WEBVTT - How to KEEP Yourself Out of Debt #467 0:00:00.120 --> 0:00:02.640 Welcome to How the Money. I'm Joel, I'm Matt, and 0:00:02.680 --> 0:00:25.239 today we're discussing how to keep yourself out of debt. Yeah, dude, 0:00:25.239 --> 0:00:27.000 this makes me think about Okay, so you know the 0:00:27.160 --> 0:00:29.880 played out scene and pretty much any TV show, cartoon, 0:00:30.000 --> 0:00:31.920 or movie where somebody like gets kicked thrown out of 0:00:31.920 --> 0:00:34.000 a bar and they're like, get out of here, and 0:00:34.040 --> 0:00:36.120 they throw them and then they're like and stay out. 0:00:37.360 --> 0:00:39.120 That's what we're talking about today. And we're not talking 0:00:39.120 --> 0:00:40.919 about We're not going to focus on how to get 0:00:40.960 --> 0:00:43.640 out of debt. We're gonna talk about how you can 0:00:43.840 --> 0:00:46.360 stay out of debts. And by the way, have you 0:00:46.360 --> 0:00:48.480 ever gotten like kicked out of a bar? I don't 0:00:48.479 --> 0:00:50.879 think so. I'm trying to think. I wish I had 0:00:50.920 --> 0:00:54.640 a good story, but you and I are two, We're 0:00:54.680 --> 0:00:57.520 two law abiding dudes, and yeah, I don't think I've 0:00:57.560 --> 0:00:59.920 even ever been asked to leave. I tend to be fair, 0:01:00.000 --> 0:01:03.120 really well behaved when I'm mountain, one thing I'm not 0:01:03.360 --> 0:01:05.560 terribly proud of. But a long time ago, this is 0:01:05.560 --> 0:01:07.399 what I'm day before I the dirt, Okay, at a 0:01:07.400 --> 0:01:10.200 Braves game, I was sitting next to the bullpen for 0:01:10.240 --> 0:01:13.280 the opposing team the It was the Florida Marlins back then. 0:01:13.280 --> 0:01:15.080 I don't think they had name changed. They're the worst, 0:01:15.200 --> 0:01:18.240 and I think I maybe was like just you know, 0:01:18.400 --> 0:01:20.280 not no cursewords or anything like that, but just just 0:01:20.400 --> 0:01:23.800 some general unkind heckling. Yes, the part of the game. 0:01:24.000 --> 0:01:25.560 And I remember as the security guy coming up to 0:01:25.600 --> 0:01:27.120 me like that's enough, and I was like, okay, that's 0:01:27.480 --> 0:01:31.000 I'm done. But he didn't ask you to leave or anything. 0:01:31.080 --> 0:01:33.040 No, no no, no, I did. I hadn't gotten to that point. 0:01:33.080 --> 0:01:34.240 I just said a few things and he was like, 0:01:34.280 --> 0:01:36.640 that's your good buddy. Okay. I hadn't even been drinking. 0:01:36.640 --> 0:01:38.640 I was just literally just kind of a pump punk kid, 0:01:38.640 --> 0:01:41.080 I think, a punk yeah, being a punk kid. So 0:01:41.240 --> 0:01:43.399 you were right behind the dugout or no, behind the 0:01:43.440 --> 0:01:45.600 bullpen in the outfield? Yeah, oh, in the outfield, Okay. 0:01:45.600 --> 0:01:47.040 I was thinking because if you were, no, I didn't 0:01:47.080 --> 0:01:48.720 have the premos seat. If you can get the premos 0:01:48.720 --> 0:01:51.120 seats occasionally, because back then you could get the company 0:01:51.160 --> 0:01:53.360 tickets and if nobody claimed those, I mean you're sitting 0:01:53.400 --> 0:01:56.000 pretty close to the batter's box. Yeah. Well, even back 0:01:56.000 --> 0:01:58.240 in the day, almost no one went to Braves games, 0:01:58.240 --> 0:02:00.320 so you could get the cheap tickets and still like 0:02:00.320 --> 0:02:02.200 move up to the fancy seats, which which was nice. 0:02:02.480 --> 0:02:04.960 That was one of those like extra perks where like oh, 0:02:05.080 --> 0:02:06.960 going down for the four hundreds to the one hundreds 0:02:07.080 --> 0:02:09.880 without paying any more money? Was it? Joyce? Was that 0:02:09.960 --> 0:02:12.760 the the usher? Yes? She was really. I can't believe 0:02:12.880 --> 0:02:15.160 I remember her name. She was awesome. I can't remember 0:02:15.160 --> 0:02:18.680 what section she was in charge of guarding. Then she 0:02:18.760 --> 0:02:20.840 did not keep out the people who are not supposed 0:02:20.880 --> 0:02:22.400 to be out. Well, in our