Creating a Debt Payoff Plan (Bestie Ep) #390

the waves. But we are replaying a bestie episode. This is a really good one, as it seems a lot of people are returning to their old spending ways. There's nothing wrong with being intentional with your money, but we don't want you to get carried away with your spending. Uh. And in this episode, we actually go step by step on how to create a debt payoff plan and how to stick with it. Yeah, I feel like this episode does deserve another spin, Mattine. People haven't listened to it

because it's way back in the back catalog. Well, it's right here for you right now and U. Yeah, but before we get to that episode, you know, this is typically a Friday flight episode, and we did want to mention actually one Friday flight story before we get into this Bestie episode one headline it everyone out there should be excited about that that we saw a pesky refinance fee is going away. Hooray. Any listeners that have been around for any length the time, you know how much

we hate fees. And as of August one, lenders will no longer have to pay Fannie and Freddie an additional half a percent fee that was imposed at the end of last year, and so that means lower rates for you when it comes to refinancing a mortgage, which I know a lot of people are considering right now because rights or low. Yeah, this is great news because it will save the average person twenty dollars a month on a three thousand dollar mortgage loan and twenty bucks a month.

That's not chump change, not at all. Yeah, So shopping around for that refinance is of course always a good idea. But we wanted to pass on the good news that rates that you're seeing next week could be even lower as this fee gets acts completely. It's something that we covered towards the end of last year because we saw that this was gonna be something that was going to be added to the cost of underwriting alone, but that

is not something you're gonna have to worry about much longer. Yeah, man, I'm kind of guy who wants to see, like an Elon Musk flamethrower take into all the fees in existence, and so yeah, just seeing a fee go down in

flames like this just makes me so happy. By the way, make sure to check out Monday's episode, we have an interview with the one and only Clark Howard, my good friend, and so yeah, there's some really helpful travel advice that we got into in that conversation, as well as some wisdom when it comes to being your own advocate in the tumultuous world of personal finance. So you can look forward to that hitting your podcatcher. But for now, let's get on that bestie episode about debt payoff and Matt

back to the beach for us. Welcome to How the Money. I'm Joel and I am Matt, and today we are discussing creating a debt payoff plan. Joel Man, we are talking about debt. Everybody's got it. A lot of people do people not everybody. A lot of people do though, and the amount of debt that we as a country have us as individuals. 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 lot, Yes, exactly. So that's what we're gonna talk about this episode. We're gonna talk through what it actually takes to paid on debt. Yeah, But before we get to that, Matt, real quick, I wanted to talk about guilt and money. And I think, especially this time a year, maybe a lot of us are feeling guilt over how we've spent. And some of that might be warranted. Right. We we might have in November December, in the lead up to the holidays, we

might have bought too many gifts for other people. We we probably could have done just a little bit better in how we thought through a spending plan, right, And we're gonna talk about a debt plan, but we could have thought through our spending a little bit better. But I think ultimately this show and 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 space. 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 and to save more. And so I think, you know, as we get 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 move 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 as I'm gonna go there in one second, But I think a guilt trips for you know, 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, right, Like to me be proud a little bit at time. Exactly. Yeah. Like, to me, guilt is basically knowing that you could have done something better but you didn't. It basically cause attention to the fact that you're responsible for your actions. And when it comes from money, I think there's definitely a need for more responsibility when it comes to you know,

personal finances. But interestingly, like you mentioned shame, and I think that's so clutch because there's a big difference between guilt and shame. Have you read any of Burnet Brown. She's like, she's a she's you know, she has ted talks and she's written books and she's an author. I'm familiar with her just because my wife talks about her a lot. I 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 is that,

like shame is well, for let's start with guilt. Guilt is knowing that you did something bad and 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. You know, you're not a terrible person because you you know, you blew your budget one month or maybe you didn't quite put enough towards retirements that year, right, But when you identify with being a poor saver, like if that's who you feel you are, well, that's when it can become negative versus 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, and so we have to kind of break that psychological barrier of feeling shame with how we've handled our money. And 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 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. Um, that's that's what we want to be here. We don't want to be here to use a stick to beat you over the head

because you haven't done things properly. What we want to do is encourage you, motivate you, give you the tools to create a more positive outlook on 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 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 back that you receive on a project or something that you're working on. If you take that feedback and you then modify your behavior and that allows you to grow.

