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Practical Strategies for Paying off Credit Card Debt · Cash Confident with Brie Sodano

• 0:01
  Speaker 1: Welcome to the Cash Confident Podcast.
• 0:03
  Speaker 1: I'm Brie Sedano, your fearless host, personal finance expert and the visionary behind the revolutionary Cash Confident community.
• 0:10
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• 0:22
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• 0:32
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• 0:43
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• 0:55
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• 1:02
  Speaker 1: So buckle up, my fierce and ambitious friends, as we embark on this transformative journey to becoming cash confident together.
• 1:10
  Speaker 1: Oh, thank you for coming back to another episode of the Cash Confident Podcast.
• 1:21
  Speaker 1: And today we're going to talk about practical strategies for paying off debt.
• 1:25
  Speaker 1: And so today we're not really going to get into the mindset.
• 1:28
  Speaker 1: I'm going to talk like a little smidge about mindset, a little smidge about habits when it comes to paying off the credit card debt, but today we're just going to really talk about, like nuts and bolts, practical strategies like what needs to happen, all right, and so there's some strategies that I use.
• 1:43
  Speaker 1: So the first one is the snowball.
• 1:45
  Speaker 1: This one you can give a Google to.
• 1:47
  Speaker 1: I didn't come up with this.
• 1:48
  Speaker 1: This is a tried and true, tested method for paying off credit card debt.
• 1:53
  Speaker 1: Now, actually, that's the one that we're going to start with.
• 1:56
  Speaker 1: So here's what I want you to do before we start actually getting into the strategies actually.
• 2:01
  Speaker 1: So we're just going to take one little step back.
• 2:04
  Speaker 1: What you want to do is let's make a list of your credit cards the balance that's there, the minimum payment that you need to make the interest rate.
• 2:13
  Speaker 1: So the credit card, so you would write capital one of a $1,000 balance.
• 2:18
  Speaker 1: It's a $98 minimum payment and it's a 19% interest rate.
• 2:23
  Speaker 1: If it's a 0% interest rate, maybe give that a little search and see when those interest charges start.
• 2:30
  Speaker 1: Okay, so that's what we want to do.
• 2:33
  Speaker 1: So here's so listen, here's what we want to total up.
• 2:35
  Speaker 1: So look at your total balance, and I'm talking credit cards.
• 2:38
  Speaker 1: I'm not really talking about your car.
• 2:41
  Speaker 1: I'm not talking about your house, I'm not talking about your student loan.
• 2:43
  Speaker 1: And the reason why is credit cards really need to be treated a little bit differently than those other debt.
• 2:48
  Speaker 1: And so mortgages.
• 2:50
  Speaker 1: So, depending on when you got your mortgage, for the last many years mortgage rates have been, you know, in the threes.
• 2:56
  Speaker 1: I know recently they went up.
• 2:58
  Speaker 1: So I'm assuming if you bought it at a new like six or seven percent interest rate, you're probably not looking at refinancing currently.
• 3:05
  Speaker 1: So look at your house.
• 3:06
  Speaker 1: Payment is probably one that we're just going to make the required payment on and then leave that alone.
• 3:11
  Speaker 1: Car payments are interesting.
• 3:12
  Speaker 1: So I tend to look at car payments as just like a revolving expense.
• 3:17
  Speaker 1: So if you're going to need a car for the rest of your life, you're not necessarily always going to have a car payment, because your cars could eventually be paid off, but that expense doesn't really go away.
• 3:27
  Speaker 1: So let's just say you're used to having a $500 a month car expense.
• 3:32
  Speaker 1: As your car ages, your payment comes down, your taxes come down, but chances are your maintenance is going to go up a bit.
• 3:38
  Speaker 1: Right, chances are.
• 3:39
  Speaker 1: Those are the trade-offs.
• 3:41
  Speaker 1: So whatever number you're comfortable with as far as car expense, I would just leave that in as a line item.
• 3:49
  Speaker 1: The thing that I would suggest about car payments is that when your car gets paid off, don't increase your lifestyle.
• 3:57
  Speaker 1: Keep that car payment.
• 3:58
  Speaker 1: I might air quotes up.
• 4:00
  Speaker 1: Let's just say you have a car payment that's $500.
• 4:02
  Speaker 1: When your car gets paid off, start putting that $500 into your working capital account.
• 4:08
  Speaker 1: Start doing that because chances are, if your car's more than if you bought a brand new car and it's five years old chances are you're going to start to need some of the maintenance.
