Why You Can’t Get Out of Credit Card Debt While You’re Still Using Credit Cards: Lessons from the sessions | 616

0:00You cannot get out of credit card debt if you're still using credit cards. So he had consolidated$68 ,000 of credit card debt into a loan, but then he was still using a credit card because he wanted the points. If the point system was working, you wouldn't be$68 ,000 in debt. They're winning. You're not winning. Ask the question and stop talking. The bottom line, stop relying on the credit cards. 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?

0:37Or you don't want to give up those pumpkin spice lattes? If you don't already know how to budget, or if you're using credit cards to get through the month? 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.

1:11In 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. We want to help you take the guesswork out of your budget, improve your marriages, and even bring your kids in on a 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.

1:38This is the Financial Coaching for Women podcast. You cannot get out of credit card debt if you're still using credit cards. What? I feel like that. Are you sure? I feel that we're all basically can understand that, But I did have a client that they came in and they came in because they were, he had, her husband had some credit card debt that she maybe shouldn't really realize how serious it was. And so that's why they're coaching. And so this is a big focus of theirs. So he had consolidated$68 ,000 of credit card debt into a loan. Oh, that was before we talked. It's fine. But then he was still using a credit card.

2:18Our last session, he was talking, she was talking about how to, what we were trying to talk about this. and he was still using a credit card because he wanted the points. It's our favorite. It's our favorite conversation to have. We love talking about credit card points. It looks like it worked really well for the$68 ,000. Yeah. Yeah. So that's kind of the premise of this whole discussion is, first of all, and that's not, the main thing is you can't get out of debt if you're still doing it. You really, it's not going to work because even if you do pay off some stuff, you're still in that cycle of being behind because you're using them every month.

2:49But also you're not going to get out of debt because you're not changing the habits. and you're not learning how to actually spend the money that you're making instead of spending imaginary money, that's what we should just call credit cards, imaginary money. Because it's like Monopoly money. It's not your money. It's not real. It's not yours. And it's not great. So anyway. Well, we can talk about the points conversation, which we've done at probably nauseam at this point. But I think what I told her is maybe go back and talk about, can we just pause for six months? What if we try this for six months?

3:20What if we do it this way for six months? And if you really still feel strongly about your credit card after we've learned how to budget, after we've really learned our numbers, because using a credit card doesn't force you to do any of this. It doesn't require you to actually budget and stick with your grocery limit or whatever, all of those things. It allows you to just to not pay attention. So if I said, why don't you go ask them that question? See if we can pause using that, make some progress, get good at budgeting, get on the same page financially. And then if he wants to in six months, go back, then do it.

3:49I think that's really important because a lot of people will try to tell their spouse what they're doing or what they should do. And especially if one person is dealing with the finance and the other one doesn't. So they feel like it's their burden or it's their weight on their shoulders. So they feel like, I'll just tell my spouse what we're doing. That doesn't usually go well. It just doesn't go over very well. And this isn't a parent-child relationship. We really want to remember that. We want it to be a partnership where you guys are making these decisions together. So we really recommend having the conversations, asking lots of questions, and put the ball in their court.

4:24Ask the question and stop talking. And let them have an input. Let them say, hey, look, I don't think what we've been doing has been working. What do you think? And then from there, you guys can make a plan together. I like the part where you said something that we're both really good at, which is asking questions and then stop talking. That's obviously a skill set I have. No, I'm just kidding. But I do like it because what it made me think of is a lot of times the conversations that you guys are having about money are in passing, are because of something stressful that just happened or is about to happen.

4:55Right before bed. It's just not the time. But what Vanessa is saying is suggesting that you make time on purpose and it's a full conversation. It's a real conversation. And that's actually very interesting because imagine if you just asked and then stopped talking. and it wasn't this back and forth or this like tit for tat or just a rushed conversation. What might you guys agree on? What might you guys come up with? It's such an interesting idea to do because a lot of times we're not talking about money in this way, in this deep way, in this dreaming way of what we want, what we're, what's possible.

5:27And your spouse may surprise you. I just want to throw that out there. I think that's a great point. We hear that a lot. I've had a lot of clients message me and us after, like we tell them, okay, after this call, you're going to go home and you're going to talk to your spouse. You're they come back and oh my gosh I almost peed my pants I was so nervous I was sweating and they said it wasn't that bad you're right so we do hear that a lot and like on the flip side somebody I think asked us like what podcast should I or I think that's actually what she asked me in the beginning what podcast should I send him so that he'll stop using credit cards and I was like well don't think that's gonna work in fact I and it's probably gonna do the opposite effect I just don't think that's a good plan but so we let's have this conversation and that's why I said frame it that way because it seems like a very reasonable request like just six months and then if you feel so strongly let's go you can go back to it but the but what we're going to tell you and you're not going to have him listen to this because we're talking to you any of you that are yeah is that the the fact is 68 000 like that's the data if the point system was working you wouldn't be 68 000 in debt if that if it was going well you wouldn't have that debt plus more credit cards that you're still putting adding debt on, which is not to shame you, but just understand they are winning.

6:39They are winning. It's not, you're not winning. The free money is what he called it. The free money. You're not winning because you're paying interest. You're not getting any free money. I actually remember telling my client that in a call. He said, what about all my credit card points? And I said, well, you're$32 ,000 in debt. Tell me how that's going for you. And he like stared at me. So listen, we understand, we get it. You want the points, blah, blah, blah. It seems like a, it seems like a win, but it's not. And when you're paying 24%, 28%, 29%, 30 % now, 33 % interest on these credit cards every month.

