Speaker 1: Welcome to How the Money. I'm Joel and I and
Speaker 1: Matt's and today we're discussing the real reason to avoid debt. Yeah, boy,
Speaker 1: in this episode is all about debt. We talked about
Speaker 1: debt all the time, but we are going to specifically
Speaker 1: talk about why it is that we want to make
Speaker 1: sure that we avoid debt. There are some of the
Speaker 1: obvious reasons, of course, that we're gonna touch on, but
Speaker 1: there are several other what we're gonna call real reasons
Speaker 1: that you should be avoiding debt. And there are things
Speaker 1: that I think we we tend to avoid. It's something
Speaker 1: that we discount, but these are very important things and
Speaker 1: I'm excited to get to those, Buddy, Yeah, yeah, it
Speaker 1: should be good. And you know, it's funny. At the
Speaker 1: dinner table last night we were talking about debt. My
Speaker 1: seven year old is learning a lot about Georgia history.
Speaker 1: She's learning about James Oglethorpe, who who essentially founded the
Speaker 1: colony here and um and part of his mission was
Speaker 1: to eliminate debtors prisons and to give people that were
Speaker 1: in prison due to having too much debt in uh
Speaker 1: in Great Britain a fresh start over here in the
Speaker 1: United States. So I'm glad to report, Yeah, I'm glad
Speaker 1: to I'm glad that's still remaining successful that there are
Speaker 1: no debtors prison here at least. Um, if you owe
Speaker 1: somebody money and you can't pay, you're not gonna get
Speaker 1: tossed into jail for it. But there's certainly a lot
Speaker 1: more reasons to avoid debt than going to jail, even
Speaker 1: though that's not a consequence we were facing in the
Speaker 1: United States theusdays. But Matt, before we get to that,
Speaker 1: let's talk about our printer Toner. Let's give it this
Speaker 1: is our brother printer or update. So several months or
Speaker 1: a few months ago now it is a little over
Speaker 1: three months, we talked about how our our printer gave
Speaker 1: us a little warning messages it stopped printing and it's
Speaker 1: aid replaced owner. Uh, And I was like, wait what
Speaker 1: we we just got this thing, like we really hadn't
Speaker 1: had it that long. We started using it in May.
Speaker 1: I don't know if you remember that. Yeah, And and
Speaker 1: this was in October that we got that message. So
Speaker 1: we talked about how we we looked up how to
Speaker 1: bypass that message, and the reason for that is because
Speaker 1: our printer was working fine. I mean, it was printing
Speaker 1: perfectly fine up until then, and all of a sudden,
Speaker 1: the message popped up, it stopped printing. We bypassed that
Speaker 1: and we continued to print just fine up until a
Speaker 1: few days ago. A few days ago, Uh, you and
Speaker 1: I were printing something off and we noticed there's kind
Speaker 1: of the streaks across the paper. We took out the
Speaker 1: toner cartridge. You gave the old shake. You love shaking
Speaker 1: the toner cartridge like weight, you know. Uh, you popped
Speaker 1: the back in there, and uh yeah, we we've got
Speaker 1: several more prints out of it. But I think we're
Speaker 1: at the point now to where we're going to finally
Speaker 1: have to replace the toner cartridge. But I wanted to
Speaker 1: point that out because a first of all, it's like, okay,
Speaker 1: you gotta know the three months out of it, big whoop.
Speaker 1: But dude, seriously, we didn't start using that thing until
Speaker 1: the very end of April. I look back in our
Speaker 1: correspondence when we were talking about the printer purchasing it
Speaker 1: for the for the office here. So if you do
Speaker 1: the math, that means we got more life out of
Speaker 1: that toner cartridge, which is huge. That's a big deal.
Speaker 1: Granted these things don't cost very much, but it's the
Speaker 1: little winds, uh, these little ways that we're able to,
Speaker 1: you know, just tweak a little bit and make sure
Speaker 1: that we're able to keep more money in our own pockets. Yeah,
Speaker 1: it's it's almost like squeezing that tub but toothpaste all
Speaker 1: the way down to the very bottom bottom and getting
Speaker 1: like three more brushes out of it or eight more
Speaker 1: brushes out of it or whatever. And I know people
Speaker 1: have throwing techniques for doing that, but we kind of
Speaker 1: basically did that with the toner cartridge here, um, and
Speaker 1: I'm proud of us, man, I think that's a good move.
Speaker 1: And yeah, next time your printer is is telling you
Speaker 1: to replace a cartridge and it still looks like it's
Speaker 1: pretty completely fine, don't listen to it. See if you
Speaker 1: can override that control. You know, your printer in all
Speaker 1: likelihood isn't the exact same as ours. But I'm sure
Speaker 1: there's a method for you to be able to do that,
Speaker 1: so you can extend the life of the cartridge or
Speaker 1: the toner that you've got. Don't just toss it out
Speaker 1: because the computer tells you to. Yeah, that's right. Luckily,
Speaker 1: we actually do have another toner cartridge on deck because
Speaker 1: it was on sale when we purchased the printer, and
Speaker 1: you're like, oh, we totally need one of those stocking up.
Speaker 1: That's what we totally did. We have that and you
Speaker 1: were like, what are you doing there? Yeah, you bought
Speaker 1: that as well as this giant don't what do you
Speaker 1: call those? The giant boxes of pay for this got
Speaker 1: like eight reams of of paper? Is that what they're called?
Speaker 1: Like the reems? I mean, we have so much freaking
Speaker 1: paper We're never going to go through all of it.
