Financial Edge: When It Helps and When It Hurts

Hey there. Welcome back to the Get Out of Debt I Show. I’m Steve Rhode, the original Get Out of Debt
I. And of course, I’m joined by the new Get Out of Debt I, Damon Day. Say hello, Damon.
Hello, Damon.
Life doesn’t usually send a calendar invite before it knocks you on your ass. One bad break,
one layoff, one medical bill, one surprised divorce, and suddenly everything you’ve been juggling
comes crashing down. And if you’re already living too close to the edge, there’s no cushion.
No breathing room, just a free fall. Today we’re diving into why the financial choices you make
before the storm matter more than anything else you’ll try to fix after. This isn’t about shame.
It’s not it’s not about anger. It’s about strategy. It’s about taking back a little control now
before life decides to remind you how little control we all really have. So stick around because
what we’re about to talk about could be the thing that saves your ass from a whole lot of pain.
Damon, that about sum it up? I think that sums it up really good. And I think we’re going to maybe
open some ice here with this podcast. Not to say that we have any kind of rocket science thoughts
going on here. It’s pretty basic stuff. But when presented the right way, I think there’ll be some
aha moments for a lot of listeners. You know, what’s interesting is that yes, it is all basic.
However, people so often hear the opposite advice. Let me give you an example. I’m not giving
the show away. But part of the opposite advice people have heard in all my many, many decades is
this is my fault. My dead is my responsibility. I’ve got to dig myself out. And we’re going to
use every dollar to pay back our creditors because I made a promise to repay them. And then
the world comes crashing down when the reality is you have financial choices to make.
Don’t assume that what other people say that sounds popular is right for you.
Is that right? Yeah, 100%. I mean, and that strategy can work for people. You know, it might be
right for somebody, but it’s not right for everybody. I’m chewing a fruit chew. You didn’t stop
your fruit. Choose before we started the show. No, I thought you were going to go on longer. You
usually do. So, so, so you’re you’re snacking ability was based on me going off on one of my
diet tribes. So, I know. Well, you didn’t go off on a diet tribe. You went off on a diet.
Well, you know, the purpose of this podcast today is we really, Steven, I want to talk about
choices. And you know, and not the choices that you’ve made. The past is the past. You know,
Steve’s, Steve’s got a very simple philosophy that I have adopted over the years. And I like it a
lot. And it’s it’s very simple. It’s let’s do better moving forward, right? Let’s we’ll look
at what happened in the past just as so away. So, we don’t, you know, have history repeat itself,
right? We want to have an understanding of how we got here. But there’s no point getting beat
up over it or you know, and everybody’s been there where you’ve just overindulged a bit or whatever
the situation is or it may be completely, you know, things that were completely out of your control
that got you in the situation. But if you’re in a situation where your unsecured debt is larger
than your savings account, we have some corrections to make. We have to turn this franchise around.
And I’m not talking about money in your retirement accounts. I’m talking about pretty much liquid
savings where if you got an offender vendor, which Steve got into a couple of days ago, you know,
transmission went out on the car. You needed a couple thousand dollars. Money that you can go,
oh, okay, and you have, right? Not selling off stock so I can get some money to get my transmission
fixed. But I’m talking about your liquid savings that you can use. So many people have been kind
of sold into this mindset. And I see it every day, every day with clients that I talk to. So,
it’s universal. So, you’re not, you’re not alone if you think this way. But it’s in my opinion,
the wrong way to think. And it’s going to get you into the situations that you’re in.
But if you think that you need to have credit, you need to have a credit card so for that
just in case this or just in case that. Well, the just in case this will happen. It’s not a matter of
if it’s a matter of when. And so what happens is we have available credit cards. And I’m not a,
you know, subscribing to the fact you shouldn’t have credit cards and you shouldn’t have credit.
That’s not what I’m saying. Have all the credit cards and credit you want.
But you need to be in a situation where you have liquid savings to cover life’s expenses. You don’t
want to use the credit cards as my emergency fund, right? Because what’ll happen is you’ll end up,
maybe where you’re at right now, $50,000 in debt, $100,000 in debt. Because of the my just-in-case
stuff that happened, right? So I had new tires put on the car. I had this. I had that. And where do
they go? Well, if you don’t have the funds, they go on the credit cards. And then now the minimum
payments on those credit cards add to the problem that you’re already having, which is you’ve got too
much output and not enough income. And it just mounts and gets bigger and bigger and bigger. And then
all of a sudden the cards that were there for the just-in case, now we’re there for the groceries.
