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- [00:00]
A
Let's do it.
- [00:01]
B
Here's some debt questions everyone's asking.
- [00:10]
A
Brian, I am so excited to talk about this because we know that our audience has questions about debt. Is it good? Is it bad? How should I use it? What should I do? What should I not do? And I'm glad that we can speak into those questions and hopefully help our financial mutants do money better.
- [00:28]
B
Well, yeah, debt can be chainsaw dangerous. Yep, I talk about that all the time. But there's this balance for how do you properly use debt? How do you also make sure you're paying off debt in a very reasonable timeframe so you're not getting out over your skis? We're kind of going to hopefully cover that by going through some of these general questions we often get on. How do you do debt and how do you do debt?
- [00:50]
A
Well, and look, we know that you guys, you financial mutants, you're optimizers. So there's a good chance that a lot of you are using debt and you're not using it in a negative or a bad way. But you even want to make sure that in the way that you're using it, you're using it to the optimum level. You are maximizing how you use it and use it well so that that chainsaw tool that you have can be incredibly effective and not something that actually works against your future financial wealth building.
- [01:18]
B
You know what else is effective? Subscribing to the channel. Go ahead and turn on the notifications. We appreciate every one of you.
- [01:24]
A
Okay, Bo, let's talk about the very first debt that people often have questions about. For most of us, this is the single largest purchase we will make in our entire financial lives. And oftentimes when we go to make this purchase, we have to use debt in order to be able to do it. And that purchase is homeownership.
- [01:42]
B
Now, the good news is, fortunately for mortgages, historically this is not going to be the highest interest rate out there. This is not like credit cards or even student loans, I mean, or student loans or car loans. Mortgage debt. Now, I will tell you, most recently it's been a little bit higher and we'll cover that. But the first question most people have is, guys, should we do fixed mortgages? Should we do adjustable mortgages? What type of mortgage should we have on our house?
- [02:08]
A
Yeah, what is the one that makes the most sense? And you just mentioned the two most common types. There are fixed rate mortgages and there are adjustable rate mortgages. And this is pretty common sense. A fixed rate mortgage says, I'm Going to pay a defined interest rate over the term of the loan. Whether it's a 10, 20, 30 year loan, I'm going to pay a fixed interest rate over that term. Adjustable rates are a little bit different. They say we're going to have a rate that adjusts. Perhaps it's fixed for some period of time, three years, five years, seven years. But after that period it's going to fluctuate and it's going to move. With interest rates, as you can imagine, there are pros and cons to each, but they are not created equal.
- [02:48]
B
Yeah, this is something we were talking about in the content meeting is that this whole adjustable versus fixed, it's an odd place in history because usually when interest rates are super low, why in the world would you not just do the fixed? Because if you have a 15 year, 30 year mortgage and you're in histor historic lows, this is like the biggest, no brainer. But now that we're in a higher interest rate environment historically, you can quickly see where people are thinking, hey, maybe I ought to do the ARM or an adjustable rate. But Bo, we were talking about, well first you gotta go look at our checklist on home ownership. And I was saying that Bo, my example was maybe somebody's moving in five to seven years from the time they moved the house. And you're like, well should they even be buying a house?
- [03:30]
A
Probably wouldn't be buying a primary residence if you're gonna move inside a five to seven years. So where I think adjustable rate mortgages likely have practical use case is if this is some sort of investment asset or some capital asset that has an intermediate term holding period to where you believe either one of two things will happen. You'll have the ability to refinance into a lower fixed rate at some point or potentially you may just be selling the asset altogether. It's really just a bridge loan for a temporary holding period. That's not the way we look at, that's not generally the way we hold our primary residences.
- [04:01]
B
But then the next question we get is how can I lower my interest rate? Because if I've just gone ahead and shared with you guys that we're in a historic historical time where interest rates have gotten higher than they've been in the last 10 to 15 years, there has to be a way that we can bring this higher rate down where it's more manageable, especially as interest rates start dropping.