• 4:15
  Speaker 1: And if your car's older, you're going to need some maintenance.
• 4:17
  Speaker 1: Your timing belts are going to need to be done.
• 4:19
  Speaker 1: Your tires are going to need to be I don't know, whatever, I'm not a car expert Rotate it.
• 4:24
  Speaker 1: You're going to need new stuff, like your tires.
• 4:26
  Speaker 1: Your car is going to need maintenance.
• 4:28
  Speaker 1: I do know that.
• 4:28
  Speaker 1: So just start putting that aside.
• 4:30
  Speaker 1: And then, that way, when it gets to the point where your mechanic's looking at you on a tanker also, the thing is, the cost of fixing this car anymore is getting to the point of it not making any sort of sense.
• 4:41
  Speaker 1: Right?
• 4:42
  Speaker 1: That's a conversation that I feel like most people have had with their mechanics.
• 4:45
  Speaker 1: I know I've had that with a couple of mechanics.
• 4:47
  Speaker 1: Because I like to drive my car, I take good care of my car and I drive it.
• 4:51
  Speaker 1: I usually will have a car like 10 years and that works for me.
• 4:54
  Speaker 1: Other people like shorter relationships with their cars.
• 4:56
  Speaker 1: It doesn't matter, everybody's perfect, but anyways.
• 4:58
  Speaker 1: So start putting that money aside so that way you either have a down payment, you have the maintenance money or whatever else.
• 5:03
  Speaker 1: So if you're already, if your financial cash flow is strong enough to be making that car payment when the car payment finishes, keep saving that money, all right.
• 5:10
  Speaker 1: So I'm going to say that about.
• 5:11
  Speaker 1: So the house, we're generally going to leave alone.
• 5:14
  Speaker 1: The cars we're going to treat a little bit differently.
• 5:17
  Speaker 1: Student loans also, we're going to treat differently.
• 5:20
  Speaker 1: For some people that I've worked with, their student loans are like a mortgage-sized payment.
• 5:24
  Speaker 1: Under no circumstances listen to me, grab your pens Under no circumstances should you pay off all of your student loans before you start investing Hard.
• 5:32
  Speaker 1: No, I know that there's a very famous money guru who says you should pay off all of your debt before you start investing, and I would tell you that I've worked with people when I was a stockbroker.
• 5:43
  Speaker 1: I've worked with people who come to see me at 50 years old and they're like I finally paid off my last little bit of debt.
• 5:48
  Speaker 1: I'm like cool, you're going to retire in 15 years.
• 5:50
  Speaker 1: That's not enough time.
• 5:51
  Speaker 1: That's not enough time to save any money.
• 5:53
  Speaker 1: That's not enough time for the market to make any money for you.
• 5:56
  Speaker 1: You can save your money in 15 years, of course, but there's not enough time.
• 6:01
  Speaker 1: You don't have time.
• 6:02
  Speaker 1: So then you're looking at real estate, which is fine.
• 6:03
  Speaker 1: Real estate is a beautiful way to invest money for things, but then you also need to really get a whole skillset.
• 6:09
  Speaker 1: You need a second job of real estate, and people say that it's passive income, but it's not.
• 6:14
  Speaker 1: I don't find any evidence of that being true and I'll tell you.
• 6:17
  Speaker 1: It's because one of my very best friends in the world flips houses or rents houses, and she's busy.
• 6:22
  Speaker 1: She does it.
• 6:23
  Speaker 1: Her income is not directly tied to her time as far as that goes, but she's been to many classes, she's invested in a lot of money and she's working for these things and it does produce several I think I don't know thousands of dollars a month.
• 6:34
  Speaker 1: I'm not exactly sure, but I'm just saying, if you get, look at the money that you, every seven to 10 years, invested money should double.
• 6:43
  Speaker 1: So if we miss the opportunity to save money in our 20s because we're worrying about our debt, people think, oh, it's the 20% of the credit card interest, and I'm like the thing that you lose, though, is the double.
• 6:53
  Speaker 1: So let's just say, in my 20s I could save $10,000, right.
• 6:57
  Speaker 1: And let's just say, by the end of my 20s, I don't know.
• 7:01
  Speaker 1: Let's just say, at the end of my 20s, I have $10,000.
• 7:06
  Speaker 1: At the end of my 30s, that money alone is going to be worth, let's say, $20,000.
