WEBVTT - Creating a Debt Payoff Plan (Bestie Ep) #390 0:00:00.120 --> 0:00:03.440 Joel, what's going on, buddy? Hello, my friend, are you 0:00:03.520 --> 0:00:05.920 enjoying your time right now at the beach? I am 0:00:06.720 --> 0:00:08.559 recording this before we go there, but I'm just imagining 0:00:08.600 --> 0:00:11.119 the joy I'm gonna feel. I'm asking future Joel if 0:00:11.360 --> 0:00:13.399 if he's going to enjoy his he's having a rock 0:00:13.440 --> 0:00:15.600 and time. Yeah, we're actually at the beach for a 0:00:15.640 --> 0:00:18.599 few days. We've gone there with our families. We're spending 0:00:18.640 --> 0:00:20.319 a lot of time out there in the sun, in 0:00:20.360 --> 0:00:24.040 the waves. But we are replaying a bestie episode. This 0:00:24.120 --> 0:00:25.880 is a really good one, as it seems a lot 0:00:25.960 --> 0:00:29.760 of people are returning to their old spending ways. There's 0:00:29.800 --> 0:00:31.880 nothing wrong with being intentional with your money, but we 0:00:31.920 --> 0:00:34.800 don't want you to get carried away with your spending. Uh. 0:00:34.840 --> 0:00:37.400 And in this episode, we actually go step by step 0:00:37.440 --> 0:00:40.479 on how to create a debt payoff plan and how 0:00:40.479 --> 0:00:42.360 to stick with it. Yeah, I feel like this episode 0:00:42.520 --> 0:00:45.440 does deserve another spin, Mattine. People haven't listened to it 0:00:45.440 --> 0:00:47.879 because it's way back in the back catalog. Well, it's 0:00:47.960 --> 0:00:49.720 right here for you right now and U. Yeah, but 0:00:49.840 --> 0:00:51.800 before we get to that episode, you know, this is 0:00:52.120 --> 0:00:54.040 typically a Friday flight episode, and we did want to 0:00:54.080 --> 0:00:57.640 mention actually one Friday flight story before we get into 0:00:57.640 --> 0:01:01.320 this Bestie episode one headline it everyone out there should 0:01:01.320 --> 0:01:04.520 be excited about that that we saw a pesky refinance 0:01:04.600 --> 0:01:07.200 fee is going away. Hooray. Any listeners that have been 0:01:07.200 --> 0:01:09.119 around for any length the time, you know how much 0:01:09.160 --> 0:01:12.640 we hate fees. And as of August one, lenders will 0:01:12.680 --> 0:01:15.399 no longer have to pay Fannie and Freddie an additional 0:01:15.680 --> 0:01:17.480 half a percent fee that was imposed at the end 0:01:17.520 --> 0:01:20.319 of last year, and so that means lower rates for 0:01:20.440 --> 0:01:23.319 you when it comes to refinancing a mortgage, which I 0:01:23.319 --> 0:01:25.479 know a lot of people are considering right now because 0:01:25.720 --> 0:01:27.720 rights or low. Yeah, this is great news because it 0:01:27.720 --> 0:01:29.920 will save the average person twenty dollars a month on 0:01:29.959 --> 0:01:33.760 a three thousand dollar mortgage loan and twenty bucks a month. 0:01:33.840 --> 0:01:36.040 That's not chump change, not at all. Yeah, So shopping 0:01:36.040 --> 0:01:39.120 around for that refinance is of course always a good idea. 0:01:39.120 --> 0:01:41.280 But we wanted to pass on the good news that 0:01:41.480 --> 0:01:44.319 rates that you're seeing next week could be even lower 0:01:44.560 --> 0:01:47.440 as this fee gets acts completely. It's something that we 0:01:47.560 --> 0:01:49.720 covered towards the end of last year because we saw 0:01:49.760 --> 0:01:51.120 that this was gonna be something that was going to 0:01:51.120 --> 0:01:54.680 be added to the cost of underwriting alone, but that 0:01:54.800 --> 0:01:57.040 is not something you're gonna have to worry about much longer. Yeah, man, 0:01:57.040 --> 0:01:58.720 I'm kind of guy who wants to see, like an 0:01:58.720 --> 0:02:01.560 Elon Musk flamethrower take into all the fees in existence, 0:02:01.560 --> 0:02:03.360 and so yeah, just seeing a fee go down in 0:02:03.400 --> 0:02:06.880 flames like this just makes me so happy. By the way, 0:02:06.960 --> 0:02:09.800 make sure to check out Monday's episode, we have an 0:02:09.800 --> 0:02:12.800 interview with the one and only Clark Howard, my good friend, 0:02:12.840 --> 0:02:15.040 and so yeah, there's some really helpful travel advice that 0:02:15.080 --> 0:02:17.360 we got into in that conversation, as well as some 0:02:17.520 --> 0:02:19.920 wisdom when it comes to being your own advocate in 0:02:19.960 --> 0:02:22.880 the tumultuous world of personal finance. So you can look 0:02:22.919 --> 0:02:25.160 forward to that hitting your podcatcher. But for now, let's 0:02:25.160 --> 0:02:27.720 get on that bestie episode about debt payoff and Matt 0:02:27.840 --> 0:02:30.360 back to the beach for us. Welcome to How the Money. 