BiggerPockets Money Podcast - 189: Revenge Spending: How It’s Sabotaging Your Financial Relationship

Episode Date: April 19, 2021

Getting a finance degree doesn’t make you a great investor or saver, that’s what Teri Slater, personal finance coach found to be true after completing her degree. From a relatively early stage, Teri had already racked up student loan debt, a car loan, and credit card debt. She pulled herself out of debt and felt accomplished, but after she got married and bought her first house, she found herself back in debt. About $200k in debt! Teri and her (then) husband had high incomes, a nice home, children, and a couple of dogs. From the outside, it looked like they were doing phenomenally, but inside the home, Teri and her husband were barely scraping by with enough money to pay the mortgage every month. They had credit card debt, a car loan, a truck loan, business loans, and a HELOC (home equity line of credit) against the house. They were completely surrounded by debt.  They decided to attend Financial Peace University sessions and take the baby steps to get out of debt. Teri still felt embarrassed at the end of the meetings and was hesitant to disclose how they were doing financially. It took her and her husband years to get out of hundreds of thousands in debt, but as of 2018, Teri is debt free! Now she puts a generous amount towards her after-tax and pre-tax retirement accounts, and helps teach others how they too can be on a path to financial freedom. Teri knows first hand how hard it can be to talk through financial situations with your partner. She goes through some tactics to get your partner on the same page as you and create clear goals, all without revenge spending!  In This Episode We Cover Staying out of debt when you go to college  Diagnosing the behavioral issues around debt  Getting out of debt and staying out of debt  Keeping up the momentum when you’re paying off large amounts of debt  How to stop “revenge spending” when you feel it coming on And So Much More! Check the full show notes here: https://www.biggerpockets.com/moneyshow189 Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Bigger Pockets Money podcast, show number 189, where we talk with Terry Slater about changing your mindset and habits in order to get out of debt. There was no question about like what the end goal was. And the end goal was like no more debt, right? Like we're paying this off and there's not any more debt. So that was just like, that was a line in the sand that was drawn like back when we first started, which was around 2012. So that line had already been drawn.

So we knew that we weren't going to cross that. But I think, you know, even if, even if. it is like kind of smooth sailing or you're not facing, you know, $200,000 in debt, it's a smaller hurdle. Either way, for some people, you know, they can go at it with an intensity that is just like, I don't care if I sleep at night. I don't care if I eat. I'm just going to work, work, work and pay off the debt. And for some of us, we really need to kind of build in these other tiny rewards. And so I'm kind of an advocate for that. Hello, hello, hello. My name is Mindy Jensen, and with me, as always, is my flipping awesome co-host, Scott Trench.

We really live in the moment for these intro analogies. Thank you, Mindy. Scott and I are here to make financial independence less scary, less just for somebody else. To introduce you to every money story, because we truly believe financial freedom is attainable for everyone, no matter when or where you're starting. That's right. Whether you want to retire early and travel the world, go on to make big-time investments in assets like real estate, start your own business or pay off $200,000 in debt over six years.

We'll help you reach your financial goals and get money out of the way so that you can launch yourself towards those dreams. Scott, I'm so excited to talk to Terry today because, like you said, she had $200,000 in debt. You know what else? She had a degree in finance, which, as she says, I got a degree in finance, only to realize that it taught me nothing about personal finance. After taking a class with her husband, she realized they had dramatically different spending habits and a lot of expensive bills based on past decisions and commitments.

Today, Terry is going to talk about a phrase called revenge spending, which I think is probably far more prevalent than we even recognize. I love that phrase, revenge spending. That's so descriptive. We talk about being paycheck to paycheck, even when that paycheck is high. We talk about keeping up with the Joneses and learning to say no. Tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening.

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Audible Originals, podcasts, and a massive back catalog across business, health, parenting, and more, all accessible in one app. If you're looking to turn everyday moments into real progress, Audible has been indispensable for me over over 10 years. Kickstart your well-being journey with your first audiobook free when you sign up for a free 30-day trial at audible.com slash BPMoney. Terry Slater, welcome to the Bigger Pockets Money podcast. I'm so excited to talk to you today. Thank you. I'm excited to be here. Thanks for having me. Let's jump right into it because I know we've got a lot to cover today. Where does your journey with money begin? Well, I would say that my journey with money really begins by, I got into some credit card debt really early on in college.

This was back in the day when they would let you, you know, like get a free baseball hat for a college, you know, a credit application. So I racked up a lot of debt really, really early on in life. Student loans went on and on for a really long time. I was in school for like 10 years. So I ended up, you know, getting into a lot of debt. and I paid off all of my credit cards at one point with the help of a credit counseling agency. And the sad part about that is that, like, in hindsight, I thought I was out of debt because I had

paid off my credit cards, but I still had a car loan. I still had student loans. So I wasn't actually out of debt. And then once I bought my first house, I hadn't had credit cards for a while at that point. And I still hadn't dealt with my own behavioral issues. So I actually went back into debt like tenfold. So after buying our first house, we really, you know, took out the home equity line of credit and like maxed out credit cards and put, you know, vacations on credit. And so it all kind of started like way back when, you know, I had all this debt like early on in life. So the interesting part of all of that was that when I, when I eliminated my credit card debt the first time, I won't say got out of debt. When I eliminated my credit card debt the first time, I thought,

I learned a lot and I thought, boy, I really want to take. teach other people about this. So I went to school and I got a degree in finance, which has nothing to do with personal finance at all. So kind of learned that. So that's why it really took me a long time to end up addressing all the behavioral issues as well. Yeah, those finance degrees are whack. That's a bit of foreshadowing that behavioral issues. But I think that's really important to realize that this is not, you don't just pay off your credit card debt and then you're done until you address those behavioral issues, until you address like the, the the reason behind the spending, it's going to come back. It's just like losing weight. If you overeat

to compensate or you eat junk food all the time, you lose the weight and you don't change the behavior, it's going to come back. It's going to come back deadfold, just like you did. Yep, exactly. So what sort of debt load are we talking about coming out of college? Okay, so, well, okay, let me just preface this by saying that I didn't get out of college until after I was already like married and had a kid. So that was like later. But my early, years, I probably had, you know, maybe I'm going to say around like eight, $8 to $10,000 in like miscellaneous, like, I mean, I did it all wrong. Like, I bounced checks. You know, I had, you know, credit cards. I had, you know, different, like, I would get these checks in the mail.