Speaker 1: But I mean, hey, you got it on sale. And
Speaker 1: I think our listeners are proud of the fact that,
Speaker 1: you know, anytime you put us together, like we take
Speaker 1: being cheap and frugal kind of to the next level.
Speaker 1: We're frugal on our own, but then you combine us
Speaker 1: and we're just capable of so much more. All let's
Speaker 1: go ahead and introduce our beer for this episode. This
Speaker 1: is a beer, another beer by Heist Brewery, and this
Speaker 1: one is called emo J, so it's like o J,
Speaker 1: but it's emo J. This is a double I P
Speaker 1: A and uh yeah, looking forward to sharing this one
Speaker 1: with you, Bud, and we will share our thoughts on
Speaker 1: this beer at the end of the episode sounds good
Speaker 1: man looking forward to it, all right, but let's get
Speaker 1: onto the subject at hand. We're talking about the real
Speaker 1: reason to avoid debt and Matt thinking about this episode,
Speaker 1: it made me think about David Foster Wallace, famous writer,
Speaker 1: uh and and he gave this uh incredibly famous commencement
Speaker 1: speech at Kenyan College back in the day. I think
Speaker 1: it was back in early two thousands. Maybe, dude, I
Speaker 1: feel like all the best commencetion speeches were back in
Speaker 1: like the two thousand's, you know, I'm thinking of like
Speaker 1: Steve Jobs, Bill Gates, Will Ferrell, like all the good ones.
Speaker 1: Getting nostalgic for those, Oprah. Maybe you can go back
Speaker 1: to YouTube and and you know, watch them to your
Speaker 1: heart's contending. But in particular, Yeah, one of the things
Speaker 1: he said in that commencement speech with which has been
Speaker 1: something that has uh stuck with with anybody who's heard
Speaker 1: that speech. He gives this example of fish swimming in water,
Speaker 1: and these two young fish happened to meet older fish
Speaker 1: along the way, and the older fish nods at them
Speaker 1: and says, more than boys, how's the water? And then
Speaker 1: the two young fish keeps swimming for a little bit.
Speaker 1: Eventually one of them looks over to his buddy and says,
Speaker 1: what the hell is water? And uh and basically Wallace
Speaker 1: then goes on to argue that that we tend to
Speaker 1: live our lives according to values and rules that are
Speaker 1: hard to see, much less defined, and and I think
Speaker 1: Matt such in such a similar way. We live in
Speaker 1: a culture that that pushes us to go into debt
Speaker 1: for everything. Um, it's like the message that we're constantly
Speaker 1: bombarded with. It's the water that we kind of swim
Speaker 1: in in our society. Um. And I think you and
Speaker 1: I in this episode, we're going to push back on
Speaker 1: that messaging and give some real reasons to avoid debt.
Speaker 1: The nasty clutches of debt, Uh extend so far into
Speaker 1: so many areas of our lives, and so there's just
Speaker 1: like a ton of great reasons to be avoiding it
Speaker 1: as much as possible. Yeah, debt, it's pervasive. It's it's
Speaker 1: so commonplace, man, that we're hardly even aware of the
Speaker 1: fact that you know that it's not normal. We haven't
Speaker 1: always lived in a society fueled by debt and increased
Speaker 1: consumption that it allows and actually it pushes us towards
Speaker 1: ever increasing amounts and varieties of indebtedness. Right, Americans currently oh,
Speaker 1: more than fourteen trillion dollars in consumer debt overall, the
Speaker 1: average American is in more than six thousand dollars in
Speaker 1: credit card debt. And then you know, we all know
Speaker 1: that the student loan debt is basically at a crisis level,
Speaker 1: right over one point six trillion dollars in total. Uh,
Speaker 1: those numbers can be hard to even just wrap our
Speaker 1: brains around, and and sometimes we kind of just tune
Speaker 1: them out because they are hard to fathom. But you know,
Speaker 1: student loan debt has increased by over one hund percent
Speaker 1: in the past ten years alone. Wow. Yeah, that's crazy,
Speaker 1: certainly awful for so many people graduating college these days.
Speaker 1: Even back when you and I went to college, uh,
Speaker 1: you know, almost twenty years ago, it was a student
Speaker 1: that was at a completely different point. It wasn't talked
Speaker 1: about the way it is today because it wasn't as
Speaker 1: awful and as awful of a spot as it is
Speaker 1: today affecting so many people so negatively. And then on
Speaker 1: top of that, uh, let's talk about other kinds of
Speaker 1: debt like car debt has become far more common than
Speaker 1: ever two. According to Experience, the average new car payment
Speaker 1: is five hundred and fifty four dollars a month, and
Speaker 1: that's a big chunk of a lot of people's monthly
Speaker 1: budget if they're driving a new car. And what if, Matt,
Speaker 1: they're driving not a car but a truck instead. Even moment,
Speaker 1: it gets far, far worse. Right, Friend of the show
Speaker 1: Ben Carlson ran the numbers not too long ago on
Speaker 1: his website, and he found that most folks are going
Speaker 1: to spend anywhere between eight hundred and thirteen hundred dollars
Speaker 1: a month over sixty months, over five years in order
Speaker 1: to buy a truck. So crazy. That's before gasing insurance.
Speaker 1: So you're talking about uh and the toe package in
Speaker 1: the toe package is gonna ramp that cost stuff even more.
