WEBVTT - The Real Reason to Avoid Debt #308 0:00:00.160 --> 0:00:02.560 Welcome to How the Money. I'm Joel and I and 0:00:02.640 --> 0:00:25.799 Matt's and today we're discussing the real reason to avoid debt. Yeah, boy, 0:00:26.680 --> 0:00:29.760 in this episode is all about debt. We talked about 0:00:29.760 --> 0:00:31.960 debt all the time, but we are going to specifically 0:00:32.000 --> 0:00:33.960 talk about why it is that we want to make 0:00:33.960 --> 0:00:36.280 sure that we avoid debt. There are some of the 0:00:36.320 --> 0:00:38.239 obvious reasons, of course, that we're gonna touch on, but 0:00:38.280 --> 0:00:42.680 there are several other what we're gonna call real reasons 0:00:43.040 --> 0:00:44.640 that you should be avoiding debt. And there are things 0:00:44.640 --> 0:00:46.360 that I think we we tend to avoid. It's something 0:00:46.400 --> 0:00:49.559 that we discount, but these are very important things and 0:00:49.680 --> 0:00:51.519 I'm excited to get to those, Buddy, Yeah, yeah, it 0:00:51.520 --> 0:00:53.360 should be good. And you know, it's funny. At the 0:00:53.400 --> 0:00:55.480 dinner table last night we were talking about debt. My 0:00:55.520 --> 0:00:58.000 seven year old is learning a lot about Georgia history. 0:00:58.000 --> 0:01:02.720 She's learning about James Oglethorpe, who who essentially founded the 0:01:03.000 --> 0:01:06.080 colony here and um and part of his mission was 0:01:06.120 --> 0:01:09.880 to eliminate debtors prisons and to give people that were 0:01:09.959 --> 0:01:14.160 in prison due to having too much debt in uh 0:01:14.160 --> 0:01:16.080 in Great Britain a fresh start over here in the 0:01:16.120 --> 0:01:18.759 United States. So I'm glad to report, Yeah, I'm glad 0:01:18.760 --> 0:01:21.280 to I'm glad that's still remaining successful that there are 0:01:21.280 --> 0:01:23.880 no debtors prison here at least. Um, if you owe 0:01:23.920 --> 0:01:25.759 somebody money and you can't pay, you're not gonna get 0:01:25.880 --> 0:01:27.679 tossed into jail for it. But there's certainly a lot 0:01:27.720 --> 0:01:30.640 more reasons to avoid debt than going to jail, even 0:01:30.680 --> 0:01:32.640 though that's not a consequence we were facing in the 0:01:32.760 --> 0:01:34.920 United States theusdays. But Matt, before we get to that, 0:01:35.000 --> 0:01:39.280 let's talk about our printer Toner. Let's give it this 0:01:39.400 --> 0:01:41.840 is our brother printer or update. So several months or 0:01:41.840 --> 0:01:43.360 a few months ago now it is a little over 0:01:43.400 --> 0:01:46.880 three months, we talked about how our our printer gave 0:01:46.959 --> 0:01:49.120 us a little warning messages it stopped printing and it's 0:01:49.120 --> 0:01:51.400 aid replaced owner. Uh, And I was like, wait what 0:01:51.440 --> 0:01:53.360 we we just got this thing, like we really hadn't 0:01:53.400 --> 0:01:55.200 had it that long. We started using it in May. 0:01:55.280 --> 0:01:57.680 I don't know if you remember that. Yeah, And and 0:01:57.720 --> 0:01:59.640 this was in October that we got that message. So 0:01:59.680 --> 0:02:01.480 we talked about how we we looked up how to 0:02:01.560 --> 0:02:04.000 bypass that message, and the reason for that is because 0:02:04.000 --> 0:02:06.520 our printer was working fine. I mean, it was printing 0:02:06.720 --> 0:02:08.440 perfectly fine up until then, and all of a sudden, 0:02:08.440 --> 0:02:11.000 the message popped up, it stopped printing. We bypassed that 0:02:11.080 --> 0:02:14.840 and we continued to print just fine up until a 0:02:14.880 --> 0:02:17.480 few days ago. A few days ago, Uh, you and 0:02:17.520 --> 0:02:19.640 I were printing something off and we noticed there's kind 0:02:19.680 --> 0:02:22.360 of the streaks across the paper. We took out the 0:02:22.360 --> 0:02:25.480 toner cartridge. You gave the old shake. You love shaking 0:02:25.560 --> 0:02:29.160 the toner cartridge like weight, you know. Uh, you popped 0:02:29.160 --> 0:02:30.959 the back in there, and uh yeah, we we've got 0:02:31.160 --> 0:02:33.200 several more prints out of it. But I think we're 0:02:33.240 --> 0:02:34.880 at the point now to where we're going to finally 0:02:34.960 --> 0:02:37.360 have to replace the toner cartridge. But I wanted to 0:02:37.360 --> 0:02:39.960 point that out because a first of all, it's like, okay, 0:02:39.960 --> 0:02:42.160 you gotta know the three months out of it, big whoop. 