We usually share a new podcast each and every Monday, but we wanted to follow up our last episode with this quick episode (or part 2) on why people get in debt while it was on all of our minds. Besides, we really can’t wait to share all our great Christmas tips and know we need to get it out sooner to help make the biggest impact possible – coming Monday! Finally, have an awesome week everyone!
What’s this Episode About?
We continue right where we left off last time – continuing through our list of the top reasons why people get into debt. This episode stands by itself but we encourage you to download and listen to part one to get the most out of this. As we shared before, this will help families understand what caused them to build that much debt in the first place, know what temptations they need to overcome, and then know how to prevent themselves from going back into debt again after paying off their debt!
Recap: Top 33 Reasons Why People Get in Debt (not listed in any particular order)
- It all started with The American Dream
- Medical Debt
- I fell victim to the credit card marketing
- Not paying attention to what I was doing
- A lot of high cost bills happened all at once. I panicked
- Emergencies (car, etc)
- Student Loans
- Car loan
- Emotionally trying to fill a void
- Making excuse to experience life before children
- If the creditors approved us then there shouldn’t be a reason why we couldn’t handle it
- Keeping up appearance of two college-graduate professionals
- Thinking it was owed to us because we had gone to school and had full-time professional jobs
- Not wanting to tell one another, “No!”
- Sheer lack of communication in general
- It just happened
- The problem with multiple credit cards – if you’re a good payer they will raise your limit
- Not understanding how interest works
- You keep spending as long as the credit card goes through
- Also not continuously not balancing the checkbook or monitoring the spending
- We really never checked our credit card statements
- Temporary loss of one income – long enough to get behind a bit more
- Loss of job
- Poor money management
- Lack of savings
- Reduced income – either in current employment or going from two incomes to one income
- Home improvement projects (second mortgage)
We address a few of these reasons more in depth
How much is this debt costing us?
We attempt to answer the question, “How much is this debt costing us?” Between the cost of our secured and unsecured debts we were paying over $1,200 in interest each month. In addition, we discuss some of the details between each of the loan types and even – shock! – payday loans. See our thumbnail of our podcast below; we share where we took that picture and the pain and meaning associated with that image.
We then share a resource where we go into the real details for each of those loan types. If nothing else, understanding the cost of that debt may help families take a second thought before going that much deeper into debt.
Emotionally trying to fill a void
There so many crises in our lives and very often spending money is perceived to be the cure that many choose to numb that pain. We dig deeper into our own crisis years ago that contributed to part of our own reason for going so deeply into debt.
If this is an issue that you deal with, we encourage you to sit back and work through this and provide some starting points. We remember this was a very private and intimate subject and just how hard it was to start talking about this. If you have a spouse, once you start opening up that subject it will get easier to talk about. We know this. We’ve been there.
Making the excuse to enjoy life before children
This is an extremely important conversation for those that are young and newly married. We’re not saying to not enjoy life by spending a little extra, but rather to do it wisely. Instead of building debt, set your goals and work towards a planned expense with saved money instead. We share other tips throughout this segment.
Not checking your checkbook, monitoring your spending
There’s just something about checking in continuously that really makes a huge difference in the way your approach spending and your budget. We discuss a mystery that occurred between when we got a new credit card and received that first bill.
Do you agree with us that a healthy meal at home is half the cost of a meal at McDonalds. Are we too low? Too high?
We discuss what we like to refer to as the Daily Standup meeting. If you work in software, you just might recognize this meeting and the three questions. We break them down and discuss examples of each:
- What did we spend today?
- What do we plan to spend tomorrow?
- Are there any obstacles you have either now or coming up soon?
This simple meeting can set the stage for more responsible spending. We share our thoughts on the optimal schedule is for this meeting.
As far as checking your credit card statements, we share different tips on what to look for. Not only are there fees that shouldn’t be charged but other fees and charges that you might have signed up for but forgotten about.
Loss of job or underemployment
This section starts off providing tips for when you’re not prepared for a job loss, starting with short-term solutions and ideas for bringing in extra income. We mention a penniless week (see the resources below). This can actually be used not only to help families struggling with a loss of income but can be implemented occasionally by families trying to use what is in their pantry and wanting to get their spending under control.
We discuss using side hustles and provide a resource (see below) for finding the right side hustle for your family.
Finally we discuss longer-term solutions that should be all of our goals so we will be ready for an unemployment situation or underemployment situation.
Our 2% Tip of the Week:
In this week’s episode we discuss medical debt and a number of ideas on how to reduce it.
- Always ask for an itemized bill – We share a couple of tips on how to review that bill with an example of how we saved over $100 just from disputing one line item.
- How to approach and negotiate with the biller – Do you think that medical facilities will negotiate balances? Find out with the best tips on how to do it for the most success!
- When should you call the medical biller? – Alex shares from his experience he had from a surgery he had just three days prior to recording this episode!
There are so many tips we want to share and this is one of the highest ranked reasons for the cause of debt of so many. We will make a goal to dedicate a whole episode to medical debt!
Resources mentioned in this podcast:
- Check out our book, The 2% Rule to Get Debt Free Fast: An Innovative Method To Pay Your Loans Off For Good . In this book we share the total cost of debt, dedicating two full chapters to the subject: one to cover secured debt and the other to cover unsecured debt.
- We created a 64-page workbook to give you the tools and the resources to help you pay off your debt. You can see the digital version or the printed version.
- Use the family questionnaire (in our workbook) to discuss your long-term and short-term goals to establish your priorities for your family. Once you can set those as your focus you can ignore the distractions around us.
- Check out this article on how to sell your items back to Amazon or go directly to the Amazon Trade In page to get started.
- How to Make $1000 in 30 Days – If you just found yourself unemployed, underemployed, or are looking to reach a quick financial goal that you just need by next month, then this is the right place to start. So follow these tips and see how you can make that $1,000 in just under a month!
- Have your own Penniless week – We mentioned this as an idea for struggling families dealing with unemployment. In the same place we also share how we still do these today. There’s a few rules you need to follow to make this work, but this can be a great way to see some extra income in your budget – in just a week!
- Over 100 Ways to Earn Extra Income – Check out over 150 ideas to get your side hustle started! When you are underemployed, unemployed, or just trying to find your next 2% increase (see our book above for more) then you will want to check these ideas out!
Don’t Miss an Episode
If you want to make sure that you never miss an episode we encourage you to sign up for our Take Back Your Finances Podcast list. As part of this list we will also send you additional resources from the latest podcast episode like checklists or related worksheets to help you implement that weeks topic – only for members of this list! Plus, just for signing up we’ll send you our copy of How to Build Your $1,000 Emergency Fund in 30 Days (a $5 value) just for signing up!
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Finally, as we continue to share,
if we help anyone, then it makes everything we do worth it!
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