Speaker 1: And that's of course gonna be a major drain on
Speaker 1: your outgoing funds every single month for a long period
Speaker 1: of time. That is like, that's what we're talking about
Speaker 1: in this episode. Yeah, and given the mathematical answer to
Speaker 1: why debt like this is bad can also be helpful, right, So,
Speaker 1: assuming just a measly five percent rate of return, that
Speaker 1: same monthly amount invested over thirty years would grow to
Speaker 1: about four and fifty thousand dollars um. But the thing is,
Speaker 1: you know, that's not all there is to it. Debt
Speaker 1: impacts us in so many other ways. And that's exactly
Speaker 1: what we're gonna be discussing today. We're gonna talk about
Speaker 1: the far reaching negative effects of debt on this episode. Yeah,
Speaker 1: and and part of it is just newer kinds of
Speaker 1: debt that are taking people by stage. Uh. We just
Speaker 1: there's just so many more options at our disposal then
Speaker 1: there used to be. Marketers and companies are always coming
Speaker 1: up with new ways for us to get and then
Speaker 1: stay indebted to them. Uh there's like to buy now,
Speaker 1: pay later, which which sounds so nice. Or there's zero
Speaker 1: percent interest for three years you don't pay until, or
Speaker 1: something like that. Uh. Those furniture stores are are trying
Speaker 1: to get you to come in and buy something that
Speaker 1: you don't actually have to pay for today. Um, and
Speaker 1: of course it sounds lovely until the payday comes. Yeah.
Speaker 1: Credit card companies to man, I just renewed, I just
Speaker 1: activated a new credit card, and you know it was
Speaker 1: just got old, and so they send you new ones
Speaker 1: that you have to activate. And while I was activating
Speaker 1: the card, the guy was just like, also, by the way,
Speaker 1: we are offering you a zero percent interest until August
Speaker 1: of this year, would you like us to go ahead
Speaker 1: and activate that for you? Assuming I was gonna say yes,
Speaker 1: And I was just like no, no thanks, And he
Speaker 1: restated it two or three different times, thinking that I
Speaker 1: didn't understand what he was saying, like, no, man, you
Speaker 1: don't get it. Yeah, I like no, I I said,
Speaker 1: I don't want that. And I didn't want it because
Speaker 1: just in case there's I don't know any additional things
Speaker 1: associated with it that I didn't really want to give
Speaker 1: any time to to reading about. I didn't want anything
Speaker 1: else sent to me in the mail. And of course
Speaker 1: I didn't care about the zero percent because I didn't
Speaker 1: I don't carry debt on those cards. But daying, I
Speaker 1: feels debt set on making sure I was gonna take
Speaker 1: advantage of that opportunity. Yeah, I mean, I think the
Speaker 1: main appeal, you know, when when somebody like that is
Speaker 1: trying to trying to pitch that to you, or you know,
Speaker 1: these other businesses that are offering you access to to
Speaker 1: get something today for a very small down payment and
Speaker 1: then pay for it for years to come. The main
Speaker 1: appeal is that it doesn't feel like you're spending as
Speaker 1: much as you actually are, um and that can feel
Speaker 1: good for a minute. And of course, installment loans for
Speaker 1: nearly everything you can want are just so easily accessible
Speaker 1: these days. But but most folks are going into debt
Speaker 1: in order to buy rapidly depreciating assets right that they're
Speaker 1: trying to inflict their lifestyle by living on more than
Speaker 1: they bring home, and so buying something on credit that's
Speaker 1: quickly losing its value becomes an even worse move. I mean,
Speaker 1: there's the idea of just buying something that's going to
Speaker 1: quickly lose its value altogether. But if you're buying it
Speaker 1: to pay for it over an extended period of time
Speaker 1: while paying interest on that item, you compound a decision
Speaker 1: that's already not a great one. Yeah, dude, it's truly
Speaker 1: a countercultural move, you know, to minimize debts or even
Speaker 1: avoiding it all together. But you know, you and I
Speaker 1: we are totally fine doing things differently being looked at
Speaker 1: a little like like weirdos. And the thing is too, man,
Speaker 1: I don't think we're alone. Because this last year we
Speaker 1: actually saw consumer debt levels decreased, you know, unfortunately a
Speaker 1: lot of folks saw their incomes decrease. But what's amazing
Speaker 1: is that they're spending I guess decreased by even more,
Speaker 1: you know, like that in the stimulus checks, and they're
Speaker 1: tossing that money straight at their credit card debt, which
Speaker 1: was which was awesome to see. Yeah, very encouraging to
Speaker 1: hear that. But again, there are so many other benefits
Speaker 1: and other reasons to live life on your own terms
Speaker 1: and to keep your debt to a minimum. Uh. And
Speaker 1: we're going to discuss more of that right after this break.
Speaker 1: All right, man, let's get back to what we're talking
Speaker 1: about debt and the real reasons to avoid debt. Obviously,
Speaker 1: there's the math of it, all right, And you're paying
Speaker 1: interest for something when if instead you had bought it
Speaker 1: with cash, you'd saved up and you were investing money instead,
Speaker 1: you just ran the numbers and uh, it's a big
Speaker 1: dichotomy right in how that money works for you versus
Speaker 1: it putting you in an insecure position. Um. And it's
Speaker 1: important to note though, Uh, we've talked about this before
Speaker 1: on the show, but that not all debt is bad.
Speaker 1: So let's talk about that just for a minute. Debt
Speaker 1: can make more sense when you're using it specifically to
Speaker 1: invest in something, and let's talk about a couple of
Speaker 1: ways that that happens. One is that you can use
Speaker 1: debt to invest in yourself, and this could be taking
Speaker 1: out student loans in order to go to college or
Speaker 1: get an advanced degree. UM. I feel like it's kind
Speaker 1: of weird that we just talked about how awful student
Speaker 1: loans are and how bad of a place certain but
Speaker 1: but really, at times, student loans can be useful for
Speaker 1: for people in order to get to the place they
Speaker 1: want in order to earn more over their entire working career.