0:02:42.560 --> 0:02:44.840 But dude, seriously, we didn't start using that thing until 0:02:44.840 --> 0:02:47.079 the very end of April. I look back in our 0:02:47.120 --> 0:02:49.600 correspondence when we were talking about the printer purchasing it 0:02:49.680 --> 0:02:51.720 for the for the office here. So if you do 0:02:51.760 --> 0:02:54.920 the math, that means we got more life out of 0:02:54.919 --> 0:02:57.120 that toner cartridge, which is huge. That's a big deal. 0:02:57.360 --> 0:02:59.919 Granted these things don't cost very much, but it's the 0:03:00.160 --> 0:03:02.320 little winds, uh, these little ways that we're able to, 0:03:02.480 --> 0:03:03.919 you know, just tweak a little bit and make sure 0:03:03.919 --> 0:03:06.200 that we're able to keep more money in our own pockets. Yeah, 0:03:06.200 --> 0:03:08.720 it's it's almost like squeezing that tub but toothpaste all 0:03:08.720 --> 0:03:10.880 the way down to the very bottom bottom and getting 0:03:10.880 --> 0:03:12.840 like three more brushes out of it or eight more 0:03:12.880 --> 0:03:14.400 brushes out of it or whatever. And I know people 0:03:14.440 --> 0:03:16.880 have throwing techniques for doing that, but we kind of 0:03:16.919 --> 0:03:19.280 basically did that with the toner cartridge here, um, and 0:03:19.320 --> 0:03:21.600 I'm proud of us, man, I think that's a good move. 0:03:21.960 --> 0:03:24.280 And yeah, next time your printer is is telling you 0:03:24.360 --> 0:03:27.079 to replace a cartridge and it still looks like it's 0:03:27.120 --> 0:03:29.400 pretty completely fine, don't listen to it. See if you 0:03:29.400 --> 0:03:31.560 can override that control. You know, your printer in all 0:03:31.600 --> 0:03:33.840 likelihood isn't the exact same as ours. But I'm sure 0:03:33.880 --> 0:03:35.800 there's a method for you to be able to do that, 0:03:35.800 --> 0:03:37.880 so you can extend the life of the cartridge or 0:03:37.920 --> 0:03:40.200 the toner that you've got. Don't just toss it out 0:03:40.240 --> 0:03:43.200 because the computer tells you to. Yeah, that's right. Luckily, 0:03:43.240 --> 0:03:46.960 we actually do have another toner cartridge on deck because 0:03:47.280 --> 0:03:49.200 it was on sale when we purchased the printer, and 0:03:49.240 --> 0:03:51.440 you're like, oh, we totally need one of those stocking up. 0:03:52.200 --> 0:03:53.880 That's what we totally did. We have that and you 0:03:53.880 --> 0:03:55.760 were like, what are you doing there? Yeah, you bought 0:03:55.800 --> 0:03:58.480 that as well as this giant don't what do you 0:03:58.520 --> 0:04:00.480 call those? The giant boxes of pay for this got 0:04:00.600 --> 0:04:03.040 like eight reams of of paper? Is that what they're called? 0:04:03.120 --> 0:04:05.320 Like the reems? I mean, we have so much freaking 0:04:05.320 --> 0:04:07.320 paper We're never going to go through all of it. 0:04:07.360 --> 0:04:09.200 But I mean, hey, you got it on sale. And 0:04:09.280 --> 0:04:11.640 I think our listeners are proud of the fact that, 0:04:11.840 --> 0:04:14.000 you know, anytime you put us together, like we take 0:04:14.120 --> 0:04:16.400 being cheap and frugal kind of to the next level. 