If your debt keeps you up at night, the problem usually isn’t the math. You already know the numbers don’t work. In this episode, Steve Rhode and Damon Day get to the part nobody talks about: debt is math wrapped in emotion, and it’s the emotion — the fear, the shame, the “I’ll deal with it later” — that keeps people frozen long after they could have been free.
Why Is Debt So Hard to Deal With If You Already Know the Math?
Nobody listening to a debt podcast needs to be told debt is bad. As Damon puts it, there’s no one out there having an epiphany that they’d be better off without their credit card balance. Everybody already knows the math. Where people get stuck is the emotional layer sitting on top of it.
Steve has said it for years: debt is nothing but math wrapped in emotion. The numbers are simple. The feelings are not. Shame about not providing for your family, fear that bankruptcy will “ruin your life,” the belief that there’s a moral failing involved — those are the things that stop people from looking honestly at their options.
Damon describes his real job with clients this way: not telling them to get out of debt, but helping them overcome the emotions that are getting in their own way. A good consultant, he says, is someone who borrows your watch and tells you the time — takes the emotion out, shines a light on every option, and lets you see them clearly without the fear attached.
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Is Bankruptcy Really a Moral Failure?
Steve makes a sharp point: bankruptcy isn’t a financial problem, it’s a branding problem. Walk a client through a classic Chapter 7 without naming it — call it “the federal fresh start program” — and they’ll say sign me up. Say the word “bankruptcy” and suddenly it’s a moral failure. Nothing about the facts changed. Only the name on the paper did.
The U.S. court system itself refers to it as the fresh start. Steve jokes that if you called it “strategic de-leveraging” — the language corporations and even churches use — nobody would flinch. The stigma is marketing, not reality.
To be clear, Steve and Damon don’t make a dime if you file. They aren’t a bankruptcy firm, and bankruptcy isn’t right for everyone. The point isn’t to push one option — it’s to strip away the preconceived notions (“my insurance will skyrocket,” “I’ll never finance a car”) so you can evaluate every path for what it actually is. Most of those fears, when you do the math, cost a fraction of the debt you’d discharge.
What Should You Do First When Debt Feels Overwhelming?
The number one move is the one almost nobody thinks of: put your own oxygen mask on first. Just like on an airplane, you take care of yourself before you can take care of anyone else. Steve points to why this matters so much:
- 49% of people in debt screened positive for depression symptoms.
- Money worry eats the mental bandwidth you need to think straight — a 2013 Science study measured it on reasoning tests and found it eased once the pressure did.
- People with financial problems are eight times more likely to die by suicide.
So before the spreadsheets, before the strategy, take care of your mental health and your view of your own life. As Steve says, once you’ve done that, the rest is academic. (If you’re struggling, you are not alone — reach out to someone, and know the financial crisis itself is survivable.)
The “Goose That Laid the Golden Car”: Life Without a Car Payment
Damon walks through the kind of math that turns the emotion back on — the picture of what life could look like once the debt is gone. He calls it the goose that laid the golden car, and it starts with one rule: get the hell out of consumer debt first.
Here’s the rough sketch he ran live on the show:
- Say you owe $25,000 at 6% — about $600 a month with four-plus years left.
- Once you’re out of consumer debt, you can afford to throw $1,000 a month at the car instead of $600. It’s paid off in about 27 months.
- Now keep paying that $1,000 — but to yourself, into the market at a conservative 7%. After seven years that’s roughly $109,000.
- When the car finally wears out (drive it 10–12 years), pay cash for a nice three-year-old car around $35,000. Your fund drops to about $74,000 — and keeps growing.
- Ten years later that $74,000 is around $145,000, and you haven’t added a dime or made a car payment in over a decade.
The lesson isn’t the exact numbers — it’s that servicing debt is what stands between you and that life. Steve’s message to his own kids: a car payment is one of the biggest wealth killers there is, and writing a check for a car hurts enough that you stop buying more than you need.
The College and Parent PLUS Loan Trap
Damon flags a quieter danger: the “sandwich generation” parents helping aging parents and kids at the same time, signing $50,000–$60,000-a-year Parent PLUS loans because they don’t know what else to do. Banks aren’t handing money to a 17-year-old with no credit — they’re hooking the parent. The same money, put into a 529 or retirement account instead, could leave a child far better off than an expensive out-of-state degree. It’s the same hyperbolic discounting that keeps people in credit card debt: trading a known future problem for short-term relief.
The Bottom Line
Everything on this episode points to one common thread: consumer debt is the cancer that keeps your life small. Steve recently wrote that credit card balances more than 90 days late are at their highest level since 2011 — proof that people are kicking the can rather than dealing with it. (See The Credit Card Number That Should Scare You Isn’t the Balance. It’s the Late Payments.)
You don’t need a guru to tell you debt is bad. You need to take care of yourself first, pause the panic, look honestly at every option, and pick the one that gets you to the life you actually want — whatever the paperwork happens to be called. And if you want to talk it through with someone who has lived it, you can set up a free call with Damon at damonday.com.
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Key Takeaways
- Debt is math wrapped in emotion — you already know the numbers; it’s the fear, shame, and panic that keep you stuck.
- Bankruptcy is a branding problem, not a moral failure. The U.S. courts literally call it the “fresh start” — describe it without the word and people say “sign me up.”
- Put your own oxygen mask on first: 49% of people in debt screened positive for depression symptoms, money worry eats the mental bandwidth you need to think straight, and financial problems make suicide 8x more likely.
- Common bankruptcy fears (insurance going up, can’t finance a car) usually cost a few hundred dollars against tens of thousands in discharged debt — do the math before you decide.
- The “goose that laid the golden car”: get out of consumer debt, pay yourself the old car payment, invest it, and you can buy cars with cash for life.
