Budgets Are a Page of Lies — Build Systems Instead

Opening

Hey, you're back with the Get Out of Debt Guy show. I'm Steve Rhode, the old original Get Out of Debt Guy. With me, as always, is the new, fresher-smelling, younger Get Out of Debt Guy, the new Get Out of Debt Guy, Damon Day. Say hello, Damon. Hey, everyone. Before I forget, if you have a question you want to talk to a real human, you can reach Damon at damonday, D-A-M-O-N D-A-Y dot com.

And if you want to talk to my AI chatbot that's trained on my 30 years of experience, you can go to getoutofdebt.org and get some wisdom without having to speak to a real human. All right, Damon, you know, we've been doing these great outlines and these great intros for the podcast, and just to show you, you know, how much people value they're getting for their free podcast, we both looked at the outline for today and went, ‘Nah.’ Yeah, I called Steve and I was like, ‘I'm looking at the outline, and it doesn't really make any sense. It wants us talking about settlement and settlement funds and things like that, and it feels like it's just kind of thrown into our series, and people are going to be like, ‘What are they talking about?’’ And Steve went, ‘I thought the same exact thing when I looked at it this morning.’ Yeah. Well, so the way this has worked is we created a year's worth of show outlines, I don't know, four, five, six months ago. You did it in December. December.

Kind of kicked it off. Yeah, right at the new year, yeah. So now that we're into it… I don't know where it veered, but we both kind of lost the interest in that one. So we'll see what happens with next week. But yeah, neither one of us have looked at it yet.

But yeah, next week we'll see if it's back on track. I wonder what next week is. I haven't looked at it. Actually, I can tell you real quick because I'm looking. Yeah, yeah. Spring cleaning your finances need.

Oh, well, that's actually good. Maybe, yeah. Yeah, we might be back on track next week. Who knows? Yeah, this week's show just sucked. So we scrapped it.

Yeah. Nope, we're not doing that. Anyway, we're still doing a show, just not doing that one. Yeah, I mean, anyway, it's another week that you've been living in debt. You've been maybe celebrating. You're making some progress.

You're feeling a little bit better, a little bit more balanced about your debt. It's not tearing you down. You're not feeling shame. You're not feeling stupid. You're feeling like, you know, you talked to Damon or you visited getoutofdebt.org and you got some advice. And hope is headed your way.

Things are looking up. It's not as desperate and dark as you thought it was. And if you have any of those positive feelings or emotions, then damn it, Damon, we've been doing our job. Oh, damn it, Damon. There's that garbage pail kid. Damn it, Damon.

Damn it, Damon. What are you rustling over there? I scratched my forehead. My bad. Oh, okay. So, and for those that don't know, I am nursing a slipped disc in my back.

It was questionable whether or not we could even do this podcast, and we had to put it off for like an hour and a half while I went in the pool, did my exercises, put my TENS unit on, iced my back, and I did not take my very potent narcotic this morning for fear that it would kick in right when we were doing the podcast. If you hear any weird noises like that out of me, that's just me shifting in my chair, so I apologize ahead of time. But I think it's a great— is your beard brushing against the mic? Is that what it is? You know what? It is my beard brushing.

I won't turn my head. That must be what it is. All right. But your back situation is actually a great example of, I mean, you didn't know that your back was going to go out. You know, if you had to go to work and be someplace, you would be able to move. You wouldn't be getting paid.

Oh, dude, I've barely been able to get out of bed for— it happened on Sunday. I was putting together a big trampoline in the yard for my daughter, and it wasn't anything specific. It was just, oh, my back's starting to hurt. And then the more I did it, the more, it's really starting to hurt. Hold on, I need a break. And then it was like, I can't get off my knee right now.

Yeah. And then it just got worse from there. I've been chiropractors all week, bed, ice, TENS unit. I mean, I'm like, you know, I can't fart without falling over at this point. Well, I mean, it's just painful, man. But it's a good example that you never know that these things are coming, and one event like this can put you way behind on your bills.

Oh, 100%. If I had an actual job that I had to go to, I would be taking personal time or vacation time or something. Yeah. You know, I had to skip— I couldn't even take my daughter to softball practice last night. I could not get in the car to drive. I was just like, sorry, you can't go.

And my wife was at my son's baseball game, so it was either I drive her or she doesn't go. So she didn't go. Okay. Well, it sounds like you might have another couple weeks of this. I hope not, because I only have two pills left. Well, alternatives, my friend.

Yeah, but the point is, anything can happen. And, you know, if you're paycheck to paycheck and you're in debt and you're barely making ends meet, and you decide you need to put together a trampoline on a Sunday, that could be the one thing that not only throws your back out, but throws out your finances as well. All right, so we've been starting with articles from the GetOutOfDebt.org site that I have written in the past week, and something caught your eye. Yeah, you know, we started doing these a few months ago and, you know, going through some of these articles that you write, and luckily we did because I think it's made our shows more interesting and completely saved the show for today because we had an alternative that we could talk about. But for those of you that aren't familiar with the site, go to GetOutOfDebt.org. Steve is a writing fool, and he's got a lot of great information on there.

