Financial Audit Episode Summary

Podcast: Financial Audit
Host: Caleb Hammer
Episode: Disgusting Degenerate Steals $40,000 From Everyone | Financial Audit
Date: August 30, 2024

Episode Overview

In this raw and revealing episode, Caleb Hammer sits down with Sierra, a 27-year-old accounts payable clerk based in Austin, Texas, who openly admits to disastrous financial habits. The conversation uncovers her pattern of overspending, irresponsible debt management, and the personal circumstances that led to her accruing over $40,000 in liabilities. Caleb provides tough love mixed with practical guidance as Sierra reflects on her mistakes, seeks accountability, and discusses plans to get her finances under control.

Key Discussion Points & Insights

1. Background and Income Situation

• Sierra works as a temp accounts payable clerk earning $20/hour, projected to become a permanent employee at the same wage. She has no PTO and occasionally gets overtime.
  • “How do you feel living on Austin in that?”
    Sierra: “Not great.” (01:15)
• She identifies that Austin’s cost of living is high for her income.

2. 401(k) Withdrawals and Lost Retirement Potential

• Sierra has withdrawn $3,000 from her 401(k) over the past year, mainly to cover a car down payment.
  • Caleb: “That $3,000 was worth $72,628 at retirement… What’d you take it out for?” (03:41–04:25)
• She admits this isn’t the first time she’s tapped retirement funds, reducing her balance to about $300.

3. Autoimmune Disorders and Job Instability

• She left a higher-paying production job at Tesla due to an autoimmune disorder, which has left her fatigued and unable to work physically demanding jobs.
  • “I have an autoimmune disorder… it started really affecting my health.” (06:51–07:01)
• Plans to supplement income with a Starbucks job, despite health challenges.

4. Budgeting and Overspending

• Sierra is largely unaware of her monthly outflows:
  • Estimates spending $2,000, but actual monthly spend is $3,800 vs. $2,200 earned.
  • Caleb: “You spent double what you make… How do people not know this?” (08:33–09:06)
• Admits much of her overspending is on discretionary items, especially dining out (approx. 27% of income).

5. Debt Profile and Management Failures

• Multiple credit cards maxed out, several sent to collections. Fails to make even minimum payments.
  • Caleb: “You’re over the limit. By $200… Why aren’t you at least paying your minimums?” (21:31–22:13)
• Only recently began to confront her habits, prompted by upcoming therapy through an employer benefit.

6. Living Situation and Rent-to-Own Mobile Home Trap

• Sierra is joint on a 30-year, $30,000 rent-to-own trailer agreement in Corpus with her ex-fiancé, though she lives in Austin. Rent is $1,200/month, much of which is at risk due to her ex’s unreliable payments and inability to refinance the agreement.
  • “You’re gonna spend… $432,000 on a mobile home worth $30,000”
    Caleb: “That’s crazy.” (17:01–17:18)
• Trying to remove herself from financial liability with little progress.

7. Car Purchase and its Consequences

• After using insurance payout from hail damage and 401(k) withdrawal, Sierra financed a new 2024 Kia at 12% interest for 7 years, owing over $30,000.
  • Caleb: “This is an insane car for you!...Making $20 an hour, not making minimum monthly payments. How did you get qualified for a loan?” (37:36–41:20)
• Admits regret, especially as her former car payment was much lower.

8. Recurring Financial Self-Sabotage

• Ongoing non-essential spending (e.g., perfume on afterpay, TikTok shopping for pets, frequent dining out, streaming services, and even dating apps).
  • Caleb: “You blow it up…don’t even put payments on it…and allow it to go $200 over the credit limit.” (28:46–29:35)
• Openly acknowledges lack of discipline and pattern of avoiding bill payments.