- Parent PLUS and student loans are a trap for the sandwich generation — the same money in a 529 or retirement account often serves a child far better than an expensive degree.
- Credit card balances 90+ days late are at their highest since 2011 — don’t kick the can; the sooner you act, the more options you have.
Full Transcript
Click to expand transcript
Editor’s note (2026-08-04): Two figures I quoted in this episode — one converting financial stress into IQ points, and one describing how many people in debt are clinically depressed — both need qualifying, and I have corrected them elsewhere on the site rather than edit what I said. The cognitive figure came from a 2013 study that measured reasoning rather than administering any IQ test, described an effect that eased once money pressure lifted, and whose laboratory half has replicated poorly since; the depression figure came from a screening questionnaire of 136 people, which indicates who should be assessed rather than who has been diagnosed. The audio and transcript are left exactly as recorded. Here is the full correction.
Episode Introduction
Steve Rhode: Hey, you’re back with the Get Out of Debt Guy’s show. I’m Steve Rhode, the old original balding moss growing, rolling down a hill. I don’t know. Get Out of Debt Guy.
And with me as always is Damon Day, the new Get Out of Debt Guy. He smells like Irish spring. Remember those commercials? Come on, Steve.
Yeah. Come on, Steve. You’re, you’re rolling stone. Say hello, Damon.
Hello, Damon, you’re back again. And, uh, this week’s idea topic, the thing that Damon and I have been chit-chatting about offline is something that’s really hitting me hard today. And that is my brain is so overwhelmed. I’m trying to manage three different things, two different businesses.
Writing posts I’m behind on my true crime podcast. It should have come out yesterday. And I feel a lot of pressure and stress about getting shit done. I’m sure everybody can relate to that, but it’s, it really weighs on you.
Now, if I added on to all the, the stress and pressure and everything else that I feel right now, if I added onto that, the fear and panic and shame of being in debt, Oh my God. I’d have to go back to those days where, I mean, thank God we only had, you know, a few cable channels or a small number of cable channels and not all these streaming services, because back in 1989, when I was living through this misery, um, it was easy to pick the stupid, dumb infomercials I’d watch all night long when I couldn’t sleep. I guess now it’d be TikTok. I, dude, I’m not as old as you, but I did the same.
I got, I got, I got drawers of seminar tapes and all kinds of stuff that I bought trying to make more money. Yeah. I mean, plus a lot of it was just distraction. Now, the funny thing was, uh, I had the hardest time sleeping at night because I’d worry and panic and everything else, but damn, the minute the sun came up, I could go right to sleep.
Yeah. And I mean, everybody’s different because when, you know, when I was going through my BS and it was much, much later than when you were going through your BS, um, you know, there, there was a two in front of, of the number, not a one, um, I, I don’t know. I have a weird ability to compartmentalize crap where, and I’m not saying it’s better, I’m just saying it’s a weird ability to, and I’m sure other people are like this too, where you can, it’s compartmentalize not in a good way, but in a way that’s like, you know, I’ll deal with that later. Right.
Which is going to just make it worse when, um, you get again, hyperbolic discounting and action right here. I know it well, I may forget the word often, but I know it well. Um, but it, it, that kind of stuff when I was in debt, the debt and all that didn’t keep me up at night. Like that didn’t like cause me to lose sleep or anything like that.
But every once in a while when I’d really sit down and I would like, okay, I got to tackle this thing. That would stress me out when I’m in the moment, like trying to like figure this out and then I would just get overwhelmed with it. Right. And then be like, eh, later I got other more important things focused on right now.
And that’s what, that’s what happened to me. It wasn’t for me, it wasn’t a daily constant stressor. It was a blissful existence for a month or two. And then a crash, like, Oh shit, what am I going to do about this?
Oh, there’s nothing I can do. I’m going to shut. I always felt like a failure, not being able to take care of my family and disappointing my wife and letting my three-year-old daughter down and all that stuff, but, um, compartmentalizing is actually really good because for those that don’t know in my life as a, uh, a search and rescue pilot, I have had many in-flight emergencies. And if you just focus on the outcome, you will freak out and die.
So the solution is always, uh, you deal with the next decision I have to make and you solve it, and then you go to the next one and the next one, and you don’t allow yourself to get panicked. Well, I’ve flown with Steve and I can tell you that the one trait that you do not want in any pilot is a panic type personality. You want calm under control. I know we’re rushing towards the ground, but I got it.
You want that guy? Even if it is head, he’s like, this is bad. My motto as a pilot is, you know what? There’s no sense dying all 10 stuff.
Yeah. But we’re going to work on this all the way to the scene. Well, you know, the rule is fly the plane to the scene of the crash. Yeah.
You’ll be the first one there. Aviate, navigate, communicate. Uh, but this all brings up this kind of mental struggle that people have right now and for people who are listening to us that are feeling that pressure, even if it’s in waves, that stress and shame, um, you are not alone. We, we have been there.
We have lived it. You don’t need to listen to some personal finance guru to tell you how to budget your way out of a mess. Because, because what you need is to listen to what we’re going to tell you on this podcast. I thought you were going to say Jesus.
What you need, y’all need Jesus, Jesus, take the credit cards. Never heard that one before. But, uh, what you need is to listen and let what we’re going to tell you on this podcast percolate so that we can help you deal with the current crisis, whatever the situation is in a step-by-step, no panic way. Because the ultimate answer to what is going to happen if your finance is crashed, it’s all survivable.
The, the only people that die from that financial crash are the people who we’ve talked about it on other podcasts, the people that kill themselves or jump off the balcony or, you know, do other stupid, they do it to themselves. You know, no collector comes to your house and hangs you. It’s terrible, but that doesn’t happen. Yeah.
