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Done. A show about finances and

1:54

feelings where we don't talk down

1:56

to you. Guys. Hold on to

1:58

your but your butts. Because... We

2:00

have a guest that has come

2:02

up in our mailbag a bunch

2:04

and people have been requesting because

2:06

she did the boring episode. I

2:08

think it was called A Listener

2:10

Asked to Come On, the show.

2:12

So go and find that one.

2:14

Stephanie Lee, do you want to

2:16

tell the people who you are

2:18

and what's happened since we did

2:20

the boring episode? Oh, sure. So

2:23

I have a business called Frequently

2:25

Text Questions where I help people learn

2:27

things that they want to

2:29

know about. money like how

2:31

to help prepare their taxes

2:33

or to better understand retirement

2:36

saving options, things like that.

2:38

And since I came on

2:40

the show last year, I

2:42

was very inspired by

2:44

it, so I started a

2:47

weekly newsletter called The Boring

2:49

newsletter. And so if you're

2:51

interested in signing up, you

2:53

could do that at my

2:55

website frequently taxed questions.com. And

2:58

every week I write about

3:00

something that I think most people

3:02

would find maybe boring, but I think

3:04

is secretly awesome. I think of you

3:06

every time I see those turbo tax

3:09

commercials that are like, don't do your

3:11

own taxes. I'm like, I bet this

3:13

drives Stephanie up a wall. Yeah, I

3:16

think most people probably could do it

3:18

themselves if they want to. Not everyone

3:20

wants to, and that's totally fine, but

3:23

I think if you're interested, it's, you

3:25

know, don't, I would say, don't, don't

3:27

feel intimidated, you can do it, you

3:29

can learn. And it's a wonderful

3:31

entry point to learning about other

3:34

aspects of managing money as well.

3:36

So that's actually, to me, the best

3:38

reason to do it yourself is because

3:40

it helps you start to feel empowered and,

3:42

you know, get on top of your own

3:44

money issues, money issues. So I brought you

3:46

on because I want to talk about debt.

3:48

So welcome to the boring episode part two.

3:51

So I have a lot of like shame

3:53

around debt. I know debt is like a

3:55

huge trigger for a lot of people. And

3:57

on your website, one of the third things

3:59

on the list. of what you talk

4:01

about is debt. So can you

4:03

explain like what you do for

4:05

people there and what people are

4:07

looking for? Yeah, so I think

4:10

primarily people, I totally understand what

4:12

you mean about feeling shame around

4:14

it. I'm actually in the middle

4:16

reading this book about the history

4:18

of debt and one of the

4:20

things that the author David Graber

4:23

writes about is how in all

4:25

different cultures over the last, you

4:27

know, multiple thousands of years around

4:29

the world, there have been these

4:31

kind of moral ideas around debt,

4:34

which are kind of in conflict

4:36

with each other simultaneously, this idea

4:38

that if you borrow money, it's

4:40

immoral to not pay it back.

4:42

But then at the same time,

4:44

people who lend money are immoral,

4:47

right? And so we have these

4:49

kind of... conflicting ideas around it.

4:51

I think that it's not a

4:53

very helpful way to think about

4:55

it when it comes to day

4:58

to day. How do I manage

5:00

my personal finances? I guess that's

5:02

I have a kind of a

5:04

practical approach. And so if someone

5:06

is in debt and does not

5:08

want to be, you know, step

5:11

one is making that decision and

5:13

then step two would be making

5:15

a plan. Right. And so, you

5:17

know, sitting down and making a

5:19

plan and kind of getting your

5:22

arms around it, that's, you know,

5:24

that would be the program there.

5:26

What's the first step of making

5:28

a plan? Right. Yeah. So I

5:30

think step one is to make

5:32

a list of all of your

5:35

debts. Right. And so that could

5:37

be fairly quick to do or

5:39

it could be more time consuming,

5:41

just depending on where someone is

5:43

starting from. So it would be,

5:46

you know, what is the loan?

5:48

Where is it owed to? What

5:50

is the outstanding balance today? What

5:52

are the required? monthly payments or

5:54

required minimum payments and what's the

5:56

interest rate? Right, so just a

5:59

list. I have, you know, this

6:01

visa and it has a $2,000

6:03

balance. I have this student loan

6:05

and it's $3,000, right? Just what

6:07

are they, right, just to lay

6:10

it all out? That is step

6:12

one, because if you don't know

6:14

what you're trying to pay off,

6:16

you can't really make a specific

6:18

plan for it. I would say

6:21

step one is cry. I would

6:23

say step one, cry. Step two,

6:25

do that. Right, right. Well, I

6:27

mean, yeah, really step one, it's

6:29

like deciding that you want to

6:31

tackle it. Right. I mean, that's

6:34

not something that has to happen

6:36

on your own. Yeah. Do you

6:38

have like a history of being

6:40

in debt or like a background

6:42

in that? I don't. My partner

6:45

when we first met had student

6:47

loan debt and I think had

6:49

a lot of shame around it

6:51

from starting a program that they

6:53

didn't finish, you know, and we

6:55

had some discussions around kind of,

6:58

well, okay, what's the plan? And

7:00

it was, you know, so we

7:02

made a plan and we did

7:04

the plan. So, okay, so I

7:06

wanted to do this episode because

7:09

I have... fluctuated so wildly in

7:11

terms of financial stability. When I

7:13

left college, I didn't realize how

7:15

much I had in student loans,

7:17

which was like around 40 to

7:19

50K, and I didn't look into

7:22

it at all. I wasn't like

7:24

aware of it. I didn't, I

7:26

had it on auto pay and

7:28

I like didn't want to do

7:30

anything. And it just seemed like

7:33

such an insurmountable number. And then

7:35

I didn't get a credit card

7:37

until I was like 25, and

7:39

then I was so scared to

7:41

use it. I just never had

7:43

any cash really and my income

7:46

was fluctuating so much and I

7:48

didn't know anything about interest rates.