What's It's a positive thing. It's about gaining knowledge and learning from our mistakes. And yeah, like you said, you hopefully that's what folks can do from listening to this podcast. Yeah, man, I think I used to feel guilt over buying really nice beer, and now I just don't anymore. It's because it's something that I've prioritized highly and something that I've made an important line item 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 Yetti Imperial Stout by Great Divide Brewing and the kind folks at a Great Divide in Denver, Colorado, they sent this beer our way. I'm really excited to have the barrel aged version of their Yetti 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, y'all are 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. We're talking today on the show. We're talking about creating a debt payoff plan. And let 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 cause

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 that 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 eight 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 on credit cards and this time a year they're getting that statement in the mail 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 debt, not to mention the other death they might be caring right now, so it doesn't

get even further out of hand. Well, Joel, you're talking about debt, and I feel like I'm super a d D today because you mentioned quicksand and I started thinking about quicksand why is why is like why would we When we were kids everything was quicksand like Mario Brothers to head quicksand like even as kids playing it's like watch out for the quicksand like quicksand was this real thing, like this real problem that we had to watch out for.

When I think about quicksand I think about the Princess Bride, you know, I mean to me that's strongly correlated. Yes, it's like late eighties, early nineties quicksand was everywhere. Now everything's lava, like the kids have moved on to lava, like it used to be quicksand now it's lava. Alright, Well, sorry, a little side with old school reference. We're gonna stick with quicksand floors lava. All right. Let's get back to debt a little bit. Though. Here's the thing. Here's a

fact for you. Outstanding student loan debt, Joel, it has reached an all time high last year. We hit one point four one trillion dollars of Americans have credit card debt, and the average outstanding balance it's just over six thousand dollars, while consumer debt as a whole stands at fourteen trillion. It's not just I covered my ears there because it just got so horrendous. Way can you say it again? Dude?

It's terrible, and not only is it just an incredible amount of mon but it's also how we're going about getting this debt. Car loans they've gotten longer, with some folks not just taking out sixty months of payment, but seventy two and eighty four month long loans, and then you know, they end up trading their cars and while they're upside down, or taking out debt for smaller and

smaller purchases as well. Everyone out there, like all the different retailers, offer a payment plan now, and it spans from you know, services at home like your h VAC too, urban outfitters if you just want to, you know, pick up some shoes. We are funding our lifestyles through the accumulation of more and more as well as riskier debt. It's just become easier to take on debt for anything now. Like you go to the dentist and you can take out a payment plan on that new artificial tooth or

whatever surgery you had to undergo. Yeah, I gotta think that that is the absolute least fun loan to pay on. Yeah, paying on my root canal still, I'll give you a three 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 electrician probably has the ability to offer you alone on that new age fact. I mean, it's just kind

of almost gotten preposterous. And then we end up sinking ourselves in a hole, 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 have to change our relationship to debt and how we consider taking it on.

But Matt also too, I think it's important to mention before we get into the specifics of creating a debt payoff plan that we don't think all 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 there are reasons worth accruing debt, for example, going to get an education or starting a business, or buying a home, and we kind of discussed that in

more detail and episode one. But just because you're considering one of those good debts 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 debts you take on. Yes, we we need to take value in account because you know, not having massive amounts of debt is important, and so

I mean, I'll not note. You might be asking like, well, 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

the credit card or maybe to take out alone. If anything, it feels like free money, right, And it's really easy to gain access to that credit, which is why in a recent episode MAUT we talked about cash, debit or credit like how we spend using credit cards is in particular, the biggest downside is the ease abuse, and that's what causes us to use them more frequently. Even though it's a smooth transaction. Even though we like credit cards, it can be away 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, if fitsing thousand dollar car like that could easily end up costing you closer to twenty dollars because you took out a car loan and you're paying interest, and so effectively you're paying way more than you should have for that vehicle. And it's hard to reach your financial goals when you're constantly over paying for things. Yeah, Matt, having a lot of debt puts

you on just not solid footing. It puts you in this kind of quick sand thing, right, I mean, let's get back to the 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 when 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 and