- [04:20]
A
There's really two ways that people often lower their interest rate. One you've heard of and one you haven't the one you've heard of is just refinancing. We'll talk more about that. But the one you likely have not heard of or not as familiar with are loan modifications. These are pretty amazing things in the financial world.
- [04:38]
B
Yeah, I even say loan modifications isn't actually a versus one versus the other. This actually should be part of your refinance process. Everybody who's considering refinance, the first thing you should try to do is reach out to your existing lender and ask if they will do a rate modification. Which all this is is basically calling your current lender and asking them to restate your mortgage rate from maybe it's at 7% or a little over 7. What if new rates are now below 6? Would they for a few hundred bucks or whatever their fee is to do rate modifications, Consider restating your loan at the lower rate. There's a very good chance, especially with these big lenders, they're going to say no. But it doesn't hurt to ask because it's substantially cheaper and a lot less of an arduous process doing a loan modification versus doing a full refinance.
- [05:28]
A
But if a loan modification is not available or the lender does say no to you, then you move to refinance. There's generally two types of refinances that we most often see. There's a cash out refinance where essentially you're going to tap into the equity that you've built up inside of the real estate asset inside of your home and you're going to pull some cash out of it. Well, this doesn't really make a ton of sense at super high interest rates or certainly not if interest rates are higher than what your primary mortgage is, because now you're borrowing very, very costly money. Doesn't make a ton of sense. A lot of real estate investors will use cash out refinances to begin acquiring and buying other properties. Well then a regular normal refinance is just called a rate and term refi. Where likely what you're going to do is you're going to reset the interest rate that you're pay paying oftentimes at a lower interest rate and you're going to reset the term of the loan. If you had a loan that you've been paying on for five years and you go take out a new refinance five years in, you're going to recast that mortgage over 30 years. So it resets the term of the loan and it also resets the rate at which you're paying but there's some things you want to make sure you watch out for when you do that.
- [06:35]
B
Yeah. By the way, just giving opinions on this cash out refinance, they can be a little bit more aggressive, especially where is the money going? There are fees associated with refinance. Is this actually going towards buying more assets or building more net worth or balance sheet assets or is this just going towards consumption? There's a lot of things. Just realize this is actually probably increasing the risk when you do a cash out refinance versus lowering the risk activity. Just go into it with your eyes open. Part of life, I think is that you are trying to figure out how do you from a risk perspective. Yes, you might need debt in the beginning, but at some point you do want to remove leverage from your life because it does, you want to de risk your life. So be careful with the cash out refis because you might just find yourself in a situation where you just don't actually own the asset.
- [07:28]
A
One of the questions that people hear is, okay, I hear this, I hear about refinancing. I really want to understand when should I do this? How do I know that it makes sense for me to refinance? Because oftentimes what refinancing can do is it can either lower your payment that you're paying on your mortgage or it might decrease your term. You may be refinancing from a 30 year mortgage down to a 15 year mortgage. So how do I know, especially if I got a mortgage in the last couple of years, how do I know when it makes sense for me to refi? Are there any rules of thumb that I should abide by to know that this is something that might trigger for.
- [08:03]
B
Me, Yeah, I would be paying attention to what's going on with obviously the ten year treasury, but then more importantly where mortgage rates are. And once you notice that your mortgage rate is a full 1% higher than where the current market is, it makes sense to start doing some research, I think.
- [08:20]
A
So let's think through. Okay, how do I go about deciding is this worthwhile? Because obviously refinancing is not a free endeavor. There are costs associated with it. You want to make sure that the interest savings that you achieve through the refinance compensate you in a reasonable amount of time for the cost that you're going to incur to do the refinance. So let's walk through a very simple case study. Let's assume that we have Manny and Twyla and they have a $400,000 mortgage balance currently at 7%. Their current monthly payment is $2,661 a month and it's going to cost them $3,500 to refinance. Then the question becomes how much would I need the rate to drop by in order to justify this? If they were to refinance their mortgage and rates drop to 5.5% their new monthly payment instead of being 2661amonth, it now drops to $2312 a month. Their monthly interest savings are about $349 a month in savings. Well, if I just take $3500 and I divide it by $349 per month savings, it's going to take me about 10 months to break even on this refinance. So long as I believe I'm going to be in the house for at least 10 months, it probably makes sense to refinance.
