Bankruptcy Isn’t Failure — It’s a Financial Tool

Life Is Awesome After Bankruptcy (Once You Get There)

Hey, welcome back to the Get Out of Debt Guy. I’m Steve Rhode, the old Get Out of Debt Guy. With me, as always, is Damon Day, the new Get Out of Debt Guy, I guess. I’m the other guy most of the time. I don’t know. We’ve never really found a good way to introduce this. If you’re listening to us right now on our weekly audio podcast, you’re missing the video because we’re doing a video of this week’s podcast because Damon had a burning subject that he wanted to get to, and it’s one actually that I see all the time on the Ask Steve AI chat on getoutofdebt.org.

Damon, I’m teeing you up. Steve. Yeah, we’re making this one special on the video, on the Penny Stupid channel and the Get Out of Debt.org, or the Get Out of Debt Guy channel, if you will. So today we’re going to be talking about big shocker, bankruptcy. But, but, we’re talking about actually life is awesome, or life can be awesome after a bankruptcy. And the reason we’re doing it is, you know, we talk about bankruptcy a lot, but I always like to preface with neither Steve or I are bankruptcy attorneys.

We’re not trying to sell people bankruptcy or anything like that. We’re just being dragnet out here, right? Just the facts, man. We’re just trying to help people understand the facts. So we did a video podcast about two years ago, and the title of it was Life Is Not Over After Bankruptcy. And we didn’t plan that or anything like that. It just kind of, you know, it was a podcast that we shot and we threw it up on the YouTube channels, and it didn’t do anything for a year.

It just kind of sat there. And then all of a sudden, about last year, it just started taking off. And that video, even today, gets more views on our channel than any other video that we have up there. And we’ve got, I don’t know, six or seven hundred videos up there, but it’s the Life Is Not Over After Bankruptcy. That is just consistently drawing people in, and that’s telling us that there’s a lot going on right now, right? There’s a lot of people looking for information, trying to figure out what to do.

And, you know, bankruptcy is kind of, you know, coming out of the dark, so to speak, is the way the economy is and everything. So we wanted to do this follow-up video, and truth be told, I want to see if I can make this video take off too. But I also wanted to make sure we got some good information out there because everybody likes to talk about the specifics of bankruptcy and this, that, and the other. But I really want to have a chat with Steve because we’ve both filed bankruptcy personally, so we can bring our own experiences to this.

I wanted to have a chat with Steve about, you know, what is life actually like after you file bankruptcy? Because so many of us have no idea. You know, it just blows my mind that businesses file bankruptcy and celebrate it. Like, you know, it would be nothing for a bank or somebody holding debt to file bankruptcy and celebrate it by reorganizing, and yet just keep pushing people down to try to do something legally and responsible for their own situation. Now, to be perfectly clear, when I went through bankruptcy, it sucked.

But it sucked because I didn’t understand it. I didn’t realize what was actually going to happen. Because the reality is, after filing bankruptcy, it was awesome. But it took me a while to get to that point. You know, I went through the same thing everybody else does. I went through the, I have a moral obligation to repay my creditors, only to file bankruptcy because none of them could help me or would help me, and then try to send them payments afterwards, and they all refused them and said, Please don’t.

Yeah. You know, when you look at it factually afterwards, the fears and the misbeliefs that you have just don’t add up. So, hey, I’m totally with you, Damon, that I don’t think we’re here pushing bankruptcy as much as we see the greater need to just educate people about it, because they can’t make good decisions if they don’t know what the truth is.

The Munchausen-by-Proxy Metaphor

Yeah. Well, I kind of look at it as Munchausen by proxy. Stick with me, Steve. All right. So, as far as metaphors go, I think this is a great metaphor. But Munchausen by proxy, for those that don’t know, is basically if you have a parent or a caregiver or somebody that essentially is keeping you sick on purpose or somehow convincing you that you don’t want to leave, right? You got to stay there, and the person that you’re relying on to take care of you is the one that’s making you sick.

That’s what we’re dealing with when we have the banks and the credit score, right? The credit score is your mama, right? And it’s like no matter how bad they treat you, you’ve got this thing in your mind that I have to keep paying, I have to keep doing this, I have to make sure my credit score stays good. No matter how bad my life seems right now financially, they’ve convinced me that it’s worse without them. Right. And that’s actually not the case, right? They don’t want you to even have the ability to think about maybe I don’t need to be under, feel pressed by this idea that my credit score has to be 750.

