What an another awesome Google Hangout featuring some motivational ladies. I definitely felt blessed to be in with good company as they shared some great tips and strategies to help women conquer their debt.
As promised, the video and transcript are below.
Transcript follows below……
Jeff Rose: This is Jeff Rose with the DebtMovement.com. Welcome to our second Google Hangout. We’re only three minutes or two minutes behind schedule. So today, if you can see all our participants, you will probably notice that one thing is not like the other, that one thing being myself. I am the only male who is joining us today, but that’s okay. I’m going to talk very, very minimal today but I have some awesome guests.
Today’s topic is Women and Debt – Taking Back Control. We have some awesome guests who all have some debt experience that they can share, also some of their expertise to help you get out of debt. Before I introduce them, I just want a few quick announcements.
February 1st is actually the beginning of the 90-day period of paying off debt. We’ve been getting people enrolled, getting people signed up. We also have been having some prepayment in debt. We have almost 2,000 people signed up already, which is amazing. We already have paid off, I think $150,000 of debt and it just seems like it keeps snowballing.
There are people telling me, “Hey, we just discovered the Debt Movement. We want to join. We want to help out. We want to sign up.” So I’m just loving what we’re doing. If you have it, share it with your friends, your coworkers, anyone that you know that’s struggling with debt, I please encourage you to do so. It’s easy with Facebok, Twitter, or Google+, everything nowadays, or just the good old going next door and knocking on your neighbor’s door.
Let’s go ahead and kick off today’s Google Hangout. Our first guest is Farnoosh Torabi, and if you’re her friend you can call her Noosha, I’ve just learned. She is an author, speaker. She is a media personality. You might have seen her on the Today Show and also on Yahoo Finance and I think about 24 other places. So we decided to have her on the call with us.
I also have Meadow DeVor who is a money coach, author, and she brings, I think a certain amount of sass that I felt this Hangout needed. I’m glad to have her on board. She’s a fiery redhead that will soon be introducing herself.
Then we have Carrie Rocha who is the author of Pocket Your Dollars. Her book was just recently released and it has some awesome feedback. I know in the personal finance blogging community there have been a lot of people raging about it and I know she’s got some good press as well.
Then Carrie Smith who is an entrepreneur, writer, I think she contributes to 24 different websites, as far as I know, including my own. She’s also the Debt Movement Community Founder.
That is my brief introduction and I’m going to shut up for a second, but I would like for them to also introduce themselves in why they want to take part in this debt movement and what they have to bring here today. So, Farnoosh, would you mind kicking this off?
Farnoosh Torabi: Sure. Thanks, Jeff. That was quite an introduction. I don’t know if I have any more to say about myself, but I could say that I’m really excited to be here particularly talking amongst women, to women, about women.
I think that while there are a lot of strides we are making in the career space, in the financial world, in the world at large, there are some specific concerns that women have when it comes to money. We make less than men. We tend to declare bankruptcy more frequently than men. A lot of us are single mothers. A lot of us will end up divorced, unfortunately, and that will mean bigger financial obstacles ahead.
I think that there are a lot of specific concerns that women have as it relates to money. I’ve helped a lot of women over the years and I look forward to fielding as many questions today as possible. It’s great to have this female power, so I’m excited to connect with as many of you as possible. I’m very hopeful that we’re going to be able to help a lot of people today.
Jeff Rose: Awesome. How about you, Meadow?
Meadow DeVor: My name is Meadow DeVor. I am very passionate about debt pay up and about people’s relationship with money, specifically women. I work mostly with women. I was, like Farnoosh said, a divorced mom. I basically lost all my money and ended up $570,000 in debt when I got a divorce at 35. Over the next three years, I ended up paying all my debt completely and because of that, I wrote a book.
The people that I work with, I work with repairing their relationship with money – the emotional relationship that they have with money – and what’s going on with them, why they got into that specific place. I have different angle than a lot of people. I don’t have a lot of money experience except for screwing it up. But I do understand emotions and I do understand women’s need to be responsible for themselves and to create a life that they really are proud of.
Jeff Rose: Awesome, cool. All right, Carrie Smith?
Carrie Smith: My big passion right now is obviously with the Debt Movement. I’m really excited that I can contribute and I just can’t even explain how important it is for me. I’m a young adult, still in my 20s, and I have already been a $150,000 in debt and got out of it. I’ve already been divorced, went through the whole thing.
I’ve experienced a lot, and I really like to help and reach out to people who are starting their career and just starting out in life like I am and avoid the mistakes that I did. When you’re so young, you shouldn’t tie yourself up with some of the things that a lot of young people feel like they have to and that American Dream is out there. It’s not something that you absolutely have to do.
I’m really excited to share my story and interact with everyone in the Debt Movement. I love talking to the community. There are some really awesome things that we’re going to be doing, and I’m excited about it.