0:02:30.440 --> 0:02:32.640 I'm Joel and I am Matt, and today we are 0:02:32.680 --> 0:02:54.440 discussing creating a debt payoff plan. Joel Man, we are 0:02:54.440 --> 0:02:57.120 talking about debt. Everybody's got it. A lot of people 0:02:57.120 --> 0:02:59.959 do people not everybody. A lot of people do though, 0:03:00.280 --> 0:03:03.240 and the amount of debt that we as a country 0:03:03.240 --> 0:03:06.079 have us as individuals. There is just so much debt 0:03:06.120 --> 0:03:07.840 going around. We know that we want to get rid 0:03:07.840 --> 0:03:11.160 of debt, but we don't necessarily know what steps to 0:03:11.240 --> 0:03:12.920 take in order to get rid of that debt. But 0:03:12.960 --> 0:03:15.239 a plan can help a whole lot, Yes, exactly. So 0:03:15.280 --> 0:03:17.080 that's what we're gonna talk about this episode. We're gonna 0:03:17.120 --> 0:03:19.640 talk through what it actually takes to paid on debt. Yeah, 0:03:19.680 --> 0:03:21.079 But before we get to that, Matt, real quick, I 0:03:21.120 --> 0:03:23.920 wanted to talk about guilt and money. And I think, 0:03:24.080 --> 0:03:26.200 especially this time a year, maybe a lot of us 0:03:26.240 --> 0:03:29.920 are feeling guilt over how we've spent. And some of 0:03:29.960 --> 0:03:33.040 that might be warranted. Right. We we might have in 0:03:33.080 --> 0:03:35.640 November December, in the lead up to the holidays, we 0:03:35.720 --> 0:03:37.520 might have bought too many gifts for other people. We 0:03:37.520 --> 0:03:39.200 we probably could have done just a little bit better 0:03:39.480 --> 0:03:42.280 in how we thought through a spending plan, right, And 0:03:42.320 --> 0:03:43.800 we're gonna talk about a debt plan, but we could 0:03:43.800 --> 0:03:45.600 have thought through our spending a little bit better. But 0:03:45.800 --> 0:03:48.960 I think ultimately this show and how we talk about money, 0:03:49.200 --> 0:03:51.240 we don't want people to feel guilty all the time 0:03:51.280 --> 0:03:53.840 about how they're spending. And I think certain folks in 0:03:53.880 --> 0:03:57.120 the personal finance space. That's kind of their main tactic 0:03:57.360 --> 0:03:59.680 is to make people feel guilty about how they do 0:03:59.720 --> 0:04:02.520 spend versus motivating folks to help them spend less and 0:04:02.560 --> 0:04:04.480 to save more. And so I think, you know, as 0:04:04.520 --> 0:04:06.600 we get further and further into this new year, I 0:04:06.640 --> 0:04:08.800 just want to let people know that this podcast, that 0:04:08.920 --> 0:04:12.680 what we do, it's all about helping people prioritize the 0:04:12.760 --> 0:04:16.440 right things and it's not about shaming them for the 0:04:16.680 --> 0:04:18.320 for the move that they've made, for the things that 0:04:18.360 --> 0:04:20.240 they haven't done as well as they could have done. Yeah, 0:04:20.279 --> 0:04:22.719 totally do. I completely agree. I think you said shame, 0:04:22.760 --> 0:04:24.440 which totally may think of something else as well as 0:04:24.440 --> 0:04:26.240 I'm gonna go there in one second, But I think 0:04:26.240 --> 0:04:28.560 a guilt trips for you know, based on your spending, 0:04:29.320 --> 0:04:32.520 that's a bad idea. If you have identified what it 0:04:32.680 --> 0:04:34.440 is that you want to spend your money on, like, 0:04:34.520 --> 0:04:36.160 if you have a plan, if you know where your 0:04:36.200 --> 0:04:39.120 priorities lie, then it's okay to spend money. And yes, 0:04:39.200 --> 0:04:41.440 you do not need to