Speaker 1: I took on student loans um when I was in college.
Speaker 1: I was fortunate that they were kept to a minimum.
Speaker 1: I think I graduated with like fourteen dollars and student loans,
Speaker 1: which is definitely less than most people these days. Uh.
Speaker 1: It also could be getting a professional certification that will
Speaker 1: enhance your career. Investing in yourself pays dividends for decades
Speaker 1: to come. I would say, don't get too cheap here
Speaker 1: and avoid debt to the point that you'd be harming
Speaker 1: your future prospects. That here inhibiting your your future growth potential. Right. Yeah. Yeah,
Speaker 1: being frugal is going to a community college taking some
Speaker 1: great courses, right and being sure to limit your debtload.
Speaker 1: Being cheap is completely avoiding that deatload altogether and having
Speaker 1: no education and appreciating assets like real estate. Man, that
Speaker 1: can also be worth accumulating debt for, right, especially if
Speaker 1: that asset will be generating cash flow for you. And
Speaker 1: so if you're buying a home to live in and
Speaker 1: and you know a house hack a portion, or maybe
Speaker 1: you're buying a multi family house in order to rent
Speaker 1: out all of the units, well, you know, in those cases,
Speaker 1: taking on debt is often the only way to get
Speaker 1: into small time real estate investing. Yeah, and debt in
Speaker 1: in that scenario makes sense because it's the only way
Speaker 1: you're going to be able to get into that game. Yeah,
Speaker 1: some folks stay to to save up cash and do everything,
Speaker 1: you know, completely det free. But that's that's something that
Speaker 1: we advocate for. Yeah, it's just too high of a
Speaker 1: bar for almost everyone to meet. That I understand why
Speaker 1: somebody would suggest that, but um, yeah, we don't feel
Speaker 1: the same. But even in the course of taking out debt,
Speaker 1: for investment purposes, whether you're investing in yourself or real estate,
Speaker 1: it's important to use it judiciously, right, think about what
Speaker 1: the return is going to be, and if it's worth
Speaker 1: taking on debt in the first place. Can you potentially
Speaker 1: save up longer to avoid that debt or just to
Speaker 1: take on less debt when you're making that move, Can
Speaker 1: you go to a school that's not going to cost
Speaker 1: as much Matt like you mentioned, or or can you
Speaker 1: save up for another year to have more of a
Speaker 1: down payment to put down on that real estate purchase
Speaker 1: that you're planning, which puts you on more solid financial ground. Right,
Speaker 1: even when we're talking about quote unquote good debt, it's
Speaker 1: important still at the same time to tread lightly and
Speaker 1: not take on whatever debt is available to you just because, um,
Speaker 1: just because you can totally man. Yeah, And so that's
Speaker 1: you know, quote unquote good debt. Let's talk about bad debt.
Speaker 1: This is the debt that you should be you know,
Speaker 1: most careful of. And we're talking about here, consumption fueled debts.
Speaker 1: That's what you want to avoid. Uh, you know, anything
Speaker 1: that you are buying with your credit cards and that
Speaker 1: you're not able to pay off at the end of
Speaker 1: the month. That is consumption fueled debt. Credit cards, dude,
Speaker 1: they are amazing. They rock as a method of payment,
Speaker 1: but not so much as a way to buy stuff
Speaker 1: that you can't afford, you know, And if you're only
Speaker 1: able to pay the minimums or you know, are close
Speaker 1: to it, you can end up paying twice as much
Speaker 1: for everything that you're buying once you include interests. So
Speaker 1: you know, if you're struggling to use credit cards in
Speaker 1: a way that doesn't get you into trouble, then it's
Speaker 1: going to be best to avoid them all together. Yeah,
Speaker 1: that is interesting, Matt. That over time, if you're just
Speaker 1: paying the minimums whatever you bought, Let's say you bought
Speaker 1: an Ikea desk or a hundred fifty dollars based on
Speaker 1: the interest rate, um, if you're paying it off over
Speaker 1: years to come, because you're only paying the minimums, you
Speaker 1: might pay three dollars to that desk. And we all
Speaker 1: know three dollars for an Ikea desk is way too much.
Speaker 1: Definitely not worth it. Particle board, you know, it's just
Speaker 1: it's not gonna even last that long. Let's be honest.
Speaker 1: But let's go back to car loans. For a second
Speaker 1: to like, long term car loans are as sempt of
Speaker 1: consumption in our society. You know, before the break, we
Speaker 1: talked about how awful and expensive these loans can get
Speaker 1: on a monthly basis. Well, the worst part is that
Speaker 1: the average car loan has been getting longer and longer
Speaker 1: over the years. So you know, we talked about based
Speaker 1: on a sixty month cycle, what it would look like.
Speaker 1: What's what a truck payment would look like. Well, oftentimes
Speaker 1: people are stretching their debt payments on a new vehicle
Speaker 1: out for seven or eight years, so crazy. Yeah, and
Speaker 1: I feel like that in turn has led to more
Speaker 1: expensive cars and a generation of people buying the car
Speaker 1: based on the payments alone, really just stretching their financial
Speaker 1: limits in order to buy a vehicle that they never
Speaker 1: should have considered in the first place. Yeah, it really
Speaker 1: does feel that folks are only looking at the payment.
Speaker 1: You know, the the cost of cars have gone up
Speaker 1: and in the length of the terms have also extended.
