Creating a Debt Payoff Plan #159
This episode is brought to you by office. Depot Office depot has supplies and services for businesses of any size and they have a wide range of services they can provide twenty four seven tech support. Print your marketing materials and even help you design your office with variety of furniture solutions. They also have all of the supplies. Your office needs from ink and in paper to cleaning and break room supplies. I'll tell you one thing that I never want to have to mess with again is figuring out what kind of toner cartridges. My particular brand of printer her needs office depot. has you covered whether you're running a home office like I do or work in a larger corporate setting they have you covered office. Depot is ready to help your business with knowledgeable eligible associates in over thirteen hundred stores or online at Office Depot Dot Com. Welcome to had a money. I'm Joel and I and Matt and today we are discussing creating a debt. Payoff Plan Dan. Joe May we're talking about debt. Everybody's got a lot of people. Do not not everybody. I A lot of people do though and the amount of debt that we as a country have us as individuals else there is just so much debt going around. We know that we want to get rid of debt. But we don't necessarily know what steps to take in order to get rid of that debt but a plan can help a whole yes exactly. So that's what we're GonNa talk about this episode. We're GonNa talk through what it actually takes debate on that but before we get to that Matt Real quick. I wanted to talk about guilt and money and I think especially this time. I'm a year maybe a lot of us are feeling guilt over how we spent and some of that might be warranted right. We might have in November December in the lead up to do the holidays. We might have bought too many other people. We probably could have done just a little bit better in how we thought through a spending plan right. We're GONNA talk about a debt plan but we could have thought through our spending a little little bit better but I think ultimately the show in how we talk about money. We don't want people to feel guilty all the time about how they're spending and I think certain folks in the personal finance base. That's kind of their main. Tactic is to make people feel guilty about how they do spend versus motivating folks to help them spend less into save more and so I think as we get it further and further into this New Year. I just want to let people know that this podcast that what we do. It's all about helping people prioritize the right things and it's not about Shaming them for the for the moves that they've made for the things that they haven't done as well as they could have done. Yeah totally do. I completely agree. I think you said shame which totally may think of something else as well. So I'M GONNA go there and one second but I think a guilt trip based on your spending. That's a bad idea if you have identified what it is that you want to spend your money on like if you have a plan if you know where your priorities lie. Then it's okay to spend money and yes you do not need to feel guilty. I do think though that a little bit of guilt can be a good thing being like to me and prod a little bit Exactly like to me guilt is basically knowing that you could have done something better but you didn't basically calls attention to the fact that you're responsible for your actions and when it comes to our money I think there's definitely a need for more responsibility when it comes to personal finances but interesting you mentioned shame and I think that's so clutch because there's a big the difference between guilt and shame true. Have you read any of Brunei Brown. She's like a she's a she's a she has ted talks and she's written books. She's an author. I'm familiar with her. Just because my wife talks about our lives haven't read any of her books she she's I think she's really great but she talks about shame. And one of the ways she characterizes it shame is well for our with guilt. Guilt is is knowing that you did something bad so you feel bad for that action right whereas shame is like you identify as being a bad person and so we want to focus on the behavior. Savior you're not a terrible person because you you blow your budget one month or maybe didn't quite put enough towards retirement that year right but when you identify with being ecorse aver late. If that's who you feel you are less when it can become negative verses a positive effect it can almost be become a self fulfilling cycle. Oh Yeah if we identify ourselves as a certain way we're going to act. Accordingly yes and so we have to kind of break that psychological barrier of feeling shame with how we've handled our money and I. Yeah I completely agree. I think a little bit of guilt can help drive us in the proper direction but if we completely identify as being someone who doesn't know how to handle money well well then. Hopefully this show can help people this this year to learn some of those tools and then to kind of help break those chains of potential. Shame that's associated with how they handle money totally on. That's what we want to be here. We don't want to be here. You're to use a stick to beat you over the head because you haven't done things properly. WELL WE WANNA do is encourage you motivate you give you the tools to create a more positive outlook on your your relationship with money and then specifically give you the proper approaches to how you can handle your money well so that you can make changes moving forward so that whatever cycle. Maybe you've become accustomed awesome to living in relationship to your money. Just isn't the case anymore. Yeah totally I think if you feel a tiny little bit of guilt when you learn something new or maybe you hear something that you haven't done. I think that can be okay if you respond. Positively to that right. It's just like constructive criticism or feedback that you receive on a project or something that you're working on. If you take that feedback in you you then modify your behavior and that allows you to grow. It's a positive thing it's about gaining knowledge and learning from our mistakes and yeah like you said. Hopefully that's what folks can do from listening to this podcast. I think I used to feel guilt over buying really nice beer and now I I just don't anymore. It's because it's something that I've prioritized highly and in something that I've made an important line in my budget and so I think that's another way that people can approach