I mean, it’s not the UAE. No, I think they’ve stopped throwing people in prison there, by the way. Well, they got too crowded. Have, have, have they stopped leaving the Bentley at the airport then?
When the Stress and Shame Hit
No, no, the long-term, long-term parking at the airport is a nightmare because all the Bentleys are abandoned. The rich people flee in the country if they have debt or even, even the not so rich people, they have debt. They’re going to get the hell out of there. Yeah.
I mean, I’ve told lots of people over the years that, you know, had gone to the UAE for work or whatever reason, uh, you know, and they’ll contact me and Steve, what should I do? I’m falling behind. I’ve lost my income. I don’t know what to do.
And my answer is always get out of the country. Yeah. Yeah. And then they come here and they’re at a bar and they’re listening to some American, you know, go on and on about, oh my gosh, I’m gonna have to file bankruptcy and my life’s going to be over.
And the guy goes, you get to file bankruptcy? You don’t go to jail? What kind of country is this? You just, you just have to file a paper and you get to start over.
Yeah. What is this? And you can stay in your house. Crazy stuff.
That’s crazy. I love America. It’s the greatest place ever. Yeah.
In fact, I just read that, uh, all of the Catholic churches in the Boston area are all of them individually. Each parish is getting ready to file their own bankruptcy so they can discharge all their liabilities from priest sex abuse claims. No, no, no. Here to for here to for strategic.
Okay. De-leveraging strategic. It’s it’s the word. I am fully convinced.
It’s just the word, because if I called it Biden’s fresh start or Trump’s fresh start, and then I explained it to somebody, they’d be like, and again, not every single person, I always like to practice that we’re not just saying everybody sees a file bankruptcy. Lots of times bankruptcies. How many bankruptcies does Trump have? Like six?
Yeah. I, I don’t know, but I’m, I’m telling you, it’s just, it’s, it’s a marketing issue. It’s a branding problem. Bankruptcy has got a brand.
Oh, absolutely. That’s what it is. And it’s not bankruptcy. It’s strategic de-leveraging and it’s Biden Trump’s fresh start.
And I say I’m together. So that way it’s not political. I don’t care what side you’re on. It’s, it’s the same, no matter who’s the president.
Well, it’s, you know, in, in fact, the, uh, uh, us court system refers to it as the fresh start plan. So yeah, I think, you know, the funny thing is I guarantee you when I’m talking to somebody, if I’m looking at a situation, I’m going, oh, this is just a classic chapter seven, uh, be the best option for them bar none. And I explained the program and I called it, uh, oh, there’s a new federal fresh start program. And I told them what it would do for them specifically went through it.
Sign me up. Guaranteed, guaranteed. Sign me up. That sounds great.
And then as soon as I say it’s called bankruptcy, they’re like, well, hold on. That’s a moral failure. But everything I just said is all true. It doesn’t change.
The only thing that changes is the name on the paper. The title of the paper is different. And it’s like, holy shit, hold up. I know, but let’s talk about the, you know, the mental struggles that people have.
Because I mean, this is real. Um, in my day, when I was doing personal consults, I actually offered a service, it was called a walk in the woods. And, um, I had people, yeah, I had people fly across the country and spend the day with me. We would just go for a walk and talk through their situation.
Sometimes people go for a walk in the woods and then come out. No, no, no. Mine was, mine was good, but it was just, you know, we need to get out of your element, we need to get into something different and we need to just focus on having a conversation. And by the end of those days, people would leave with an entirely different point of view and they’d feel refreshed and excited about what tomorrow was going to bring.
And people don’t have that opportunity. Well, you know, you say it all the time, you know, debt is nothing but math wrapped in emotion, right? And you know, I’m, you know, anybody listening to this podcast, whenever they’re listening, you know, they don’t need you and I to say, debt is bad. Okay.
Like everybody knows they should, like, there, there’s nobody listening to this going, oh, he’s got a good point. I should get out of debt. Why hadn’t I thought of that? Like, there’s nobody going like, oh, an epiphany.
These guys are so smart. They told me to get out of debt. And that makes so much damn sense. No shit.
Right. Everybody knows the math, right? No, there’s nobody that looks at their finances and goes, you know, if I didn’t have this credit card debt, I would be better off, everybody knows they’d be better off, right? So it’s, it’s, you don’t need us to tell you to get out of debt where everybody trips up is the emotional part of it is being open to the different options and going immediately to the, what about this?
Or what about this? And I’m not saying that’s bad as you’re gathering information, but the thing that I struggle with the most, when, when, when speaking with clients in terms of trying to help them is really my main job is to help them overcome the emotions that are getting in their own damn way. That’s really the problem. Yeah.
I mean, it’s, and you know, it’s, it’s like, uh, you know, I don’t know when you were in school, but when I was in school, we had those problems like, you know, a train leaves Chicago, um, but it’s almost like, you know, a train leaves Chicago with a bunch of passengers on board and can’t make it all the way to the Chicago. Well, tell the passengers get off, you know, you don’t, you don’t have to feel bad. It’s not a moral failure. The damn train broke down.
Uh, we just need a different path from where we are right now. Yeah. Yeah. See, we always, we always say what a, a, a good consultant is somebody that borrows your watch and can tell you the time, right?
This is cause I’m, I’m not going to, you know, say, oh yeah, you need to get out of debt and you’re going to, this guy’s a genius, right? What, but what I’m going to do is I’m going to help you take a step back and strip the emotion away from it. And, and, you know, we’re emotional creatures, so it’s not like we’re just emotionless making decisions, but what we have to do is shift, right? The reason why we, we, we were prevented from making, and I’m doing air quotes, you know, a smart financial decision is because we’re afraid of this.
