The Rachel Cruze Show - How to Pay Off All Your Credit Card Debt FAST

Episode Date: August 19, 2019

What would your life look like if you didn’t have any credit card payments? If you had a pile of money saved up in the bank? If you owned your stuff instead of it owning you? You guys—that life is possible! So, in the latest episode of The Rachel Cruze Show, I’m going to show you how to live debt free. You’ll learn: The number one proven method for getting out of debt How one couple dug their way out of almost $40,000 in credit card debt 10 ways to stay super motivated while getting out of debt RESOURCES Zander Insurance  Financial Peace University  Contentment Journal Learn more about your ad choices. Visit megaphone.fm/adchoices

I can't imagine going back to the way we were living before. We just thought credit card debt was something we were going to have our whole lives. What was the moment that you said, I'm done. Like, I've had it. What we had was broken. So I think this really saved our marriage. Paying off debt, part of the momentum is your wife. Hey, guys, welcome to the Rachel Cruz Show podcast.

So glad that you're here. This show is a really fun one because it's a follow-up from last episode, all about how to live life without a credit card, but millions of Americans have credit cards and credit card debt. So if you're one of those, you might be thinking, okay, that's awesome. How do I live life without one? And how do I get out of the credit card debt that I've accumulated? Because, you know, you may have had a lot of fun racking up some credit card debt, but it's not as much fun once you see the bill. So this episode, we're going to talk all about how to get out of not just credit card debt, but debt in general. So I hope those of you on this journey, you stay motivated. I hope

this episode helps you. And for those of you who have not begun your get out of debt journey, I pray this episode helps you get motivated to start that today. So here's this episode of the Rachel Cruz Show podcast. We talk a lot about living debt-free on this show, but you may be asking yourself, how do you get there? Well, getting out of debt, it takes a lot of work, a lot of sacrifice, and a lot of intentionality. So, long story short, it's not going to happen overnight. But just imagine what your life could look like without payments, that you actually have money saved in the bank, owning your stuff versus it, owning you, and no more paying for things that you've done in the past. And the great thing is,

that life is possible. So in this episode, I'm going to show you the proven plan to get out of credit card debts and all other debt, for that matter. We're going to bring someone on and hear their debt-free story, and talk through how you can stay motivated and encouraged on your journey. So to kick us off in this episode, let's talk about how do you get out of debt? Because there are multiple ways people say you should get out of debt. One of those ways is debt consolidation. Nope, not a good idea. Just going to tell you. Because here's the deal. Debt is not a math problem. It's a behavior problem. And many people who actually use debt consolidation end up and more debt because they've just moved their debt around,

and they don't address the real issue of what got them into debt in the first place. So it's not fixing the problem. It's just masking it. And as one psychologist put it, debt consolidation seems to create the psychological effect of making you feel like you have zeroed out. So then borrowers just start spending up again. Don't want that. So no bueno to debt consolidation.

Another way people say you should pay off debt is highest interest rate to lowest interest. rate. And that's not a great idea either. Because again, this is not a math problem. But Rachel, mathematically, it would be correct to pay off the highest interest rate first. Yes. But if we were doing math, we wouldn't be in credit card debt, people. Okay? So it's not a math issue. By paying your debts off smallest to largest, regardless of the interest rate, you're going to get some quick wins. And we find that people get out of debt faster, not by the highest interest rates, but by paying off the smallest debt, which is the debt snowball. That's right. This method is proven that people get out of debt the most efficient way. And the debt snowball is this, where you list out all of

your debts, smallest amount to the largest amount, again, regardless of the interest rate, pay minimum payments on everything, and you pay off the smallest debt first. Once that's paid off, you take all the payments you're throwing at that, you roll it over to the second smallest debt. And then once that's paid off, you have payments from the smallest debt. and the second smallest debt together, because they're paid off, and you rode over to the third smallest debt, and you keep going and going and going and throughout this process, you're going crazy, you're selling stuff, you're getting an extra job, you're looking at your budget, and you're cutting stuff out. I mean, you are making sacrifices through this process, because you will find