it and so matt speaking of Beer. The beer that we're having on the show today is barrel aged Yeti imperial stout Out By great divide brewing. And the kind folks at a great divide in Denver Colorado they sent speer our way. I'm really excited to have the barely edged version of their yeti imperial stout on the show with you today my friend. Yeah this is our last one by them. We've had them for the past few episodes now so man. Great divide yellow fantastic. You make some awesome beers like you always have and yeah we'll get to our tasting notes on this one at the end of the episode. All Right Matt. Let's get into the topic at hand. Were today on the show talking about creating a debt payoff plan and let me me ask this question to our listeners. At the very beginning of the episode and it might be a little awkward. How's your debt situation and does that question itself because a lump to rise in your throat well? Personal levels of indebtedness are a major issue in our country but lots of folks feel like they're stuck in quicksand up to their midsections and they don't know how to navigate themselves out of the problem. They put themselves in. We need a plan to help us get out of debt and to get our feet set in the right direction this year and so when we see headlines Matt like we've seen lately eighty six percent of millennials overspent on Christmas gifts. Well we know what that means that means that a lot of those folks have put that extra spending on plastic credit cards and this time of year. They're getting that statement in the mail and and they're a little shocked. They didn't know that they spent that much. And they didn't realize that they wouldn't be able to afford the bill and now they need some help to tackle that not to mention the other depth they might be carrying right now so it doesn't even even further out of hand. Well Joe you're talking about debt and I feel like I'm super. Add today you mentioned quicksand. And I started thinking about quicksand. Why is why is why? When when we were kids everything was quicksand like Mario Brothers to head quicksand like even as kids playing? It's like watching the quicksand like quicksand. Was this real thing real problem that we had to watch out for when I think about quicksand I think about the princess. Subscribe to the strongly correlated. Yes like late. Eighty s early ninety s quicksand was everywhere. Now everything's lava like the kids have moved onto lava like it used to be quick quicksand. Now Slava all right well a little old school reference we're gonNA stick with quicksand floors lava all right. Let's get back to a little bit though. Here's the thing here's a fact for your outstanding eating student. Loan Debt Joel. It has reached an all time high last year. We hit one point. Four one trillion dollars sixty one percent of Americans have credit card debt and the average outstanding bounds is just over six thousand dollars while consumer debt as a whole stands at fourteen trillion. It's not covered my ears there because it just got. It's a horrendous way again terrible and not only is it just an incredible amount of money but it's also how we're going about getting this debt car loans. They've got longer longer with some folks not just taking out six months payment but seventy two and eighty four month long loans. And then they end up trading their cars in while they're upside down or taking Out Debt for smaller and smaller purchases as well everyone out there like all. The differ retailers offer a payment plan now and it spans from services at home. Like you're h Vac to urban outfitters. If you just want to pick up some shoes we are funding our life styles through the accumulation of more and more as well as riskier debt. It's just become easier to take on for anything now like you go to the dentist and you can take out a payment plan on that new artificial tooth or whatever surger you had to undergo. Yeah I gotta think that that that is the absolute least fund loan to pay on right. Yeah paying on my root canal. Still I'll give you a three percent loan on that Root Canal Matt but that's just the kind of day and age. We live in easy access to debt for almost anything. Yeah your local small business. Electricity probably has the ability to offer you alone on that new fact. I mean it's just kind of almost gotten preposterous. And and then we end up seeking ourselves in a whole even if it's zero percent even if it's zero percent for multiple years we'll take out the debt and then ultimately we just don't have the money to meet those obligations so we at the change our relationship to debt and how we consider taking it on but also to. I think it's important to mentioned before we get into the specifics of creating a debt. Payoff plan that. We don't think all old debt is terrible like we're not anti every single kind of debt out there. Not all debt is bad debt. Some debt can be used effectively and their reasons worth accruing debt for for example going to get an education or starting a business or buying a home and we kind of discussed that in more detail in episode one forty one. But just because you're considering one of those good debts doesn't doesn't give you a free pass to blindly. Take out loans in order to go to a fancy school or to pursue your dream of owning your own restaurant or to buy more house than you can afford. You still have to take value into the equation when you're thinking about what that you take on. Yes we need to take value into account because not having massive amounts of debt is important and so so I mean. I know you might be asking like well. Why is getting out of debt? Why is that actually important? The biggest reason that we're GONNA share that getting out of debt is so stinking. Paramount is because debt is expensive in the moment. It doesn't feel expensive to pay with a credit card or maybe to take out a loan if anything it feels like free money right and it's really easy to gain in access to that credit which is why a recent episode Matt. We talked about cash debit or credit. Like how we spend using credit cards is in particular. The biggest downside is the ease of use use and natural causes us to use them more frequently even though a smooth transaction even though we like credit cards it can be a way for us to spend money that we don't have exactly. Yeah but here's the thing at the core of it though like using your credit cards as a tool. That's not the problem because it really is just a tool. It's when we don't pay off the balances and the interest begins to accrue. It's