We’re afraid of that. Or, oh, this is different. I’ve always done it this way. So what we have to do is take away the scary, right?
That’s the first thing, take away the scary, let’s shine the light on all these different options that you have. So we can, we can see what they are. We can understand them. We can, um, take away any preconceived notions that you might have, like things like, you know, the knee-jerk reaction of, oh my gosh, if I file bankruptcy, my insurance, my life is ruined.
Oh my God. Yeah. And it’s like, dude, your life is already ruined right now. You’re doing a pretty damn good job of that, you know, as it is.
I mean, is it going to, but what you have to do is shift those emotions to then seeing, you know, letting yourself understand what your life could be like if this problem was gone, if the debt was gone and, and, and focus on that emotion, right, focus on how it would feel for you and your family. How would you like to be able to breathe? Yeah. Massive thing keeping you up at night was gone because you don’t want to argue things in the absolute.
Bankruptcy Is a Branding Problem
Like if, you know, we’re talking, and again, we’re not pushing, Steve and I aren’t bankruptcy firms. We don’t make any money if you file bankruptcy. All right. That’s, we’re not, it’s not our agenda.
We got a secret bankruptcy program that we’re going to sell you or anything like that, right? We just talk about it a lot because it gets a bad rap, but oftentimes it’s not going to be a great solution. It just, for some people it is for some people it’s not, but again, you’ve got to figure that out. There are a lot of other options, but if you are in debt, that is bad.
You’ve got to get out of debt and we can give you a jillion examples today, but it, it really comes down to the emotions around everything. And, and that’s what we want to focus this podcast on today, because if we can kind of peel back the layers and just pause the emotions or set those aside and be open to looking at alternatives and evaluating them for what they are, and then working through those, um, the, the preconceived notions and, you know, the things that you think might happen. And, oh, if I file bankruptcy, my insurance is going to skyrocket. I’m not going to be able to, uh, you know, finance a car for 10 years, all these crazy, I can tell you most clients, yeah, have no clue how it actually works and how their life is actually going to look.
The good thing is Steve and I have been through it ourselves and we’ve helped between the two of us, thousands of people get on the other side of debt in various ways, right? But get on the other side of it and we can share with you what your life is going to look like when you’re on the other side of it, you know, and it is good, Lord, I had a client once and she got really pissed at me at the end of a one hour conversation. So you said to me, what good was this talk? Because the only thing you did was confirm the things that he already knew.
Yeah, no, it’s math wrapped in emotion. Yeah, it’s a hundred percent. Um, you know, and I always, I find that a lot of people, it’s, you know, human brains are funny things, right? The way we, the way we do things.
And man, I’ve got so many stories of different scenarios of I’d be on the other end of the phone and I was like, this is where we’re going with this. But I mean, just things like, you know, let’s say, you know, we’re talking about, you know, the idea that maybe filing bankruptcy makes a lot of sense for, you know, your specific situation and I’m looking at it and, oh my gosh, you know, chapter seven is going to save you a hundred thousand dollars. It’s going to allow you to start putting money away for retirement right away. It’s going to allow you to do all these great things like pretty quick, solve this problem that you’ve been struggling with for 10 years, and then somebody will immediately jump to, well, yeah, but my, like I said, my insurance is going to skyrocket and here’s the thing.
That may or may not be true. When I filed bankruptcy, my insurance rates didn’t change. Now, sometimes they can, it depends on your circumstances, your insurance company, but you can’t argue that in the absolute, right? I mean, people have confirmation bias up the wazoo, right?
Where they’re always like, well, I’m going to go search for the information that I feel is true. And I’m going to keep searching until I find that information and I’m going to go. Justify my position. Yeah.
And they’ll say, see, I can’t file bankruptcy because I don’t want my insurance rates. Yeah. You’re going to discharge 50 grand in debt and your insurance rates are going to go up $200 a year. Yeah.
Now that’s a good question to pose, right? It’s good to know that. So let, now we unpack it. I think, okay, well, that’s, that’s a valid concern because it can happen.
It’s not guaranteed to happen, but it can. Okay. So let’s go worst case scenario. If that happened, how much would your insurance possibly go up?
A hundred dollars a month. Now at that point, you know, and again, I don’t know, $200 a month, $50 a month, nobody knows, right? Now you might be looking at your cashflow. If you’ve ever looked at it, that was step number one.
Let’s look at the cashflow and you might go, there’s no way I can afford that increase. So therefore I can’t file for bankruptcy or fall behind on my debt so I can negotiate better deals and get out of the debt or whatever it is, but what you’re not thinking about because your brain is kind of shutting down because you’re looking at the emotion of it is, yeah, but even if that was true and you wiped out a hundred thousand dollars on the other side, you can afford it if the insurance actually went up 50 bucks or a hundred bucks or whatever, right? Or they go, well, I won’t be able to finance a car right away. Oh, okay.
That’s potentially true, right? You might not be able to file bankruptcy and go down to the car dealership the next month and finance a car, but again, you know, is that worth a hundred thousand dollars? And if you need to finance a car right away, maybe we do it before you file the bankruptcy. I mean, there’s ways around problems, but when people are stressed and they’re very emotional about it, they only see the problem.
They need the consultant to take the watch off your wrist and say, well, actually, if you look at it upside down, we can just go right around this and we can solve that problem. What else you got for me, right? I mean, that’s essentially what I do is we work through these problems that people have. Well, if I did this and that’s fine.
We go back and forth until they run out of it. I almost said excuses are, you know, in their mind, valid reasons to avoid something, and then they’re finally open to, well, okay, well, maybe it’s not as bad as I thought. Maybe I’ll take a look at it. Right.
And that’s what I want. I just want you to take a look at things. I want you to look at everything. It’s hard for people.