- [09:40]
B
Yeah. This is why you can quickly see that it does make sense, especially when you do the break even analysis. Let's go ahead and figure out where the payoff or break even point is. What I like is we even have for our visual learners. Let's look at this is primarily driven from the cash flow perspective. I do want to go in a minute. We're going to give some guidance on there's even some risk you got to be careful with. But it is interesting when you look at this from a visual standpoint. You can see, yes, refinancing because you have that out of pocket of $3,500. It looks like, man, why am I even doing this versus making original mortgage. But it's that monthly savings every month there is going to come a crossover point. And for this time it was very quick in the first 18 months you can see here, crossover point was at 10 months. So you're now doing from a cash flow perspective much better. Once you do hit that crossover breakeven.
- [10:28]
A
Point and then as you extrapolate this out over the term of a normal mortgage 30 years, you can see that those interest savings will continue to accumulate. So refinancing can actually keep tons of money in your back pocket, in your wallet, in your army of dollar bills over the long term. But you want to make sure you do it at the point in time where it makes sense to do that.
- [10:48]
B
Yeah. One thing that I do want to remind people this is why if you want to go to moneyguy.com resources we have a refinance guide and it's I worry because you'll notice when interest rates start moving quickly, you might Find yourself thinking, well, it was great to refinance the first time. How about we refinance again? Because rates keep coming down. You do have to be careful, remember what your original mortgage payment was and maybe even consider keeping that mortgage payment. Because what I don't want you to do is a lot of times when you refinance, you're also resetting the term of repayment. So if you're on 30 year mortgages and you've been paying for three years and you come back to another 30 year mortgage, you can see you just added three years to your payoff term. So don't get just so mesmerized by the cash flow savings that you don't consider keeping your payments the same so that you can actually just take advantage of that interest rate difference and you even pay off the loan that much sooner.
- [11:45]
A
I love it. Now, home ownership and mortgages aren't the only kind of debts that most people face, especially today. With today's workforce, another common debt that most people have to undertake or a lot of our audience has to deal with are student loans. These are very much real issues that are serving as either stumbling blocks or hindrances to folks building financial independence for the future.
- [12:11]
B
Yeah, and I love education. You know, I've often said that I feel like education is the ladder of opportunity to become the better version of yourself. But we have gotten too much of a good thing.
- [12:21]
A
Absolutely.
- [12:22]
B
It's because a lot of people at a very young age are building up tremendous debt that's almost becoming such a hindrance that it's really letting them entering adulting with a huge weight that they're dragging around. So that's why how much is too much for student loans is the big question we get. And we've come up with a good rule. It's called the first year financing rule. Bo, can you explain how this works?
- [12:47]
A
Yeah. Basically, whenever you go out to get student loans, you don't want to have your total student loan debt exceed what you anticipate your first year salary to be. And what's great is with all the resources available to us, we can go research and figure out for the vocation for the profession that I want to move into. What's the average starting salary for that job? Well, if I know that the average starting salary for the job I want to pursue is $50,000 a year, I need to make sure that I do not accumulate more than $50,000 of student loan debt to go acquire the degree necessary for me to be able to do that job. Now here's the problem. Financial institutions are not going to follow this rule. They're going to tell you, we'll give you as much student loan debt as you think, so we'll let you rack it up no matter what you're going to make your first year. And we don't even care if you work in this job when you graduate. So this is something that you have to buyer beware on so that you can keep yourself protected and not allow yourself to get into a precarious situation in the future.
- [13:47]
B
Well, so that's beginning with the end in mind. But there are a lot of our listeners that might have just found us and they've already gotten, they're already out doing the adult thing. They have this student loan balance. So they're asking themselves, should I prioritize paying off my student loan? And this is one of those things where I want to remind people we've tried to help you do things well by coming up with the financial order of operations.