Jeff Rose: Cool. Carrie?
Carrie Rocha: All right. Hi, I’m Carrie Rocha. In June 2006, my husband and I had between $50,000 and $60,000 in debt in addition to our mortgage. We decided to get out of debt and we wanted to stay out of debt for the rest of our lives. It took us two and a half years from the day that we made that decision to the day that I wrote the check that paid off the last of those debts.
After we did that, we went, “How did this happen?” Not, “How did we get out of debt?” We already knew we should have a budget. We knew we should have an emergency fund. We’d known those things. In fact, I’d been tracking expenses for three years watching us fall into debt. So what happened and what made it so that with this behavioral change that we needed stuck this time?
When we looked back and had some introspection about it, we realized that we’d changed on the inside a lot like what Meadow was talking about. We changed our attitudes about money and because we had made those internal changes, the behavior and the healthy choices that we wanted were a lot easier to make on the outside.
I started a blog in March 2009 to just share some of what my husband and I had learned in our journey. Now it’s my full time vocation to just blog and inspire other people. Like Jeff mentioned upfront, I released a book about three weeks ago about the five attitude changes that my husband and I went through getting out of debt. It’s just been so well-received because people know a lot of what we should be doing but we’re not doing it. We need to get out why that is. So, I’m glad to be here.
Jeff Rose: Awesome. Let’s see if you can expand upon this. I’m just going to ask questions that I had – I’m sorry, actually Carrie Smith had helped me out with, I don’t want to take full credit for it.
As a woman, can you share some of the biggest obstacles you faced with that that maybe would be from a different perspective than what a male would have? Carrie do you want to go ahead and continue with that?
Carrie Rocha: Just making sure. Yeah, when you talked about obstacles with debt, when my husband and I were getting out of debt, we didn’t have kids at first but now I have two kids that are four and five. I recognize how differently my husband and I think about providing for our kids. Certainly my husband’s a provider and he cares about that. I tend to feel more guilt-ridden about things. Guilty if I don’t buy them things, guilty if I buy myself something instead of them.
As I get together with girl friends and we talk about it, they go,
“Me too. I feel guilty. I can’t buy myself something nice.” In fact, one of my friends said, “I had to ask for gift cards for Christmas to places where I knew I couldn’t buy something for my kids because I knew that if my family gave me one to Target, I’d feel guilty if I spent it on myself.”
Talking about debt, it ties in to how we spend our money. I know that our emotions and that there’s this guilt place that a lot of women operate out of and because of it, we can overspend.
Farnoosh Torabi: I would just chime in and say that there’s absolutely more of an emotional toll that women take when it comes to their finances. We have a hard time compartmentalizing like, this is our money; this is our relationship; this is our career. It all gets intertwined and it’s really hard to focus very black and white.
But I would add too that from a practical standpoint, it’s a lot more difficult for women to get out of debt because it cost more for us, as women. I just had a story for Yahoo Finance on how we have to spend more for things like healthcare and deodorant. We don’t negotiate as much as men, so sometimes we put ourselves at risk of paying more for a car or home insurance or mortgage.
I think from a technical standpoint too, the odds are a little against us because we have to fork out so much more money than men do, on average, which keeps us buried in debt potentially longer. Or it’s a little bit harder for us to get out of debt.
Meadow DeVor: I agree with what you said and I would also add that as a stereotype or as a gender, we’ve been programmed to be the princess of the fairytale and hoping that that prince comes and saves us. We weren’t taught by any of the stories that we grew up with that you’re the one that’s going to save you. You’re the one that’s going to have to negotiate your salary. You’re the one that’s going to have to have that money set aside. You’re the one that is responsible for knowing how much money you’re in debt for or if this house is upside down, regardless if you’re in a marriage or not.
I think that the biggest obstacle that I see for women is that we didn’t understand how deep our responsibility to our own financial well-being lies. Like you were saying Carrie, the guilt piece of it, that we feel guilty for wanting to know that or asking for those questions, it’s just so interwoven into being female. It’s a tough lesson to unlearn.
Carrie Smith: I can definitely piggyback off that and say that I can even go a little bit deeper just to say that when you do experience those things, because I know I did as well, you grow up. You’re expected to know it but you’re not taught it. Then there’s that whole, who’s paying the debt? Because we bring both of the debt together, and you’re not sure. Even if you do make his money and he makes his money, you can’t out-make him or you don’t make enough. It is a lot to go through, for sure.
When you do come up to the place where you’re divorced and you don’t know all of the finances, you’re left out there hanging and you have to scramble. I’m sure every one of you guys understand that too. That was a big for me – not understanding all the aspects of it and then having to create a career out of thin air and overcome the debt obstacles myself.