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. We're using returns in the positive sense as opposed to everything we buy having a much larger price tag based on the fact that we have interest payments going alongside of it. Yeah, that's the difference between paying interest versus receiving interest. Right, And I got a

quick illustration for you. Imagine have you ever been to a store where there's like a second floor, or maybe e've been to a mall, a movie theater perhaps, Right, where there's an escalator. So imagine you're on level one and level two. That's where you're trying to get to level two, Joel. That's where your financial dreams and hopes are in front of you. You've got two escalators. You've got one that's coming down. At least, it's not like

a sky skyscraper that I have to climb, you know. Yeah, but on 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 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 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, Matt, But even still, like, yes, I agree, right, like I've I've done that before as a kid, But it's still a lot harder versus when you have interest working for you. When you're receiving interest, it's like you're getting on the correct side and you're you know, you're writing that interest up. If you want, you can only rely on that interest and you can

just stay in 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. It's like the best feeling I know. I mean, how quickly do you get from like one level to the next just by doing that. It's amazing. And so maybe the next time you're thinking about taking out a car loan or some other consumer debt, some credit card debt, picture that illustration, because like that 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. It's so difficult to make any progress when we're bogged down with that interest working against us. Yeah, no doubt. And we have to get to these specifics for folks that are writing that down escalator and they want to get off, they want to get out of debt, and they want to make their

money work for them. Well, let's get to the specifics of how to create a debt payoff plan right after this break, all right, Jill, we're back and we're talking about creating a debt payoff plan. By the way, did you like my my little illustration about the escalator? That was a great illustration another one I was thinking of two. I was just like, okay, what about like headwinds and

wins that you're back. I'm like, I was gonna say an example of you know, when you're up at the tea box and you're playing disc off and you're 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, right, True, It's true. Yeah, that's another great illustration and one that makes sense to me. But I feel like most folks have probably been on escalator is more often than they've actually thrown a disc off.

It's probably true for most folks out there, sadly, because disc golf is a great sport. All Right, We're gonna talk 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 plane of action is to get organized, and so making sure that you're aware of all the debts that you oh is a really important fort step on your path to crushing debts. Yeah. Man, I mean we've used this illustration before, but if you're planning a road trip, you're going to make the dots along the wave where you want to stop. You kind of want to know the layout.

How long is it gonna take me to get here and there, especially if you got kids, Like where are we gonna stop to pete? Where we're gonna stop to eat? There's all these questions that come with a big, major trip, right, And so I think the same thing, like paying off your debt is this big trip and you want to plan the points along the way you want to you want to know exactly what's in store so that nothing hits you terribly by surprise. Yeah, you don't just throw

everybody in the car and just start driving. That's a terrible plan. Like lick your fingers sticking up in the air, decide which way then we're gonna go east. Let's do it. 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. And then we've talked before about the debt snowball approach for is the debt avalanche approach and which one people should consider, And we went into 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 rewards along the way, or do you just want to pay these debts off as quickly as humanly possible while paying as a little

interest as you can. Either way, he'll focus hard on completely obliterating one debt while paying the minimums on the others. In both approaches. Maintaining a high level of focus is the key to success, because once you know that lay of the land mat 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

it's gonna work for you? Looking at the strategies 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, Joel, you know. And one thing I'll say is that I think for folks especially who are listening to this podcast, they're thinking, no man, debt avalanche, that's 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 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 my 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 then quickly move on to the next one, and that feels good, and when it feels good, that's something that you will 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 plan 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 fully funding my wrath I r A, and I was just investing a lot more in my four owing K because it was a lot easier for me to click the button that up the percentage point coming out of my paycheck. I barely felt it than it was to actually increase that automatic draft amount from my bank account into Vanguard to fund my wrath. And so it literally took more work for you to up your wrath I RA versus your

four own case. Yeah, and really the work is the same. It's the mental It's a mental hurdle I couldn't overcome. And so I think that's a huge thing that we do need to consider. What what what's the easiest mental mental hurdle 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, you've gotten organized, you've picked your approach. You know, you thought

about which strategy is gonna work for you. The next step is we want you to look at your timeline a little bit. This is when you are going to do some math and you want to calculate how much monthly income you can put towards your debts and and actually figure out how long it will take you to be rid of it all. It is important to know how long this will take in order to 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. If you are not realistically approaching your debt path plan, it can be easy to lose hope and basically just burn and fizzle out. Yeah. It reminds me of our conversation with J. D Roth not too long ago, and he specifically mentioned he gave a very vivid picture of his