when we use these tools incorrectly and so when we're paying interest on a balance we're paying way too much money for the things that we likely shouldn't have purchased in the first place so for example a a fifteen thousand dollar car that could easily end up costing you closer to twenty thousand dollars because you took out a car loan and you're paying interest so effectively you're paying way more than you should for vehicle. It's hard to reach your financial goals. When you're constantly overpaying for things Matt having a lot of debt puts you on just not solid pudding put you in this kind of quicksand thing right? I mean looking uh-huh quicksand. It puts you in this scenario where you're not as financially flexible as you could be. If you didn't have that debt in your life the more debt you have the weaker position that you're in and the less freedom you have and we're constantly overpaying for pretty much everything in our lives it's also it's hard to get ahead and to reach any of those financial goals that we have the going is slow when we have interest payments working against us. It feels like all the cards are stacked against us and that can be really discouraging and instead we want to be on the receiving side of interest and that means like having a high interest savings account that means our investments essentially making money for us while we sleep instead of interest working against our money. It's working for us. It's allowing us to quickly achieve our goals. That's when it allows us to build wealth we're using interest in the positive frame reason returns in the positive sense as opposed to everything thing we by having a much larger price tag based on the fact that we have interest payments going along side of it. Yeah that's the difference between paying interest versus receiving interest. Right and I got a quick Gila station for you imagine. Have you ever been to a store where there was like a second floor. Or maybe you've been to a mall a movie theater. Perhaps right where there's an escalator. Sure so imagine you're on level one and level two. That's we're trying to get to level to jolt that's where your financial dreams and hopes are in front of you. You've got to glitters you've got one. That's coming down. At least it's not like a skyscraper that climate but a one side. You've got an escalator. Coming down on the other side you've got an escalator going up and when you have debts that that is when interest is working against you right that is you trying to get to the second level by going up the side of the escalator. That's coming down when you're doing that you're working crazy hard. It takes takes way longer and you know what at some point. You might even actually give up because it's too hard. I probably could have done it really easily when I was twenty five minutes but even still like yes. I agree right like I've I've done before as a kid but it's still a lot harder versus when you have interest working for you when you were receiving interest. It's like you're getting on the correct side and you're you know you're riding that interest up if if you want you can only rely on that interest and you can disdain there but if you continue to work a little bit imagine how quickly you're GonNa get to that next level walking while you're on an escalator is like the best feelings doing I'm I mean. How quickly do you get from like one level to the next just by doing that? It's amazing and so the next time you're thinking about taking a car loan or some other consumer debts and credit card debt picture that illustration illustration because it truly is what it's like. It's like like you said being in quicksand and you're trying to trying to hop out of that quicksand. It's so difficult to do that. So difficult to make any progress when we're bogged down with that interest working against us no doubt and we have to get to these specifics for folks that are writing that down escalator and they WANNA get off they want to get out of debt and they WanNa make their money work doc for them well. Let's get to the specifics of how to create a debt. Payoff plan right after this break as a small business owner. You already have a lot on your plate. The last thing you want to worry about is your bank. That's why access bank provides hassle-free banking business owners like like you deserve. Access is so confident in their basic business checking account that they won't give you a hundred bucks to try it out just use Promo Code H.. T. M. as in how the money and visit access bank dot com slash. HTM Today to get started. Yes Joel you know. I actually have an account with access had it for years for my photography business. My favorite thing is that I never need to go to an actual physical branch man. It's completely online. And I'm able to make mobile deposits from my Home Office so easy. Plus their basic business checking account gives you up to two hundred free transactions per month unlimited domestic. ATM Fee Reimbursements. No maintenance fees and no minimum balance required quired access makes it easy to access your money and their mobile banking tools. Save you time go to a bank dot com slash. HTM to learn more and get get your one hundred dollars access bank small business banking simplified. Joe We're back and we're talking about creating a debt payoff plan. Oh and by the way did you like my my little illustration about the escalator that was a great illustration another one. I was thinking of feels like okay. What about like headwinds and Wins at your back. I was GONNA say an example of You you know when you're up at the T box and you're playing off and getting ready to throw your driver but you've got that strong headwind. It's GonNa be a lot harder than if you had to win at your back true that's true. Yeah that's another great illustration and one that makes makes sense to me. But I feel like most folks have probably been on escalators more often than they've actually thrown a discussion probably true for most folks sadly because disc golf is a great sport. All right. We're GonNa talk right now though about what steps that you need to take when it comes to creating a debt payoff plan. These are the steps that we're going to actually help you to make real substantial progress this year. The first thing that you need to do is to make a list of all your debts. The first step in any plan of action is to get organized and so making sure that you're aware of all. The debts is a really important for step on under path to crushing debt. We've used this illustration