Speaker 1: But you know, you know what, they're able to maintain
Speaker 1: the same payments because they're stretching it out with even
Speaker 1: more interests over more years. Yeah, and then again puts
Speaker 1: you in a precarious financial situation. Um, if something happens
Speaker 1: to your car, or if you decide to trade that
Speaker 1: car in for a new one, you're only compare funding
Speaker 1: again the negative debt situation that that you're in, right, right,
Speaker 1: So let's do let's keep moving on. Let's touch on
Speaker 1: like the traditional reasons to get out of debt. You know, uh,
Speaker 1: you've likely heard that you're not supposed to be in debt.
Speaker 1: Some money experts out there have spoken about the idiocy
Speaker 1: of going into debt in such harsh terms that it
Speaker 1: is like permanently scarred anybody listening. But in the fact
Speaker 1: that you or I just even mentioned credit cards as them,
Speaker 1: like you knowing their ears what happened? Right, But dude, honestly,
Speaker 1: fear of getting yelled at by like a radio talk
Speaker 1: show host, Like, that's not a great reason to avoid debt.
Speaker 1: And of course, we talk about getting out of debt
Speaker 1: all the time here on our show. Uh, And the
Speaker 1: way that we typically talk about it is from the
Speaker 1: angle of the amounts of money that you're losing every
Speaker 1: month to interest. Right, we use basic math and highlight
Speaker 1: the fact that you want interest working for you, uh,
Speaker 1: instead of against you. We've used the illustration before of
Speaker 1: an escalator, right, And when you have interest working against you,
Speaker 1: it's kind of like you're trying to run up the
Speaker 1: wrong escalator, which you can be fine, let's be on.
Speaker 1: It's a challenge, I'll say that, right. Uh, but think
Speaker 1: about how long it takes you to get to that
Speaker 1: next level. That's what it's like when you have interest
Speaker 1: working against you. But when you have interest working for you,
Speaker 1: it's like you're sprinting up the side that is going
Speaker 1: the right way. Uh. And isn't it just so fun
Speaker 1: how quickly you arrived at the next level? You know,
Speaker 1: it makes me I mean, it's been forever since I've
Speaker 1: kind of been out in public on an escalator. But
Speaker 1: are you the kind of person who like stands on
Speaker 1: the escalator and like rides it up or are you
Speaker 1: a walker? I'm a walker? Are you? I'm not like
Speaker 1: a fast walker? You know, there's certain people that you're like,
Speaker 1: don't get in their way two steps at a time,
Speaker 1: but you can hand at the airport, Yeah, yeah, they're
Speaker 1: I don't know if they're late for the plane or
Speaker 1: what's going on, but they're they're intent on moving sidewalks
Speaker 1: on their mission. Yeah, honestly, would you say that this
Speaker 1: is what it feels like when you have an e
Speaker 1: bike because you're still peddling, but you're just going away faster.
Speaker 1: That's how it is on a moving sidewalk where an escalator,
Speaker 1: Like you're still walking, but the things moving with you,
Speaker 1: and it's like you're a bionic human being, you know,
Speaker 1: like you're able to cover so much ground. Now, it's
Speaker 1: pretty it's pretty similar. Yeah, but yeah, I'm I'm a
Speaker 1: walker as well. I don't write it unless I'm with
Speaker 1: a kid, because they get freaked out by the escalator,
Speaker 1: at least mine. Dude. Yeah, well, that's a good illustration though, because, um,
Speaker 1: while it might be fun, especially you know when we
Speaker 1: were younger to try to run up the escalator that's
Speaker 1: going the wrong way, I got energy for that anymore. Yeah, exactly.
Speaker 1: But that's exactly what it's like when when you've incurred
Speaker 1: too much debt, you are finding yourself going going against
Speaker 1: the flow, You're battling up hill and there's there's so
Speaker 1: many reasons for that. So yeah, we've talked about like
Speaker 1: some of the traditional reasons to get out of debt
Speaker 1: um and and those are I think compelling, but man,
Speaker 1: I think that there are a ton of other reasons
Speaker 1: actually that people should really consider getting out of debt,
Speaker 1: the real reason, the real reasons it affects them in
Speaker 1: so many other ways. We're gonna get to all of
Speaker 1: those reasons, and I think they're going to be super
Speaker 1: compelling for our listeners. So, like, let's say you have
Speaker 1: maybe thought of your debt as not really being that bad,
Speaker 1: or maybe you're like, you know, I can play with
Speaker 1: it at least a little bit, and I can get
Speaker 1: into a little bit of debt, or I cannot pay
Speaker 1: my credit cards for a few months, and you know what,
Speaker 1: because of these other effects that debt has on your life,
Speaker 1: we would ask you to reconsider that. And so we'll
Speaker 1: get into those effects and how bad they can actually
Speaker 1: be right after this break. All right, we are back
Speaker 1: from the break, and now it is time for the
Speaker 1: real reasons to get out of debt. Um First, the man,
Speaker 1: saving money on interest is huge, right, and like we
Speaker 1: don't want to diminish that, But there's more to the
Speaker 1: story of what having less debt actually means in your life,
Speaker 1: you know, Like we found either thro your personal experience
Speaker 1: and you know what we hear every day from how
Speaker 1: the money listeners that the mental and the emotional, the
Speaker 1: psychological side of not owing anyone anything, or at least