when he was in the bath. Okay, he was like, this is how I came up with my debt payoff plan. I was in the shower. I had this epiphany. He's like, I ran 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 debt payoff plan. What I know, Yeah, I know, I totally picture. I can

totally picture it was. It was maybe too vivid, and he said he realized it was gonna take thirty six months for him to pay off his debt after kind of calculating it out, and this timeline helped him track his 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 step 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, 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 end of

the tunnel. If we have no idea and we just or aimlessly attempting every month to put more money towards our debt, but we don't have a time frame in mind, well then it can just be a little more difficult to actually stick with it. It's like the difference between running a marathon versus like a sprint, Like you need to know the distance because if you start running a marathon like you're running a Fodre sprint, well, guess what you're gonna burn out and you're gonna completely give up.

And so yeah, having that and goal in mind and knowing that time frame is is so important. And there are tools that can help, by the way, and well link to those in the show notes, whether you're taking the snowball approach or the avalanche approach, will link to a tool that can kind of help you as you plug in your information, it can give you that timeframe so that you're not just doing pen and paper. You can actually plug it into a spreadsheet and then you've

got breadsheets. You can share it with your significant other or your partner, and it's this kind of perfect opportunity to be on the same page, to be looking at the same numbers, and it can kind of just kind of help you plot your path. Well, you know, I'm all about the spreadsheets. I know you are, buddy. Yeah, And so another step we want you 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 I want you to say to yourself this year, I am all about paying off that debt. It's like your alter ego, Yes, like that that's just who you are. What this means is not saving for a vacation, not saving for that new car that maybe you wanted. Instead, it means throwing

all of your weight behind that one singular goal. This is a crazy powerful approach, and anyone who has paid off large amounts of debt quickly will attest to the power of this type of focus. And again, you want to make sure to prioritize that top debt while you pay minimums on everything else, regardless of what approach you take, whether you take the debt snowball or whether you take

the debt avalanche. All right, we've referenced Batman in this podcast before, Matt, but so basically Batman is this perfect representation of creating an alter ego. It's 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. He's just creating an alter ego that helps him 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 appre coach paying off debt in our lives 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 ourselves that we are someone who can pay off a large amount of debt, who can make a change in our 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. That's a nerd bad guy reference. I love it. The next step is basically to move on to debt number two. Once you've done all of that and you've crushed that first debt, move on to the next debt on the list. Again, regardless of which method that you're taking. After that first debt is eliminated,

you're gonna have more money. It's 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 lists. Right, Like interest is 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 you're still going up the wrong escalator, but maybe the escalator has slowed down a little bit.

And not only has this slow down, Jill, you've also gotten stronger because now you have more money to throw and to attack that next debt with. Yeah, it's incredible how this process, the debt payoff plan becomes easier after that first debt is removed, whether you're going avalanche or snowball, having one fewer debt, it just increases your ability to

attack debt number two. It's a beautiful thing. Yeah, 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 want to pay down, it might take a lot of mental capacity to focus on that one debt when you know you've got these other ones that you're just paying minimums on, right, But guess what, you knock out 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 that are kind of sitting there, and then you know, the number just gets smaller and smaller. There are so many reasons why focusing on a singular debt is so the way to go. Yeah, and Matt, I think another important thing to say on when we move on to another debt is it it's important to give ourselves a little reward along the way

with each major milestone that we achieve. We discussed this recently in the gamification episode, but small rewards along the way can give us a renewed hope to pause and realize that we're doing it. Well, that's huge, and then we can start to rent and repeat and kind of continue along in the process. But once we've appropriately celebrated knocking out a credit card debt or a car loan, then start setting your sights on the next debt to crush.

Maybe student loans are next on the hit list. But however you're doing it, make sure that you do give yourself like a little reward along the way. It can really increase that positivity 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 too that we can reward our So it's not even by spending money, but there's ways that we can reinforce that behavior, even just with sharing it with others. If you've told some friends about your financial journey or like your plan to pay down some debt and you tell them, hey, guess what, you know those three credit cards that I'm planning to

knock out, one of them is completely done with. Like, that's huge, and hopefully you know, 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, like encouraging utically. And if you don't have these these type of friends, we would encourage you, you know, a to talk about money with your friends

and family, but also check out Facebook. Within our group, folks are often posting their winds and then how they're succeeding with their money, and we would suggest jumping in there encouraging those folks. And then when the time comes for you to knock out some of your big debts or meet some of your financial goals, you can share that in there as well, and it will be folks in there who will be pumped for you. And guess

what that costs you? Nothing? Yeah? Man, sharing those wins with other people that you don't even have to like 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 playing superhero mindset, a question pops up, well, how can we accelerate 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 too. 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, how 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, 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 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 plan is complete, it's gonna help you build savings and have money to invest for your future at the same time. Yeah, Joe, So that's addressing expenses, right, if we're able to cut back.