So oppressed that I will keep giving them money month after month after month, even if I’ve spent 10 years trying to Dave Ramsey my damn way out of this debt. And it’s still not working, but that’s—there’s no other option. I have to keep doing it because they’re the ones that are going to take care of me. I see it every day where people have this idea in their mind that, well, what if there’s an emergency? I have to have a credit card in case there’s an emergency.

No, you don’t. You know what’s nice to have in an emergency? Fifty freaking grand in the bank. That’s what you need in case there’s an emergency, not some damn credit card going, Please, sir, can I have some more credit? Right? So what we have here is Munchausen by proxy, and Steve and I are here to break you out of that and let you see that there is a whole world out there that you’re not aware of because you’re stuck staring at your damn credit score. You know, it’s funny— Man, that works for me.

I just riffed it, man. I riffed it. Really? You’re kidding. Yeah. No, no. I don’t have a teleprompter. Well, I don’t either right now.

What the Collectors Never Tell You

It’s funny when you think about it, people are always worried about what the collector’s going to, you know, call and how they’re going to judge you and what they’re going to say and everything. But people never think about, you know what? After you file bankruptcy, the collector’s not calling. You don’t have to be worried about judgment. They don’t give a shit. They’ve moved on to the next person trying to manipulate. You know, no, they haven’t. You know who’s going to call? The bank. They’ll be like, Hey, you want another credit card?

That’s just like you experienced, and I experienced, because it was within one year after my bankruptcy back in 1990 that I got a mortgage. It was two years later, because I was doing much better afterwards and creditors wouldn’t take my payments, I think it was two years later we bought two new cars at the same time. Yeah, but wait, I thought your life was like screwed for 10 years because you have a bankruptcy. No. Isn’t that true? No, it’s not true. That’s what the Munchausen mommy tells me.

I have bad credit for 10 years, right? Well, your Munchausen mommy needs help, is what she needs. We’re gonna do another video called Munchausen Mommy. Munchausen Mommy. I like that. Chase Bank is the Munchausen mommy. Yeah, so none of that stuff’s reality. No, and let me be clear.

Why We Disagree With the “Cut Up Your Cards” Approach

Neither Steve nor I are advocating the whole Dave Ramsey, you don’t need a credit card, you don’t need this, you don’t need that. You know, that’s all well and good if you don’t want one. But we’re not saying, hey, file bankruptcy and don’t worry about having a credit card for 10 years. Steve alluded a second ago to my story when I filed bankruptcy back in, was 2010? Was it 10? 11. I think I filed in 2011. Yeah. The day I got my discharge papers, which was somewhere like February of 2012 is when it’s actually done, debt’s been discharged, you get your letter like, here’s your freedom letter, get out of jail letter, you know, you get to go and enjoy life now.

You don’t have to worry about a couple hundred thousand dollars in debt. It’s all gone. Same freaking day, I open up the mailbox, I get the discharge papers from the court. Also in there is Capital One credit card, brand new credit card. Not an offer. I’d already gotten the offer as soon as I filed bankruptcy. Capital One was freaking tripping over themselves to get me a new credit card. They’re sending me letters, hey, we see you filed bankruptcy. We got our Fresh Start program. Sign up now, you know, 0% interest for 18 months.

I’m sitting there going, are you serious? Okay, da da da da da, right? And it was just a coincidence that, and it sounds like I’m making it up, but the same day, and Steve will remember the story because he was there for it, and I called him up going, you’re not gonna believe this shit, right? And you’re right, I did not believe it. Yeah. I had a brand new Capital One credit card. I didn’t even go 24 damn hours from the time I had a few hundred thousand dollars in debt gone to I have a credit card.

So tell me again how you can’t file bankruptcy because you might want to fly on a plane and buy a plane ticket or something that you’ve got in your head because Munchausen mommy is giving you bad information. No, I think it was a week or two weeks after my discharge where I had my new credit card. I got a secured card, though. I think it was MBNA or Bank of America. So I put down $500 as a deposit, and I got a $500 credit limit, and they started reporting to the credit bureaus.