• 7:08
  Speaker 1: And then, at the end of the 40s, it's going to be $40,000.
• 7:11
  Speaker 1: And at the end of the 50s it's going to be $80,000.
• 7:13
  Speaker 1: And then at the end of the 60s, it's going to be $160,000.
• 7:20
  Speaker 1: So, right.
• 7:21
  Speaker 1: So that's why I say this, because when I was doing retirement planning, I'm like this advice is so dangerous because you can't borrow money for retirement and there are literally people eating cat food in retirement and I'm like to what?
• 7:35
  Speaker 1: Save the 20% on the interest.
• 7:36
  Speaker 1: Anyways, I get all worked up about this.
• 7:39
  Speaker 1: This infuriates me.
• 7:40
  Speaker 1: Okay, so there's that piece, all right.
• 7:43
  Speaker 1: So these strategies that I'm talking about are really about consumer debt.
• 7:46
  Speaker 1: They're about credit cards.
• 7:47
  Speaker 1: Okay, so that's what we're talking about here.
• 7:49
  Speaker 1: So you should have your list together.
• 7:52
  Speaker 1: Now, the first thing that we want to do when we're looking at this list is that really, we're looking at the total balance, and what you want to compare your total balance to is the number of months of your take-home income.
• 8:04
  Speaker 1: So let's just say you'll make $120,000 a year and for the sake of easy math, we're just going to call that $10,000 a month.
• 8:11
  Speaker 1: I know, in real life you're going to pay taxes, you're going to pay for your benefits, the other things, but for you to understand this, it's a piece of cake.
• 8:18
  Speaker 1: All right, now let's say your credit card debt is $10,000.
• 8:21
  Speaker 1: All right, so you have about one month's worth of work that you need to do to be able to pay off this credit card debt.
• 8:28
  Speaker 1: It's like one month of income, I guess is a better way to say it.
• 8:34
  Speaker 1: Okay, now, if you have one month, two months of income, all right, that needs to be addressed.
• 8:40
  Speaker 1: Obviously, we're going to pay it off, but we're going to be okay.
• 8:43
  Speaker 1: Once we start getting five, six months, once you start getting six months of income into credit card debt, we're starting to have really big problems.
• 8:53
  Speaker 1: We get more than six months.
• 8:54
  Speaker 1: I'll tell you, when I see somebody who's got more than six months of income and credit card debt, a lot of times I'm like you're going to need to do a bankruptcy, because what ends up happening is we end up with no cash flow.
• 9:08
  Speaker 1: You'll end up just stuck in the situation forever, and I don't love to recommend the bankruptcy and nobody loves to get that recommendation, and I don't actually have to do it all that often.
• 9:17
  Speaker 1: And obviously I'm not a lawyer.
• 9:19
  Speaker 1: You have to talk to a lawyer to go get legal advice about a bankruptcy.
• 9:22
  Speaker 1: But there are certain numbers that I'm like we could put a plan together, but this is going to be like a 20 year, 28 year debt payoff plan and it's probably not going to be.
• 9:32
  Speaker 1: You're going to have to live with such restriction for such length of time that it's not probably going to be super effective.
• 9:38
  Speaker 1: All right, okay, so first, that's one of the things that I look for when I'm like doing that work with somebody.
• 9:44
  Speaker 1: I'm like how many months of debt are we in?
• 9:45
  Speaker 1: Do we have one month of income in debt?
• 9:47
  Speaker 1: Two months of income in debt?
• 9:48
  Speaker 1: Three months of income in debt, four, five, six, all right.
• 9:50
  Speaker 1: So let's start to get into these strategies.
• 9:52
  Speaker 1: So the first strategy that I started talking about 10 whole minutes ago is the snowball, and so this plan is already famous.
• 9:58
  Speaker 1: This is a great plan.
• 10:00
  Speaker 1: So basically, what you do is you write all of your debts down and you start paying your debt with this.
• 10:06
  Speaker 1: So you like line them up by balance size.
• 10:08
  Speaker 1: So let's say you have three debts One has 100, one has 200, one has $300 balances, all right, and let's just say your minimum payments on that, what it was at $600 of credit card debt.
• 10:21
  Speaker 1: Let's just say your minimum payments is $100.
• 10:24
  Speaker 1: All right, and you can afford to pay $150.
• 10:28
  Speaker 1: So you're going to make the minimum payment plus an extra $50.