And then we can come up with a plan. It’s hard for people to change their beliefs. You know, if everybody around them and the religious organization and the Dave Ramsey’s of the world are all telling you one thing, it becomes ingrained in you. But that doesn’t make it true.
I mean, here’s a somewhat interesting situation. I had a client once who insisted on continuing to tithe at the church and it was putting him so far behind every month. That I asked him, can you go to your church and can you ask them, is there a way for me to volunteer an equivalent amount of services in it so, because I don’t have that money, like, can I be responsible for mowing the church grounds, taking care of landscaping, doing something else that will save you that money and I can tithe that way. And the person came back and said, the church said, no, you can only tithe to us in money.
And it was impossible. I know it was impossible to have that conversation with him at the moment. Like, uh, what does that say to you? Because he was in the belief that whatever the church said was the absolute truth.
Well, there’s more than one. Right. Exactly. But, you know, it was really, well, I never was able to persuade him, um, on that subject because it was so ingrained in him, there’s, as I always say, there’s no six words I can tell people to radically change their mind.
Yeah. And, and my thing is too, you know, when I talk with clients, I don’t say, look, this is the way you should do it because I said, and this is the way it has to be done, you know, that’s, that’s absolutely not my job because I’m a hundred percent. You know, my thing is, look, we all get one shot at this life, right? How we choose to, to spend our time is up to you.
Like, so who’s to say that, Hey, you know, getting out of the debt and every dollar going towards the debt is, should be the most important thing you should focus on for the next five years. And, you know, sacrifice family, sacrifice your kids. Hey, we can’t do this. You know, during those last couple of years, maybe that you have them in the house before they move out.
Right. Enjoy that. Yeah. So it’s, it’s not, there’s, there’s no absolutes.
Math Wrapped in Emotion
My focus is more on let’s take an overall look at the whole situation and let’s really start prioritizing what’s important to us now and what’s going to be important to us in the future. And I have a lot of conversations, especially when it comes to parents, because people are much more apt to sacrifice things in their personal life than they are for their kids. Like if their kids are gonna, in their mind perceived to be suffering for their misgivings or their, you know, issues, they are very reluctant to do it, which I totally understand, which again is why bankruptcy makes a lot of sense. Because here’s the thing, kids probably won’t even know you filed for bankruptcy unless you tell them, but it will free up a whole bunch of money.
That you can use to spoil your kids. If that’s what you want to do. The funny thing is the number one thing people should consider is something that nobody will ever think of, which is if you find yourself stressed and feeling all those things that we’ve been talking about, the number one thing to focus on is just like on the airplane, when the flight attendant says in case of emergency, puts your oxygen mask on first before you put it on the child, because you need to take care of yourself first so that you’re there to help those other people and what people don’t realize is the number one thing we said, it’s math wrapped in emotion, but the number one thing I’ve always said to people is the first thing we need to do is take care of you. We need to take care of your mental health.
49% of people in debt are clinically depressed. We need to take care of your thought processes, uh, debt problems, uh, on average drop IQ, 13 points. We need to take care of your view on life because people with financial problems are eight times more likely to commit suicide. So we need to take care of you first and put your mask on first.
And then the rest of it is academic. Yeah. Yeah. And a large, large percentage of my clients, um, are what I call it, like the sandwich generation, right?
Where you’re stuck in the middle of, you know, financially helping aging parents and trying to get your kids through college and your, your, you know, your future, your retirement, your savings have all taken a backseat to those two, you know, getting pulled in both of those directions. And even as much as people, I think these days understand that college is not always this to go to knee jerk reaction answer, and that maybe not everybody should be going to college. And maybe that might not be a good investment to, to dig, to sign your life away for parent plus loans and student loans at 50, $60,000 a year, because that’s what your kid wants to do. They’re still doing it just because they don’t know what to do.
And they may be in a financial situation where they, they, they’re so over leveraged with debt that they don’t have any possibility of helping their child go to college except for signing student loans. And so just that lack of, well, I don’t know what else to do. And that, again, that hyperbolic discounting, which is the pain point is my kid just graduated and they want to go to college. I know consciously that if I sign these student loans, it’s probably, it’s going to be a problem.
It’s going to be a lot of money that we’re going to owe in the future, but that’s a future problem. Right. And so they’re just because they don’t know what else to do. And they feel all this pressure from society and everything else.
And little Johnny’s going to school over here and you know, big Steve has gone to school over here or whatever. Right. And so they don’t want to disappoint their kid. And so instead of like, you know, really taking a good serious look at, well, what are we investing this money in?
What does my child want to do? How much is this degree going to cost? Is that a good investment for the family? Because that’s essentially what it is.
Well, most of the time, the parents are the ones, banks aren’t stupid. They don’t want to give a whole bunch of money to some 17 year old kid with no credit score, no track record. They want to hook the parent. Right.
But here’s, who’s not telling you good advice is the private out-of-state school that is selling your kid a spot for $160,000, whatever it costs for these $200,000. Um, they’re not saying, you know, this is a dumb financial move for you. Because if you took the same $60,000 a year and put it in a retirement account now for your 18 year old child, they would be incredibly well taken care of after you’re gone. But yeah.
And, and not only that, I mean, if, you know, for some of us, you know, our, our kids are already at that age, but if you’re maybe on the younger side and your kids are a lot young and you’ve got time, if you’re spending a thousand dollars a month servicing debt, $1,500 a month servicing debt. If we can get rid of that debt right now, you could throw that money into a 529 plan, or, you know, even if it’s not, there’s plenty of vehicles you could put that money into for your kid that you’re already spending right now, just on servicing debt, putting Jamie Diamond’s grandkids through school rather than your own, you know, and, and then allow, and then do things in a creative way and actually be able to get your kid an education. If that’s important to the both of you at the time, without having to take out student loans. I know that’s a novel concept, but your future self will thank you for that.