feel guilty. I do think though, 0:04:41.560 --> 0:04:45.040 that a little bit of guilt can be a good thing, right, 0:04:45.080 --> 0:04:47.480 Like to me be proud a little bit at time. Exactly. Yeah. Like, 0:04:47.520 --> 0:04:50.159 to me, guilt is basically knowing that you could have 0:04:50.200 --> 0:04:53.359 done something better but you didn't. It basically cause attention 0:04:53.400 --> 0:04:55.479 to the fact that you're responsible for your actions. And 0:04:55.520 --> 0:04:57.560 when it comes from money, I think there's definitely a 0:04:57.600 --> 0:04:59.560 need for more responsibility when it comes to you know, 0:04:59.640 --> 0:05:02.800 personal finances. But interestingly, like you mentioned shame, and I 0:05:02.839 --> 0:05:05.520 think that's so clutch because there's a big difference between 0:05:05.680 --> 0:05:08.480 guilt and shame. Have you read any of Burnet Brown. 0:05:08.720 --> 0:05:11.040 She's like, she's a she's you know, she has ted 0:05:11.080 --> 0:05:12.840 talks and she's written books and she's an author. I'm 0:05:12.839 --> 0:05:14.839 familiar with her just because my wife talks about her 0:05:14.839 --> 0:05:16.360 a lot. I haven't read any of her books. She 0:05:16.360 --> 0:05:18.880 she's I think she's really great. But she talks about shame, 0:05:19.040 --> 0:05:21.400 and one of the ways she characterizes it is that, 0:05:21.440 --> 0:05:24.280 like shame is well, for let's start with guilt. Guilt 0:05:24.640 --> 0:05:26.720 is knowing that you did something bad and so you 0:05:26.720 --> 0:05:30.160 feel bad for that action, right, whereas shame is like 0:05:30.279 --> 0:05:33.880 you identify as being a bad person, and so we 0:05:33.920 --> 0:05:35.719 want to focus on the behavior. You know, you're not 0:05:35.760 --> 0:05:37.960 a terrible person because you you know, you blew your 0:05:38.000 --> 0:05:40.240 budget one month or maybe you didn't quite put enough 0:05:40.240 --> 0:05:43.960 towards retirements that year, right, But when you identify with 0:05:44.160 --> 0:05:46.760 being a poor saver, like if that's who you feel 0:05:46.800 --> 0:05:50.000 you are, well, that's when it can become negative versus 0:05:50.440 --> 0:05:53.120 a positive effect. It can almost be become a self 0:05:53.160 --> 0:05:56.400 fulfilling cycle. Oh yeah. If we identify ourselves as a 0:05:56.400 --> 0:05:59.720 certain way, we're going to act accordingly, and so we 0:05:59.800 --> 0:06:02.839 have to kind of break that psychological barrier of feeling 0:06:02.920 --> 0:06:05.480 shame with how we've handled our money. And I completely agree. 0:06:05.480 --> 0:06:07.440 I think a little bit of guilt can help drive 0:06:07.520 --> 0:06:09.880 us in the proper direction. But if we completely identify 0:06:09.880 --> 0:06:12.280 as being someone who doesn't know how to handle money, well, well, 0:06:12.279 --> 0:06:15.760 then hopefully this show can help people this year to 0:06:15.839 --> 0:06:17.640 learn some of those tools and then to kind of 0:06:17.640 --> 0:06:21.159 help break those chains of potential shame that's associated with 0:06:21.160 --> 0:06:23.200 how they handle money. Totally. Um, that's that's what we 0:06:23.240 --> 0:06:24.839 want to be here. We don't want to be here 0:06:24.880 --> 0:06:26.800 to use a stick to beat you over the head 0:06:26.839 --> 0:06:29.120 because you haven't done things properly. What we want to 0:06:29.160 --> 0:06:31.960 do is encourage you, motivate you, give you the tools 0:06:32.160 --> 0:06:35.600 to create a more positive outlook on your relationship with 0:06:35.640 --> 0:06:38.640 money and then specifically give you the proper approaches to 0:06:38.720 --> 0:06:40.800 how you can handle your money well so that you 0:06:40.839 --> 0:06:43.840 can make changes moving forward, so that whatever cycle maybe 0:06:43.880 --> 0:06:47.119 you've become accustomed to living in relationship to your money 0:06:47.560 --> 0:06:49.880 just isn't the case anymore. Yeah, totally. I think if 0:06:49.920 --> 0:06:51.960 you feel a tiny little bit of guilt when you 0:06:52.040 --> 