Speaker 1: being in complete control of your your debt obligations is
Speaker 1: incredibly freeing, right you know. So, aside from the math,
Speaker 1: aside from the numbers, here are the real reasons that
Speaker 1: we want folks to avoid debt. And the first one
Speaker 1: we want to touch on is the stress involved with
Speaker 1: having debt in your life. You know, many of us
Speaker 1: have personally felt the effects of of money stress in
Speaker 1: our own lives, but you know, it can also have
Speaker 1: the big impact on those around us as well. Debt
Speaker 1: can negatively impact our relationships either with you know, our
Speaker 1: our partner as well as our children. According to a
Speaker 1: study by the Decision Lab, individuals have experienced a negative
Speaker 1: impact on relationships because of debt in their lives. Yeah. Man,
Speaker 1: I mean I grew up in a house where my
Speaker 1: parents loved each other deeply. They still love each other deeply,
Speaker 1: but I remember money was an issue. Money caused a
Speaker 1: lot of stress. Money caused some fights. Um, that was
Speaker 1: hard on the kids, That was hard on us growing up,
Speaker 1: That was hard on my parents. Um. And so yeah,
Speaker 1: I've seen firsthand the role that debt can take in
Speaker 1: a marriage and how it can cause the levels of
Speaker 1: stress to rise severely, and um, I know some of
Speaker 1: our listeners have experienced that to firsthand. So yeah, I'm
Speaker 1: actually surprised it's as low as because it just feels
Speaker 1: like it's one of those things where so many people
Speaker 1: are in debt in our country and that alone it
Speaker 1: does impact relationships in a negative way. Yeah, I guess
Speaker 1: the other seventy five they're just kind of taking that
Speaker 1: debt and just kind of stuffing in away, like packing
Speaker 1: it away, so which I'm sure will end up being uh,
Speaker 1: not a wise thing to do, right, Yeah, it'll come
Speaker 1: up at some point. And another reason to avoid debt
Speaker 1: another one of the real reasons is that it makes
Speaker 1: us dumber. Being in debt and struggling to pay our
Speaker 1: bills has has been shown to lower our the i
Speaker 1: Q by thirteen points. I don't have thirteen points of
Speaker 1: spiritual so that's why that's that's why I'm not in debt. Yeah, yeah,
Speaker 1: we don't want you going on the Forest Gump levels,
Speaker 1: you know, But like when you when you look at
Speaker 1: the facts, when you look at the stats, researchers have
Speaker 1: pointed to the fact that this scarcity mindset is actually
Speaker 1: different than stress. Right, it seems similar, but there's a
Speaker 1: difference here. It can make you less reasonable, less rational,
Speaker 1: less generous, and more subject to bad ideas and bad
Speaker 1: impulses and matt with how unreasonable and um and irrational
Speaker 1: you are. I would have thought you had been a
Speaker 1: lot of debt, you'd think, But I make it up
Speaker 1: in generosity, there must be. You can overcompensate. O good,
Speaker 1: that's good, That's how it works. But basically, like living
Speaker 1: in access, debt can damage your psyche in a meaningful way.
Speaker 1: And it can actually make you feel like you're walking
Speaker 1: through life with like handcuffs around your brain. Your debt
Speaker 1: can make you feel dumber than you actually are. Yeah,
Speaker 1: and dude, not actually just our minds, right, it impacts
Speaker 1: our bodies as well. And Associated Press survey man They
Speaker 1: found that individuals with high levels of debt related stress
Speaker 1: are more than three times as likely to suffer from
Speaker 1: ulcers and other digestive problems compared to people with lower
Speaker 1: debt stress. They're also twice as likely to have heart problems,
Speaker 1: including arrhythmias and heart attacks. Dude A and the Federal
Speaker 1: Reserve Bank of Atlanta. They have research that shows that
Speaker 1: debt leads to higher mortality rates as well. So so
Speaker 1: not only does this have an impact on our minds, right,
Speaker 1: and the weight and the just the thoughts that we
Speaker 1: carry around with us, but it actually literally affects our
Speaker 1: bodies and our physical health as well. Yeah. Man, that's crazy.
Speaker 1: I feel like that is. If there's not the number
Speaker 1: one reason to get out of debt might not be
Speaker 1: the math reason. It might be that you're saving your
Speaker 1: mind in your body from like all this difficulty. I
Speaker 1: don't want else. I don't want to die either, you know, Like, uh,
Speaker 1: and yeah, the fact that debt has like these far
Speaker 1: reaching impacts on how we deal with life, how we
Speaker 1: go through life, how we feel every single day. Um,
Speaker 1: that's that's almost more important than the interest that you're
Speaker 1: paying to the bank or the company that you're from. Yeah.
Speaker 1: So let's get to another a few other reasons why
Speaker 1: it makes so much sense to get rid of debt.
Speaker 1: Why it makes sense to avoid debt. Debt actually quells
Speaker 1: your creativity. If every problem that we have can be
Speaker 1: solved by buying something or just taking on more debt,
Speaker 1: then every problem becomes a nail and debt's the hammer.
Speaker 1: Um And then if you disallow debt having that role
Speaker 1: in your life, it'll force you to think outside the
Speaker 1: box or to learn a new skill. I think sometimes,
Speaker 1: Matt Uh, the ability, the easy nature of being able
Speaker 1: to take on more debt in our society does mean
Speaker 1: that we are not forced to come up with creative solutions.