And on Money's episode, we talked about earning more money, you know, through entrepreneurship, through starting your own small business. We had an interview there with Vincent, so we'd recommend checking that one 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 want to make sure that you're doing

both of those. We're gonna continue to talk about creating a debt payoff plan, and after the break, we're gonna talk specifically about some different practical advice and some different tactical steps that we can take in order to pay down our debt. Faster. We're gonna get to those right

after the break. All right, now, we're back to break, and we do have some practical and tactical things we have to share in their galactical In this part of the show about how people should approach their debt 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 it. 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 order to achieve our debt payoff more 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 this state of debt in the first place.

One of the major 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 are your arch nemesis and you just don't know how to stop using them, will cut them up or freeze them, put them in a freezer bag inside of your freezer, like literally put them in a ziplock bag, fill it with water, and stick in your freezer. Put that junk

on ice, exactly. Like, 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 this is your row some 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 in a block of ice. Let's clarify, because that is literally one way

to freeze your credit cards. But there's I think sometimes some confusion when people say I've freeze my credit. Well, that's not freezing your credit. That's literally freezing your credit cards to curb your behavior. But then you can actually freeze your credit by going to trains, Union, Experience 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 and

unfreeze it, typically temporarily. Yeah, And that's something that we recommend, is 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 a step to take if that credit card has become this problem in your life,

this thorn in your side, yeah, man. And another thing to note on at since we're speaking about your credit score and freezing your credit, well, your credit score is this awesome thing to monitor along the way while you're involved in this debt payoff plan. And we really like 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 scorecard

dot com. If you check out sign up 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 is motivating as you see that credit score balloon over time, as it continues to rise from let's say it's at six a d. Now you know, over six months you might be at seven thirty, 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 have a really low credit score because you have an overwhelming amount of debt, well attacking that increases your score and not only means you have less debt weighing you down, but also means the possibilities of taking out positive future debt right of something like a house

are just greatly increased. Yeah, seeing that credit score boost like that, that's an amazing secondary benefit of paying down that debt. It'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 big money and they rarely live up to their claims. Often you end up paying them, you know, a lot of money, and they do little or nothing to help

you in your debt payoff pursuit. UH. In that case, you're often better off on your own because at least then you can toss 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, yeah, if you just pay these people a couple of thousand dollars, three or four thousand dollars, they can help you consolidate your debt, 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 that these debt payoff companies say they're gonna do, they either don't do

or you can do yourself. That's just not a smart way to go. Yeah, that money upfront huge red flag. So what you do want to go if you're debt is overwhelming, is going to be your local affiliate of the n f c 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. They have the power to help and kind of counsel

you along your debt journey. They do the things that many of the debt payoff firms say that they'll do, but then they don't in actuality. Yeah, that's true. The NFCC 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 debt payments. That is the only place I would send them to. And so yeah, NFCC 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. And Matt, let's talk quickly about apps. There are apps 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, but they come with a caveat. There's one called coins q O 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 I we prefer the D I Y 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 use one of those apps, use it to its full potential, because, yeah, paying a fee is 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 a debt payoff plan, well then that's great. And those are two worth considering. Yeah, man, 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 undebt it.

And by the way, those are unburied dot me and undebt dot it's I guess thattand's in Italy the I T. I love how the different websites are using the different I don't know what you call it, like the dot com, dot net, like the postscripts 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 u r L for our website from how the Money dot com to how the Money dot listen to our podcast now how

the Money dot Beer. Actually I legit think there is a beer. Yeah, I was gonna say that that's a really oh my gosh. Either way, though, let's talk about these websites unburry me and undebtit. They are both similar and they can offer some help creating a debt payoff plan. If you prefer a more digital interface, definitely give one of these shot with the different graphs and you know, the digital feedback it might help you to visualize your progress. And and and you know, for that reason it can be