Because as that debt starts to grow, it squeezes out your cash flow to the point where you’re like,
well, the only way I can afford to get groceries if I put that on the card. And then before you know
the plan of, I just need these credit cards just in case there’s an emergency, turned into a $50,000
problem. So you’d go, what? Go ahead. Look at what happened to me over the past weekend. I got
rear-ended, which in the car is damaged, which creates, you know, financial, it shouldn’t,
but it creates a financial burden for me. The other insurance company is handling the repairs
and everything else. But in order for me to get the rental car, I have to agree to be financially
responsible for it and then hopefully get reimbursed for it. So, you know, you have to be prepared
because things happen. I mean, even in the past couple of weeks, you know, a good friend of mine
had a surprise wake up message from his wife saying, I want a divorce. You know, and then all of a
sudden his life is upside down. And so without that, I hate to call it an emergency fund because
every day is an emergency. You just never know. But without that liquid cash, you get in this conflict
of, oh my God, I feel like such a loser and such a failure. I have to repay all this debt. And so,
I’m going to use every dollar I can to pay my monthly bills and then leave yourself in a
worse situation where the smallest thing can tank you. I have, I have a memory from a client.
She was living paycheck to paycheck. And then one morning she woke up and her hot water heater
was off. It was an electric hot water heater. No more hot water. It was wintertime. And she had
to get it fixed. So she, I’m not sure if she got a penny loan or whatever, beg borrowed and stole
or whatever to get the money to get the hot water unit replaced. And so she was not only living
paycheck to paycheck. She was now way over the edge. And to make the story worse, the reason I
remember this is because after they replaced the new hot water heater, it turned out it was
just the circuit breaker that had flipped. Wait, so the, the, the installer had to obviously figure
that out to even get the new one to work. So are they? He was just the installer. He didn’t.
Okay, we’re not going to just do it, but he just took the old one out. He just can’t get
good help these days, Steve. Well, what I’m saying is, you know, that shouldn’t have happened to her.
That’s completely unfair. And, but stuff does happen. So if you’re feeling any sort of financial
pressure right now, and you’re saying to yourself, oh my God, I’m such a failure. I’m such a loser.
I’ve got to meet that obligation. The truth is, no, you don’t. You know, you got to put yourself
in your family and your safety first. Now, that might mean you’re going to make some choices,
like maybe we’re going to cancel Netflix or stuff like that. But like Damon said, don’t make
bad financial choices where you’re putting yourself in a worse situation.
Well, and, you know, speaking of choices, right? So think of it like this. Everything is a choice.
And again, I’m, I’m talking about doing better moving forward, right? I’m not talking about,
let’s, let’s examine the choices that you have made and meet you up over it. That’s not what we do.
It’s doing better moving forward regardless of how you got in the situation. And life is hard,
right? Life is full of hard choices. You know, paying back all of your debt in full and eating beans
and rice to do it is hard. Paying back all of your debt and, you know, on the interest rates that
you have and just continuing to do what you’re doing and going paycheck to paycheck and juggling
this and juggling that and okay, I got to make this payment. Well, it’s, it’s late. It’s due on the
first, but it’s not late till the 10th. So if I, as long as I paid on the ninth, I’m going to be okay.
I’m not, you know, that, that kind of living is hard. Choosing to file bankruptcy is emotionally
difficult. Choosing to strategically default on payments in order to negotiate better rates or
negotiate principle is an emotionally difficult decision, right? These are all difficult choices,
but the point is they are all choices. Continuing to live the way that you’re living is a choice.
If, again, if it’s very simple, if your debt is larger than your savings account, that’s it.
You need to call me. The choices that you’re making are wrong. Now, we need to do better moving
forward. I don’t want you to live a life where you’re using credit cards for the just-in-case.
I’m going to get you to a point as quickly as possible to where you have liquid cash in the bank
for the just-in-case. You can still have credit cards if you want. You can solve a great credit
score. I’m not opposed to any of that. Life is, whoever said life is easier with bad credit,
I don’t know, but life is easier with good credit. But you have to look at how much
that debt is costing you. If you have $50,000 in debt, you’re probably paying about $1,500 a month.
