– You might have had fun
putting those purchases on your credit cards, but not
as much fun taking them off. But I’m here to show you how
to pay off your credit cards and all of your debt, and how to stay motivated along the way. (upbeat music) We talk a lot about living
debt-free on this show, but you may be asking yourself,
“How do you get there?” Well, getting out of debt,
it takes a lot of work, a lot of sacrifice, and
a lot of intentionality. So, long story short: It’s
not going to happen overnight. But just imagine what your life could look like without payments: to actually have money saved in the bank, owning your stuff versus it owning you, and no more paying for things
that you’ve done in the past. And the great thing is,
that life is possible. So, in this episode I’m
going to show you the proven plan to get out of credit card debt, and all other debt for that matter. We’re going to bring someone on
and hear their debt-free story and talk through how
you can stay motivated and encouraged on your journey. So, to kick us off in this
episode, let’s talk about how do you get out of debt? Because there are multiple
ways people say you should get out of debt. One of those ways is debt consolidation. Nope, not a good
idea—just going to tell you. Because here’s the deal:
debt is not a math problem, it’s a behavior problem. And
many people who actually use debt consolidation end up in more debt, because they’ve just
moved their debt around and they don’t address the real issue of what got them into
debt in the first place. So it’s not fixing the
problem, it’s just masking it. And as one psychologist put
it, “Debt consolidation seems to create the psychological
effect of making you feel like you have zeroed out.” So then borrowers just start
spending up again (sighs). Don’t want that, so no
bueno to debt consolidation. Another way people say
you should pay off debt is highest interest rate
to lowest interest rates. And that’s not a great idea either, because again, this is not a math problem. “But Rachel, mathematically
it would be correct to pay off the highest
interest rate first.” Yes, but if we we’re doing math, we wouldn’t be in credit
card debt people, okay? So, it’s not a math issue. By paying your debts
off smallest to largest, regardless of the interest rate, you’re going to get some quick wins. And we find that people
get out of debt faster, not by the highest interest
rates, but by paying off the smallest debt—which
is the debt snowball. That’s right, this method is
proven that people get out of debt the most efficient way. And the debt snowball is this: where you list out all of your debts, smallest amount to largest amount— again, regardless of the interest rate. Pay minimum payments on
everything and you pay off the smallest debt first. Once that’s paid off, you take all the payments
you were throwing at that, you roll it over to the
second smallest debt, and once that’s paid off
you have payments from the smallest debt and the
second smallest debt together, because they’re paid off,
and you roll it over to the third smallest debt. And you keep going and going and going, and throughout this
process you’re going crazy. You’re selling stuff.
You’re getting an extra job. You’re looking at your budget,
and you’re cutting stuff out. I mean you are making
sacrifices through this process because you will find that
the deeper you are willing to sacrifice your lifestyle, the faster you will be out of debt. So, I want you to be intense. Actually, I want you to be gazelle intense. (light music) So you may be asking yourself,
“What is gazelle intensity?” Well, my old pops, old Dave
Ramsey, coined the phrase. And it’s a great one, because
the picture is brilliant and it sticks in your mind. But in Proverbs 6 it says, “If you have signed surety,
my son,” which means you’ve gotten yourself into debt, “do this.” “Deliver yourself like a gazelle
from the hand of the hunter and a bird from the hand of the fowler.” And I love that because you think about it, deliver yourself like a gazelle from the hand of the hunter. So think about the cheetahs,
the lions—all the predators that are after the gazelle. And you watch it play out,
even on the Discovery Channel. And you watch that gazelle outmaneuver, outrun their predator. And you see the intensity,
because it is life or death. So when Scripture says that
this is what you do to get out of debt—it is life
or death—you go crazy. So, gazelle intensity is that
you are nuts. Everyone around you is like, “What are they doing?” I mean you are selling
stuff. You’re working hard. You’re sacrificing to get out of debt. Because I can tell you, it’s
easy to wander your way in. It is hard to wander your way out. So, what does gazelle intensity look like? Is it going to Hawaii or on vacation while you still have credit card debt? (buzzer sounding) Not gazelle intensity. No, no, no. Instead, if you spent thousands
of dollars not on a vacation, but putting it towards
your debt over the year . . . (dinging)
Gazelle intense. Buying a grande, nonfat,