And everything comes down to all these things. The common thread is debt. Servicing debt is prohibiting you the ability to have these nice things, to be able to do this. And what we need to do is really start looking at what your life could be today and moving forward without debt.
And that’s where the emotion turns back on. That’s what you need to focus on. That’s what you need to get excited about. Like, you know, I talk to my kids all the time about, you never want to have a car payment.
Right. I mean, they’re all still my, my, my one son is driving now. Um, and my, my whole thing is, you know, the car payment is one of the biggest wealth killers out there. Right.
Especially this concept. Yeah. Oh, today it’s just freaking ridiculous. Oh, I need to get a truck.
Oh, it’s only $110,000. Oh, cool. You know, I mean, it’s, it’s nuts, but you know, I’ve got this concept of, you know, uh, setting up a fund. Right.
And I, I’m not saying I’m not taking credit for inventing the idea or anything, but think about this and get excited about this. What would your life be like if you never had a car payment again, ever? Think about it. Most people go their whole lives and never don’t have a car payment.
It’s as soon as they, now, especially nowadays with six year loans, seven year loans, it’s getting ridiculous. By the time they get done paying off their car, it’s almost like they go, well, time for a new car, you know? And they just roll it over, roll over negative equity and they always have a car payment. And I can teach you how to never have a car payment in, you know, seven, eight, nine years, depending on your situation.
Imagine nine years from now, you never have to make a car payment again. And I’m not talking about just the basic, you know, drive a paid off car. And, and pay the payment to yourself. And then when you save up enough money by the car, well, that’s part of it, but I like to take it a step further.
Wouldn’t it be nice if you had a fund, an endowment, if you will, that you set up, right? And that fund generates enough money automatically to where every time you end up needing a new car, there’s enough money in the fund where you just go pay cash for the car, leaving enough money still in the fund and 10, 12 years later, when you need the next new car, you go back in and you just, it’s the goose that laid the golden car. Right. And, and, and again, anybody listening to this podcast can do that.
If you get the hell out of debt, debt is what’s keeping you for it. And this is just one example of a car. I mean, you can do it for anything, but I was just running some quick math. I don’t know if we have time for me to run through it.
Put Your Own Oxygen Mask On First
So let’s do it. Let’s do it. So, okay. Let’s say you’ve got, I don’t know, $25,000 left on your car.
Let’s assume everybody is driving a car, listening to this and currently has a car payment. So how do we get the hell out of that? All right. We’ve got 25 grand, 6%.
We’re paying, you know, roughly 600 bucks a month. Okay. You’ve got four and a half years left on that loan, whatever it is. Well, here’s what we’re going to do.
Instead of paying 600 bucks, we’re going to pay a thousand. Now everybody’s going to go, how in the hell am I going to, where am I going to get an extra 400 bucks? You got to get the hell out of consumer debt. Okay.
Everything starts with get the hell out of consumer debt. You’re going to notice a theme on this podcast, you know, things that your, your life could be if you didn’t have the debt and we’ve got to get to the point where having the debt is scarier to you than the things that you need to do to get out of the debt, right? At a certain point, you become less afraid of bankruptcy or less afraid of settlement and more afraid of what your life is currently and what your life will be in the future because you are not acting, you’re just kicking the can down the road, solving problems as they come in day after day. So let’s say you’re in this situation, we get you out of debt.
I don’t care how we do it, but we get you out of consumer debt. So then you can afford to say, okay, I want my car endowment. I wanted the goose that laid the golden car. So now I’m out of this consumer debt.
I can afford to throw a thousand bucks a month at my car instead of 600. Now we’re going to pay that car off in a little bit, a little over two years, 27 months. Now, here’s what we do. The car’s paid off in two years, still a great car.
You probably only now had it three or four years. You take care of your car. You should be able to drive almost any car out there for 10 to 12 years, at least. You know, some of them, you can even push, you know, 15 or even longer if you, you, you really want to.
But let’s just say 10 to 12 years, you’re going to drive a car. That’s not crazy. You know, right now I’ve got a, um, a 2014 Cadillac that I got from my grandfather when he passed and now my son drives it and it’s a, it’s a 2014. So what’s that?
12 years old. It’s only got 130,000 miles on it. And it’s still, it’s still a great car. My son drives it, you know, 22, 23 miles a gallon.
I mean, I must say it’s, you know, it’s Cadillac XTS. I’m not, you know, it’s a pretty fancy car for a first vehicle for a kid. I remind him every day how lucky he is to have a car like that. Um, but, but again, the car is still great.
It’s in great shape. Still looks good. It’s 12 years old and it’s nowhere near the end of its life, right? I mean, we, he might have that car for the next five years.
I told him you drive that car until you have enough money to pay cash for the next one. You do not want to finance one. And so what we’re going to do now is we’re going to take that thousand dollars a month that now is freed up in your budget and what you don’t do is say, whew, I have an extra thousand dollars a month party time. You don’t do that.
People, you just keep going forward. Oh, people will do that, but the, but they’re not going to have the, the goose that laid the golden card. They’re not going to have that endowment fund. That’s only for rich people, right?
So, so you take that thousand bucks a month and you just invest it. And there’s, I’m not going to get into what you should invest in or anything like that. You put it in the market, you get an Acorns account, whatever it is. You put it in the market.
Let’s say you get a 7% return, which is very conservative. Long-term returns 7% in seven years at a thousand bucks a month. And again, your car’s four years old, five years old in seven years, your car is going to be 10 to 12 years old. Maybe time to replace it.