0:04:17.040 --> 0:04:19.320 We're frugal on our own, but then you combine us 0:04:19.320 --> 0:04:22.480 and we're just capable of so much more. All let's 0:04:22.480 --> 0:04:24.240 go ahead and introduce our beer for this episode. This 0:04:24.279 --> 0:04:27.240 is a beer, another beer by Heist Brewery, and this 0:04:27.279 --> 0:04:30.240 one is called emo J, so it's like o J, 0:04:30.440 --> 0:04:34.000 but it's emo J. This is a double I P 0:04:34.160 --> 0:04:35.919 A and uh yeah, looking forward to sharing this one 0:04:35.960 --> 0:04:38.720 with you, Bud, and we will share our thoughts on 0:04:38.760 --> 0:04:40.520 this beer at the end of the episode sounds good 0:04:40.520 --> 0:04:42.320 man looking forward to it, all right, but let's get 0:04:42.320 --> 0:04:44.680 onto the subject at hand. We're talking about the real 0:04:44.839 --> 0:04:48.160 reason to avoid debt and Matt thinking about this episode, 0:04:48.160 --> 0:04:51.320 it made me think about David Foster Wallace, famous writer, 0:04:51.880 --> 0:04:55.520 uh and and he gave this uh incredibly famous commencement 0:04:55.560 --> 0:04:58.040 speech at Kenyan College back in the day. I think 0:04:58.040 --> 0:05:00.520 it was back in early two thousands. Maybe, dude, I 0:05:00.520 --> 0:05:02.400 feel like all the best commencetion speeches were back in 0:05:02.440 --> 0:05:04.320 like the two thousand's, you know, I'm thinking of like 0:05:04.360 --> 0:05:08.800 Steve Jobs, Bill Gates, Will Ferrell, like all the good ones. 0:05:09.160 --> 0:05:11.960 Getting nostalgic for those, Oprah. Maybe you can go back 0:05:12.000 --> 0:05:13.919 to YouTube and and you know, watch them to your 0:05:13.920 --> 0:05:17.120 heart's contending. But in particular, Yeah, one of the things 0:05:17.120 --> 0:05:19.320 he said in that commencement speech with which has been 0:05:19.400 --> 0:05:23.120 something that has uh stuck with with anybody who's heard 0:05:23.120 --> 0:05:26.040 that speech. He gives this example of fish swimming in water, 0:05:26.440 --> 0:05:29.000 and these two young fish happened to meet older fish 0:05:29.000 --> 0:05:31.240 along the way, and the older fish nods at them 0:05:31.279 --> 0:05:33.719 and says, more than boys, how's the water? And then 0:05:33.760 --> 0:05:35.400 the two young fish keeps swimming for a little bit. 0:05:35.520 --> 0:05:38.760 Eventually one of them looks over to his buddy and says, 0:05:39.240 --> 0:05:42.960 what the hell is water? And uh and basically Wallace 0:05:43.000 --> 0:05:44.719 then goes on to argue that that we tend to 0:05:44.760 --> 0:05:47.800 live our lives according to values and rules that are 0:05:47.800 --> 0:05:51.040 hard to see, much less defined, and and I think 0:05:51.080 --> 0:05:54.200 Matt such in such a similar way. We live in 0:05:54.200 --> 0:05:56.320 a culture that that pushes us to go into debt 0:05:56.760 --> 0:06:00.880 for everything. Um, it's like the message that we're constantly 0:06:00.960 --> 0:06:03.280 bombarded with. It's the water that we kind of swim 0:06:03.279 --> 0:06:06.120 in in our society. Um. And I think you and 0:06:06.160 --> 0:06:07.839 I in this episode, we're going to push back on 0:06:07.960 --> 0:06:11.360 that messaging and give some real reasons to avoid debt. 0:06:11.520 --> 0:06:15.560 The nasty clutches of debt, Uh extend so far into 0:06:15.640 --> 0:06:17.359 so many areas of our lives, and so there's just 0:06:17.440 --> 0:06:20.680 like a ton of great reasons to be avoiding it 0:06:20.720 --> 0:06:23.720 as much as possible. Yeah, debt, it's pervasive. It's it's 0:06:23.720 --> 0:06:26.039 so commonplace, man, that we're hardly even aware of the 0:06:26.080 --> 0:06:28.680 fact that you know that it's not normal. We haven't 0:06:28.720 --> 0:06:31.760 always lived in a society fueled by debt and increased 0:06:31.839 --> 0:06:35.320 consumption that it allows and actually it pushes us towards 0:06:35.400 --> 0:06:40.640 ever increasing amounts and varieties of indebtedness. Right, Americans currently oh, 0:06:40.720 --> 0:06:44.040 more than fourteen trillion dollars in consumer debt overall, the 0:06:44.480 --> 0:06:47.200 average American is in more than six thousand dollars in 0:06:47.240 --> 0:06:49.360 credit card debt. And then you know, we all know 0:06:49.440 --> 0:06:52.679 that the student loan debt is basically at a crisis level, 0:06:52.800 --> 0:06:55.640 right over one point six trillion dollars in total. Uh, 0:06:55.640 --> 0:06:58.280 those numbers can be hard to even just wrap our 0:06:58.360 --> 0:07:00.640 brains