If that debt was gone, that $1,500 can go into a retirement fund or an investment account.
Turn into millions. If you look at just, okay, you’re going to use that snowball this thing,
and you’re going to pay $2,000 a month if you could even find $2,000 a month, and you’re going to
spend three, four, five years eating beans and rice and paying it off. Again, a difficult choice,
but a choice nonetheless. Well, you also have to look at what if I took that $2,000 a month and
invested it, right? What would that look like? It would be over $100,000 after three or four years.
That’s a lot of money. But again, you have to choose your difficulty. No matter what you do is
going to be a difficult choice because it is going to involve some changes that you have to
make. But- Yeah, none of them are fun. But don’t kid yourself. Not consciously making a choice
is making a choice, continuing to do what you’re doing. If you have no savings and high credit and
your balance in bills, and you’re like, I don’t want to do the Dave Ramsey thing, and oh, I don’t
want to do my debt negotiation. And I don’t want to do bankruptcy. I don’t want to do any of those
things. I’m going to get- I’m going to just continue to do it and it’s going to get better.
Unless you’re up for a huge promotion, you’ve got some major life event, you have a big inheritance
about ready to come around the corner, it’s not going to get better on its own. And choosing not to
be proactive with it is this also making a difficult choice. And it’s usually the most expensive
choice continuing- Yeah, but what holds people back is guilt and shame, which I totally understand
and I bend there myself. You might have been there yourself at some point. And the funny thing
about that is the only person that feels guilt and shame is you. Right? When I felt it,
I felt so small, I felt so bad, so terrible. And you know what? Everyone around me,
everybody I passed driving out the road, everyone at the grocery store, they didn’t care.
The only person that cared was me. And I cared more about how I felt emotionally
than if I was making the right choice, which was stupid. Yeah. And again, we’re not saying that
paying all your debt back is the wrong choice for everybody. That’s not what we’re saying. Because
for some people, that might be their correct choice. It might be what they want to do. And if you’ve
looked at the options and decided that that is in your best interest, and that’s what you want to
do, then that’s the right choice, as far as I’m concerned, because I tend to find all the time.
It’s your money, it’s your life. But I have a big asterisk to that. I totally agree with you.
The big asterisk is the big butt is- Is your wife coming into the studio?
Yeah, she just walked in. That light is on, ham!
Now, the big asterisk is that do it in a way where you can keep yourself safe. You can meet
your life right now. And you can repay those debts at any point in the future as you can afford
to do it. You don’t have to jump to what they want. You can jump to what you can reasonably
accomplish. And before I stop talking, I need to remind people that if you want to talk to
Damon, the best way to do it is to visit his website, DamonDay.com, d-a-m-o-n-d-a-y.com,
cost nothing to talk to him, cost nothing to get great advice and to pick his brain. And the only
person who will be sorry is you if you don’t do it. And I’m pretty funny. And there’s no judgment
on that call because I’ve been there myself. So again, it’s a simple litmus test. Look at your
savings account, look at your credit card balances. If the balances on your cards are higher than
your savings, just call me. Let’s talk about some op- You don’t have to act on any of my advice.
That’s just advice. But I will give you some strategies and things that you can think about.
Some, you might not even be aware of. You’re not saying to call me and I’m going to say,
oh, you got to go bankrupt or you got to pay all your debt back no matter what.
My focus is never on, you have to do this, you have to do that. My focus is on educating people
on those difficult choices and kind of giving you an idea of what those choices would look like
for you specifically in your current situation. So you could say, okay, if I do this difficult
choice, my life will look like this in the next few years. If I do this other difficult choice,
it’ll look like this. If I do that, that’s my job. I want to shine that light on there because so
many people are trying to decide what to do and they’re on the internet, they’re researching,
they’re looking at bankruptcy, looking at settlement, looking at Dave Ramsey’s financial piece
type strategy, looking at consolidation, you’re looking at all these things but you don’t have all
the information. I always like the example of the person that says, I have to do this myself. I
have to figure out how do I solve this problem to which historically I have always said to the
person, you wake up tomorrow morning and you have a bad tooth. What do you do? You go into garage?