9. Therapy and Behavioral Change

• Sierra recognizes a need for behavioral change and is planning therapy.
  • Caleb: “[Therapy] is one of those things almost like this conversation where people go…and they don’t do any work outside of therapy…you’re going to need to put in the work and discipline still.” (50:00–50:45)

10. Debt Totals and Outlook

• Debt includes at least $6,000 in student loans, multiple charged-off credit cards (e.g., Citibank $1,639, Amazon $725), and over $1,400 in unpaid tolls.
• Caleb: “There’s not one thing we’ve looked at that I can see a bright side to…everything so far has literally been your choice.” (44:26–44:48)

Notable Quotes & Memorable Moments

• On 401(k) withdrawals:
  Caleb: “That is the last thing I would be smiling about in this entire world, my dude. Yeah, you’re taking from your 401k…This is your literal retirement.” (02:39–02:50)

• On spending habits:
  Caleb: “How was 35% or 27% [of your income] anywhere acceptable when you have payments you could have made three times this minimum payment on your going out to eat?” (24:15–24:48)

• On rent-to-own: Caleb: "You're gonna spend...$432,000 for something worth $30,000."
  Sierra: "That's crazy." (17:01–17:18)

• On minimum payments and irresponsibility:
  Caleb: "If you pay your minimums, you're not gonna go over the credit card limit…But you don't pay anything. You really don't. The woman who pays no bills. You literally just don't pay the bills that you have." (56:11–56:24)

• On self-discipline:
  Sierra: "There's...There. It's a discipline problem for sure." (24:59–25:05)

• On the extreme car note:
  Caleb: "This is an insane car for you...This makes no sense. Why did you think you needed a brand new car?" (40:06–41:20)

Timeline of Major Segments

| Timestamp | Segment | Key Topic | |-----------|---------|-----------| | 01:01 | Introduction to Sierra | Overview of income/job | | 02:19–03:41 | 401(k) withdrawals | Early signs of financial mismanagement | | 04:25 | Car purchase backstory | Use of 401(k) for down payment | | 05:35 | Ongoing 401(k) withdrawals | Drained retirement account | | 06:47 | Income drop due to health | Leaving higher paying job | | 08:33–09:06 | Spending vs. earning | Start of budgeting issues | | 12:00 – 19:00 | Rent-to-own mobile home | Financial liability with ex-fiancé | | 21:18 | Credit card balances | Account over limit and charged off | | 24:15 | Eating out overspending | Disproportionate discretionary spend | | 34:25 | Spending justification | Self-reflection on choices | | 37:36 | Car loan deep dive | High payment, bad loan | | 44:26 | Financial choices summary | Tough love from Caleb | | 50:00 | Behavior and therapy | Commitment to change | | 62:18 | Frivolous spending | Spending on gifts, dating, and more | | 69:02 | Budget breakdown | Rent, bills, debt minimums | | 72:35 | Debt repayment strategies | Need for extra income, plan | | 77:35 | Focus on car as problem | Potential for car sale/trade-in | | 80:59 | Financial score summary | Reality check, 0/10 score |

Caleb’s Final Assessment and Recommendations

• Score: Hammer Financial Score – 0/10 (Overspent, debt in collections, no emergency fund, no retirement, no true assets)
• Main Causes: “Everything so far has literally been your choice…There’s not one thing we’ve looked at that I can see a bright side to. I’m sorry.”
• Action Plan:
  • Immediate, radical spending cut—especially on discretionary items.
  • Secure and work a second job to increase income, despite health challenges.
  • Consider selling the car and buying a cheaper vehicle to reduce debt burden.
  • Focus on therapy and actionable steps; information and tools alone won't help—behavioral change is critical.
  • Use available resources (budgeting and investing tools) but understand only sustained action will drive change.
  • Continue to pressure ex-fiancé to remove herself from mobile home liability.
  • Stick to minimum payments on all debts, prioritize catching up, and avoid further borrowing.

Takeaways for Listeners

• Awareness is the first step, but action and discipline are non-negotiable for financial recovery.
• Life situations can cause setbacks, but most poor financial situations are the result of choices that can be changed with hard work and accountability.
• Therapy, education, and budgeting tools are only as useful as the effort invested outside of those sessions/resources.
• Spending is often a bigger problem than income for many young professionals—the numbers don’t lie.

“Want is a want is a want. I want to be skinny. But if I don’t go on a diet, if I don’t work out, I’m not going to get skinny…”
–Caleb Hammer (25:25–25:34)

For More

• Full post-show available to podcast supporters and members.
• Resources, budgeting spreadsheets, and tools mentioned by Caleb are linked in the episode description.