around, and and sometimes we kind of just tune 0:07:00.680 --> 0:07:03.720 them out because they are hard to fathom. But you know, 0:07:03.760 --> 0:07:06.760 student loan debt has increased by over one hund percent 0:07:07.040 --> 0:07:10.080 in the past ten years alone. Wow. Yeah, that's crazy, 0:07:10.360 --> 0:07:14.200 certainly awful for so many people graduating college these days. 0:07:14.440 --> 0:07:16.560 Even back when you and I went to college, uh, 0:07:16.720 --> 0:07:19.720 you know, almost twenty years ago, it was a student 0:07:19.800 --> 0:07:21.720 that was at a completely different point. It wasn't talked 0:07:21.720 --> 0:07:23.880 about the way it is today because it wasn't as 0:07:23.920 --> 0:07:26.040 awful and as awful of a spot as it is 0:07:26.040 --> 0:07:28.920 today affecting so many people so negatively. And then on 0:07:29.000 --> 0:07:31.040 top of that, uh, let's talk about other kinds of 0:07:31.040 --> 0:07:33.040 debt like car debt has become far more common than 0:07:33.080 --> 0:07:36.440 ever two. According to Experience, the average new car payment 0:07:36.520 --> 0:07:39.640 is five hundred and fifty four dollars a month, and 0:07:39.680 --> 0:07:42.200 that's a big chunk of a lot of people's monthly 0:07:42.240 --> 0:07:45.360 budget if they're driving a new car. And what if, Matt, 0:07:45.520 --> 0:07:48.840 they're driving not a car but a truck instead. Even moment, 0:07:49.360 --> 0:07:51.480 it gets far, far worse. Right, Friend of the show 0:07:51.560 --> 0:07:53.800 Ben Carlson ran the numbers not too long ago on 0:07:53.880 --> 0:07:56.000 his website, and he found that most folks are going 0:07:56.040 --> 0:07:59.080 to spend anywhere between eight hundred and thirteen hundred dollars 0:07:59.160 --> 0:08:02.120 a month over sixty months, over five years in order 0:08:02.160 --> 0:08:05.640 to buy a truck. So crazy. That's before gasing insurance. 0:08:06.120 --> 0:08:08.600 So you're talking about uh and the toe package in 0:08:08.680 --> 0:08:11.240 the toe package is gonna ramp that cost stuff even more. 0:08:11.360 --> 0:08:13.679 And that's of course gonna be a major drain on 0:08:13.800 --> 0:08:16.239 your outgoing funds every single month for a long period 0:08:16.280 --> 0:08:18.600 of time. That is like, that's what we're talking about 0:08:18.600 --> 0:08:21.520 in this episode. Yeah, and given the mathematical answer to 0:08:21.520 --> 0:08:23.840 why debt like this is bad can also be helpful, right, So, 0:08:23.880 --> 0:08:27.520 assuming just a measly five percent rate of return, that 0:08:27.640 --> 0:08:31.160 same monthly amount invested over thirty years would grow to 0:08:31.480 --> 0:08:35.320 about four and fifty thousand dollars um. But the thing is, 0:08:35.360 --> 0:08:36.880 you know, that's not all there is to it. Debt 0:08:37.080 --> 0:08:40.280 impacts us in so many other ways. And that's exactly 0:08:40.280 --> 0:08:42.880 what we're gonna be discussing today. We're gonna talk about 0:08:42.880 --> 0:08:46.600 the far reaching negative effects of debt on this episode. Yeah, 0:08:46.679 --> 0:08:48.960 and and part of it is just newer kinds of 0:08:49.000 --> 0:08:51.680 debt that are taking people by stage. Uh. We just 0:08:51.720 --> 0:08:54.920 there's just so many more options at our disposal then 0:08:55.000 --> 0:08:57.719 there used to be. Marketers and companies are always coming 0:08:57.800 --> 0:08:59.760 up with new ways for us to get and then 0:09:00.120 --> 0:09:03.040 stay indebted to them. Uh there's like to buy now, 0:09:03.120 --> 0:09:05.839 pay later, which which sounds so nice. Or there's zero 0:09:05.880 --> 0:09:09.719 percent interest for three years you don't pay until, or 0:09:09.760 --> 0:09:12.280 something like that. Uh. Those furniture stores are are trying 0:09:12.280 --> 0:09:14.160 to get you to come in and buy something that 0:09:14.240 --> 0:09:16.320 you don't actually have to pay for today. Um, and 0:09:16.360 --> 0:09:19.080 of course it sounds lovely until the payday comes. Yeah. 0:09:19.080 --> 0:09:21.120 Credit