After the Webinar: Breaking the Bondage of Debt. Q&A with Courtney from Heroes Financial Coaching

Webinar presenter Courtney answered a number of your questions after her webinar, Breaking the Bondage of Debt. Here are just a few of her responses.

 

Audience Question: Do you know how many people actually don’t have any debt? 

Courtney:  Oh, I have no idea. I would imagine, the numbers are pretty low, But, yeah, I don’t know. That’s a great question. I would look it up on Google. That’s where you can find some good statistics and websites that will have that, but it’d be helpful to find that out.

 

Audience Question: I keep hearing about the Dave Ramsey envelope method of saving and paying bills. Are you familiar with this approach, and if so, how does this work? And does it really work? 

Courtney: Yes. So, Dave Ramsey is a big financial guru. He is the one who will tell you, that you only need a thousand dollars in your emergency fund. So, I differ with him on that, but I do like a lot of what he has to say, like the envelope method can be really helpful if you’re that person who’ll never stick to your budget if you have a debit card or credit card in your hand, and you need to use cash. And so, if you’re a cached person and you find that it’s really helpful because it allows you to see and feel what you’re paying when you have to hand somebody a $20 bill versus just, you know, tapping your credit card, then that is a great method for helping you to pay off your debt. And so, that app that I shared as well for budgeting is Dave Ramsey’s app, and I love it. I think it’s so helpful. I don’t use Tash personally. But, when I have used it in the past, it was really beneficial for helping me to stick to my plan.

 

Audience Question: What do you think about a consumer credit counseling service?

Courtney: Oh, goodness, I have not done a whole lot of research into those, I would just say, be careful. A lot of times, they market themselves as helping you, but they can have fees that go with it. Um, and you just want to read the fine print if you’re doing anything that involves consolidation and those types of things, too, there can be, you know, fees, or maybe you’re not allowed to pay off the debt quicker than what the original term is. So just make sure you’re reading the fine print if you’re looking into that because you don’t want to get stuck into a messy situation. Consolidation can be beneficial. But if you are not already putting the other things into place, first to free up money to pay off your debt, then it’s not going to help you in the long end. And I’ve had so many people come to me saying, “I consolidated this credit card debt. Now, I’m back up to $100,000 of credit card debt again, and I still have this consolidation loan.” Because what happens is they’re not changing habits. And so, I would say, when you, if you talk to you a consolidator, just be wary of that, that they’re making a profit off of you, number one, working with them, and number two, the fact that, yeah, it’s, it’s more about your habits with your money. And so, if you’re not changing the habits, these consolidations probably not going to actually help you in the long end.

Host: It’s kind of like going on a crash diet or taking medicine to lose weight, but not changing the habits and the process.

 

Audience Question: What do you recommend if the majority of your debt is $220,000 in student loans while basic expenditures are higher than income and overtime is not an option? 

Courtney: OK, so what I would recommend there is first of all talking to the lender for those student loans and making sure you’re on a payment. So, where they, I can’t think of a name for it. Where they look at your income… income-based payments is what it’s called, to make sure that it’s as low as it can be for right now. If overtime is not an option, find a side gig, like find something you can do if you have kids like do it when they’re sleeping at night. I mean, I’m telling you, I’ve done it all when we were trying to pay off debt and build our emergency fund and it wasn’t fun, but I knew it needed to be done. And, so, find some way to bring in some extra income to help you out. Though, you know, loan forgiveness exists for some people. It’s really hard to get it. A lot of times, they’ll tell you that you’re on the plan, and then you’ll complete the process, the 10 years or whatever, and then you’re still not granted loan forgiveness. I would definitely start with you have to increase your income, whether it’s going to a different job, working for a different company or organization or finding a different way to increase income, but you have to in order to make some leeway. Because, yeah, that’s painful that much student loan debt is stinky, I feel you on that.

 

Audience Question: How much is too much money in emergency funds? Do I keep those emergency funds in a bank account earning virtually no interest or in an investment account where the money market at least provides some return?

