← So Money with Farnoosh Torabi
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- [01:47]
Lynette Calfani Cox
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Lynette Calfani Cox
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Lynette Calfani Cox
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Lynette Calfani Cox
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Lynette Calfani Cox
Terms.
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So Money Podcast Host or Announcer
So Money Episode 1945 the Truth About Debt Inequality and Starting Over.
- [02:12]
Farnoosh Torabi
You're listening to SO MONEY with award winning money guru Farnoosh Torabi. Each day get a 30 minute dose of financial inspiration from the world's top business minds, authors, influencers and from Farnoosh yourselves. Looking for ways to save on gas or double your double coupons. Sorry, you're in the wrong place. Seeking profound ways to live a richer, happier life. Welcome to SO money.
- [02:38]
Lynette Calfani Cox
Getting out of debt is one thing. The real challenge is staying out of debt. That's the real challenge. That's the real flex. Okay, but the way that I approach it now is it has to be strategic. Like you have to think about just because you get a credit card offer, just because someone offers you a mortgage loan, a car note or whatever, it doesn't mean you have to accept it. You don't have to say yes.
- [03:03]
So Money Podcast Host or Announcer
Welcome to SO Money everyone. I'm Farnoosh Tarabi. Our guest today is truly one of the original voices in personal finance and someone whose work has shaped how millions of Americans think about debt, credit and financial freedom. Lynette Calfani Cox is on so Money to talk about her powerful new book, Bounce Back, the Ultimate Guide to Financial Resilience and why resilience, not perfection, is the real key to getting ahead with money. And in this conversation, we go deep. We talk about why, despite decades of financial education, so many Americans are still drowning in debt, how systemic barriers and policy decisions shape our financial outcomes, and what it really takes to recover after life's biggest setbacks, from divorce and job loss to disasters and what Lynette calls dollar deficits. Lynette also shares her own deeply personal story of climbing out of six fig years of credit card debt, the mindset, shifts that made lasting freedom possible, and why you don't have to wait until you're debt free to start saving, investing and rebuilding your life. A little bit more about Lynette Kalfani Cox. She's a New York Times bestselling author, a nationally recognized personal finance expert, and one of the most influential educators in the financial literacy movement. She's known to millions as the Money Coach and she's appeared regularly on major national media outlets. She's helped individuals, families and organizations navigate everything from crushing debt to long term wealth creation. If you've ever felt financially stuck or wondered how am I going to pick things up? This episode is your roadmap forward.
- [04:45]
Farnoosh Torabi (Interviewer)
Let's do it. Lynette Calfani Cox, welcome back to so money. OG. The OG's in the house.
- [04:53]
Lynette Calfani Cox
Thank you. Woo. I like that. See, you didn't call me auntie. You didn't call me auntie. Oh gee.
- [04:59]
Farnoosh Torabi (Interviewer)
Oh gee. Original Gangster 2026. I've been doing this show for 11 years and so far this year we've had David Bach, we've had the founder of, we've had the founder of YNAB. We've had, we're going to have Mr. Money Mustache on the show. He's not even in personal finance anymore. But I'm pulling him back in. I'm roping him back in. I'm bringing back all the OGs and it's just wow.
- [05:27]
Lynette Calfani Cox
I remember just reading all of his finish rich books and being inspired by him and seeing the work that he had done for so long. And so that's awesome to hear.
- [05:37]
Farnoosh Torabi (Interviewer)
And we were all in the trenches when personal finance was just getting its place on the map. And I love that you have stuck with it for all of these years as well. You're one of the most prolific authors and experts in this space and wanted to have you back today to share a little bit about your journey, but also exciting news about your latest book called Bounce Back the Ultimate Guide to Financial Resilience. And I really want to, I want to dedicate a lot of this show to that theme because so many people are struggling today. Which brings me to my first question. Lynette, being that you have been in this space for decades now, I'm curious to know, from your perch, do you think that the service of personal finance, the industry, you and I in this world as experts and this sort of like service industry of personal finance, do you think it's improved over the years given that so many Americans are still in debt? Consumer debt is actually at its worst.
- [06:39]
Lynette Calfani Cox
Right.