7:10You are not winning and you're$68 ,000 in debt. It's not great. And you know, the definition of insanity is doing the same thing over and over again, expecting different results. Okay. You're here for a reason. You're here because something that you're doing isn't working and you want out. You want a change. We're telling you that the change is stop using credit cards, stop relying on credit cards because, and also consolidating that debt. Oh no, baby, don't do that. We love when people come to us and I haven't done it yet, but this is what I'm thinking. We're like, okay, don't do that. Don't consolidate because we want you to be able to pay them off one at a time so you can see the difference.

7:43And also the problem here is, and we've had other situations and other conversations with clients based on their specific situation, right? But think about it. You've just now consolidated$68 ,000 into one credit card loan. The payment for that loan will never change. So whether you owe them$1 ,000 or you owe them$68 ,000, the payment that you're paying the bank is the same. It never changes. And so that clump of money, you can never get reduced. Whereas sometimes you can have these conversations with them and reduce the payments. And so you'll see the difference. You'll get that money back in your budget each month as you make payments.

8:17So there's a lot to unpack there. We can make that four or five different podcasts. But just know that it is a game that you're not winning. And the bottom line, stop relying on the credit cards.

8:34All right. So I had a sweet client who thought that this third paycheck they were getting, Shana, was extra. How many times do we hear that? How many times do we hear like, oh, it's an extra paycheck? Yeah. And sometimes they're really waiting on it. They're planning their whole financial strategy on it. They really are. Dang. Okay. And we want to tell you, look, when you get an extra paycheck in a month, that also means that you had an extra two weeks, right? So when you have those extra two weeks, you have groceries, you have gas, you have spending, you have different things you have to pay for.

9:07So you now have a six week budget versus a four week budget because that paycheck is not extra. If you use that paycheck for the quote unquote extra that you want, you're now going to be missing out on money that you needed to begin with. So just remember that paycheck. And if you get paid every other week, this is where that comes into play and a lot of people do so you will have another paycheck not extra you'll have another paycheck that month and which will require you to make a six-week budget because it's an extra two weeks of pay so you're accounting for that and so you need to make sure you allot for groceries and gas and weekly spending and everything that comes along with it so just just we just want you to be diligent when you see that extra paycheck come in don't don't throw a party just yet.

9:52No? No. So now they're not allowed to have parties? Gosh, Vanessa. No, I'm kidding. I'm kidding. But there is, we do once, like Vanessa said, once all of that's accounted for, because like you're saving, so your whole month's budget is not wrapped up, right? It's just a spending, like Vanessa said. All your bills are monthly, and then all of your savings buckets should hopefully be monthly. So then you just, it's just your spending. So then you might have money that you're going to put towards a certain goal, which is exciting. Maybe Maybe it's a party. Maybe it's a party. Could be a party. You don't know.

10:22Don't plan it around that third paycheck. Don't plan it in spite of that. But anyway, there may be some extra money to put towards something, but it's not an extra paycheck. It just has to be planned out just like every other paycheck. And like Vanessa, it does happen twice a year. I don't love it. I don't have any of the things that are extra, like the mortgage payments. Like it's not, it doesn't fit neatly in the perfect math box. Those every other week mortgage payments. It's so ugly. And I just think it's rude. So I just wanted to throw that out there. But it is a thing. and then some of you it will be in September and some of it will be in October where they get just depending on which day you get paid or whatever which is kind of cool but yeah just use it wisely yeah just put it in your budget it's not just this free money that you can put wherever yeah plan for it and account for it my husband he cracks up because every time he gets a bonus in 30 seconds it's dispersed already I have it gone and he'll go check the account to see what his bonus was and it's not there.

11:16And he's like, babe, where'd it go? And I'm like, I know us. I know us very well. And so it is already where it's supposed to be. And he's like, good call. So it's just because we've been there. Like when we were married before we started doing this system, we relied on that budget or that bonus to be able to carry us through the next couple of months. And I remember going, we are flat broke waiting on this bonus every three months to come. And so I just remember that extra money is not actually extra money. Use it wisely, plan for it, account for it. Yeah, I love that. So in that instance, then you might use the quote unquote extra that you have that month to fund some savings buckets that you can't necessarily fund every single month because you only have the regular paycheck cycle.

11:59And then, so yeah, so you just put your extra two weeks of spending in there. So you're going to add that in there and And then you're going to plan on purpose what number is showing up as quote unquote extra for the month on purpose what you're going to do with it. So all of these lessons from the sessions come from our one-on-one coaching calls that we have with clients. It's our six-month program. We absolutely love having people in this program. It really allows us to work on their situation. And a lot of times they don't think they can afford coaching until they can afford coaching. Until they see it and we see it.

12:28And so if that's something you're interested in, if you're thinking, I've done this by myself and I want to do it a different way. I want to see what somebody else sees with my money, go to budgetbesties.com forward slash coaching and book a free call and we can chat about it. If you make good money, but have nothing to show for it, this quiz will help you figure out what's really going on with your money and what your next step should be. You'll get a personalized result and a simple action step to help you feel more organized and less stressed. Go to budgetbesties.com forward slash quiz and take the free quiz today.

12:57That's budgetbesties.com forward slash quiz to find out what's really going on with your money.