- [14:11]
A
It's a step tried and true.
- [14:12]
B
I mean, it really is. The financial order of operations is going to cut the corner off so you know exactly what to do with your next dollar. But you're trying to very quickly figure out, is this a step three when we talk about high interest debt? So we had to kind of think about this, and I cover this in Millionaire Mission in my book as well, is what is high interest debt specifically when it comes to student loan debt?
- [14:33]
A
Yeah. And what we said is it kind of depends on your age and what your market expectations are for the opportunity cost of your dollars. Well, generally speaking, if we look at historic equity risk premium, the amount of money we get for going out and putting our dollars to work. If you're in your 20s and your student loan interest rates are above 6%, you may want to prioritize paying off your student loans. If you're in your 30s and your student loan interest rates are above 5%, you may want to prioritize paying off your student loans. And then in your 40s, if you still have student loans and they're above 4%, you may want to prioritize paying off those student loans. Because as soon as you get those loans gone and you're done with that, then you can begin deploying all of your army of dollar bills to growing for future financial independence and you won't have to carry that weight through the rest of your adult working career.
- [15:24]
B
Yeah, I like that. The balance between the risk, the balance between opportunity costs. We've really tried to help you figure out Is this a step three or is this a step nine of the financial order of operations? It does. I mentioned, and Ari alluded to it earlier, student loans have now drifted into this dialogue, the zeitgeist of where we are in society right now because there's a lot of young people that struggle with it. So what should you do if you're struggling to make payments?
- [15:51]
A
Bo Yeah, a lot of folks have recognized, man, I made maybe I didn't make the best financial decisions when I was taking out these student loans. Maybe I got myself in a situation where I didn't really realize that I was signing up for. But now it's my reality. I'm in this reality where I have to pay for these student loans and I maybe I'm not making the level of income I thought I was making or maybe life is just more expensive than I anticipated. How can I think about doing this? Well, fortunately there are a number of options and plans available to you to potentially help reduce or alleviate some of the pressure you feel from student loans. One of the most common right now is an income driven repayment plan, which basically you're put on a plan that ties to the income that you're earning to calculate what your monthly student loan payment should be. It takes into account your income as well as your family size. And if you make the payments for a specific number of years, there's even a chance that some of your loan could be forgiven after you pass a certain amount of time making that income following through with that income driven repayment plan.
- [17:00]
B
Yeah, and this is one of those things where you gotta go read the fine print, know what's going on. So I'd encourage you to go to studentaid.govidr so you can understand the income driven repayment plans. And then these can be coupled with. This has been another thing that's been been brought forward into the public dialogue into some of these forgiveness programs. What's the two most popular ones you hear about?
- [17:22]
A
Yeah, the two that we see the most often, the public service Loan forgiveness program as well as the teacher Loan forgiveness program. And they're pretty self explanatory. Public Service Loan forgiveness forgives the remaining balance after 120 qualifying payments for public service workers. So we want to make sure that if you're going to work in public service, that you work in a job that qualifies for this loan forgiveness and your monthly payment will be determined by your income driven repayment plan. Teacher Loan forgiveness is very similar, but rather than it being for public service, it's for teachers, you get partial forgiveness for teachers who teach for five consecutive years in a qualifying school. So you want to make sure the school that you're teaching in qualifies. And this will Forgive up to 17,500 for math, science and special ed, as well as up to 5,000 for other fields. So if you have student loan and you're going into public service or you're going to be a teacher, you may want to see if your loans might qualify for some of these potential forgiveness programs.
- [18:22]
B
Yeah. And then this leads to. Because we're about to enter a period where interest rates are going down. So immediately people go have questions, say, should I refinance my student loans? Well, this is part of that personal, impersonal finances. Because it depends. And especially we've come through a period where you even saw a lot of the federal student loan programs, they weren't accruing interest. They were completely, you know, it wasn't even just deferred. I mean, there was just no interest accruing whatsoever. And then we've even seen some discussions about complete loan forgiveness. So you can quickly realize, man, there's a big decision to be made. If I do try to refinance or consolidate, you need to pay attention to the different words I'm using. They're impacted as part of this discussion.