I don't know if they still do this. I hope not. But I get these checks in the mail. It's like, just take this to the bank and cash it. And I would do that. And I didn't realize that it was like 26% interest, like right away. So I had done. that. So yeah, I probably had about 10 to 12, 8, 10, 12,000, something like that to begin with. Once we kind of get to the fast forward to the end of my story, that was over $200,000 in debt that we paid off over the course of about six years. So yeah, can you describe your situation maybe in some detail at that peak moment of 200,000 in debt? Like what was that comprised? What was that comprised of? What was the income? Where were we at that point?

Yeah, so at that point, I was still married. And so combined, we had over six-figure income. I'm going to say it was probably in the neighborhood, ballpark, like, you know, 130 to 150 a year combined income. And the debt, interestingly, I mean, it started out, I would say, as probably close to like $140,000 to $150,000 in debt. But like, it was a six-year journey to pay off all of it. And so it was credit cards, car loan, truck loan, you know, some old business debt that he had, or I would say business loans that he had on equipment, things like that too. We had, you know, care credit accounts for like our pets that were always going to the vet. We had a home equity line of credit that was on interest-only payments. So, I mean, and the pinnacle of all that, I think, is that we were really making pretty good progress. I mean, paying, you know, several thousand extra on our debts every month. And then one year, we got hit with a tax bill that was another 13,000. So it was just like, oh, you know, we felt like, oh, we were making good progress. And then it just like slipped back again.

So what was the moment in time where you kind of realized like, oh, we're going to, we're going to stop accumulating debt and begin paying it off? What was that kind of pivot for you guys? Yeah. So I would say that I hit what I would call kind of my rock bottom when, and this was really only like 10, 11 years ago, 2010, I knew we weren't going to make a mortgage payment. And that was the first time ever that I thought, oh, this is like, I don't know what we're going to do anymore. And so I called my parents and asked them if I could borrow enough money to, you know, make a mortgage payment. And I said, I'll pay you back. I don't know when, but hopefully with my tax return next year. And then that was when we got hit with the tax bill. So I wasn't able to pay them off for

like over a year. I still hadn't made a single payment to them. And while they didn't care, weighed really heavily on me. And so at that point, that was kind of the pivotal change where I was working as a financial counselor at that time anyway. My coworker had kind of handed me like a CD and said, this is Dave Ramsey's financial piece if you want to like look into this. I also took a part-time job working overnight. So I was working full-time and then I would work overnights in a bakery for a few nights a week. And so with those weekly paychecks, I would get from the bakery. I would send it to my parents. So it was kind of like this big accumulation of like a lot of things happening all at the

same time where that was what it took to like shake me to my core and make me really change everything that was happening. So how do you think you were projecting outwardly to like your friends and folks who weren't aware of that, you know, besides that one friend? Do you think they were able to see any of this or do you think that you look like you were really successful at that point? Yeah, no. I think that everybody probably thought that we had it going on, right?

because we had, you know, we had like nice house and like the two kids and a couple dogs and, you know, whatever. In my mind, I knew it was rough and like we didn't take vacations and we didn't enjoy much of our life. Like on the outside, it looked like we had, you know, good things, nice cars, what have you. But even that coworker of mine, I don't think that she even like fully knew what was going on with me. So it was just kind of like sort of, you know, when when the student is ready, the teacher will

appear kind of a thing. So, yeah. Well, I have a billion questions on this, but you said it was a set of things happening. Was there a trigger point? Or when did you kind of sit down and say, okay, I'm going to begin intentionally planning paying this off, or was it more of a subtle shift? Or how did that transpire where you actually began to stop accumulating these debts and begin paying them off?

Yeah. So I had had a lot of conversations with my husband at the time. and, you know, we were just kind of starting to look at, like, how are we going to address things? And the communication between the two of us wasn't always ideal. You know, like, I came to the table with one perspective, and I think he felt attacked sometimes. And, you know, it's just, it was just difficult communication in the relationship. And so for us when we, that's why I went through Financial Peace University with him, because I needed him to hear it from somebody else that wasn't me.

You know, and then the messages really kind of started to like sink in a little bit for him. It was still a very, very long road. But that was the pivotal moment where like we wrote it all down. Even I didn't do any budgeting before that prior to that. And so that was when I became super diligent. And I've made a budget every single month since then, you know, yeah. I have a comment. You have a degree in finance.

Yeah. And $200,000 in the debt. And you still didn't budget. So people who are listening right now who are like, I know I need to make a change, it's okay to not know what you're doing. Realizing that and making the change once you recognize it is the only thing that's going to help you out. You can't like beating yourself up.

Oh, I've never made a budget before. So I guess I'm just never going to or I should be doing this and I'm not. I can't ever change. Yeah, you can, but you have to make it work. And here's Terry saying, I knew what to do and I still didn't do it. it. And it wasn't until I missed a mortgage payment and had to borrow from my parents that it really kind of kicked me into gear. Also, that comment about your husband, he had to hear it from somebody other than me. If you're coming at this from two different points, it can be impossible sometimes

to convince someone that you're right. Don't try. If you have the conversation and it's not working out, find somebody else that they'll listen to so that you can get this. Ultimately, you want to get on the path. you get there, it doesn't matter that you're right or they're right or whatever, figure out some way to get them to listen. And yeah, sometimes it's not going to come from you. And that's, it's hard. It's hard. Yeah, it's hard. And I think that, you know, people will change when they're ready to change. And I think that the best thing that we can do in relationships is to not nag, right? We can, like, bring up, I say bring up concepts, right? So, like, talk about, like, what your goals are for the future. And, like, if the two of you dream together and have these things

together that you both look forward to, that's beneficial. We were just not necessarily aligned in life anyway, which so that didn't work out. But, you know, still having these like bigger goals and visions that you're working on together, you know, and also coming at it from a position of curiosity, I think is really important too. So, you know, if you're, if you're married to a spender and they spend on all kinds of crazy frivolous things, like maybe approach it not from a point of like, I wish you wouldn't do that or why are you doing that? But like, really learn and ask questions about, like, you know, kind of getting at the root of why are they spending on what they're spending on? Because a lot of times it does cover up like other insecurities or, you know, they've got

past issues that maybe they haven't dealt with like family money type history stories and things like that too. So come at it from a position of like understanding and curiosity and patience because it takes time to get the other person on board. How long between, your kind of decision point, your inflection point and your husbands. That's really tough to answer. That's really tough to answer because, you know, we're divorced now. And so I'm just going to go on record and say that I still think that we don't align necessarily with, like, our financial goals. Great.