Farnoosh Torabi: But I will say this: As women, maybe it’s just because I’m biased as a female and because I’ve watched other amazing women dig themselves out of debt and find that job, I feel like women are more capable of bootstrapping and really rolling up their sleeves. Once they’ve made up their mind to attack the dilemma, they will do whatever it takes – especially if it involves children, the welfare of their family. In that way, I think women are really phenomenal as a gender. We can take the heat. We look forward to the challenge in some ways. It’s freakish but I think that’s why we prevail in so many situations.
Jeff Rose: I’ll share with you a familiar situation. As a financial planner, most of my clients are baby boomers and up, so what I see a lot of is you have the husband who is the primary breadwinner, the spouse that was a stay-home mom, where the spouse knows nothing about the finances, even still. Now, we’re finally seeing a shift.
Now we’re seeing more spouses, more women stepping up. In my own household, my wife, she’s the one that does the checking. She lets me know when I can write a check and how much I can write it for. She helps with the bills. She lets me do the investments and all that stuff since it’s my day job. But we have a good balance to where … if we’re going to make a major purchase, we always talk about it. For us, anything over $1,000, we also have a talk.
What are some tips that you can share with women to either start taking some responsibility or at least sharing the responsibilities with their spouse? How can they actually get that going in their household if they’re not already?
Meadow DeVor: I’ll step in first. I think the primary thing that you have to come from is understanding what the truth is and being willing to speak the truth, having good communication around money. You can’t communicate your desires, what you want, your actions, the results that you’re going to get financially if you don’t know the truth yourself.
As I have gone through this journey myself and also worked with a lot of women in it, I cannot underestimate how many people don’t understand what the truth is. The truth is the actual number, what your net worth is. If you don’t understand that worth, and you’re spending month to month to get by, you’re not going to get to your financial goals.
Carrie Rocha: One of the things that I would add is there are so many tools available in this technology age – whether you have a smartphone and there are apps or there are programs you can use on your computer. From something like Mint.com where you can sync up your bank accounts and both parties can have equal access to look at not just each individual transaction on what’s being spent, but aggregated numbers. Where is the money going?
I think you’re right, Jeff. I have an increasing number of my friends that I can talk to where even if they’re stay at home moms, they’re the ones that are doing the checking and the banking and running the day to day finances, even in some cases where they’re not working outside the home. There is more of a shift in that but in the situation where somebody doesn’t know, get access to it beyond just certainly your logins, but plug in to some of the free tools that exist online so you really have the information that you need.
Farnoosh Torabi: Right. I think the ultimate goal is to level the playing field. If you have one spouse that’s bringing in more money than the other or one spouse who’s not working at all, I think it’s really easy for that spouse who’s not working or making a lot less to relinquish responsibilities and just bury his or her head in the sand and not have to worry if the mortgage gets paid or how much the cellphone bill is. I think that’s a really slippery slope. Transparency is really key, as Carrie pointed out. You just have to be able to share your account, do it online. There are sites like Manilla and Mint and the others that we love that allow you, for free, to really just track your expenses.
But Jeff, you and your wife have a really good strategy too, which is to talk about thresholds of expenses. If there’s something that’s going to come out of the community account, that’s more than a few hundred dollars or a few thousand dollars, we have to talk about that. I think that’s really important because sometimes couples go months without talking about money but there are all these missed opportunities to do it and this is a great one – like if you’re going to go out there to buy a camera for the household or get new tires for the car, talk about where you can shop around, or what kinds of deals are out there.
It has to be a joint effort, otherwise it’s really easy for one member of the relationship to relinquish responsibility and that can really bite you. Not even if you’re splitting up, but if your spouse is in the hospital or is on a trip and you can’t get access to the person who’s normally paying the bills and addressing the finances, you have to be able to step in seamlessly so that nothing goes out of whack.
Carrie Rocha: Jeff, I just want to say, you guys have a $1,000 threshold? That’s pretty impressive. Ours is $50 so, let’s stay in orders of magnitude here. And really, there are things that I spend $90 at the grocery store, it’s not that but my husband and I really have said, look, anything that’s material that we haven’t talked about in advance, we want to talk about it.
One of the reasons is that we’re really prone to impulse shopping and that’s part of how we ended up in debt. Not just all through those sort of consumer things, but recognizing that talking about it will help balance and just make sure that it’s something that we need or that really fits with our family’s priorities and isn’t just a spur of the moment thing. For anybody else who’s threshold of what they need to talk about is way less, mine too.
Meadow DeVor: Well, it helps to be single, so I don’t have to ask anybody.
Jeff Rose: Awesome. Anyone else on that topic?
All right. This will be a touchy one. I have my personal opinion on this and just looking to see what you think.
Does it ever make sense for spouses to have separate checking accounts, separate savings accounts, or having their money separate?