And we decided we wanted to start highlighting some of the articles each week that he's been writing. And it's one thing to hear us talk about the articles, but most of the articles, there's a much deeper dive on all the subjects that we cover than just what we talk about. So if there's any article that we touch on that you think resonates with you or could be interesting, definitely go to the website, do a quick search with the hourglass in the top right corner, type in whatever keywords that sound right, and it will pop up. But the first one I wanted to talk about, we touched on it last week, and I actually had a couple of people call me specifically about that episode when we were talking about ADHD and debt and, you know, ways to get out of debt when you have ADHD. And I had several phone calls specifically for that.

What Dave Ramsey Gets Right

And I think inspired by the article that we talked about last week, you wrote this article, which is What Dave Ramsey Gets Right. And what he completely misses, and I thought it was very interesting because we do pick on Dave Ramsey a lot, but this one actually, you took the time to really say, hey, look, he does a lot of good things for people, and he does. And so I wanted to bring that one up and kind of go over some of the things that we agree with him on and some of the things that he may have just kind of missed the boat on because it doesn't maybe fit, you know, his whole philosophy there. Yeah, I've met Dave Ramsey types in my life, and, you know, they're very cut and dry, very black and white. And, you know, my experience with his advice is like, You should know this. It's obvious.

You know, get off your ass, type thing. And that is just not the way that people's brains work. Now, you can say that somebody is lazy, but you have to understand why they're not as motivated as you. And if you're not somebody that loves spreadsheets and loves tracking numbers and is willing to cut your life to the bone and try to make it out in five years or something like that, if you get distracted at all, if something unexpected happens, then that black and white advice is just not going to work for you. Yeah. So cover the, you know, you had right at the top of the article, you had some things bullet pointed that, you know, things that you agree with Dave Ramsey on, things that you feel like he definitely gets right.

Well, I think he says debt is a serious problem that requires a real plan. I think that's spot on. The debt snowball creates psychological wins that build momentum. It can. Living below your means is genuinely necessary for financial progress. Hey, spend less than you make is always the cardinal rule.

And you could write a whole book right there. Yeah, the end. Emergency—my new book. Emergency funds prevent good people with bad problems from spiraling after one bad event. I see what you did there. And, you know, his community does provide some accountability and encouragement.

But I think one of the things that you and I have both heard since doing these shows is there's a whole group of people out there that did not succeed by following that path. And then they just end up feeling worse, like somehow they're stupid or they failed or whatever, but they feel abandoned. Yeah, I'll get comments like, you know, I've tried Dave Ramsey more times than I can remember over the years, and I try it, I'm going to make it work, and it just doesn't work for me. Right. Well, I don't think it would work for you and I either. Yeah.

Well, it's just, it's not fun, man. I like to have fun. We get one shot at this life. I want to have a little bit of fun in my life. Right. You know, my rule if you have unexpected money is save a third, spend a third, and just blow a third, you know, because you got to enjoy life along the way.

Yeah. Yeah, exactly. So anyway, it's a good article, and we get into a lot of what we covered last week about, you know, people's brains are different. Everybody works differently, and the standard just, you know, make a budget, spend less than you make, get a roommate, eat beans and rice. That doesn't always work for everybody. And Steve, you know, it was clear to point out, it's like if that method is working for you and you're seeing progress, you know, by all means, go for it.

But if you've tried it before, it's not working for you, and you're looking for other approaches, there are other ways. And what Steve alluded to earlier is people will try it, it won't work, and then they'll kind of just withdraw. They'll feel like a failure. They'll feel isolated, and they're like, Well, I'm never going to be able to get out of this. There's nothing I can do. And then it just starts that emotional spending cycle.

Well, if I can't get out of the debt, I might as well enjoy my damn life and just get deeper in debt. And, you know, it's like buy the ice cream, you know? So if you followed him, you followed his financial piece or listened to his podcast or watched his show or whatever, and you feel like it's not working for you, you're not alone. And there are some very good reasons why it might not be. So don't give up. You know, you just have to approach it in a different way.

Like, for example, if you're not the I'm going to track every penny and put money in an envelope and, you know, spend like that, if you have stress-related, which everyone in debt does, some stress-related impact on your mood, if you're depressed, I mean, depression leads to the inability to make a plan, take action, follow through. And so that's just not going to lead you to being successful over a long period of time. Let's say you have ADHD as well. So one of the things you can do is, like, automate every payment. Set up automatic savings transfers the day you get paid. Make sure that you put it in a high-yield savings account.

Not just the one at your bank.