that the deeper you are willing to sacrifice your lifestyle, the faster you will be out of debt. So, I want you to be intense. Actually, I want you to be gazelle intense. So you may be asking yourself, what is gazelle intensity? Well, my old pops, old Dave Ramsey, coined the phrase, and it's a great one because the picture is like brilliant and it sticks in your mind. But in Proverbs 6 it says, if you have signed surety, my son, which means you've gotten yourself into debt, do this. Deliver yourself like a gazelle from the hand of the hunter and a bird from the hand of the fowler. And I love that because you think about it, deliver yourself like a gazelle from the hand of the hunter. So think about the cheetahs, the lions, all the predators that are after

the gazelle. And you watch it play out, even on the Discovery Channel, and you watch that gazelle outmaneuver, outrun their predator. And you see the intensity, because it is life or death. So when scripture says that this is what you do to get out of debt, it is life or death, you go crazy. So gazelle intensity is that you are nuts. Everyone around you is like, what are they doing? I mean, you are selling stuff, you're working hard, you're sacrificing to get out of debt. Because I can tell you, it's easy to wonder your way in. It is hard to wonder your way out.

So, what does gazelle intensity look like? Is it going to Hawaii or on vacation while you still have credit card debt? Not gazelle intensity. No, no, no. Instead, if you spent thousands of dollars not on a vacation, but putting towards your debt over the year, gazelle intense. Buying a grande, non-fat, vanilla, chai, no whip, heated to 113 degrees with stevie and a dash, not a full pinch of cinnamon? Not gazelle intense.

Coffee from home? Gazelle intense. Going to your favorite concert and out to dinner and out after with friends and Ubering all around town over the weekends. Not gazelle intense. Staying home or going to your extra job? Gazell intense. See? Intensity being intense about this because the average person getting out of debt, using the debt snowball, being gazelle intense, pays off all of their debt in 18 to 24 months. So yes, is there a sacrifice involved? Absolutely. But I can tell you, you can still enjoy your life while you're getting out of debt. I always think about Rosanna and Jeremy, who were on the show a few months ago, and they were actually in the process of getting out of debt, but they had so much joy. And they talked about how much more fun life is when they have to

plan for things and everything they do with their kids, you know, it's experiences, and sometimes it's free stuff, but they're like, man, it's so much better than this life they were living from credit card bill to credit card bill. So it may seem like a lot, but just think about it. 18 months ago was February of 2018. Go back to your pictures on your iPhone. Like, look and see, oh my gosh, it's amazing. Time goes so fast. And again, paying off all of their debt in 18 to 24 months. That's the average for all debts. That includes student loans and car loans. and yes, credit cards. So when you're on this process, this journey of getting out of debt, I will tell you the heart issues are a real thing. And so contentment is something that you have

got to learn because contentment will get you through this process. So if you've not checked out my contentment journal, make sure to click the link in the show notes and make sure you're doing that. So as you're doing all this work, and it's a lot of hard work to take care of your family and give them a better future. It's so great. But I really want to make sure that your family is taking care of over the long haul and that you have life insurance. One misconception about life insurance is that it's really expensive. And honestly, that's true with whole life insurance, but not term life. It's actually really inexpensive and what I want you to have. So in fact, the average 35-year-old couple can pay as little as $38 a month combined. And that would get them half a million

each in coverage for 20 years. But you're not going to find that just anywhere. So that's why I use and recommend Xander Insurance. They shop around for you to get you the best possible rates. And you guys, don't wait. Do it now. Go to Xanderinsurance.com and get started today. It will give you so much peace of mind. All right. Up next, I want to introduce you to someone who is Gazelle Intense paying off credit card debts, so I can't wait for you to hear their story. I felt hopeless, disappointed in myself. I felt like trapped like a rat in the wheel that I knew that we needed to do something, but I had no idea where to start.