And then I think within three months, they converted it to an unsecured credit card and sent me back my deposit with interest. Yeah. And, you know, I’m not saying that bankruptcy is all going to—or post-bankruptcy is all sunshine and roses, right? But how is your life now? Because when you’re in debt, this is what we’re comparing it to, right? You’re not comparing it to, well, bankruptcy versus everything’s great, I’m debt-free, I have a 750 credit score. Oh, I don’t want to file bankruptcy because it’s going to ruin that.

No. If you’re in that situation, you’re not thinking about a bankruptcy. But if you’re in a situation where you’re listening to this podcast, right, most people listening are in debt. Compare your life, right? How awesome is your life right now, right? Well, I got to have this credit card in case there’s an emergency. I need to have that available credit. Or I got to have a credit card in case I want to rent a car. No, you don’t. You can rent a car, A, without a credit card, or B, you can get a credit card after your bankruptcy.

You know, don’t be brainwashed into thinking your life is over for ten freaking years. Ten years, yeah. That’s what they want you to think. They don’t want you to leave the nest. They want you to stay here, my precious, precious. Keep paying, keep paying. Yeah, they love you when you keep paying. And again, we’re not here saying if you’re in debt, go file bankruptcy. The whole point of this video is just to get people to step back and just be open to looking at options. Oftentimes I’ll have a client, we look at bankruptcy, makes no sense.

That happens, right? Bankruptcy is not the one-size-fits-all for everybody. There’s lots of different ways to get out of debt. The bottom line is you’ve got to get out of the debt. I don’t really care how you do it. We can go over lots of different options. When clients call me, we go over all kinds of different ways, even good old-fashioned Dave Ramsey. If you like, you know, jamming the needles in your eye, you could go that route if you wanted to. I just don’t understand his approach.

I understand it sells, and, you know, that’s— Oh, it sells big. It sells big. But, you know, his belief that after bankruptcy or before, you need to cut up all your cards and, you know, never only use a debit card. Every one of those things doesn’t make any sense. Debit cards are left safe and secure. If you don’t pursue getting another credit card, hey, that’s fine. That’s on you. But you’re not going to rebuild your credit. And the biggest thing that I have seen over 30-plus years is that when people file bankruptcy, that is the teachable moment.

They have now learned what not to do, what to avoid. I always believe there’s no sense wasting a perfectly good mistake. And I see people doing better financially. And in fact, that’s what the Federal Reserve found, and I wrote about it on getoutofdebt.org, that you recover faster after bankruptcy than you do limping along and eating beans and rice and trying to make minimum payments. Well, I think, and again, I’m not in Dave Ramsey’s head, but I think where—and I like a lot of the stuff that Dave has, right?—but I think where he’s coming from is kind of like from lowest common denominator type of stuff.

And it’s true. There is a large segment of the population that are not good with money. You know, you can blame it on schooling, you can blame it on parents, you can blame it on whatever you want to blame it on. But I think he takes that idea that says, okay, since some people aren’t able to handle credit responsibly, then I need to have a process or a plan where all people—no people—can handle it responsibly because it’s an easier shtick. You know, it’s hard to write a book that has an individual page for every person reading the book, right?

You can’t have an individual strategy. So I would disagree with his position that people can’t handle it responsibly because, number one, we know that financial education, financial literacy doesn’t work. It’s proven over and over and over again. But the thing that does replace that is just an awareness of people to ask questions. Instead of just assuming. That’s the whole thing we need to get past. That is a life skill, and that’s not a, you know, credit or debt skill. I agree with you. Trying to tell everybody to avoid it, it’s not really educating.

I mean, do you hear him say, Okay, after your financial trauma is over, we need to rebuild your credit, and here’s how you do it. I don’t hear him say that, but— No, he says you don’t need a credit card. And I don’t watch a lot of Dave Ramsey anymore because it’s the same stuff, kind of like our channel, it’s the same stuff, all right? But I also believe there’s not a lot of people listening to our podcast after they’re out of debt and they’re gone and they’re, you know—debt’s kind of one of those acute things.

It’s like, Oh my God, I’m in debt. I got to fix it. I can’t pay the bill, and you go search for a solution. You find it, you fix it, and then you’re not fixated on it, right? It’s not like a Joe Rogan experience where it’s new every time. It’s the same stuff. But no, as far as I know, Dave Ramsey doesn’t talk about that. He talks about how now that you’re done with credit cards, you don’t need them anymore, and you don’t need to have a credit score.