Build Systems, Not Budgets

So we need you to build systems and not budgets, because Damon and I both agree that budgets alone are nothing but a page of lies. Yeah, and, you know, sometimes just getting out of the debt and getting a fresh start is the right solution rather than struggling with this stuff for years. And then Dave Ramsey's got a lot of good advice. You know, when Dave Ramsey's advice works really well? When you're already out of debt. Yeah, that's true.

And you've got positive cash flow, then you can use a lot of his advice and incorporate that into your lifestyle without having to have a huge lifestyle sacrifice, because you already have the extra money. It's that first part that derails most people, where they got to spend five years living this crappy-ass life. They don't want to do that. And especially if they have a family, they don't want to do that to their family if they don't have to. And they have a hard time saying no to things, which contributes to that. So if you can get yourself to a point where you're starting debt-free, a lot of that advice makes a lot of sense, and you can utilize that advice to not get back to a place where you're in debt and trying to figure out how to get out.

So we're not saying everything Dave Ramsey says is wrong. A lot of that stuff is good, common-sense advice. You know, one last thing I would like to touch on is if Dave Ramsey's plan doesn't work for you and you just can't afford to repay your debt, that is not a moral failure, right? That's not worthy of shame. That's a math problem.

Debt Is Math, Not Morality

So don't take it upon yourself to, you know, I got to do this for five years because I have a moral obligation to repay my debt. It always cracks me up when people say they have a moral obligation to repay their debt. Dave Ramsey filed bankruptcy. He might tell you not to, but he did it. He got the advantages, and he rebuilt his life. So stop looking at things as, how are other people going to look at you, and start looking at them like, what does this math problem tell me?

Yeah. And I think I've heard—it's been a while—but I think I heard Dave Ramsey say one time that, you know, after he filed bankruptcy and he was out of debt and he rebuilt his life and started making money, he called all of his creditors and repaid every single one of them. Well, good for him. That's bullshit, though. Yeah, because I did the same thing.

Why Creditors Cannot Take Money After a Discharge

Yeah, and my creditors told me, Please do not send the money. Yeah. And the reason they did is because a creditor can actually get into a lot of trouble accepting payments for a debt that's been discharged in bankruptcy. Yeah. And other creditors told me, We just don't have an account to apply it to anymore. Yeah, there's no mechanism for them to accept the money.

Right. You're not dealing with an individual, right? Like, if, Steve, if I owed you $10,000 and you filed bankruptcy and years later you call me up and you're like, You know, I feel really bad, but I'm doing a lot better now, and it's always weighed on me. I really want to pay you that $10,000 back. Yeah. And I said, Oh, okay, sure, great.

There's going to be no problem. Right. But when you're trying to call Chase Bank and like, Oh, you know, I had this account that, you know, eight years ago I filed a bankruptcy on, and I owed you guys five grand, and I feel really bad about it, and I'm doing really well now. I'd like to send you a check for $8,000. They're not going to know where you should send the check to. Yeah, they won't know what to do with it.

Yeah. What if they said, Oh, and what about the interest in the meantime? And the guy's like, Yeah, make that out to cash. Yeah. Well, I mean, let's flip this for a second, because let's say you legally discharged your debt. You no longer have a legal requirement to repay that debt.

If he had taken his money that he discharged way back then, or I had taken mine, and I had stuck that into a retirement account 40 years ago, imagine how much that would be worth today and able to care for me in my retirement years. So which morality are we talking about? Your duty to yourself in the future or your duty to creditors in the past? Yeah. And even if Dave Ramsey was able to write checks and pay off all of his past debts, the point is, according to him, he did that when he was in a position to be able to do that, and bankruptcy allowed him to get into the position to be able to say, Hey, I want to pay everybody back. So what's wrong with letting you get into that position where you could, if you wanted to and they accepted it, you could then pay everybody back?

I agree with you completely, but I get a chuckle out of people who say, I have a moral obligation to repay my debt, and so I'm not going to file bankruptcy, but I'd like to settle it. Yeah. Well, the thing is, you don't have a moral obligation to repay your debt. You're afraid of filing bankruptcy. That's what the issue is. That's right.

Because repaying half your debt is not meeting your obligation. Now, you know, what is your obligation? All right, because you sign a contract or enter into an agreement with, let's say, a credit card company, and you can't repay it for whatever reason. They're charging you an interest rate that's based on the risk factor of how they have identified you by credit score, payment history, whatever. And they have taken a chance on you in lending you that money. And yet you run into an unexpected job loss, your back goes out, whatever, and you can't make that payment.

You've entered into an absolute agreement, right? You have to make this payment every month, no matter what. Life just doesn't fucking work like that. Yeah, and that's why you're paying an interest rate that, as long as you could repay it for maybe even a couple of years, they're getting all their money back. Well, yeah. I mean, so let's talk about that interest rate.