- [19:11]
A
Yeah. When we think about loan consolidation versus refinancing, they're not the same. When you think about consolidation, oftentimes you're combining multiple federal loans into one. What it allows you to do is instead of having multiple payments now going out, you have one singular payment going out, but it may extend the loan term. Again, it depends on the nature of the loans that you're consolidating. When you're refinancing, though, now you're replacing a federal loan with a private loan. And while it could lower your interest rate and it could reduce the monthly payment, there's a good chance that you may be foregoing forgiveness programs or you may be moving yourself away from income driven repayment options. So you want to make sure just because the interest rate is lower, you really understand the benefit that you're giving up. Because sometimes it might not make sense to refinance, especially if you're someone who's working towards ultimate loan forgiveness. This is another one of those areas where if you can do a little bit of research on the front end and if you can make yourself an informed consumer about your student loans, you can make decisions today that hopefully will set you up to be able to make much better decisions later on in your financial life.
- [20:19]
B
And don't be scared to do some of those break even analysis calculations that we've talked about with some other debt programs out there. If you know what the cost of doing this refinance is and you know what your savings on the lower interest rate are going to be, you can quickly decide if this is something that has a break even. But don't forget to take into account, especially if you're going from a federal program to a private program deal. Don't just be the siren song of lower interest costs. Make sure you know what you're walking away from on some of the deferment. The loan forgiveness programs out there. Measure twice, cut once, because this is a big, big decision.
- [20:55]
A
All right, Brian, so we talked about homeownership and mortgages. We've talked about student loans. I'd argue those are debts that, not that we love, we don't love any debts, but debts that are acceptable and we understand they're part of our process. But these next ones, man, I don't like these. And if you are someone who has had to use this, I hope that you're in a place now where you can move away from and never have to go back to it. Because credit cards can legitimately be napalm to your financial situation. We know that compounding interest can be our absolute greatest ally or it can be our fiercest foe. And when you're racking up credit card debt at 15, 20, 25% interest rates, you are digging a hole that gets harder and harder and harder to get out of.
- [21:40]
B
Now don't mishear us because we've done a lot of surveys out there, both for our clients as well as even you guys out there in our audience. And credit card use is okay. It's really what we're talking about here is credit card debt. That's where the no way definitely kicks in is if you're not paying off your credit card every month. Guys, you really are turning the most powerful force in your wealth building journey against you. This thing is horrible. So this is why we actually put paying off high interest debt as step three of the financial order of operations, even before we get to emergency reserves of step four. So we need to talk about should I invest or should I pay off my debt?
- [22:24]
A
Yeah, because people say this all the, well, guys, I'm young and I understand the wealth multiplier and I get that, man, if I have $1 at the age of 20, it can turn into $88 by the time I get to 65. So that's so powerful. Why on earth should I prioritize paying off this credit card debt when my money can turn into that? And the answer is it's really math. Brian, will you hold the thing up? We recognize that yes, every dollar that we invest can turn into $88 for a 20 year old by the time they get to 6. But do you realize that every dollar you carry in credit card debt can cost you 25 cents a year in interest? It is literally working against you. The only thing in the financial world that's better than that is step two.