And to a certain extent, I agree with that. It sucks having to play that game, but at the same time, that’s the game. That’s the game we’ve all kind of signed on to in this society. And life is easier with no debt and good credit. It just, it is. So, you know, why can’t you have it? You can have your cake and eat it too. Now, temporarily, you might have to have bad credit to get out of the debt, but the debt is what’s costing you.

You get out of the debt, okay, what? I got bad credit for a year, maybe two years, but then two and a half, three years later, my credit is back up in the 700s, maybe even faster, and I have no debt, so I’m not shelling out $2,000 a month anymore to these creditors. What can I do with this extra $2,000 a month? Maybe rebuild my retirement or catch up my retirement or build an emergency fund so I’m not so dependent on having available credit. I can have available credit, but I can be responsible with it because now I’m doing better moving forward.

I’m learning from the mistakes of the past. I’m not putting things on credit that I can’t afford. So now I’m able to use credit cards post-bankruptcy for the things I should be using them for, for that extra security when I’m going to the gas station, not worried about my debit card getting skimmed. You know, if I get ripped off from somebody or whatever, I call up my creditor and say, Hey, I didn’t get the service. No problem. They’ll get the money back, you know, back on your statement.

So you get those reward points, right? 1%, 2%, 3%. Might not seem like a lot, but if you put all of your household expenses every month on a card like we do in my household, we get an extra, you know, one, two, three hundred dollars a month because we spend quite a bit. You know, just in free money is basically what it is. It’s just discounts on everything that we’re already buying, and we just treat the credit card like an extension of our checking account. It’s just we don’t spend anything we don’t have in there.

Using a Credit Card Like a Transfer Account, Not a Bill

You just hit a key point, which is people say it’s stupid to spend on a credit card to get reward points. That misses the mark, because if you’re going to spend anyway, why would you use a debit card that is significantly less safe to use as a financial instrument and not use a credit card that will get you reward points? People say, But Steve, I will run up all this debt that I can’t afford to pay. All right, here’s the thing. Debit card, you’re giving people access into your actual checking account, electronic access.

Credit card acts as a barrier between you and the merchant in case there’s a problem; they can’t reach into your account. However, and I’ve told this to people so many times and they all go, Huh. However, after my bankruptcy, I was shy. I didn’t want to get back into debt again. And so what I did was I just paid my bill off every week. Yeah, it did. Build up. And I got the plus and the perks. Well, that’s what I’m saying, as an extension of our checking account, right?

So I don’t wait till I get the statement and then make a big, you know, $8,000 payment or whatever it is for that card, right? You know, we have one or two cards. Actually, I think three cards in our house that we use. Well, this one’s 4% for gas, and this one’s 3% for groceries or whatever. So whenever we’re buying groceries, using this card; gas, we’re using this card, whatever. Once a week, I usually just log into that card and whatever the balance is at that time, I just, you know, click.

That’s it. Click, and then the money leaves the checking and goes there. I don’t wait till I get an $8,000 bill and then, oh, I got 30 days to pay it. It’s just as we’re using it, I just treat it like a transfer where you have, you know, you have a checking and a savings, right? You transfer money back and forth. Well, you have a checking and a savings and a credit card now. A credit card is just an account, and you just transfer money from the checking into the credit card account, same way you’d transfer money from savings into your checking.

No different. Well, in fact, I don’t even log on to the computer to do it because now I just use my app. Yeah, I just use my phone, and I just go, Pay the balance. I don’t even say, Pay the statement. I just say, Pay the balance today. Yeah, whatever the current balance is. Yeah, done. And then by the time you get—then when you do it right, when you hit your statement date, you don’t have a balance on there. When that statement rolls over, it shows a zero balance.

It doesn’t have to show—or if you just wait till it’s due, then it would show like an $8,000 balance. And then on your credit report, if you’re talking about utilization, right, if you’re trying to keep your credit good, it almost looks like your credit card is maxed out, even though you’re paying it every month. So that’s a whole different video, but there’s little tricks that you can do. Just pay it a few days sooner before the statement rolls over, and all of a sudden your credit card will show a zero balance, even if you’re floating $10,000 a month on there every month.

The “Suspicious Activity” Freeze

Now, this is how times have changed in the last 30 years. After my bankruptcy and I had a credit card— I would do exactly what I just described. I would pay it off in full. And the credit card company at the time—it’s a bank that no longer exists; got merged into one of the other big ones—they would freeze my card for four days. No, they would freeze my card for four days after I paid it off in full because paying your balance off in full was suspicious behavior.