We had about $40,000 in credit card debt. We just thought credit card debt was something we were going to have our whole lives. At first, you know, we each had a credit card and a lot of it was we didn't have a lot of money, so that was we used debt as income. That was to pay for groceries and anybody that would give us some credit to buy some stuff that we needed. We had it. It just seemed like something that was normal that everyone did, so we just kind of followed them all. So one day I listened to the Dave Ramsey show for the first time, and his message clicked with me immediately, and I came home. Russell and I had a difficult

conversation. We ordered the book and read it, and we were able to work through some things, and then it was all from there. And when we discovered this program and really, we realized, how stupid we had done. And we got on track. It was rough on the kids, rough on both of them, especially our son, because he was a freshman in college and he was a freshman in college and he wanted to do fun college things

and we had to tell him no. Same thing with our daughter. You know, we were always, you could go out to eat on the weekends and that was just something that she looked forward to. And we had to say, no, we're cooking again at the house. Going through this and our children seeing what we went through,

I feel like they will have learned and not get into the situation that we did. Before we didn't live on a budget, and if we wanted to spend something we spent it, if we went to go out and we went out to eat. And now that we live on a budget and everything is intentional, we have so much more freedom. Thanks guys so much for being here coming on the show. Thank you for having us. Yeah, absolutely. And you guys are here in Nashville because you just did. your debt-free screen.

That's all. Yeah. Okay, so how much debt total was paid off? $84,000. $84,000. How long did it take you guys? 22 months. 22 months.

Right at two years, $84,000. Okay, and how much of that was credit card debt? $40,000. $40,000. Yes, almost half of it. Okay, so I'm like, I'm like so curious. Okay, so how many credit cards did you have that totaled $40,000 of debt? Right, so we had a Visa and a MasterCard that had most of it on there,

but then we also had five or six. cards from different stores that had $1,000 a year, $1,000 a year. Totally, yes. So when you have $40,000 of credit card debt specifically, a lot of people get credit cards because they think, okay, well, my necessities, I have to have a credit card to survive and to pay the bills. Some people use it, and they just overspent. They live way beyond their means.

So what kind of boat would you guys be in both of those? Both. What did you put on the credit cards? Initially, when we started out, we were very young. We had our son young and we needed it for necessities. We needed it for groceries just to survive. I mean, I think you stated it was our extra income. Yes, yes, you will.

And then once we got to a point where we didn't need them anymore, we had had them for so long that that was an option to get whatever we wanted quickly without planning for it. So, yeah, we used it to get furniture, mattresses, lawnmowers, you name if there was a big, expense that we need it, just put it on a credit card. Yeah, which is so normal, right? Right. That's like how so many people live.

So when you bought things like a new mattress or furniture and all of that, did you know going into those purchases, like, we're not going to be able to pay these off at the end of the month? Because some people say, well, I have a credit card and I'll just pay it off at the end of the month. Did you have that mindset or did you think, okay, we're buying things that we clearly are not going to be able to pay off, but we're okay with that. I think we were okay with it.

Yeah, yeah. We were fine with, oh, we'll take two years to pay it off or three years to pay it off. Yes. So you lived in this cycle with credit card. for how long would you say? Our entire marriage up to that point. So we'll be married 20 years next month. Okay. So 17 years. Yes. Okay. So 17 years of kind of this habit, right? This being part of your life. What was the moment that you said, I'm done? I'm so tired. I've seen these credit card bills. I'm so tired of being in debt. Like, I've had it. What was that moment for you guys? Well, the way I felt is,