7:50

anything like that. Then I got

7:52

better with money into my, not

7:54

even making more, like I was

7:57

making more, but I was still

7:59

bad with money. And then as

8:01

I got more into learning about

8:03

money as I started this show,

8:05

I was working on paying off

8:07

my debts and I paid, you

8:10

know, paid off my student loans

8:12

luckily with money that I was

8:14

making from TV and different like

8:16

writing jobs and things like that.

8:18

And then I thought I was

8:21

in a place where I. was

8:23

doing really well and I bought

8:25

a house with a partner then

8:27

me and that partner split up

8:29

so in November so now there's

8:31

some you know legal stuff with

8:34

the house and the house is

8:36

no longer like an investment for

8:38

me and I feel like I

8:40

quote-unquote back slid I feel like

8:42

I went now I went back

8:45

back and I had some more

8:47

credit card debt. which was terrifying.

8:49

I mean, and maybe there are

8:51

people that will be screaming at

8:53

me, I don't know, but I

8:55

have like my little investments that

8:58

I was like doing, like my

9:00

little Apple investment, whatever. And now

9:02

I'm, I have enough money to

9:04

like keep me going for a

9:06

little while till I get paid

9:09

again. But I was like, wow,

9:11

I really like, I've learned everything

9:13

and I, you know. I there's

9:15

no way I could ever get

9:17

back in debt. And I think

9:19

the big thing is that I

9:22

wanted to like have you on

9:24

and I wanted to talk about

9:26

this openly because I think there

9:28

are it's not linear. And there

9:30

are so many ways and reasons

9:33

that people get back into debt

9:35

or are in debt and then

9:37

not in debt or you know

9:39

like I can you speak a

9:41

little bit to like the reasons

9:43

that people get into debt and

9:46

like what why it's like not

9:48

all the same and. You know,

9:50

yeah, stuff like that. I mean,

9:52

it's, I mean, it's almost like

9:54

saying. well is everyone's life the

9:57

same like sort of obviously no

9:59

right and so you know it

10:01

could be something that happens that

10:03

is just an outside force right

10:05

medical dead super common you know

10:07

any kind of a big life

10:10

change right could be splitting up

10:12

from a partner you know you're

10:14

living with other family and then

10:16

you just can't any number of

10:18

reasons right job loss you or

10:21

if you share finances with someone

10:23

in the household big their job

10:25

loss car accident and so you

10:27

need an emergency repair in your

10:29

car because without your transportation you

10:31

can't get to work right I

10:34

mean it's just it like I

10:36

could keep going right anything that

10:38

can happen in life right because

10:40

I mean money money kind of

10:42

touches everything you know and so

10:45

there's all kinds of things and

10:47

you know It's like, look, that

10:49

doesn't mean that you didn't, it

10:51

doesn't mean you don't know things

10:53

about money. It doesn't mean you

10:55

did bad, right? It just means

10:58

maybe you didn't have an emergency

11:00

fund or, you know, I don't

11:02

know, something else, right? Maybe you're

11:04

working on it, but you just

11:06

didn't build it up yet, right?

11:09

I mean, it just, you know,

11:11

so it's like, you just make

11:13

a plan and then just start

11:15

working on the new plan, right.

11:17

Okay, this is the new plan.

11:19

You know, I had sort of

11:22

said, oh, I don't have experience

11:24

with that. I have mortgage debt

11:26

right now. Sometimes I forget. I

11:28

don't think of it that way,

11:30

but of course it is. Of

11:33

course it's debt. We were in

11:35

a different home previously and had

11:37

made a certain amount of progress.

11:39

You know, I have a goal

11:41

of paying it off earlier than

11:43

required. And then we moved to

11:46

a different home and then I

11:48

kind of had to reset that

11:50

way because We moved to a

11:52

different area and we loved it.

11:54

And so I'm like, look, I.

11:57

get all these benefits in my

11:59

life from it I made a

12:01

choice right I just decided okay

12:03

this is the new plan here's

12:05

the new thing happening in life

12:08

okay and so it has some

12:10

financial implications I went into I

12:12

understood it okay here it is

12:14

right if you split up with

12:16

a partner I mean what are

12:18

you gonna say oh the only

12:21

thing that matters in my life

12:23

is financial implications of something of

12:25

course not You know, you have

12:27

to make the right decisions for

12:29

your life and then you'll figure

12:32

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12:34

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14:43

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14:48

like within your grasp, you know, that isn't

14:50

like so far fetched, then... I guess New

14:52

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advisor. You

17:06

know it's funny I get interviewed

17:09

a lot right for this show

17:11

and I just did one where

17:13

they were like gave done like

17:15

show bad with money started bad

17:17

with money and now they're good

17:19

with money so tell us what's

17:21

going and I like in the

17:23

back of my head know that

17:25

everything is real fucked up right

17:28

now and I'd so I was

17:30

like I have to be honest

17:32

on this show like I can't

17:34

because I can't have people thinking

17:36

like oh well now you know

17:38

everything's fine because a big life

17:40

change happened and I had to

17:42

move and I had to, like

17:45

I had, you know, all of

17:47

these debts all of a sudden.