• 10:30
  Speaker 1: All right, what you're going to do is you're going to take the $100 or the.
• 10:34
  Speaker 1: You're going to pay all three minimums and then you're going to take the extra $50 that you have and you're going to put it toward the smallest debt first.
• 10:42
  Speaker 1: Now at $100, this is going to be a very quick play, right?
• 10:45
  Speaker 1: So you're going to pay that for essentially two months, let's just say, or three months.
• 10:52
  Speaker 1: So you're going to pay the minimum payment $50.
• 10:53
  Speaker 1: And then the third month.
• 10:54
  Speaker 1: You might not even need the whole $50 because we're paying off $100 balance for the sake of easy math, all right.
• 10:57
  Speaker 1: Then we're going to roll the minimum payment that was for the $100 debt.
• 11:02
  Speaker 1: So let's just say that was $30 and the $50 extra payment.
• 11:06
  Speaker 1: So then we're going to say, all right, so we're going to next, we're going to be paying and then we're going to add it to the minimum payment of the second.
• 11:15
  Speaker 1: So let's just say you have $80 of extra debt payment, all right.
• 11:20
  Speaker 1: And then let's just say the extra debt payment, all right.
• 11:26
  Speaker 1: And then let's just say the $200 balance was also a let's call that one $40.
• 11:28
  Speaker 1: So you're going to pay the $40 minimum payment toward debt number two at the $200 balance, and then you're going to pay the extra $80.
• 11:33
  Speaker 1: Right, and so your total is $120 that you're going to be paying and that's going to move real quick.
• 11:39
  Speaker 1: Again, you're going to be at this for a month or two, two months, two months, two months, all right.
• 11:42
  Speaker 1: And then we're going to move that entire extra payment.
• 11:45
  Speaker 1: So you'll be paying the whole $150 to that $300.
• 11:49
  Speaker 1: That was the biggest one, all right, that's how it goes.
• 11:53
  Speaker 1: It's easy, it's simple to understand the thing that you have to understand about the snowball method is that you really have to pick a number that goes extra toward your debt that's reasonable and sustainable.
• 12:03
  Speaker 1: Now really have to pick a number that goes extra toward your debt that's reasonable and sustainable.
• 12:09
  Speaker 1: Now, also, when I'm working with clients before, when I'm first starting with somebody who's coming to see me about credit cards, the first thing I want to do is I want them to go a few months without using their credit cards, and what this does is it breaks all those habit loops, and this is tough to do.
• 12:15
  Speaker 1: So I want to see I take your credit cards out of your browsers, get used to just working with what your debit card feels like, and the reason that I might that step, I might leave clients in for three months, and the reason is it takes a minute to build a new financial habits.
• 12:29
  Speaker 1: That takes a little while to.
• 12:31
  Speaker 1: You have to learn new financial habits of keeping up with your money, like really looking at your bank accounts on a regular basis, really seeing what's going on there, and you have to learn how to what it feels like to be limited by cash flow.
• 12:44
  Speaker 1: Like most, if you're using your credit cards, you can spend more money than you have, and that is a nice comfort.
• 12:50
  Speaker 1: That's a nice comfort, and so it takes a minute to get used to not having that nice comfort, all right, so that's one of the first things that we're going to do.
• 12:58
  Speaker 1: Then we want to start building our savings.
• 13:00
  Speaker 1: We want to start building a savings habit, because otherwise you're going to be right back in debt.
• 13:05
  Speaker 1: If you don't build a savings habit, you're never going to have any money to use when you need it, and then you're going to have to borrow money again.
• 13:11
  Speaker 1: And that two steps forward, one step back that can add years onto your plan and it can make you feel defeated and really suck the wind out of your sails.
• 13:20
  Speaker 1: And so it's also from a habit standpoint.
• 13:23
  Speaker 1: The habit of saving money, the habit of having money, is what keeps you out of credit card debt.
• 13:28
  Speaker 1: So you have to start that habit.
• 13:30
  Speaker 1: Okay, you have to if you want to stay out of credit card, right?
• 13:33
  Speaker 1: So I do not suggest that people put all of their free cash flow toward credit card debt, because I find it to be wildly ineffective.
• 13:39
  Speaker 1: I've worked with thousands of people.
• 13:40
  Speaker 1: I don't find that it works all that well, and I know that there is a very famous guru in the world that says that you should do it that way and whatever.
• 13:48
  Speaker 1: For some people it does work.