- [06:39]
Farnoosh Torabi (Interviewer)
We have more credit card debt than ever. And that could be obviously a byproduct of where the cost of living is inflation. I don't want to blame people for this, but at the same time, there's some accountability to to talk about. But how would you characterize where personal finance has gone over the years?
- [06:57]
Lynette Calfani Cox
Overall, I would look at it from two perspectives. The short answer is, unfortunately, I would say that things have gotten worse and not better. Now I want to temper that, of course, by really relaying some degree of optimism about the things that have improved and the direction where I see things going. So you mentioned, for example, personal responsibility and the fact that things like the debt problem in America have only gotten worse over time. You're absolutely right about that. So when I first wrote Zero Debt the Ultimate Guide to Financial Freedom, it became a New York Times bestseller published in 2004. And unfortunately, the debt problem, we're at what, 1.2 trillion or so right now in consumer debt alone, at least a trillion and a half, 1.7 trillion in student loan debt. Auto loans are up there again, over a trillion dollars. But we have other forms of debt, buy now, pay later, hundreds of billions of dollars. So we're seeing that despite what we've all been out there pounding the pavement, doing and talking about everything from personal responsibility to working on the things that you can control. It hasn't gotten better for A lot of Americans, we still have 75% or so who can't even come up with $500 in terms of emergency savings. Obviously, housing affordability has become a major issue and that has generationally, potentially set a whole group of folks back. So if you just look empirically at the data, we're seeing an increasingly large gap between the haves and the have nots. Income inequality is spreading, wealth inequality is spreading. And some of this, of course, is very much tied to what we do as practitioners in terms of how we're talking to our audiences, what we're, the advice that we're telling them to do, et cetera. And yes, absolutely, accountability matters and personal responsibility. People who know my own story know, for example, I share my own journey about paying off $100,000 in credit card debt and I never missed a single payment and kind of what I did to get out of debt. But the reality is now, from this vantage point, having done this for two plus decades, and having talked to others who preceded me who did it for several decades, I see with more clarity and precision and insight now how essentially in this country we've erected barriers for some and given boosts to others. So I do think now, increasingly the conversation as personal finance experts is moving towards that recognition of how much systemic forces and environmental and structural issues play a role in whether or not people are able to get ahead. I think that's a very relevant, important and needed conversation. And so I'll end, and I know this is a long winded way to answer this first question right out the gate, but I'll end by telling you this story of a woman who used to work at hsbc. Her name is Loretta Abrams and she was the head of their Community Outreach division. She had been there for two plus decades and long story short, she retired maybe, I don't know, a decade or so ago because HSBC had been a client of mine and had done a lot of work to support my financial literacy efforts. When she retired, I flew out to the Chicago area, said, I'm going to take you to lunch. And I asked her pretty much the same question that you asked me, point blank. And I said, Loretta, what can I expect whenever I retire and whatever happens down the road, we're all in this fight together to promote financial literacy. And she told me something I've never forgotten, and she was spot on. She said, you're doing a lot of great work. Keep doing it, it's necessary, it's important. She said, but at the end of your career, you will likely look back and think it was a drop in the bucket. The problems are so massive, the need is so great, and the impact of all that we do, it's negligible over time. It keeps adding up. But other factors are playing a role too, and they're just as big and powerful. So she was like, keep hope. Don't give up. Don't just throw in the towel and think, because it is important, you're changing lives. But when you look at it statistically, it's gonna feel like a drop in the bucket. And at first I was like, oh, my God, this is depressing. But it also encouraged me because it really did drive home that, okay, what is the difference that I'm gonna make? And if I can change two lives today, if I can change 200 today, if I can change 2000 this month or this year, then at least I've helped those 2,000 or two people to live a better financial life. Wow, I'd have made a depression.
- [12:01]
Farnoosh Torabi (Interviewer)
Yeah. But the two truths can be held at the same time. She is right and you're right. What do you think are. What do you think is one of the biggest systemic mountains that we are currently climbing and maybe we'll never get to the other side of, at least in our generation? There are many.
