BiggerPockets Money Podcast - 56: Change Your Personal Finances (& Your Millennial Money Mindset) with Paychecks & Balances

Episode Date: January 21, 2019

Rich Jones and Marcus Garrett are the men behind Paychecks and Balances, a podcast aimed at helping Millennials figure out their finances. And they should know a little on the subject—both Rich and Marcus made some pretty epic money mistakes in their youth. From Rich just not looking at his bills to Marcus actively going into almost $30K of debt in 72 hours (NOT a typo!), they know what owing money to someone feels like. Marcus details his D.E.B.T. plan so you can pick yourself up, dust yourself off, and pay off your debt for good. Are you looking to be debt-free in 2019? This episode can help you formulate a plan that works for your specific situation, with tips for staying out of debt once you arrive. In This Episode We Cover: Marcus and Rich's money journey How Marcus spent $26K in just one weekend How Rich optimized his budget around things he wants versus the things he needs The concept of the debt snowball Rich's hybrid approach to tackling his debt The purpose of an emergency fund Advice for being financially responsible The importance of focusing on priorities first Their advice for people on paying debts The importance of being conscious about your decisions, especially when it comes to paying debt Building responsible habits And SO much more! Links from the Show FinCon Podcast Movement Mint Annual Credit Report Bankrate Paychecks & Balances Podcast - How I Reached Six Figures in My Trading Account ft. Jason Brown- PB105 Uber Lyft We Read the 15 Best Personal Finance and Investment Books and Summarized the Action Items From Each That Will Make You Rich - Paychecks and Balances Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Bigger Pockets Money podcast show number 56, where we interview Rich Jones and Marcus Garrett from Paychecks and Balances. 2018 has really been that year for me where I've had that intentionality, which I think is the most important part of it, is having that goal and having that vision. And for me, I always talk about having an emotional connection to whatever goal you're setting for yourself. It's time for a new American dream, one that doesn't involve working in a cubicle for 40 years, barely scraping by. Whether you're looking to get your financial house in order, invest the money you already. have or discover new paths for wealth creation. You're in the right place. This show is for anyone who has money or wants more. This is the Bigger Pockets Money podcast. How's it good? Everybody, I'm Scott Trench. I'm here with my co-host, Miss Minnie Jensen. How you doing today, Mindy?

I am doing fantastic, Scott. Over the weekend, I ran a 5K. I don't want to share my time with you because it is a blisteringly slow 15-minute miles. No, I came in at 43 minutes because running is not my thing. But I finished. That's great. I finished and that's better than not finishing. What's your end goal? Is it a half or a full marathon? Oh, half marathon. I'm not crazy. Nice. Just a half. And that's in May. Hopefully I will be able to. I haven't decided exactly which half marathon I'm running yet. It's somewhere in the Colorado area, northern Colorado, because that's where I'm at. There was this one that looked really fun, but you have to start at six o'clock in the morning and it's an hour away. I'm like, yeah, no.

Really fun relative. Yeah, I was going to say, that does not sound very fun. I am super excited for today's show, Rich Jones and Marcus Garrett from Patex and Balances. I'm a huge fan of their podcast. I think they give a lot of really great information. They have a lot of good guests that come on their show. And I met them at, I first saw them at FinCon like a hundred years ago. They were talking and they were just so engaging.

And, you know, I just, I really enjoyed hearing them speak. learned a lot from them. So when I met them again at podcast movement, I got up the courage to talk to them. And they're like, yeah, we'd love to be on your show. So that was very, very exciting. Love it. Yeah, I'm looking for, I'm very much looking forward to this as well. They had a great energy, great stories, great advice, just very, very overall fantastic show. If you're looking to pursue financial freedom, but are maybe starting from position of having a significant amount of personal debt. Yeah. They give a lot of tips for just even changing your mind. set over it. You know, Rich didn't have any idea how much debt he even had because he didn't

want to deal with it. So he just never looked. And then he decided, you know what, I don't want to have this debt anymore. He looked. He made a plan and paid it off. And Marcus, you know what? I don't even want to tell Marcus's story. I want to let him tell his story because he has a very fun way to get into $30,000 in debt in 12 minutes or something like that. Yes. Well, let's bring him in. 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. That's why I like Monarch. It helps you see exactly where your money is going, and more importantly, where your taxed refund can make the biggest

impact. Because the goal isn't just to look backward, it's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial life, including budgeting, accounts and investments, net worth, and future planning together in one dashboard on your phone or your laptop. Feel aware and in control of your finances this tax season and get 50% off your Monarch's subscription with the code Pockets. What I personally like is that Monarch keeps you focused on achieving, not just tracking.

You can see your budgets, debt payoff, savings goals, and net worth all in one place. So every decision actually moves in Eel. Achieve your financial goals for good with Monarch, the all-in-one tool that makes money management simple. Use the code Pockts at Monarch.com for half off your first year. That's 50% off at Monarch. dark.com code pockets. I love Matt, said no one ever.

Nobody starts a business thinking, you know what would make this more fun? Calculating quarterly estimated taxes. But somehow, every small business owner ends up doing it. Your dreams of creating, selling, and growing get replaced by late nights chasing receipts, juggling invoices, and wondering if that bad sushi lunch with Scott counts as a right-off. Change all that with Found. Found is a business banking platform built to take the pain out of managing money.

It automatically tracks expenses, organizes invoices, and even preps you for tax season without you doing the heavy lifting. You can set aside money for business goals, control spending with virtual cards, and find tax write-offs you didn't even know existed. It saves time, money, and probably a few years of life expectancy. Found has over 30,000 five-star reviews from owners who say, Sound makes everything easier. Expenses, income, profits, taxes, invoices even. So reclaim your time and your sanity. Open a found account for free at found.com.

That's fowund.com. Found is a financial technology company, not a bank. Banking services are provided by lead bank, member FDIC. Don't put this one off. Join thousands of small business online. owners who have streamlined their finances with Foun. Audible has been a core part of my routine for more than a decade. I started listening years ago to make better use of drive time and workouts, and it stuck.

At this point, I've logged over 229 audiobook completions on Audible alone, and I still regularly re-listen to the highest impact titles. Lately, I've been listening to Bigger Liener Stronger for Fitness, the Anxious Generation for Parenting Perspective, and several Arthur Brooks' audiobooks that have been excellent for mental well-being. What makes Audible so powerful is its breadth. Beyond audiobooks, you also get 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 BP Money. Rich and Marcus from Paychecks and Balances. Welcome to the Bigger Pockets Money podcast. How are you doing today? Doing well. Thanks so much for having us.

Awesome. Thank you for having us. Thank you for coming on. I'm super excited. So I met you guys or I saw you guys. I didn't meet you guys. I saw you guys at FinCon a couple of years ago. Rich, can you show your t-shirt and Scott show your t-shirt?

Yep. Scott and Rich actually both wore the same shirt today, which I think is kind of funny. And it was not planned. It was not planned. I bet you guys called each other up on the phone. Hey, I'm going to wear my fan shirt. Yeah, me too. We're going to look great.

We're going to match. Although it would have been better if Mitch and Marcus matched. So, you know, Marcus, you kind of ruined the vibe. Sorry. Yeah, that's my fault. That's my fault. Okay, so let's jump into it because I have a feeling this is going to go for a really long time. Can you walk us through where your journey with money began?

Yeah. So for me, even how I thought about personal finance and just really thinking about personal finance wasn't something that I strongly considered to a few years ago and I'm 35 now. and it feels kind of crazy, but I know a lot of folks that have a similar story. And growing up, I can remember seeing my parents sit at the kitchen table, paying bills, and they wouldn't always pay the balance in full. I got used to seeing them pay the minimum balance and for it to be okay to carry balances on credit cards over the course of years.

And even when I first got to college and I thought about money, I was one of those people that went to the financial services office and asked for a loan to get a refund check that I would use for things. that weren't actually what you were supposed to use a refund check for in college. And then even after graduation, I've always been more of a spender. I know a lot of people talk about spenders versus savers.