So the rate that you're being charged is made up of a number of different factors. One is the base cost of money to the bank, but another one is they have white-coated scientists that are calculating how much they think they're going to lose, how many people are going to default, and they've already factored that number in. Damon and I are not telling you to just walk away. In all of our years, I have very rarely, I can't think of anybody off the top of my head that just said, Screw it, I'm not going to pay my creditors and walk away. Everyone has some sort of underlying circumstance, and It's already priced in. So, so, I mean, I'm trying to say it without saying you shouldn't feel bad for just walking away, but, you know, if you have a legal opportunity— Well, do creditors feel bad for you?

Oh, hell no. You know, what kind of sympathy do you get from your creditors when you are paying every single month and you're draining your savings and you're draining your retirement and you're doing everything you can, selling everything in your house, just trying to survive just to keep the payments current? Are you getting any kind of sympathy or concessions from your creditor? Yeah, you're not even getting a balance reduction. No. They don't even pay attention to you until you miss a payment.

Right. It's like, hey, wait, wait, wait, what's going on? Right. Are you okay? What can we do? You know, and this whole time you spent years avoiding missing a payment, and they won't help you until you miss a payment.

Oh, well, I mean, think about all the people that you've talked to that continue to spend down their savings account or borrow from their 401(k) just to continue to make payments with no solution. Yeah. If you're drawing down savings, drawing down retirement right now, trying to pay your bills, you need to call me immediately, right? Because the sooner you call me, the sooner we can put a plan together, the sooner we can protect that cash. Because the hardest thing to do is save that money and put it away, right? It's easy to make a million dollars if you already have ten million dollars in the bank.

What's hard is to get that first million. That's the hardest part. So if you're starting to build that and you've got half a million in retirement, a quarter million dollars, whatever, the last thing, the absolute worst thing you could do is start draining that money that took you 20 years to build up or whatever it was, because you're in a temporary situation from a cash flow perspective. You're in a temporary negative cash flow situation, and you're going to drain 10 years or 20 years of savings trying to keep up the status quo, paying payments to creditors that are charging you 25, 30 percent from an account that would be absolutely protected if you just went bankrupt. Now, I'm not saying you call me and we're going to go bankrupt. That's not what I'm saying.

I'm saying we want to look at all of the options. So I don't want you going away thinking, no point calling Damon unless I'm ready to file bankruptcy. No. We will look at it. I had a client yesterday that called me—well, she's not a client yet, but she probably will be a client. And, you know, from the cash flow perspective, everything that was going on, I was like, Oh, this is probably going to be a Chapter 7.

This looks like a Chapter 7 makes the most sense. But then she told me how much equity she had in her house, and then she told me what state she lived in. And I went, Oh, we're not really going to talk about a Chapter 7 bankruptcy because that's a non-starter. It's not going to work. Yeah, unless you're okay with losing your house. And she went, No, I don't really like that idea.

And I went, I didn't think so. So let's talk about some other alternatives, because a Chapter 7 bankruptcy is not going to work for you. But that's the kind of conversations we need to have, which is let's look at these different options and let's decide, is it even a possibility before we're saying yes or before we're saying no. All right, what's the next article? The next article, kind of say, I was going to say you had a good segue, but that was about 10 minutes ago. Sorry.

Depression and Debt Feed Each Other

The next article, and I think is really important because I do see this a lot as well, is why depression and debt feed each other and how to break that loop. And you see that a lot, Steve, when people are in debt, they are also depressed. And it's kind of a chicken-and-egg argument because you also have the flip side. When people are depressed, they tend to get into debt. Yeah, it's kind of like ADHD. It's a brain chemistry thing.

And being depressed about your debt. So on the GetOutOfDebt.org website, a couple of free quizzes, calculators. If you scroll down to the bottom, the debt stress test and your brain on debt, and it will show you exactly how your debt is impacting the way that you're thinking right now. So over the years, and this is, it does segue to the previous story, like— I have never heard anybody call into the Dave Ramsey show and have them say, You know, it sounds like you're depressed right now. Have you spoken to your medical doctor or, you know, somebody else to deal with that? Because once you do, once you deal with that depression and you get some help for it, you have hope that shines its light again in the future.

You stop feeling like every day is hopeless and worthless. And there have been many, many, many clients over the years where I've said to them, The first thing we need to do is we need to pay attention to this depression that you're going through. And whether that's medical therapy or talk therapy or whatever, unless we can build a good, solid foundation from you to build on, you're just going to go in this toilet bowl circle. Well, you know, it can make you depressed. You know, thinking that Dave Ramsey is like kind of the only option, the only solution. You call into his radio show, you finally get through to the big guy, and you're spilling your guts, telling him everything that's going on, and he goes, Well, it's time to put on your big boy pants and sell your house.

You know, that can make you pretty depressed if, you know, maybe that house is the one thing you have. It's the stable foundation for your family. You've got young kids, and that's the one thing you don't want to do. And you get through to the show, and Dave Ramsey himself's like, Well, you got to sell your house, otherwise you're not a man. Right, and you feel like you're being judged. Yeah.