Speaker 1: You know, we try to talk about creative solutions on
Speaker 1: this show all the time. Whether it's going to a
Speaker 1: tool bank to borrow something as opposed to just buying
Speaker 1: that tool and putting it on a credit card that
Speaker 1: you can't pay for. There's all sorts of ways that
Speaker 1: you're forced to be creative in your financial life when
Speaker 1: you basically disallowed debt as an option. Yeah, there's a
Speaker 1: level of resourcefulness and creativity that we can achieve by
Speaker 1: not becoming dependent on consumption in our ability to to
Speaker 1: rack up consumer debt. Right. Also, man, getting out of debt,
Speaker 1: let'slet's let's talk about freedom. Right, Getting out of debt
Speaker 1: can unleashed. I think something inside of us that like
Speaker 1: we didn't even know is there now when we don't
Speaker 1: owe anyone anything, there's a sense of freedom that will
Speaker 1: often like spur us on to pursue either like a
Speaker 1: new venture or maybe you know, start our own business.
Speaker 1: Not everybody is necessarily wired that way, but at least
Speaker 1: one thing is true, and that is that you don't
Speaker 1: have debt holding you back any longer, regardless of what
Speaker 1: it is that you do want to pursue in your life. Yeah.
Speaker 1: I think sometimes the debt can feel like like a
Speaker 1: lead weight around our our feet or like, h you know,
Speaker 1: when you're going to get your X rays done yet
Speaker 1: at the at the dental office, you gotta put that
Speaker 1: lead jacket on over here. It's been about ten years. Okay, yes,
Speaker 1: don't ever go to the dentist. I forget Um, you
Speaker 1: should do that. Don't send me email? Hey, no, actually
Speaker 1: do send it to Matt's specific email addressing. You don't
Speaker 1: mind not to me. I don't want to read those,
Speaker 1: but please criticize him for your t is still look
Speaker 1: good though, buddy. Um. But but yeah, when you go
Speaker 1: into a dental office, Matt and they finally do take
Speaker 1: your X rays, you'll put on this like led jacket
Speaker 1: that goes over the top of you. I do remember that.
Speaker 1: It's it's like walking around with that all the time.
Speaker 1: It can feel like that being in debt. A little
Speaker 1: bit of it is comforting, you know, like they got
Speaker 1: that they've got those weighted blankets. Yeah, my brother in
Speaker 1: law has one of those that you asked for Christmas,
Speaker 1: like several years ago. It's really nice when you're lying down.
Speaker 1: It's different when you're trying to like walk exactly. Dude.
Speaker 1: It makes me think of those folks that have like
Speaker 1: the weighted vests and they're out for a run or
Speaker 1: like hiking up a mountain. It's like, what are you doing?
Speaker 1: You were insane? But I guess they're training. Training. That's
Speaker 1: what you want to do, but it's not what you
Speaker 1: want to do when you're actually running a race. And
Speaker 1: and that's basically what we're talking about now, right, Like
Speaker 1: this is the race of life. This is you know,
Speaker 1: this is our personal finances that we're talking about here. Yeah. Yeah,
Speaker 1: and debt limits our future options because we're weighed down
Speaker 1: by the pain minuts of prior decisions. It's like those
Speaker 1: debts are just like more and more of those X
Speaker 1: ray jackets as a way to jackets like coming down
Speaker 1: top of this and like every year that we continue
Speaker 1: to progress in this way, it's more and more weight
Speaker 1: that's added on to how we move through life. This
Speaker 1: leads to less freedom and less autonomy in our own lives.
Speaker 1: When we're inundated with debt, it's harder to move to
Speaker 1: a new place, and work opportunities can be limited. You
Speaker 1: may even be forced to stay in a job that
Speaker 1: you hate because your debt levels are out of control,
Speaker 1: Like you have to have that job, you have to
Speaker 1: have that paycheck every two weeks or things are gonna
Speaker 1: completely fall apart um. And so I think that is
Speaker 1: another one of the biggest reasons to get out of
Speaker 1: debt is that you do have more control over the
Speaker 1: decisions you you want to make. You have more options
Speaker 1: in greater freedom when you have less debt. Yeah, that's right, man.
Speaker 1: And one other real reason that we want folks to
Speaker 1: get out of debts is because when debt is always
Speaker 1: an option in our lives, it doesn't foster our ability
Speaker 1: to say no right. Self control is an important part
Speaker 1: of personal finance, and when debt is an easy option
Speaker 1: that we're used to taking, we tend to weaken those
Speaker 1: super important self control muscles. As those muscles atrophy, we
Speaker 1: find ourselves open to borrowing more and more, we find
Speaker 1: ourselves over consuming. Uh you know, we're we're saddling our
Speaker 1: future selves with those past decisions. Like you you just
Speaker 1: you were just talking about that. Um, Like we make
Speaker 1: these decisions in the past and we find ourselves paying
Speaker 1: for them like a little bit in the you know,
Speaker 1: in the future. Like it's sometimes it's not that far
Speaker 1: into the future. Right. We just got out the holidays,
Speaker 1: and it made me think of eggnog Christmas cookies. Uh,
Speaker 1: in the moment you eat those or you know, you know,
Speaker 1: you're like, oh, yeah, eggnog, that sounds really good, but
Speaker 1: what is it? Like two SIPs and you're just like, oh,
Speaker 1: egg bad decision, you know. I feel like that's how
Speaker 1: it is when it comes to debt. In the moment,
Speaker 1: it's so easy and it's so tempting and it sounds
Speaker 1: so great, but it doesn't take very long before we
Speaker 1: are regretting those decisions. Yeah, it's funny too. I remember
Speaker 1: in my twenties I would hear people, you know, ten
Speaker 1: fifteen years ahead of me, and they would talk about
Speaker 1: how man I had two beers las signed I don't
Speaker 1: feel very good today, and I was like, I don't
Speaker 1: understand that because when I have two beers, I feel
Speaker 1: great the next day. But the older you get, you
Speaker 1: begin to feel the impact of those decisions more. And yeah,
Speaker 1: so I think true with our finances, right, Like I
Speaker 1: think when you're younger, you have more energy, maybe have
Speaker 1: more wiggle room when it comes to your expenses and
Speaker 1: what you can earn a little more resilience, Yeah, a
Speaker 1: little more resilience exactly, you can kind of make up
Speaker 1: for some of those poor decisions. But as we get older,
Speaker 1: we either don't want to expand that additional energy to
Speaker 1: make up for poor spending decisions, or a lot of
Speaker 1: folks don't have that as an option, right, Yeah, yeah
Speaker 1: for sure. So so really, when it comes down to it,
Speaker 1: there are a lot of reasons to avoid debt. Debt
Speaker 1: is actually much more than just a mathematical problem that
Speaker 1: needs solving. I think we have to think about it
Speaker 1: in those terms. We have to think about it as
Speaker 1: a problem that affects our whole being, that affects our relationship,
Speaker 1: that affects the way we go through our days. And
Speaker 1: if you're mired in debt, you're likely missing out on
Speaker 1: the freedom and the creative opportunities that kicking debt to
Speaker 1: the curb can bring you. So, yeah, we hope that
Speaker 1: this episode has been some some motivation to spur you
Speaker 1: on towards getting after that debt payoff plan this year. Man.