Maybe it’s like my Cadillac. The longer you keep it, the better this gets. But let’s say in seven years, it’s given up the ghost. So now it’s 12 years old.
You know, you’ve had a paid off car for seven years. You diligently put that thousand bucks a month in your state. You stayed out of consumer debt so you can afford to do that. Now, you know what you got in your fund?
You’ve got $109,000 and, you know, after seven years of doing that 109 grand. Right. So it sounds like I need to borrow by, do you go buy a new diesel truck? No, no, you don’t do that.
The Goose That Laid the Golden Car
You go in and say, okay, I’ve got 109,000. You don’t go shopping for cars in the a hundred thousand dollar range. You go in and you go, okay, well, what are, what do I need? You know, do I need a brand new car?
No. And it’s amazing how less often you will consider or even think about buying a new car with all of the bells and whistles if you’re financing it versus if you’re paying cash. Because when you’re paying cash, that’s a huge pain point. And when you’re talking about writing a check for $50,000, you’re going to go, oh my God, but when you go finance it for $50,000, you’re just like, oh, it’s like 800 a month.
You know, I can afford that. I’ve been putting $1,000 a month away for seven years. I deserve it. I’m going to.
What will my payment be? You go in. Yeah. And there’s no more payments.
You are now your own bank. You don’t ever finance a car again. And you go in there and you say, what do I actually need to get from point A to point B? I want to have a nice car.
I’ve been saving all this money. That’s fine. Right. But you can find a really nice used car, two, three years old.
I’m not talking about a clunker. Obviously the more aggressive you are, that’s up to you, but go in and look for a car in the $35,000 range. That’s not a piece of crap, you know, $40,000 range even. Okay.
So buy a car that’s three or four years old. So, you know, the big depreciation hit has already been taken. It’s still a new car. Yeah.
So let’s say you go pay cash, $35,000 car here in Arizona, where I’m at, they’ve got this cool little deal where if you buy a used car, private party, no sales tax on it, that could save you $4,000 right there. That’s a good deal. Buy it from a dealer. You got sales tax.
You buy it from private party, no sales tax. So now you don’t, don’t go spend 109, even though you have it, you spend 35 and you go pay cash for the car. Now here’s the magic, the magic of the goose that laid the golden car. Now you’ve been paying a thousand dollars a month.
You’ve been diligent. You’ve been killing it. You’ve been awesome. Now your fund, you bought that car.
Your fund is down to $74,000, give or take. Now you can still contribute if you want. Maybe you cut back to 500 bucks a month, or maybe you just leave it alone and you don’t contribute anymore. But you’ve got a two or three year old car that you can drive for the next nine or 10 years with no car payment.
And you still have $74,000 sitting in the market or wherever you invested in. Figure out, and these are 7% returns. If it’s, if it averages 8%, 9%, 10%, the numbers are even better. Stock market just hit an all time high yesterday.
Yeah. But now you’ve got what I would call your own little endowment for your car. And you’ve got 74,000 seed money at 7% after 10 years, that’s going to be about $145,000, 10 years. Maybe that now that car is 12, 13 years old, time to go buy another one.
Do the same thing. Now, 10 years from now, 15 years from now, a $35,000 car, as we know, is not going to be the same as a $35,000 car today. That equivalent $35,000 car is probably going to be $50,000 15 years from now. But that’s okay.
Cause you’ve got $145,000. And remember you haven’t added another dime to this fund in 10 years. You haven’t had a car payment now in over 12 years, and you’ve got as much money as you need. The less you take out, the more and the faster that will grow.
And eventually that’s going to get big enough where you can start taking money out for other things. Now that’s all great math, but let me prove to you that it is wrapped in emotion. I’m going to give you the receipts on this because I just on getoutofdebt.org you can read all the posts, but I just had a post this week about credit card debt numbers and how a credit card debt and housing debt are both accelerating very rapidly here. Here’s the point that I want to make is since 2011, this is the highest amount of credit card balances people are carrying that are more than 90 days old.
So rather than dealing with the situation and getting themselves in a good situation, like you just described, the balances are just getting older and people are just kicking the can further down the road. Because it’s so overwhelming, they don’t know how to solve it. So they’re like, why am I going to waste time on it? They compartmentalize it.
Right. And like, well, I’m alive today. I have things today. And so it’s easy to push it, but it’s going to get worse and worse and worse.
And the sooner you get out ahead of it, the better off you’re going to be. And what was that other article you wrote, Steve, that just ties into it? It was the, here it is right here. The credit card number that should scare you.
Isn’t the balance. It’s the late payment. It’s just growing. It’s how, yeah.
How many, you’re not alone. How many people in this country right now are drowning in consumer debt, right? And everything’s going up. Cars are getting more.
And guys, the way to get ahead in life is not to trade time for money until you retire. That’s not how you get ahead. Well, can we, you know, can we quickly run through the, uh, your brain on debt quiz on the site? Debt quiz.
Debt quiz. Yeah, maybe. Um, yeah, Steve’s got, you know, if you haven’t been to the site, get out of debt.org it’s tons of articles. I’m talking tens of thousands of articles.
Uh, anything you ever wanted to know, most of the stuff we talk about on the show is just us looking at some articles that Steve has recently written or written in the past and we discuss them. Um, but he’s got a lot of great free tools on that site. Um, and one of them is, uh, the year, what is it? Uh, your, your brain on my, your brain on debt.
My, my screen just like reset and I just got a smile. And you can always reach Damon at, uh, damonday.com D A M O N D A Y.com. Set up a free call with him. Uh, he sounds exactly the same way on the phone.
So like a total moron, but as we wind up this podcast, let’s just run through your brain on debt and it will really solidify what we’ve been talking about, do you want me to read you the questions or do you want to do it and pick the answer that you most commonly hear? Well, since we have absolutely no script and no plan on this podcast, um, this is the first time hearing about it. So you tell me what you’d like to do. All right.