17:49

So I also have read in

17:51

my book Bad With Money, I

17:53

talked about this guy who wrote

17:55

an article for the New York

17:57

Times where he was like, I

17:59

am simply defaulting on my student

18:01

loans. I don't care. I will

18:04

not be punished for pursuing education,

18:06

fuck off. So can you think

18:08

like, and then sometimes I think

18:10

for... me like okay it's it's

18:12

it's credit it's like having a

18:14

credit score and then it's also

18:16

like the psychological component but like

18:18

you were talking about the history

18:21

of debt like why why do

18:23

people think oh I need to

18:25

pay it off is there a

18:27

real tangible reason you mean like

18:29

why people sometimes think about it

18:31

as a moral issue specifically yeah

18:33

like I mean or why are

18:35

the more what moral reasons and

18:37

then is there really a reason

18:40

what happens to you if you

18:42

don't pay it? Why do people

18:44

think that it's a moral issue?

18:46

I don't know, that's a big

18:48

question. Like I'm not sure. I

18:50

think, I guess not moral, but

18:52

I guess like psychologically we're taught

18:54

to feel, oh my God, I'm

18:57

less than. I totally, I'm on

18:59

a minute, it kind of goes

19:01

with other parts of dominant culture

19:03

where people with more money are

19:05

viewed as better in all kinds

19:07

of ways, you know? I mean,

19:09

this, I think there's also that,

19:11

like, you touched on this very

19:13

practical question of, okay, what's going

19:16

to happen to me if I

19:18

don't pay. Yeah, tell me what's

19:20

going to happen to me. Yeah.

19:22

Oh, so the answer to that,

19:24

it depends on what kind of

19:26

debt you're talking about, right? So

19:28

if you're talking about a mortgage

19:30

for a home, in, you know,

19:33

if you wait long enough, at

19:35

some point, a sheriff can come

19:37

and evict you from your house

19:39

when you get foreclosed closed on.

19:41

I mean, I mean, I mean,

19:43

that's your worst case case scenario.

19:45

What about if your credit card

19:47

debt, like you're just a person

19:49

like me living in an apartment?