And for myself, I've always been someone that's like to spend money, especially when I'm going through things. And it's something that I've gotten a grip on over the past couple of years where I've said, all right, I have these goals for myself and these things that I really want to accomplish. So I need to put myself in the financial situation

to make those things a reality. Awesome. Okay, and Marcus, where does your financial journey begin? I was like, oh, I'm up. So I guess it's a three-part story for me, and I'll try to keep it quick. So the one that I told on the podcast before was right after, shortly after, I must have been, well, I don't want to say the age, because I don't know what's inappropriate to know when Santa wasn't real. But whenever I found out Santa wasn't real, I just started harassing my parents directly.

And I was like, I was obsessed with this remote control car that I had to get. And they were like, yeah, and I harassed them for months. Like, you know, I'm an auditor now. so maybe I always had that personality growing up. But like September, I was like, yo, Christmas, I had a little, I took the picture of the car. I was like, don't mess it up. I want this one. It was red and black.

I put it on the refrigerator. And I was like, dear Santa, which is my parents. And I was like, I want this. And my dad, who had turned down several Christmas gifts up to that point, it was like, bet we'll go half. And I was like, half. What kind of scam is this? Santa always just brought the gifts.

And so I was all upset. We went back and forth for months. It was actually my first budgetary lesson, because I must have been old enough to somehow accumulate money. I can't believe it was at a job or if I was doing allowance. But somehow I came up with my half of it. And I think I played with that car two times. And it was like my first budgetary experience.

And then you flash forward probably 10 years. I was 27 before I actually put a budget together. And by that point, for those who already know and listen to the show, I was $30,000 in debt. I was at rock bottom. And I was like, I got to do something different. And so that's something different is like my last year of college when I learned to study might actually get me higher grades.

I was like, I got to get out of here. So I always wait. So I'm like at the very worst rock bottom of scenario before I finally react. So it was 27 before I finally put a budget together. And then to answer your question, which brings us closer to the future, I didn't really know about quote unquote personal finance until paychecks and balances when I kind of learned about this ultimate and a great community and that it existed and that people were actually achieving financial freedom and financial independence at my age or younger.

That was the first time I really learned about, you know, fire and financial independence and that people could actually achieve it in what it could look like. And I start putting a plan together for that, although I don't really consider myself or I don't know if I consider myself a true fire, but I am working towards financial independence. I do like the concept. Could you quickly walk us through some of the things that, you know, for those of us who don't know your story, how did you tackle that $30,000 in debt? You know, you put together the budget.

What insights did you get from that? And what did you do after that? So because I'm a dinosaur, I use an Excel spreadsheet. There wasn't like all these apps. There wasn't like all these great online things. And so I put the plan together myself. And still to this day, my most useful tool is actually this little whiteboard that I bought from Walmart from like $9.99.

I don't know if I could plug Walmart. You ought to bleep that out. But it's like the most frequent thing that I use, So people are always like, what's this, what's your favorite app? And I do like meant. And I have all these electronic means, but the most useful one to me is this, I erase it every, it's a monthly calendar. I erase it every month and I write down all my bills.

And that's why Rich knows got to complain on every show because pretty much consistently someone, and I'm not going to drop any names, they know who they are because I'm mad at them right now. They raised like $6 here, $5 there. I just got another $5 fee on a cell phone company, which is really large and probably number one. And so, like, I always know when, like, they're nickel and dime you, but I feel like most people just don't know what I call now, or I've heard. It's not my term, like, money leaks. So at 27, I put together something similar to that, but Excel. And then I also did, which some people like, I took a piece of paper, literally a notebook. I'm old school. And I wrote with a pen. That's the, what people use and they didn't have ads for the younger listeners. And I wrote on the left side, needs. And I wrote once, and I folded it, hot dog style. And then I left it alone for a few days. And then I came back and I noticed a lot of the needs were actually wants and I redistributed accordingly. And then I put my budget together. I just, I mean, I kept it simple.

I looked at how much money I was making where I wanted to be in a few years. And I told myself that as I achieved different goals, so I guess informally, I was using the snowball method. As I paid off different bills, I'd buy something from the wants column. But over time, when you go so long without a want, you realize it's not really a big priority in your life. And so it was really easy for me to go without. And I'll quickly say the story, although you probably have a follow-up question,

I forgot to mention this, how I got into all that debt primarily was actually one weekend. So I got, I had about $9,000 in debt when I graduated school. 26,000 of that came in one weekend. Whoa, what was that weekend? Yeah, you can't just say that and be like, okay, bye. That's a great teaser. Yeah, I realized I did. I opened it in the inverse.

I was like, yeah, I put this budget together. But the short version of it is I graduated school. I had about $9,000 in debt. So, of course, in my mind, I'm 22 years old. I just got my bachelor's degree in business. So, of course, I'm like, everybody makes six figures. That's why I got a business degree. And so I'm about to go out here and make it ring because that's what people do.

That's why I went to school. And they sent me a what I didn't know at the time, a consolidation loan marketing letter. I think I chose the one with like the most colorful envelope and like, you know, most representation. I was like, this guy looks like me. and I sent off for this, I guess it must have been a $10,000 consolidation loan. And for whatever reason, I thought they'd pay off the cards for me. I actually forgot. I don't think I was thinking about it.

And then this $10,000 check came in the mail. And I had what was then a pretty high maintenance, enabling girlfriend. Shout out to her. She's an ex now. And we were like, let's make it rain. And so we went on this notorious shopping spree. It's probably till talked about in this small town. we were growing up in at the time, bought everybody that was willing and it was able to drink

drinks. And so it's actually surprisingly difficult to spend $10,000, like somehow, like, woke up on Sunday and it was still there. And so I went out and got a, I remember, a $13,000 used Toyota Camry, 2005, with rims, of course, because I have my standards. And I didn't even negotiate. Like, I walked on the lot. I was like, I want that one. And the guy was like, well, you want to go inside and, you know, talk figures. I was like, I don't negotiate that. I got $10,000. And so I bought the car. And he actually turned out, it was a small town. He actually turned out to be my first, or I guess that be my third financial lesson. He kind of walked through the loan. He's like, here's what the loan means and here's all the details and turn.

I was really bored. I was rolling my eyes. I was like, can't believe this dude's talking to me about loans and money. Like, he doesn't know that I got $10,000. And so I did pay off one card. So I paid off one credit card. I now have the $10,000 consolidation loan, so that's $13,000 for the people keeping track at home. The car was about $13,000. I believe a 7% interest rate, if I remember correctly. And then because I guess I was just bored, I went out and got a flat screen TV, which people still don't believe me was $3,000.

Like when they first came out, they were $3,000. Like, the same TV you can buy today for about maybe $200 on these Black Friday specials was $3,000. and then that plus interest got me up to my $30,000. That's kind of what I tell the book and the story about. So that's awesome. How long did it take you to pay off all of this? It took me seven years to pay off 72 hours. Jeez.