Yeah, because nobody—who’s going to do that? You know, and I have a couple of cards like that. It pisses us off too, actually. But the good cards won’t do that. They’ll make—like, I have plenty of cards that I use that make the credit available as soon as I click it, credit’s available. But then you have other cards that are—they’re cards that tend to cater towards people that have lower credit, right? Yeah. So they have policies in place, and exactly what you said: suspicious activity. I had—was it my PayPal card?

I think it was my PayPal card. Pisses me off. I don’t use it that much, but I like the cash back. But you send in a payment, sometimes they’ll credit it right away. Sometimes they’ll hold it for a week. Like, they’ll take the money, right? But then they won’t give me the available credit for like a week. And then if you make like a big payment or two payments in a row, they’ll freeze them both. And I call them, and they’re like, Well, it’s suspicious activity.

It’ll clear. One time it was 14 days. I’m like, 14 days? They’re like, Well, it’s suspicious. It’s like a fraud protection. I’m like— Well, it’s funny you mention that, because I had a PayPal card too at one point. Same thing. Same thing. Yeah. I applied my FT philosophy to it. You know what that is, don’t you? I have an idea. It’s F this. Fuck that. Yeah, okay, fuck that. Well, that’s what I was telling the rep. I know it’s not her fault. She’s just telling me what their policy is.

But I’m like— You guys are worried somebody’s gonna get ahold of my information and pay a big balance off on my card? That’s what you’re worried about? I’m like, what kind of fraud? I gave you money. I’m not taking money from you. I gave it to you, and you said that’s suspicious. Wait a minute. What’s going on with all this money you’re sending us? Guys, it’s all a game. You just have to learn how to play the game and use it to your advantage. That’s why I don’t agree with the philosophy of don’t have credit, you don’t need credit.

Credit makes shit easier to do. You just got to learn how to use the system. They’re playing a game. You just got to, you know, stop playing by their rules and go out and flip the script, use the system to your advantage. But you got to get out of debt. Again, I’m not saying you go file bankruptcy. Sit down, let’s figure out a way to get rid of the debt so that thousand bucks a month, fifteen hundred bucks a month that you’re working that extra job for, you’re out there freaking DoorDashing just to pay Chase every month.

Let’s get you out of that cycle and then get you that extra money coming in so you can actually build something instead of just going along day to day to day trying to keep up. That’s what you’re doing right now. It’s not going to work. Get out of that Munchausen relationship you’re in.

The Ask Steve AI Chat — and Who We Refer People To

I neglected to say at the beginning of the podcast how people can reach you and, you know, set up a free consultation and talk to you. Damon Day, D-A-M-O-N D-A-Y dot com. You can reach Damon there. And, you know, Steve, where do they go for good information? I mean, you can go to my site, but my site’s pretty sparse compared to the main site that Steve runs, getoutofdebt.org. And I don’t think there’s anything— I said I don’t think there’s anything you can think of about debt that’s not already been covered by Steve over the last twenty-some-odd years on that website.

You can even search anything. It’s on there. You can even use my anonymous Ask Steve AI chatbot that I programmed and trained, all on my approach and philosophy. You can ask any question. And I, Damon, I am amazed the people that come in and go, I have never been able to talk with anybody about this, you know, and they leave giving it five stars. I feel so much better. I, you know, thank you for hearing me. And people who want me to send Damon transcripts, who say that they’re going to contact Damon, I ask permission, and if they say yes, I will forward him the transcript.

And you’ve read those transcripts. And personally, I think that people open up more because they’re not being judged at all. And they finally—it’s funny to watch some of those transcripts, you know, because it’s like a consult call with a client where they tell you one thing, and then a little bit later they tell you another thing. Yeah, and those transcripts are anonymous, by the way. When the website sends them over to me, that’s only if they’re in a situation where they want to have a consultation with me and the AI chatbot asks if they’d like to have a consultation with me, and then asks if it’s okay to send the transcript so I have the information.

So you don’t have to— But I don’t ask your name. You know, you might be— That’s what I was going to say. So when I get that transcript, I see the transcript, but I don’t have any kind of identifying information. So you don’t have to worry about if I talk to the chatbot, something I say about my situation is going to get out on the internet or whatever. There’s no names attached. He’ll call you something like, you know, Sharp Raven or something. He’ll give you a nickname.