19:52

Right, and then it can get,

19:54

credit cards can get sent to

19:56

collections. You can start having an

19:58

unbelievable number of phone calls at

20:00

your personal phone number, phone calls

20:02

to your work, maybe. Sometimes, you

20:04

know, there are stories you'll hear

20:06

about where someone's, you know, colleagues,

20:09

boss is hearing from collectors. threatening

20:11

things. Sometimes they say things that

20:13

are not legal, that they're not

20:15

allowed to say, but they do

20:17

it. way, right? You know, just

20:19

trying to get you to reach

20:21

an agreement to pay, you know,

20:23

something on credit cards, right? I

20:25

mean, but the first thing that

20:28

happens is when you stop paying

20:30

is you start accruing additional interest

20:32

charges, right? And so, I mean,

20:34

that's true for I think pretty

20:36

much every kind of debt, you

20:38

know, one thing to know about

20:40

student loans is that those are

20:42

not dischargeable in bankruptcy. So that

20:45

means if you decide to file

20:47

bankruptcy, you go to the court

20:49

and you say, look, I can't

20:51

pay my debts, right? And there's

20:53

a very long, from what I

20:55

understand, unpleasant process, where you have

20:57

to pay fees to the court

20:59

and they get information, all kinds

21:01

of paperwork from you. your tax

21:04

returns, every scrap of paper they

21:06

need to figure out what kind

21:08

of debts you have, what your

21:10

income is, what kind of assets

21:12

you have. And if the court

21:14

reaches a conclusion, indeed, you cannot

21:16

pay your debts, they will wipe

21:18

your debts clean for you. But

21:21

only for the types of debt

21:23

that are considered, quote, dischargeable in

21:25

bankruptcy. So that would be like

21:27

credit cards are dischargeable in bankruptcy,

21:29

or dischargeable in bankruptcy. but student

21:31

loans are not. And so what

21:33

that means is those student loans

21:35

you're still going to owe. Even

21:37

if you decide you're going to

21:40

declare bankruptcy, which is going to

21:42

screw up your credit for the

21:44

next 10 years, you still owe

21:46

on the student loans. And a

21:48

divorce, you know, some like a

21:50

very big traumatic life event that

21:52

is extremely unpleasant that they hope

21:54

no one else has to go

21:57

through. What would you say is

21:59

the second step of the getting

22:01

out of debt plan? Right. So

22:03

if if if kind of after

22:05

you've decided if step one is

22:07

making a list of all your

22:09

debt. step two would be making

22:11

a plan for your money that

22:13

would include some debt payoff right

22:16

so at its kind of core

22:18

level it's I think it's pretty

22:20

straightforward it's like you have a

22:22

job so you have a certain

22:24

amount of money that's incoming and

22:26

that could be you know if

22:28

it's a if it's a if

22:30

it's a steady paycheck every month

22:33

then it's steady if it's variable

22:35

income fine it's variable right but

22:37

you've got your incoming and then

22:39

you have your outgoing, right? And

22:41

so your outgoing money, you're going

22:43

to probably want to divide into

22:45

your absolute required things and then

22:47

everything else, right? So the absolute

22:49

required things that would be your

22:52

housing, your food, utilities, transportation to

22:54

work, right? And then everything else,

22:56

you know, it's probably up for

22:58

grabs. To me, it was so

23:00

easy to get there. and so

23:02

hard to get out of that

23:04

the number just seems insurmountable like

23:06

with interest rates like is that

23:09

the order I'm looking at like

23:11

the order in which you pay

23:13

off various debts like the right

23:15

order is is like whatever has

23:17

the highest interest rate or is

23:19

the the right order like medical

23:21

credit card then student loans you

23:23

know like what or is it

23:25

just looking at the interest rate

23:28

because I went by interest rate.

23:30

Right. So yeah, so that people

23:32

call that the debt avalanche method.

23:34

Yeah, so there's kind of two

23:36

common approaches. When someone is making

23:38

a plan, what is the order

23:40

that I should work on paying

23:42

off my debts? And I'll just

23:45

say up top, the most important

23:47

thing is that whatever plan you

23:49

pick that it has kind of

23:51

resonates with you and you like

23:53

it because If you don't stick

23:55

with the plan, it's not going

23:57

to work. So pick a plan

23:59

that you think works for you,

24:01

right? But the two common... One

24:04

would be to list out your

24:06

debts and you could rank them

24:08

highest interest rate first and then

24:10

lowest interest rate last. And so

24:12

you would start out by saying,

24:14

okay, I have a credit card

24:16

loan, it has a 20% interest

24:18

rate, everything else, I mean, which

24:20

would be, that's not a crazy

24:23

number, right? You know, it has

24:25

a 20% interest rate, and then

24:27

my next one is, you know,

24:29

my student loan, and it has

24:31

a 6% interest rate. and then

24:33

you know everything else is you

24:35

know maybe less than that or

24:37

whatever is in between right so

24:40

start with that highest one and

24:42

then you're gonna pay the minimums

24:44

or just whatever is required on

24:46

everything else and then all your

24:48

extra money will go to that

24:50

first one right so let's say

24:52

you do your budget it's you

24:54

know X amount for my rent

24:56

and for food and for everything

24:59

else And you have, I'm going

25:01

to just use round numbers to

25:03

make it simple. Let's say you

25:05

have $1,000 a month that you

25:07

could put to debt and the

25:09

required minimum on, you know, let's

25:11

say you have four loans and

25:13

loans two through three and four,

25:16

the required minimums add up to

25:18

like $400. Then 600 would go

25:20

on loan number one, right? Assuming

25:22

that, you know, let's say the

25:24

minimum or the required payment on

25:26

loan number one is like 300,

25:28

then you would be paying an

25:30

extra 300 on top of that

25:32

each month. And you would just

25:35

keep doing that until loan number

25:37

one is totally paid off. Then

25:39

you would take that 600 that

25:41

had been going to loan number

25:43

one, you would start throwing that

25:45

at loan number two and keep

25:47

paying in loan three and four,

25:49

you're just doing still the the

25:52

monthly required amounts, right? and then

25:54

everything on two. You don't want

25:56

to realize that you're only paying

25:58

the interest rate. Right, right. using

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at guard your card. Yeah,

26:36

you need to do extra to

26:38

pay down that principle, right? And

26:40

so once you know, you just

26:42

can't a rinse and repeat, right?

26:44

And so all the extra that

26:46

you can, you're throwing at whatever

26:48

is top of your list, right?

26:50

And so that could be based

26:52

on highest interest rate, like you

26:54

said, that's debt avalanche method. And

26:56

then the other method that a

26:58

lot of people like is called

27:00

debt snowball. And that's where you

27:02

start out with whatever has the

27:04

smallest balance, the amount outstanding on

27:06

the loan, and then you get

27:08

that one done first, and then

27:10

you go to the next largest,

27:13

next largest, you do them in

27:15

that order. And even though, from

27:17

a strictly mathematical sense, you'll pay

27:19

more in interest, it has a

27:21

psychological effect on people. you know,

27:23

you take your littlest loan and

27:25

you get it paid off and

27:27

it's like, oh my God, I

27:29

did it. I got one paid

27:31

off, right? And it provides this

27:33

motivation and, you know, a feeling

27:35

of excitement and so then you,

27:37

you know, you want to keep

27:39

going with the next one because,

27:41

you know, what if your highest

27:43

interest loan is going to take

27:45

you a really long time if

27:47

you don't have as much of

27:49

a feeling of a feeling of

27:51

progress, right? keeping up the motivation

27:53

to get it done. Just one

27:55

thing you know that that phrase

27:57

debt snowball, you're gonna hate this.

27:59

But you know who coined that

28:01

term? Is it Dave Ramsey? It's

28:03

Dave Ramsey? No! No! He's like

28:05

the boogie man. I know. Oh

28:07

my God. You say his name

28:09

five times and he shows up.