- [12:25]
Lynette Calfani Cox
There are many. So one of the things that I think that we are increasingly recognizing is that policy matters. That policy at every level matters. And I don't mean just what's the policy coming out of Washington, D.C. what is the policy at your bank that you're doing business? So we've seen, for example, here's a case in point. In some zip codes, in some areas, the threshold for your savings or deposits on hold with that institution are higher than other places. And if you don't have the required minimum savings amount in your, say, checking account or savings account, you're going to be subjected to a fee. And the reality is that in lower income neighborhoods, lower wealth neighborhoods, those numbers tend to be higher.
- [13:19]
Farnoosh Torabi (Interviewer)
Right?
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Lynette Calfani Cox
Why is that? Why would a person who is living statistically in an area where there's less wealth be expected to have $250 minimum, $1,000 minimum? And I'm just randomly giving just numbers just to illustrate the point. Whereas someone in a higher income area is expected to have, instead of 250, 150 or a lower amount. So then what happens is that policy turns punitive for the people who can least afford it. So yes, they will have higher monthly fees, or yes, they'll end up bouncing checks because of how things are structured essentially. So I just want people to think about what policy decisions mean. Everything from do you make it hard for people to opt in or opt out? If someone is looking at retirement savings, is the default to have them enrolled in a benefit plan on their job? Or are you saying here, you just figure it out. Here's your 401k, your 403b, your 457 plan. You just, it's on, you figure it out. So all of these things really do make a difference because how many of us were taught this stuff in our families or from an educational standpoint? Very few of us overall.
- [14:36]
Farnoosh Torabi (Interviewer)
Yeah.
- [14:36]
Lynette Calfani Cox
So that's one of the big things that I think is worth us all examining and then thinking about how do we want to shift the needle on.
- [14:43]
Farnoosh Torabi (Interviewer)
That makes me think of prepaid debit cards and the rush card and that whole category of they were branded as let's help the underbanked bank. It's okay. You want to help the underbanked, why don't you actually educate them with no fee, bank accounts, financial literacy programs. Instead you're handing them cars with monthly fees and they can't actually go to a bank.
- [15:08]
Lynette Calfani Cox
It's.
- [15:09]
Farnoosh Torabi (Interviewer)
They're not, they don't work at a bank. It's just. Okay, let's. I know what you're doing. Actually. This is a money making scheme. Scheme. Let's call it what it is.
- [15:17]
Lynette Calfani Cox
And let's take that one step further. Yes, let's. You asked about the industry which we operate and we're operating within. The financial services industry, the financial education industry, the financial wellness space, et cetera. A lot of the folks that we do business with are financial services institutions. Their banks, their credit unions, their mortgage lenders, auto finance companies, you name it, Fintechs, insurers, and more. I say we cast a spotlight, right? And again, I'm not bashing the model for them to make money. These are all for profit entities, right? They're in business to make money. Maybe credit unions, obviously the exception there in terms of the model not being for profit driven. But the idea here is that every institution that's a for profit entity has a right to make money. I don't begrudge them that. But at what point does your entire business model rest on either exploitation or being punitive or gotchas? An inordinate amount of fees, high fees at every level. Just an easy slippery slope for people to quote, unquote, accidentally forget something, whether They've done a 30 day free trial with you on something and then they either forgot to opt out and then you hit their card. Not a problem because they opted in. But after they say, okay, I want to cancel this, you make it like ridiculously hard to cancel something or so there's all these financial like I said, gotchas can really trip people up in a lot of ways.
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So Money Podcast Host or Announcer
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- [21:04]
Farnoosh Torabi (Interviewer)
Let's transition now to your latest book. It's called Bounce Back. And there's also an accompanying workbook, Bounce Back the Ultimate Guide to Financial Resilience, in part inspired by your own Bounce Back journey of getting out of six figures worth of debt. That also inspired your very first New York Times bestselling book. But in this book you go through a lot of Ds, bouncing back from debt, disability, downsizing from a job, discrimination, divorce. Where do we start?