I kind of built up to that moment. I had known for a while that what we had was broken. and that we made too much money to be broke and we were broke. And then I discovered the Dave Ramsey show. And that kind of gave us our path. Very cool. That gave us our solution. Yeah. So you're the first one that kind of discovered the plan and all of that, this idea of

living debt-free. And so when did you come into the picture? Like, when did you share this with him? How did that conversation go? Yeah, it was right before Christmas in 2016 that we had the difficult conversation. We got it all out there out on the table. It was a very difficult conversation. Yeah. That's scary, you guys. It was scary. Yeah. For a lot of people, they just like, ignorance is bliss in a sense, and they just know they have all this stuff. But pulling it out and

actually looking at the numbers, it's really, really scary. So how did that go? You said it was tough. Talk to me about that. Were there tears? Was there yelling? There was tears. There was yelling. It was probably be the most epic fight I think we've had in our marriage. Wow. And money can destroy a marriage. And I think, I think ours was perhaps on that path. So I think this really saved our marriage. Wow. And so you got to the point that you felt it was so stressful. Were you scared? Yes. Yes. Yeah. Yes. Yeah. Because the lack of security, especially for a woman, it's deep. Yeah. And when you don't think, like, we're not going to be okay, that's a scary point. in that transition. Okay, I'm going to interrupt myself during this interview because if you saw the in-person

interview on the video version of this, she starts to tear up. And I think we ended up editing out a little bit because she even said, like, I'm so sorry. I don't know why I'm getting emotional. And she, she did. She was super emotional during all of this. And it just reminded me of the fact that fear is so real. And when you're at the bottom, especially financially speaking, it can be so overwhelming. I feel like a lot of people right now in our day and age struggle with anxiety. They struggle with fear. And I read an article that in the top five reasons that Americans have anxiety is money related. One of those is financial. And that's just a huge problem, you guys, because I see that and the fear it is. It is so real. And the hard thing about money is usually a result of deeper issues. And so for her and him,

as I was talking to this couple, I'm like, man, their lack of communication around money was there. They were not talking about what was going on. And it all came to a head in this big epic fight she talked about, which I'm so thankful that they ended up talking about it, even if it was a fight, I'm like, at least it was being verbalized and communicated. But how many people just completely go alone in the dark, even when they're married and not communicating about the subject? So if you're married out there, I know it can be so scary.

It can be so intimidating. But you have got to communicate with your spouse about this subject. Because once you bring something into the light, it's amazing when those, you're, those anxious thoughts and those questions you have in your head, they start to really disappear because not only are you bringing another person in with you to help you solve the problem, but it's not all on you. It's not all on your shoulders creating that. And so together, you guys can make a plan to figure out, okay, how do we get in a better spot with our money? And that's what this couple did. That's why I love their story. I'm like, the fear was so real, sitting right there on the couch

with her, even though they're out of credit card debt, not a debt in general. You know, she can go back to that emotion because it is. It's so real and it's a result of other issues and those issues can be brought to the light and help not just your money situation, but your life in general. So when you laid everything out and you saw it and the fighting and the tears all came, was it because y'all just didn't know how much was there or that you guys hadn't communicated? So like he was finding out things that you had bought or vice versa. Yeah, so it's mainly I feel like she didn't know exactly how much debt we were in. And so, and I was kind of afraid to tell her.

And so once I was able to tell her our situation and we cleared everything up, it actually was a big relief on me once I was able to get over that boundary. Yes. And that fight ended in, you know, hugs and kisses and stuff. So, in the next day, we really, you know, committed to going ahead and getting out of debt. Yeah, well, Russell, I think that's such a great point, because especially with couples, when you're not communicating about money, naturally one person kind of just takes on the responsibility of the money

and the other one doesn't. And so the person that's responsible, it's a very lonely place because it's like you're the one, all the responsibilities on you, it feels heavy, it feels like this burden because you're like, I'm the only one that knows this. And so did you find that it was this lonely place and you felt that burden lift when you share this with her? Definitely, yes.

It was a weight off my shoulders and my chest when we finally knew exactly where we were. Yes. And so what did your kids, how were they in this whole process of you guys getting out of debt? Because you have a 19-year-old? He's 21 now. And then how old's your other one? 14-year-old.

14. Okay. So how were they during this whole journey? At first, they were a little disgruntled, I think. Especially our son being a freshman in college and he was going through a change in his life. And then all of a sudden we're like, we're getting out of debt. So there's a few times he'd call me up. I'm going to go out to eat tonight or go out this weekend.