28:11

Candyman. Yeah. Well, wow. Make sure

28:13

that you're not just paying the

28:15

interest rate. Because you can look

28:17

and be like, oh wow, I'm

28:19

really paying this off every month.

28:21

And it's like, no, you're just

28:23

paying the interest rate, the loan

28:25

is exactly the loan is exactly

28:27

the same. Yeah, I mean, and

28:29

in that case, then if you're

28:31

thinking about your budget, it could

28:33

be a situation where you would

28:35

say, look, given what I really

28:37

need to have to cover my

28:39

most basic expenses and to make

28:41

progress on paying the debt, maybe

28:43

you need to look at the

28:45

income side of the equation, right?

28:47

And to say, I mean, because,

28:49

you know, look, it's like there's

28:51

money that comes in, there's money

28:53

that goes out and you've got

28:55

different levers for each of those,

28:57

right. And so If you look

28:59

at your income and you say,

29:01

okay, you know, maybe I need

29:03

to try to make more money,

29:05

what would that look like for

29:07

me? You know, does it mean

29:09

trying to get a raise at

29:11

my current job? Does it mean

29:13

taking on a side job? You

29:15

know, I mean, that's going to

29:17

be different for everyone. But, you

29:19

know, just kind of knowing like,

29:21

look, here's something that I want

29:23

to do, you know, you don't

29:25

have to become an entrepreneur or

29:27

something, it could just be... you

29:29

know, a part-time job that you're

29:31

going to do just for a

29:33

short period of time while you're

29:35

trying to accomplish this goal. You

29:37

know? So unfortunate. Does it make

29:39

sense to consolidate loans? People always

29:41

ask about that. It can be

29:43

expensive. You know, there can be

29:45

fees associated with that. I think

29:47

it probably the answer depends on

29:49

someone's exact debt situation, some of

29:51

the specifics there. I think that...

29:53

One thing to keep in mind

29:55

with that would be to not

29:57

fall into a trap of feeling

29:59

like, okay, a consolidation I've made progress

30:02

on paying off my debt because

30:04

you're not actually changing the

30:06

amount of loans outstanding if you

30:08

do a consolidation you're

30:11

just reducing the number of

30:13

loans that you have and maybe changing

30:15

the interest rate but the

30:18

amount outstanding would be the

30:20

same right and so keeping

30:22

that kind of psychological component

30:24

in mind I think that's

30:26

really important. Yeah, can you explain,

30:28

sorry I said that, but

30:30

like can you explain what

30:33

consolidating means? And the

30:35

ways that it's like what the

30:38

companies are and like how

30:40

it happens. Yeah, so let's say

30:42

that you have, you know, two

30:45

different credit cards that

30:47

have a balance each $2,000,

30:49

right? And you wanted... have

30:51

you could consolidate those into one

30:53

loan that has a balance of

30:55

$4,000, right? And so, but that's

30:58

not going to come for free. You're

31:00

going to pay some fees to make

31:02

that happen, right? And maybe you're

31:04

going to get a lower interest

31:06

rate in the process, right, on

31:08

the new fourth, you know, you're

31:11

basically saying I'm going to have

31:13

a new $4,000 loan and it's

31:15

going to replace each of those

31:17

prior existing $2,000 loans, right? So

31:19

I'm going to. take my new

31:21

loan, the proceeds of my new

31:23

loan, they're going to pay off the

31:25

old existing loans, and then I'm going

31:27

to have to pay it on the new loan

31:29

instead, right? So it's kind of

31:31

like you're just moving pieces around

31:34

on a board, maybe, but

31:36

you're not eliminating the debt, right?

31:38

But does it matter if the interest

31:40

rate is better? It's a good thing

31:42

to get a better interest rate. I

31:44

would say you might want to think

31:47

about, well, what's it going to cost

31:49

me to do a consolidation loan? And

31:51

how does that compare to the

31:53

interest that I might save? What

31:56

would it cost you? Fees from doing

31:58

a consolidation loan, right? I mean, it's

32:00

just like if you, for example,

32:02

refinance a mortgage, you have to

32:04

pay a transaction fee to do

32:06

that. And so it only makes

32:09

sense to go ahead with a

32:11

refinancing transaction if the interest you

32:13

will save while the loan is

32:15

outstanding would outweigh the fee, right?

32:17

It's kind of like that, right?

32:19

And so it's kind of a

32:21

math question. So, you know, and

32:23

it takes, you know, it takes

32:25

effort to do it as well.

32:27

Right, and so depending on someone's

32:29

debt situation, they might want to

32:31

just focus on how can I

32:33

pay it off, right? How can

32:35

I take all my effort and

32:37

energy and think about how can

32:39

I just pay this off? So

32:41

here's here's maybe a thing that

32:43

I thought of that is is

32:46

you're going to tell me as

32:48

bad. What if you have a

32:50

credit card that has like a

32:52

14% interest rate and then you

32:54

open another credit card. That has

32:56

zero. And then you pay, you

32:58

use that credit card to pay

33:00

the other credit card. And then

33:02

you have a, like a balance

33:04

transfer. Yeah, what about that? Yeah,

33:06

so that, that's fine. You and,

33:08

and if, if you say, look,

33:10

scenario one, I have a 14%

33:12

credit card, I'm gonna pay it

33:14

off over. the next year, I'm

33:16

going to pay, you know, X

33:18

amount per month to get it

33:20

paid off. And then I take

33:22

scenario two. I do the balance

33:25

transfer. You have to know if

33:27

there are fees to do that,

33:29

right? And then I'm going to

33:31

do that exact same plan of

33:33

paying X amount a month to

33:35

pay it all off. If the

33:37

interest you would save in scenario

33:39

number two is more than whatever

33:41

the balance transfer cost, Then great,

33:43

that's a good plan. But don't

33:45

trick yourself into thinking, I did

33:47

the balance. transfer and so therefore

33:49

my work is done. No, your

33:51

work is not done. The work

33:53

is actually paying down the balance.