0:06:54.080 learn something new or maybe you hear something that you 0:06:54.120 --> 0:06:56.600 haven't done, I think that can be okay if you 0:06:56.640 --> 0:06:59.560 respond positively to that. Right. It's just like constructive criticism 0:06:59.680 --> 0:07:01.719 or back that you receive on a project or something 0:07:01.720 --> 0:07:04.480 that you're working on. If you take that feedback and 0:07:04.560 --> 0:07:07.400 you then modify your behavior and that allows you to grow. 0:07:07.600 --> 0:07:09.920 What's It's a positive thing. It's about gaining knowledge and 0:07:10.040 --> 0:07:11.880 learning from our mistakes. And yeah, like you said, you 0:07:11.960 --> 0:07:15.760 hopefully that's what folks can do from listening to this podcast. Yeah, man, 0:07:15.920 --> 0:07:18.840 I think I used to feel guilt over buying really 0:07:18.920 --> 0:07:22.559 nice beer, and now I just don't anymore. It's because 0:07:22.600 --> 0:07:25.400 it's something that I've prioritized highly and something that I've 0:07:25.440 --> 0:07:27.920 made an important line item in my budget. And so 0:07:27.960 --> 0:07:29.840 I think that's another way that people can approach it. 0:07:29.840 --> 0:07:31.720 And so Matt, speaking of beer, the beer that we're 0:07:31.720 --> 0:07:34.680 having on the show today is barrel aged Yetti Imperial 0:07:34.680 --> 0:07:37.640 Stout by Great Divide Brewing and the kind folks at 0:07:37.640 --> 0:07:40.040 a Great Divide in Denver, Colorado, they sent this beer 0:07:40.040 --> 0:07:42.280 our way. I'm really excited to have the barrel aged 0:07:42.400 --> 0:07:44.880 version of their Yetti Imperial Stout on the show with 0:07:44.920 --> 0:07:47.240 you today, my friend. Yeah, this is our last one 0:07:47.240 --> 0:07:50.200 by them, we've had them for the past few episodes now. 0:07:50.320 --> 0:07:53.240 So man, Great Divide, y'all are fantastic. You make some 0:07:53.360 --> 0:07:55.880 awesome beers like you always have. And yeah, we'll get 0:07:55.880 --> 0:07:58.000 to our tasting notes on this one at the end 0:07:58.000 --> 0:08:00.040 of the episode. All right, Matt, let's get into the 0:08:00.080 --> 0:08:01.800 topic at hand. We're talking today on the show. We're 0:08:01.800 --> 0:08:04.720 talking about creating a debt payoff plan. And let me 0:08:04.760 --> 0:08:06.880 ask this question to our listeners at the very beginning 0:08:06.880 --> 0:08:08.480 of the episode, and it might be a little awkward, 0:08:08.760 --> 0:08:13.360 how's your debt situation? And does that question itself cause 0:08:13.400 --> 0:08:16.240 a lump to rise in your throat? Well, personal levels 0:08:16.240 --> 0:08:19.040 of indebtedness are a major issue in our country, but 0:08:19.080 --> 0:08:21.160 lots of folks feel like they're stuck in quicksand up 0:08:21.160 --> 0:08:23.400 to their midsections and they don't know how to navigate 0:08:23.440 --> 0:08:25.720 themselves out of the problem that they put themselves in. 0:08:26.120 --> 0:08:27.680 We need a plan to help us get out of 0:08:27.760 --> 0:08:29.840 debt and to get our feet set in the right 0:08:29.840 --> 0:08:32.440 direction this year. And so when we see headlines Matt 0:08:32.480 --> 0:08:35.440 like we've seen lately eight six percent of millennials overspent 0:08:35.520 --> 0:08:38.240 on Christmas gifts, well, we know what that means. That 0:08:38.280 --> 0:08:39.960 means that a lot of those folks have put that 0:08:40.000 --> 0:08:42.959 extra spending on plastic on credit cards and this time 0:08:42.960 --> 0:08:44.720 a year they're getting that statement in the mail and 0:08:44.760 --> 0:08:47.000 they're a little shocked. They didn't know that they spent 0:08:47.080 --> 0:08:48.920 that much, and they didn't realize that they wouldn't be 0:08:48.920 --> 0:08:50.600 able to afford the bill, and now they need some 0:08:50.640 --> 0:08:52.720 help to tackle that debt, not to mention the other 0:08:52.800 --> 0:08:54.480 death they might be caring right now, so it doesn't 0:08:54.480 --> 0:08:56.520 get even further out of hand. Well, Joel, you're talking 