Yeah. I don’t ask email address, phone number, name, nothing. The whole point of the Ask Steve— Chatbot is to get you real information. And, yeah, you know, I was just saying, it’s a great place to start when you’re swimming, you don’t know what to do, you’re drowning, you know you can’t, you know, keep up on your bills or you’re barely keeping up, and you’re trying to, you know, look at all these different ads online and call this company and this debt settlement company and this attorney and this, that, and you’re just swimming in information and confused.

To ask Steve chatbot is a great place to go and say, Hey, look, this is what’s going on. It’s completely anonymous. You can lay it all out there, and you can just, like, throw up on the chatbot and be like, What do I do? And the chatbot will start walking you through, like, breaking down what’s going on and things that you should look at and resources that you can go to. It’s a crazy tool. You forget you’re not talking to a real person. You literally think you’re talking to Steve.

Yeah. I have people that are like, Oh, I talked to Steve on the website, and he recommended I talk to you. And I said, Well, you didn’t technically talk to Steve. You talked to Steve’s likeness. Now, I mean, like, one of the reasons why I recommend people talk to you, it’s because I don’t get anything out of recommending you. I don’t get any referral fee, nothing. I don’t get any of that. I send people to you, Steve. Yeah, that’s all I get. Appreciate that. But I send people to you because they get exceptional help and advice.

So one of the reasons why I would, the chatbot would recommend sending someone to you is especially if they have misperceptions about bankruptcy, and they just need to talk to somebody about their particular situation. Again, you’re not going to advise them legally or anything else, but you can help them to understand what reality is in the world. And another reason is, like, for example, I don’t know why, but there’s been a whole rash of people… Who are 70 years old and older. In fact, there was one guy not that long ago who came in who’s in a nursing home.

He’s in an assisted living facility. Don’t tell me he’s like signing up in a debt settlement company or something. Yes, yes. I mean, there’s a whole string of those. And so trying to, I’ll give them other referrals too, like HELPS, which is a nonprofit agency that helps seniors and disabled people for free. Yeah. I will refer people if they want to talk to a bankruptcy attorney to go through one of the national listings, NACBA. If they have questions in a complicated situation and they want to talk to somebody about it, I will suggest that they contact you.

Recently, there was a very difficult federal student loan situation, and I suggest, the chat suggested they contact Josh Cohen, right, the student loan attorney. So it’s all about getting people to the right solution without selling you a damn thing. That’s almost un-American. Damn socialist. The humanity. But I mean, yeah, a lot of it, a lot of what I do is just help people kind of get past the preconceived notions. Let’s take the emotion out of it and let’s, okay, here’s an option, here’s an option, here’s an option.

Oh, I don’t like this option. Well, why not? Let’s just unpack that. Maybe you don’t like it because it’s something that you heard and that’s not actually true. So my big thing is let’s make good decisions based on good information. You can’t make good decisions based on bad information. It seems simple, but that’s the reason so many people just take a bad situation and make it worse because they made a big financial decision based on bad information. So we want to fix that, just get you all the information that you need so then you can decide, wow, bankruptcy doesn’t sound as bad as I thought.

That might actually really be awesome for me. Or, yeah, I looked at bankruptcy based on what you’re saying in my situation, that totally sucks for me, right? But we don’t know, and we can’t make a decision about it until we know for sure. And that’s my whole focus, is let’s figure it out. So when I was going through my situation, I was worried and looking around for, how can I deal with this situation? What do I need to do? And I was thinking, I did, you know, what everybody does, and I didn’t—well, I did not talk to friends, because nobody talks to friends when they’re in financial trouble.

Yeah, talk to friends about this stuff, yeah. But I reached out to credit counseling groups, and they told me, no, you can’t afford the payment, and blah, blah, blah. But the one thing that I didn’t do—I was searching for solutions—the one thing I didn’t do was, and it occurred to me later, was, what is reality here? You know, what did I miss? What did I not research? I was just reacting, and everybody else was driving the bus. I was not in charge at all. And so after going through it, I thought, you know what?

There’s got to be a better way. Well, and this is the better way. Yeah, well, think about how lucky you guys are, if you are going through a tough time financially, how lucky you are to be going through that tough time now versus in 1990, when there was no Chat AI Steve in 1990 for Steve. There, you know, there was—I was in junior high, so I wasn’t available to help him out. I had overnight infomercials. Yeah, I mean, it’s like, what’s—you know, Steve didn’t even have the freaking internet, really, to even—I mean, what did he have, Encyclopedia Britannica, and find out what does that say about my debt, right?