Farnoosh Torabi: I’m a big advocate of joint and equal accounts. Like we said earlier, it’s really important to have transparency in the relationship and for each member of the relationship to feel accountable in some regard, in some degree in the relationship, financially. I think a joint account serves that purpose – whether it’s a joint account that’s going to help to pay for your joint expenses or joint savings goal down the road. I think that can be really healthy and helpful for the relationship.
Then, in order to avoid these feelings of guilt that women have about buying things for themselves, and likewise men, I think it’s important to have your own slush fund, your own personal fund for treating yourself to whatever it is you want to treat yourself to and you both agree on what that percentage of your salaries will be. If it’s 10% of our joint income goes to our joint savings account and then 5% goes into our play money account for ourselves, I think that can be another way to keep the financial relationship healthy and eradicate any sense of guilt.
I’m a proponent of both a shared account and of course independent accounts to maintain your autonomy in the relationship, really.
Carrie Smith: I agree with that. I like to call that my “yours, mine, and ours”. It definitely keeps the guilt at bay and I like your idea about having the joint for the goals too, savings for the goals, not just paying money for the bills and stuff like that.
Carrie Rocha: We have joint accounts and within that we each have some money that we set aside and earmark. Using various technology, I use the software You Need a Budget to manage our budget. Even though we have a joint account, there is money that’s earmarked for me and earmarked for my husband.
The only situation where sometimes our money ends up being separate is both my husband and I are business owners and for a variety of legal and tax sorts of reasons, we’ve needed to have some things separated because of the way our ownership structures are to give us maximum tax advantage, but apart from that, anything that’s a part of our family, we agree we’re one family.
When we decided to get married we were for better or for worse. At times when he was making more, when I was making more, all of our money went together and then from there we agreed on how much we set aside for us, for our kids, for our vacations, for all of that that we’re saving for at any given time.
Meadow DeVor: I will say that if you don’t have a really healthy relationship with your own money, to try to combine with another person, you’re going to bring your dysfunction, you’re going to bring your shame, you’re going to bring your guilt and all those things. They need to be cleaned up before you can even hope to have a working relationship with somebody else’s finances.
I would definitely urge that if you feel ashamed of your spending or of your debt or anything like that, that you get help with that first before you try to open that up and deal with somebody that’s like, “Why did you buy those shoes?” Because if you don’t feel good about your own spending and if you feel like you need to keep secrets or anything like that, you’re not going to be able to meet somebody in a clean and healthy place.
Jeff Rose: All right. That’s actually kind of my feelings. The only personal example I had was with a young couple that’s about our age and they totally had separate finances. She made her money; he made his money. She was buying Louis Vuitton purses; he had no idea. They’re just things I didn’t like. I just didn’t think they had a very healthy relationship. They ended up getting divorced. That’s just one example. They didn’t have the money talk. I think it’s so essential. Anyway, that’s why I was curious to hear the input and definitely some good advice there.
With debt and with women, sometimes it’s hard to find an ally, someone you can lean on, especially for single women that are in debt. They don’t have a spouse to help them out.
What would you say are some good resources or just different ways that they can get tips to help them with their debt situation? If you had to point someone in the right direction, other than the Debt Movement, of course.
Meadow DeVor: Farnoosh’s book. I have bought it so many times for so many young girls. I’m serious. It’s been a graduation gift for every single girl I know.
Farnoosh Torabi: Oh my gosh, I was going to say all of our resources, all of blogs, all of our books and future books, I think … Thank you, but I would add to that there are a lot of women who have been there and done that. I think you’re going to find who those women are. A lot of them are online sharing stories with their blogs, but then it could be your neighbor, it could be your sister-in-law, it could be your friend at work. Not to make any assumptions, but I think it’s important to have a buddy to go through this because as everyone here knows, it’s a very emotional process and you need to feel supported and you need to learn from other people’s mistakes.
I would also say if you don’t want to share with someone personally because you’re not comfortable with that, there’s always the National Foundation for Credit Counseling, there’s Money Management International – the first meeting is free – they’ll actually help you figure out what should your budget be, how are you spending your money. If it’s decided that you need to enter a debt management program, then that’s the next step. I think that costs $10, $15 a month, but if you’re really in a bind, they might be able to waive that fee for you.
Unlike these debt consolidation programs, or these get out of debt quickly programs, it’s a process with debt management. It could be two, three, five years, but the good news is it doesn’t damage your credit. I think, honestly, going through a process to get out of debt, as Carrie and a lot of us here know, it’s good to go through the motions of getting out of debt and feeling what that feels like because if you don’t, and you just wake up one day and the debt’s gone, it’s like winning a lottery. You’re likely to go back to those bad behaviors because you don’t know what it feels like to go through that hard process of shedding that debt.
Talk to your girl friends. They’ve probably got some stories to share and some empathy, or tap into these professional resources. Why not? The first meeting is free. It can’t hurt.
