Financial Audit Podcast: “Financial Audit’s Biggest Gold Digger”

Host: Caleb Hammer
Guests: Elle (31) & Paul (38) from San Antonio
Date: June 9, 2025

Episode Overview

In this episode of Financial Audit, host Caleb Hammer sits down with Elle and Paul, a married couple who, despite a strong household income of nearly $12,000/month, are teetering on a financial cliff due to habits of overspending, debt accrual, and lifestyle misalignment with their means. The episode serves as a real-time intervention—revealing the disconnect between high income and financial health, and delving into the psychology, communication patterns, and practicalities behind their persistent debt cycle. Caleb offers hard truths, actionable budgeting strategies, and direct confrontation about sacrifice and priorities, all peppered with the show’s signature candor and engagement.

Key Discussion Points & Insights

1. Background and Income Snapshot

• Elle: Recent college grad in biology, Navy veteran, mother of two, planning for graduate studies. Receives VA disability with dependents.
• Paul: Navy police officer, retiring within a year, expecting disability income post-retirement.
• Household Income:
  • Paul: ~$7,200/month (two $3,600 paychecks)
  • Elle: ~$4,750/month VA disability
  • Total: ~$11,900–$12,000/month

Caleb: “When you just get to go to school and have this income... Why are we struggling so much? What the possible is happening?” (05:11)

2. History of Debt and Prior Attempts to Get Out

• Patterns: Repeated cycles of accumulating and “paying off” debt, largely via consolidation or home equity loans, but never changing underlying behaviors.
• Previous Methods: Dave Ramsey’s snowball approach; home equity consolidation (2023).

Paul: “Over the last 10 years... we’ve come out of [debt] twice, paid off everything... and then racked up a lot more debt.” (09:03)

3. Where Is the Money Going?

• Misc. (“BS”) Spending:
  • $4,137/month on random, unnecessary stuff—exclusive of fast food and dining out.
• Dining/Takeout:
  • As much as $1,200/month
• Kids' Activities/Experiences:
  • Gymnastics, baseball, gym equipment, birthday parties—spending justified as “memories” but often excessive.
• Hobbies & Fun Money:
  • Elle focuses on children’s clothes, gifting, and home items; Paul collects (movies, board games), convention tickets, gadgets.
• Out-of-Control Amazon Spending:
  • “Go buy anything BS. Amazon” — small items accumulate rapidly with little friction or scrutiny.

Caleb: “You’re losing $2,000 a year just in interest on two cards...” (59:55)
Caleb: “Spending $7k-8k a month on BS when we could have fully… The amount of money we could have put towards debt was crazy.” (98:37)

4. Denial, Communication Issues, & Rationalizations

• Elle and Paul both acknowledge issues, but differ wildly in perception and urgency. Elle minimizes ("it's still stable"), while Paul wants to draw the line.
• Communication around purchases and budgeting is virtually nonexistent:
  • Purchases over $100 no longer discussed.
  • “We talk after the purchases usually, but…” (18:38)
• Rationalizations include:
  • Creating memories for kids
  • Inflation (“doesn’t feel like we have more”)
  • Justifying purchases as “fixable,” not “easy,” repeatedly

Elle: “It’s not financially smart, but it is stable as long as you can make payments.” (34:11)
Caleb (challenging): “It is not stable if our debt is just building, building, building, because the dam breaks.” (34:15)
Paul: “I don’t want the kids to only see stress between mom and dad… you are going to put them in a horrible situation.” (21:54)

5. Hard Numbers: Debt Breakdown & Minimum Payments

• Credit Cards: Over $44,000—minimum payment routines; $24,600+ maxed on one card alone; over $3,000/month total minimums
• Home Equity Loan (Consolidation 2023): $38,309 at 7.45%
• Car Loans: Two expensive new vehicles (truck and Ford Escape), high payments ($1,229 for truck, $606 for escape)
• Other Loans: Furniture, medical, emergency AC repair—all on 0% or low interest, but principles are growing
• Mortgage: $213,000 at a very favorable 2.75% rate

Caleb: “If you make just the minimum payments on [this card], it’ll take you 32 years to pay off. Last Christmas takes 32 years to pay off.” (47:03)

6. Interest and Opportunity Costs

• Year-to-date interest on various debts already over $5,700 and climbing.
• Home equity, truck, credit card and other loan interests swallow massive cash that could fund family dreams.
• Discussed lost opportunity: $6,000/year currently spent on “fun money” could have provided $25,000–$50,000 college funds for each child by now.

Caleb: "This year so far, $5,752.48 has been taken from your hands in just interest... sounds like a pretty good chunk of a Disney trip if I've ever heard." (92:24)

7. Budgeting Attempts and Behavioral Obstacles

• Use of Excel spreadsheets for bills fell apart; resistance to automated tools; fail to stick with manual solutions.
• Fun money allocation ($200–$400/month planned, but actual BS spending up to $8,000/month).
• Both describe themselves as “spenders,” unable to resist frictionless spending (ESPECIALLY Amazon).

