When Paying Off Debt Isn’t the Right Move (Yes, Really!) | 449

0:00Today, we're bringing you real life stories and lessons from our private coaching sessions. If our clients are dealing with it, chances are you are too. So we're breaking it down to help you avoid the same mistakes, feel less alone, and walk away with some quick wins for your budget. Do you make good money but have nothing to show for it? Are you tired of living paycheck to paycheck? Do you have big dreams for your financial future? Do you want to get debt-free but you don't want to live on beans and rice? Or you don't want to give up those pumpkin spice lattes? Hey, it's okay if you don't already know how to budget or if you're using credit cards to get through the month.

0:31Hey, it's okay if you want to seem like you have your finances all together, or you're not on the same page with your spouse when it comes to finances. We know what you're doing probably isn't working, but guess what? You're in the right place. We're Shana and Vanessa. We're best friends, business partners, and master financial coaches trained by Dave Ramsey. We've been in business since 2019, helping hundreds of amazing people like you create budgets, get out of debt, stop living paycheck to paycheck, and know exactly what to do with their money. In this podcast, we'll share with you everything we know, plus everything we're working on with our clients so that you have the best chance at reaching your financial goals.

1:07We want to help you take the guesswork out of your budget, improve your marriages, and even bring your kids in on the conversation. We can help you no matter where you're at, whether you're the single mom who's never had$500 in her savings account or the millionaire who's paid off four real estate mortgages. And we're not going to shy away from the tough love. We'll tell you what you need to hear and encourage you at the same time. This is the Financial Coaching for Women podcast. I have this client and she's new and I love her so much and we are working it out, you guys. But she likes to do a lot of things.

1:39She likes to make a lot of decisions between sessions that maybe we didn't exactly talk about. And I think, I'm going to tell you exactly what she did, but I think that we know we've seen clients that want to make it more complicated. Like they feel like they need to be doing stuff and it's more complicated because that's like the, that is the status of anxiety and not drama, but like stress that they live in. They're just used to it. So they have to keep creating it. Like it's a self-sabotaging cycle. And so this client, we're, she's a teacher. Great. Part of what one of her big goals is to get what we teach to the point where she's got a paycheck all year round because we were setting aside some.

2:18Unfortunately, she started in June. So we're not there yet. But either way, what we do know is August, she's going to be completely without income because you know what's really nice for her husband, her ex-husband or her baby daddy, whatever. He does. He's a teacher and doesn't have to pay child support for that month. Isn't that nice? I was like, oh, but you still have to pay the child. You have to support the child. And I was like, how does that work? So she doesn't get her child support or a paycheck in August. Okay. It's drastic. It's serious. We're working on it. okay we're working with some options that we have one of those one of the parts of the plan was that we were going to save money that she did not need for the June and July budgets and put them and put that into August as a paycheck she decided between sessions that we had once maybe talked about at one point her paying off the set so she should do it so she just went ahead and took her$800 and paid off a debt because it made her she's like this I was annoyed at this debt so I just paid it off.

3:13I was like, but, and this is her, this is the cycle. Maybe someone, or you've been here. I feel good. I paid off this debt, but now in August, I have no money. So guess what I'm going to do? I'm going to get more debt because I didn't, I don't have any money. And so we just keep ourselves in this cycle. What we were supposed to do is she's going to have a great September. We're going to be so rolling. September is going to be fabulous. Like in September, we'll start paying off debt. We'll start setting aside money for next summer. We'll start paying off debt. It's going to be a party, but we're holding tight.

3:39We were supposed to be holding tight. We should not hold tight. He paid it off because it was annoying her. And it felt messy. She wanted it gone. I was like, I do not care what you wanted, Fran. We were not talking. Verbally, I need to get a contract verbally signed before we end a session next time with everybody. Don't buy houses. Don't pay off debts that we didn't talk about. Don't transfer money for random savings that we didn't. Let's just keep it the way it is. I think that may have been the session that you texted me and you said, can we put in our contract that they're not allowed to make any big financial decisions without their coach?

4:12in between coaching sessions. And this makes sense. Yes. I think we've had people do this. I had somebody buy a house. That's why she was saying that they literally came to their coaching session and said, Hey, I bought a house. Can I afford it? And I was like, Hey, no, actually you can. Yes. So I see this poor lady. She probably was so excited that she had the cash in her bank account. So she wanted to pay off debt and make like real progress. Cause she was like, I'm paying for coaching. I'm investing in myself. This is what I should do. So I'm doing it. Let alone in two months, she needs that money really bad.