- [21:34]
Lynette Calfani Cox
I know, so it feels like. It feels heavy. Honestly, when I look back at my career, I'm like so many times, I was a little bit ahead of the curve when I come out with some of my books. So when I wrote Bounce Back, I knew that people were starting to be on the cusp of struggling. We were seeing inflation so high, and people were looking at their cash position and not feeling so good about it. I talked about this concept that I call the dreaded Ds, because they all start with the letter D. And you just mentioned many of them. Another one is called dollar deficits, which is, I'm broke, I have no cash flow, I have no savings. And what I really wanted to articulate in the book is that everybody is going to go through a setback of some kind. Everybody's going to face a challenge. At every level of income, at every level of wealth, there's something. We're all connected from a human standpoint. Some of us are going to go through divorce, Some of us are going to lose a loved one, maybe the main breadwinner family. Some of us might go through disasters, natural disasters, et cetera, earthquakes, fires, flood, tornadoes, et cetera. And so these are real things that all of us experience. And having wealth doesn't protect us. Having education, being a certain age, income, racial background or otherwise, none of it protects us from life's challenges. So I wanted to steer people towards the strategies that can help them to recover more quickly. We know that places like Pew, the Pew research center in D.C. they've identified a number of economic shocks that happen, and they've said, so many people have shocks all the time. And so what can we do to help them? So one of the things that I tell people to do in terms of where to start is to start with the pain point that is most bothering them. Right? It's like you're walking down the street and you feel a rock or a piece of something in your shoe. You're not going to just keep going. You're going to pause for a second and empty out that rock or whatever's in there because it's bothering you and it's preventing you from taking further steps forward. So some people are mostly pressed by the debt levels that they're carrying. Some people are dealing with damaged credit. That's their dreaded D. And so they really want to focus on improving their credit. Some people feel like they lack the cash reserves or the assets that they want to build, so maybe they would focus on dollar deficits. But really, obviously, it's very individualized. And I encourage people to first look at what are the top one, two, or maybe at Most three things that are most pressing for you and then start taking them one at a time.
- [24:09]
Farnoosh Torabi (Interviewer)
Seems like with a lot of these pain points, the first action step is to shore up cash. Except with some exceptions. But it seems like having some liquidity would solve for a lot of these pain points. But correct me if I'm wrong.
- [24:27]
Lynette Calfani Cox
I do think you're wrong. So here's what I'll say. Yes, money can be a help, and it can absolutely assist anybody from bouncing back if they've had a problem of some kind or a challenge or a setback. But actually, what I argue in Bounce Back in the first couple of chapters of the book is that you need to do something else before you attend to the personal finance, the practical and the tactical, the steps and the how to There's a reason we call it personal finance. It's about the individual. It's about the personal human being involved. And so one of the things that I tell people, and I'm sure some readers were shocked to see this, is I focus first on your overall well being, your mental health, your relationships, your physical well being. Because the reality is if you're not whole and if you're not tending to yourself in a way that is building you up and providing for solid decision making. If you're stressed out, if you're anxious about your money situation, if you're in reactive mode, chances are you're going to make poor decisions, poor financial choices. So I actually tell people to focus on things like wellness, on the importance of connection, and about building the relationships in their life, really attending to those, because it's that sense of community, the network, the people in your life that actually provide the grounding and the foundation for you to be able to become more resilient and to bounce back no matter what the situation. If you went through a divorce, if you lost your job, if you lost a house because of a natural disaster, again, having that sense of connection with community, the right people in your life, that helps you to recover more quickly. So I really actually focus on that first before getting to the have some money set aside and cash and all of that. And I know it's a little counterintuitive, but it actually helps people to build that resilience and that framework for recovery.
- [26:35]
Farnoosh Torabi (Interviewer)
It's so refreshing, I'm sure, to read that and go, oh my God, thank God Lynette doesn't want me to have a six month rainy day reserve first, because that's not gonna happen immediately. Let's unpack the cost of living dilemma because I Think for most of my listeners, this probably will hit home hard because even if we have our jobs and the cost of living, let's say this time last year, you're probably looking at an increased cost of living. Whether you know, you're talking about your insurance bill, your utility bill, your college tuition bill, if you've got kids in school, or just what do you advise people to do? Where can they cut when they feel like these are the fixed costs? It's not like they're eating out too much or they've got these subscriptions that they gotta cut back on. It's just these fixed costs that are eking higher. It's the non negotiables. They feel like they don't have fat to trim. How do they address this economic shock?