vanilla chai, no-whip, heated to 113 degrees
with Stevia and a dash— not a full pinch—of cinnamon? (buzzer sounding)
Not gazelle intense. Coffee from home? (dinging)
Gazelle intense. Going to your favorite
concert, and out to dinner, and out after with friends,
and Ubering all around town over the weekends? (buzzer sounding)
Not gazelle intense. Staying home or going to your extra job? (dinging)
Gazelle intense. See, intensity! Being intense about this, because the average person
getting out of debt, using the debt snowball,
being gazelle intense, pays off all of their
debt in 18 to 24 months. So, yes, is there sacrifice involved? Absolutely. But I can tell
you, you can still enjoy your life while your getting out of debt. I always think about Rosanna and Jeremy who were on the show a few months ago, and they were actually in the
process of getting out of debt, but they had so much joy. And
they talked about how much more fun that life is when they
have to plan for things. And like, everything they do
with their kids, you know, it’s experiences, and
sometimes it’s free stuff. But they’re like man, it’s
so much better than this life they were living that went
from credit card bill to credit card bill. So it may seem like a lot,
but just think about it. 18 months ago was February of 2018. Go back to your pictures on your iPhone— like look and see, oh
my gosh, it’s amazing. Time goes so fast. And again,
paying off all their debt in 18 to 24 months—that’s
the average for all debts. That includes student loans and car loans and yes, credit cards. So, when you’re on this process— this journey of getting out
of debt—I will tell you, the heart issues are a real thing. And so contentment is something
that you have got to learn, because contentment will get
you through this process. So, if you’ve not checked
out my Contentment Journal, make sure to click the
link in the show notes, and make sure you are doing that. So, as you’re doing all this work— and it’s a lot of hard work
to take care of your family and give them a better
future, it’s so great. But I really want to make
sure that your family is taken care of over the long haul and that you have life insurance. One misconception about life insurance is that it’s really expensive, and honestly that’s true
with whole life insurance, but not term life. It’s actually really inexpensive and what I want you to have. So, in fact, the average 35-year-old
couple can pay as little as $38 a month combined,
and that would get them half a million dollars each
in coverage for 20 years. But, you’re not going to
find that just anywhere, so that’s why I use and
recommend Zander Insurance. They shop around for you to
get you the best possible rates. And you guys, don’t wait—do it now. Go to zanderinsurance.com
and get started today. It will give you so much peace of mind. All right, up next I want to
introduce you to someone who is gazelle intense in
paying off credit card debts, and so I can’t wait for
you to hear their story. (sad music) – I felt hopeless, disappointed in myself. – I felt like trapped,
like a rat in the wheel. That I knew that we needed to do something, but I had no idea where to start. – We had about $40,000 of credit card debt. We just thought credit
card debt was something we were going to have our whole lives. At first, you know, we
each had a credit card. And a lot of it was we
didn’t have a lot of money. So that was—we used that
as income. That was to pay for groceries. And anybody
that would give us some credit to buy some stuff that we
needed, we had it. It just seemed like
something that was normal, that everyone did, so we
just kind of followed along. – So one day I listened
to The Dave Ramsey Show for the first time and his
message clicked with me immediately, and I came home. Russell and I had a
difficult conversation. We ordered the book and read
it, and we were able to work through some things, and
then it was all from there. And when we discovered
this program and realized how stupid we had been,
and we got on track, it was rough on the kids—
rough on both of them. Especially our son, because
he was a freshman in college and he wanted to do fun college things, and we had to tell him no. – The same thing with our
daughter, you know. We were always go out to eat on the weekends,
and that was just something that she looked forward
to. And we had to say, “No, we’re cooking again at the house.” Going through this and our children seeing what we went through, I feel
like they will have learned and even not get into this
situation that we did. – Before, we didn’t live on
a budget, and if we wanted to spend something, we spent it. If we wanted to go out to
eat, we went out to eat. And now that we live on a budget and everything is intentional,
we have so much more freedom. – [Both] We’re debt-free! (cheering)
(applauding) – Thanks, guys, so much for
being here and coming on the show. – Thank you for having us. – Yeah, absolutely. And you
guys are here in Nashville because you just did
your debt-free scream. – That’s right.