And it's like you leave that and you're like, Well, if Dave Ramsey says I have to sell my house, I can't tell you how many episodes I've listened to over the years, and I'm screaming at the damn thing. It's like, No, it's not your only option, dumbass. It's just like, but that, you know, you got to put your big boy pants on. You got to sell your house. You know, wait a minute. Before you do that, let's look at some alternatives.

Maybe you don't have to. Maybe you want to sell your house. Maybe it's a good option. Maybe you want to move anyway. Fine. Maybe there's times when selling your house makes sense.

Well, that's a good example. Not every time you have debt, sell your house, put on your big boy pants. That's a good example of not everything is black and white. And, you know, one thing, I got to pat us both on the back for this one, is one thing is that we don't judge people. And there's more than one way out of debt. And because we've been there, bro.

Yeah. I would never say to somebody, Put your big boy pants on and, you know, do something. I don't. In fact, right now, I can't even put my pants on. My wife has to help me. Last night, and this is, I'm probably more, I shouldn't share this much, but Kathy's gone.

She's at my son's baseball game. My other son's home. Yeah. And I am stark naked in my bathroom. I just got out of the pool because I'm doing my exercises. Are you naked in the pool?

Oh, okay. No, no, I have my trunks on, but now there's no other adult home but me. My son is home. Yeah. My other son. I'm stark naked in my bathroom.

My trunks are on the floor. My shorts are also on the floor. I'm trying to get them with my toes. Yeah. I cannot get them on, and I'm standing there going, my son's 19. Okay, do I traumatize my oldest baby boy, or do I just put a bathrobe on and walk around for the next four hours until my wife gets home?

I mean, when you say, I couldn't go, I've gone to work if I had a job, I definitely could not have gone to work if I had a job. But, well, yeah, put your big boy pants on. Yeah, but like your story, don't leave us hanging. I was bound and determined I did not traumatize my child. I was eventually able to get my shorts with my toes and get them, like, laid out to where I could step in them, and I shimmied with my legs kind of up to my knees, and then I was able to slowly reach down with my fingertips and get them from my knees, and I was able to get my shorts on. Now, we're not talking about whether or not I was going commando at that point, but at least I had shorts on.

What's that brown stripe in your pants? Smells like affordability. Yeah, that actually happened with my dad. So, you know, his dementia increased. I went to visit him at the assisted living facility, and I walked in his room, and on his bedspread, I said, ‘What’s that brown stripe on your bed, Dad?’ I remember the story. He goes, ‘Shit.’ I never heard my dad cuss at all, you know, when I was growing up.

So, it’s shit. What do you mean it’s shit? How did that get on your bed? He goes, ‘Well, I sat on it.’ What do you mean? Why? ‘Well, I decided I don’t want to wear underwear anymore.’ It’s like, ‘Oh, Jesus, Dad.’ For the last five years of his life, his name was ‘Jesus, Dad, you’re killing me.’ Well, you can’t say we don’t have fun on this show.

No, no. It’s a financial podcast like no other. Yeah, well, we’re trying to help people that are depressed about their debt. You know, you got to laugh once in a while, right? I think we’re the only financial podcast with a brown stripe. That’s right.

It’s only debt. We can fix it. You know, life goes on, right? Who cares? Yeah, you might feel shitty. It could be worse.

Yeah, you could be naked in your bathroom wondering if you need to call your 19-year-old son and help you put on your shorts. It could be worse. It’s like I was on a road trip with my dad after I was in college, and we had to share the same bed in a hotel. And I didn’t sleep the whole night because I was like, ‘Don’t spoon your dad. Don’t spoon your dad.’ Where’s your other hand? Between two pillows.

Yeah, those aren’t pillows. So, the other problem the depression causes when you’re in debt is, like I said, you’re circling the bowl because it causes sleep disruption. You’re watching overnight infomercials or something on YouTube or scrolling through TikTok or whatever. You don't have the money to hang out with other people. Now you've got social withdrawal, withdrawal, and, you know, you're fearful of the next phone call or letter in the mailbox. It's a terrible situation that is not setting you up for success.

That's why I like to try to tackle this particular problem first. And it also applies for other issues and other mental health problems like bipolar, schizophrenia, or, you know, where you are overspending or gambling, addictive behavior. These are all—that is the symptom of those underlying causes. And if you only address the debt and you never think about what has led to it, you're just going to find yourself in the same spot. Yeah. Well, you've got a quote here on this article where it's like, telling a depressed person to stay motivated for five years and grind out your debt is like telling someone with a broken leg to walk it off.

Yeah, it's so true. You know, it's not going to happen. You can't do it. Yeah. Well, it's like, you know, it's like you go to emergency room because you've broken your arm and you walk in and you go, My arm hurts, you know, and they're like, You need to budget better. The two things don't go together.

Yeah. Well, and listen, here's a couple of bullet points. You know, the specific ways depression generates debt, and listeners, tell me if any of these resonate with you right now. These are a couple of bullet points. Avoidance: not opening mail, ignoring bills, missing payment deadlines because the anxiety of engaging in them is unbearable. Right?