And can you send me some money? And I'm like, I'm sorry, man. I'm just, we got to tighten up. I can't do it. So that was tough. That's impressive as a dad to put up that boundary. I mean, because a lot of parents, little kids, you know, that's kind of a whole different topic. And then teenagers is.

And then even kids that are shifting into their adulthood, right? Yeah. Who are still somewhat dependent upon you as a college student. So was it hard to say no to your kids? Yeah. It was harder to say no to him because it was so. such a change for him. You know, most of his life, we had, we just did what we wanted when we wanted.

We wanted to go out to eat. We did. It was hard on our daughter in the sense that she was entering middle school and all of a sudden, no new clothes, you know, we really had to shut down the amount we were spending on clothes. And so she's been good, though. She's gone through most of middle school without really getting many new clothes. Yes.

I think now she feels entitled. That's right. That's right. Now she's like, all right, mom and dad are debt free. Let's go to the mall. Let's enjoy this. Because some of the lectures of life you guys paused on, and I heard through the Great Fine, that you're a Disney family.

You love Disney World. Yeah, Universal. Universal. Oh, okay, okay, okay. We can work with that. We can work with that now. But you guys did that trip a lot, and you paused it, right? We did.

That was our motivation to get through this journey because every time our kids did complain, we just reminded them, we're going to Universal in the fall of 2019. and this is what we're doing. Just remember that, how much fun is going to be. Yes. Okay, Disney and Universal are not the same thing. Someone was like, Rachel, they love Disney. And when she said Universal in that interview,

my heart broke just a little bit, but that's okay. All you Universal fans, we can still be friends, but man, I mean, I'm still a Disney fan at heart, I'm not going to lie. But I do love it, no matter whether it was Disney or Universal, they have this goal that they're about to talk about, but this why, this picture in their head of like, okay, here's the future, here's what we're working towards. And you have to have that, you guys, you have to have that when you're getting out of debt to keep you motivated. So what would you say to someone who's hearing the story, because there's a lot of

people watching this, hearing, wow, they got out of all their debt, including all this credit card debt, and they're not living with credit cards, but they're sitting there thinking, but you have a credit card. Like in 2019, you still have to have a credit card. What would you say to them? No, you absolutely do not have to have a credit card. A credit card is this chain around your neck that prevents you from using your income for the joy of life, for generosity to others. It's just not something you should do to yourself. What would you say, Russell? Yeah, absolutely.

I feel the same way. And there's no reason to have a credit card at all. We haven't used one in two years or over two years, really three years. And you're breathing. Yeah. You're having a great time and spending money on fun things and not feeling guilty about it. I love it. Love it.

So those out there watching that are in the middle of their debt-free journey, they're paying off debt. Because there's a lot of people watching on Baby Step 2, majority of people are. What would you say to help them stay motivated that you're like, okay, we know it's hard. It can be a long process, but what could they do to stay motivated? I would say my biggest motivation was that goal, that picture in my head of, you know, for me, this is like a bucket list trip to Universal because we're going for the Halloween part. And so just remembering, so having that goal is really important, especially when you're in the middle of the journey and it becomes difficult. And you've been doing it for so long. and it's still so long to go before you're complete.

It can be really hard to stay encouraged. So for me, it was having that goal, that picture in my head of where I wanted to. I was going to celebrate getting through that. Yes, that's so good. So good. What about you, Russell? Yeah, I mean, the same thing. I mean, just knowing that when we were done, we're going to have that freedom

and how good it was going to feel. Yes. And, you know, when we got to step three, when we started building our emergency fund, just seeing some extra money. going to the bank, and it's sitting there and you can look at it. That was a nice feeling, too. Yes. Okay, so 22 months, you guys worked like crazy, you sacrificed, you paid off an insane amount of debt. Was it worth it? Absolutely. Give me like an adjective of before,

beforehand, like how you felt until sitting on this couch right now being completely debt-free with money saved now in the bank with the emergency fund. What would you say? I feel like a completely different person. I can't imagine going back to the way we were living before. That would be waking up in a nightmare to going back to the way we were living before. The freedom we have now living on a budget, knowing that when we do something, when we spend money, it's intentional. it's so freeing.