Like, how do you research other than, you know, get the Yellow Pages? Anybody know what the Yellow Pages is? And, you know, look for what? What do you look for, bankruptcy attorney? But what if you’re trying to avoid that? Where would you get information on bankruptcy? It’s just— You’re so lucky to be going through it right now where the information is unlimited, which is great, but it’s also part of the problem too, because it’s a fire hose coming at you. So you need somebody to help you dissect all that information that you’re getting and figure out, how does this apply to me specifically?

That’s the part that’s missing. There was internet, but it was a CompuServe account with a dial-up modem. Well. And there was no debt help available on there. In fact, I was, I think, if not the very first, one of the very first debt help websites back in 1994. Well, Steve, we all know you’re a pioneer. He’s the old Get Out of Debt guy. Idiot. Ask him about the Oregon Trail. He was on it. Thank God you didn’t die of diphtheria. Yep.

Bankruptcy, Shame, and the Bible

So, you know, if you have any of those judgments, you have any of those concerns, the morality, everything else, how people might judge you, what you’re worried about, just ask. Because, you know, here’s the other thing too, Damon, is I’ve had people say to me, like, they have a misperception, a myth or something, and I’ll tell them, you know, that’s actually not true. And they don’t believe it because they’ve heard the myth so many times that that’s true for them. The biggest one, this is the one I like, is— Well, that’s how Munchausen works, Steve.

It’s all based on the lie. It is. But the people who think that it’s going to be anti-Christian or against the church or anything. And yet, the Bible has debt forgiveness in it. Yeah. And why isn’t it compassionate to give you your life back, you know? And here’s the other thing, and you and I have been hammering this for a long time, which is if you don’t do something about your debt, you’re not sacrificing anything except your future, right? The people who try to wade through this for 10 years only to be in the same situation and just wasted those 10 years.

The $1,000 Investing Experiment

Oh, in fact, where’s my phone? Like we’ve been doing this stock experiment. Oh, yeah. VOO. Yeah. VOO. So I radically changed up my trading agent because I wasn’t happy with it, but— I didn’t change anything because I don’t have a trading agent. I’m the placebo control. So my balance is $1,014, starting at $1,000. Stock market. No point. Steve, while I’m looking up VOO, tell everybody what we’re talking about. Yeah, so we started an experiment. I wanted to see if we could make it as easy as possible for people to save money.

The problem is getting rich is boring. Yeah. Because that’s the way to get rich. It’s so freaking easy. It’s not complicated. Like, for example— Well, when you try to complicate it, that’s when you go broke. That’s true. I mean, all the day traders and everybody else, the crypto traders who all sell a course, or— I tried crypto trading to see if there was any reality in it. No, there’s no reality in it. But— The thing that you can do is, if you file bankruptcy, you’re going to have the most money each month in your pocket than you’ve had for years.

Yeah. So start saving that as quickly as possible and putting it into a stock index fund that will pay off over the long haul. Because last time we talked about how people create generational wealth by starting. You don’t have to be rich to do that. You just have to start. If you start when even starting an account like you have for your three kids—they’re still teenagers. Is Evan still a teenager? Yeah, he’s going to be 20 next month. He’s going to be 20, but he’s 19.

Well, then he’s on his way up. But if you start an account for your kids when they’re teenagers, it’ll grow into, you know, millions if they don’t touch it. When they go to retire, you have set them up for little money just by starting early and not being crazy or selective. So we started this experiment. Damon put money into an index fund. So how much is VOO worth now? VOO. So VOO. So we start— With a thousand dollars. Yep. And Vu is current, and I, for my end of the experiment, I don’t do anything.

I just, you know, put the money in and I watch it. And just let it ride. Yeah. Yeah. And I don’t know if I close it or what, but it was at a thousand, I believe, and 21. Somehow I just lost—oh, here it is—1,021.30. Okay. And I’m at 1,014, and the money is slowly growing. Last week was much better. Too bad we didn’t do our balances last week. The market went down. But people are always worried, The stock market went down. Yeah, you know what, though?