33:55

You know what I mean? Yeah.

33:57

So it's not a terrible idea.

33:59

It's a fine idea. Just don't

34:02

trick yourself like, okay, and now

34:04

I'm done. Right, right. I was

34:06

thinking about, like, I was like,

34:08

well, you could do a balance

34:10

transfer. Then you have a year,

34:12

it's a new credit card, so

34:14

you have a year. of like

34:16

free, not free, you have a

34:18

year of no interest rates. And

34:20

then, but I guess that's just

34:22

sort of running from the initial.

34:24

Yeah, I mean, look, I think

34:26

it can, it's, it can be

34:28

a good part of a plan,

34:30

right? But it's not the whole

34:32

plan. Does that affect your credit

34:34

score at all to close the

34:36

one and then open the other

34:39

one? It can, that might be

34:41

fine, right? And then also keep

34:43

in mind there, there, there is

34:45

a difference between. paying off the

34:47

balance on a credit card versus

34:49

closing the account entirely. You know,

34:51

you could have a credit card

34:53

where you pay it off, you

34:55

could even cut up the plastic

34:57

piece of plastic, and the account

34:59

is still open. Right, you could

35:01

take a credit card, you could

35:03

put it in a drawer, you

35:05

could cut the card in half,

35:07

if you want to make sure

35:09

you're not going to use it

35:11

again, but the account could still

35:13

be open. You can always call

35:16

them, they'll mail you, a new

35:18

one. right away. They'll be happy

35:20

to mail you on if you

35:22

want if you want. So if

35:24

you want to leave the account

35:26

open and not use the card,

35:28

that is definitely fine. Also, if

35:30

you want to close it, that's

35:32

fine too. Right. I, you know,

35:34

I think people worry about credit

35:36

scores a lot. And sometimes when

35:38

they don't need to, it's almost

35:40

like if you just live your

35:42

life and try to work on

35:44

having good finance practices, the credit

35:46

score, usually it's gonna just take

35:48

care of itself. Yeah. You know,

35:50

like if you're worried, if you're,

35:52

if the thing that's on your

35:55

mind is I want to get

35:57

out of credit card debt, well,

35:59

are you going to be applying

36:01

for more credit cards right now,

36:03

maybe not too much, you know?

36:05

And so in which case, does

36:07

your credit score really matter? No,

36:09

you just do the one and

36:11

then balance transfer. And then next

36:13

year, do it again. And then

36:15

next year, do it again. That's

36:17

Galaxy Brain, baby. Yeah. So

36:32

what are trade lines? Oh, trade

36:34

lines? Yeah, so that's, have you

36:36

ever heard of someone where they

36:39

are an authorized user on a

36:41

credit card? Like, there's a, maybe

36:43

it's like a married couple, and

36:45

one of them has a credit

36:48

card, because the credit card can

36:50

only be in one person's name,

36:52

right? Unlike a bank account, you

36:54

could have like a joint account,

36:56

credit card is just in one

36:59

person's name, so. Let's say I

37:01

want my partner to be an

37:03

authorized user on the account, that

37:05

means they get a critical credit

37:08

card in the mail with their

37:10

name on it, but it's still

37:12

this, it would be my credit

37:14

card that they're using, right, the

37:17

one account, and I would still

37:19

be responsible for paying it. I

37:21

could give my child, I could

37:23

make my child an authorized user

37:25

on my account if I wanted

37:28

to, right? It's you know, it

37:30

doesn't have to be someone that's

37:32

related to you in some way.

37:34

You could just decide. Oh, I

37:37

want to do that. This stems

37:39

from a time when my understanding

37:41

is in the US from a

37:43

time when a married woman was

37:46

not allowed to have a credit

37:48

card account of her own. And

37:50

so they came up with this

37:52

way where She could be an

37:54

authorized user on her husband's credit

37:57

card. So I remember when I

37:59

was in high school, I had

38:01

a teacher who told me about

38:03

this. out after she got married,

38:06

she wasn't allowed to continue having

38:08

her credit card. I was like,

38:10

what? Yeah. So that's the origin

38:12

of I think of this this

38:15

whole authorized user thing. And that

38:17

is just a different way of

38:19

saying a trade line. So like

38:21

if I made you an authorized

38:23

user on my account, let's say

38:26

I've had that credit card open

38:28

for 10 years. Right. One of

38:30

the factors that goes into someone's

38:32

credit score is the length of

38:35

their credit history. And so let's

38:37

say you only had credit cards

38:39

that had been open an average

38:41

or credit accounts open an average

38:44

of like two years having a

38:46

longer term account like 10 years

38:48

that would be helpful for you

38:50

for including that in your average.