Yeah. Oh, my. I like that quote. I don't appreciate. It's got $10,000. I will say this because it's probably a very frequent question. And people always ask, do you regret it? And it's a complicated story.

like but for it's weird it's like those dichotomy those parallel timeline but for that story would be here today would i be working with rich would i be in the personal finance community like what would i be talking about and it was the best weekend of my life i mean can you imagine somebody walking up to you and saying hey you have 72 hours to spend this 10 000 you know what will you do like this ABC scenario i was like that and so i don't know it's it's difficult i can't say i regret it was a really great weekend. That was funny because Marcus has the glamorous story and my debt was all just accumulation over time. It would be small things, buying food, buying video games, buying clothes. I'm a tech geek, so buying a lot of gadgets here and there. And there was a stretch for

many years where I couldn't even tell you exactly how much debt I had because I had to spread a car house multiple cards. And I ultimately got to a point where I said, what am I doing? And coincidentally, that point was probably around the time that we started this podcast. And I also used spreadsheets. And I can remember making a list of all of my expenses. And what I've learned over the years is that what I budget versus what I actually spend, those things are not the same. I've tried to be in the past a lot more optimistic and stern about my budget. And I've gotten to a point where I accept that there are certain things that I'm going to spend more on. There are certain things that I can do without. And so I now optimize my budget around those things that I accept that I'm going to spend more on,

those things that bring me happiness, which is something that we talk a lot about, because a lot of the story that's out there or a lot of the stories that you hear about personal finance, they're more so the struggle stories where people are eating cheese sandwiches, no offense, Marcus, because I think you were doing that or people are living in the basement. And that wasn't my experience. You know, I've had professional jobs. I've had income. So I've never been in a situation where I felt like I was struggling.

but I have been in the situation where if one thing happened, if one thing went wrong, then I might find myself in financial struggle or financial trouble. And that's part of what really got me going, having that stress of I know I'm okay right now, but if something goes wrong, I could suddenly find myself in a bad spot. So, Rich, what was your total amount of debt before you finally figured everything out and started paying it off? It was probably about $20,000 total. and there was a stretch where I was paying down one card that probably had about $11,000 on it,

and then the other card probably had about $8,000 or $9,000 on it. And I started making a dent in that in 2017. And at the beginning of 2018, I had about $8,000 of credit card debt to start the year, which I ultimately ended up paying that off in July of this year. So I became completely credit card debt free. Awesome. Congrats. Yes.

So I noticed that neither one of you. graduated with a ton of student loan debt. How did you pay for college? Yeah. So for me, I went to school at Cornell University and fortunately the program that I was in, it was considered an in-state program. So I was able to take advantage of kind of the in-state tuition amount. And I also had some scholarships going into undergrad. And I really looked out because I think when I graduated, I had less than $30,000 of student loan debt. And I paid it. off a number of years ago. And it kind of just paid it off and it just happened. I didn't think anything about it. And then I realized how much debt, you know, some folks have out there from

education. And for me, it was probably, you know, $90 that just came out of my monthly funds. And I just got used to it over the course of years. And then a few years back, I mean, it's probably five years ago now. I realized that my student loan debt was paid off. And, you know, I understand that in some ways that's a privilege and that's an advantage compared to folks who are walking away with hundreds of thousands of dollars of student loan debt. For me, so I need to actually praise my parents because they're probably mad about that remote control car. They listen to the show now.

They text me about their thoughts. I need to praise them. I need to thank them for paying for my college education. So Texas actually, and I've actually been recommending this to people over the years, this particular fund went bankrupt and then they brought it back with a different branding scheme, of course, because branding is everything. But Texas used to have, and they still call. call it this, but it's a Texas Tomorrow Fund. So if you were a student in Texas and you went to a public

school, you could purchase, well, now is it set up, you could purchase credits going towards the school at the current rate. So if you buy it in 2018, but your child goes to school in 2040, you bought it in, you locked in the rate for 2018. My understanding, and obviously my parents could probably speak to this more articulately than me, is back in the day it used to be you would buy the credits and then you could go to any school, regardless of. of what it costs, which of course, you know, we all know that school is like quadrupling cost. So that's why the fund went bankrupt. So it paid from my first four years of public school. I started off the University of Texas and ultimately graduated from Sam Houston State University.

And because of that transfer, I had to take about, I think it was another semester of school. So I had about a $3,000 loan. But, I mean, as people might imagine, that was pretty small. Like Rich said, I just paid it off. Naturally, I paid it off early. And I did it as part of that getting out of debt journey. Let's move into the mechanics of paying down your debt. You mentioned the phrase debt snowball. Can you describe what that is and how you applied that? So specifically, debt snowball is taking the lowest payments,

and I believe it's popularized by Dave Ramsey. So, of course, I'll give credit there. But you pay down or you take all your payments that are outstanding, and you pay down the lowest first, and then you roll any payments remaining, and you pay the minimums, all your outstanding, and you roll or snowball your payments toward the remaining payments until all of those payments are paid off.

There's also an avalanche, so it's basically the opposite of that formula and that you either take your largest outstanding balance or your largest outstanding balance with the highest APR because that's usually where you're paying the most costs. And then you pay down from there and you avalanche towards the smaller, which of course, you know, avalanche are going down the mountain. You pay down the smaller bills into those are paid off. Most people like a snowball. Because it's a smaller payment, you get those mental wins. It's actually typically really difficult for people just to stick to a debt payment plan. And I mean, honestly, that was my course as well. So while I think formally I might have used the snowball, it's not like I sat down and

intentionally set out to do this snowball method of payment. Actually, what I did is I sat down and now I just kind of break it down into four steps. I use the acronym debt. So, you know, D, define the problem. E, establish a plan. B, budget for success. And T, trust the process. So what I did there is define the problem.

I use annual credit report.com. You can download it for free. It's still readily available. People come to me with all these other fans. apps and websites. I'm like, whatever, as long as it's free, because there's really no point for paying at this point. But like I said, I like to keep it simple. For me, establish a goal we already talked about. I use bank rate a lot, actually, and I know they're still around, but really it's just you need a reliable debt calculator. I don't really get caught up in which one's the

best. And I was like, you just need one that works. The best one is the one that works. And then budgeting for success is I changed the budget as necessary. I like some months, I'm like, you know what? Yeah, I'm supposed to pay the student loan this month, but it would feel better to pay the credit card. It's like I bought something that I don't, I feel emotionally bad about. I need to pay that off this month. And so people get caught off and oh, no, I'm falling off the plan and this, this, that, and the other. And I'm like, it's your plan to stick to or fall off or get back on. And so I really adjusted from month to month. Like, I wanted to make something over the minimum payment on every bill, or excuse me, on the most important bill to me that month. Sometimes at a line with, snowball, but sometimes it's just like I went out and bought something that I feel guilty about now. It feels great at the time when I buy it. 30 days later, I'm like, you know, I need to pay that off. And so as long as you're making progress, progress, not perfection.

I love it. Rich, a lot of people I find when I'm talking about debt kind of seem to be in your situation where you were at the beginning of this where you don't even know what debts you owe. So I assume that to define the problem part of that was the first kind of major step for you and kind of going through that. What was your approach for tackling your debt? Yeah, for me, it was kind of a hybrid approach. And so I think about Snowball and I hear Markers talk about paying off the smallest balance first. And for me, when I have a card that has like $9,000 on it, that doesn't feel like a small balance. But for me, it was really about the intentionality because I was carrying debt while I also had the money to be able to pay more. And I chose to have that cash and use it for other things as opposed to actually tackling that debt. So what I did was start with the card that had the $9,000 balance. on it. It was also the oldest card. And every time I came across a chunk of cash, whether that was

through tax refunds, whether that was through performance bonuses at work, if I was doing consulting work on the side, if I got a gift of some sort, I would take that chunk and apply it to that credit card. And then once I got that card paid off, and it probably took me over a year to be able to pay that off, maybe even two years on that first card. And then with the second card where I had probably, you know, 10 or $11,000 on it, it was very much the same process. And what I noticed is that there was a stretch where my savings account was growing. And it felt good to look at how much money was in there and be like, okay, now I'm in a better spot. And if something happens, I can cover it. But then I got to a point where I said, you know what? What is the sense of having this money in here if I'm

continuing to pay credit card interest? And it was at a point with this other card where I was paying over $100 a month in credit card interest. And I just got tired of looking at it. And I got tired of seeing that notification every month that you're now paying $125 in interest. And I applied that same system where anytime I got a significant chunk of cash, I would pay that or I would pay more than the minimum. Oftentimes I'd pay, you know, two or $300 more if I had the money to start making a dent in that. And then I decided that with my performance bonus, rather than just put that in savings and be able to look at it that I was going to apply most of that to my credit card debt, which is why at the beginning of 2018, I had about $8,000. But that's also considering that I've