before but if you're planning a road trip you're going to make the dots along the way where you want to stop you kind of want to know the layout about how long is it going to take me to get here and there especially the kids like where we're going to stop the P. or we're gonNA stop to eat. There's all these questions that come with the big major trip. That's right and so I think the same thing like paying paying off your debt. Is this big trip and you want to plan the points along the way you want to know. Exactly what's in store so that nothing terribly by surprise. Yeah you don't just throw everybody in the car born to start driving. That's a terrible plan. Look your finger stick it up in the air. Decide which way the we're GONNA go east. We'll see where we end up. Yeah yeah that's not a good way to go so yeah making a list of all your debts helps you at least get the lay of the land and then you need to pick your approach. We've talked before about the debt snowball approach versus the debt avalanche approach in which toine people should consider. We went to a lot of detail on how you decipher. which plan is better for you in episode eighty-six but do you need or just want some more emotional awards along the way or do you just WanNa pay these debts off as quickly as humanly possible while paying as little interest as you can either way you'll focus hard on completely obliterating one on debt while paying the minimums on the others in both approaches? Maintaining a high level of focus. Is the key to success. Could once you know that lay the Land Matt. It's really important to kind of choose which approach you're GonNa take and then sticking to it if you've come up with a strategy do you think is going to work for you looking at the strategy that might potentially work for you and then picking one and sticking to it is going to be crucial to your probability of success. Yeah Joe in one thing I'll say is that I think for folks especially who are listening to this podcast. They're they're thinking noman that avalanche the way to go look at the numbers. Do the math but the older I get. I realized that so much of our money is not just knowing knowing. The correct information isn't just seeing the numbers right because we don't operate as robots. We don't always make the rational decision. Our emotions play such a huge role when it comes to how we handle our money and because of that I think the debt snowball needs to be considered by way more people than it actually is because you are receiving that feedback more quickly. You're able to quickly pay off a debt and quickly move onto the next one and that feels good and and when it feels good. That's something that you'll continue to do exactly the best plan that we can create is the plan that we can stick to yes. It's not just the best plane in theory. It's the one that we can actually accomplish in real life and just quick example Matt for me for a lot of years. I wasn't it fully funding my Roth. IRA and I was just investing a lot more in my 401k. Because it was a lot easier for me to click the button that up. Two percentage point coming out of my paycheck barely felt it it than it was to actually increase automatic draft amount from my bank account into vanguard to fund my Roth and so it literally took more work for you up your Roth. Ira Save versus your 401k. And and really the work is the same. It's the mental hurdle I couldn't overcome and so I think that's a huge thing that we do need to consider wh- what's the easiest mental mental hurdle title for us to overcome and again the plan that we can stick with is the one that we need to commit to so true man all right so now you've made a list of all your debts. Got An organized. You've picked your approach. You you know you thought thought about which strategy going to work for you. The next step is we want you to look at your time line a little bit. This is when you are going to do some math. And you calculate how much monthly income you can put towards your debts and actually figure out how long it'll take you to be rid of it. All it is important to know how long this will take in order to manage manage your own expectations. If you don't take the step you might think you'll knock out your debt. Let's just say by the end of the year and then maybe October rolls around. And you realize that you're not even close us if you are not realistically approaching your debt. Payoff plan it can be easy to lose hope and basically just burn and fill out. It reminds me of our conversation with J D Roth not not too long ago. And he specifically mentioned he gave a very vivid picture of his Co. when he was in the bath yes okay he was like this is how I came up with my debt. Payoff Yeah Plan. I was in the shower. I had this epiphany. He's like Iran out. I didn't dry off. I had a towel around me and I sat at the table for hours and I came up with this plan. What a madman I know? Yeah I I totally picture I can tell you picture. It was maybe two vivid and he said he realized it was going to take thirty six months for pay off his debt after kind of calculating it out and and this time line helped him track progress knowing that timeline helped him have a realistic expectation in mind for how long it was going to take him to be rid of all his debt. And that's really important for us to take in. This process is to map out the length of time that it's going to take us to go from a bunch of debt to no debt yet because that can help us stick with it if we know that it's going to take three years. Well there's light at the tunnel if we have no idea and we just aimlessly attempting every month to put more money towards her debt. We don't have a timeframe in mind. Well then it could just be a little more difficult to actually stick with it. It's like the difference between running a marathon versus a four hundred meter sprint. Like you need. You didn't know the distance because if you start running a marathon a like year running a four hundred meter sprint. Well guess what you'RE GONNA burn out and you're going to completely give up and so having that goal in mind and and knowing that timeframe is so important and there are tools that can help by the way we'll link to those in the show notes whether you're taking the snowball approach or the avalanche approach willing to a tool. Well that can help you as you plug in your information it can give you that timeframe so that you're not just doing pendant paper you can actually plug into a spreadsheet and then you've got brad she you can share it