- [27:35]
Lynette Calfani Cox
Unfortunately, this is something that has hit everyone and I would argue that there has been a lot that's changed in the past year. Unfortunately, on the expense side, a ton has shifted and costs are up across the board for everything. And here's a couple of case in points. We had an accountant that we were using for over a decade, for I think 13 or 14 years or so. We recently fired our accountants and we have, we opted to search around to comparison shop to get better value, not only from the standpoint of what are we paying per month because we have a sort of like a retainer agreement with them and they provided some advisory services, quarterly check ins and things of that nature, but also the practical services that they provided as well. And we have a more complex and more robust life. And admittedly we own eight properties, we own a business, we have a complex financial situation. So we understand it's not going to be, it's not going to be cheap. However, we'd seen like we've seen with so many other areas, especially in insurance costs, for example, 20%, 30% annual increases. So after a while we were like, nope, this is it. This is, we're drawing the line here. And for us, we used to live in New Jersey, where, you know, you live in New Jersey, so obviously you know about this. One of the reasons that we moved in 2019 was in addition to me telling my husband, I have to get out of the cold, I'm not used to this. I can't take this ice and snow anymore. We said, let's look at our cost of living and our youngest daughter who will have five more years of school before college and let's decide on a place. And we chose Texas. We chose the suburbs of Houston. Now here's the reality. No State income taxes. Woohoo. Great. That saved me a lot of money on my state income taxes and what I was paying to the, on the business front to the state of New Jersey. However, having no state income taxes also means you have high property taxes. So yeah, now my property tax bill is over 16,000. I tell people when it comes to cutting, have realistic assessments about the cost cutting that you do today will likely not hold. It will increasingly not just edge up, it might move up significantly. So to the extent that you can, you might want to take a look back and do a little bit of forecasting. You can play around with calculators online, et cetera to help you with this. But take a look at the actual increases in things over the last say five to seven years. And then I think that you can realistically expect over the next five to seven years we're probably going to see a similar trajectory. Now major things like housing, we obviously we had a huge run up post pandemic in housing prices. Do I expect that kind of run up? Absolutely not. But generally speaking, so many other things, they're not going up by 3, 4 or 5% a year, they're going up substantially more. And I think that people should plan for that. The cost cutting is about values. It's about what is most important to you. The things that are must haves, keep those in your life. Comparison shop the other things maybe you look at what am I willing to sacrifice or cut back on?
- [31:01]
Farnoosh Torabi (Interviewer)
So what I'm hearing from you is the fixed cost or the fixed cost, you got to work around that. And maybe it means you got to bring in more income, honestly or what have you to support that. It's really these variable costs and the lifestyle expenses that you gotta scrutinize more. And you may think you've done everything in those departments, but actually take a.
- [31:23]
Lynette Calfani Cox
Harder look for sure. And it's not just okay, let me try to cost cut. You mentioned David Bach before and obviously he's known for talking about the latte factor and saying it's not about you just cutting out your job or your cup of coffee and whatnot. And he's right. To the extent that quality of life still matters. Because at the end of the day, if we keep asking people again as personal finance practitioners, cut, cut, chop this live according to such austerity and frugality. What happens is people get frugal fatigue, get exhausted by it and they cannot sustain it. It's the same thing as if somebody said I want to lose 20 pounds and then you say okay, go on a crash diet. Never eat another cookie or another piece of cake or potato chips or whatever. Yeah, they'll stick to it for a couple weeks, maybe a month or so. And then they're going to gorge because they're going to feel like I've been missing out kind of thing. So some things are about moderation or about values. That's why I say what is most important to you. If you said education is most important to me, I'm planning for my kids college education, then maybe you might want to bump up that 529 plan savings that you're doing. And then maybe you say, yeah, I do eat out two or three times a month. And maybe instead of two or three times a month, I can do once a month. Or maybe instead of going out to dinner, I can go out to lunch and that's generally speaking less expensive. Or maybe I won't order drinks when I go out. So you don't have to change your entire lifestyle and say, I'm not going out to eat anymore. Because who wants to live that kind of life? The humanity side of us recognizes that people feel like, I work hard for a living and they feel, quote, unquote, I deserve this and you do, but you also deserve not to be stressed out by your finances, not to be in debt, not to have to worry about money. So that kind of reconciliation has to happen. What are you willing to do or to modify and not necessarily have to give up altogether.