taken a chunk of probably $3,000 that I'd apply to that to make it $8,000 at the beginning of the year. And then over the course of the first few months in 2018, again, every time I got money or if by chance I got something additional at work, because one thing that's part of my compensation, and it's particularly common in Silicon Valley is to have stock or RSUs, which a lot of folks look at as an investment, and it is an investment, but I said, hey, I'm in a position where I can cash out a few shares of stock from work and apply that to pay off my credit card debt. And as much as I would like to see this investment grow, I'd much rather my personal credit card debt be at $0. So I ended up cashing out a few units, and that's what allowed me to be able to pay off the debt

in total this year. I love it. I think that the purpose of an emergency fund in my mind, if you have bad debt, right, the only thing worse than bad debt is even more new bad debt, right? And that seems kind of what the purpose of that emergency fund is. So what was your kind of thought process on how much cash in kind of an emergency fund or savings account or whatever that you were comfortable with before you started to apply everything else on top of that to the debt? What was that kind of threshold for you? Yeah, for me, it was a couple of months of living expenses. I know we commonly hear three to six. And so once I had a couple of months of living expenses stocked away, I felt pretty good about if anything came up.

And I went through all the scenarios of terrible things that could happen. And I knew that I'd be able to, like for example, if I lost my job, I would have enough money to live for a couple of months. And then, of course, I would also be scrambling to find a new job, which I didn't worry a whole lot about. As long as I knew that I had that couple of months of living expenses saved up. And then once I had that, it was all about how do I become debt-free? And 2018 has really been that year for me where I've had that intentionality, which I think is the most important part of it, is having that goal and having that vision. And for me, I always talk about having an emotional connection to whatever goal you're setting for yourself, because I think a lot

of time we'll set goals arbitrarily. And I've done this a lot in the past. And so for me, when I really started thinking about what I wanted my life to look like and how I wanted to feel on a daily basis and how it would feel to achieve that goal, to have financial independence, to be completely debt-free, to be in a position to save more money, or even be in a position to make more money, whether that's through work or extracurricular pursuits, once I really had that outlined in my head and I could see myself getting there, then having extra money and knowing what to do what it became an easy decision. Love it. What happened to your guys' credit scores during this process?

Yeah, for me, my credit score has gone up significantly. I think right now, depending which bureau you look at, it ranges somewhere between 800 and 8.8.000. 25. And during the process, I noticed it would go up a few points here and there. And there were times surprisingly where I would pay a chunk of debt and maybe not pay off the balance in full. And I, and I would go and look at my score and expect it to jump 20 points. And so there were periods where it would actually go down. You know, it might go down a point or two or it might go up five points here and there. But I did notice generally when I look at the chart or the graph, the line graph that shows your progress over time, there were dips, but ultimately it trended upward.

Yeah, and similar, we actually just wrote a post about how we both. And because we took different journeys to get there. We both broke into the 800 FICO Club. I don't know if broke in is the appropriate word, but we did. It's been more difficult for me to cling to the 800 for some reason. Actually, I think I know exactly what the reason is. So mine's fluctuated between 750 and 800. And then I also talk about in that post and full transparency,

is it even worth the journey? I feel like it's a really millennial friendly, like, you know, stun on the gram type of thing. Like, yeah, 800 FICO. and then you fall out, it's like, you know, when your 4.0 GPO goes down, it's a GPA goes down. It's actually very hard to maintain. And so I also talked a little bit about it even worth the headache. But it was a nice accomplishment to have.

And I also want to talk a little bit or expand a little bit on Rich's point in addition to your question. And I don't know about Rich, but for me, you know, I'm also a natural spender. I'm probably actually probably more so a natural spender than Rich, as y'all can tell by that story. And so when people will kind of hear that, they're like, well, what changed? fundamentally, I'm still the same person. I'm slightly more mature. I'm definitely older. I'm way older. I'm slightly more mature. They haven't like correlated together. Yeah, that's what my hairline says, too. And so I automate everything. Like Rich knows this. So the easiest way for me to be financially responsible is to get all the responsible money out of my hands as quickly as possible. So by

the third of the month, the 401k is funded. I'm also in government, so I have a pension fund, and I'm looking to vest in that. I've vested in another one separately in the previous job. And so by the third, all the responsible things that I need to do in my life are done so that technically for the next 28 days, I should be responsible. But if I'm not, all the responsible things are taking care of. So I can really not do too much harm to myself other than spending all of my checking account. And I bring that up because the reason I was able to do that and actually is thinking is change is, you know, modifying the plan is, you know, change the plan, not the goal. And I tell people, and I don't know about rich, but I work in a fairly secure environment. I mean, my pay doesn't fluctuate.

There was one day I sat down. It was depressing. And I forecasted what I would make with, you know, cost of living increases for the next 20 years because it's all public record. That's one of the gifts and curse that comes to working in the public sector is I can look at all the pay bans and everyone can. It's right there on Google. And I can go, okay, if I stayed in this career field for the next 25 years, here's my life. I wasn't very happy with the result. And so I think there was another motivating factor for like, what does financial independence look like for me and what does multiple income streams?

look like within that life. 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. That's why I like Monarch. It helps you see exactly where your money is going and more importantly, where your tax refund can make the biggest impact. Because the goal isn't just to look backward, it's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial life, including budgeting, accounts and investments, net worth, and future planning together in one dashboard on your phone or your laptop.

Feel aware and in control of your finances this tax season and get 50% off your Monarch subscription with the code Pockes. What I personally like is that Monarch keeps you focused on achieving, not just tracking. You can see your budgets, debt payoff, savings goals, and net worth all in one place. So every decision actually moves in Edle. Achieve your financial goals for good with Monarch, the all-in-one tool that makes money management simple. Use the code Pockets at monarch.com for half off your first year. That's 50% off at monarch.com code pockets. You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast? Easy. Just use Indeed. When it comes to hiring, Indeed is all you need. That means you can stop struggling to get

your job notice on other job sites. Indeed's sponsored jobs helps you stand out and hire the right people quickly. Your job post jumps straight to the top of the page where your ideal candidates are looking. And it works. Sponsored jobs on Indeed get 45% more applications than non-sponsored posts. The best part? No monthly subscriptions or long-term contracts. You only pay for results. And speaking of results, in the minute I've been talking to you, 23 people just got hired through Indeed worldwide. There's no need to wait any longer. Speed up your hiring right now with Indeed. And listeners of this show will get a $75 sponsored job credit to get your jobs more visibility at Indeed.com slash bigger pockets. Just go to Indeed.com slash Bigger Pockets right now and support our show by saying you heard about Indeed on this podcast.

Indeed.com slash bigger pockets. Terms and conditions apply. Hiring, Indeed is all you need. When you want more, start your business with Northwest Registered Agent and get access to thousands of free guides, tools, and legal forms to help you launch and protect your business all in one place. Build your complete business identity with Northwest today. Northwest Registered Agent has been helping small business owners and entrepreneurs launch and grow businesses for nearly 30 years. They're the largest registered agent and LLC service in the U.S. With over 1,500 corporate guides who are real people who know your local laws and can help you and your business every step of the way. Northwest makes life easy for business owners. They don't just help you form your business. They give you the free tools you need after you form it, like operating agreements, meeting minutes, and thousands of how-to guides that explain the complicated ins and outs of running a business.

And with Northwest, privacy is automatic. They never sell your data. And all services are handled in-house because privacy by default is their pledge. to all customers. Visit northwest registeredagent.com slash money-free and start building something amazing. Get more with Northwest Registered Agent at Northwest Registeredagent.com slash money-free. Where are my gloves?

Come on, heat. Any day now? Winter is hard, but your groceries don't have to be. This winter, stay warm. Tap the banners to order your groceries online at voila. Enjoy in-store prices without leaving your home. You'll find the same regular prices online as in-store. Many promotions are available both in-store and online, though some may vary.