card companies to man, I just renewed, I just 0:09:21.160 --> 0:09:23.400 activated a new credit card, and you know it was 0:09:23.559 --> 0:09:25.280 just got old, and so they send you new ones 0:09:25.280 --> 0:09:27.160 that you have to activate. And while I was activating 0:09:27.200 --> 0:09:29.520 the card, the guy was just like, also, by the way, 0:09:29.600 --> 0:09:32.200 we are offering you a zero percent interest until August 0:09:32.200 --> 0:09:33.640 of this year, would you like us to go ahead 0:09:33.640 --> 0:09:35.880 and activate that for you? Assuming I was gonna say yes, 0:09:35.920 --> 0:09:37.920 And I was just like no, no thanks, And he 0:09:38.000 --> 0:09:40.319 restated it two or three different times, thinking that I 0:09:40.320 --> 0:09:42.199 didn't understand what he was saying, like, no, man, you 0:09:42.240 --> 0:09:44.520 don't get it. Yeah, I like no, I I said, 0:09:44.640 --> 0:09:46.480 I don't want that. And I didn't want it because 0:09:46.600 --> 0:09:48.640 just in case there's I don't know any additional things 0:09:48.679 --> 0:09:50.760 associated with it that I didn't really want to give 0:09:50.880 --> 0:09:53.840 any time to to reading about. I didn't want anything 0:09:53.840 --> 0:09:55.600 else sent to me in the mail. And of course 0:09:55.640 --> 0:09:57.840 I didn't care about the zero percent because I didn't 0:09:57.840 --> 0:10:00.280 I don't carry debt on those cards. But daying, I 0:10:00.280 --> 0:10:01.880 feels debt set on making sure I was gonna take 0:10:01.880 --> 0:10:04.960 advantage of that opportunity. Yeah, I mean, I think the 0:10:05.000 --> 0:10:07.240 main appeal, you know, when when somebody like that is 0:10:07.280 --> 0:10:09.680 trying to trying to pitch that to you, or you know, 0:10:09.720 --> 0:10:12.440 these other businesses that are offering you access to to 0:10:12.480 --> 0:10:15.559 get something today for a very small down payment and 0:10:15.559 --> 0:10:17.720 then pay for it for years to come. The main 0:10:17.760 --> 0:10:19.959 appeal is that it doesn't feel like you're spending as 0:10:20.000 --> 0:10:23.120 much as you actually are, um and that can feel 0:10:23.120 --> 0:10:26.200 good for a minute. And of course, installment loans for 0:10:26.240 --> 0:10:28.600 nearly everything you can want are just so easily accessible 0:10:28.640 --> 0:10:30.920 these days. But but most folks are going into debt 0:10:30.920 --> 0:10:34.240 in order to buy rapidly depreciating assets right that they're 0:10:34.280 --> 0:10:36.880 trying to inflict their lifestyle by living on more than 0:10:36.960 --> 0:10:39.600 they bring home, and so buying something on credit that's 0:10:39.640 --> 0:10:42.360 quickly losing its value becomes an even worse move. I mean, 0:10:42.400 --> 0:10:44.079 there's the idea of just buying something that's going to 0:10:44.160 --> 0:10:47.320 quickly lose its value altogether. But if you're buying it 0:10:47.559 --> 0:10:49.400 to pay for it over an extended period of time 0:10:49.400 --> 0:10:52.520 while paying interest on that item, you compound a decision 0:10:52.600 --> 0:10:55.240 that's already not a great one. Yeah, dude, it's truly 0:10:55.400 --> 0:10:58.319 a countercultural move, you know, to minimize debts or even 0:10:58.360 --> 0:11:00.360 avoiding it all together. But you know, you and I 0:11:00.679 --> 0:11:03.360 we are totally fine doing things differently being looked at 0:11:03.400 --> 0:11:06.240 a little like like weirdos. And the thing is too, man, 0:11:06.360 --> 0:11:08.439 I don't think we're alone. Because this last year we 0:11:08.480 --> 0:11:12.040 actually saw consumer debt levels decreased, you know, unfortunately a 0:11:12.040 --> 0:11:14.240 lot of folks saw their incomes decrease. But what's amazing 0:11:14.320 --> 0:11:17.160 is that they're spending I guess decreased by even more, 0:11:17.240 --> 0:11:19.560 you know, like that in the stimulus checks, and they're 0:11:19.600 --> 0:11:22.520 tossing that money straight at their credit card debt, which 0:11:22.559 --> 0:11:25.320 was which was awesome to see. Yeah, very encouraging to 0:11:25.400 --> 0:11:28.800 hear that. But again, there are so many other benefits 0:11:28.840 --> 0:11:30.959 and other reasons to live life on your own terms 0:11:30.960 --> 0:11:33.400 and to keep your debt to a minimum. Uh. And 0:11:33.400 --> 0:11:36.200 we're going to discuss more of that right after this break. 