with your your significant other or your partner and it's the perfect opportunity to be on the same page to be looking at the same numbers and it can Kinda Kinda help you out your path. Well you know I'm all about the spreadsheets. You our our buddy. Yeah and so we wanted to take is essentially to create a debt slaying identity. Basically what I want you to do if you're in debt and you're looking to get out of it is is I want you to say to yourself this year. I am all about paying off that debt. It's like your alter ego. Yes you are. What this means is not saving for a vacation not saving for for that new car? That maybe you wanted instead it means throwing all of your weight behind one singular goal. This is a crazy powerful approach and anyone who's paid off large amounts of debt quickly will attest to the power of this type of focus. And again you WANNA make sure to prioritize top debt while you pay minimums on everything else regardless regardless of what approach you take whether you take the snowball or whether you take the dead avalanche. Aren't we've reference Batman in this podcast before Matt Basically Batman is this perfect representation of creating an alter ego. It's not that he has these special powers. I mean. Sure he's got a cooler vehicle and like a grappling hook or whatever but he can't actually fly or do anything super duper special vessel. He he's just creating an alter ego that helps them to fight crime. It's almost like when he puts on the suit he becomes a different person. And I think that's kind of how we need to approach paying off debt in our lives in twenty twenty is to create this alter ego to put ourselves in this new state of mind in this new superhero suit. If you will and I think that that just kind of mental shift in telling Our selves that we are someone who can pay off a large amount of that who can make a change in her life. Who can shift our habits? That's a that's a really powerful thing for us as we step up to the plate in order to vanquish the debt that has become the bane of our existence. Such a nerd bad guy reference. I love it. The next step is basically to move onto that number two once you've done all of that and you've crushed that first debt move onto the next on the list again regardless of which method and that you're taking after that first debt is eliminated. You're going to have more money to blast that next debt on your on your list. You might notice that it's a little bit easier to attack that next debt that you have on your list right like interest. It's still working against you because you still have debt. But it's not working against you quite as hard going back to the escalator analogy like like. You're still going up. The escalator but maybe escalator has slowed down a little bit and not only has slowed down. Joel you've also gotten stronger because now you have more money to throw into attack that next debt with yeah. It's incredible how this process the payoff plan. Becomes easier after that first. Debt is removed whether you're going avalanche or snowball having one fewer debt just increases your ability to attack that number two. It's a beautiful thing you've got more money and it's just easier to focus as well because guess what if you've got six different debts that you know that you WANNA pay down Tom. It might take a lot of mental capacity to focus on that one day. When you know you've got these other ones that you're just paying minimum on right but guess what you're not got one of those and now you've only you've only got five so you're paying against one of them and there's just four of them that are kind of sitting there and then the number just get smaller smaller? There are so many reasons why focusing on a singular debt is so so the way to go. Yeah and and Matt I think another important thing to say on we move onto another debt. Is it important to give ourselves a little reward along the way. Hey with each major milestone that we achieve we discussed this. Recently in the game of -CATION episode put smaller awards. Along the way can give us renewed hope to pause and realize that. Ah We're doing it. Well that's huge and then we can start to rinse and repeat and continue along in the process but once we appropriately celebrated knocking out a credit credit card debt or a car loan. Then start setting your sights on the next debt to crush maybe student loans next on the hitlist. But however you're doing it make sure that you do give yourself a little reward along the way it can really increase that positively and continue to fuel you in that Superhero esque pursuit of paying your debt off. Yeah man we're emotional creatures and to have that positive feedback is so important and I think that's one way to that. We can reward ourselves night even by spending money but there's ways that we can reinforce that behavior even just sharing with others if you've told some friends about your financial or like your plan to pay down some debt and tell them hey guess what you know those three credit cards that I'm planning planning to to knock out or one of them is completely done with like. That's huge and hopefully if you've talked about your money with these folks these are friends who can then celebrate with you and encourage you and they become like your cheerleaders urging you and if you don't have these these type of friends we would encourage you to talk about money with your friends and family but also check out. FACEBOOK book within our group folks are often posting their wins and in how they're succeeding with their money and we would suggest jumping in their encouraging. Those folks and then when the time comes for you to knock out some of Berbick debts or meet some your financial goals you can share that in there as well. If it'll be folks in there who will be pumped for you and guess what the costs you nothing Yemen sharing those winds with other people people. The you don't even have to treat yourself to something super fancy but honestly even just that encouragement from people around you. That are rooting for you. That's enough of a reward. oftentimes for us to keep going. That can really be a big motivation for us and Matt now if we are kind of in this debt slaying superhero mindset a question POPs up. Well how can we accelerate great. This debt payoff plan process. Well there are ways that we can potentially earn extra money and then other ways that we can cut back in our spending and those things can accelerate the amount that we're able to put towards that debt to kind of make that thirty six