really valuable. 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 your progress. You know, like it is pretty easy to create a little graph and a little chart and you kind of fill it in as you work your way up that notebook paper. Just know 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 and some people they're on a computer all day and using a website like unburied dot me or on debt dot it is is going to be a massive help in the way they approach paying off that debt. And for other people, you know what, a pen and some paper that's gonna

be motivation enough. They don't need some sort of really cute see graph and interface to help them tackle their debt. So just kind of know your tendencies and that can help you, and Matt, 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. A 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 is particularly useful, Matt, for folks that have a good credit score. If they can qualify for a credit card with a zero percent intro period of like let's say fifteen or eighteen months, and they're ready to to pay off their 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

how to money dot com. For folks that 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 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 that you're looking to pay off, well, another hack that you can do is to call your 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 they call and ask for help. 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 Matt, one example I wanted to mention is let's say you've got a student loan through a company like so FI, and one of the coolest benefits that they offer is help if you lose your job. Not only will they provide actual assistance for you looking for employment, but what they'll do is they'll say, you know what, you don't have to pay your loan for the next six months while you're looking for employment,

it and so stuff like that. 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 that they can can help you along the process. Yeah. On the note of lower interest rates as well, Man, we would recommend for folks to consider checking out maybe some alternatives to credit cards. If you have a home, you can consider a helock 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 that. You're taking your debt and you're tying it to your property. That debt is now a secure debt because your home is 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 that you you take on lightly. Yeah, because it's one thing to not

be able to pay off a credit card. There are certain rights that you have. You're not gonna 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 you take out a helock, that cau are that homes on the line. Dude, Yeah, exactly.

And so if you're gonna have trouble paying it off with a helock, 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 pay. That's right. And another option to consider is you can always borrow money, maybe from a family member. This is something that it just depends on who you are and what your 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 could come to that relationship. But if your credit score is really low, that might be your only option for lowering any super high interest rates that you might have, So definitely consider that. Yeah, Matt. If someone submitted and ask 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 back all together, and just kind of go into that loan situation 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, some moves that you can make to help accelerate that debt payoff plan, and yeah, crush that debt once and for all. Yeah, And it's important to keep in mind as well that these are things that you want to consider after you have a solid plan in place, like 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 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 and really help you along and provide some encouragement and make it possible for you to pay down that debt, but first you do need to have a solid plan in place for these additional pieces to kind of slot in. Yeah,

I completely agree. And you know what, for anybody out there who is it's experiencing a load of debt that is uncomfortable, well, best of luck to you and creating a debt payoff plan. 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 in helping you actually achieve being rid of it as opposed to kind of feeling like you're in this quicksand

scenario and you 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 debt payoff plane is as you win. All right, it's it's beer time. Let's take a back to the beer. This episode, you and I shared a barrel aged YETI Imperial Stouts. I want to say this can it's it's brown and gold and it's like perfect

for for the way this beer tastes. And I want to mention to you the way it poured, and it poured pitch black, and at the same time, it had this amazingly dark brown head. It looked like crema, Like if you've ever gotten an espresso where you know the the espresso bubbles, like the little cream at the top, they call it crema. A little insider knowledge for you, exactly. But I couldn't get over how richly brown that head

was on his beer. And every time I kind of world it, it it almost had like some red notes in it looked amazing. But yeah, what were your thoughts on how this spear tasted? Man, this beer was so good. It had these nice boozy barrel notes on an already delicious stout. I felt like the stout was chock full 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 that perfect pairing, it's that perfect marriage. And that's what that's what this beer was. It was so good. Yeah, it's really good. It was Asian whiskey barrels and I feel like you could tell that it wasn't Asian and bourbon barrels, because typically I think when you get bourbon, it's a little bit sweeter, and this stout drink a little dryer 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 reminds me of like that fancier chocolate where it's like eight percent caw cow or is that how you say it, you say calco cocoa. I don't know. It's a spelled like cal cow, and I don't think I use that word very often. I don't know either, But you know the fancy chocolate where it's there's zero sweetness going on at all. That's what I picked up

out of it. It just had incredibly deep flavor notes and I really enjoyed it. All right, man, Well is that going to be it for this episode? That's gonna do it. Let's wrap it up, all right. For folks that want more money information, well, you can go to our website at how to money dot com and we'll also have show notes up for this episode. All right, man, Well, that's gonna do it, Joel until next time. Best friends out, best friends out,