case, we got to 0:02:22.400 --> 0:02:25.040 know her pretty well. And there's value in relationships. That's 0:02:25.040 --> 0:02:26.880 what that taught me to And Joyce, she and I 0:02:26.919 --> 0:02:29.320 became friends and we would sit there. We would talk 0:02:29.400 --> 0:02:31.240 during the game and stuff, and I got to know her, 0:02:31.320 --> 0:02:32.840 she got to know my family. It was one of 0:02:32.840 --> 0:02:36.200 those things where, uh, it just we just kept going 0:02:36.200 --> 0:02:38.440 down to that section and hung out with Joyce every 0:02:38.480 --> 0:02:41.600 time we went to a baseball game. I missed those days. Yeah. Well, 0:02:41.639 --> 0:02:44.079 And the fact is, if you know, it's the second 0:02:44.080 --> 0:02:47.360 third inning and she looks down and only the rows 0:02:47.520 --> 0:02:49.160 you know, you know, have people in them, Like, why 0:02:49.160 --> 0:02:52.520 not let somebody down? It looks better for TV? Right, exactly. 0:02:52.560 --> 0:02:54.240 That's what I always thought. If there are people in 0:02:54.280 --> 0:02:56.440 the stands, then you're gonna go. Yes, yeah, I mean 0:02:56.600 --> 0:02:58.800 I remember watching speaking of the Marlins their games, and 0:02:58.840 --> 0:03:00.919 there they used to be in. I don't know these days, 0:03:00.960 --> 0:03:03.359 I don't watch baseball as much, and we don't even 0:03:03.360 --> 0:03:05.480 know if there's gonna be a baseball season this year 0:03:05.680 --> 0:03:08.400 or not at this point. But nobody went to the 0:03:08.440 --> 0:03:10.880 Marlins games, Like nobody. You think someone would hit a 0:03:10.919 --> 0:03:13.200 home run and you would see somebody from like four 0:03:13.240 --> 0:03:15.640 sections over running over to try to get the home running. 0:03:15.680 --> 0:03:17.560 Five minutes later they get the ball exactly. That's how 0:03:17.560 --> 0:03:20.119 a few people there were at those games. But Matt, 0:03:20.200 --> 0:03:22.119 let's let's move on. Let's mention the beer that we're 0:03:22.120 --> 0:03:25.240 having on this episode. This one is called Empress Rising. 0:03:25.320 --> 0:03:28.240 It's a bourbon barrel aged stout by Birds Fly South. 0:03:28.560 --> 0:03:31.359 You pick this up on your recent trek to South Carolina. 0:03:31.440 --> 0:03:33.880 Thank you, and uh, we'll give our thoughts on this 0:03:33.919 --> 0:03:36.200 one at the end of the episode, but for now, 0:03:36.280 --> 0:03:37.960 let's get on. Let's talk about debt for a second. 0:03:38.000 --> 0:03:40.600 And and like you said, Matt, we're talking about how 0:03:40.600 --> 0:03:42.880 to keep yourself out of debt. So We've done episodes 0:03:42.920 --> 0:03:45.480 on how to get out of debt, but but the 0:03:45.480 --> 0:03:48.400 thing is, nobody talks about how to stay out of debt, 0:03:48.400 --> 0:03:51.760 and so for for some people, debt becomes this recurring cycle. 0:03:52.160 --> 0:03:54.360 And you made a good analogy at the beginning of 0:03:54.400 --> 0:03:58.080 the episode, But what it made me think of was 0:03:58.480 --> 0:04:01.720 the Seinfeld Reservation episode. Do you remember that one? Have 0:04:01.720 --> 0:04:03.840 you seen that? You always bring up Seinfeld and I 0:04:03.840 --> 0:04:06.360 always have to say, no, I'm not a boomer, all right, 0:04:06.400 --> 0:04:08.920 I'm not like this gen xer who is in love 0:04:08.960 --> 0:04:11.360 with Seinfeld. Please, there are lots of millennials and Gen 0:04:11.400 --> 0:04:14.640 zears watching Seinfeld on Netflix as we speak. I wouldn't 0:04:14.640 --> 0:04:17.799 be surprised, honestly if there are more gen's ears watching 0:04:17.880 --> 0:04:21.039 Seinfeld as like a nostalgia thing, because I feel like millennials, 0:04:21.240 --> 0:04:23.880 it was just before time, so it's not old enough 0:04:23.920 --> 0:04:26.480 to be cool. Yeah, yeah, yeah, And I mean I've 0:04:26.560 --> 0:04:28.359 I've watched a number of episodes. I'm not like a 0:04:28.600 --> 0:04:31.400 Seinfeld person all the way, although I do think it's 0:04:31.440 --> 0:04:33.680 really funny. But there's this one episode, and I think 0:04:33.680 --> 0:04:36.760 it's maybe one of the funnier ones where Jerry gets 0:04:36.760 --> 0:04:39.720 to the rental car counter and they're like, I'm sorry, sir, 0:04:39.760 --> 0:04:41.560 we don't have a car for you. And he's like, 0:04:41.880 --> 0:04:43.920 but I have a reservation and they're like, yeah, we 0:04:43.960 --> 0:04:46.560 still don't have the car. He's like, wait, wait a second. 