– Yes. – Yeah, okay. So how much
debt total was paid off? – About $84,000. – $84,000—how long did it take you guys? – 22 months. – 22 months—right at two years. $84,000. Okay, and how much of that
was credit card debt? – $40,000. – $40,000, okay
– Yes, it was at least half of it. – Okay, so I’m like so curious. Okay, so how many credit cards did you have that totaled $40,000 of debt? – Right, so we had a Visa and a Mastercard that had most of it on
there, but then we also had five or six cards from different stores that had $1,000 here, $1,000 here. – Totally, yes. So when you
have $40,000 of credit card debt specifically, a lot of
people get credit cards because they think okay, well
my necessities—I have to have a credit card to survive
and to pay the bills. Some people use it and
they just overspend— they live way beyond their means. So what kind of boat would you guys be in? Both of those, like— – Both.
– What did you put— yeah, what did you put
on the credit cards? – Initially, when we started
out, we were very young. We had our son young and we
needed it for necessities. We needed it for
groceries, just to survive. I mean I think you stated it
as it was our extra income. – Yes, yes.
– If you will. – Yeah. – And then once we got to a
point where we didn’t need them anymore, we had had them
for so long that that was an option to get
whatever we wanted quickly and without planning for it. – Totally. Yeah. Which
is so normal, right? I mean, that’s how
so many people live. So when you bought things
like a new mattress or furniture and all of
that, did you know going into those purchases, like,
we’re not going to be able to pay these off at the end of the month? Because some people say,
“Well I have a credit card. I’ll just pay it off at
the end of the month.” Did you have that
mind-set? Or did you think, okay, we’re buying things
that we clearly are not going to be able to pay off,
but we’re okay with that? – I think we were okay with it. – Yeah.
– We were fine with oh, we’ll take
two years to pay it off, or three years to pay it off. – Yes, totally. So you lived
in this cycle with credit cards for how long, would you say? – Our entire marriage up to that point. So we’ll be married 20
years next month so— – 17 years, probably. 17 or 18 years.
– Yes, okay. So 17 years of kind of this
habit, right? Of this being part of your life. What was the moment that you
said, “I’m done. I’m so tired of seeing these credit card bills. I’m so tired of being in
debt. I’ve had it.” What was that moment for you guys? – Yeah, it was right
before Christmas in 2016 that we had that difficult conversation. We got it all out there on the table. It was a very difficult conversation. – Yeah, I was going to say—I
mean that’s scary you guys. – It was scary. – Yeah, for a lot of
people, they just like . . . Ignorance is bliss in a
sense, and they just know they have all this stuff, but pulling it out and actually looking at the numbers— it’s really, really scary. So, how did that go? You said it was tough, but talk to me about that.
– It was. It was. (laughing) – Were there tears? Was there yelling? Like, I mean all of it.
– There was. There was tears. There was yelling. It was
probably the most epic fight I think we’ve had in our marriage. – [Rachel] Wow. – And yet, if money can destroy a marriage, and I think, I think ours
was perhaps on that path. So I think this really saved our marriage. – Wow, yeah. Well, Russell, I
think this is such a great point. Because especially with couples,
when you’re not communicating about money, naturally one
person kind of just takes on the responsibility of the
money, and the other one doesn’t. And so the person that’s
responsible, it’s a very lonely place, because it’s like you’re the one— all the responsibility is
on you. It feels heavy. It feels like this
burden, because you’re like, “I’m the only one that knows this.” And so, did you find that
it was this lonely place, and you felt that burden lift when you shared this with her?
– Oh definitely, yes. It was weight of my shoulders and my chest when we finally knew
exactly where we were. – Yes, so good. So what
would you say to someone who’s hearing the story—
because there’s a lot of people watching this—hearing, “Wow, they got out of all
their debt, including all this credit card debt, and they’re
not living with credit cards.” But they are sitting there thinking, “But you have to have a
credit card. It’s 2019. You still have to have a credit card.” What would you say to them? – No, you absolutely do not
have to have a credit card. A credit card is this
chain around your neck that prevents you from using your income for the joy of life, for
generosity to others. It’s just not something
you should do to yourself. – So those out there watching
that are in the middle of their debt-free journey—
they’re paying off debt. Because there’s a lot of people
watching on Baby Step 2— the majority of people are.