0:11:45.280 --> 0:11:46.760 All right, man, let's get back to what we're talking 0:11:46.800 --> 0:11:50.520 about debt and the real reasons to avoid debt. Obviously, 0:11:50.880 --> 0:11:53.120 there's the math of it, all right, And you're paying 0:11:53.120 --> 0:11:56.160 interest for something when if instead you had bought it 0:11:56.440 --> 0:11:59.880 with cash, you'd saved up and you were investing money instead, 0:12:00.280 --> 0:12:02.520 you just ran the numbers and uh, it's a big 0:12:02.559 --> 0:12:05.960 dichotomy right in how that money works for you versus 0:12:05.960 --> 0:12:09.439 it putting you in an insecure position. Um. And it's 0:12:09.440 --> 0:12:12.080 important to note though, Uh, we've talked about this before 0:12:12.080 --> 0:12:14.000 on the show, but that not all debt is bad. 0:12:14.280 --> 0:12:16.520 So let's talk about that just for a minute. Debt 0:12:16.640 --> 0:12:20.240 can make more sense when you're using it specifically to 0:12:20.559 --> 0:12:23.440 invest in something, and let's talk about a couple of 0:12:23.480 --> 0:12:27.160 ways that that happens. One is that you can use 0:12:27.280 --> 0:12:30.880 debt to invest in yourself, and this could be taking 0:12:30.880 --> 0:12:32.920 out student loans in order to go to college or 0:12:32.960 --> 0:12:35.360 get an advanced degree. UM. I feel like it's kind 0:12:35.360 --> 0:12:37.240 of weird that we just talked about how awful student 0:12:37.240 --> 0:12:38.800 loans are and how bad of a place certain but 0:12:38.920 --> 0:12:42.720 but really, at times, student loans can be useful for 0:12:42.720 --> 0:12:44.640 for people in order to get to the place they 0:12:44.640 --> 0:12:47.280 want in order to earn more over their entire working career. 0:12:47.640 --> 0:12:50.320 I took on student loans um when I was in college. 0:12:50.559 --> 0:12:52.480 I was fortunate that they were kept to a minimum. 0:12:52.480 --> 0:12:54.840 I think I graduated with like fourteen dollars and student loans, 0:12:54.840 --> 0:12:58.160 which is definitely less than most people these days. Uh. 0:12:58.160 --> 0:13:01.080 It also could be getting a professional certification that will 0:13:01.160 --> 0:13:05.280 enhance your career. Investing in yourself pays dividends for decades 0:13:05.360 --> 0:13:07.679 to come. I would say, don't get too cheap here 0:13:07.720 --> 0:13:11.040 and avoid debt to the point that you'd be harming 0:13:11.080 --> 0:13:15.719 your future prospects. That here inhibiting your your future growth potential. Right. Yeah. Yeah, 0:13:15.760 --> 0:13:18.560 being frugal is going to a community college taking some 0:13:18.640 --> 0:13:21.280 great courses, right and being sure to limit your debtload. 0:13:21.600 --> 0:13:25.800 Being cheap is completely avoiding that deatload altogether and having 0:13:25.880 --> 0:13:29.960 no education and appreciating assets like real estate. Man, that 0:13:30.000 --> 0:13:33.880 can also be worth accumulating debt for, right, especially if 0:13:33.880 --> 0:13:36.760 that asset will be generating cash flow for you. And 0:13:36.760 --> 0:13:38.640 so if you're buying a home to live in and 0:13:38.640 --> 0:13:41.000 and you know a house hack a portion, or maybe 0:13:41.000 --> 0:13:42.920 you're buying a multi family house in order to rent 0:13:42.960 --> 0:13:45.760 out all of the units, well, you know, in those cases, 0:13:45.800 --> 0:13:48.920 taking on debt is often the only way to get 0:13:48.960 --> 0:13:51.880 into small time real estate investing. Yeah, and debt in 0:13:51.880 --> 0:13:55.319 in that scenario makes sense because it's the only way 0:13:55.440 --> 0:13:58.040 you're going to be able to get into that