month plan. Let's say a thirty three month plan and that's kind of fun to yeah. That's right. We need to address both sides of the equation Right. We talked about this last week on. Our episode on frugality frugality doesn't always cut it. But we need to address our big expenses as well as some of the big ways that we can increase our income. Yeah totally so on. The note of cutting back back will choose a specific few areas that are meaningful for you to be able to still enjoy life. Don't stop drinking craft beer altogether necessarily but make it. Maybe maybe a special treat and that act of cutting back well it can help you to achieve this quote unquote no bad debt status far more quickly and if you can continue it after this debt payoff appleans complete. It's going to help you build savings and have money to invest for your future at the same time. Yeah Joe so that's addressing expenses right like if we're able to cut back in on money's episode. We talked about earning more money through entrepreneurship through starting your own. Small Business We had an interview there with Vincent. So we'd recommend checking out if you're looking to address that side of the equation but either way you can accelerate the process by focusing on your expenses by focusing on your income. You WanNa make sure that you're doing both of those reading continued to talk about creating a debt payoff the plan and after the break we're GonNa talk specifically about some different practical advice and some different tactical steps that we take in order to pay down our debt faster. We're GONNA we get to those right after the break. This episode is brought to you by office depot office office depot has supplies and services for businesses of any size. I guess speak to this personally as a college student when I was a business. The size of one Office Depot provides twenty four seven tech. Support it lets you print your own marketing materials and it can help you design your office with a bunch of furniture solutions. The also have exactly the supplies. Your office needs from Your Home Office to a commercial setup. They've got the ink. They've got the paper they've got the cleaning. They've got the break room supplies. So when I was setting up my Home Office I went straight to office depot because because I had a ton of stuff I needed to get and I wanted to get it all in one place but don't take my word for it see for yourself. Office depot is ready to help your business with knowledgeable associates in over one thousand three hundred stores or online at Office Depot Dot Com are. Now we're back to the break and we do have some practical and tactical things. We have to share intergalactic in this part of the show about how people should approach their debt. Payoff payoff plan. We kind of went through all the steps. But there are a lot of other things to consider some tips some hacks as the kids like to say on how to approach this plan that can help accelerate salaried beyond just the ideas of earning more money. There are specific things that we can take advantage of in order to help us lower the interest rate or. Find the help that we need in in order to achieve our debt quickly so matt I think one of the first things that needs to be noted is we really need to think long and hard about the things that led us to to the state of of debt in the first place. One of the things we need to come to grips with is to think about our triggers. Like what caused us to spend money that we didn't have in the first place knowing. Those triggers is the first step to changing our habits. And that's a really crucial process in this whole plan. So if your credit cards or your emphasis and you just don't know how to stop. Stop using them. We'll cut them up or freeze them. Put them in a freezer bag inside of your freezer literally. Put them in a ziplock bag filled with water and stick in your freezer. Put that junk on ice exactly. Look look if that's your trigger. You have to figure out how to make that stop. Because even as you're paying off your debt you might be accruing more along the way and you're just kind of it's zero sum game if we don't know the things that are actually triggering us to spend in the ways that are hurting our finances and real quick you mentioned like putting your credit cards and a block of ice. Let's clarify because that is literally one way A to freeze or credit cards but I think sometimes some confusion when people say. I'm a free to my credit. Well that's not freezing your credit. That's literally freezing your credit cards to curb your behavior. Then you can actually freeze your credit by going to trains Union Experien- and Equifax and that actually puts a lock on your credit. That way nobody including yourself is able to take out new credit new credit cards unless they go on their first in unfreeze it typically temporarily. Yeah and that's something that we recommend is for folks to freeze their credit. So that other people can't take out credit lines in your name but freezing. Your credit card definitely stepped if that credit card and has become this problem in your life. This thorn in your side Yemen and another thing to note on since we're speaking about your credit score and freezing your credit. Well your credit score is awesome to monitor along the way while you're involved in this debt payoff plan and we really liked the website. Credit Karma there are other sites out there as well that can help you stay in touch with your credit score. Discover has one as well credit score card DOT COM if you check out sign that for one of those services and you're staying familiar with what's going on with your credit score well as you're paying your debt off it's going to have a direct positive benefit on your credit score and that that is motivating as you see that credit score balloon over time as it continues to rise from. Let's say it's at six eighty now over six months you might be at seven thirty and and that is going to help you achieve these other goals of being able to potentially take out a mortgage right if you want to buy a house and you really low credit score because you have an overwhelming amount of debt. Well well attacking that increase your score and not only means you have less weighing you down but also means the possibility of taking out positive future dead right something something like a house or just greatly increased. Yeah seeing that credit score boost like that. That's an amazing secondary benefit of paying down that debt. Let's also talk about where not to go if