So, yeah. Sorry for the inartful question. No, it's not, not a problem at all. I just, I want to be mindful of, you know, speaking, you know, on behalf of him. or anything like that too. So yeah. Makes perfect sense. Yeah.

So you said you got the financial piece CDs from Dave Ramsey. And so I have recently begun learning about that in more detail here in the past couple of months. And I think they're great, actually. And I think they're fantastic program. But I was wondering if you had any, if you used that at all for your personal journey. Yeah. So we went through the actual classes like in person.

And so I will also say that both my ex and I. I did not come from, like, religious backgrounds. So that, that environment was definitely just kind of like a little bit different for us to be, you know, because it's usually facilitated in a church frequently. So we went through the classes and kind of, you know, followed the book and learned the lessons and the baby steps are like really, it's just a super easy way to like break down the tactical part of personal finance. But there was also, when we went through that, there was also a part at the end of each meeting where you kind of got together in groups and would share and talk and discuss. And I did not want to do that, right? I was super embarrassed and, like, kind of had some

shame around the whole thing. And I knew that, like, he and I weren't necessarily aligned on everything. So I didn't want to, like, come across as, like, sort of, you know, putting that out there that things are hard and, like, we're not just, like, right next to each other alongside this journey, like, happy go lucky, can't wait to, you know, wrap this up. It was a difficult process. So I would say that I took from that program, like the tactical steps that just made. it really easy for he and I both to, like, have the tactical measures in place. It was still the conversational part, like, between us, the relationship that continued to be work after that program, too. Okay. And so what can you give us maybe some, some indication of, like,

the, the, the, the, how things changed following kind of this and, and, and your journey in eliminating the debt? Yeah. So I would say that most. the whole thing kind of felt like a grind. But we definitely changed in that we became better at, you know, saving money for bigger things that we needed and saying no to other things. One of the really interesting pivotal moments was that we had, the house that we lived in actually had two furnaces. And so one of our furnaces went out and we had been saving money to replace it. It wasn't an emergency because it went out in in the spring, like late spring. So we knew we had until the next year to replace the furnace. So we were saving up cash to get a new furnace. And I would say that we probably had around

$4,500 in the bank saved up. And it was starting to come into the fall. And then low and behold, this like stupid monster truck that ended up costing us like over $80,000 and just miscellaneous repairs, it lost its transmission at about the same time as we were about to buy this new furnace. so that savings had to go from the furnace to now repairing the truck. And so we heated our house with space heaters that winter. So like little things like that, they were just huge mindset shifts, right? I mean, we could have, you know, financed the new furnace or, you know, put the truck repair on a credit card. But we just had like a lot of like little moments like that that were, you know, cash flowing, you know, braces and dogs having cancer and all these things that we just ended up, you know,

paying cash for as we went along. So like I said, it was kind of like a long, slow grind. But yeah, it was six years. And so, I mean, thankfully, so we got a debt around 2018. So I haven't, you know, used, I mean, I use credit cards still, but I pay them off every month. So I don't have any debt to speak of now, which is really nice. So that's how it's been since then. It sounds like on almost any journey that you're changing mindset and changing the way that you act and behave. In the beginning, it's one step forward, two steps back. One step forward, two steps back. And you're like, it's so easy to throw in the towel and be like, oh, forget it.

I'm not making any progress. I might as well, I'm always going to be a debt or I'm always going to be overweight or I'm always going to be whatever that I'm trying to change. How do you stay committed when you're about to pay cash for a furnace and then everything's going to be great? And your truck drops the transmission. Yeah. Yeah. I mean, it's hard. But I mean, there was no question about like what the end goal was.

And the end goal was like no more debt, right? Like we're paying this off and there's not any more debt. So that was just like that was a line in the sand that was drawn like back when we first started, which was around 2012. So that line had already been drawn. So we knew that we weren't going to cross that. But I think, you know, even if even if it is like kind of smooth sailing or you're not facing, you know, $200,000 in debt, it's a smaller hurdle. Either way, for some people, they can go at it with an intensity that is just like, I don't,

I don't care if I sleep at night. I don't care if I eat. I'm just going to work, work, work and pay off the debt. And for some of us, we really need to kind of build in these, tiny rewards. And so I'm kind of an advocate for that. Like if you feel like you need to reward yourself every now and then for making progress to help keep you on track, then that's a really good way to go. So, you know, take yourself out for a nice dinner, like only after you've paid off something and just don't make it as frequent, right? So it doesn't become like your new normal.

I think one thing that I look at is whether or not people get out of debt only to then still just go ahead and spend all their paychecks. Maybe they don't have any more debt. any more going forward, but still, you know, the spending everything that you make is still a dangerous game to play. So I think a big elephant in the room here potentially is, as you mentioned earlier, that you got divorced. Did that happen during or after your payoff, your debt payoff journey? And were there any root causes with this journey that contributed? So it happened after. So we got out of debt in April of 2018 and then we divorced in late 2019. So it was, I would say, like a year and a half later. And sorry, what was your other question about that?

Was there any like financial conflict that maybe was? Yeah. Yeah, no. It really, it really wasn't. I mean, as much as this was like a really like challenging, you know, part of our lives, the money didn't cause any fights. Like I said, it was just more like, what was important to me wasn't important to him and what was important to him wasn't important to me, right? So it was just like misaligned values that, you know, ultimately ended that. relationship. And so, thank goodness, we got out of debt beforehand because that really made everything, like, pretty easy when it came to, you know, just finalizing that. When you go back to the beginning of your journey, what were, what were like kind of the biggest

debts that were in your, like the ones that maybe were the real grind at the end because of the snowball method with Dave Ramsey, you'd pay off the small ones. But what were some of those big ones that really took the bulk of that time? Yeah. So I would say among the largest were, I mean, I had a credit card that was well over $25,000. So there was that one. And it very, very closely aligned with the truck loan that we also had, which was also kind of that in the credit card sort of ran tandem. And so those two were, yeah, kind of the long haul.