- [23:08]
B
Yeah. And the reason a lot of people are throwing me like, what in the world? Why is there a step two with employer match before we get to high interest debt? Because you just said 25%. If you're paying 25% to your credit card company, that seems like a losing proposition. That's like two and a half times what we're hoping the s and P500 gets you in an investment. If you're doing an index investment of some sort, the reality is that your employer is incentivized to give you some type of matching contribution. I encourage you to look to see if yours does. If your employer is giving you 50 cents on the dollar for every dollar you put in, that's a 50% guaranteed rate of return. If your employer gives you a dollar for dollar match, that is the equivalent of 100% guaranteed rate of return. You notice very quickly, for all my math minded people, 50%, 100% is greater than the 20 to 25% that you get in step three with credit card debt. So even though I despise, I loathe credit card debt, a lot of you are going to still already come to this system with this decision already. It's water under the bridge. So I've got to figure out how I can triage to get you in a better place. I don't want you walking away from one of the strongest wealth building tools, which is your employer's retirement program. And I don't want you maximizing this retirement plan. I just want you to get your employer match and then let's get very serious about paying off the high interest debt.
- [24:30]
A
So then the question becomes, all right, well how do I do it? Okay, I'm sold. I got to get out of this high interest credit card debt. I've got to get it paid off. What are the methods? What can I deploy to do that? And there's really two different methods and we don't care which one we use because we want you to get out of the debt. The one that we often go for is the avalanche method. You take all of your debts and you arrange them by the highest interest rate first. And you begin attacking your highest interest rate. And you work from your highest interest rate to your lowest interest rate. Mathematically, this is going to be the most advantageous payoff plan. However, we do recognize that 80% of personal finance is behavioral. So some people love to use the snowball method where I'm going to arrange all of my debts. I'm going to arrange it by balance, from smallest balance to my highest balance and I pay off the smallest balance first. And then when I pay that one off, I'm going to move to the next one and then the next one. And what this allows you to do is get small wins along the way to hopefully build momentum. I will go on record as saying we do not care which one you use so long as you are paying off and knocking off the debt. Do whichever one is going to allow you to get the debt off your balance sheet.
- [25:43]
B
Now what you just didn't say though, and I see a lot of people especially they think they're financial mutants. This is not financial mutant territory here. But these balance transfers, these credit card companies will offer you 0%. And I think a lot of people who have credit card debt, they see this mirage or this siren song that says, hey, I can take the pain away by doing this 0% transfer. But there's usually some catches and I want to make sure you guys are aware of this, is that typically when you do a balance transfer, there is a 3 to 5% upfront fee just to even have the ability to do this. So there is a friction cost right there. And then what I don't like is you said so much of personal finance is behavioral.
- [26:25]
A
Yep.
- [26:25]
B
I don't like people feeling that the pressure has been taken off by just because they have this balance transfer that they now don't have to kind of really sharpen the pencil and figure out what's going on in their financial life so they can get out of this either make more money, spend less. How are we going to get out out of this horrible situation? I don't want you feeling like all is relieved because typically these balance transfers have a very small window that they give you this short term incentive and then normal aprs come right back. Plus that 3 to 5%. Just don't fall into this trap. I think it's one of those things where maybe there's going to be a financial mutant that is the outlier that can actually use this to speed up their debt repayment. But I think for a lot of people it could become a behavioral trap as well.
- [27:11]
A
So one of the things that people say is, okay, I heard about debt consolidation as it relates to student loans, is that something I should consider when it comes to my credit cards is debt consolidation. If I have a number of different credit cards and have a number of different balances out there, is that something I should consider consolidating? Well, let me give you the first sort of thing that I often see people do when they ask about how do I go about consolidating the first thing that a lot of people say, I've got a home equity line and I know that my home equity line that's going to be deductible interest and it's going to be a lower than credit cards. Should I consider pulling money out of my home equity line and then paying off my credit cards? Let me tell you why we do not love that strategy. Yes, it's a lower interest rate. Yes, the interest for home equity lines is deductible. What you have done now is you have taken non secured debt, credit card debt on things that you've bought, consumed and are gone now, and you have now consolidate it into secured debt. Your home, your shelter, the thing that puts a roof over your head. If you don't pay your credit card balances, yeah, it sucks. You'll go into collections, people will come after you, you'll get annoying phone calls, it'll ding your credit. If you don't pay off your mortgage and you don't pay your home equity line, they will come take your home from you. So don't ever trade unsecured debt for secured debt because it's not worth the risk that you are applying to your financial situation. So then the question becomes, if I am going to consolidate, how do I do it? Does it make sense? Is this something I should do?
