 00:44:54,840 Speaker 1: you to use your dollars in in the most efficient manner. 1019 00:44:55,160 --> 00:44:57,920 Speaker 1: But so many of us have just been warned so 1020 00:44:58,080 --> 00:45:00,279 Speaker 1: severely about the dangers of debt that we you have 1021 00:45:00,440 --> 00:45:02,440 Speaker 1: refused to believe that it can be any good. And 1022 00:45:02,520 --> 00:45:04,840 Speaker 1: the truth is, you know that debt it's used improperly 1023 00:45:04,880 --> 00:45:07,120 Speaker 1: more often than it's used smartly in a wise way. 1024 00:45:07,160 --> 00:45:10,120 Speaker 1: But that doesn't mean that it's not possible or even 1025 00:45:10,160 --> 00:45:13,080 Speaker 1: desirable to use debt in an intelligent manner. We want 1026 00:45:13,080 --> 00:45:15,120 Speaker 1: you to kind of it's a pendulum that swings back 1027 00:45:15,120 --> 00:45:17,439 Speaker 1: and forth, and depending on where you are in life 1028 00:45:17,600 --> 00:45:21,200 Speaker 1: and depending on your personal risk tolerance, you're going to 1029 00:45:21,239 --> 00:45:23,480 Speaker 1: find yourself swinging one way or the other. And I 1030 00:45:23,520 --> 00:45:25,359 Speaker 1: don't know, like there might be times in your life 1031 00:45:25,400 --> 00:45:27,680 Speaker 1: when you do need to eliminate it completely. It just 1032 00:45:27,760 --> 00:45:30,160 Speaker 1: depends on what you've got going on. But we we 1033 00:45:30,280 --> 00:45:32,359 Speaker 1: want folks to approach it with a little bit more 1034 00:45:32,440 --> 00:45:35,120 Speaker 1: nuanced because we think that it can serve you well. 1035 00:45:35,120 --> 00:45:38,879 Speaker 2: Well, especially in a modern society right where to take 1036 00:45:38,960 --> 00:45:40,920 Speaker 2: on debt to go get a higher education, if it's 1037 00:45:40,920 --> 00:45:44,440 Speaker 2: done with smartly, can result in hundreds of thousands of 1038 00:45:44,480 --> 00:45:47,200 Speaker 2: dollars more income during the rest of your life. And 1039 00:45:47,280 --> 00:45:50,000 Speaker 2: if you take the debt as dumb approach, you're potentially 1040 00:45:50,320 --> 00:45:54,200 Speaker 2: pushing aside future income. Or you might be saying, you 1041 00:45:54,239 --> 00:45:55,600 Speaker 2: know what, I only want to buy a house if 1042 00:45:55,600 --> 00:45:58,080 Speaker 2: it's cash, because I think debt is the devil. And 1043 00:45:58,320 --> 00:46:00,400 Speaker 2: if you do that, you might be waiting a decade 1044 00:46:00,560 --> 00:46:02,399 Speaker 2: or longer in order to buy that home. It's tough 1045 00:46:02,680 --> 00:46:05,759 Speaker 2: usually to save up to buy a house in cash. 1046 00:46:06,160 --> 00:46:08,279 Speaker 2: Or you might say rental property is not for me 1047 00:46:08,320 --> 00:46:09,880 Speaker 2: because it means I have to take on debt, and 1048 00:46:10,040 --> 00:46:12,040 Speaker 2: that's that's a scary thing. But if you run the 1049 00:46:12,120 --> 00:46:13,799 Speaker 2: numbers and you're like, man, I can use that debt 1050 00:46:13,840 --> 00:46:17,320 Speaker 2: strategically to increase my cash flow, to further my income, 1051 00:46:17,719 --> 00:46:20,719 Speaker 2: to build wealth, Suddenly it becomes more of like a 1052 00:46:20,800 --> 00:46:23,919 Speaker 2: jumping stone than it does a hindrance. And so yeah, 1053 00:46:24,000 --> 00:46:26,440 Speaker 2: it's it's not that debt can't be used poorly. Most 1054 00:46:26,440 --> 00:46:27,960 Speaker 2: of the time it is, but we think it can 1055 00:46:28,000 --> 00:46:30,680 Speaker 2: also be used strategically and can help you reach your 1056 00:46:30,800 --> 00:46:34,279 Speaker 2: financial goals more quickly if you're smart about it. That's right, 1057 00:46:34,400 --> 00:46:35,719 Speaker 2: all right, ma, Let's get back to the beer that 1058 00:46:35,760 --> 00:46:38,120 Speaker 2: we had on this episode. This is called Milk and Cookies. 1059 00:46:38,160 --> 00:46:40,319 Speaker 2: It's by a Wicked Weed Brewing. What were your thoughts 1060 00:46:40,480 --> 00:46:41,280 Speaker 2: on this stout? 