0:04:46.839 --> 0:04:49.800 You know how to take the reservation, but you don't 0:04:49.800 --> 0:04:52.080 know how to keep the reservation, and really that's the 0:04:52.120 --> 0:04:55.720 most important part. And they're you know, they go through 0:04:55.720 --> 0:04:57.920 this whole song of dance talking to the supervisor and 0:04:57.960 --> 0:05:00.479 all that, and he's just you know, lamb basting the 0:05:00.480 --> 0:05:02.919 whole thing. Um. I think he eventually gets like a 0:05:02.960 --> 0:05:07.400 subcompact car or something like that. But similarly, folks might 0:05:07.400 --> 0:05:09.839 know how to get out of debt, and but the 0:05:09.839 --> 0:05:11.520 problem is they might have to be doing it on 0:05:11.520 --> 0:05:13.280 a regular basis because they don't know how to stay 0:05:13.279 --> 0:05:15.360 out of debt. And so, yeah, you might find yourself 0:05:15.440 --> 0:05:18.679 digging out of a debt hole each year right around 0:05:18.680 --> 0:05:22.200 this time, because this is when most people are getting 0:05:22.560 --> 0:05:26.080 their credit card statements in the mail or in the email, 0:05:26.080 --> 0:05:29.160 I guess, and so holiday spending that it tends to 0:05:29.160 --> 0:05:30.640 sneak up on a lot of people and that's why 0:05:30.640 --> 0:05:33.080 so many folks are feeling the after effects now. But 0:05:33.200 --> 0:05:36.440 we think a crucial part of making meaningful progress with 0:05:36.480 --> 0:05:38.760 your money is learning how to take debt to the 0:05:38.800 --> 0:05:41.159 curb for good, at least the kinds of debt that 0:05:41.200 --> 0:05:43.599 we think are are the worst forms. Yeah, because you know, 0:05:43.600 --> 0:05:45.640 we also try to give a nuance take when we 0:05:45.720 --> 0:05:48.159 talk about debt, like, we don't think that all forms 0:05:48.160 --> 0:05:51.200 of debt are inherently evil. There are some forms of 0:05:51.279 --> 0:05:56.000 debt that are certainly way less evil that that than 0:05:56.080 --> 0:05:59.560 some other types, almost tinging on good but not quite exactly. Yeah, 0:05:59.560 --> 0:06:02.000 but much of the debt that folks took out over 0:06:02.040 --> 0:06:04.040 the holidays, like you said, are the bad kind. We're 0:06:04.040 --> 0:06:06.799 talking about credit card debt. A Walt Hubs survey shows 0:06:06.920 --> 0:06:11.159 that folks say that they overspent during the Christmas shopping season, 0:06:11.360 --> 0:06:13.920 and roughly the same percentage of Americans confessed that that 0:06:13.920 --> 0:06:17.320 meant taking on higher levels of debt. This is according 0:06:17.360 --> 0:06:21.320 to a lending Tree survey, the average American has one thousand, 0:06:21.320 --> 0:06:24.160 two nine dollars of debt weighing them down like an 0:06:24.200 --> 0:06:27.400 anvil this time of year. From Christmas, and of course, 0:06:27.440 --> 0:06:30.200 what is their preferred form of debts? Many of them 0:06:30.240 --> 0:06:33.120 put those purchases on their credit card. Uh, and they're 0:06:33.120 --> 0:06:35.640 stuck now with that debt for months to come. That 0:06:36.000 --> 0:06:38.120 is our problem that we're trying to address. That's right. 0:06:38.240 --> 0:06:41.280 And Matt, you might think after hearing those statistics that 0:06:41.400 --> 0:06:43.800 you and I were anti credit card, but that is 0:06:43.800 --> 0:06:46.640 not the case either, right, But we are against buying 0:06:46.640 --> 0:06:49.719 stuff we like to play with fire evidently, well, I 0:06:49.720 --> 0:06:51.400 mean it's it's definitely. It's one of those things we 0:06:51.400 --> 0:06:53.760 have always said is a tool. And think of all 0:06:53.800 --> 0:06:56.480 the wonderful things you can do with fire, exactly exactly, 0:06:56.560 --> 0:06:58.839 And uh, yeah, you have a nice wood burning stove 0:06:58.960 --> 0:07:01.000 up on the screen port in your house. It's quite lovely. 