Speaker 1: Actually actually feel like I'm not sure if it was
Speaker 1: just motivation. I feel like we're almost like the ghost
Speaker 1: of Christmas future something coming to Ebene's are Scrooge like,
Speaker 1: this is what debt can do to you? And um,
Speaker 1: I really do. I mean I only thirty days behind
Speaker 1: the curve by Christmas, right, But it feels like it's
Speaker 1: this important message to relay that that that's not something
Speaker 1: to mess around with or play with, that that it
Speaker 1: can have profound effects on your on your life, um
Speaker 1: and on you know, your marriage, on your friendships, it
Speaker 1: really in your health. Yeah, it's far reaching the impacts
Speaker 1: of of taking on too much debtload in your life. Yeah. So, Joel,
Speaker 1: you know, during this episode, we have basically made a
Speaker 1: case why we want you out of debt, but we
Speaker 1: haven't necessarily told you how to do that. But that's
Speaker 1: because we've we've already done that. We've done that in
Speaker 1: recent episodes. We recommend folks to check out a recent
Speaker 1: episode to seven. That's where we talked about the debt
Speaker 1: snowball versus the debt avalanche, which are two different methods
Speaker 1: of paying down debt. And if you find yourself in
Speaker 1: massive amounts of debt and you, I mean you feel
Speaker 1: completely overwhelmed, we would recommend for you to check out
Speaker 1: a nonprofit debt counselor via the NFCC or check out
Speaker 1: Money Management International. That's the company that Thomas Needs she
Speaker 1: works for. We actually interviewed him back in the episode
Speaker 1: one and he was able to provide some some helpful
Speaker 1: advice and thoughts when it comes to the overwhelming amounts
Speaker 1: of debt that we can find ourselves in. So so, yeah,
Speaker 1: this is this episode is all about why you should
Speaker 1: be avoiding it. Check out those two episodes if you're
Speaker 1: looking for some next steps, and we'll make sure to
Speaker 1: link to those episodes within the show notes for this episode,
Speaker 1: no doubt. All right, man, let's take it back to
Speaker 1: the beer. Uh. Today on the show, we drank a
Speaker 1: double I p a called emo j like emoji but
Speaker 1: orange juice. I don't know, it's kind of kind of
Speaker 1: weird connotation going on here from I thought about it
Speaker 1: from the emoji standpoint because it's j It's not g
Speaker 1: that's true, but it still feels like emoji. Um even
Speaker 1: think it's emo j okay, but the hop kind of
Speaker 1: looks like in Emoji. I saw the emo and it maybe.
Speaker 1: I mean, we're kind of referencing our college days. They're
Speaker 1: thinking like dashboard copet totally take me, Yeah, Dashboard confessional days.
Speaker 1: But yeah, man, this this beer. So these guys are
Speaker 1: out of Charlotte High Spury and if you are anywhere
Speaker 1: near Charlotte, you have got to check out this brewery.
Speaker 1: This was a fantastic beer, Like you said, a double
Speaker 1: I p A hazy New England style I P A
Speaker 1: and like the name suggests, it's like a glass of
Speaker 1: orange juice, super orange, super you know, fruity citrusy and
Speaker 1: had that smooth nature going on, but with a lot
Speaker 1: of hot flavor. Really enjoyed this one. I'm actually really
Speaker 1: excited now that we've got two more High Spury beers
Speaker 1: to enjoy next week. But yeah, what were your thoughts
Speaker 1: on this specific beer? You know, I thought this one
Speaker 1: was interesting, almost had like a tiny bit of like
Speaker 1: corientor flavor going on too. I don't know where that
Speaker 1: was coming from but um. But yeah, so this was
Speaker 1: it was an interesting beer. I mean I always love
Speaker 1: a beer like this. I mean, do we ever get
Speaker 1: tired of the O J style? Um? I vas I
Speaker 1: don't think so. There's another good one from heist Um
Speaker 1: for sure. So all right, Matt, I think that's gonna
Speaker 1: do it for this episode. For our listeners who want
Speaker 1: the show notes for this episode, or you can check
Speaker 1: those out along with a lot of other resources up
Speaker 1: on our website at how to money dot com. Yeah, buddy,
Speaker 1: that's gonna be it. So until next time, Best friends Out,
Speaker 1: Best Friends Out. M M.