So I got a question. Suppose I'm $30,000 in debt, and I see a long way back to getting to zero, much less financial independence. What advice would you have for someone who's listening in that position for conceptualizing, getting first out of debt, and then beginning to build income streams, which maybe seems like a completely insurmountable challenge? I actually probably wouldn't look at that way. I guess you can have that as a long-term goal,

but I would focus on whichever one of those is your priority first. And I say that because that's why it's hard, and I really don't like when people give these universal, one-size-fits-all approaches to life, is if you are, let's say, your mid-career, you've done well for yourself, and you're making six figures, you might be able to do both. You might be able to plan for finance.

You might be able to do all three. You might be able to allocate some money to debt, put some in savings, establish an emergency fund, and save for retirement and financial independence. If that's a lucrative way and you have that money available to you, you might have to make some sacrifices on the back end. I paid off my vehicle early, for example. I know Rich has done the same. So that, for me, that was at that was at Toyota Camry at the time. So that was $350 back in my pocket that was being allocated at that 7% interest rate. So that was $350 that I could either put towards debt, I could start investing. I believe in that scenario, I actually started putting it

towards the debt. But that's what I'm talking about is, you know, look at your lifestyle and where your money is going and say, can you do all three? Most people cannot. So that's why I'm going to say instead of, I would say Rich and I, if there's levels to this, we're at the third level, not in a bad way, but we're 15 years. Well, I'm almost 15 years into my career. I don't speak for Rich. He's a little bit younger than me. He likes to point it out all the time. I like six months, man. Come on now. Like I said, he likes to point it out all the time. And so, you know, I can look at Mike's scenario. And I can look at Mike's scenario. And I And I'm not giving an example.

I like to look at my whole year and break it down by quarters because that's what's worked for me. I have a whiteboard for this. I've taken pictures of it. And for me, last year, I was like, okay, I haven't really been prioritizing having an emergency fund. It's actually in full transparency. It's near zero right now. And I'm trying to get it up to $1,000 to answer your question, because I have a secure job. My check or my savings account paid less than 2%.

And I'm looking at the stock market, which last year was averaging 20%, although I think it's like 5% right now before people try to write in and call me out. And so when I'm looking at 20% in the stock market investing and 2%, that's a very simple scenario. So I allocated 80% of my money, in that case, 80% of 20% towards investing because that's what was important to me last year. Now that that scenario might be changing where I might be looking at 5% versus 2% to Rich's point, okay, maybe now I need to start funding the emergency fund because an emergency is more likely to arrive. It's like playing, the odds, playing the probability, and taking calculated risk. I guess more accurately and specifically answer your question, which risk are you going to take? They're all risk. And what I usually see is

people take no risk. They're like, I'm just going to sit here. I'm going to do nothing. I'm $30,000 in debt. I'm not going to save because that's scary. I'm living paycheck to paycheck. I'm not going to put anything in the stock market because that's scary. And then five and 10 years passed and they're still equally squared five, 10 years later. I'm like, well, you didn't accomplish anything. They're perpetuating your fear. And so definitely don't do that. Whether it's financial independence, retirement, or savings, our debt, choose one, make that your focus, automate it, and it will take care of itself. Like I said, trust the process. Yeah, I love what you're talking about there. One of the risks that goes undefined by a lot of people is if you don't start attacking your debt

or investing or building up an emergency fund, what you know is going to happen is you're going to continue to live in this, like the situation that where you're stuck, you're continuing to pay interest, the snowball is working against you, things are compounding. That's the worst possible scenario, right? I think, you know, besides accumulating even more, you know. So the anything, anything that goes on with, hey, I'm going to start accumulating more cash and somehow deploying it in an advantageous way to move me into a better situation, whether that's an emergency fund, whether that's paying down debt, whether that's making an investment. It doesn't matter is what you're saying. And as long as you're making a choice there that you think is the best for you,

and you're applying that consistently and aggressively in that, you know, because that's the thing. It's like we talk about all these different investing and interest, you know, how to pay down debt. No, what matters is get your savings rate up and apply that money consistently and the way that makes the most sense given your personal preferences and then the odds of success, the probabilities that you're rolling. I think it's great. Yeah, I mean, to put it very simple.

Actually, this is one guest that we had on the show recently, Jason Brown. is number one, if you're doing nothing, how's that working out for you? So do something. Like, it's one fourth probability. It's literally four things. Choose one. People get caught up on those which one is right. And I would say any of them is right, but nothing is wrong.

So choose one. And then what Jason said is, like, as far as on the job front and things like that, and he was talking about passive income and increasing your income through investment, is he talks to these people who, they're like, well, you know, it's scary, it's risky, and I don't like it. He's like, you don't like your job now. So what's a different scenario besides doing this other thing you don't like, which might possibly allow you to leave this former thing you don't like?

So, I mean, it's kind of, I talk to people about, you know, everyone has excuses, but typically they break down into valid invalid. So let's remove all the invalid excuses. Let's kind of focus on those valid excuses. So if there's four things you need to choose from, choose the least risk one, then choose one and start moving forward on it. Then you can tackle those other three later. you know a big part of it for me was also thinking about the fact by paying off or paying credit card debt

and then also having a car note is that that was money that was tied up every month that I wish could be used for other things. And I was listening to a podcast a few months ago and it was actually the impetus that led me to, you know, cash out a couple of stock units and pay off that final amount on the credit card. And then also to pay off my car note two years early where I'm like, man, I have, you know, $325. every month that just goes out the door, it would be great to have that money to invest, whether it's in stock or whether it's in a personal interest or whether it's in entrepreneurship, it would be great to have that money every month

versus just accept that, hey, I'm just going to be paying this for the next two years, next three years, next four years. And for some folks who have a high amount of debt, like that's going to be part of the process, maybe you will be paying it over that chunk of time. But if you have a choice and you know that there's something that you're interested in, in which my case, entrepreneurship is something that I think about a lot, and there are a lot of costs that go into starting your own business and running a

business. And I just kept thinking, I'm carrying this debt for this car note. I'm paying this every month. This is money that could be going towards something that's ultimately going to allow me to make more money. And so that's why it was such a big motivational factor for me. I'll give one more example, because I like to keep it really simple. And Rich just reminded me. I was actually looking at this this weekend, our last week now. And it was, should I, I was actually asking myself, should I pay my car off earlier? So my car loans like 1.99% or something to that effect, which again, these things, it's ironic that all these responsible decisions actually, you know, money does actually make you more money.

So I'm able to get this low interest rate. As you hear, that new car interest rate was lower than the 7% I was paying in college. And so I bought this new car. And I'm like, okay, to Rich's point, it just, it's actually. actually not that much of my budget, but it's just painful to make a car payment. I went five years without it. And now every month I regret it. I was like, what was that thinking? Man, I should have just drove that camera into the ground. I had 180,000 on. I probably could have put another 200. And so that being said, I'm here now. And I was like, all right, I just don't like making this car payment.

Is it smart to allocate more to this car payment? I went into Excel, Microsoft Office, however people feel about it. It has thousands of templates. I typed in loan schedule. And guess what? 10 popped up. was a car payment loan schedule. And it allowed me to figure out this loan amortization, if anyone wants to look it up. And I was like, okay, and I started playing with the numbers, how much I would put towards his car extra each month to pay it off early. And I think I was looking at paying it off a year or two early. I'm about halfway through the payments now. And it would save me money, obviously. But even in totality, it's $2,000 in interest. And so I'm like, all right, so I'm going to allocate a lot of money each month to get maybe $1,000 back extra.