Retail therapy or compulsive spending. Yeah. Right? You just get depressed, you feel bad. Oh, I know what's going to get me that dopamine hit. I'm just going to go buy this new pair of shoes, or, you know, whatever it is.

Inability to work consistently. Depression affects job performance, attendance, career advancement. Decision paralysis. I see this every single day when they start laying out different options and people have a hard time just making a decision where they just stick with the status quo, continue draining their 401(k), continue draining their savings because they're trying to keep their minimum payments, because making that decision to rip the Band-Aid off and let the payments go to eventually settle the debt or meet with that bankruptcy attorney to really figure out, okay, is this something I need to do? I need to hire this attorney and we just need to file bankruptcy. They'll put off that decision for sometimes months, sometimes years.

I share that story of a client I had one time that called me back 10 years later. Literally 10 years. We had one phone call. She never hired me. She wasn't ready to, you know, she didn't like this idea of doing anything other than kind of maintaining the status quo, and she just couldn't bring herself to even make the decision to hire me to help her work through the decision. That was the ironic part is, you know, when people initially hire me, you're hiring me to help you make these decisions.

That's what you're hiring for. You're hiring me for the advice. She couldn't even make the decision at that point to hire me to help her make the decision, right? And she waited 10 years before she finally just had enough and called me back. And I had not spoken to her, had any communication for a decade. Out of the blue, I get this message, Hey, we talked a while back.

And I went and looked her up in my system. I'm like, Yeah, it was a while back. It was a decade ago. And this has like been five or six or seven years ago now, so it was a while ago. So this was like, our initial call was like maybe 15 years ago. But she finally was just like, You know what?

I've been doing the same thing that you told me not to do for the last 10 years. All I've done was gotten another $100,000 more into debt, and I'm finally ready to talk to you about it. I'm finally ready to do something. And we got her all Taken care of and got her debt gone in 18 months, got it resolved. But, you know, unfortunately, she spent hundreds of thousands of dollars in that decision paralysis, just not being able to make those decisions and wanting to put it off and doing the easy things. These are just, you know, symptoms of depression, right?

So here's how you break that cycle. One of the ways is go to getoutofdebt.org, use the AI chatbot, talk to virtual me, talk to Damon, go to damonday.com, talk to Damon. Actual me. Yeah, talk to real Damon. Because—thanks, Steve, real Damon. Yeah, you get what you pay for.

Because one of the things is that if you can start to reduce that financial stress by getting answers, by getting truth, and by getting clarity, it will help to reduce that depression. You also need to treat depression as a medical condition and not a character flaw. This is not a moral problem on your side. You can't just read a self-help book and make it go away. Depression is often caused by brain chemistry, and so just reading a book is not going to fix that. And you should try to reach out to somebody that you know and, you know, have a coffee, have a meeting, have a—just get together.

You need to restore social connections. And by all means, just stop the damn shame narrative. Debt is math, not morality, and you're not a bad person because the math broke. So there's a solution out there. Yeah, what he said. Yeah, okay.

Next. Next. All right, here's one.

How to Pay Off Debt When You Have No Extra Money

How to pay off debt when you have no extra money. I love this one because people ask me all the time, especially when it comes to bankruptcy, and they find out it's going to cost $2,000, $2,500. Or maybe even $3,000, depending on the city, state you live in, to file bankruptcy. And they go, How the hell am I supposed to file bankruptcy? I can't afford to freaking eat, and I definitely can't afford a bankruptcy attorney. And this one is usually fairly easy to solve if you just take a step back and look at the situation, Steve.

Well, financial problems are solved by either reducing the amount that you owe, increasing your income, or a combination of the both. And again, the problem is it's hard to get out of debt by desperation rather than by inspiration. What I mean is it's hard for you to think about a side hustle or a gig or some way else you can earn money when you're not sleeping, you can barely think clearly. That's not an opportunity for you to increase your income. So, go ahead. So I kind of look at it like this.

You're on this treadmill and you're going full speed, right? This is life. And you're going full speed, paycheck to paycheck. Things are getting paid barely on time or maybe a few days late, but not so late you're getting the late fee or anything like that. And you're just go, go, go, go, go, go, go. You don't have time to look at anything or do anything different.

You're just going. Well, sometimes you have to get off that treadmill, right? You got to get off the hamster wheel, take a step back, and then you can have the ability to think clearly and make some different decisions. And a lot of that just comes from cash flow. You may be broke, but that's because all the money that's coming in is going out. Maybe we have to look at the situation and say, Hey, look, we're going to have to get more aggressive with this.

Maybe we need to miss some payments on some of these debts because we're looking at maybe doing a settlement strategy or we're looking at filing bankruptcy. Guess what? If we're thinking we're going to file a Chapter 7 bankruptcy, we don't have to file the bankruptcy immediately. We could file the bankruptcy in six months. We can file the bankruptcy in a year. Yeah, you can stop paying now.