0:08:56.520 --> 0:08:58.640 about debt, and I feel like I'm super a d 0:08:58.720 --> 0:09:02.240 D today because you mentioned quicksand and I started thinking 0:09:02.240 --> 0:09:04.520 about quicksand why is why is like why would we 0:09:04.600 --> 0:09:07.360 When we were kids everything was quicksand like Mario Brothers 0:09:07.360 --> 0:09:09.600 to head quicksand like even as kids playing it's like 0:09:09.720 --> 0:09:11.839 watch out for the quicksand like quicksand was this real thing, 0:09:11.920 --> 0:09:13.280 like this real problem that we had to watch out for. 0:09:13.320 --> 0:09:15.319 When I think about quicksand I think about the Princess Bride, 0:09:15.920 --> 0:09:18.760 you know, I mean to me that's strongly correlated. Yes, 0:09:18.760 --> 0:09:21.400 it's like late eighties, early nineties quicksand was everywhere. Now 0:09:21.440 --> 0:09:24.000 everything's lava, like the kids have moved on to lava, 0:09:24.120 --> 0:09:26.760 like it used to be quicksand now it's lava. Alright, Well, sorry, 0:09:26.800 --> 0:09:28.600 a little side with old school reference. We're gonna stick 0:09:28.600 --> 0:09:31.760 with quicksand floors lava. All right. Let's get back to 0:09:31.840 --> 0:09:33.960 debt a little bit. Though. Here's the thing. Here's a 0:09:33.960 --> 0:09:37.240 fact for you. Outstanding student loan debt, Joel, it has 0:09:37.280 --> 0:09:40.760 reached an all time high last year. We hit one 0:09:40.800 --> 0:09:45.360 point four one trillion dollars of Americans have credit card debt, 0:09:45.360 --> 0:09:48.319 and the average outstanding balance it's just over six thousand dollars, 0:09:48.280 --> 0:09:52.120 while consumer debt as a whole stands at fourteen trillion. 0:09:52.640 --> 0:09:54.439 It's not just I covered my ears there because it 0:09:54.520 --> 0:09:56.600 just got so horrendous. Way can you say it again? Dude? 0:09:56.600 --> 0:09:59.360 It's terrible, and not only is it just an incredible 0:09:59.360 --> 0:10:02.439 amount of mon but it's also how we're going about 0:10:02.480 --> 0:10:05.280 getting this debt. Car loans they've gotten longer, with some 0:10:05.320 --> 0:10:07.440 folks not just taking out sixty months of payment, but 0:10:07.520 --> 0:10:10.959 seventy two and eighty four month long loans, and then 0:10:11.280 --> 0:10:13.080 you know, they end up trading their cars and while 0:10:13.080 --> 0:10:16.000 they're upside down, or taking out debt for smaller and 0:10:16.040 --> 0:10:19.400 smaller purchases as well. Everyone out there, like all the 0:10:19.400 --> 0:10:22.079 different retailers, offer a payment plan now, and it spans 0:10:22.160 --> 0:10:25.080 from you know, services at home like your h VAC too, 0:10:25.600 --> 0:10:27.400 urban outfitters if you just want to, you know, pick 0:10:27.440 --> 0:10:31.000 up some shoes. We are funding our lifestyles through the 0:10:31.040 --> 0:10:34.480 accumulation of more and more as well as riskier debt. 0:10:34.679 --> 0:10:37.760 It's just become easier to take on debt for anything now. 0:10:37.800 --> 0:10:40.000 Like you go to the dentist and you can take 0:10:40.000 --> 0:10:42.480 out a payment plan on that new artificial tooth or 0:10:42.520 --> 0:10:44.600 whatever surgery you had to undergo. Yeah, I gotta think 0:10:44.600 --> 0:10:47.880 that that is the absolute least fun loan to pay on. Yeah, 0:10:48.160 --> 0:10:50.040 paying on my root canal still, I'll give you a 0:10:50.040 --> 0:10:52.400 three loan on that root canal, Matt. But that's just 0:10:52.440 --> 0:10:54.000 the kind of day and age we live in. Easy 0:10:54.040 --> 0:10:57.160 access to debt for almost anything. Yeah, your local small 0:10:57.200 --> 0:11:00.800 business electrician probably has the ability to offer you alone 0:11:00.840 --> 0:11:02.960 on that new age fact. I mean, it's just kind 0:11:02.960 --> 0:11:05.720 of almost gotten preposterous. And then we end up sinking 0:11:05.720 --> 0:11:08.840 ourselves in a hole, even if it's zero percent, Even 0:11:08.840 --> 0:11:11.319 if it's zero percent for multiple years, we'll take out 0:11:11.320 --> 0:11:13.040 the debt and then ultimately we just don't have the 0:11:13.040 --> 0:11:15.120 money to meet those obligations. So we have to change 0:11:15.120 --> 0:11:17.800 our relationship to debt and how we consider taking it on. 0:11:18.120 --> 0:11:20.040 But Matt also too, I think it's important to mention 0:11:20.080 --> 0:11:22.600 before we get into the specifics of creating a debt 0:11:22.600 --> 0:11:26.040 payoff plan that we don't think all debt is terrible, 0:11:26.120 --> 0:11:28.800 Like we're not anti every single kind of debt out there. 