Carrie Rocha: I will just say on the word of caution side of that. As you’re connecting with some of your friends, follow your gut. If you’ve got friends who are consistently telling you, “There’s nothing more with buying more.”, “You don’t have to worry about it.” Be mindful of that. Just because they’re your friend or they’re your sister or they’re your mom, you might want to judge someone by the fruit of their life and not have the fruit be what kind of car they drive or what kind of clothes they wear, but I mean is their financial house in order?
I know in my family when I was getting out of debt, I knew that I had an aunt and an uncle, both, who really, I knew, had good control of their finances. I’d watch them from childhood all the way up and had seen decisions they had made, listen to them talk around the holiday table. I can remember making a phone call to my uncle and just saying, “This is what I want to do. I’m changing my financial life, etc.” and he said, “You’ve got the cart before the horse.” He just gave me a few words of advice. Plug in to some people but make sure that they’re also healthy people themselves so you don’t follow the blind leading the blind and you both end up in a ditch.
Farnoosh Torabi: Good point.
Carrie Smith: One of my favorite resources that I used when I was trying to learn everything on my own was to go to the local community college here and then took a two-month course on personal finance, budgeting, and it was a really good way to connect with the people around my age too that were going through some of the same things. It’s so weird that nobody teaches that in high school. They don’t. Even your parents sometimes don’t teach you. I was able to connect with some professors there and learn the ropes even from the beginning. That started my journey and figuring out for myself after that.
Meadow DeVor: My advice is very similar to all of you guys’. I found mentors and I found mentors that weren’t just wealthy by the standards of what they drove or where they lived. I found mentors that, like Carrie said, had a financially good house to live in, a good relationship with it.
I decided to mentor under them by asking them the way they thought about money and that was really my primary turning point – sitting down and having a conversation like, “How do you think about that? How do you think about credit cards? How do you think about earning?”
Hearing the way they thought about it just gave me the map to follow instead of trying to pattern, oh I want that house, or I want that bigger car, I want those jeans. It just gave me, oh, that’s the guideline. This is the thinking that goes behind it. This is what a healthy relationship with money sounds like. That has a been the key and the foundation to all of my change.
Carrie Rocha: The book The Millionaire Next Door was that for me.
Meadow DeVor: Yes, yes, yes. I agree. We have them all. We all have millionaires next door to us.
Jeff Rose: Carrie, you had mentioned using Mint.com. You said you used You Need a Budget online app as one of your budgeting tools. I just want to plug ReadyForZero, since they’re a proud supporter and partner of the debt movement. Here are some great online tools. We’re all in Google Hangout, so we can do text stuff, specially app stuff, but for some people, they need it to be either Excel spreadsheets, notebooks.
Can each of you share some online tools and then just some basic tools that people can use to help them view their debt, acknowledge their debt, and help them pay it off?
Farnoosh Tobari: Hey, I use good old Excel. When I was getting out of debt in my 20s, I used an excel sheet. I had my expenses in one column. I had my debt in another column. I had my income in a third column. I just played with that.
It wasn’t as cool as Mint and all these other great advances we’ve made with budgeting software, but I think that for me, the real takeaway was that I was able to visualize everything in one place and really have something to refer to and keep with me wherever I went so that I had a checking point. I had to refer to this.
It’s really easy, as we know, when you’re in debt to pretend like it doesn’t exist. People just get the bills and they hide them in the junk drawers. It’s really hard to avoid the real issues, the truth, as Meadow said. But I think that if you have it written down, whether it’s online, offline, something that you can keep with you on the go, that’s really the trick, something that you force yourself to check every day.
I still say to people who are even out of debt, check your bank balance every single morning. Use the tools that your bank provides, a mobile app you can download on your phone that just lets you know how much you have in checking. So if you’re going to plan a big weekend, you know what your parameters are.
It’s just like going on a diet. If you know that you’re a couple of pounds over your ideal weight, you’re not going to spring for the cheesecake. Or maybe you will but you know that the next day you have to take it easy. I think it’s the same thing with your money. You have to have a daily check in, whether that’s online or off.
Carrie Rocha: I used Excel all the while. I just started using online tools within the last year. While we were getting out of debt and for the last six or seven years, I did everything in Excel. There were two things that I did in Excel that were really helpful to me.
One was cash flow planning. I made a little chart with the left-hand side were all of the bills that came in, in a month. Each column was every pay check, all the money that we got in. I could assign every dollar a job and I would schedule it out for six months. I could see this is how much extra we’ll be paying down on our debt over the course of these next few months. If we got extra money from a gift or something, I would plug it right in in there so we could see where we would assign it.
The other thing was I kept a list of all of our debts and I did what’s commonly called the debt snowball but I listed all of my debts in one place and kept track of their balances. Farnoosh was saying keep track of your bank balance. I was, at the time, obsessive about what my debt balances were because it felt so good to watch them drop. Finally, after all these years of watching them go up, up, I just loved checking in to see how much we had knocked off each different month. Updating that was really a rewarding thing for me while we were paying everything off.