Yeah, and once we know we're going to file, why would we keep sending Chase 300 bucks a month? Why would we keep sending Bank of America $500 a month? You might be spending $2,000 a month on minimum payments on debts that are going to get discharged in a bankruptcy. So guess what? Once you talk to somebody like me, and we can go through it and come up with a plan and figure, oh, okay, maybe we are going to file bankruptcy, I can give you permission to let some of those payments go. And when I say give you permission, I don't have any extra power.

Giving you permission is just educating you on what would happen if you don't make those payments. So that gives you the permission to say, okay, it's not going to be a big deal. I can miss those payments. They're not going to do anything to me for quite a while, right? And by then, I will be able to then now take that $2,000 and I could put it in my savings account every month. Holy crap, what would it feel like to have $2,000 a month going into your savings account right now, today, knowing that the banks don't hold any more power over you because you've already talked to the attorney.

You know what you're going to do. You know what it takes. And then how hard is it going to be to pay the $2,500 fee for the bankruptcy attorney that we're going to hire three months from now, four months from now, six months from now? No problem. In fact, we might even fund your retirement account a little bit, get some extra money in that retirement account in this window while we have this extra cash before we file the bankruptcy. Or it might not be a bankruptcy.

It might be a settlement strategy or something else where, again, I can give you permission to let payments go on certain things by explaining what's going to happen right now and what's going to happen in the future. And then there's the money you can start saving to eventually offer some of your creditors as a settlement. There are options out there that go beyond. Cut everything out of your budget and go make more money and put your big boy pants on and sell your house. There's other options. You know, people say, I can't afford to file bankruptcy, and every bankruptcy attorney is going to tell people the same thing.

Well, stop paying your bills for three months. Absolutely. Yeah, because, you know, if you can retain a bankruptcy attorney, you might not have to give them the full fee, but you can give them some of them, and instantly they're your legal representative, and they can shut the creditors up. Yeah, and if you can't afford to file bankruptcy, you can't afford to keep living like you're living. You can't afford the debt either, because that means you're paying so much out that you're not able to save up any money. And nobody can live like that for an extended period of time.

I always tell clients, you can have cash or you can have credit. Obviously, if you have both, that's good too, but you cannot operate and have no cash and no credit. Nobody can live like that for an extended period of time. It's just a matter of time before the transmission falls out of the car, you got a nail in your tire that's not repairable, whatever it is. If you are maxed out on credit and you have no savings, you're totally screwed. Maybe you don't know it today, but you are very screwed in the near future, and we need to get you off of that or get you out of that situation before the transmission's laying in the driveway.

Yeah, I mean, the universe sent you a clue. Well, here's another thing I've run into, is people who get in a terrible financial situation and, you know, we said one of the things you can do is increase income, reduce the debt. Well, one of the ways that you can increase income is you can actually take advantage of the benefits that you're already eligible for. That might be food stamps or utility subsidies or Medicaid, for example. There's, on the getoutofdebt.org website, at the very bottom, look for the benefits calculator, and it'll take you through with your age and state and all the things that you're eligible for. And people said to me all these years, Steve, I don't want to do that.

I feel bad about claiming benefits. Well, just get your tax money back. Yeah, the second part of that sentence is, I feel bad about claiming benefits slash that you're entitled to. Yeah. Well, and you'd be surprised, because inflation has been so freaking crazy, you'd be surprised what is considered low income these days. You know, what was considered low income 10 years ago is very different than what's considered low income today.

Hell, if I was in charge, I'd say a quarter million dollars and under is low income these days. I mean, it is hard to raise a family. It sounds crazy, I know, but it is. And I know there's people listening to this right now making $150,000, $200,000 a year going, Yeah, he's freaking right, dude. I'm out here on the struggle bus, right? And it's so true.

It's just everything is freaking expensive, and people that were making $200,000 10 years ago that were thinking they were, like, high on the hog are now sitting here going, We're in more credit card debt than we've ever been in our lives because of this lifestyle. Not even the lifestyle creep. It's just the expense of everything. We haven't changed our lifestyle, but our entire lifestyle has gotten twice as expensive as it was seven or eight years ago. We haven't changed it. Lifestyle changed on us.

Well, Damon, we're actually running out of time. Oh, you're killing me small. I mean, we had three more, but we did. You know, we're already at 44 minutes, so— Well, what? Do you want to cut it off, or do you want me to read the titles of these three? Oh, read the titles.

All right, so the three that we have not gotten to: one, I can't afford to hang out. This is a big one. The social shame of being broke nobody talks about. Go watch that Friends episode. I love that episode where Joey and Phoebe and Rachel, you know, because they don't have, you know, they don't make a lot of money, and they're just so sick and tired of going out to dinner with the other three friends, Ross, Chandler, and Monica, because they always go to expensive restaurants and they can't afford it. So in this episode, they're all six going out for Monica's birthday, and they go to this nice restaurant and they get drinks and desserts and all this stuff.