you're in debt over your head if you're not able to handle the payments Currently on your debt do not sign up with a debt consolidation company. They charge large big money and they rarely live up to their claims. Often you'll end up paying them a lot of money and they do little or nothing to help you in your debt. Payoff off pursuit. In that case often better off on your own because at least then you could pass more of that money towards your debt and not going to the service. That's not actually providing any value. Yeah if you hear an advertiser or someone specifically tells you if you just pay these people a couple thousand dollars three four thousand dollars. They can help you consolidate your debt. So they can work with your creditors they'll help you achieve your own debt payoff plan well. Upfront payment For someone to do that for you when most of the things. These debt payoff companies. Say they're gonNA do they either. Don't do or you can do yourself. That's not a smart way to go. Yeah that money upfront. Huge Red Flag so overwhelming is going to be your local affiliate Elliot of the NFC C.. Which is the National Foundation for credit? Counseling they are a nonprofit and they are full of helpful financial services like debt and budget counseling. Alling they have the power to help and can council you along your journey. They do the things that many of the debt payoff firm. Say that they'll do but then they don't in actuality yep that's true the FCC is the only place. I would tell someone who is up to their eyeballs in debt and doesn't know where to go and can't afford their payments. There's the only place I would send them to and so yeah. NFC DOT ORG find your local affiliate meet with someone there. That is your best path forward if you're in debt that you can't manage in Matt. Let's talk quickly quickly about APPS. There are popping up all over the place that claim to help people with their debt. Payoff and there are some apps that I think could potentially be helpful. They come with a caveat. There's one called coins Q.. Oh I N S and. There's one called tally that offer to help. But they charge you to do so as well. So you know you and and I we prefer the diy no fee approach but these APPs can be helpful for the right person who has a tough time actually sticking to something and if these APPs are going to help basically make the process smoother for you and that fee is basically going to prevent you from defaulting on your debt. Well then what we would say is us one of those APPs that use it to its full. Oh potential because yeah paying a fee is better than not doing it all together. If that's GonNa get you motivated. If that's going to be the thing that helps you to actually stick to pay off plan. Well then that's great and those are two considering the I mean. Those are some of the different APPS. And there's also some websites that can help as well I'm thinking of unburied me and endebted. And by the way those are unburied dot me and Annette dot it I guess towns in Italy the it eleven different websites are using the different. I don't know what you call it. Like the DOT COM dot net scripts or whatever. But they're working them into the name of their site. which is I love it? That's why we're changing the URL for our website from dot com to money dot. Listen to our podcast now. How to money dot beer? Actually legit thing there is here. I was gonNA say that really. It's real oh my gosh either way. Let's talk about these websites. UNBEAR- me and unvetted. They are both similar and they can offer some help. Creating debt plan if you prefer a more digital interface definitely a shot with a different graphs and the digital feedback. It might help you to visualize your progress. In and for that reason it can be really valuable will but at the same time we don't want tech to keep you from actually getting a plan together at all pen and paper can be really valuable especially when it comes to just tracking senior progress. You know you'd like it is pretty easy to create a little the graph and a little chart and you kind of filled in as you work your way up that notebook paper just new yourself and participate in any of these different little tips and strategies that you know will resonate the most with you. Yeah Man I agree I think part of it comes down to knowing yourself and knowing the ways that your best going to be able to stick to a debt payoff plan and and in some people. They're gonNA computer all day and using a website like unburied dot Meuron debt dot. It is going to be a massive help in the way they approach paying. Hang off that debt and for other people you know what a pen and some paper. That's going to be motivation enough. They don't need some sort of cutesy graph interface to help them tackle their debt. So so just Kinda know your tendencies and that can help you. I feel like there are a few more hacks that we really should mention to help. Folks actually save more on interest payments and potentially pay off their debt even more quickly once they have a clear plan in place zero percent credit card. Transfer can be a game changer for folks especially if they're on the fast track to eradicating debt. And this this is particularly useful Matt for folks that have a good credit score if they can qualify for a credit card with zero percent period of. Let's say fifteen or eighteen months and they're ready to pay author debt quickly. Well this can mean no interest payments on the majority of that debt for a long period of time and so we just wrote an article about the best balanced transfer credit cards. It's up on our site at money. Dot Com for folks specifically are interested in a card like that and we outline the ones that are going to charge the fewest fees. So that when you make that transfer your payments are working working to pay off your debt. They're not going towards the bottom line of the credit card companies and if you currently have a credit card and that's one of the major debts you're looking to pay off all another hack. The you can do is to call credit card company and ask for help whether it's a credit card company or another creditor they're often procedures in place for people to call and ask for help up Matt we've talked about asking for a discount before this is asking for potentially a lower interest rate on your debt. Which is going to help you to be able to pay it off more quickly and met one example I wanted to mention is is? Let's say you've got a student loan through a company like S-o-f-i and one of the coolest benefits