38:52

And so if I make you

38:55

an authorized user, then that history

38:57

would get kind of. imported into

38:59

your credit history. So that's why

39:01

sometimes a parent will make their

39:04

child an authorized user because it

39:06

helps the child build a credit

39:08

history, right? This term trade lines

39:10

refers to it. It's actually something

39:13

people sometimes even sell their trade

39:15

lines. Other people will buy them,

39:17

right? So if someone is, yeah,

39:19

so if someone is looking to

39:21

buy, you know, kind of a...

39:24

quick solution to improving credit, like

39:26

if they're going to apply for

39:28

credit, and they want a fix

39:30

like that, you can actually pay

39:33

money to have someone, you know,

39:35

add you as an authorized user

39:37

and get the trade line. Who?

39:39

What? How do you do? Who?

39:41

Who? Well, let's see. Like, I

39:44

think there's a Craigslist of trade

39:46

lines. No, like so like there's

39:48

a firm trade line supply company

39:50

is one that I'm familiar with.

39:53

And who is the person selling

39:55

it and how much are they

39:57

selling it for? And how does

39:59

that not bite you in the

40:02

ass? So the person who purchases

40:04

the trade line, they don't actually

40:06

get a credit card in the

40:08

mail necessarily, right? Like the whoever

40:10

is selling it could make that

40:13

decision. And they could also say,

40:15

okay, this person is an authorized

40:17

user on the account, but their

40:19

spending limit is $0. Like you

40:22

could do it. Yeah, like you

40:24

could do it that way. Oh

40:26

my God. This is news to

40:28

me. Yeah, no, this is actually,

40:31

you kind of hit on something

40:33

that's kind of obscure. I think

40:35

a lot of people aren't familiar

40:37

with it, but it does exist.

40:39

That is so wild. And, and

40:42

God, I hate our country. That

40:44

is so wild. So man, is

40:46

that how much are they selling

40:48

them for? Well, so you, you,

40:51

the person who's buying it would

40:53

only be interested in buying it

40:55

if your credit is superb? Mine's

40:57

great, I think. Yeah, so that

41:00

would be one thing. And then

41:02

typically you would want a credit

41:04

card that's been open for like

41:06

probably a minimum of two years,

41:08

but the more the better. And

41:11

so yeah, it might be like,

41:13

oh gosh, I don't know, something

41:15

like three or $400, something in

41:17

that range. No, I think typically

41:20

no. How many people can you

41:22

have on a trade line? You

41:24

know, so the credit card companies

41:26

don't like this. Oh, you think?

41:29

Right. Yeah, they frown on this

41:31

because it kind of is messing

41:33

with the whole premise of like,

41:35

what is it? What is someone's

41:37

credit report show? What does it

41:40

mean? You know, that kind of

41:42

thing. And so it's one of

41:44

these activities where... It's not illegal.

41:46

It's kind of like counting cards.

41:49

It's like it's not illegal, but

41:51

the casinos hate it and they're

41:53

going to try to stop it,

41:55

right? And if a casino thinks

41:58

you're counting cards, they're just going

42:00

to kick you out, right? I

42:02

think that's how trade lines are

42:04

with credit cards where, you know,

42:06

if you're, if you're having maybe

42:09

one authorized user, maybe two at

42:11

a time, and then you kind

42:13

of, you keep them on the

42:15

account for, I don't know, six,

42:18

nine months, whatever it is that

42:20

they need to kind of build

42:22

that history, then you can remove

42:24

them, and then maybe at that

42:27

point, wait a month or two,

42:29

do it again, you know, that

42:31

kind of a thing. The bank

42:33

is like, just person keeps breaking

42:35

up with people. Yeah, well, and

42:38

the risk would be if you're

42:40

doing this too much and the

42:42

bank observes that activity, they might

42:44

cancel your card. Got it. That

42:47

would be the risk, right? You

42:49

learn something new every day. Yeah.

42:51

Yeah. We don't endorse it, but

42:53

we sure are talking about it.

42:56

Final outgoing thoughts of like, if

42:58

someone is in a lot of

43:00

debt. I read too much true

43:02

crime and it's just like debt

43:04

seems to be a thing that

43:07

motivates a lot of murder and

43:09

like it just because I think

43:11

it's just so it feels so

43:13

insurmountable like what what can you

43:16

do if you're listening to this

43:18

and you're like I have $60,000

43:20

in just credit card debt like

43:22

I don't fucking know man. Mm-hmm.

43:25

Mm-hmm. So the whole start out

43:27

by making a list step. That's

43:29

a really big step, right? Because

43:31

we'll kick you out, right? I

43:33

think that's how trade lines are

43:36

with credit cards, where, you know,

43:38

if you're, if you're having maybe

43:40

one authorized user, maybe two at

43:42

a time, and then you kind

43:45

of, you keep them on the

43:47

account for, I don't know, six,

43:49

nine months, whatever it is that

43:51

they need to kind of build

43:54

that history, then you can remove

43:56

them. And then maybe at that

43:58

point. wait a month or two,

44:00

do it again, you know, that

44:02

kind of a thing. The bank

44:05

is like just person keeps breaking.