So freeing. And I love that because it's the tridentry picture of the idea that being in control gives you that freedom. And people think, well, living my life with credit cards and doing whatever I want whenever I want it, that doesn't end up in freedom. It ends up in stress and bondage like you guys' experience. And so I think that was so well said. Well, thank you guys so much for being on. I really appreciate you sharing your story. Thank you.

Thank you. All right, guys, coming up next, we're going to talk about 10 ways for you to stay motivated while you. get out of debt. All right, as you're getting out of debt, it can be a long process. So you have to stay motivated. So here are 10 ways for you to stay motivated while you're paying off debt. Number one, track your progress. Seriously, it's so important to see your progress visually. So I've created some free goal trackers. You can download for each of the deaths that you have. Just click the link and the show notes. You can download those. Number two, remember your why. Why are you doing this? Is it for your kids? Is it for your future? Is it because you

want to go on great vacations every year after you're out of debt. Like, what is it? What is your why? That keeps you motivated. Number three, dream about retirement and the future. Because just think, if you're not making the sacrifices now, 65-year-old you does not want to make those sacrifices? No, sacrifice now. So dream about the future. Number four, set small rewards. This is really true, especially with student loan debt. Student loan debt, there's always, it's a ton. So maybe you break it up and you say, okay, every $15,000 I pay off, you know, I do something kind of fun in the middle of it. So sometimes you have to have those small rewards throughout this process. Number five, remember how far you've come.

The trackers are going to help with this. But look back and just remember, okay, if we've done it, if we've made it this far, we can keep going. We can keep doing this. Number six, make sure you have someone in your life who loves you enough to hurt your feelings and keep you on track. If you have all yes people around you and you're like, oh, I really want to buy this new sweater. And they're like, yeah, do it. No, no, no, no, get that girlfriend out of here. You need the girlfriend, you call, and you're like, I really want to buy that J. Crew sweater.

And she's like, listen, you can buy it next year. Just hold off. That's who you need. Number seven, check your budgets. I love this. I've gotten in the habit of doing this. I check every dollar almost every day. Just look at the progress and just to see how we're doing monthly with our money.

And the same is true when you're getting out of debt. Number eight, plan for one fun, cheap or free thing that you can do once a week. This is big because in this process of getting out of debt, there's a lot of things you can't do, so find something that you can do. Number nine, quit the comparisons and do a social media purge. Yes, we love our fashion bloggers and our lifestyle bloggers, but sometimes you may need to unfollow them because they may have stuff that you just simply are not going to buy. So why tempt yourself?

Do a little purge if you need to. And number 10, surround yourself with people who are encouraging or who are also on the same journey as you. And a great way to do this is to join a financial peace university class. This is our nine-week class. It walks you through the whole baby steps and getting out of debt, budgeting, insurance, like everything you need to know is there and you're actually with a group of people. So click the link in the show notes to sign up for a class. All right, that was such a fun episode.

Thank you so much for listening. And I hope that you feel inspired to get gazelle intent, pay off your credit cards, pay off all your debts, and live this debt-free life. I'm telling you. It's the best life to live. It really is. All right. If you've not checked out

the Rachel Cruz show video version, you can do that on YouTube and Facebook. And if you've not yet subscribed to this podcast, make sure you do that. And if the spirit leads, you can leave a review if you like. Yes. And, man, I love this topic.

It's kind of like the bread and butter of Ramses Solutions, helping you get out of credit card debt and debt in general. But man, this stuff works. So, again, thanks for listening. And as always, remember to take control of your money and create all my few lives.

So if you guys enjoyed this podcast, we have more from the Ramsey Network, like the Dave Ramsey Show. If you're looking for boring financial talk, you're in the wrong place. This is not your mother's 401k meeting. This is life on the radio. And it's just downright entertaining. That's why there's about 14 million of you out there today. Thanks for hanging out with us, America.

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