0:07:01.080 --> 0:07:04.359 It's it's a great mood center, and it's just like 0:07:04.400 --> 0:07:07.440 provide some warmth during these winter months. But at the 0:07:07.480 --> 0:07:09.680 same time, like, yeah, you could burn the house down 0:07:09.720 --> 0:07:12.040 and you weren't careful. And so the same thing is 0:07:12.040 --> 0:07:14.760 true with credit cards. Right, We're not against buying stuff 0:07:14.760 --> 0:07:17.200 on on a credit card, but we are against buying 0:07:17.240 --> 0:07:19.120 that same stuff on a credit card if you're not 0:07:19.160 --> 0:07:20.920 going to be able to afford to pay that bill 0:07:21.080 --> 0:07:24.480 in full when it arrives. And so, yes, since January, 0:07:24.520 --> 0:07:27.160 debt hangovers have become like kind of a cycle. I 0:07:27.160 --> 0:07:28.800 would say for a lot of people Matt where they're like, 0:07:28.840 --> 0:07:30.960 how did I end up here again? Uh, let's talk 0:07:30.960 --> 0:07:32.880 about how we ensure that we don't end up in 0:07:32.880 --> 0:07:36.640 the same place in early planning ahead so that we 0:07:36.760 --> 0:07:40.360 avoid this cycle next year. So our first piece of advice, 0:07:40.400 --> 0:07:43.080 it's going to sound maybe kind of simple, but we 0:07:43.080 --> 0:07:46.200 would say to avoid debt in the first place. And 0:07:46.840 --> 0:07:49.320 that could probably be the entire like that could be 0:07:49.320 --> 0:07:52.720 the new title for this episode in the first place. Yes, 0:07:52.920 --> 0:07:55.440 and yeah, you know you we've talked about strategies before 0:07:55.480 --> 0:07:57.600 to get yourself out of debt. But the best way 0:07:57.640 --> 0:07:59.360 to to dig yourself out of debt is to is 0:07:59.360 --> 0:08:01.000 to not have any to begin with, right, to not 0:08:01.280 --> 0:08:04.320 start in that hall. And and for most folks, the 0:08:04.600 --> 0:08:07.680 basic way to do that is to start planning ahead 0:08:07.960 --> 0:08:10.160 in a better way. And so, yeah, you might not 0:08:10.200 --> 0:08:13.480 be thinking about your Christmas or holiday present for late 0:08:14.840 --> 0:08:16.760 right now. I'm sure you're not like picking out presents 0:08:16.800 --> 0:08:19.720 for Grandma and your sister at this moment in time 0:08:19.720 --> 0:08:22.400 in January, but you should be baking the dollars you 0:08:22.440 --> 0:08:24.840 want to spend into your budget and your savings plan. Now. 0:08:24.880 --> 0:08:27.120 You should have an idea for how much you're going 0:08:27.160 --> 0:08:30.600 to spend later on in this year, even now, and 0:08:30.680 --> 0:08:33.000 you should be saving right now those dollars that you 0:08:33.040 --> 0:08:35.200 eventually want to spend in this right. Yeah, and now 0:08:35.480 --> 0:08:37.960 is the perfect time because you know roughly what you 0:08:38.000 --> 0:08:41.440 spent this past Christmas, so you can put together an 0:08:41.480 --> 0:08:43.680 accurate picture of of how much you will likely need 0:08:44.120 --> 0:08:46.840 tennis months from now. And plus you've got more time 0:08:46.880 --> 0:08:49.319 to save. You can make some of these these more 0:08:49.440 --> 0:08:51.840 minor changes to ensure that you avoid debt if you 0:08:51.840 --> 0:08:54.160 start soon enough. So, for instance, you know you've heard 0:08:54.160 --> 0:08:56.080 of lay away right kind of feels like this old 0:08:56.080 --> 0:08:58.960 school way of buying stuff, But you know that that's 0:08:58.960 --> 0:09:00.720 when you want to buy something, you don't have the money, 0:09:00.880 --> 0:09:02.840 but the retailer it sets the item aside and you 0:09:02.880 --> 0:09:05.640 make payments in order to finally make the purchase take 0:09:05.640 --> 0:09:08.200 the thing home. We've got no qualums with this approach, 0:09:08.360 --> 0:09:10.520 but you know it sometimes comes without it fees. We 0:09:10.520 --> 0:09:12.600 don't like that. Plus I hate the idea of a 0:09:12.640 --> 0:09:15.400 retailer being the one who holds your money, you know, 0:09:15.480 --> 0:09:17.680 like why let a retailer act as a savings account 0:09:17.840 --> 0:09:20.240 when you have your own savings account. And so we're 0:09:20.240 --> 0:09:23.360 all about the principles behind layaway, but we just want 0:09:23.400 --> 0:09:26.000 to see you doing that yourself. Plus actual lay away. 0:09:26.040 --> 0:09:27.840 It's it's kind of disappearing right now because of the 0:09:28.120 --> 0:09:31.599 different buy now, pay later programs. But Joel, this this 0:09:31.679 --> 0:09:33.840 kind of makes me think of you know, earlier this month, 0:09:33.880 --> 0:09:35.880 we talked about some of the different money challenges that 0:09:35.920 --> 0:09:38.680 can jump start your finances. The fifty two Weeks Savings 0:09:38.760 --> 0:09:42.600 Challenge is made for saving for Christmas. Like literally, you 0:09:42.640 --> 0:09:44.920 set aside a dollar every single week, which means that 0:09:44.960 --> 0:09:47.120 even though we're a month into the year already, it's 0:09:47.120 --> 0:09:48.840 only gonna take you like tin bucks to get caught up. 0:09:49.000 --> 0:09:51.880 And you can join the fifty two Weeks Savings Challenge. 0:09:52.360 --> 0:09:54.360 And what's really cool, it's a it's a dollar week, 0:09:54.360 --> 0:09:56.960 but then it ramps up it's an extra dollar sorry exactly. Yeah, 0:09:57.040 --> 0:09:59.280 so week one one dollar week to two dollars and 0:09:59.280 --> 0:10:02.000 then you know, obviously of your balance gets larger and larger. 0:10:02.360 --> 0:10:04.120 But what's super cool is that by the end of 0:10:04.160 --> 0:10:07.520 the year, you're gonna have like around which is the 0:10:07.600 --> 0:10:10.200 same amount of money that everyone is going in debt force. 0:10:10.920 --> 0:10:12.800 It is I feel like this challenge, the fifty two 0:10:12.800 --> 0:10:16.160 Weeks Savings challenge was made for saving money and setting 0:10:16.160 --> 0:10:18.199 it aside for Christmas. So if that's something that you 0:10:18.280 --> 0:10:20.320 missed earlier this month, will make sure to include that 0:10:20.320 --> 0:10:22.320 sign up in the show. No, it's for this episode 0:10:22.360 --> 0:10:24.080 up on the website at how the Money dot com. 0:10:24.320 --> 0:10:26.720 But we would highly recommend if you have had a 0:10:26.760 --> 0:10:29.440 problem going into debt for Christmas, that you at least 0:10:29.440 --> 0:10:31.840 consider joining the fifty two week savings Plane. Yeah, if 0:10:31.840 --> 0:10:34.680 you're like, I'm bad at planning, but I really really 0:10:34.679 --> 0:10:37.000 want to make sure that this doesn't happen again, that 0:10:37.160 --> 0:10:39.520 turning it into a game. It's like we talked about, 0:10:39.840 --> 0:10:42.400 is this great way to make planning ahead a little 0:10:42.400 --> 0:10:44.960 bit easier because you're challenging yourself and you're like, I'm 0:10:44.960 --> 0:10:47.040 gonna rise this challenge. I'm gonna make it happen. And 0:10:47.040 --> 0:10:49.240 and Matt, if if people sign up for that challenge, 0:10:49.400 --> 0:10:51.640 not only will they get helpful reminder email from us, 0:10:51.679 --> 0:10:53.640 but also a PDF that you created to help them 0:10:53.679 --> 0:10:56.880 track their progress and print it out physical representation of 0:10:57.000 --> 0:10:59.160 the money progress that you're making. Is is just so 0:10:59.240 --> 0:11:03.080 helpful in in helping you like stay at it. And 0:11:03.160 --> 0:11:05.080 you mentioned by now pay later, which I wanted to 0:11:05.080 --> 0:11:08.560 touch on too, because you're right, like those layaway plans 0:11:08.559 --> 0:11:10.280 at Walmart brought him back I don't know, seven or 0:11:10.280 --> 0:11:13.120 eight years ago and they became popular kind of again. 