Courtney: Here’s what I think with an emergency fund. I think if you have a max of six months of expenses, that’s a pretty good safe place to be because it allows if you lost your job or anything like that, probably within six months, you could find, you know, a replacement. So, I would say don’t have more than six months of an emergency sitting in a savings account. And when I say saving some money market is an option as well, because it’s normally a very safe place for your money. What I found right now, though, is the high-yield savings account, interest rates are sitting about the same, if not better, than a lot of money markets. And that’s where I have mine right now. And, again, my mind is an Ally Bank. But there are a lot of credit unions who have good interest rates right now, and it’s sitting at 5%, is what I’m making on our emergency fund, Which is so much better than a normal savings account, where you’re making like, yeah, less than 1% interest. So, I would look at doing that, Changing it to an account that actually is going to make you some interest in it. And then, yeah, the rest put into some kind of investment. And there’s tons of people, you know, you can meet with financial planners, things like that. Or you can be self-taught when it comes to investing as well. The rest I would put towards either an investment or if you’re saving up for, like, a rental home or things like that, putting that money towards a different goal. It can be really easy to have a huge emergency fund. Maybe even for some people, it could be a year’s worth. Do what feels safe to you when it comes to that emergency fund, and then the rest find somewhere to invest it for the future because it’s going to make more of a return for you that way and actually bring in some passive income in that way.

 

Audience Question:  And just to clarify, when we’re putting away money for the emergency fund, that should be, how shall we say liquid, it should be something that’s readily available. It should not be something that we have to cash it or sell stock. It should be liquid assets, is that right? 

Courtney: Yep. You want cash sitting in a savings account that you can easily access. And so, for us, our Ally Bank account where we have our emergency fund, it takes about a day to transfer. And that money to our normal checking account so I know that if I need it, we have credit cards, I can use my credit card. And then as soon as put it on the credit card, I can transfer that money over to my checking for my savings. You don’t want it tied up in an investment or things like that, where you’ll be penalized for taking it out or that you’ll have to pay fees, or that it’s difficult to access, like a CD or things like that, where you have to leave it in there for six months. Don’t do that. Put it somewhere where you can get it ASAP if you need it, because it’s for an emergency, at that point, and you’re going to need it fast.

 

Audience Question: If we wanted to go deeper into understanding our spending or money habits, are there any other books that we should be reading, I know you mentioned, Psychology of Money, are there other books that you would recommend? 

Courtney: That’s the one right now when it comes to like money mindset that I have found to be really helpful. It was the first one I actually heard where they said the idea of saving money is a new idea. It’s actually a new concept in the last about 100 years, people didn’t really save money before that. They didn’t really plan for retirement, which I found astounding. I was like, well, that makes so much sense like, most people have always lived paycheck to paycheck their entire

And so, I think that one is so, so amazing. Uh, there are no other apps, right now that I can recommend when it comes to the money mindset that I’ve found. There’s plenty of podcasts out there, I’m sure you can find that are good. Again, Dave Ramsey’s can be helpful. I just, he’s not always the nicest person, and if you tend to feel guilty about your debt, he might not be the person to listen to. If you need somebody who offers encouragement, unkindness. But he’s really good when it comes to just, like, basic money principles and you can listen to his radio show and things like that, so he’s, he’s another good one.

Host: That’s a very, very good point. How you deliver the news, or how you deliver the advice can matter.

Courtney: Yes. Kindness goes a long way.

 

Audience Question: We are in the heart of the holiday spending season. What do we do if we just heard your webinar and realize we’re in trouble? 

Courtney: Don’t give up, hope. Just know that you know what, you can look at this year as an example for next year and say, “I’m going to start saving in January for Christmas next year.” And that’s what we did. We actually paid for almost all of our Christmas presents using cash-back apps, which was crazy to think that I have saved over $500 using cash-back apps like Rakuten. And if you go to my website, you can find the links for those, because if you just sign up on their normal website, they don’t give you the sign-up bonuses and things like that. But if you use somebody’s referral link, you get those. And so, for me, I saved money doing that and prepared for the future. And also, don’t beat yourself up. You do what most people do, unfortunately, and if you spent too much, you know what, come January, instead of being angry, instead of yelling and being upset at yourself, take a deep breath, and say, “Right now, I’m going to change, and this is my chance.” I was talking to Chris before the show began because January is such a bright time for people’s finances because we’re all looking to start something new in the new year. We’re looking to change. We’re looking to be a better version of ourselves next year. And so, if you’re looking for that, just know that, yes, you might be upset that you spent too much this holiday season, it’s okay. Give yourself some grace. And move on, and just take it step by step. As you head into January, that’s my encouragement. And if you need help with that, reach out for sure, because I would love to help you.

 

Click Here to Watch a Recording of Breaking the Bondage of Debt.  

 

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