So that whole snowball method is really interesting because you can see some quick wins in the beginning, which is great for keeping up the momentum. But when you get to the big ones at the end where like no matter what. Like I said, we were paying like $3,000 a month on some of these debts. And even then, when it still takes almost a year to pay off one credit card at $3,000 a month, that's a little tough to take sometimes. So those were the big grinds. You know, one of the things that Dave Ramsey suggests is that you, baby step one is, for example, save up a $1,000 emergency fund. Baby step two is the debt snowball, which in your case took six years, right?

And then baby step three is the three to six month emergency reserve. One of the things I was thinking when you were sharing your story is that you had, you know, it sounds like a big house with two furnaces and a big truck there and a couple of other things like that. Do you feel that in your case, a bigger baby step one would have been beneficial as a, you know, do you think that there's nuance there? or do you think that the low what the low reserve kept you uncomfortable and in it on the program? Okay, let's just be clear and say that like having a thousand dollars in the bank was more accomplished than we had been for most of our adult life anyway. So I mean, let's just call that what it is. It was good that we even had that. Do I think that having more would have been helpful, maybe,

but so two things to say, yes, I think it's flexible. I also see a lot of times when people are self-employed or have very, very, like, you know, unstable income sources or their job is always kind of in limbo, then, yeah, I think having a bigger emergency fund is a good idea. With ours, we had enough, like, disposable income that whenever other things came up, we were able to cash flow them. And just so basically, our debt payments would scale back a little bit while we paid cash for the other thing that was going on at the time. So I think as long as you can kind of balance that out, you don't necessarily have to have a big beefier emergency fund. I would say we didn't really necessarily, we didn't like deplete the emergency fund and then stop paying on debt to like build it

back up again. So we didn't keep doing that. We just basically scaled back the debt payments while we increased the cash flow for whatever else was happening. Got it. After you began the journey with financial peace and those types of things, how much were you able to start paying off immediately? And how did that scale or change over time? You know, if you were to say like, hey, over the last six months, I paid $5,000, the first, you know, at one point, that was able to get that to $30 or $40. How did that work for you guys? Yeah. So I never necessarily felt like we had any, like, big sweeps of momentum. The only one caveat to that, I would say, is that we did have a car accident that all four

of us were involved in in my family. And luckily, we walked away from it, but we did get a big insurance settlement from that. So that was kind of a chunk of money that we were, we were able to sort of put towards some of the debt in one, you know, fell swoop. But aside from that, I would say everything else was mostly just kind of a grind. And we paid about $30,000 a year on debt. And so that's not only just like the minimum monthly payments, but also whatever extra we were paying. So we definitely had job changes in there that increased income too. He was self-employed for a lot of time and then decided to stop the self-employment and go back and take a regular job. So there were things like that that also impacted our income, but it was still, the rate was pretty generally 30 to 35,000 a year was being paid on debt.

Awesome. Thank you. That's really helpful with that. And it's interesting because in a lot of other stories we've heard, there's been kind of like a, it takes a good six months to a year to really get into the momentum of paying it off. And then it, you know, however long it continues after that, it continues. Some cases are 18, 24, some cases are six years. Some cases are 10 years with the debt payoff. Did you put yourself on a budget when you decided, okay, we're going to stop accumulating debt and we're going to pay it all off. Did you like track spending or, you know, say, okay, we only have this much money for each of these categories or was it just kind of loosey-goosey? Yeah, for sure. So I've always done the bills, the finances in the relationship. And so, yes, so I said I had never done a budget

really prior to then. To me, the most important first step really was just to even like see where we were spending. So once I had that, because, I mean, a budget means almost nothing when you don't even know what you're currently spending. So once I had that, then we had a framework from which to work from where we could really kind of say, okay, that number for groceries seems about right. Like, I don't think I can make any adjustments there or, you know, we're going out to eat way more than I think maybe we should be. So let's see if we can just scale that back, right? So it helps you to at least determine, like, where you can cut back. So yes, what I did was I had, I found online, And I still use this for any of my clients that want, like, a tool to, like, visualize the debt.

There's a spreadsheet that's, like, a debt snowball calculator. And you basically just kind of plug in, like, the numbers on all your debt and then how much extra can you pay. And it shows you, like, the payoff timeline in spreadsheet form. So it's kind of an overwhelming spreadsheet, but I think it's super awesome because it shows you everything. So, yeah, I was able to say, okay, this much extra will go to this. And then we could see it, you know, month by month, too, to be able to kind of track. you know, how we were doing with that. Sometimes the spreadsheets are overwhelming, but if you don't look at everything, you're going to

miss something. And, you know, what are you spending on? Well, here's what I spend on groceries and gas. Great. Where does the rest of your money go? You have to look at everything. And that first month, when you first start looking at where your money's going, that is shocking. That is like, oh, wow.

Right. Because you think you're good with money, or I'm making a lot of money. lot of money. I don't have any problems. And then you start realizing, I actually do have some problems. I need to change this. And that is, in my opinion, the most important thing you can do once you decide to get out of debt or you decide to go into the FI movement and pursue financial independence, track where your money is going. Without judgment, just write it down. And I am like old school notebook, write it down. How much I spent, where I spent it about what it was, like groceries at Target. It could be other things too, but it's groceries. And then you watch, you total it up as you go. You watch, oh, it's the sixth of the month. And I already

have spent $1,000, not including my mortgage. Right. That's a lot of money. I need to stop that. So, yeah, that is powerful. And I love that your spreadsheet is overwhelming. If you want to get out of debt, it's overwhelming at first. And it gets easier every day that you commit to taking the steps to doing it. Yeah, and being able to see that timeline of when it's going to end too, right? Like knowing exactly when this is going to be over was super helpful. Yes, yes, the light at the end of the tunnel. Yeah. So when you were in the middle of your debt-free journey, were you saving and investing anything