0:11:13.360 --> 0:11:16.959 But now they're they're becoming less popular because by now 0:11:17.000 --> 0:11:21.319 pay later is like the new layaway, but there are problems. 0:11:21.720 --> 0:11:24.520 It's we don't think by now, pay later is helpful 0:11:24.559 --> 0:11:27.000 for folks in the same way that layaway plans were 0:11:27.400 --> 0:11:30.080 because with by now pay later plans, you're getting the 0:11:30.080 --> 0:11:34.320 item right now, which provides that immediate gratification, whereas with layaway, 0:11:34.480 --> 0:11:37.760 the retailers holding onto the item until you actually have 0:11:38.280 --> 0:11:40.440 all the money in hand to to pay for it, 0:11:40.640 --> 0:11:42.720 or even not l away, but just the preferred method 0:11:42.760 --> 0:11:45.679 of you saving up cash to buy something yourself. As 0:11:45.679 --> 0:11:47.240 you're saving o that money, yeah you've got that money 0:11:47.280 --> 0:11:49.439 in the bank, but you do not yet have that item. 0:11:49.559 --> 0:11:52.840 So there's this massive difference in how we experience the 0:11:52.840 --> 0:11:55.360 act of buying something. If we immediately get an item 0:11:55.400 --> 0:11:57.800 when we didn't have the money versus if the store 0:11:57.880 --> 0:12:00.000 is holding onto it or versus waiting until we actually 0:12:00.120 --> 0:12:02.640 have all the money to purchase the item at once, 0:12:02.960 --> 0:12:04.640 we feel like we can move on and start buying 0:12:04.679 --> 0:12:06.880 other stuff that we want, because heck, we're on that 0:12:06.880 --> 0:12:09.640 payment plan. Just four or six easy payments and you know, 0:12:09.679 --> 0:12:12.360 we'll be done paying off that Teddy Bear for our 0:12:12.440 --> 0:12:15.040 daughter in in like, you know, four months, which sounds 0:12:15.559 --> 0:12:18.880 crazy for smaller toys, but that's that's how far by 0:12:18.920 --> 0:12:22.480 now pay later is going. Is You're you're stretching out. 0:12:22.520 --> 0:12:24.360 You'll being able to stretch out almost any anything that 0:12:24.360 --> 0:12:26.840 you want to buy now, even just an article of clothing. Yeah, 0:12:26.840 --> 0:12:28.920 that shift that takes place, I mean it makes me 0:12:28.920 --> 0:12:31.280 think about going for like a run or like going 0:12:31.320 --> 0:12:33.680 to work out or something like that. Sometimes folks will 0:12:33.760 --> 0:12:36.040 reward themselves with like maybe a little piece of chocolate 0:12:36.200 --> 0:12:38.040 after they get back from their run. Right, it's sort 0:12:38.080 --> 0:12:39.360 of like saying, Okay, I want to give myself the 0:12:39.400 --> 0:12:42.000 chocolate now, and then after that then I'm going to 0:12:42.080 --> 0:12:45.640 go for a run. Like no, what's the point, Like, 0:12:45.679 --> 0:12:47.840 if you haven't actually earned the thing yet, I think 0:12:47.880 --> 0:12:50.440 you have a much less chance of actually doing the 0:12:50.480 --> 0:12:54.360 hard thing as opposed to immediately gratifying yourself with the easy, fun, 0:12:54.440 --> 0:12:57.520 delicious thing. Yeah, yeah, I agree. And and it seems 0:12:57.559 --> 0:13:01.360 like because we're we're putting the purchase down into bite 0:13:01.360 --> 0:13:05.000 size payment chunks that we can actually afford things that 0:13:05.000 --> 0:13:07.559 that ultimately we really can't afford, and and then we're 0:13:07.559 --> 0:13:09.160 gonna be paying for the item for months to come. 0:13:09.400 --> 0:13:11.720 And it just it's psychologically makes it so much easier 0:13:11.720 --> 0:13:13.400 to buy stuff that we we don't need or that 0:13:13.440 --> 0:13:15.880 we don't have the money to buy, which increases the 0:13:15.920 --> 0:13:18.079 likelihood that we're gonna find ourselves back in this debt hole. 0:13:18.160 --> 0:13:20.720 So I think by now pay later is it seems 0:13:20.760 --> 0:13:23.720 like a solution to people where they can get the 0:13:23.720 --> 0:13:26.880 things that they want without taking on debt, because you know, 