Meadow DeVor: I would agree. I’m definitely not of the camp of Excel or anything that money-wise, I would say. I’m much more of the lineage of artist and much more free thinking. I have an artist sketchbook that I use for all my work. It had all my debt balances in there. It’s multicolored, it’s all fancy and girly. It would probably scare all of you people, but that’s what I use. It made me feel good because I feel like the world of money is so stale and it was so over my head.
I was so scared to ask questions or feel stupid because I felt smart in most of my life. In money, I felt really dumb. So, I just made a pact with myself to make it something personal, that was something that I could check in with, kept it in my journal, used cash quite a bit, and actually pulled it out, looked at it that was $40. Notice how much you just spent.
I have most of my clients do it in this way and it really works for them, even having a little spiral-bound notebook in their purse to check in every time they spend money and to get it away from this very masculine energy, and this very organized energy of money, to make it a lot more fun and a little more creative.
Carrie Smith: I just want to say that there’s nothing wrong with starting out on paper and doing it with Excel or however you do it because I am a full-blown tech. I do everything paperless. I’m all online, but I didn’t start that way.
I took a tax class and they make write down and do people’s taxes on paper first. That’s the only way you learn – really understand the foundation. If that method works for you, keep it up. If it doesn’t, go online and you’ve got the complete in and outs. Just do the method that works best for you, what makes it fun, what makes it enjoyable and then take it from there.
Carrie Rocha: I have a friend who does everything in a spiral notebook because all of their family budget and they set aside for vacations and different things they’re saving for, but they leave it accessible so their kids can look at it and can understand where they’re at for their savings goals towards anything that their family wants. They’re intentional to just keep it in printed form so their entire family has access to it.
Farnoosh Torabi: That’s smart.
Meadow DeVor: I wanted to also say that I used the snowball as well. It works.
Jeff Rose: All right. So let’s get a fun question. For those that get married, and my wife actually was the lucky recipient of this, so when she graduated college she was debt-free. I, on the other hand, had student loan debt, credit card debt, so she married into debt. She had never had a credit card before meeting me. She was lucky to inherit my debt. I’ve seen this a lot. I’ve seen both cases. One spouse has a lot of debt, the other doesn’t have any, sometimes it’s joint.
How do you suggest couples approach that whenever you have one that has a lot of debt and the other doesn’t have any at all? One example, I had a client, the husband had $90,000 of student loan debt, whereas the wife had zero. That obviously causes a strain, or can cause a strain if they allow it. So what kind of tips would you all give?
Farnoosh Torabi: And you’re already married, Jeff? Is that the assumption?
Jeff Rose: Yes. Assuming that you’re till death do us part, correct.
Farnoosh Torabi: Well, I had a friend who got married and she inherited a lot of her husband’s, not inherited I should say, she just … as a couple now, what’s mine is mine, what’s yours is yours, from a philosophical standpoint. Technically it wasn’t her debt but of course she felt that it was her duty to create tradeoffs in the relationship so that he could get back on his feet and that they could together then, go forward and buy a home and all that other stuff. She made the mistake, I think, of paying off all his credit card debt. I don’t advise that.
I think that if you’ve already made the decision to spend happily ever after with a partner who has a lot of debt, you need to talk about an action plan. That doesn’t mean you writing all the checks to pay off that debt, but it means coming up with the tradeoffs in the relationship – whether that’s spending a lot less from now until the next three or five years so that your partner and you a little bit can really address this debt. Create a goal. If your goal is in three years you want to buy a house, that gives you the carrot to then really focus on the debt.
Make sure that when you’re in that relationship that you don’t actually inherit the debt. In other words you don’t, for example, take out a home equity line of credit and pay off your husband’s debt or your wife’s debt and now both of your names is on that home equity line of credit and now essentially you’ve absorbed that credit card debt. That happens a lot of times unknowingly.
That can create a problem because if things don’t go well or you yourself want to apply for your own credit card, that will be taken into account. That debt that you now absorbed will be taken into account. It’s important, I think, for couples to make sure that they do still have separation with the debt, but together they figure out a way to really attack it that is equitable, that’s balanced, and that keeps in mind a joint goal so that both parties feel motivated.
In that case, it’s absolutely essential that you share at least visibility to all the spending accounts so that no one goes astray. If your goal is to get out of debt in three years or two years, you’re going to have to really, really focus. That means you can’t go out and splurge on something frivolous. There has to be that sense of accountability. Clearly you’ve got to talk a lot, you’ve got to have scheduled meetings, because it’s unfortunate that a lot of couples are dealing with it, but I don’t think you can deal with it loosely. You have to really, really focus straightforward and communicative.