0:11:29.160 --> 0:11:31.720 Not all debt is bad debt. Some debt can be 0:11:31.800 --> 0:11:35.120 used effectively, and there are reasons worth accruing debt, for example, 0:11:35.160 --> 0:11:37.240 going to get an education or starting a business, or 0:11:37.240 --> 0:11:39.440 buying a home, and we kind of discussed that in 0:11:39.440 --> 0:11:43.080 more detail and episode one. But just because you're considering 0:11:43.080 --> 0:11:45.280 one of those good debts doesn't give you a free 0:11:45.280 --> 0:11:47.480 pass to blindly take out loans in order to go 0:11:47.559 --> 0:11:49.920 to a fancy school or to pursue your dream of 0:11:49.920 --> 0:11:52.320 owning your own restaurant, or to buy more house than 0:11:52.360 --> 0:11:55.000 you can afford. You still have to take value into 0:11:55.080 --> 0:11:58.640 the equation when you're thinking about what debts you take on. Yes, 0:11:58.720 --> 0:12:01.480 we we need to take value in account because you know, 0:12:01.559 --> 0:12:04.960 not having massive amounts of debt is important, and so 0:12:05.120 --> 0:12:07.480 I mean, I'll not note. You might be asking like, well, well, 0:12:07.520 --> 0:12:09.920 why is getting out of debt? Why is that actually important? 0:12:10.000 --> 0:12:11.720 The biggest reason that we're gonna share that getting out 0:12:11.760 --> 0:12:15.760 of debt is so stinking paramount is because debt is expensive. 0:12:16.040 --> 0:12:18.640 In the moment, it doesn't feel expensive to pay with 0:12:18.640 --> 0:12:21.280 the credit card or maybe to take out alone. If anything, 0:12:21.280 --> 0:12:24.120 it feels like free money, right, And it's really easy 0:12:24.200 --> 0:12:26.800 to gain access to that credit, which is why in 0:12:26.840 --> 0:12:29.079 a recent episode MAUT we talked about cash, debit or 0:12:29.120 --> 0:12:32.800 credit like how we spend using credit cards is in particular, 0:12:32.840 --> 0:12:35.400 the biggest downside is the ease abuse, and that's what 0:12:35.440 --> 0:12:37.400 causes us to use them more frequently. Even though it's 0:12:37.400 --> 0:12:39.920 a smooth transaction. Even though we like credit cards, it 0:12:40.000 --> 0:12:42.640 can be away for us to spend money that we 0:12:42.679 --> 0:12:45.240 don't have exactly. Yeah, but here's the thing at the 0:12:45.280 --> 0:12:48.000 core of it, though, Like using your credit cards as 0:12:48.000 --> 0:12:50.040 a tool, that's not the problem because it really is 0:12:50.080 --> 0:12:52.200 just a tool. It's when we don't pay off the 0:12:52.200 --> 0:12:54.960 balances and the interest begins to accrue. It's when we 0:12:55.080 --> 0:12:58.560 use these tools incorrectly. And so when we're paying interest 0:12:58.640 --> 0:13:01.000 on a balance, we're paying way too much money for 0:13:01.000 --> 0:13:03.280 the things that we likely shouldn't have purchased in the 0:13:03.280 --> 0:13:06.040 first place. So, for example, if fitsing thousand dollar car 0:13:06.600 --> 0:13:08.400 like that could easily end up costing you closer to 0:13:08.520 --> 0:13:10.840 twenty dollars because you took out a car loan and 0:13:10.840 --> 0:13:13.800 you're paying interest, and so effectively you're paying way more 0:13:13.800 --> 0:13:15.360 than you should have for that vehicle. And it's hard 0:13:15.400 --> 0:13:18.400 to reach your financial goals when you're constantly over paying 0:13:18.400 --> 0:13:20.680 for things. Yeah, Matt, having a lot of debt puts 0:13:20.720 --> 0:13:23.079 you on just not solid footing. It puts you in 