44:07

up with people. Yeah, well, and

44:09

the risk would be if you're

44:11

doing this too much and the

44:14

bank observes that activity, they might

44:16

cancel your card. Got it. That

44:18

would be the risk, right? You

44:20

learn something new every day. Yeah.

44:23

We don't endorse it, but we

44:25

sure are talking about it. Final

44:27

outgoing thoughts of like, if someone

44:29

is in a lot of debt,

44:31

I read too much true crime.

44:34

And it's just like, debt seems

44:36

to be a thing that motivates

44:38

a lot of murder. And like,

44:40

it's just because I think it's

44:43

just so, it feels so insurmountable.

44:45

Like, what can you do if

44:47

you're listening to this and you're

44:49

like, I have $60,000 in just

44:52

credit card debt? Like, I don't

44:54

fucking know, man. That's a really

44:56

big step. Right, because what that

44:58

saying is to look at it

45:00

like kind of square on, right?

45:03

I mean, I think a lot

45:05

of people don't really even know

45:07

what they have, right? So I

45:09

think that's a step one. And

45:12

if you've done it, you know,

45:14

making a plan to start working

45:16

on it, your plan is not

45:18

going to stay the same for

45:21

like two years, right? You're going

45:23

to make a plan. you're going

45:25

to see how it goes, and

45:27

then you're probably going to have

45:29

adjustments that you make, right? You

45:32

know, like if part of the

45:34

plan needs to be, and, you

45:36

know, it's not true for everyone,

45:38

but it's usually true, if part

45:41

of it needs to be working

45:43

on the expense side, working on

45:45

the outgoing side, right, changing up

45:47

spending on things other than, you

45:50

know, than the strict requirements, well,

45:52

you probably want to start tracking

45:54

your spending your spending. a little

45:56

bit. It's like financial mindfulness, right?

45:58

And pay. attention and say, you

46:01

know, you could look back at

46:03

a few months of bank statements,

46:05

credit card bills, just figure out

46:07

like, what am I, where is it

46:09

going, right? Because you might not

46:12

know, you might have some surprises.

46:14

Usually when people do that, they

46:16

end up spending less money

46:18

without really explicitly trying to,

46:20

because all of a sudden

46:22

they're just paying attention to

46:24

it and thinking about it more,

46:26

right? If you focus on something, you

46:28

end up being more successful at

46:31

it, right? I mean, that's just natural,

46:33

right? Like if you're really paying

46:35

attention, you're going to get where

46:37

you want to more quickly. So

46:39

I think, you know, starting to pay

46:41

attention to, okay, where is it

46:43

going is really important. And then

46:45

you're going to start making adjustments

46:48

to your plan, which is that's

46:50

another word for budget, right. By

46:52

the way, it's just... plan, which

46:54

it doesn't have to mean like,

46:56

oh my God, austerity, right? You

46:58

can, part of your plan can

47:00

be spending money on some

47:03

things that you enjoy, right? And

47:05

you should have some enjoyment in

47:07

a budget, right? You should have

47:09

some, okay, I just paid off

47:11

$1,000, I'm going to treat myself

47:13

to, you know, whatever gives you

47:15

joy, you know, a fancy latte,

47:18

a manicure, a massage, you know,

47:20

whatever it is, right. you get

47:22

to have a you get to

47:24

have a treat right? New sneakers.

47:26

Yeah, new sneakers. Some kind of

47:29

a something nice that's like

47:31

affordable for you, but is

47:33

still like nice and awesome,

47:36

right? And you know, so

47:38

have the milestones built in

47:40

to that, but I think

47:42

having a plan, see how

47:44

it goes, pay attention to

47:46

where the money is going,

47:48

and then make adjustments, right?

47:50

you know I don't know it's kind

47:53

of unrelated but I was hearing

47:55

someone talk about like COVID safety

47:57

and they were saying like look you know

47:59

maybe you were doing things before

48:01

where you didn't take any safety

48:03

precautions and then now you realize

48:06

like oh actually maybe I should

48:08

you're like it's okay you know

48:10

just start doing it's fine yeah

48:12

yeah I have to just stop

48:14

looking at things as linear and

48:17

being like this is backsliding this

48:19

isn't backsliding you know right yeah

48:21

enlightening life's not life is just

48:23

life you know that is true

48:25

it's hard it's a hard thing

48:28

to come to realize weirdly but

48:30

yeah Yeah. Well, thank you so

48:32

much for returning. I really appreciate

48:34

it. Where can the listeners find

48:37

you and find out more about

48:39

you? Oh, sure. Yeah. So thank

48:41

you so much for having me.

48:43

I'm sorry. Some of this discussion

48:45

was kind of dower. No. This

48:48

is what we like. Okay. Yeah.

48:50

So yeah, people can find me

48:52

at my website, which is frequently

48:54

tax questions.com. Thank you. No. Thank

48:56

you. Bad with Money with Gabriel

48:59

S. Dunn is a production of

49:01

noted bisexual, produced by Melissa D.

49:03

Motz and Diamond and Print Productions,

49:05

edited by Diane Kang, post-production sound

49:07

by Coco Lorenz, production assistance by

49:10

Melanie D. Watson, and music by

49:12

Mike Kaplan, Zach Sherwin, and Jack

49:14

Dolgan, sung by Sam Barbera. Thank

49:16

you, love you, bye!