Carrie Rocha: We had that situation. When I met my husband, I had been in debt prior. I had just gotten out of debt. He had debt. We got married, then we got more debt together, and then we got out of all of that debt again.
Two things that I would say: Upfront, even though we ended up accumulating more debt, we had a lot of conversations before we got married about our orientation toward money because my husband had more debt than what I did but yet, I believed that he was in a place of “I want to change too.” We had a joint commitment to a different future.
It wasn’t as if he was committed to a lifestyle that was going to just continue driving us into debt and I wanted something else and it was going to be a constant pull. He was in a place of “Look, these different things have happened to my life. This has screwed up. Here I am. Now let’s go forward and what’s our plan for getting out?” We had always had that will to get out. We just lacked the stick-tuitiveness somehow and that didn’t come for a couple of years into our marriage.
But what Farnoosh was saying about scheduled meetings, we were religious about sitting down at the end of every month and looking at our expenses, because we tracked our expenses. Where was our money going and how did that line up with our plan? They never matched exactly because you can’t predict everything but we could stop and then make adjustments. What I found most useful was we always talked about what was coming three or six months out.
That’s why our spending threshold is $50, not a $1,000 like you were saying upfront, Jeff, because anything that we were going to spend a $1,000 on, we’ve been talking about for some period of time. That doesn’t just happen one night till tomorrow that I decide I want to make a big expense. It’s like we would just sit down and say, “What’s coming? What do you want to do over the next three to six months?” and we would account for that and plan for those things, but all the while, we were committed to debt.
While we were getting out of debt, my husband was in a sales position so he made base plus commission. When said, okay, we’re going to live on your base plus what I was making and use that commission money, 100% of it, toward this debt until we get out. So he really did feel like he was working 40 hours a week to get out of this debt that he had brought more of it into the relationship than I did.
Jeff Rose: That’s good.
Meadow DeVor: I really appreciate what both of you guys were saying. I think that debt is a by-product of dysfunctional thinking about your money, which usually is a dysfunctional thought pattern or some kind of attitude problem in your life.
I think if you are at the point where you’re thinking about getting married to somebody who is in a lot of debt and you’re not, it’s a really, really big red flag to sit down and have a conversation as to what created the debt. It might have been accidental but typically, people don’t end up in debt on accident. They end up in debt because of the way they believe and because of what they’re avoiding in their life.
I agree with Farnoosh. I would not suggest getting into a relationship and paying off somebody’s debt. There’s so much to be learned by paying off your own debt and understanding that. That said, I totally agree with Carrie as to having a marriage that’s a partnership and we have these similar goals, but that has to be discussed and that has to be understood because if somebody is just like, “I’m just getting out of debt because you want me to.” That’s not going to work.
Jeff Rose: Awesome. All right. We have two more questions before we wrap this up. This one actually is from someone that has been watching the Google Hangout. This is Casey. I’m glad that someone is watching us. Communicate to me, they have a question, as they learn about this debt thing.
Her question, which I’m sure a lot of people can relate with, is what happens if your spouse is not onboard with budgeting? How do you get them involved or how do you help them see the value and just making it a joint mission? Any experiences or any stories you guys can share?
Farnoosh Tobari: I helped a family whose husband was very much against not only budgeting but even talking about money. He didn’t want to discuss how he was spending his own money. For me, you’re not talking just about money here. If you’re basically denying your spouse the commitment to engage in conversations about money and have a budget and to really be open to that, that to me, signals a problem that’s deeper than just having an aversion to budgeting.
I think maybe there’s some trust issues there that need to be explored. There are some issues of “What are we here for? What are we doing?” that need to be answered. Because what a budget essentially is, is a vehicle to help you towards achieving your goals. If that is how you phrase it, budgeting is not just me trying to figure out how we’re spending and be nitpicky and anal.
It’s really so that both of us can get closer to our dreams and get closer to our goals. I think there’s a conversation there about what are those goals. If he’s onboard with the goals, then he should be onboard with the journey to those goals. That does include a budget. I would phrase it that way and maybe ask, “What is it about the budget that you don’t like or don’t feel comfortable with?”
Maybe he hates the word budget. I think a lot of people naturally have an aversion to that. So maybe you call it something else. But if it’s something that runs deeper, that needs to be explored and maybe you should get a third party in there to figure out what are really the underlying issues.
Carrie Rocha: I think along the lines of Farnoosh said that after you’ve been married some period of time, you can lose sight of those dreams. You spent time when you were dating envisioning this grand future and all of this. Pretty soon, you’re doing your day to day life and he’s going one direction and you’re going another.