0:13:26.920 --> 0:13:29.360 you're just doing an installment plan instead of taking put 0:13:29.440 --> 0:13:31.679 it on the credit card. But but ultimately it's it's 0:13:31.720 --> 0:13:34.839 having a very similar effect on your budget. Yeah. Well 0:13:34.880 --> 0:13:37.319 that also assumes that you make your payments on time. 0:13:37.559 --> 0:13:40.040 You're assuming the best case scenario. But if let's say 0:13:40.080 --> 0:13:41.600 you hit a little rough patch and you're not able 0:13:41.640 --> 0:13:43.599 to make that payment, well that's when you're gonna be 0:13:43.679 --> 0:13:45.920 hit with those late fees. And that's I mean, you 0:13:45.960 --> 0:13:47.280 call it what you want, you call a late fee, 0:13:47.400 --> 0:13:50.080 you call it interest payments. You are still paying more 0:13:50.160 --> 0:13:52.360 for an item because you're using leverage to to buy 0:13:52.400 --> 0:13:54.240 things that you can't afford in the here and now. 0:13:54.440 --> 0:13:57.080 But we're gonna give some more practical tips for keeping 0:13:57.240 --> 0:14:00.559 folks out of debts, and we'll get to those after 0:14:00.600 --> 0:14:11.760 this break. All right, Matt, we're back. We're talking about 0:14:11.800 --> 0:14:14.720 how to keep yourself out of debts, right and you know, 0:14:14.840 --> 0:14:17.360 let's let's talk about why for a second. And Um, 0:14:17.360 --> 0:14:20.040 that might sound self explanatory, but one of the things 0:14:20.320 --> 0:14:21.800 we want to point out, we want to make sure 0:14:21.840 --> 0:14:24.880 you hear, is that you know, the biggest problem with 0:14:24.920 --> 0:14:27.800 debt isn't necessarily the fact that you want new stuff. 0:14:28.280 --> 0:14:31.840 Matt and I were not against buying new things on occasion. 0:14:31.840 --> 0:14:34.640 We get the new items occasionally, yes, and we're human. 0:14:34.760 --> 0:14:38.200 I talked to you in passing about the home rento 0:14:38.320 --> 0:14:40.440 that I'm doing at our house right now. We're doing 0:14:40.480 --> 0:14:42.400 a lot of work and it involves buying a lot 0:14:42.440 --> 0:14:44.960 of new stuff and it's gonna get used. You get 0:14:45.000 --> 0:14:47.560 new tile exactly. You didn't get used would although I 0:14:47.600 --> 0:14:50.000 thought about getting used out but I did not. Um, 0:14:50.080 --> 0:14:51.960 And it's it's it's one of those things where or 0:14:51.960 --> 0:14:56.000 at least it's like vintage tile at reclaimed would oftentimes 0:14:56.040 --> 0:14:59.400 that's all even actually more expensive than getting even new 0:14:59.480 --> 0:15:02.560 the new stuff. True, it's like, we don't wanna pretend 0:15:02.760 --> 0:15:04.480 that we don't buy new stuff. And and and we have 0:15:04.760 --> 0:15:06.640 friends in this space, friends we've had on the show 0:15:06.680 --> 0:15:10.560 who are almost like against buying new stuff at all, 0:15:10.600 --> 0:15:12.800 and they make that a pattern of their lives to 0:15:13.040 --> 0:15:15.200 encourage people not to buy new things, and they don't 0:15:15.200 --> 0:15:17.760 do it themselves. And we think that's admirable, but that's 0:15:17.880 --> 0:15:19.400 not the stance that we take. And so we just 0:15:19.600 --> 0:15:22.480 we don't want to suggest that you shouldn't be buying 0:15:22.480 --> 0:15:25.800 new things, but we do want to suggest and uh 0:15:25.880 --> 0:15:28.160 strongly suggest that you shouldn't be paying interest in order 0:15:28.200 --> 0:15:32.040 to finance the new stuff. That's what we dislike. And so, yeah, 0:15:32.120 --> 0:15:33.880 not being able to pay for it in full means 0:15:33.880 --> 0:15:37.480 that you're paying more for everything that you're buying. And 0:15:37.480 --> 0:15:40.240 the average person Matt has a revolving credit card balance 0:15:40.360 --> 0:15:42.960 of close to six thousand dollars, which means not only 0:15:42.960 --> 0:15:45.880 do they have that like credit card debt hangover right 0:15:45.920 --> 0:15:48.600 now in January, but at the same time they're they're 0:15:48.600 --> 0:15:50.880 paying roughly a thousand dollars in interest to the credit 0:15:50.920 --> 0:15:54.280 card companies every single year, and you know, that's a 0:15:54.360 --> 0:15:57.400 huge portion of your annual income going to the credit 0:15:57.400 --> 0:16:00.360 card companies because you were not able to rain in 0:16:00.640 --> 0:16:02.960 some of that spending, right, And so yeah, just think 0:16:03.000 --> 0:16:05.240 of all the other good that that money could be 0:16:05.280 --> 0:16:09.640 doing for you, not for the visa or master card. 0:16:09.680 --> 0:16:11.680 And so yeah, we would say utilizing debt for everyday 0:16:11.680 --> 0:16:16.560 purchases means that you're overpaying for everything. Everything that if 0:16:16.560 --> 0:16:18.400 it's sixty bucks, it turns out it actually costs you 0:16:18.440 --> 0:16:21.520 seventy two dollars, right, everything is costing you more, that's right. Yeah, 0:16:21.560 --> 0:16:24.360 And remember too that the concept of interest, like that 0:16:24.680 --> 0:16:28.160 concept right there, like that isn't inherently evil either. You 0:16:28.200 --> 0:16:29.600 just want to make sure that you are on the 0:16:29.680 --> 0:16:32.160 receiving end of interest, not on the paying end. We've 0:16:32.240 --> 0:16:34.320 used this analogy before, but interest is kind of like 0:16:34.360 --> 0:16:37.000 an escalator, right, and so when you're walking up the 0:16:37.040 --> 0:16:40.040 side that is going up like a normal human being, 0:16:40.560 --> 0:16:43.120 you're going to get to that next floor really quickly. 0:16:43.320 --> 0:16:45.800 Like that is what happens when you invest your money 0:16:45.800 --> 0:16:48.200 and you've got interest working for you. But if you're 0:16:48.240 --> 0:16:50.320 going against the flow, you've got the steps coming at 0:16:50.320 --> 0:16:52.520 you rather than with you. It sounds like a lot 0:16:52.520 --> 0:16:55.640 of fun. If you're like a middle schooler, then it's 0:16:55.640 --> 0:16:57.920 gonna take so much more effort. And that is what 0:16:57.960 --> 0:17:00.600 it's like to have consumer debt. That's a great way 0:17:00.680 --> 0:17:02.840 to think about interest. You what it's working for you, 0:17:03.040 --> 0:17:05.840 not against Yeah, and this is not an episode about investing, 0:17:05.880 --> 0:17:08.239 but we talked about that enough and how that is 0:17:09.240 --> 0:17:11.439 giving you the opposite effect over time, right that that 0:17:11.480 --> 0:17:14.120 your money is working for you, whereas you know, when 0:17:14.119 --> 0:17:16.840 you're in debt, uh, the lack of money is working 0:17:16.840 --> 0:17:19.760 against you. Now that we're planning ahead, though, in order 0:17:19.800 --> 0:17:22.280 to attempt to avoid debt in the future, it's also 0:17:22.320 --> 0:17:25.080 important to evaluate what lad you into debt in the 0:17:25.080 --> 0:17:27.240 first place. So we'd say that's another really important step 0:17:27.440 --> 0:17:29.920 in making sure that you don't find yourself ground like 0:17:29.960 --> 0:17:33.080 groundhog Day, you know, in the same position every single year. 0:17:33.400 --> 0:17:36.760 And so, yeah, there are probably some underlying behaviors that 0:17:36.960 --> 0:17:39.560 you're not incredibly aware of that you need to kind 0:17:39.560 --> 0:17:42.520 of come to grips with, Like was it something random 0:17:42.560 --> 0:17:44.879 like a medical bill from an accident that was a 0:17:44.920 --> 0:17:47.439 one time thing, Because that's that's a different thing that 0:17:47.480 --> 0:17:49.560 we're talking about when it comes to the debt load 0:17:49.600 --> 0:17:51.879 that you have in your life. If so, then a 0:17:51.920 --> 0:17:55.439 simple solution is to have more cash in savings. You 0:17:55.480 --> 0:17:57.719 probably know what we're gonna say here, but you need 0:17:57.720 --> 0:18:01.200 an emergency fund, right, and so yeah, for for those 0:18:01.960 --> 0:18:03.920 that margin, those things you can't plan for, you've gotta 0:18:03.920 --> 0:18:07.560