- [33:15]
Farnoosh Torabi (Interviewer)
Great points. You brought up debt. You're the money coach and you're also an expert on debt. And a lot of us are struggling with this in different ways. There's credit card debt, there's medical debt, student loan debt. And many people have a school of thought that I'm not going to do any other financial move, invest, save until the debt is out of the picture. What's your philosophy on that? Is there a way to kind of manage the debt while doing these other important things with our money?
- [33:45]
Lynette Calfani Cox
I am 100% not in the Dave Ramsey school of personal finance management that basically says sell everything, do nothing until you pay off your debt. To me, that is advice that is not culturally relevant. It is not contextually appropriate or advantageous for the vast majority of people. Now I recognize of course, that the debt is a stranglehold and I'm not trying to diss his method in terms of saying debt is putting you in bondage and that it keeps you from getting ahead. What I am talking about is the how to it. All right? And so for Me, if you tell people, do not save, do not invest, do not put aside money for other goals until you have paid off the debt, you'll have people years and years behind if ever. So I tell people, it's an uncomfortable truth, but you have to do both. You have to save at the same time that you're paying off debt. And then it's about prioritizing, about saying, okay, I have $250 that I could allot. I'm going to put 125 extra or whatever towards my debt payments and 125 into my savings. Because here's what's going to happen if you don't do both simultaneously. You'll have no cash savings and then something will happen, some kind of disaster. You'll get a flat tire, your kid will get sick and you'll have extra medical bills. And what's. You're not going to have any emergency savings set aside to deal with that. The plumbing, your toilet might get stopped up and you might have to call a plumber, who knows? But what's going to happen if you don't have cash? You're going to whip out plastic and then you're going to get deeper into debt. So it's not a fix long term and it doesn't help people to build the muscle of savings, of budgeting, of planning for the future. So this is what's called for with responsible stewardship, in my opinion, that you have to learn how to juggle and how to do multiple things simultaneously.
- [35:52]
So Money Podcast Host or Announcer
And then with regards to bouncing back.
- [35:55]
Farnoosh Torabi (Interviewer)
From the debt, let's say you've got your nest egg for savings and you're no longer put in the 125 here and the 125 there. You're now ready to put all, you're ready to get aggressive with the debt. How do you actually accelerate the debt payoff? There's the snowball and the avalanche method and we've. But I'm looking for some really aggressive tactics. And I'll say, like the people who've come on this show, including you, they get uncomfortable. They will spend a minimum six months to a year getting really uncomfortable. And that may mean working overtime, it may mean going back and living with their parents. It may mean going on a spending freeze. Freeze and austerity is the name of the game for six months. But then it's a lifetime of financial freedom. Tell me some methods.
- [36:45]
Lynette Calfani Cox
I love that because it does make people uncomfortable and it challenges them because so many times people say I really want to be debt free. I Want to pay this off, this is bothering me. They'll identify that as the number one challenge or goal. But then the reality is when you drill down with them, they want something else more than they want to be out of debt. They want to maintain the lifestyle. They want the freedom to spend any way that they choose. They want to be able to buy, do or have whatever they want. And so then we have a conversation about it. We question which is truly more important to you? Is it more important to make a small temporary sacrifice or is it more important to you to keep having the lifestyle or the flexibility or the freedom that you want? Now, there's a lot of strategies that people can do to get out of debt that are non traditional. And I don't for years I have not advocated what are conventional strategies for debt elimination. So one thing nine out of ten experts will say is pay off your high interest rate debt first. I absolutely, that's not my methodology. And honestly, again, looking at what we do as practitioners, if that worked, why would we have so many people in debt still it was actually effective. We wouldn't have generationally 10, 20 years worth people in debt getting out of getting out of debt and then getting right back in debt. So I don't think that's it. Again, I tell people to pick their area of pain and to do what is to attack the thing that is bothering them most. So sometimes what's bothering people most is not just that they have high interests rate debt. It might be that they feel out of control because they have too many credit cards. So in that instance, the strategy is pay down the cards with the lowest dollar balance first. So you just pick them off one at a time. In some cases, somebody might say, oh my gosh, I'm living too close to the edge. When I had my $100,000 in credit card debt, this was the case for me. I had very low interest rates back then because I knew how to negotiate. And I had 4.9%, 2.9%, I had several at 0% interest rate rates. But the problem was I was at my credit limits with all my cards. I was right.