or were you just paying it all down? And if I see you shaking your head, so if you could go back and do it differently, would you have changed anything? Yeah. So this is such a great, great question. No, we were not putting anything into our retirement accounts at all, save for in 2013, I got a new job. And at that point, it was mandatory that I had to put money in for a pension as its government work. So then I started putting in, but that was, you know, a few years really prior to the end. So yes, in hindsight, looking back now. So I mean, it's one thing to say, you know, don't put money into retirement while you're, you know, trying to get out of debt because you can look at the math and the equation there and just try to

figure out like what's what. But when you think about the time value of money, like we lost a lot of time there, right? I mean, that was six years, but let's be honest, we weren't putting a lot of money away before we were, you know, getting into debt either. So, but we did definitely lose a lot of time and I'm not as young as I wish I was. So now I'm kind of scrambling and trying to like make up for that now. So you get back to zero in 2018. First of, how does that feel? Things improving in general with your respect to your outlook on your financial position at that point. And then what happens next? Yeah. So it definitely was such a celebratory moment. And we really brought our daughters along on this journey with us. Like we would have monthly

budget meetings with them too. So like they got to understand. I wanted them to understand why we were saying no all the time to, you know, whatever little requests they had. So we brought them along that journey too. So they definitely understood that it was like a big deal. So it was a huge celebration after the fact. And I don't even think that we had any particular like a big dinner or trip or anything like that. We really just like shot off confetti in the house and like, you know, screamed at ourselves, we're debt-free. So, but yeah, so that definitely was a pretty interesting moment, and it was nice to bring them along board with that, too. You asked me another question about that. Sorry, I always, I have this annoying habit of asking six questions in a row.

So the next question is, what did you do next? Did you continue with the baby steps, or did you begin doing something different? Yeah, so that's interesting. Let me relate it to the baby steps. So, you know, afterwards is the three to six months of living expenses. And I would say that there was work in progress on that, but that was also a little bit slow going. Kids in college, I think, is also a really interesting and very personal topic. So I have never told my kids, like, it's mandatory that you go to college. Like, I want you to know, what your life is going to entail before I want you to just, like, spend a bunch of money on a degree that you don't even really know, you know, what you're going to do with or what have you. So we told our kids both that we would pay

for their first year of college and there's enough money to do that. So I wasn't like trying to like beef up a big college savings. And then as far as like paying off the mortgage that the timeliness of that didn't necessarily work out that we were, you know, working together on that. So after our divorce, I did sell the house. So that was about a year ago now that I sold the house. So I can totally say debt-free because there's no mortgage now either. And so, yeah, now I'm just like, I am piling money away as fast as I possibly can. Awesome. So I would love to know what kind of what that outlook is now. So you're debt-free. I assume you have the emergency fund set up. And how are you investing now and going after it? Yeah. So now I'm, you know, I'm fully funding my Roth every year. I've got just sort of a,

I've got a non-taxable, a taxable account to just at Vanguard, and it's just, you know, index funds, you know, kind of boring, but reliable. So it's done well this past year. So that's good. And then I do have like existing like employer, you know, other money that's still kind of sitting off to the side there. So there was a Roth 401k option available. So that's something that I also max out as well, too. Nice. Well, it sounds like you're after. the races with all this stuff. And you have a business now that you run. Is that right? Yep. Absolutely. Do you want us through kind of how you started that or how you got into that? Was that simultaneous with all this or in progress or how did that get going? Yeah. So like I said,

when I was first learning about personal finance and got a finance degree and realized that really wasn't it, I called a nonprofit and asked them if I could just come and teach like high school students. I wanted to teach other people about personal finance. And so they brought me on, just kind of on a volunteer basis to do, you know, teaching. I would go to like senior centers and community centers and high schools and teach basic personal finance stuff. And then I became a financial counselor for this nonprofit back in 2009. So you can imagine I did a lot of foreclosure counseling. I did a lot of bankruptcy counseling.

So that was work that I had done previously with a nonprofit. it. And so now I have shifted into my current financial coaching business is I'm still, I'm a very detail-oriented person. So I'm still very tactical and kind of teaching people like how to, you know, move forward in their personal finances. But I really focus a lot now on the behavioral stuff and sort of helping them to have productive conversations. And a lot of it is just kind of guiding conversations. A lot of couples have one person that does the money, you know, if you will. So that person can kind of come at the picture with sort of, I would say, a jaded view, right? Sometimes we can get like automatically defensive about, you know, what the other person is doing or spending or what have you.

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Find out more at go-transit.com slash tickets. Do you have any experience working with like, and I'm asking this because I have personal curiosity here, but with like, do you ever get people who have weird situations with debt where like, I think I owe this person money or don't have that? Or is that something that you help with? Or is it more of a conversation facilitation? Yeah, yeah, all the time. So I generally will tell people, first of all, if you don't even know what's out there, right,

go pull a credit report. So that's kind of first and foremost. Because a lot of times there's things that we're not aware of or sometimes people don't realize that they had things that went to collections and no one's reaching out to them. So they, you know, don't know that's there. It's also a good fraud prevention tactic too because I've certainly seen it's really sad when you see this, but I've seen a lot of families where even especially if a couple of people in the family share the same name, you can see some sort of family financial fraud happening. So yeah, I do kind of walk through that with people to be able to see everything that way you can map it out because you need to have. the whole picture to start, you know, mapping it out. Yeah, I've taken a big interest in this, you know, especially with some folks that have checkered pasts in some cases. There can be a lot

of weird stuff going on, right? So like, hey, here's a loan that's not kept on the books. Or here's a friend or family member who has impersonated me. And so it's a case, it's literally cases of fraud in some cases, but we're not willing to press charges because it's friends or family and those types of things. And I think the biggest question overall that, at least I've seen, I'd defer to your experience, but is around this big question mark of the statute of limitations on old debts. And so, you know, have you come across that? And how would you advise somebody who's got an old debt that they're afraid to talk to because they don't want to restart it or whatever? How does that work with the statute of limitations on old debt?