4:44But oh gosh, I'm so sorry. Poor thing. Yeah. And I think - I see where her heart is. Yeah. We're going to work it out. She's very scrappy. So I know she's going to be all right, but I just, the thing is we've got to do one thing at a time and it does feel like you want to get this gone as quickly as you can, but trust the process. The process is there on paper for a reason. Okay. And sometimes paying off debt is just not the goal. And that unfortunately is the case right now. It may not be the goal at this moment. Give yourself a minute. Yeah. Give yourself a minute and it will become very easy and natural to pay off debt, not making everything tight and crazy because you supposedly got this win of paying off credit card.

5:20Nobody cares about the credit card. Nobody knows what we know is, do you have food to eat? That's what we're going to be knowing about. So anyway, it's just making split decisions. Again, that's what I'm saying. Like we keep ourselves in this mode of stress. That's just what we're used to. We're going to stop doing it. We're going to write a plan and we're going to stick to the plan. We're going to be okay with the plan. We're going to be okay with there's money in there. We're not going to find a way to mess it up or spend it or pay off debt. We're going to be okay because we know we're going to get that money.

5:45It's going to be fine. I'm fine. Everybody's fine. She's fine with it. I'm fine with everything. It goes along with my client's story because she was building cash in her account and the first thing she wanted to do was pay off debt. Like I remember one session I spoke to her and she said, Hey, I put$5 ,000 on the credit card. And I was like, why? But no. Why did you do that? She thought, so we always do. We rack it up and then we pay it off. And I was like, no, like I have been telling you that we need the minimum payment. That's all that you're doing. But to her, she saw cash in the account, saw an opportunity to pay off the card because she didn't want to pay the one month of interest on the card, even though she's been, okay, here's the thing.

6:25Yes. You may not be paying interest. We hear people, we don't never pay interest. You just pay it off every month. You're still paying and buying more things and racking up debt because you're not using cash. So it's like a whole cycle. It's again, a game that you're not winning at. They're winning the game. But she saw the cash in her account, saw an opportunity to pay off stuff and did it. And then realized like what the actual plan was, which was to build the cash in the account because we needed that to set her up to where she wouldn't have to use or be or rely on debt in the future. Because we needed to set her spending accounts up.

7:01We needed to set her savings accounts up. Her son was getting married. She needed the cash. Do you think she had the cash? No, you want me to tell you what she did instead? She pulled out of her 401k. Oh my goodness. It's just getting better and better. Yes, it is. It was a great session. She pulled cash out of her retirement account to pay for the wedding because she didn't have the cash because she used the cash to pay on the card that she wasn't supposed to. So it's like a whole cycle. I think, especially when you're starting this financial literacy journey, you may see cash in your account for the very first time and you want to do so many things with it, but you need to really take a step back and go, okay, what is the best decision for me first?

7:38What am I going to use this cash for to build a buffer for myself so that I'm not going back in debt ever again? Like what if this was the month that you never used credit again? And how, what does that look like for me? And how can I make that happen? Oh, let me tell you to make that happen. You have to fund your gas and groceries account. You have to fund your personal spending account. You have to fund your restaurant account or your kid's account because when you don't have that money, that's what you put on debt or that's what you rack up and use credit for because you haven't planned to have the cash available to spend on those things.

8:08All right, budget besties, it's time for some real talk. You don't need another budget. You need a budget system. Our simplified budget system is what you've been looking for. It's going to allow you to be bougie on a budget. You'll be able to easily set up a system that runs automatically and shows you exactly where your money is going. And it's going to give you permission to spend. Everybody loves that. Yeah. It's straightforward, pretty, and packed with walkthrough videos that break down the exact methods we use with our clients to get out of debt, set up a bills account, separate spending, build savings buckets, and end the paycheck to paycheck feel.

8:44If you're new to budgeting, this is the perfect way to jump in. And if you're already a budget nerd like us, you're about to meet your new obsession. This is the upgrade to your finances that you need right now. Yeah. So head on over to budgetbestdc.com forward slash budget and grab yours. Now back to today's show. I think that what stands out to me is that we just need to call this what it is. You're using credit because you're not managing your money. It's, you're not using credit because you're smart at points. You're not using credit because of any other reason. You're not being responsible to manage your own money.

9:20What Vanessa's saying is when we're using cash. It sounds super novel. No, you're using your own money to pay for stuff. That's what that is. When we're stacking up the cash so we can pay our own bills, so we can buy our own groceries, we're not relying on someone else. That's what credit is. It's relying on someone else to pay for something for me because I can't do it myself. What we know is that's not true. It's not the actual truth of the situation. It's just a habit that you're in. But I just want to call a spade. You're relying on someone else to pay your stuff for you when you're using credit.