What would you say to help them stay motivated? That you’re like, “Okay, we know it’s hard,
it can be a long process.” But what could they do to stay motivated? – I would say my biggest
motivation was that goal. That picture in my head
of where I wanted to . . . How I was going to celebrate
getting through that. – Yes, that’s so good, so good. What about you Russell? – Yeah, I mean, the same thing. I mean, just knowing that when
we were done, we were going to have that freedom, and how
good it was going to feel. And, you know, when we got
to Step 3 and we started building our emergency fund,
just seeing some extra money go in the bank and it sitting
there and you can look at it—that was a nice feeling too. – Oh, so good. Oh, it totally is, yes. Give me an adjective
of before, like how you felt, until
sitting on this couch right now being completely debt free with
money saved now in the bank with the emergency fund. What would you say? – I feel like a completely
different person. I can’t imagine going back to
the way we were living before. That would be waking up in a nightmare. The freedom we have
now, living on a budget, knowing that when we do
something, when we spend money, it’s intentional. It’s so freeing. – It’s so freeing, and I love
that, because it’s the tried and true picture of the
idea that being in control gives you that freedom. A lot of people think, well
living my life with credit cards and doing whatever I
want, whenever I want it, that doesn’t end up in
freedom, it ends up in stress and bondage. I know you guys experienced that. And so, I think that was so well said. Well, thank you guys so much for being on. I really appreciate
you sharing your story. – Thank you.
– Thank you. – All right guys, coming up
next we’re going to talk about 10 ways for you to stay motivated
while you get out of debt. (upbeat music) All right, as you’re getting out of debt it can be a long process, so
you have to stay motivated. So here are 10 ways for
you to stay motivated while you’re paying off debt. Number one: Track your progress. Seriously, it’s so important
to see your progress visually. So I’ve created some free
goal trackers you can download for each of the debts that you have. Just click the link in the show notes so you can download those. Number two: Remember your why. Why are you doing this? Is it for your kids?
Is it for your future? Is it because you want to go
on great vacations every year after you’re out of debt? Like what is it? What is your why? That keeps you motivated. Number three: Dream about
retirement and the future. Because just think, if you’re
not making the sacrifices now, 65-year-old you does not
want to make those sacrifices. No, sacrifice now. So, dream about the future. Number four: Set small rewards. This is really true, especially
with student loan debts. Student loan debt—there’s
always, it’s a ton. So maybe you break it up and you say, “Okay, every $15,000 I pay
off, you know, I do something kind of fun in the middle of it.” So sometimes you have to
have those small rewards throughout this process. Number five: Remember how far you’ve come. The trackers are going to help with this. But look back and just remember:
Okay, if we’ve done it, if we’ve made it this
far, we can keep going. We can keep doing this. Number six: Make sure you
have someone in your life who loves you enough to hurt your feelings and keep you on track. If you have all “yes” people
around you and you’re like, “Oh, I really want to buy this new sweater.” And they’re like, “Yeah, do it.” No, no, no. Get that
girlfriend out of here. You need the girlfriend
you call and you’re like, (inhaling) “I really want to buy that J.Crew sweater.” And she’s like, “Listen,
you can buy it next year. Just hold off.” That’s who you need. Number seven: Check your budgets. I love this. I’ve gotten
in the habit of doing this. I check EveryDollar almost every day. Just look at the progress,
and just to see how we’re doing monthly with our
money. And the same is true when you’re getting out of debt. Number eight: Plan for one
fun, cheap or free thing that you can do once a week. This is big, because in this
process of getting out of debt there’s a lot of things you can’t do. So find something that you can do. Number nine: Quit the comparisons and do a social media purge. Yes, we love our fashion bloggers
and our lifestyle bloggers, but sometimes you may
need to unfollow them. Because they may have
stuff that you just simply are not going to buy. So, why tempt yourself? Do a little purge if you need to. And number 10: Surround
yourself with people who are encouraging or who are also
on the same journey as you. And a great way to do this is to join a Financial Peace University class. This is our nine-week
class. It walks you through the whole Baby Steps
in getting out of debt, budgeting, insurance—like
everything you need to know is there, and you’re actually
with a group of people. So, click the link in the show notes to sign up for a class. All right you guys, this was so fun. I loved this episode, talking
about getting out of debt, and especially credit card debt. Living without credit
cards—we can do this. So I hope you feel super
inspired to be gazelle intense at paying off that debt. Now, if you’ve not yet
subscribed to my podcast, make sure you do that because
we have some really fun bonus material that comes out there. And as always, for you, make
sure that you take control of your money and create a life you love.