Yeah. So truthfully speaking, it's been kind of a long time since I've come across that situation. so I'm always, like, I don't necessarily keep up with all of the laws. So I'm always a little hesitant to answer anything that could be construed as legal or accounting advice, which it's not. But a lot of times, let's also maybe if I can also talk about like family debt too, things like that. Like, I think that there's often, it's known that like, they don't expect to get that money from me. Or sometimes it's the opposite of like, I know they don't want me to pay them back, but I want to pay them back. right? And so a lot of times the conversation can be just about like integrity, you know, as far as like what you want to pay back. But when you're dealing with like old debts where you're afraid of what

might happen, I always say that communication is key all the time. And so number one, have a plan before you like make the call. And there's a lot to watch out for as far as kind of like, you know, shadiness, right? So if you've got an old debt and you call and say, you know, hey, I want to pay this off, And they tell you that they've, you know, added eight times the amount because of interest and fees. That's not the end-all be-all. You can have other conversations and kind of wiggle that down and find a meeting point or something like that. Don't pay on anything until you've got the agreement in writing, right? And don't allow electronic access to your bank account because that's when it gets real nasty.

But I think a lot of times people are also really afraid of someone coming after them. And I always say, you know, there's a court process that has to happen, right? If someone's going to like garnish your wages or come after your bank account, they have to go through a court process, at least in Colorado, you know, in order to get the judgment in order to move forward with that too. So it's, yeah, there's a big process involved there. In general, one of the fears is, hey, if I call a person, a creditor and it's five years and the statute of limitation of my state is six, then, and I even admit that it's mine, I restart the statute of limitations. So I don't even want to pick up the phone or answer the mail or whatever because I'm letting that expire. Any like general advice there, you know, and this is entertainment and entertainment purposes only with this, but any general advice there. Yeah, I don't even know if I want to give any general advice on that.

I'm so, I'm really, I'm so super careful about, you know, anything that could even cross the line for legal that I just, yeah, we'll defer to Mindy. Well, no, I'm not going to give legal advice either. I know I'm not qualified. Who is somebody that someone can talk to about this to get the information? Is this a CPA or an attorney or a credit counselor? Because I know that there's a lot of people out there who are like, ooh, I just want to ignore it. Or like Scott said, if I talk to them, that is another hit on the account and then it

restarts from there. And, you know, I like your comment about integrity. I want to pay off my debts. but also if they're going to write it off tomorrow. You don't want to, yeah, you don't want to wake a sleeping giant. How do I find out about that? Who's a good person to reach out to? Yeah.

So I would say that there's a lot of different professionals that are able to answer that, kind of within the scope of their own role and credentials. So, yes, I do believe a lot of CPAs would have that information, but I would probably say first and foremost, you can always get a free consultation with a bankruptcy attorney, and they're going to know the law when it comes. to debts. So that might be one option. I would go in prepared, again, having like a credit report or something handy so that you can give them the full picture. But you should always be able to get a free consultation with a bankruptcy attorney. And then also, in most areas, you

can find a nonprofit, like a consumer credit counseling service. If you're not sure where to find one, on your credit card statements, there's a section that says, like, if you're having trouble paying your bill or need help talking to someone, there's an 800 number. and that's the National Foundation for Credit Counseling. And so I would say call that number and they can hook you up with an accredited counseling agency. And most of the time, you're going to be able to meet with them at no cost. They do generally have like debt management programs that will have a fee to them,

but you should be able to get the counseling at no cost. So I think they would know that too. Can you state the name of that foundation one more time? And we will link there in the show notes. This is really helpful. Thank you. Yeah, absolutely. It's the National Foundation.

for Credit Counseling. National Foundation for Credit Counseling. And we will link to that in the show notes. And hopefully there will be a number involved after we do some digging as well that we can just post there. Yeah, that's great because it just seems like from my seat, I've got like a couple of rental properties and these large mortgages associated with that.

And it's all very simple and very clear. I understand it perfectly with those types of things. But it seems like the people who most need this help have the most complicated and nuanced, situations with, again, family debts or old debts or, and it's like, do I even contact, you know, if I have a problem, I know exactly who to call and how to get, and I know I'm going to have to wait on the phone, you know, the customer support line or whatever and be annoyed, but it's not like a black box. And so, hey, I'm, I'm in 30,000 in debt and it's across all these

different things. Do I now pay $500 to an attorney to figure that out? No way, right? And so that's where I think this is so helpful as to finding these resources and aggregating them so that people can call somebody and get confidence before they go after that. Yeah, absolutely. I want to go back to the complicating factor in many people's financial journey, which is the relationship with the spouse and finances there. And there's always going to be this case, or often going to be this case, where one spouse decides to begin the journey with money or make a hard pivot or begin changing the outlook

before the other. That's just how it's going to be in many cases. Nothing wrong with that. Doesn't say anything good or bad about either spouse. But how do we healthfully begin broaching that conversation if you're the one listening to the Bigger Pockets Money Show and your spouse maybe isn't? Or they've dragged you along to listen to this. To listen to this episode. Yeah. So I think that, so again, like I said, a lot of times in couples, one person handles the money, right? And so the other person, whether they want to be or not. They may be in the dark about things. And so I think the way that you present the material needs to be kind of like coming at it from, let's look at this as we're a unified couple and I want

us to move forward on a unified front, not, you know, accusatory or, you know, gosh, I found out that you spent like $500 on Amazon. What are you even buying? You know, like that's going to set the tone wrong right away. So I think that one of the best things that you can do is, you know, kind of come at it, calmly, patiently, like, make it a fun date night, right? Like, don't say, we need to have a budget meeting. You know, that's not going to resonate with people. So just approach it in like the normal loving way that you would have any other, like, you know, big conversation in your marriage or relationship. And, you know, just come at it from a place of, again, like I said, you know, listening and learning and growing together. And if you present, you know, I've got these goals for us. I'm not sure that what we're doing today is going to help us meet those goals. What are your goals for us, right?

Like, where do you see us in 10 years? Those kind of things open up a dialogue that sort of take your defenses down. Who was it, Mindy, that suggested that you trap your spouse in your car while you're on a long drive and do come in with this discussion? I loved that as well. I heard that episode. Yeah, I love that. I did. I heard that.