It’s at the highest level that it’s always been. And here’s the thing: where do rich people put their money? Yeah. Right? Because—yeah, because their assets work for them while they sleep. And, well, we talk about the K-shaped economy on the show all the time. Yeah. Half people are doing better, half people are doing worse. So you mentioned, you know, bankruptcy about, you know, you’re screwing your future. You’re screwing your kids’ future too, because imagine your life right now if you woke up tomorrow and you didn’t have $2,000 a month in obligations on minimum payments on loans and credit cards and all that stuff.

Imagine if that was gone, and you had that extra $2,000 a month that you could not only be putting directly into your retirement, directly into your savings account so you can sleep at night and feel good, but then you would have the ability to say, You know what? I’m going to start—I’ve got kids, they’re teenagers, still living at home—I’m going to start putting whatever, 50 bucks a week in each of their accounts to grow while they’re 12 years old, and that could grow into a few million bucks by the time they retire.

And that would be something that you could do for your kids. Well, you can’t do that if you’re in debt and you’re just pain and pain and pain, and you don’t have that extra money to not only help yourself. So instead of helping your kids in their retirement, your kids are going to be burdened in your retirement because you’re not going to have enough money to support yourself. Contribute to your kids because you were worried about the Munchhausen credit score in your 40s and 50s and 60s.

Now your kids, you’re perpetuating that poverty cycle because now your kids aren’t going to be able to contribute to their own retirement and their kids because they’re helping their parents who didn’t go bankrupt in their 40s when they should have. Right. Yeah, you’re putting a burden on everybody. So here’s an example.

What $20 a Week Turns Into

My granddaughter is six. I put $20 a week into an account, and when she’s 18, using the calculation today, it’ll be worth over $27,000. That’s just in 12 years. But if she does not touch that, when she is 46 years old, it’ll be worth $316,000. That’s not a bad gift from Gramps. Yeah, and she can continue to invest that. And that’s 20 bucks a week. Everybody has 20 bucks a week, and if you don’t, that means you have too much debt, right? If you didn’t have the debt, you’d have 20 bucks a week.

You could do that. Yeah. Why can’t you make room to take care of yourself? I agree with everything you just said, Damon. It is so damn important that as the economy gets tighter for everybody, how are you going to take care of your parents? Let’s say that you can’t and you don’t have an obligation, you have no reason to take care. What happens to them? Yeah, we’re starting to see that. Yeah, like you mentioned, you’re getting a lot more people coming in, you know, 70, 75 on Social Security, I still have this debt.

And it’s like, yeah, one was 90 grand in student loans at 75. Yeah, and it’s just, it’s crazy. But it’s like, and I guarantee you every single one of those people, if they had the opportunity to go back 30 years and wipe that out and reset that pattern. Now would, would choose to do that. So when you’re making decisions—

Bankruptcy Is a Tool — Just Ask Elon Musk

What did Elon say when he was asked about if he had to file bankruptcy? Yeah, he was talking about how close SpaceX and Tesla had come to bankruptcy on multiple occasions, and that, you know, he didn’t care. He was just basically like, I’m doing what needs to be done, sleeping in the office, whatever. Hey, if we have to go bankrupt, I don’t care. It was just like, that’s just part of it, you know? And when you think about it, bankruptcy is one of the things that makes this country freaking great, right?

Because it frees you. It does. It frees you up as an individual to take some chances, take a big old country hack at a business opportunity or whatever, and go for it and reach for the stars. And if you miss, hey, you miss. We have a safety net. It’s called bankruptcy. You get a fresh start and go do it again. Successful people in business do that all the time. Took a big hack and I missed, but that’s all right. Bankrupted that. We’re starting again today. We’re going to try again.

That’s what they do. That is exactly why bankruptcy is in the United States Constitution. It is one of the founding principles of this country, is to give people the opportunity to take a chance, and if it doesn’t work out, they can try again. Yeah, but if you don’t take that step, you never have the opportunity to take another chance, right? Give yourself the opportunity to take another swing. That’s what bankruptcy does. In winding this up, I would like to leave people with: you can either listen, educate yourself, you can do better moving forward and be rich in the future, or you can keep treading water and drown.

Yeah. Bankruptcy is not as bad as you’ve been led to believe. Your mama is lying to you, and by mama, I mean your bank. Your Munchausen’s mama. Munchausen mama. I’m gonna get a T-shirt. Don’t listen to your Munchausen mama. All right, Damon, on that note, I will see ya. Peace.