I think I can do better than that. And so I started looking at, okay, okay, should I pay down my debt or should I put towards savings, should I fund that emergency fund? It just wasn't the best decision. It'd be nice to have that car payment back in my pocket for month to month, but frankly, that's an emotional decision. It's not a mathematically low risk, honestly, most responsible decision I can make right now for me. But that might be different for somebody who's maybe in the scenario I was, what, was that 10 years ago? Well, well, that just dated me. When I had that used car at 7%, that might have been a different calculation. I might have came to a different conclusion. I'll chime in. I actually have the same exact decision in my life. So I bought a

2014 Toyota Corolla at the end of 2013. That's the new model comes out, right? And that was, I financed the entire thing, zero down and got a 2% interest loan, which was, hey, do I pay this down early? It's 320 bucks a month, or do I let it continue? And thankfully, I just had my last car payment last month because five years have passed now. But I had this. It was the same thing. It was like, oh, this is terrible. I would have this money in my pocket, but I think I can do better investing my money elsewhere rather than paying down this particular note early. So. And another thing I want to point out, and this is we talk about this on the show all the time, is that either adjusting for cost of living, but maybe even more importantly, just adjust

for the cost of where you live, or maybe, I guess that's the wrong terminology, because it's where do you live and how should you live there? Because, you know, the most common scenario, and probably some people even listen, they're going to be like, well, why don't you sell the car? I was like, I live in Texas. Like, this is not a very public transportation-friendly area. I guess I could walk to work when I was like, when I lived in Denver, which is the city, I lived in seven years before this, that was an great scenario. And part of the reason I was able, I mean, shout out to Denver.

They have a great public transportation system. It gets you all over the city. You don't even need Uber. Our lift, I'll plug both. And I never used them. In fact, I only drove my car on the weekend. So I can't even think about how many miles, how many maintenance, how many oil changes was put back into my pocket simply because I took the train to work five days out of the week. Now that I'm back in Texas, that car had $180,000 on it.

It had been paid off. It kind of stalled the mileage that I was putting on the vehicle. And so I brought it back to Texas. And within a few weeks, I'm putting thousands of miles on this car because everything's thousands of miles from each other in Texas. You could drive one hour and still be in the city of Houston. And anybody who doesn't believe me, try it. You could still, you could drive an hour. straight and never leave the city of Houston. And so that scenario, that's what I'm talking about.

I was like, I need a vehicle. Now, there's some arguments about do I need the vehicle that I have. That was a personal choice. But I was like, I look at it like, well, I kept my last vehicle 10 years. I'm probably going to keep this one 10, 12 years. I'm going to buy the vehicle I want in the next 10 years. So if I pay it off in five, I'm not like, man, I got this crappy great deal that I don't want to drive for another five years. No, I want the vehicle that I want that fits within my budget. Going back to that discussion about interest rate, right, that we were talking about, you and I both chose not to pay down a very low interest rate loan early, right? And it was conscious decision we're going to point the money elsewhere to try to get a bigger spread on that return.

How does that apply to your thinking if you're, you know, where's that cutoff for you guys? What do you kind of do is that two, three, four, five, six, seven, eight percent interest. At some point in there, I assume that the math shifts in your head and you say, no, I'm going to pay it off. How do you kind of determine that? I'm laughing because it's a great question, and Rich and I are both doing it up into the left eyes. So I'll go first, just in case he's still formulating his answer. I guess I don't really have a cutoff. It's not like, okay, at 3%, this is when I make the transition.

At 2%, here's when I make the transition. Now, I can say it's fairly simple when it's such a huge spread. So like in that scenario where I was looking at, okay, this year, last year now, 2017, so I get the years, correct? the stock market was averaging about between a 14, 20% return. I think ultimately it came in at 14%. That's a simple decision because my savings account was paying 2%. Now in present, so this will be 2018, whenever this is hit in your ears, or maybe 2019, now that it was averaging about 5%, I'm like, okay, that's a 3% different.

That's a little bit. And there's inherently some calculated risk about being in the stock market, whereas your savings account very secure. It's monetary and I'm assuming it's going to be around 2% since they are raising interest rate. That's a little bit simpler decision to make. I guess what I'm saying is the easier decision is when the spread is more narrow and our, excuse me, when it's more wide. So when it's highly in your favor, that's an easy decision to make. But you said something that I think is really important and it's a conscious decision. Being thoughtful about what you're doing with your money and

the fact that I've already thought about all these scenarios and I can easily weigh them because I've done it five, 10, 20 times over the years now, it's easier for me to make that decision. Yeah, and quite honestly, that's not something as far as the interest rate that I thought about. For me, it was about financial freedom and it was about being free of all debt. And it was also thinking about the fact that I have aspirations outside of my day job. I want to be able to take the leap into entrepreneurship full time at some point. So I needed to have that money to save it, to start getting things in order for my business. And so I didn't really think very much about, you know, the interest rate and how I could stretch that money out.

it was more so about the longer term goal that I have for myself and being able to get there as quickly as possible. Got it. Yeah. I use this for the mortgage payoff versus the keeping the mortgage. There's a huge debate on the bigger pockets website about should I pay down my mortgage or should I not. I have a 3.25% interest rate on my mortgage.

And that is historically low. I'm not sure exactly how old you are rich. Markets, you've made several comments that you are old. I've got both of you beat. I know it. but my first mortgage was 7% interest rates. So I'm right there with Marcus, not negotiate. I don't negotiate.

I didn't negotiate. I thought I was some hot, snot girl getting a 7% interest rate because that's so awesome. And now you see these 3.25% rates in your, or you did. You don't see them now. And it sounds like it's so silly to pay that off early, in my opinion, because I could do something else with that money. I can take the money that would otherwise be sitting basically dead equity in my house and invest that in the stock market that's returning 14%, 20%, I will pay 3.25% to make 14% any day of the week. But I can also see Rich's point of view where you want to be debt-free.

And there's this huge mental shift where, you know, I don't mind having a mortgage, but some people that just weighs on them and they can't sleep at night. And it's ultimately it's what you can do and what you can live with. And if you can't live with being any sort of debt, then pay it all off. and work on a plan to pay it all off. Yeah. And so I think for me, debt is not freedom. And freedom is the thing that I value most.

So I had that feeling where it was weighing on me. And I'd be making payments and being like, oh, this money could be going to something else like so much more valuable. This could be going into savings. This could be going into investments. It could be going to all these other places, but instead it's going to a creditor. So I think in many cases it really just comes down to personal preference and personal choice.

But for me, I saw the debt as shackles. And I also say this, going back to that emotional aspect, and I've struggled with this myself, and I know other people struggle with it as well. One of the other differences is that you really start to get into the nuances about like a car loan payment, maybe even a student loan payment, even though they tend to be, well, hopefully they're smaller. And a home loan payment is if, let's say I decided to pay that car off early, and I've actually worked in this scenario before. And I make an early payment for 59 months, a 60-month car loan.

If I don't make that 60th month, they don't care about those 59 early month payment. They're going to take that car just the same as if I made zero payment. And whereas with a credit card are a, I guess, rotating a loan, which typically is going to be a credit card for most people, if you make an early payment, your balance is effective. typically on most cards and you make over a minimum payment, it's affected next month. You can see an immediate return.

I can see my balance going down. And I know some people are going to be saying, well, yeah, my principal's going down on the loan. I'm building equity in the home. And my principal's going down on the car. But the difference is if I don't make the credit card payment, they may come looking for me. They may make my life difficult,

but they're not going to, I don't know what they're going to take. I mean, they don't recoup anything. There's no home to come kick me out of. There's no car to come steal while I'm in the, at work, I guess, for the reality shows are correct. And so that's why I tell people, typically for the average person who's not in that six-figure income where they can do all three or all four, I mean, that's kind of that luxury that comes, the luxury that comes with more money is that you can inherently

take more risk because you've got more money to spread around. I mean, that is one of the benefits to come with it. When you're either paycheck to paycheck or near paycheck to paycheck, you've got to monitor every single dollar. And for most people, that's going to be paying. those high-interest credit card loans, I'll call them predatory, although I won't say any company,

those predatory loans, clearing off any of those balances where they may be in collections right now, then you can start talking about these other scenarios about the home and the car, what should I pay down earlier, start weighing the pros, cons, of where you want to allocate your interest.