Coming back and engaging, as women, engaging your husband in a conversation about what are your dreams, and letting him talk about his, before you say “Well, they to be ours and we have to do it and I have toy with that.” Just let him dream about what he would want. Whether that’s fishing or this or that or whatever, let him talk about what would get him really energized and then help that bring you back to what are the things that are your dreams, and together, reinvigorate those. If you don’t have that, you’re not going, I think Farnoosh said it well, the budget is about the goal or it’s about helping you on the journey toward that goal. So, really, rekindle that again.
Jeff Rose: All right. Let’s go ahead with the last point. What I just want to share with you, so each of you has the luxury position of being, “Hey, we were in debt. We paid off X amount of dollars. Here I am, thankfully, in a much better place.” Along that way, I’m sure there were obstacles. I’m sure there were points in your life where maybe you doubted that you could actually ever get out of debt.
I just wondered if you could leave one last encouragement. Maybe you have an obstacle that you overcame, for those that just feel like they have given up hope, that they’ll never be able to become debt-free, if you could just share something that came up that you were able to overcome and thankfully you stuck to your original plan and then here you are today.
Meadow DeVor: Well, I will say, I was $570,000 in debt. I was divorced. I was a single mom. My career was in the craphouse. I had the perfect storm. I had sold a business and I was owed a big, huge lump sum that was the end of the last balloon payment that I was owed. That guy went bankrupt on me. Everything bad that could happen to you financially in one year did.
I paid off my debt over a year ago and my net worth is doubling each year. I’m totally on track for a way better financial life than I ever was. If I could do it, being a single mom, completely broken, emotionally, financially, and mentally broken in that way, what got me through was just that daily pride of making some kind of stride and being willing to be humble and being willing to learn and ask questions and not have to know everything.
I think the biggest gift that debt had for me is to take me to my knees and give me an opportunity to ask for help and ask for really good teachers to show up in my life, and they did.
Carrie Rocha: I’ll go next. What happened with us in terms of getting out of debt, my husband is Brazilian and we had gone on a trip to Brazil and we were both reminded that we really would love to live in Latin America one day. Not just go on a trip, but live there, raise kids there, and not come back to the US again.
But there was a huge problem. It’s a cash society. We can’t even get to the end of the month on our cash, let alone buy a house or buy a car. There is no way. It was exactly what we just talked about in the last question. We both tasted this dream and it was so real to us that we really had that moment of “What are we going to do?”
Either we change radically our financial life or we come to the end of our life and know that the cost of not changing is that we gave up this dream. What do we want? So we made that decision, but because we, call it good fortune or whatever you want, we were both there, both shared that same passion, as we had slipups, different things and conflicts along the way, at least I always knew my husband and I were jointly committed to that same goal with the same level of passion.
I could trust, even when I didn’t understand something, like you bought that but I don’t get it or whatever, I could trust that we were on the same team in the larger picture and let some of those things go so we didn’t end up divorced in the process because we were rubbing each other wrong about all these little details of money while we were trying to make such radical change.
Farnoosh Tobari: I think the big lesson I’ve heard in this past hour is that getting out of debt is ultimately you choice. I know it’s very difficult to believe that because you think I don’t have a choice. I’m strapped. I have my hands tied behind my back. I have all the odds against me. But, clearly, we have so many amazing examples to refer to of people who really had hit rock bottom and they literally just made the choice and they committed to that choice. It was their decision to get out of debt.
As I say to everybody, no one cares more about your money than you. For those of us who are waiting for handouts, waiting for laws to change, waiting to win the lottery, it’s wishful thinking. I think that you all control your destiny. I think we’ve accepted that message in so many other realms of life. We’ve accepted that we control our destiny when it comes to finding the right partner, finding the right job. Why not getting out of debt and being financially happy and being financially stable?
Your money defines so much of your life. It doesn’t create happiness but it sure does feel good when you don’t have debt and you have money to spend. You don’t have to be looking at your ATM receipt, shaking because you’re worried about what that balance is going to say.
Just believe in yourself and know that the tools are out there but what the missing link sometimes is the belief in yourself. That can only come from within. Work on that before you give up on yourself because you can help yourself. You just have to believe it.
Jeff Rose: I like it. This might be a little cheesy but sometimes you have your daily affirmations of things that you tell yourself every day that you truly believe. I do this every day. A friend of mine taught me this. So there are these different things I say to myself every single day.
Well, I’ll go ahead and end it there. I just want to thank our guests Meadow, Carrie, Carrie, and Farnoosh for joining us for our second Google Hangout. We’ll be soon announcing our third one here, probably next week or two.
Seriously, I appreciate all your input. This has been awesome. This is exactly what I knew it would be so thanks for not letting me down on that regard.
Meadow DeVor: Thank you so much for doing this.
Carrie Rocha: Yup, thanks for having me.
Jeff Rose: I’ve got to mention, the recap will be on the bottom. We’ll have it transcribed as well. I know I had some other questions but we’ll tackle those offline as well. Thank you all. Debt Movement, let’s rock this 10 million in 90 days.