game. Yeah, 0:13:58.080 --> 0:14:00.480 some folks stay to to save up cash and do everything, 0:14:00.600 --> 0:14:02.640 you know, completely det free. But that's that's something that 0:14:02.760 --> 0:14:04.840 we advocate for. Yeah, it's just too high of a 0:14:04.880 --> 0:14:08.760 bar for almost everyone to meet. That I understand why 0:14:08.800 --> 0:14:11.240 somebody would suggest that, but um, yeah, we don't feel 0:14:11.280 --> 0:14:14.480 the same. But even in the course of taking out debt, 0:14:14.559 --> 0:14:17.800 for investment purposes, whether you're investing in yourself or real estate, 0:14:18.080 --> 0:14:21.440 it's important to use it judiciously, right, think about what 0:14:21.560 --> 0:14:23.000 the return is going to be, and if it's worth 0:14:23.000 --> 0:14:25.640 taking on debt in the first place. Can you potentially 0:14:25.680 --> 0:14:28.200 save up longer to avoid that debt or just to 0:14:28.240 --> 0:14:31.160 take on less debt when you're making that move, Can 0:14:31.240 --> 0:14:33.120 you go to a school that's not going to cost 0:14:33.120 --> 0:14:35.120 as much Matt like you mentioned, or or can you 0:14:35.160 --> 0:14:37.280 save up for another year to have more of a 0:14:37.320 --> 0:14:40.280 down payment to put down on that real estate purchase 0:14:40.360 --> 0:14:44.000 that you're planning, which puts you on more solid financial ground. Right, 0:14:44.480 --> 0:14:47.440 even when we're talking about quote unquote good debt, it's 0:14:47.480 --> 0:14:49.880 important still at the same time to tread lightly and 0:14:50.120 --> 0:14:53.760 not take on whatever debt is available to you just because, um, 0:14:53.800 --> 0:14:56.480 just because you can totally man. Yeah, And so that's 0:14:56.560 --> 0:14:59.720 you know, quote unquote good debt. Let's talk about bad debt. 0:15:00.240 --> 0:15:01.640 This is the debt that you should be you know, 0:15:01.720 --> 0:15:05.840 most careful of. And we're talking about here, consumption fueled debts. 0:15:05.960 --> 0:15:08.200 That's what you want to avoid. Uh, you know, anything 0:15:08.240 --> 0:15:10.840 that you are buying with your credit cards and that 0:15:10.880 --> 0:15:12.240 you're not able to pay off at the end of 0:15:12.240 --> 0:15:15.760 the month. That is consumption fueled debt. Credit cards, dude, 0:15:15.760 --> 0:15:18.720 they are amazing. They rock as a method of payment, 0:15:18.840 --> 0:15:20.680 but not so much as a way to buy stuff 0:15:20.720 --> 0:15:23.280 that you can't afford, you know, And if you're only 0:15:23.280 --> 0:15:25.080 able to pay the minimums or you know, are close 0:15:25.120 --> 0:15:27.200 to it, you can end up paying twice as much 0:15:27.240 --> 0:15:30.360 for everything that you're buying once you include interests. So 0:15:30.520 --> 0:15:32.760 you know, if you're struggling to use credit cards in 0:15:32.760 --> 0:15:35.080 a way that doesn't get you into trouble, then it's 0:15:35.080 --> 0:15:37.280 going to be best to avoid them all together. Yeah, 0:15:37.280 --> 0:15:39.160 that is interesting, Matt. That over time, if you're just 0:15:39.160 --> 0:15:41.400 paying the minimums whatever you bought, Let's say you bought 0:15:41.400 --> 0:15:43.600 an Ikea desk or a hundred fifty dollars based on 0:15:43.640 --> 0:15:45.800 the interest rate, um, if you're paying it off over 0:15:45.960 --> 0:15:47.840 years to come, because you're only paying the minimums, you 0:15:47.920 --> 0:15:49.520 might pay three dollars to that desk. And we all 0:15:49.520 --> 0:15:51.720 know three dollars for an Ikea desk is way too much. 0:15:51.760 --> 0:15:54.160 Definitely not worth it. Particle board, you know, it's just 0:15:54.200 --> 0:15:55.880 it's not gonna even last that long. Let's be honest. 