9:48That's what it responsibility over there. That is not what we want for you. We want you to own your finances, know your numbers. And that's why the scripture says the borrower is slave to the lender. You're in this cycle of asking permission for money, for using someone else's money, paying someone else to use money. This is not the cycle that we want for you. This is not the life for you. We want to call it out right now. That's what it is. What we want instead, as we've said many times, is for you to be your own bank. We want you to see the cash stacking up. We want you to know I have money in this business account because I'm going to be paying all my bills next month.

10:21Myself. I'm going to be paying for my trip or whatever. Myself. I'm going to be paying for the groceries at the end of the month even. Whatever. Because I have money and I'm paying myself out of my bank account because I am using my own money and managing it. Well, it reminds me of like when you said that, I think of going back to being a dependent like on your taxes when you were dependent on your parents. That's what this is. You're depending on them to help you pay for this until you can get the cash to pay them back. It's not what we want for you. We want you to be able to do this on your own.

10:49But in order to do that, you have to have a system and you have to have the cash to do that. And it has worked every single time. I had a brand new call this morning with a future client of ours. And she said, look, we made$250 ,000 last year. She said, we live paycheck to paycheck for absolutely no reason other than we have no idea how to manage our finances. And she said that when they go to buy something, they will just pick a card the card that goes through like that's how they're doing things they have multiple cards on their paypal or venmo or whatever i don't even know how that works and then when they go or shop account so when they go to pay for stuff they just click until one allows it and says authorized or accepted or whatever that is yeah and so this is back to borrow a slave to lender what you said dependent you say a lot parent-child relationship that's what this is like let me eeny meeny money mo see who will give me money to buy this thing that I actually can afford with my own money.

11:42I just don't know it. Like, and again, I think we say it before, but your great grandma didn't have any credit cards. None. Zero. So I don't know if I can say grandma anymore. We might be getting right in there. But your great grandma for sure. This is a new thing. And no, the only thing that you've ever heard or learned about it is get that credit score, girl. Get your credit cards. Get those points. That's what you learned. So it's not your fault. We're not. Even teachers are saying that. It's not your fault. You don't know. You've just gotten caught up in the game that got all of the words thrown at you.

12:11When Vanessa says financial literacy, the only financial literacy you've gotten is what the credit card marketing companies have made sure that you got through their campaigns. That's fine. So you're just caught up in this whirlwind of credit cards, Venmos, affirms like everything's free and everything's available. We get it. It's just a lot. What we're telling you is that is a bad situation. I don't want that for you. It is the parent-child. It's the dependent. It's just you're borrowing money from people. That's what it is. And it's causing all of the stress and anxiety that you don't even know if you can afford something.

12:40You should know when you drive up and you see whatever it is that you're trying to pick, the credit card thing is, that you should be like, yeah, getting that. It's coming out of this account. I got the money. Hey, whatever. You can do any kind of dance or party or hair flip that you want because you know that you have the money. We don't want this. I hope it's going to go through or I hope we have enough credit left over and we'll figure out later how we're going to pay for it. Nope, we're all done with that. Yeah, that is not a life that we want for you. That's not a life that you should want for yourself.

13:04You are making good money. It's the most money you've ever made in your life. You're going to continue from this point on to make more money as you get older. And we want you to be good stewards of it, as we know that you want to be good stewards of it. So you need a plan. You need a system. It's way more than just paying off debt or anything. It is having a budget system in place. And I think we have one. I know. It's weird when you said that. I was like, I know someone. Yeah. OK. We have a budget system. Have we talked about it very much? Not really. But look, it tells you how to set all of this up.

13:34And not only that, Vanessa keeps saying financial literacy. We actually teach you. We have videos that teach you and walk you through everything we're saying because you don't know what you don't know. And that's okay. There's no shame. We get it. That's why we created a budget system. It's literally going to do the math and help you figure it out and the walkthrough training videos so that you can learn all of this. And once you do learn it, once you put it in place, your mind's going to be like, pew. And one of the number one feedback that we hear is, why didn't anybody tell me this sooner? Why doesn't everybody know this?

14:02We're trying. Okay? Tell a friend. Yeah, tell a friend. Phone a friend. Yeah. So get the budget system and then yes, tell all of your friends and take ownership of this. Understand you were never taught it. We get it. We all, we're all in the same boat, but learn now and take control of your finances. If you're tired of feeling like your finances are all over the place and you're ready for a simple set it and forget it way to budget, we have something special for you. Watch our automate your budget masterclass at budgetbesties.com forward slash automate. We'll show you step-by-step how to finally organize your money, how to set up your accounts and put your budget on autopilot.

14:36So your bills, saving, and spending run like clockwork. Imagine less stress, more savings, and the freedom to spend money without having to track every dollar or babysit your bank account. Go to budgetbesties.com forward slash automate to start today.