Caleb: “You said about half [was BS]. No, about 75%: Panda Express, Krispy Kreme, Auntie Anne's… just bad, entertainment, more board games...” (54:12)
Paul: “We just say 'I.' Everything's on auto pay and it comes out of our debit. Bills are on auto pay.” (32:47)

8. Clash of Values and Reluctance on Sacrifice

• Elle resists the “sacrifice” of things like streaming services, elaborate holidays, and expensive kids’ activities.
• Paul admits to milking his surgery for extra home purchases; values comfort/fun sometimes over math.
• Caleb underlines the necessity of actual deprivation—cutting out all fun spending that's not required for survival—until debts are paid and an emergency fund is built.

Caleb: “If you can fit them in the TP fund, you can. But if you can’t, they’re canceled... You are, I mean, that’s a spoiled mentality.” (108:13)
Elle: “But it also has to be livable.” (108:36)

9. Action Plan & Path Forward

• Step 1: Downsize both vehicles, sell and replace to immediately cut $25,000+ in debt, slash minimum payments.
• Step 2: Implement zero-tolerance budgeting; every dollar tracked (recommendation: use budgeting app with account connections).
• Step 3: Snowball approach on remaining debts, using freed-up cash from car/BS spending.
• Step 4: No new consolidation until six months of changed behavior and aggressive debt payoff are PROVEN.
• Step 5: Build emergency fund (at least $30,000; six months' expenses).
• Step 6: Only after all debt (but mortgage) and emergency fund are in place, resume fun spending, trips, holidays.

Caleb: “If you do [these steps], in five years, bad debt free… you have no idea what life is like on that other side… you guys will literally have $5,000 a month at a minimum to blow on whatever you want if you really want to..." (112:02)

10. Memorable Quotes & Turning Points

• On their flawed logic:

  • Caleb: “How is that considered financially stable if we’re spending 14k and making 12k...?” (34:11)
  • Elle: “It’s not financially smart, but it is stable as long as you can make payments.” (34:13)

• On their children and priorities:

  • Paul: “You are going to put [the kids] in a horrible situation…because mom and dad are finally going to have the conversation about money... blow up.” (21:54)
  • Caleb: “Kids don’t recognize the value dollar…they want the experience, the warmth of Christmas.” (45:06)

• On self-awareness and making changes:

  • Caleb: “If it’s fixable, why haven’t we fixed it? …Last time, to get out of debt we had to take equity from our home. If it’s so easy, then why are we here?” (71:32)
  • Paul: “We did not change our life at that moment when we paid it all off. It was nice, it was great, but we did not change any of our lifestyle…” (61:53)

• On the hard reality:

  • Caleb: “Your truck payment is as much as your mortgage. That is the most American thing I’ve ever seen, and that is not a good thing.” (103:22)

Notable Timestamps

• 05:24: Caleb exposes the disconnect between their strong income and financial distress.
• 09:03, 09:14: The couple discuss their repeated cycles of paying off and rebuilding debt.
• 11:26 & 16:45: Discussion of spending habits, lack of budget, and avoidance of financial confrontation.
• 25:30–27:50: Breakdown of the maxed-out $24,600 credit card; justification of recent spending (son’s birthday).
• 34:11–34:26: The “it’s not smart, but it’s stable” rationalization challenged, with the dam analogy.
• 47:03: Caleb calculates “32 years to pay off” last Christmas if only minimum payments are made.
• 57:53: Hard comparison: “We can choose lazy or financial security.”
• 92:24: Total interest paid just this year: $5,752.48.
• 103:22–104:09: Shock at the truck payment equaling the mortgage; broader warning on minimum debt payments.
• 110:20–113:10: Caleb provides a concrete, stepwise plan for debt freedom (downsize cars, snowball debts, emergency fund, restricted spending).

Final Financial Scores (by Caleb)

• Spending/Budgeting: 0/10
• Debt Management: 2/10
• Emergency Fund: 1/10
• Retirement Prep: 7/10 (military pension, TSP, VA disability)
• Real Estate: 6/10 (good rate, but home equity loan drags it down)
• Overall Hammer Financial Score: 3.5/10

Recap & Takeaways

• Diagnosis: High, stable income is masked by destructive spending habits, poor communication, and a refusal to face or adjust for hard realities—especially around debt and emergencies.
• Prescription: Severe restriction of spending to survival essentials, liquidation/downsizing of vehicles, hard budgeting, and a zero-tolerance approach to debt accrual.
• Outlook: If both fully commit, within five years they can be debt-free except mortgage, have a robust emergency fund, and enjoy guilt-free spending/family trips.
• Hard Truth: “Sacrifice is non-negotiable. Until the behaviors change and the financial house is stable, there’s no room for luxury.”

Memorable Closing Moment

Elle (half-joking): “I did just recently buy 7 LA Dodger NBC New York Yankee baseball caps and I didn’t want to tell you.”
Paul: “You don’t need all seven!”
Caleb: “You’re spending in a budget. Score is 0 out of 10... just shows how easy it is to get out of this situation if you guys actually sacrifice and grind and not prioritize your fun.” (114:26)

For Further Content

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For listeners: This episode is a masterclass in personal finance “tough love.” Whether you’re a high earner or not, the lessons about communication, sacrifice, and the pitfalls of lifestyle inflation are universally applicable. The solution is not magic—it’s discipline, teamwork, and facing uncomfortable truths head-on.