Grab a nice kick. Yeah, getting some pliers or you know, what do you do? Now, why would I do that
stupid? I wouldn’t go to the dentist. Oh, you want to go to a specialist, somebody that’s trained
in order how to best help you. But when it comes to your financial stuff, you’re just going to
listen to whatever commercial comes online and do whatever. It’s really as simple as life is
full of difficult choices and you are making a choice right now just to continue the status quo.
That is a choice and a lot of people don’t really sit back and think about that. But doing what
you’re doing has gotten you into the situation that you’re in and you’re choosing to stay there
because there are options to fix it. There are ways to get you as quickly as possible to a point where,
I mean, think about it. If you woke up tomorrow and you had more money in your savings account,
then balance is on your credit cards. Some people listening to this have never felt that in their
life. Some people have felt that before but are just not there right now. So they know what it’s like
to, hey, you know how much easier you sleep at night? If you’ve got 10 grand in the bank, 20 grand in
the bank, 30 grand in the bank, and no credit card debt, you’re not sitting there going, okay,
I get paid on Friday. The rents do on this day. You know, utility bills do on this day. I’ve got to
pay my electric credit cards this day. Think about how much energy if you’re in this situation right now.
Think about how much mental energy, how much time that you spend on a daily basis thinking about
when things have to get paid and where that money is going to come from and what account it’s going
to get transferred to. Imagine if you were in a situation where all the money that you needed to
pay all of your bills for the month. And this is not hard to do. It’s not hard to get to this point.
It really is it. The money is already in your account. You’re a month ahead. Imagine being just a
month ahead where all the money that you need for this month’s bills was earned last month.
And it’s already in an account on auto draft. All the bills just get taken care of when they’re
due and you don’t even have to think about it. I was reading this story this morning about somebody.
It was two people. One, they’re both software engineers. One that was totally surprised they
got laid off from their six-figure job. And the other one was I kind of have a spidey sense that
something’s going to be happening in the near future. And they spent the next three months
squirreling away every dollar that they could just in case they got laid off. So, you know,
who was doing better? I would rather squirl away money while you’re making it and your, you know,
things are flowing than you lost your job. And now you’re going to have to make money magically
appear. Here’s the thing. I can help you if you wait till the last minute and come to me.
I can still help you. I can’t. I have clients that come to me and they go, I have no idea
my mortgages do last week. I don’t have the money. My credit cards are maxed out. You know,
I have no savings. I drain my, I got two loans on my 401k already. I have clients that come to me
like that. And I will fix it. I can fix it. But you will have more choices. How we can fix it if you
come to me before you try to do it your way. And I don’t want to sound like a jerk about it,
but trying to do it your way is not a good strategy. I promise. This is not. Or like if you think
you got it, talk to me. And then after that call, if you get off that call and go, yeah, my way
is still better. Fine. That’s fine. That’s great. That doesn’t usually happen though, because there’s
there’s strategies and things that you can do that for a lot of you would never even cross your mind.
Yeah, you don’t know what you don’t know. You don’t until you know.
It’s like that old joke I’ve told you over the years about the guy,
Carbric Soundies on the side of the road. Another guy pulls over, right? And says he’s a mechanic
and goes, oh, I will pay you. I’ll pay you. Can you help me get my car going? He goes, yeah,
no problem. Guy crawls under the car. Bam. So start the car. This car starts right up.
Guy goes, how much do I owe you? Hundred bucks. Hundred bucks. You just crawled under the car.
You hit it once. You want a hundred bucks. I want a detailed bill. Guy goes, okay.
$25 crawling under your car. $75 knowing where to hit.
And it’s the same sort of thing here. You want to go on your own. You want to, you know,
try to figure it out. You got no experience doing it. That’s fine. It’s going to cost you a lot.
More money and pain and emotional baggage and everything else. Or just talk to Damon. I mean,
for crying out loud, you’re not going to, you’re not going to get bed bugs, you know, by calling
Damon and talking to him. I mean, nothing bad is going to happen. He’s not going to report you
to anybody. You’re going to get information and advice. Yeah. That’s it. Remember, our focus is
doing better moving forward. I mean, we’ll talk about how we got there. Because again,
that’s important to understand we don’t, you know, get you back in that same spot. But this is
not about me telling you, well, that was not the right choice. That wasn’t the right choice.