• 13:49
  Speaker 1: If it's working for you, leave your plan alone, right?
• 13:53
  Speaker 1: If you're following that advice and it's working for you, okay, cool, do what works.
• 13:57
  Speaker 1: But I've worked with many people who need a different kind of strength.
• 13:59
  Speaker 1: That's all right.
• 14:00
  Speaker 1: So, anyways, that's the snowball method.
• 14:08
  Speaker 1: So basically, what you do is you add extra money toward your minimum payments.
• 14:10
  Speaker 1: You add extra money toward your minimum payments and then, when the first debt is paid off, you snowball that entire minimum payment of the first debt plus the extra toward your second, and so that second payment will be really big, and then you would make the minimum payments on the rest of your debts.
• 14:21
  Speaker 1: So you'll make the minimum payments on everything except for the one that you're focusing on, and then you'll snowball that down to the next one.
• 14:28
  Speaker 1: All right, sometimes what we can do is we can add the credit card shuffle with the snowball.
• 14:34
  Speaker 1: So the credit card shuffle is when you, let's say, you had four credit cards three were a couple were small, little piddly credit cards and then you have one with a really big balance.
• 14:44
  Speaker 1: So sometimes people don't want to be paying interest on that while they're working on the smaller credit cards, and so we would take out a zero percent balance transfer, no credit card, transfer the money, and then that way you're not paying interest while you're doing this.
• 14:56
  Speaker 1: This plan can be effective for not paying interest.
• 14:58
  Speaker 1: It can be helpful for that.
• 15:00
  Speaker 1: The thing that we have to really be careful of if we're going to play with 0% balance transfers is that we've really broken the habits.
• 15:05
  Speaker 1: Because here's what happens if you do not change the habits.
• 15:09
  Speaker 1: If you don't change the habits, what ends up happening is it takes about two years, but you'll double the size of your credit card debt.
• 15:14
  Speaker 1: That's what happens, and it's because if all those habits are in place and now the credit card that you have the bad habit with is empty, has a full available balance because you transferred it to the new card, just stays in a drawer for most people, then, like I said, it does take.
• 15:27
  Speaker 1: It takes a couple of years, but then the first card you'll run right back up because you left the habits in place and the habits the habit of needing money or not having money is the habit that starts credit card debt.
• 15:38
  Speaker 1: So if we leave the habit that causes the credit card debt in place.
• 15:41
  Speaker 1: Then we end up with more credit card debt.
• 15:43
  Speaker 1: That's the way it's all right.
• 15:44
  Speaker 1: So the snowball and then the snowball with the credit card shuffle.
• 15:47
  Speaker 1: The avalanche is the same method as the snowball, except for you would.
• 15:52
  Speaker 1: Instead of paying off the smallest credit card first, you look at the interest rates and you pay off the highest interest rate first and then you move on to the next highest interest rate and the next highest interest rate.
• 16:01
  Speaker 1: I, if I move on to the next highest interest rate and the next highest interest rate, if I'm putting somebody on a plan, most of the time I do the snowball because those wins are so helpful in being able to stick to something.
• 16:14
  Speaker 1: It just depends on what's going on with the avalanche.
• 16:15
  Speaker 1: Sometimes people's biggest debt is also their highest interest and it just can really feel daunting because you don't get any fast momentum.
• 16:22
  Speaker 1: You don't feel a win for a while and it's.
• 16:23
  Speaker 1: It just can really feel daunting because you don't get any fast momentum, you don't feel a win for a while and it's all right, it's a.
• 16:26
  Speaker 1: There's calculators online that you can play if the math really you know, if you're really into the math, about it, but I find that those psychological wins generally do something for the person.
• 16:36
  Speaker 1: Okay, then people will say, all right, should I consolidate my debt with a personal loan?
• 16:41
  Speaker 1: Okay, so that's another strategy that people will use.
• 16:44
  Speaker 1: And so, listen, if your cash flow is super tight, sometimes we need to use this strategy.
• 16:50
  Speaker 1: Sometimes I've seen people with so many credit cards and the payments are too much to me.
• 16:54
  Speaker 1: Like, the payments cause a lot of mental.
• 16:56
  Speaker 1: Let's say, you have 14, 15 payments and keeping track of all of that gets difficult, and keeping track of the minimum balances starts to be a lot.
• 17:05
  Speaker 1: The consolidation can take some mental load off of your plate.
• 17:09
  Speaker 1: And again, this is a strategy.