0:13:23.120 --> 0:13:24.760 this kind of quick sand thing, right, I mean, let's 0:13:24.760 --> 0:13:26.360 get back to the Quicksand it puts you in this 0:13:26.440 --> 0:13:29.400 scenario where you're not as financially flexible as you could 0:13:29.400 --> 0:13:31.800 be if you didn't have that debt in your life. 0:13:32.040 --> 0:13:34.319 The more debt you have, the weaker position that you're 0:13:34.320 --> 0:13:37.000 in and the less freedom you have. And when we're 0:13:37.120 --> 0:13:39.800 constantly overpaying for pretty much everything in our lives, it's 0:13:39.800 --> 0:13:41.719 also it's hard to get ahead and to reach any 0:13:41.720 --> 0:13:44.440 of those financial goals that we have. The going is slow. 0:13:44.520 --> 0:13:47.800 When we have interest payments working against us. It feels 0:13:47.800 --> 0:13:50.080 like all the cards are stacked against us, and that 0:13:50.080 --> 0:13:52.720 can be really discouraging. And instead, we want to be 0:13:52.760 --> 0:13:55.400 on the receiving side of interest, and that means like 0:13:55.520 --> 0:13:58.240 having a high interest savings account. That means our investments 0:13:58.480 --> 0:14:01.560 essentially making money for us while we sleep. Instead of 0:14:01.600 --> 0:14:04.960 interest working against our money, it's working for us and 0:14:05.000 --> 0:14:08.040 it's allowing us to quickly achieve our goals. That's when 0:14:08.080 --> 0:14:10.480 it allows us to build wealth. We're using interest in 0:14:10.520 --> 0:14:13.600 the positive frame. We're using returns in the positive sense 0:14:13.800 --> 0:14:16.439 as opposed to everything we buy having a much larger 0:14:16.480 --> 0:14:19.120 price tag based on the fact that we have interest 0:14:19.160 --> 0:14:21.920 payments going alongside of it. Yeah, that's the difference between 0:14:21.960 --> 0:14:24.480 paying interest versus receiving interest. Right, And I got a 0:14:24.520 --> 0:14:27.320 quick illustration for you. Imagine have you ever been to 0:14:27.600 --> 0:14:29.520 a store where there's like a second floor, or maybe 0:14:29.520 --> 0:14:31.680 e've been to a mall, a movie theater perhaps, Right, 0:14:31.720 --> 0:14:35.360 where there's an escalator. So imagine you're on level one 0:14:35.560 --> 0:14:37.640 and level two. That's where you're trying to get to 0:14:38.120 --> 0:14:40.280 level two, Joel. That's where your financial dreams and hopes 0:14:40.320 --> 0:14:43.800 are in front of you. You've got two escalators. You've 0:14:43.800 --> 0:14:45.440 got one that's coming down. At least, it's not like 0:14:45.440 --> 0:14:48.560 a sky skyscraper that I have to climb, you know. Yeah, 0:14:48.600 --> 0:14:50.640 but on one side you've got an escalator coming down. 0:14:50.720 --> 0:14:52.600 On the other side, you've got an escalator going up. 0:14:52.880 --> 0:14:55.440 And when you have debts, that is when interest is 0:14:55.480 --> 0:14:58.360 working against you, right, That is you trying to get 0:14:58.400 --> 0:15:00.640 to the second level by going up the side of 0:15:00.640 --> 0:15:03.040 the escalator that's coming down. When you're doing that, you're 0:15:03.040 --> 0:15:05.880 working crazy hard. It takes way longer, and you know what, 0:15:05.920 --> 0:15:08.200 at some point you might even actually give up because 0:15:08.240 --> 0:15:10.000 it's too hard. I probably could have done it really 0:15:10.040 --> 0:15:13.200 easily when I was twenty five, Matt, But even still, like, yes, 0:15:13.240 --> 0:15:15.160 I agree, right, like I've I've done that before as 0:15:15.200 --> 0:15:17.840 a kid, But it's still a lot harder versus when 0:15:17.840 --> 0:15:20.640 you have interest working for you. When you're receiving interest, 0:15:20.760 --> 0:15:22.760 it's like you're getting on the correct side and you're 0:15:22.960 --> 0:15:25.160 you know, you're writing that interest up. If you want, 0:15:25.360 --> 0:15:27.520 you can only rely on that interest and you can 0:15:27.520 --> 0:15:29.560 just stay in there. But if you continue to work 0:15:29.600 --> 0:15:31.880 a little bit, imagine