1061 00:46:41,360 --> 00:46:43,239 Speaker 1: Man, I wish I had some more. I really like 1062 00:46:43,320 --> 00:46:45,319 Speaker 1: this one. Although it says milk and cookies, it made 1063 00:46:45,360 --> 00:46:46,799 Speaker 1: me think that this is going to be a milk 1064 00:46:47,000 --> 00:46:48,680 Speaker 1: Is it a milk stout? It doesn't say on here 1065 00:46:48,719 --> 00:46:50,759 Speaker 1: if it is a milk stout, but it definitely had 1066 00:46:50,840 --> 00:46:53,760 Speaker 1: the cookies flavor going on. It says it was brewed 1067 00:46:53,840 --> 00:46:58,400 Speaker 1: with golden raisins, cinnamon, and vanilla, picking up the cinnamon 1068 00:46:58,680 --> 00:46:59,520 Speaker 1: like it was almost. 1069 00:46:59,360 --> 00:47:01,200 Speaker 2: Just a first thing I noticed. Oh yeah, it tastes 1070 00:47:01,239 --> 00:47:03,879 Speaker 2: like eating a sticker doodle basically. 1071 00:47:03,760 --> 00:47:05,160 Speaker 1: But I did not feel that it was too much. 1072 00:47:05,239 --> 00:47:06,920 Speaker 1: It was like borderline too much, like the kind of 1073 00:47:06,960 --> 00:47:09,120 Speaker 1: the spiciness that it had going on. But it had 1074 00:47:09,239 --> 00:47:12,680 Speaker 1: enough sweetness from the vanilla, maybe some of the sweetness 1075 00:47:12,719 --> 00:47:15,480 Speaker 1: from those golden raisins as well to balance it out. 1076 00:47:15,600 --> 00:47:17,920 Speaker 1: But I really I dug this one for a late 1077 00:47:18,000 --> 00:47:22,120 Speaker 1: summer imperial stout, not typically a style that you go 1078 00:47:22,239 --> 00:47:24,200 Speaker 1: for this time of the year. But I definitely enjoyed it. Yeah, no, 1079 00:47:24,280 --> 00:47:25,239 Speaker 1: I agreed. I thok it as well. 1080 00:47:25,280 --> 00:47:26,920 Speaker 2: I thought this was a lot better than the one 1081 00:47:26,960 --> 00:47:27,640 Speaker 2: we had on Monday. 1082 00:47:28,080 --> 00:47:31,640 Speaker 1: I liked it at brownie not so good, not so good. 1083 00:47:31,760 --> 00:47:33,120 Speaker 1: Milk and cookies, Yeah, this is pretty good. 1084 00:47:33,120 --> 00:47:34,400 Speaker 2: I was suposed to be like Hemp brownies too, and 1085 00:47:34,440 --> 00:47:36,279 Speaker 2: I guess I just wanted to picking out what they 1086 00:47:36,280 --> 00:47:39,400 Speaker 2: were putting down. But milk and cookies, man, and especially 1087 00:47:40,000 --> 00:47:42,480 Speaker 2: I don't know, cinnamon and a beer in the STALLI yeah, 1088 00:47:42,560 --> 00:47:45,160 Speaker 2: it's it's usually good vibe if it's not ever done. 1089 00:47:45,040 --> 00:47:48,720 Speaker 1: Good combination. And plus I mean with the golden raisins, 1090 00:47:48,840 --> 00:47:51,839 Speaker 1: like it's got me thinking of oatmeal raisin cookies, which 1091 00:47:51,840 --> 00:47:55,120 Speaker 1: are one of my favorite types of cookies. Highly underrated cookies, 1092 00:47:55,280 --> 00:47:58,840 Speaker 1: oatmeal raisin cookies. Although raisins are a sin. There's no 1093 00:47:59,000 --> 00:48:01,200 Speaker 1: oatmeal in this. This is not an oatmeal stout, but 1094 00:48:01,280 --> 00:48:04,520 Speaker 1: it was a great Imperial stout. Again, this is from 1095 00:48:04,640 --> 00:48:08,160 Speaker 1: Wicked Weed up there in Asheville, North Carolina. Definitely check 1096 00:48:08,200 --> 00:48:09,919 Speaker 1: them out if you happen to be in the area 1097 00:48:10,080 --> 00:48:10,399 Speaker 1: for sure. 1098 00:48:10,400 --> 00:48:11,960 Speaker 2: All right, that's going to do it for this episode. 1099 00:48:12,040 --> 00:48:15,279 Speaker 2: We will put links to everything we mentioned, including that 1100 00:48:15,400 --> 00:48:17,759 Speaker 2: tool that will help you formulate a plan to pay 1101 00:48:17,800 --> 00:48:20,360 Speaker 2: off your debt. We'll have all those links up on 1102 00:48:20,400 --> 00:48:21,799 Speaker 2: our site at howtomoney dot com. 1103 00:48:21,960 --> 00:48:23,640 Speaker 1: That's right, so, buddy, that is going to be it 1104 00:48:23,760 --> 00:48:26,239 Speaker 1: for this episode until next time. Best Friends Out, Best 1105 00:48:26,320 --> 00:48:27,000 Speaker 1: Friends Out.