• 17:11
  Speaker 1: And what's cool about if you consolidate your debt on a practical level?
• 17:15
  Speaker 1: What's cool about it is then you usually have a five-year payback plan, and so at the end of the five years, that loan is going to be paid off because it's not revolving debt.
• 17:23
  Speaker 1: You're not adding to it, right?
• 17:24
  Speaker 1: The thing that's super risky, though, again, the thing that's super risky is if you don't change those habits, if you don't start saving, if you don't become somebody who can have money, if you don't have enough free cash flow to save money, this plan doesn't work.
• 17:37
  Speaker 1: And then look at what?
• 17:39
  Speaker 1: Here's the like path that sometimes I'll see is people will do a zero percent balance transfer and then all of a sudden they're taking out a personal loan and then all of a sudden they're taking equity out of their homes or they're taking equity out of their retirements all right, and we?
• 17:52
  Speaker 1: These debt games are long.
• 17:54
  Speaker 1: I see people playing this, these games for 10, 20, 30, 40, depending on how old they are, even 50 years.
• 17:59
  Speaker 1: I've seen people on credit card debt for so the personal loan.
• 18:03
  Speaker 1: It's a great strategy if you need to free up cash flow.
• 18:06
  Speaker 1: If your cash flow is like, all right, this cash flow needs to be adjusted.
• 18:09
  Speaker 1: It's the same thing for 401ks.
• 18:11
  Speaker 1: So sometimes people will be like, well, should I take out a 401k loan Because at least then I'm paying the interest to myself.
• 18:15
  Speaker 1: Again, I don't necessarily love that.
• 18:17
  Speaker 1: Like I've suggested it to some clients, if their cashflow is so tight that they can't get any extra to be able to pay on the debt and they don't have any money to save, then yeah, all right, let's do this, so that way we can start building out those savings habits, because that's the thing that moves the needle.
• 18:33
  Speaker 1: So you just have to be careful.
• 18:35
  Speaker 1: So those are two strategies that we can do.
• 18:43
  Speaker 1: The next strategy is like a consolidation service or a debt reduction service.
• 18:45
  Speaker 1: This is honestly, my least favorite way to go.
• 18:48
  Speaker 1: So what I find is so sometimes clients will get out of hand with their debts and then they'll do this consolidation service.
• 18:53
  Speaker 1: And some of the consolidation services are nonprofits and some are for profits, and generally what they do is they negotiate on your behalf to get your interest rate down to zero.
• 19:02
  Speaker 1: They close your accounts and you pay the consolidation company and then they make the payments on your behalf.
• 19:10
  Speaker 1: So some of the reasons I don't like these methods is sometimes those consolidation companies are a little bit of a shit show and they're not doing a great job with managing those payments.
• 19:19
  Speaker 1: That's first and foremost because I've seen a couple like I'm like what's happening here?
• 19:24
  Speaker 1: None of this makes any sense.
• 19:25
  Speaker 1: Second is those companies are generally going to charge a fee, which is fine.
• 19:30
  Speaker 1: They do provide a service, so you just have to be aware of that.
• 19:33
  Speaker 1: I'm all for people charging for providing services and these people are running businesses so they'd have to be getting paid.
• 19:40
  Speaker 1: So there's generally a fee associated with it, which can be in the realm of reasonable to the, in the realm of a little unreasonable, because they're working with, generally, people who are pretty desperate, and that's okay.
• 19:50
  Speaker 1: That's the truth of what's going on there.
• 19:52
  Speaker 1: And, honestly, though, it does so much damage to your credit.
• 19:56
  Speaker 1: That's where sometimes I'm like, maybe because you, basically your credit, is a mess the entire time you're making those payments.
• 20:06
  Speaker 1: That's pretty much what happens.
• 20:07
  Speaker 1: That's what I've seen.
• 20:09
  Speaker 1: All right.
• 20:09
  Speaker 1: So we just want to, we just want to be judicious with that, we want to be careful with that.
• 20:13
  Speaker 1: All right, all right.
• 20:14
  Speaker 1: The last thing is a bankruptcy, and again, I'm not a lawyer.
• 20:17
  Speaker 1: You have to talk to a bankruptcy lawyer.
• 20:19
  Speaker 1: Every single state has different rules about bankruptcies, but generally bankruptcy.
• 20:25
  Speaker 1: I've had a few clients that I've recommended to talk to a bankruptcy lawyer.