0:15:56.040 --> 0:15:57.680 But let's go back to car loans. For a second 0:15:57.680 --> 0:16:00.440 to like, long term car loans are as sempt of 0:16:00.600 --> 0:16:03.040 consumption in our society. You know, before the break, we 0:16:03.120 --> 0:16:06.080 talked about how awful and expensive these loans can get 0:16:06.160 --> 0:16:07.920 on a monthly basis. Well, the worst part is that 0:16:08.000 --> 0:16:10.640 the average car loan has been getting longer and longer 0:16:10.640 --> 0:16:13.000 over the years. So you know, we talked about based 0:16:13.000 --> 0:16:15.000 on a sixty month cycle, what it would look like. 0:16:15.000 --> 0:16:18.200 What's what a truck payment would look like. Well, oftentimes 0:16:18.240 --> 0:16:20.640 people are stretching their debt payments on a new vehicle 0:16:21.000 --> 0:16:24.560 out for seven or eight years, so crazy. Yeah, and 0:16:24.760 --> 0:16:26.400 I feel like that in turn has led to more 0:16:26.480 --> 0:16:29.680 expensive cars and a generation of people buying the car 0:16:29.800 --> 0:16:33.200 based on the payments alone, really just stretching their financial 0:16:33.280 --> 0:16:35.400 limits in order to buy a vehicle that they never 0:16:35.400 --> 0:16:38.000 should have considered in the first place. Yeah, it really 0:16:38.000 --> 0:16:40.240 does feel that folks are only looking at the payment. 0:16:40.280 --> 0:16:42.480 You know, the the cost of cars have gone up 0:16:42.800 --> 0:16:45.320 and in the length of the terms have also extended. 0:16:45.360 --> 0:16:47.120 But you know, you know what, they're able to maintain 0:16:47.160 --> 0:16:49.400 the same payments because they're stretching it out with even 0:16:49.440 --> 0:16:52.160 more interests over more years. Yeah, and then again puts 0:16:52.160 --> 0:16:56.120 you in a precarious financial situation. Um, if something happens 0:16:56.120 --> 0:16:58.120 to your car, or if you decide to trade that 0:16:58.160 --> 0:17:00.280 car in for a new one, you're only compare funding 0:17:00.600 --> 0:17:03.640 again the negative debt situation that that you're in, right, right, 0:17:03.640 --> 0:17:05.679 So let's do let's keep moving on. Let's touch on 0:17:05.800 --> 0:17:08.680 like the traditional reasons to get out of debt. You know, uh, 0:17:08.720 --> 0:17:11.560 you've likely heard that you're not supposed to be in debt. 0:17:11.880 --> 0:17:14.600 Some money experts out there have spoken about the idiocy 0:17:14.640 --> 0:17:18.040 of going into debt in such harsh terms that it 0:17:18.160 --> 0:17:22.560 is like permanently scarred anybody listening. But in the fact 0:17:22.560 --> 0:17:24.880 that you or I just even mentioned credit cards as them, 0:17:24.920 --> 0:17:29.040 like you knowing their ears what happened? Right, But dude, honestly, 0:17:29.080 --> 0:17:31.720 fear of getting yelled at by like a radio talk 0:17:31.760 --> 0:17:34.440 show host, Like, that's not a great reason to avoid debt. 0:17:34.800 --> 0:17:37.320 And of course, we talk about getting out of debt 0:17:37.480 --> 0:17:39.480 all the time here on our show. Uh, And the 0:17:39.480 --> 0:17:41.280 way that we typically talk about it is from the 0:17:41.320 --> 0:17:43.720 angle of the amounts of money that you're losing every 0:17:43.720 --> 0:17:46.280 month to interest. Right, we use basic math and highlight 0:17:46.320 --> 0:17:49.000 the fact that you want interest working for you, uh, 0:17:49.040 --> 0:17:52.399 instead of against you. We've used the illustration before of 0:17:52.400 --> 0:17:55.760 an escalator, right, And when you have interest working against you, 0:17:55.800 --> 0:17:57.520 it's kind of like you're trying to run up the 0:17:57.560 --> 0:17:59.800 wrong escalator, which you can be fine, let's be on. 0:18:00.640 --> 0:18:03.200 It's a challenge, I'll say that, right. Uh, but think 0:18:03.200 --> 0:18:04.600 about how long it takes you to get to that 0:18:04.720 --> 0:18:07.080 next level. That's what it's like when you have interest 0:18:07.119 --> 0:18:09.440 working against you. But when you have interest working for you, 0:18:09.600 --> 0:18:11.760 it's like you're sprinting up the side that is going 0:18:11.880 --> 0:18:14.080 the right way. Uh. And isn't it just so fun 0:18:14.480 --> 0:18:16.800 how quickly you arrived at the next level? You know, 0:18:17.119 --> 0:18:18.719