We're going to have a money talk right now. What's your advice for somebody who is receiving now conflicting? arguments. You're saying bring it up in a nurturing fun way that makes it. The other person excited. The other person was like, nuke them in the car. What they can't escape? What do we do there? Yeah. Yeah. I mean, that's tough. And I think that really when people don't see eye to eye, like, we have to. So sometimes it does involve like seeking the council of a third party, potentially, right? But also, you know, can you maybe try to like figure out and understand why? Sometimes there's just some like family background and it's not always you know the money scripts of like oh

I grew up poor so I want to save everything I earn or oh I grew up poor so now I feel like I deserve everything now that I've got money so I mean first of all those things can play out very differently for a lot of different people but you know also finding out like what you know what are people doing with their money because let's be honest sometimes we're mad at the saver also right Sometimes people say, like, you're not like any fun or you're not letting me have any fun. So the conversation can go both ways. You can be mad at the spender or mad at the saver. So I think it just kind of comes down to getting at what are the like root, root, root causes,

which can go back, you know, to some family dynamic. I don't want to disappoint my parents. That's why I have this big house, you know, things like that. So you have to kind of figure all that out together. Yeah. I like the way you phrased it. What we're doing, you know, these are my goals. and what we're doing isn't going to get us there.

That's not what you're doing. Everything you're doing is wrong. That's together we're a team and our actions as a team aren't aligned with our goals. And that phrasing is really important. If you're the one, if you're the saver and you're listening and you want to talk to your spouse about the spending, it's not their spending. It's your spending together combined. And the goals is the focus. The goals should be the focus.

I really, really like that. What we're doing isn't working. I don't even know if we said that during our conversation about having a money date, Scott. What are some unhealthy responses from a spouse or yourself that you can kind of look out for with when it comes to these types of conversations and discussions? Yeah. I mean, this is, and I'm not, I'm not a licensed therapist or anything, but this kind of goes back to like those words that you can use the like attacking of like you this, you that, where you should come from everything as like an eye. I feel this way when you do that, right? Those are like the kind of the ways that you're supposed to approach conversations. But I mean, there's, when you say like unhealthy behaviors or unhealthy responses, that can manifest in so many, so many. different ways. And so not only can the conversation become kind of ugly and hurtful if you're just saying, you know, mean things are attacking someone's character, right? You want to attack

like the problem of the money going out, not the person's character, right? So because their character is probably good, but there's something else happening. And then there's other times I've seen and been a part of what I refer to as revenge spending, which is when one person, maybe if both parties make good money or if just one person, you know, is making a lot of money and so they spend a lot of money because, you know, they deserve it or what have you. Sometimes the other person in the relationship who might be more inclined to be the saver or not spend as much can actually start spending as revenge. And so I know that this is something that I participate in. I participate. it in a little bit, and I've seen other people participate in that as well. Like, you get mad at the other

person for spending so much money. And so you think, well, if they spend $1,000 a month on whatever, then I'm going to spend $1,000 a month on whatever. And so it's like you're almost kind of like tip for tat, and it's not, it's not going to be super beneficial to the end game either. I just never heard that term revenge spending. And so that's like an interesting one to internalize. Yeah. Yeah, I've never heard that term, but that's a really power. term, revenge spending. And I, who, I can see this being something that happens a lot more than people are willing to admit. And because I don't want you to tell me what to do. I'm the boss of me, not you. So if you're telling me, you know, if we've decided to do something together and then

you make a mistake, well, I'm going to go do that too. I can see that happening a lot. And boy, I can see a lot of tempers flaring in that situation. And, you know, the best thing to do, I think would be to just stop, step back. Hey, calm down. What's done is done. Right. Let's start here and move forward. Yeah. And it could be really hard to like have an honest look at yourself too and what role you play. And I think that that was something that, I definitely had to deal with was what role am I playing in this? Like how am I not facilitating these conversations very well or how am I maybe trying to be too restrictive, you know? And yeah, how am I also spending some money that isn't aligned with our goals either? So yeah, it's tough,

but you have to kind of be willing to look at both sides and see, because often you've got to have a balance in where you come to the table together. Oh, that's a good quote. I like that. Scott, we've kind of touched on the financial scan. Oh, I'm sorry, do you have other questions? No, I was just saying I think we should go to the famous four unless there's other things that we should ask you about, Terry. I think that covers it. Yeah, I love the revenge spending phrase a lot because I've never heard that name before. And that I can see a lot of people being like, you know, oh, well, I'm just going to do this. And then, oh, oh, that's me. I should stop. That's not furthering our goal. I can see that. Terry, this has been fantastic. I think that

people are going to listen to this. There's going to be a lot of listeners thinking, oh, Terry is me. Terry's talking about me. Terry's in my relationship with me. This is pretty spot on. And I think a lot of people are going to get a lot of value out of this. So thank you for your time today. But we're not done with you yet. We still have the famous four. Are you ready? I am. Terry, what is your favorite finance? book. Okay. So this is a little bit funny and it's so, it's so maybe outdated, but Beth Kobinger wrote a book called Get a Financial Life. And the subtitle is Personal Finance in your 20s and 30s. And so that's how long ago I bought the book. But it's so good on just a fundamental level that

I don't care what age you are. If you feel like this finance stuff is like too much, that is a really fantastic book. And it's just uncomplicated. And it covers all of the basics. That's awesome. I've never heard of that one either. Definitely going to check that one out. What was your biggest money mistake? I'm going to say the biggest money mistake was probably the home equity line of credit that we took out because when we bought our house, it was the year 2001, and we bought it on a foreclosure, but it was only a two-year-old house. So it wasn't like it was this, you know, broken down decrepit house or anything. It was just undervalued because the market it wasn't moving. So we got all kinds of financial advice that, you know, we should just take out

a home equity line of credit to do any upgrades or what have you. And let's be honest, we just took out all the money to spend it and live on it. And so we had like a $50,000 line of credit that was on interest only payments for 10 years. So, ouch, that we eventually refinanced it into the mortgage to finally get that paid off. Oh, that's a great, great story. And I think, you know, with home equity line of credits, we have lots of discussions about those over the course of the money show. And people, fundamentally, you use the home equity line of credit for a short-term purpose and pay it off.