But the three broke friends, I think one of them orders like a water, one of them orders like a salad, and that's it. And then the other three are ordering just all kinds of stuff, right? And then they get the bill, and they're like, Oh, well, let's just split it six ways. Yeah. And the three broke friends are like, What the hell? You know?

And then Ross goes, Oh, well, it's Monica's birthday, so she shouldn't have to pay, so we'll split it up just five ways. Yeah, that's better. Yeah. So anyway, and I think that resonates so true with, you know, what we were talking about in this article about that social shame of being broke and having to decline invitations when friends invite you out or invite you to a birthday party or something like that, and you feel bad, but you can't afford it, so you just decline the invitation, and then that further socially isolates you because if you keep doing that, they stop inviting you. Yeah, and they don't know why. Leads to the whole depression thing we talked about.

But I had a client once ask me, Steve, how am I going to get laid when I'm broke? I'm good, but— I don't think that's in the article. That's not in the article. No, the other thing that's not in the article is years ago there was— I would have said credit card. Yeah. Well, this falls right into that, in case of emergencies.

So years ago there was a study that was done. By who could get the most dates, you know, meeting people at a bar type thing. Yeah, I didn't think you were talking about the fruit. No. And so what they did—who cares?—what they did was they took a regular American Express card and they spray painted it black. Ah.

I see where you're going. And the black card attracted a lot more dates. I can only imagine why. Yeah. All right. The other title is, What Happens If You Don't Pay Your Buy Now, Pay Later Loan?

That's actually pretty interesting. You'd be surprised at the results. So what happens if you don't pay Afterpay, Klarna, or Sezzle? Sezzle? Sezzle? I've never done a Sezzle.

I haven't even heard of that one until just now. Well, I guess when you don't pay that, you land in a pan where you sizzle. Oh, Sezzle's gonna sizzle. Yeah. That's another one. And I think the final one we planned to talk to but didn't get to is, Can a Debt Collector Take My Car?

Yeah. And the answer is, it depends. Yeah. Yeah. And the one reason I wanted to bring that one up is because one thing you didn't put in the article, when you talk about, you know, most unsecured debt collectors cannot take your car unless they have an actual lien on the car, like, you know, the actual auto lender that has the lien can take your car. But most debt collectors aren't going to be able to take your car or aren't going to take your car if it's for a credit card or something like that, except—and this is a huge exception, which is why I wanted to bring it up—if it is a credit union and you also have a car loan with that same credit union, because all credit unions cross-collateralize their debt.

So you think you have an unsecured credit card with them or an unsecured personal loan. You don't if you have other things. If you have a savings account with that collector, if you have a mortgage—not collector, but that credit union—if you have a mortgage with that credit union, if you have a car loan with that credit union, all of those things are cross-collateralized together. So if you owe a credit union $20,000 on a credit card and you fall behind, and you also have a $200,000 mortgage with that credit union, you falling behind is serious stuff. You could— Get your home foreclosed on, potentially, if you fall behind too far on that credit card. So make sure you get some good advice if you have a credit union debt and you can't pay it.

Make sure you figure out what you're doing. The big consequence I have seen over the years is people have a car that they now want to sell because they want to raise some cash, and they have the title free and clear, but the credit union won't give it to them because they still have credit card debt. Well, you mean they paid it off, but they won't give them the title. Right. They're holding onto the title, the credit union. Yeah, yeah, yeah.

So there are some gotchas when financing with credit unions. That's why they tend to have better rates. They're not just like, because they love you. They give you better rates because it's not really unsecured. Yeah, that's right. And the last thing about the repo that always surprises people is, Well, I can't afford my car.

I'm just going to let them take it. You still owe the balance of that loan even if they take the car. A hundred percent. Yeah. It's not like walking away from a house in a non-recourse state where all they can do is take the house back. Yeah.

You know, you owe the difference. So what'll happen if you get the car repoed, the fees for the repo are just the scratch in the surface. What you're going to get is very likely a huge bill because if you're upside down on the car, which you probably are, they're just going to send it off to auction. Yeah, and get minimal for it. Yeah, they'll sell it to a wholesaler for really, really much lower than you could ever possibly imagine that that car would sell for. And you're going to get a bill for a much larger amount than you thought you were upside down in that car.

Yeah, you'll get a bill for the balance minus what they got at the auction, the pittance, plus all the fees associated with it, and you'll still owe it. And a lot of times the bank won't even hassle with the auction. They'll just sell it to a wholesaler, who's then going to put it in auction, and they're going to offer way less than they think they're going to get at auction. So it's even going to be less than the auction price in most cases. All right, Damon, on that note, you and I will put our heads together before the next podcast, figure out what we're doing with the schedule. I think we said we'd jump into the next scheduled podcast.

But until then, Damon, I will see ya. Peace.