that they offer is help. If you lose your job not only will obey provide actual assistance for you looking for employment. Both they'll do is they'll say you know what you don't have to pay her loan for the next six months while you're looking for employment and so stuff like that Jack. It's out there depending on who you're doing business with and what sort of programs are in place. It's just worth it to ask. Whoever you have debt with to see if there's some sort of way they can can help you along in the process? You know on the note of lower interest rates as well and we would recommend for folks to consider checking out maybe some alternatives to credit cards Kurds. If you have a home you can consider he lock home equity line of credits. You're going to be able to get a lower rate. Obviously there's going to be some risks associated with your taking taking your debt and you're tying it to your property that debt is now a secure debt because your home as collateral so if you are really really sure that you're going to knock out that debt then that might be something that you can do but this does not need to be something you take lightly yet because it's one thing to not be able to pay off credit card. There's certain certain rights that you have. You're not going to lose your house or get thrown in prison for not being able to pay your credit card debt but if you tie it to your home if you refinance or take out he lock that car that homes on the line in dude. Yeah exactly and and so. If you're going to have trouble paying it off with a he lock even if it lowers your interest rate. Don't do it because you don't want to lose your home over credit card debt. You were unable to the pay. That's another option to consider. Is You could always borrow money. Maybe from a family member this is something that it just depends on who you are and what your relationships relationships are with your. You know those in your family because it can get awkward in many cases. It isn't worth the possible. Harm that come to that relationship but if your credit score core is really low that might be your only option for lowering any super high interest rates that you might have so definitely consider that Matt if someone submitted an htm question for the shows where we answer listener questions and said Hey. Should I loan money to a family or friend. I think we would probably say. Don't do it or if you do know that there's a good chance that you don't get paid that altogether together. Just kind of go into that loans choice in knowing that's the case but if someone has a really low credit score if they don't have that many options this might be the best option for them If they have a good relationship with a friend or family member that is willing to help them out in this way. So yeah those are some ways that you can approach lowering potentially your overall rate of interest to move that you can make to help accelerate that debt payoff plan and yet crushed that debt once and for all yeah. It's important to keep in mind as well that these are things that you wanNA consider after after you have a solid plan in place these are these are the little tweaks right like last week. We talked about frugality and how we need to focus on the big things. Well in this case the big thing is creating that plan and and really getting after it these these little tips and tricks. These are the little tweaks. This is the frugality aspect of paying down your debt. They are certainly things that could make a pretty big impact act and really help you along and provide encouragement and make it possible for you to pay down that debt. But I you do need to have a solid plan in place for these additional pieces that Kinda slot in yeah completely agree. What for anybody out there who is experiencing a load of debt? That is uncomfortable. Well Best of luck to you in creating a debt path plan. I I feel like having this plan sometimes can help you at least have this target to aim at and it can make a huge difference in helping you actually achieve being rid of it as opposed to kind of feeling like you're in this quicksand scenario and I don't know how to get out. The plan is like the rope in princess bride. That helps you get out of the quicksand. It is right. That's exactly what that payoff lane is as you with. Its it's beer. Let's get back to the beer this episode. You and I shared a barrel aged yeti imperial stout I wanna say this canes it's Brown and Gold and it's like perfect for for the way this beer tastes and on a mission to you the way poured in Port Pitch Black and at the same time it had this amazingly dark brown head. It looked like creme like if you've ever gotten an espresso were the espresso bubbles little cream at the top they call it Karma insider knowledge for yeah exactly but I couldn't get over how richly Brown that head was on his beard and every time I kind of swirled it it almost had like some read notes in it looked amazing but Yeah what are your thoughts on how this beer tasting man. This beer was so good. It had these nice boozy barrel notes on an already delicious doubt. I felt like this doubt was chuckle of bitter dark chocolate vibes and that paired so well with the sweetness coming through from the whiskey barrel that it was aged in so in my mind if you get the dark chocolate bitter stout combined with aging in whiskey barrels it's at perfect pairings at perfect marriage. And that's what that's what this was was so good. Yeah it's really good Asian whiskey and I feel you could tell it that. It wasn't Asian Bourbon Barrels. Because typically I think when you get Bourbon it's a little bit sweeter and this stout drink a little drier to me like it had a ton of flavor But it wasn't it wasn't overly sweet a little bit on the dry side and so it kind of reminded me of like that fancier chocolate where it's like eighty percent cal. Cal Is that how you said Coco calculated. He's eighty cocoa spelled like cow. I don't think I use that word very often. Chocolate zero sweetness going on at all. That's what I picked up out of. It just had incredibly deep flavor notes and I really enjoyed it all right man for this episode. That's going to do it. Let's wrap it up all right for folks that want more money information formation. Well you can go to our website at money dot com and we'll also have shown up for this episode all right man. Well that's GonNa do it jol until next time best friends out best friends Out In this episode is brought to you by office. 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