Do you have it up in front of you? Okay. So I’ll read the question and then you tell me what the answer is. So I don’t have to read them all.
And you want me to, and you want me to, uh, act as if I’m the average person that you talk to. Okay. I’ll see if I can do that. Let me try to change my mind.
Let me reverse back to 10 year, 15 year, 20 year ago. Yeah, departmentalize yourself. All right. Yeah.
Your Brain on Debt — and Wrapping Up
When you think about your debt situation, what do you most want right now? Get out of debt, Steve. From the answers. I know.
I know. I, I’ve given this, that’s what I get. And I’m like, okay, I know that, but you said you want the answer that I most get. I want to get out of debt.
Yeah, no shit. I’m, I’m right there with you. Okay. So from the answers, there’s four options to choose from.
Um, and again, this is a quiz that’s on the site. You can go through it. Um, I’m going to say, uh, for most people, it’s someone to tell me what to do. Okay.
Someone to tell me what to do because they’re just frozen. If someone offered you a solution that would make the immediate stress go away, but would cost you more in the long run, what would you do? I’d probably take it. All right.
How far ahead are you able to think about your finances right now? Um, right now, Steve, I’m going week to week if I’m lucky, but mostly day to day. Okay. When you see an ad that says we stop the calls today or reduce your debt immediately.
How do you feel? Uh, I used to feel excited, but now I’ve, I’ve called so many of those. I realized, Oh, hold on. I got to look at your answers.
Yeah. Um, uh, curious, but skeptical. Next section. Oh, I forgot.
I have to click these two. Shoot. Give me a second. Okay.
Next section. Calculator is broken. Well, I know what I’m doing next. Crap.
Okay. Anyway, by the time you hear this, it’ll be fixed on the site. Your brain on debt, the new free fixed quiz. Hey, we’re doing live troubleshooting.
Thank you. I appreciate that. So did you get the same thing? You click next and it doesn’t go anywhere.
No. Oh, perfect. All right. Yeah.
Well, give us two hours, but I’ll be on it. All right. So let’s wind this. Anyway, when it’s working, it’s a great tool.
Yeah. It’ll help you to understand that what you’re feeling is normal and you’re not alone. And if you want to really get reinforcement that you’re not alone. Schedule a free call with Damon, D-A-M-O-N-D-A-Y.com.
Yeah, I think, I think, uh, if you’ve listened to a few podcasts, you’ll know, I’m not the typical financial advisor. I’m a real dude. You know, it’s not just about the money, right? It’s about your life.
It’s about, you know, what’s important to you because we only get one shot at it. Right. And, and sometimes if, you know, suffering a little bit is, you know, what is the most important to you because you’re providing something something for your kids or whatever. I’m not here to say that’s right.
Or that’s wrong. You know, that’s, that’s not my thing. That’s your thing. My job then will be like, okay, well, if we’re going to go down that path for the next couple of years, here’s what your life is then going to look like, and then here’s what we can do to fix it at that time.
And then you, you know, decide if that’s going to work, if that’s okay, that’s good. But, um, what we can’t do is carry consumer debt long-term because that’s the cancer that just grows, right? You get rid of that and your life is full of possibilities, Steve. Well, on that note, Damon, I will see ya.
Steve doesn’t like to edit anything very long. Peace.
Frequently Asked Questions
What does “debt is math wrapped in emotion” mean?
It means the numbers behind your debt are simple and you already understand them — you know you’d be better off without the balance. What actually keeps people stuck is the emotional layer on top: fear, shame, and the belief that owing money is a moral failing. Steve Rhode’s point is that solving debt is mostly about removing those emotions so you can evaluate your real options clearly.
Is filing bankruptcy a moral failure?
No. Bankruptcy is a legal tool the U.S. court system itself calls a “fresh start.” Steve argues the stigma is purely a branding problem — describe the exact same Chapter 7 process as a “federal fresh start program” and people embrace it; call it “bankruptcy” and they recoil, even though nothing about the facts changed. Corporations and even churches use bankruptcy strategically. It isn’t right for everyone, but it isn’t a character flaw.
What should I do first if my debt feels overwhelming?
Take care of yourself before the spreadsheets. Steve compares it to the airplane rule: put your own oxygen mask on first. With 49% of people in debt screening positive for depression symptoms, money worry eating the mental bandwidth needed to think straight, and financial stress raising suicide risk eightfold, your mental health is the priority. Once you’ve steadied yourself, looking at the options becomes far easier.
Will bankruptcy really ruin my insurance and my ability to buy a car?
Usually not the way people fear. When Steve filed, his insurance didn’t change. Even if a rate did rise, it might be a few hundred dollars a year against tens of thousands in discharged debt — a number worth doing the math on rather than treating as an absolute. And if you need to finance a car, there are often ways to handle that before filing. The fears are real questions, but they’re rarely the dealbreakers people assume.
How can I stop having a car payment for the rest of my life?
Damon calls it the “goose that laid the golden car.” First, get out of consumer debt. Then keep paying the old car payment — but to yourself, invested at a conservative return. Drive your paid-off car 10–12 years, then buy a reasonably priced used car with cash, leaving the rest of the fund invested. Done diligently, the fund grows large enough to buy every future car with cash and never finance one again.
Should parents take out Parent PLUS loans to pay for college?
Be very careful. Banks won’t lend large sums to a teenager with no credit, so they hook the parent instead. Signing $50,000–$60,000 a year in loans can wreck a parent’s retirement. The same money invested in a 529 plan or retirement account often leaves a child far better off than an expensive out-of-state degree. Treat it as the major financial investment it is, not an automatic yes.