I’ve made all kinds of wrong choices, you know, in my years. Trust me. So it’s just about, okay,
we’re at, we’re where we’re at. And again, everybody’s in a different spot, right? There’s there’s
so many different things, different scenarios. There’s no one right way. But it’s just about, okay,
where are you at? How do we get here? What can we change? We’re going to have to make some
different choices. And those choices are probably going to feel difficult. My job is to help make
those choices as, is difficult less a word, Steve? It is now. So that will be my new slogan. I will
make the choices difficult less. Difficult less. There we go. Not a grammar person, but I’ll make
a difficult list. I was know there would be no English. I’m good at math, not English. Difficult less.
Well, I was telling somebody just last week, I kind of have a personal philosophy in life now that
I’m an old fart that I just try to do better in my life and for myself every day. And that means
that if I do something that just winds up not the way it should, I will just do a kind of mental
autopsy. And how did that happen? Why did that happen? What can I do in the future to avoid that
happening? And just do better moving forward. I just want to focus on tomorrow. I’m going to live
today and focus on tomorrow. I cannot do a damn thing about yesterday. Yeah. And this is not
about depriving yourself of everything right now. That’s what a lot of people that I talk to,
they kind of mean like, oh, I’ve listened to this radio show or that radio show. And you know,
you know what I’m talking about. And it’s like, you know, a lot of them are like, look, I’m
kind of middle age. I’ve got kids right now. I’m in this situation where I only have a small window
with my kids. And I don’t want that the last five, six, seven years that I have with them before
they go to college and move out of the house and all this. I don’t want that to be the five years
that I just say, okay, we can’t do anything. You know, we’re going to sit here and do nothing
and eat top ramen and beans and rice and you can’t even watch Netflix because we canceled that,
right? So they don’t want that. So they go, no, I don’t want that for my life. And again, that’s not
just the only way you can do it. It’s not about just depriving yourself now so you can prioritize
your creditors and get out of debt. We need to get out of debt, but we don’t have to make your life
miserable doing it. You know, I chuckled while you were saying that because I remember when my
daughter was had one year left of high school and then I knew that she was going off to college
and her life was going to entirely change. And if I had had to make a choice at that time between,
we’re going to sell our house and we’re going to lower our mortgage and we’re going to live
in a more affordable area, but I’m going to have more time to spend with her for the next year.
That seems like a clear cut, you know, situation to me. Yet people get so stuck in
what will people think if we sell our house and downsize? Who gives a crap? If your personal choice
is to spend more time with your family before something happens or while you can, then that is
a choice and you can clearly see what the benefit is. Don’t worry about other people.
Yeah, 100%. Again, life is full of difficult choices. You just have to make them.
Speaking of difficult choices, Damon, I’m going to have to make a difficult choice to end the
podcast right now. I think that’s an easy choice because you don’t like to edit long podcasts.
Got me.
So again, what’s that Dave Chappelle mean? Gotcha, bitch.
We were doing video podcasts. You could put that up there. That’s just fun.
More editing. Great. I think Dave’s spell is pretty funny.
So again, you want to talk to somebody. No judgment, nothing. Go to Damon Day, d-a-m-o-n-d-a-y.com.
Get in touch with Damon. Look, I’m not trying to sell you on anything. I just want you to get some
advice rather than drive a nail through your own foot. Or as Damon said earlier, go get the ice
skate to knock your own tooth out. Yeah. And if you don’t get that reference, it’s will size.
I’m never going to the beach again. No, there’s sharks in the ocean. Yeah, I know.
I know. We were at the beach last week and somebody said, well, why aren’t you going in the water?
That’s a fish toilet. Yeah, I thought it was common knowledge that sharks were in the ocean,
but apparently a lot of people at the beach don’t know that. No, and the funny thing is the people
don’t know it are all people who are not local. Well, hey, I used to, I went to college by the beach
and I was taking surf lessons and stuff, and I was younger. I used to go in the water and, you know,
but then I got older and I went, yeah, that’s where the sharks live. Yeah, I’m good.
I’m going to swimming pool. I could see the bottom. It was funny. Last week of the beach,
I had the red flag out. You know, stay out of the water. Because it’s pooping the water or whatever.
Well, no, there’s been a huge jellyfish and there was a shark siding and everything else.
And yet people are out there dancing in the water 12 feet from shore. All right.
You do you, boo? Yeah. No, nothing. As you get older, you go, yeah, I’m going to live a little longer.
I’m good. No, I’m fine. All right. On that note, I will see you. Peace.