• 20:28
  Speaker 1: One was a widow and there was no way.
• 20:31
  Speaker 1: There was no way this math would have mathed.
• 20:33
  Speaker 1: They were not going to sort it out.
• 20:35
  Speaker 1: I've had a couple other clients where I'm like this math is not, where, this math isn't going to work.
• 20:40
  Speaker 1: You'll be paying on these credit cards until way into your retirement.
• 20:45
  Speaker 1: You're not going to be able to eat food in retirement if you pay on that, and so if you have more than six months worth of credit card debt and your cash flow is tight, if you're able to pay, if you have six months worth of credit cards but you have plenty of free flowing cash flow, then all right, cool.
• 21:00
  Speaker 1: But oftentimes I don't see those two things going together.
• 21:02
  Speaker 1: So it's just.
• 21:03
  Speaker 1: I'm just saying that it is a strategy.
• 21:05
  Speaker 1: It is a strategy and these credit card companies are able to charge 20 and 30% because of the risk, and bankruptcy is the risk.
• 21:14
  Speaker 1: That's why they're able to charge so much in interest.
• 21:17
  Speaker 1: It's because it's high risk debt.
• 21:19
  Speaker 1: It's a high risk investment for the credit card companies.
• 21:21
  Speaker 1: So you can I don't know take that for what it's worth, but those are some of the ways.
• 21:25
  Speaker 1: So, listen, practical strategies, and so the snowball is my preferred method.
• 21:29
  Speaker 1: The avalanche is secondary.
• 21:31
  Speaker 1: The credit card, the shuffle the credit card shuffle with one of those two plans is still a pretty good plan.
• 21:37
  Speaker 1: When we start getting into consolidation, those are okay, we can do those, and the last two are not my two favorite to be working on, but they're also appropriate depending on where we're at.
• 21:50
  Speaker 1: So those are some practical strategies for credit card debt.
• 21:53
  Speaker 1: So the things that you need to just be aware of is your balance, your free cash flow, how much extra you can put and how much extra really takes you to save.
• 22:00
  Speaker 1: And so, listen, if you're thinking of doing any of these things, you should look.
• 22:04
  Speaker 1: I have a course called Drop the Debt and also I have a course called the Invisible System, and the reason that they would they should go together is the invisible system is going to teach you how much money you need to save to be OK, right, like that's when we put our number, like when we put working capital together.
• 22:18
  Speaker 1: Working capital is like the maintenance on your things, the repairs, your family obligations, like the stuff that you definitely see coming, but they're just not regular monthly bills, right, like your family obligations, the foreseeable disasters, your irregular expenses, like your quarterly bills, things like that.
• 22:35
  Speaker 1: So being able to calculate that out and then be able to run some projections with those kind of numbers is super, super helpful for building the habits that keep you out of credit card debt, because really, when it comes to getting out of credit card debt once and for all, it's really like the primary thing to work on is either the habits or the mindset that is at the root of that credit card debt.
• 22:57
  Speaker 1: And so habits are so important for the credit cards because the credit card companies literally manipulate your habits Like they like.
• 23:04
  Speaker 1: When they're giving you points, what they're doing is they're manipulating your habits and once you build those habit connections they're hard to break.
• 23:11
  Speaker 1: That's why smoking is so hard to break.
• 23:13
  Speaker 1: It's a thousand tiny micro habits, right?
• 23:16
  Speaker 1: So if you get used to using that one credit card and they reward your points, now that thing is into all of your spending habits and there's a lot of spending habits, right?
• 23:26
  Speaker 1: It's the main thing.
• 23:26
  Speaker 1: And then sometimes we have to look at the mindset.
• 23:28
  Speaker 1: Sometimes we have clients over giving on their credit cards or emotionally spending on their credit cards.
• 23:34
  Speaker 1: Or there's sometimes deeper stuff.
• 23:37
  Speaker 1: Sometimes it's things like a divorce, a job loss, loss and illness, a big change of circumstances and moving house.
• 23:43
  Speaker 1: Those things will also sometimes result in credit cards too.
• 23:47
  Speaker 1: So I hope this was useful for you.
• 23:49
  Speaker 1: I love you, I appreciate you.
• 23:51
  Speaker 1: Thank you All.
• 23:52
  Speaker 1: Right Bye.
• 23:53
  Speaker 1: It was my pleasure and joy to talk with you today.
• 24:01
  Speaker 1: Thank you for listening.
• 24:02
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