But for most people, it's just tackling that immediate debt where they can see an immediate benefit. It also gets you in the habit. And now at this point, when I walk through the store, and it's funny when I go through this scenario, I'm just in the habit of being responsible.

That responsible voice starts talking to the back of my head. Like, remember 10 years ago, man, remember that 27-year-old phone call, man? Remember that remote control car? Because I'm in the habit of thinking in that manner. And like I can, well, most days more easily talk myself out of those things. So just build those responsible habits. Start which step one. Okay.

Well, yeah, building responsible habits is a good first step. Let's say somebody comes up to you and they are or somebody is listening to this show and they have a ton of debt, they're living paycheck to paycheck, they don't know where to start. How do you build a responsible habit? Like, what's a good first step for somebody who's really just scared to make a move

because they've got this tenuous string that they're hanging from, that they just, you know, if I stop doing this, then everything's going to collapse. For me, again, it's tying it to your personality. My personality, I'm an auditor. So we write everything down.

We like to triangulate evidence and corroborate that evidence on top of that evidence. And so for me, it's writing it down. I like coming up with a plan. And I'll give an exact scenario. One year, I was getting really overwhelmed. I think it was like 2016. I was like, I was falling back into some old habits. And I was like, oh, no, you know, it's happening all over again. You know, now I'm buried under the snow. I need to avalanche. I need to snowball. And I wrote it down. I took out, that's when I bought this whiteboard that I use. And I wrote it down. And I couldn't even fill up the

year. Like, after like three months, I would be back to where I needed to be. And I was like, I was just overwhelming myself with these really worst case nerd. and life is falling apart and you haven't learned anything. And for me, it's just seeing it. I'm a visual person by nature. So seeing it spread out and I was like, okay, here's what 2017 is going to look like. We need to get it together. And I like got through March and I couldn't even think of what else to do.

Like the year would take care of itself if I just did some responsible things for the next three months. And so I did. It was able to get me out of that spiral that I was getting into mentally. And then if that doesn't work and you still don't feel comfortable and I think we're demonstrating it here. We do it. So on the show, it's talk to someone. I mean, I didn't even know this community existed five, 10 years ago. And so seeing that people my age and finding people who look and resemble like me doing it gave me the confidence to say, oh, maybe I can do it myself too. Yeah. And I also think you need to understand, particularly if you're thinking about getting

out of debt and your living paycheck to paycheck, that it's going to take time. And it's okay to start small because we see the stories of so-and-so paid off $150,000 in debt, et cetera, in 18 months, and it doesn't have to take you 18 months. It can take 24 months. It can take 36. Of course, the sooner you pay off that debt, the better. But, you know, if you're paying the minimum payment right now, then pay $5 more than the minimum. Pay $10 more than the minimum. Start building that comfort level with increasing how much you're paying over time and accept that it might take you a little bit longer to pay it off. But over time, you'll say, okay, I was able to pay $5 more. Okay, I was able to pay $10, $20. And that's what really

starts building the momentum. So I would tell people, don't worry about making these huge payments. Worry about taking steps to slowly start building that habit and getting you there. And that can just be five or $10 more per month that you're putting toward your outstanding debt. And I'll quickly say, because some people are going to hear, you know, $10 what difference could that make? And there's a company out there. I don't know, I won't name drop if you could Google it. It was just $10 a month. And they said if you had $10,000 on a credit card, just paying the minimum would take like 15 years I believe, and paying an extra $10 would be four years. So you could save 11 years just by paying $10 over the minimum.

So people think it has to be this astronomical number to make a difference in their lives, and it does not. It is mathematically incorrect. I love it. Write it down. Talk to some people and take some small steps for it. I mean, like, that's it. That's all you got to do to make dramatic progress in this game of finance.

And it feels good. When you start taking those small steps and then you say, wow. I was able to pay five, 10, 15, $20 more. That then forces you to start thinking about the other things that are possible because you're like, you know what, I didn't think I could do this before and I'm actually doing it. How much more could I put toward my credit card debt? How much more money could I save? In the process of paying more, I've also realized that there are some things that maybe I don't

need as much or there are ways that I can save money that's going to allow me to put even more money toward paying off this debt. And so you can make it fun as well. You know, let me see if I can get to a point where if in a year, I'm paying $25, $50 more than the minimum. And that's why I really encourage people to start small because once you start, it's almost like going from crawling to walking to running. So, I mean, I ran track. So I guess that metaphor would make sense for me. Okay.

It is time for our famous four questions. These are the same five questions that we ask everyone. Four questions and a command. We will command you at the end. What is your favorite finance book? Rich, I'm going to tag you first. Yeah, my favorite, ooh, that is a good question. I'm going to go with I'll teach you to be rich, which I, which.

Ramit Sethi. Yes, yes, which I read a number of years ago. And it was, it was probably the first personal finance book or money book that I ever read. And it was really helpful for me in terms of even thinking about the mindset and what's possible in terms of personal finance. And, you know, one thing that we didn't talk about extensively on the show is that I was previously a long-term relationship and I was engaged in that whole dynamic and the impact that had on personal finances. And I remember that being the one book that we spoke about together and really kind of looking at some of the principles that are in it. And then also saying, okay, like, what is this future that we want to create? And how can we apply, you know, what's here to

ultimately get where we want to go? So I will teach you to be rich. It's also probably the only book that I have out that's on my shelf that looks pretty bare otherwise. Now, did you pick that book because your name is rich? I did not. I actually picked it because I saw it on a blog somewhere. I will teach you to literally be rich. I will teach you to be me. Yeah, there's no, I will teach you to be Mindy.

I will teach you to be Scott. Okay, Marcus, since nobody's going to teach you how to be, Marcus, what is your favorite finance book? So I'll start with a plug. So I'm actually reading 15 personal finance books that did a review at Paycheck. and Bounds and Boundses.com slash books. And my favorite still on the list is actually the millionaire next door by, I had to look at it, Thomas J. Stanley. For two reasons. One, I read it in high school, and it sort of impacted my thinking, but it had a much more impactful thinking now, and I read it again in my 30s. And the reason I like that book a lot is it shows what simply making

cutbacks in your life could lead to in that it kind of destroys, I guess is a word that we use the stereotype of what a millionaire looks like. And so it kind of shows how you can still build millions by living a fairly simple life. And I think there's a quote in there that no one likes, or people who don't like that don't read the book, is that anybody who has a steady income going to amass a million dollars within their lifetime. And everybody hates that, but he proves it. It's true.

It's held true. It's still true. And current people have reviewed this book all the way up to 2018. I'm sure they'll do it again in 2019. And it still hold true just by the math that they put in that book. Love it. that's also one of my favorite books. Yeah.

What was your biggest money mistake? I think we covered this to a certain degree for both you, but. Yeah. Yeah, it was my 72 hour, $26,000. I'd have to say. Nice. Yeah, you know, that's a good question. For me, it's just, I'd say it's just a series of little mistakes.