- [39:01]
So Money Podcast Host or Announcer
Time out.
- [39:02]
Farnoosh Torabi (Interviewer)
Well, can you remind me what you were spending on? I'm just like, I'm so curious. I no judging, I just want to know because I'm so curious.
- [39:09]
Lynette Calfani Cox
I'll tell you when I look back and I reflect, I was like, you were a hot mess, girl.
- [39:15]
Farnoosh Torabi (Interviewer)
I want to live vicariously through this. It's so exciting.
- [39:19]
Lynette Calfani Cox
Yes. So I racked up the hundred thousand in credit card Debt in my previous marriage. Not my husband Earl, who I've been with now for 20 years, but with my ex husband. And it was everything from vacations and travel to the Caribbean to our kids, the older two kids, when they were in private school, putting their tuition on the credit card to literally land purchase that I did in New Jersey, a plot of land which actually turned out to be fortuitous. I later sold it and used the tail end of it after I had paid off 70 or 80,000 or so worth of my credit card debt. I used the last of, I paid off the last of it by selling that same land. So we worked on that. But lifestyle, when my ex wanted electronics or gadgets, whatever he wanted. He was a tinkerer and a person who loved to go to Home Depot and whatnot. And we would buy stuff for the house at Home Depot. Just lifestyle costs for a couple. What was two kids at the time, two young kids. And yeah, it was some of everything. And I didn't have fiscal discipline at all when I was getting myself into the debt. But now I know a lot of things. Of course, having paid it off and lived now 20 years into this first, it's really easy to get back into debt. Getting out of debt is one thing. The real challenge is staying out of debt. That's the real challenge. That's the real flex.
- [40:41]
So Money Podcast Host or Announcer
Okay?
- [40:42]
Lynette Calfani Cox
But the way that I approach it now is it has to be strategic. Like you have to think about just because you get a credit card offer, just because someone offers you a mortgage loan, a car note or whatever, it doesn't mean you have to accept it. You don't have to say yes. I wrote a book also called Perfect Seven Steps to a Great Credit Rating. Because one of the things that I found, of course, is when I paid off my credit card debt, my credit score jumped like crazy. And since then I've maintained very high credit scores. I've been featured on CNBC for having a perfect 850 FICO score and all the things. But credit and debt are opposite sides of the same coin. And so when you're managing your credit obligations wisely and of course paying your bills on time and et cetera, and keeping your credit utilization rate, especially on the credit card side, low, then you're going to have a higher FICO score or higher vantage score. The lessons though that I've learned in terms of just what to do on the creative side, it's everything from selling stuff, yeah, most of us have way too much stuff in our basements, attics, Garages, our drawers, electronics, household furniture. A lot of that stuff we no longer want, need or use. Just get rid of it. Sell that stuff. Let it help you to raise some cash. Think about the things that you now do, but that you say not only am I willing to sacrifice, quote unquote, or can I cut back, or am I willing to shave some of this, but think about going into turning a hobby into cash. So you were saying about maybe you have to take on a second job or just a second side hustle or income. I tell people like, don't even almost think about it like a job or work. Do something that you just naturally already do. And you're like, this is so much fun, I love this. Or you know what, I tutor or I mentor these kids in the neighborhood and they want to learn piano or.
- [42:34]
Farnoosh Torabi (Interviewer)
Guitar or dog sit, pet sit. Yeah, exactly.
- [42:37]
Lynette Calfani Cox
Just stuff you already like to do and you're like, wait a minute, I could charge for this.
- [42:41]
Farnoosh Torabi (Interviewer)
Yeah.
- [42:41]
Lynette Calfani Cox
Then it becomes a sort of. It's already natural and built into your lifestyle so it doesn't quote unquote, take up extra time. You're just monetizing that. It's also important for people to think about the ways in which they can be creative in a creator economy. We're literally in an economy where W2 employees, gig workers, freelancers, et cetera, are excelling in every area that we look at. And so maybe you think about what that means. It doesn't mean you have to turn into a full fledged influencer or anything like that, but it definitely means that you can be creative and in some cases you might be able to grab some extra income as you referred to in non traditional areas. I always say look for the riches and the niches. Right. And so that's just some points that I would tell people to start.