- [28:42]
B
Well, yeah. And there is this process called debt consolidation where you can actually take multiple debts, typically credit cards or other consumer debt, and then roll it into one convenient plan. And sometimes the interest rate can be lower than some of the debts you have now, not all the debts. It could be more expensive than some of the debts you might have locked in with a lower interest rate experience. But it is one of those things where you have to be careful. Let's talk about how do I consolidate debt? Well, we wrote down a few steps. Bo, let's walk through. What's the first step on should you.
- [29:16]
A
Do debt consolidation number one, do your research. There are tons of fraudulent actors and fraudulent players out there who are offering very quick fixes only to leave you with even worse debt problems. They'll promise they're going to solve all of your problems and then what you end up doing is you end up getting yourself into a world of trouble. So make sure if you are going to go with a debt consolidation company, it is a legitimate company. You've done your research. It's not someone that you saw a banner Google Ad for, clicked on and all of a sudden gave them all your personal information.
- [29:48]
B
Well, I love because you got to find trusted resources. And one of my favorite is of course car Coward. I think that anybody who's out there ringing the bell to try to make sure people understand this, if you'll go to clark.com Clark has a lot of great resources on debt consolidation so you can kind of protect yourself but also know what's the right path on navigating this complicated question.
- [30:10]
A
And then the third thing is you want to compare the terms. You want to understand what's worse. The devil that I do know on the credit cards, the devil I don't know on the debt consolidation company. What are the terms? What are the payment schedules? What's the timeline? If I'm going to consolidate, am I actually in a better position by consolidating than I would have been just paying off the credit cards normally to the credit card companies? Just because you've heard it could be beneficial does not mean that it for sure will be beneficial for you.
- [30:36]
B
And then the last point on this is don't underestimate the power of changing your behavior all these things. When we give you tools on how you fix debt problems you have, I still want you to feel the pressure of the weight of leverage and debt is because I want you to truly catch the point that if you are in a bad situation now and you're going to make drastic decisions to get yourself out, how do you make sure you never ever, ever end up in this situation again? I share with you guys and when I was I was very, very transparent in Millionaire Mission when I talk about emergency reserves in step four. I think a lot of financial mutants like myself thought cash is trash. So let's use a home equity line to be our cash reserves adjacent or access to cash moment only to find myself that no, this is still a form of debt that from a behavioral standpoint pushed me out into taking more risks than I really should have put my financial life and my family in a jeopardizing situation. And I think a lot of people are way too comfortable, way too comfortable using debt these days. So understand how chainsaw dangerous any debt can be so that you don't fall into these traps.
- [31:51]
A
Debt is nothing more than a financial tool available in your tool belt. It's not one that you have to use. There's nothing wrong if you want to pay cash for cars, if you want to pay cash for a home, if you have the resources available to do that. But if you are going to use debt, you want to make sure that you use it responsibly. If you're a financial mutant, you want to make sure that you optimize the way that you're using it so that you can ultimately do money better.
- [32:17]
B
Yeah, go check us out moneyguy.com if you want free stuff. Everybody loves free stuff. Go to moneyguy.com resources and then remember, your money should work harder than you do. That way you can eventually quit working with your back, your brain, your hands. You know what, if you're paying all your money to the banks and high interest, you'll never own that game. Your army of dollar bills has to get to work. I'm your host, Brian Preston. Mr. Bo Hanson. Money Guy Team out.
- [32:45]
A
The Money Guy show is hosted by Brian Preston.
- [32:47]
B
Abound Wealth Management is a registered investment.
- [32:50]
A
Advisory firm regulated by the securities and Exchange Commission.
- [32:53]
B
In accordance and compliance with the securities.
- [32:56]
A
Laws and regulations, Abound Wealth Management does not render or offer to render personalized investment or tax advice through the Money Guy Show. The information provided is for informational purposes only and does not constitute financial, tax, investment or legal advice.