And, you know, for me, it was just to consistently putting things on a credit card and saying, I'll pay that off, I'll pay that off, I'll pay that off. So it was like making a mistake every single time. And then next thing you know, I've got $20,000 of debt total. So I can't think of one specific thing, but I can think of all the little things that I've done over the course of the years that got me into debt in the first place. Rich, would it be fair to say that maybe it was a failure to pay attention to your finances holistically during that period? Yeah. And there was a stretch where I had multiple accounts and I had business accounts mixed with personal accounts through a previous venture that I was part of. And even just understanding what was actually going out every month versus what

was coming in, it was years before I really did that exercise. And it's something that's right there on the bank statement. And it's something that you can see out there via app so easily. And for years, like, I just had no concept of what was going out and what was going in. And I think some of that was even related to fear, you know, having to accept that I, that I'd been so irresponsible for so long. And I think that even delayed me in terms of taking steps to get myself out of debt in the first place. So yeah, having that holistic understanding, definitely something that I did not have. And I mean, that's how I ended up there. You know, I didn't have the crazy weekend that Marcus did, but just over the course of years, just making bad, small financial

decisions that ultimately added up over time. So I guess that would be a different type of snowball. Love it. What is your best piece of advice for people? who are just starting out? Well, I've said it a few times, and it's because people never do it. In fact, some people will listen to the show and still not do it. And so the best piece of advice I give for starting out is to start. And so people are like, oh, man, that was a really great show. And then they come back a year later and they're like, man, I still haven't done that.

So start to take whatever financial nugget or wisdom or piece of advice that applies to you from the show and start somewhere. like we talked about that four-part plan or whatever the case you may be intimidated by, start, start. And actually, I'm going to jump back to that previous question real quick. One thing that I just thought about, within the previous relationship, I added my partner at the time as an authorized user for a credit card. And we never really had a conversation about finances and about money. And we had completely different philosophies in terms of how we thought about money. And that also ended up being a factor in why the relationship ended. So I was probably overthinking the question, but looking back, I'm like, we should not have done that.

And the biggest financial mistake might have been not having a conversation about money in the first place. It actually wasn't something that we talked about until the end of the relationship, which is pretty crazy. As far as the current question, understand your values. I think that that's something that often gets overlooked. And I've heard people say that if you look at your bank account and where you're spending, that'll tell you what you value. and if you look at your bank account and you see where you're spending and it doesn't align with that, you know, so for me, I do love food, but there are things that I like a lot more in terms of how I want to live my life. And so I think it's important to understand what your values are because those are then

going to inform your goals and then those are then going to be your guiding light for the decisions that you make, whether it's financially, personally, or professionally. And so one thing I said earlier is freedom. Debt is not freedom. Freedom is my number one value. And so now I make decisions throughout life that put me in a position to maximize the amount of freedom that I have. So understand your values. And from there, have goals that you can look forward to, have goals that you can have an emotional connection to because those are the ones that are going to stick because you can actually feel what it's going to be like to achieve them. And that's what's going to keep you going when things get tough. That I love.

What is your favorite jokes to tell at parties? I mean, is this an explicit show because the jokes that I don't go there. I'm like, I'm like, oh, uncomfortable laughter. Marcus, I'm going to let you take this. Actually, it's very easy because I don't tell jokes at parties. I guess the best jokes I tell at parties tend to be stories about myself, a very self-deprecating. And so when I tell the story, I'm actually dead serious of people like,

oh, $26,000 in one week. And I was like, it actually hurt a lot. You know, there's a lot of tears. And they're like, he was crying. I was like, yeah, I cried some nights. And so I guess the stories about myself tend to be the best jokes. Okay, I'm laughing at your delivery, not your comments. You know, I don't have go-to jokes, but I'm really good at when people are having a conversation.

I'm very good at finding like a pop culture reference or a song reference and tying that into the conversation. And people will randomly look at me and be like, how did you even come up with that? So I don't even have a good example. It could be something about hip hop or soldier boy. A soldier boy hasn't had a song in a long time. But it could be about anything. And I'll find a way to come up with something. And I'm also known to just like randomly say words.

And people will look at me kind of weird. So I might just be talking to some people that I might just say sausages. And then people will be like, what's wrong with you? And I guess that's that's also my way of making uninteresting conversations, interesting. And then it gets into a whole conversation about the way people think. And I realize I'm going way too deep here. so I am going to fade out.

Moving out of the realm of depth, what do you call a hippie's wife? Oh. I don't know. What is it? Mrs. Hippie. Oh, come on. Actually, I would say my guilty pleasure lately is dad jokes, and that would have nailed it. I wouldn't have made it either.

You'd have got a point there because I laughed. Oh, my God. No, this is, Rich, you are officially my favorite. guest ever because you groan to. I hate these jokes. Scott thinks they're awesome. I have another one because sometimes our listeners who do side with Scott, even though they're wrong,

they will send us jokes. And how many software engineers does it take to screw in a light bulb? This feels like a real world interview question where I'm at. None, it's a hardware issue. Oh, come on, man. That's like, see, and these are the jokes where the answer, like, there's, the answer is just so straightforward that it's almost like, it's like infuriated. It's like, it's like I'm sitting here racking my brain, trying to come up with this creative answer. And it's like the most obvious thing.

It's the thing that I immediately want like, like, like I feel beads of sweat in the bald spot on my head right now. Like that's like, come on. What do you mean the bald spot? You have no hair on your head at all. The whole thing is a bald spot. Well, actually there's like this little spot in the middle that's like a little bit more bald. But yeah, I guess I saw you know what? My whole head is sweating.

Oh, man. That's a good. I got to work on some of those because, yeah, I need some go-toes to make people groan or to make people go, oh, come on. I know that there's someone on Facebook who's in the podcast community and they managed to come up with one of these jokes every day. Very easily. He's, he manages to come up like one every single day. I'm like, dude, how do you do this? Like, do you have like a random dad joke generator?

Maybe that's where I need to start. I just need to have a daily joke since my inbox or something. Well, you could just go ask Jared to send you a note every single time. Yeah. Well, are either of your dads? I am not. Not that I'm aware of. Exactly.

I love that response. I'm not going to speak to rich. I'm going to try not to get myself in trouble. But as the show has grown, we're not famous. Who are we? We will keep it very humble. But like more and more people from our past are contacting us. Like I get a lot more like, I get messages on LinkedIn at this point.

Like, hey, saw the podcast on, you know, Yahoo Finance. I'm like, you know, why are you reaching out? What is this about Facebook messages? So I'm waiting for that one. Like, you know, it looks just like you. So, you know, I'm here to collect. I heard you're financially free now so you can take financially free. This child I've been hiding for 11 to 15 years, apparently.

Okay, now for the command. Tell me where people can find out more about you. Yeah, so you can find Paychecks and Balances, the podcast on your favorite podcast player. You can also find us at Paychecksandbalances.com. We're on Twitter and Instagram at Paybalances and on Facebook at Paychecks and Bances. My individual Twitter account is I am Rich Jones, and you can find Marcus at the Marcus Garrett with one T on Twitter, two T's everywhere else on her. The Marcus Garrett. I'm so excited to have spoken to the market Garrett and you are Rich Jones.

Thank you guys for coming on. I'm a huge fan of your show, and I'm super excited to have you on my show. This is awesome. Really appreciate it. Yeah, thanks, guys. A lot of fun. Okay. We will talk to.

to you soon. All right. That was Marcus Garrett and Rich Jones from Paychecks and Balances. Mindy, what do you think? I love talking to them. I love their story. I don't love their story. I mean, yay, they have debt.

But you know what? Everybody has debt. Not everybody. Most people have debt at some point in their life. And ignoring it isn't going to change it. Apparently you can get a $10,000 check from a debt consolidation company and go blow, what do you say, $26,000 in 72 hours? But then, you know, you have to be an adult and pay it off.

And formulating a plan, Marcus had some great tips, his D-E-B-T acronym, super helpful for just getting in the right mindset to pay off your debt because ignoring it doesn't work. Yep. And I think that just like starting small, you can see the results that have paid off for both of those gentlemen as they started small, took action and slowly paid off those debt. And now the enthusiasm that they're approaching their financial future with is just awesome as a result of what they've been able to achieve. Yes, I'm super excited for both of them. And I know that they're going to hit all their goals. Yeah, no question. So they need to work on their jokes, though. Yes, they do need to work on their jokes. All right. Well, should we get out of here?

We should. Okay. From episode 56 of the Bigger Pockets Money podcast, this is Mindy Jensen and Scott Trench. And we're leaving. Goodbye.