- [43:29]
Farnoosh Torabi (Interviewer)
Final question. It's not a bounce back related question, but because you are also such an expert in real estate and you mentioned land, I would love your take on real estate in 2026. There are people who have been trying to buy since 2020. It has only gotten more and more competitive as the market, the supply has gotten smaller and tighter every year since then and rates have gone up, they went down. 2020, 2022 was like the, the gold rush. And then from 2022 till now, we've seen rates pretty much climb. And I don't know, do you still think that it's a good time to buy? I feel like the narrative has changed a lot where renting has reclaimed its spot as like, hey, Brighton looks good, pretty good, you know, as a strategic place to, to wait it out and in the meantime maybe put your money in the market. But the market now is not looking very good either. So I don't know, what do you think?
- [44:29]
Lynette Calfani Cox
Yeah, I think it's a very much a mixed bag when it comes to real estate right now. And I'm saying that from the standpoint of having bought, and yes, I referenced that we owned and we sold one in December. We owned eight properties, our primary and seven rental properties in multiple states, in North Carolina, in Raleigh, North Carolina, in Austin, Texas, and in the suburbs of Atlanta, Georgia. And again, we live in the Houston suburbs. But generally speaking, we've definitely seen the market soften. Now the tide is turning to becoming more of a buyer's market. But here's the headwinds that buyers are still facing. One is of course affordability as a whole. Two is interest rates as you mentioned, still way above 6%, six and a half percent or so. And you have a lot of Gen Xers like myself and even baby boomers, et cetera, who are sitting on mortgages that were 4% or lower even. And we're loathe to give up those interest rates. And so you don't have as many people moving. A lot of people are aging in place and staying in their homes. So yes, the inventory problem that you mentioned is very much one that's firmly in place. If you look at the data from nar, the national association of Realtors, that unfortunately the age of the average first time home buyer is just climbing. Right. So it's no longer the case that you're 28, 38, and as you're a first time home buyer, it's continually going up. What we've done in our family, we've given our children. We recognize that especially because we're African American, there's a huge, not only wealth gap, but there's a homeownership gap in this country, which in large part accounts for the wealth gap. About 75% of white Americans own their own homes and about 45 to 48%, depending on whose data you believe of black folks own their own homes. And unfortunately that's like the same that it was 50 or 60 years ago when housing discrimination rules were put in place to try to beef up lending, to stop redlining and historically discriminatory practices. So we again evidence that we've not seen much change on that front. What we've done is we've given our kids what we call a wealth starter kit. And I think that a lot of families are going to have to recognize that the only way the typical younger, millennial or even Gen Z is going to get into the housing market is with family assistance on the down payment front or going through down payment assistance for programs. And there's a great website out there, down payment resource that will show you in your state, in your area funding if you're a first time homebuyer, some hope that you can get on that front. But we told our kids we'll buy you your first house, we'll put you through college debt free and then we'll buy you a car, as my husband likes to say, because then drive away now. We've given you everything that we can give you. We don't want you living in our basement. We don't.
- [47:35]
Farnoosh Torabi (Interviewer)
When I was a kid, I thought I need two things to earn my freedom. I need a license and I need money. And I know you've written many books about kids and wealth, but I love this title, the Wealth Starter Kit for your Kids.
- [47:47]
So Money Podcast Host or Announcer
Hold on to that.
- [47:48]
Farnoosh Torabi (Interviewer)
That could be a great next book. Lynette Californic Cox, thank you so much for popping by. It's so great. Don't let another I think it's been at least a pandemic since you've come by. Please let's not have another pandemic for obvious reasons happen. Congratulations on everything. We are so grateful to have you in this community, in our community and on so Money. Thank you.
- [48:10]
Lynette Calfani Cox
Thank you for having me. I appreciate that.
- [48:14]
So Money Podcast Host or Announcer
Thanks so much to Lynette Kalifani Cox for joining us. Her book again is called Bounce Back the Ultimate Guide to Financial Resilience. I'll see you back here on Wednesday. And I hope your day is so money.
- [48:39]
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