how quickly you're gonna get to 0:15:31.960 --> 0:15:34.240 that next level walking while you're on an escalator. It's 0:15:34.240 --> 0:15:36.480 like the best feeling I know. I mean, how quickly 0:15:36.480 --> 0:15:38.360 do you get from like one level to the next 0:15:38.400 --> 0:15:40.320 just by doing that. It's amazing. And so maybe the 0:15:40.320 --> 0:15:42.200 next time you're thinking about taking out a car loan 0:15:42.280 --> 0:15:44.480 or some other consumer debt, some credit card debt, picture 0:15:44.520 --> 0:15:46.560 that illustration, because like that truly is what it's like. 0:15:46.600 --> 0:15:48.480 It's like, like you said, being in quicksand and you're 0:15:48.480 --> 0:15:50.680 trying to trying to hop out of that quicksand it's 0:15:50.720 --> 0:15:52.680 so difficult to do that. It's so difficult to make 0:15:52.720 --> 0:15:56.080 any progress when we're bogged down with that interest working 0:15:56.120 --> 0:15:58.200 against us. Yeah, no doubt. And we have to get 0:15:58.200 --> 0:16:01.000 to these specifics for folks that are writing that down 0:16:01.120 --> 0:16:02.880 escalator and they want to get off, they want to 0:16:02.880 --> 0:16:04.320 get out of debt, and they want to make their 0:16:04.320 --> 0:16:07.160 money work for them. Well, let's get to the specifics 0:16:07.200 --> 0:16:09.520 of how to create a debt payoff plan right after 0:16:09.560 --> 0:16:20.400 this break, all right, Jill, we're back and we're talking 0:16:20.400 --> 0:16:22.280 about creating a debt payoff plan. By the way, did 0:16:22.280 --> 0:16:24.480 you like my my little illustration about the escalator? That 0:16:24.560 --> 0:16:26.680 was a great illustration another one I was thinking of two. 0:16:26.680 --> 0:16:28.480 I was just like, okay, what about like headwinds and 0:16:28.800 --> 0:16:30.560 wins that you're back. I'm like, I was gonna say 0:16:30.560 --> 0:16:32.400 an example of you know, when you're up at the 0:16:32.400 --> 0:16:33.960 tea box and you're playing disc off and you're getting 0:16:33.960 --> 0:16:36.200 ready to throw your driver, but you've got that strong headwind, 0:16:36.360 --> 0:16:37.840 it's gonna be a lot harder than if you had 0:16:37.840 --> 0:16:39.680 to win at your back, right, True, It's true. Yeah, 0:16:39.760 --> 0:16:42.160 that's another great illustration and one that makes sense to me. 0:16:42.320 --> 0:16:44.240 But I feel like most folks have probably been on 0:16:44.440 --> 0:16:47.160 escalator is more often than they've actually thrown a disc off. 0:16:47.320 --> 0:16:49.400 It's probably true for most folks out there, sadly, because 0:16:49.440 --> 0:16:51.520 disc golf is a great sport. All Right, We're gonna 0:16:51.560 --> 0:16:53.520 talk now, though about what steps that you need to 0:16:53.520 --> 0:16:55.680 take when it comes to creating a debt payoff plan. 0:16:56.120 --> 0:16:57.920 These are the steps that we're going to actually help 0:16:57.960 --> 0:17:00.720 you to make real substantial progress this year. The first 0:17:00.720 --> 0:17:02.720 thing that you need to do is to make a 0:17:02.800 --> 0:17:05.160 list of all your debts. The first step in any 0:17:05.160 --> 0:17:07.760 plane of action is to get organized, and so making 0:17:07.800 --> 0:17:09.520 sure that you're aware of all the debts that you 0:17:09.600 --> 0:17:12.040 oh is a really important fort step on your path 0:17:12.119 --> 0:17:14.560 to crushing debts. Yeah. Man, I mean we've used this 0:17:14.640 --> 0:17:17.640 illustration before, but if you're planning a road trip, you're 0:17:17.680 --> 0:17:19.720 going to make the dots along the wave where you 0:17:19.720 --> 0:17:21.800 want to stop. You kind of want to know the layout. 0:17:21.880 --> 0:17:23.199 How long is it gonna take me to get here 0:17:23.240 --> 0:17:24.879 and there, especially if you got kids, Like where are 0:17:24.920 --> 0:17:26.840 we gonna stop to pete? Where we're gonna stop to eat? 0:17:26.920 --> 0:17:30.120 There's all these questions that come with a big, major trip, right, 0:17:30.160 --> 0:17:31.960