And you use the mortgage for the long-term stuff. And so that's, you know, if you're listening, there's a whole bunch of things there. You know, maybe not spend it in general. But the short-term versus long-term nature, I think, really has to be coming into play because it is interest only. Yeah, exactly. And that tells you that we didn't address all of our behaviors, and that's more of what kept adding on to the debt, too. So, yep. Yeah, yeah. What is your best piece of advice for people who are just starting out? I would say, don't get too hung up on the term budgeting. I know that a lot of people have resistance to the word budgeting. And so I think it's more important to track your spending. So if you really have not started doing that at all, I'm going to say just writing down, where you spend all of your money will at least sort of like give you the guide rails so that you

can start to look at where you can make changes. And then again, you know, if you're in a relationship and you're having these conversations with somebody to try to make changes, understand that it's not going to happen overnight. So I would say, you know, be kind, be curious and be patient with your significant other so that you guys can eventually move towards the same goals. Love it. What is your favorite joke to tell at parties? All right. I'm going to give you bonus points if you can identify what movie this is from. So, and you have to play along because it's a knock-knock joke. All right.

All right. Knock-knock. Who's there? Nobody. Nobody who. Okay. Do you recognize it? I don't.

It's from a movie. It's from the pursuit of happiness with Will Smith. Yeah, I love that. I didn't see that movie. Oh, it's so good. So good. Another money movie. Oh, that's a money.

I've seen that movie. Yeah, it's a great one. I have to rewatch that and figure out where that joke. Yeah, very, very end. It's like the last clip of the movie. It's my favorite joke of all time. All right. We are hitting up on a snowmageddon.

We're recording this in the beginning of March, and we're all in the Denver area, and we're supposed to get something like 40 tons of snow. So I might watch that movie this weekend, along with 100 others. Not going anywhere. Yeah. Okay, Terry, I first came in contact with you through your new video series.

Can you tell people where they can find that and where they can find more about you? Yeah, absolutely. So if you go to my website, it's terry slater.com. And I've just launched a free mini course. It's a three-part video series. And it's designed to really just kind of give you like the three basic steps on kind of how to get started. But the benefit for me there is that. I like to interact with as many people as possible with a low barrier to entry.

So it's free because I just want to be able to talk to as many people as I can so that I can really kind of figure out what everybody's different stories are and how we can best help them moving forward. So, yep, you can find links to that on my website at the bottom of the website is where you can find me on all the different social platforms as well. Great. And we'll link to all of those in the show notes. Awesome. Yes, this is awesome. Terry, thank you so much for your time today. this was a lot of fun and I learned a lot from you. Ooh, revenge spending. Awesome. Thank you guys so much for having me.

Okay. And we'll talk to you soon. All right. Thanks. Okay. That was Terry Slater. Scott, what did you think of Terry's story? I thought it was, it was fantastic. I think it was a great debt payoff story. And it talked about the emotion and the challenge and, you know, the baby steps of Dave Ramsey, which I think are just such a powerful tool for that purpose. So I really, I learned a lot from Terry. And I think she's in a really good place financially with what she's doing right now. And I'll be interested to see how her journey evolves from here. Yeah, I really liked her story.

And I love focusing on changing your habits because, like she said, if you don't fix what the underlying problem is, you're never going to fix your finances. You might get out of debt, but you'll find yourself in even more debt very closely down the road. Yeah. I think it's interesting, too, that there's probably a lot of people out there who have a pretty high income and a lot of debt and think they're doing fine and need to kind of self-actualize this. Like, no, it's not fine to have lots of consumer debt if you have a high income. It's time to kill that, get back to zero or get rid, eliminate the consumer debt and begin building wealth.

Because, I mean, it's just so much more freeing and, and I don't know. It's something that I think you need to wake up and get going with that. And that's exactly what Terry did. And then I think together her and her husband were able to knock that out. And so if they can do it, a lot of other people can do it too. Exactly. The revenge spending, that phrase, ooh. So when she said revenge spending, I was thinking, oh, the spender is revenge spending

because you're making them not spend any money and they're not having any fun. So they're going to have revenge. And she's like, no, it's the saver saying, you're not doing it. why should I? I'm going to go and get revenge on you. And really the only person you're hurting is yourself. But that phrase is my new favorite phrase. Yeah. It goes down to like an interpretation of fair and unfair, which I think is a really unhealthy thing to be thinking about with respect to your finances. Not fair. Finances are not fair. Capitalism, not fair. It doesn't matter. The rules do not change. You have to spend less than you bring in. And if you're spending equal,

to your partner because you feel like that's what your right is, you're just compounding the problem. So I think that that's where I think the revenge spending comes down to. And the fair, unfair word, I think can really disrupt your life and your finances and probably other parts of your life, too. But again, I like Terry, I'm also not a therapist. Yeah, that's a really important thing to talk about, Scott, is the fairness. Don't keep track. Don't keep score. It is not about keeping score. It isn't about, oh, you spent $12. I only spent $10. Now I need to go spend two. When you start keeping track of things, you are going to really seriously cause problems in your relationship. It's not you against your spouse. It's you and your spouse against the world.

I had to cut you off and said, steal your phrase because I love it so much. It's not my phrase. I got it from somebody else who I cannot remember who said that. But yes, that is someday I'll remember and I will give credit where credit is due. Okay, Scott, should we get out of here? Let's do it. Before we get out of here, though, I want to give a shout out. I hadn't really, I've been to Mindy's house, but not since I think she completed it. Mindy has the most remarkable, like, transformation of a livid flip with it. And these two pictures really summarizes.

So if you want to go see those, join the Facebook group on Bigger Pockets and go check them out. And one of the posts there shows her remarkable live and flip, which she profited $100 million off of last week. $100 million. Yeah, slightly less than that. IRS, don't come knock it on my door for that money. But, yeah, I think, so you had seen the middle of that journey. You hadn't seen the beginning.

I don't think you knew what a dump it was when we bought it. So, yeah, well, thank you, Scott. That was... It's very impressive work, yeah. And so, like, like, yeah. Mindy is a true professional when it comes to these kinds of rehabs. My husband helped a little, too. You know, he put a couple of pieces up.

Yeah. And her husband, Scott. Thank you to whoever it was that was a listener that emailed Carl to informing him that Mindy called him Scott on one of the podcasts. That was fantastic. Oh, yeah, you called me, Carl. Yeah. Whatever it was, Mindy had a lapse there.

And it was hysterical. Thank you to whoever called her out to her husband directly to his email. That was fantastic. Made my day. Yeah, thanks a lot. Should we get out of here, Mindy? We should. From episode 189 of the Bigger Pockets Money podcast, he is Scott Trench.

And I am Mindy Jensen saying, okay, bye, Fry Guy.