Could Diligence and Discipline Slash Your Shopping Bill?

Podcast Announcer
00:00:01

In a world where crushing debt keeps you trapped, where living paycheck to paycheck has become your new normal, and where the dream of retirement seems impossibly out of reach, there's hope. Join financial evangelist Ralph Estep Jr. A man who's walked through the fire of financial failure and emerged stronger on the other side.

Welcome to Ask Ralph, the show where real world experience meets biblical truth to break the bondage of financial despair.

Get ready to take control of your money, break free from the financial stress and align your resources with God's purpose for your life. This is Ask Ralph with Ralph Estep Jr.

Ralph
00:00:38

Welcome to this live edition of the show. Let me add Craig in here before I get rolling too far in here. Let's see here. We are going to assign him to guest one. There we go. Craig, thank you for joining us today.

Craig
00:00:52

Great. Happy to be here.

Ralph
00:00:54

We're going to explore the intersection of faith and finance that we always do.

Today, we're going to get into three crucial aspects of financial stewardship. We're going to talk about how discipline and diligence can help you impact your spending. We're going to talk about effective strategies for conquering debt and the age old question of prioritizing investing versus paying off debt.

So again, thank you for joining me. Call me your financial evangelist, Ralph, and joined here by Craig. Craig has been joining us as a good friend of the show here, and he's going to, he's going to give us some wisdom from what he's seen in his life. So let's get into it right now, Craig, let's get to our first question today.

And our first question comes to us from Lisa, and this is what Lisa writes. She said, Ralph, I'm constantly overspending on groceries and other necessities. Every time I go to the store, I end up buying things I don't need. My grocery bill is so high that I'm always running out of money before the end of the month.

I feel like I'm drowning in a sea of receipts and credit card bills. How can I be more disciplined with my spending and finally get control of my shopping bill?" Craig, it seems like this is sort of a flashback to last week a little bit.

Craig
00:02:01

It is, yeah.

Ralph
00:02:03

But Lisa, I want to thank you for your question. And I understand how overwhelming it can be when you're honestly feel like you're overspending for it.

In fact, I just recorded a show about getting ready for retirement and how to get that overspending under control before you do that. So here's the thing I'm going to tell you right now. Discipline and diligence are essential virtues in all areas of our lives, and they're essentially important in finances too here.

And by being diligent in our spending habits, we can avoid those unnecessary expenses and ensure that our resources are used wisely. Now I've got a Bible verse for this today, so let me go right to that here. Let's see. The Bible verse for today is Proverbs 13:4, and it says, and this one's kind of rough Craig, but I thought this was apropos for today.
It says, "The soul of the sluggard craves and gets nothing, while the soul of the diligent is richly supplied." And this verse highlights the importance of diligence in all our areas of our life including our finances

So Sarah, let me, no, excuse me, Lisa, let me tell you about this. So I deal with this almost every day in my practice, somebody to come in for financial counseling or something like that. I remember not too long ago I had a client come in and we'll call her Sarah. I never liked to use real names on the show because I don't want to offend any of my clients, but she was a single mom, two kids, kind of like my mom was when I was, when I was bringing up and she's struggling to make ends meet.

What I think she said to me, she goes, Ralph, my grocery bill is through the roof and she's constantly buying things she didn't need, she took the kids with her on the store. Now, I don't know about you, Craig, but that was one of the things when I was a kid, my mom would take us with it and we would fill the cart with all kinds of stuff. So this one day Sarah comes into me and she wanted to do some financial counseling and she's just teared up and she had just gotten a credit card bill. And she said, Ralph, I don't know how I'm going to make this payment because this credit card bill was more than her monthly income.

And she felt trapped and she didn't even know where to start. So I sat down with her, like I do with all my clients. We put together a financial assessment. Here we are right now, but here are some things that I told Sarah to do and listeners today, I want you to focus on these things as well, because the truth is we are dealing with prices of groceries are high.

One of the big things you can do is start by planning your meals and creating a shopping list. We talked a little bit about this last week, we were talking about how to save money. Another big thing is avoiding shopping when you're hungry. And sometimes I'll tell you when I get in the grocery store, Craig, I don't know about you, but I get in that grocery store and things look so good.

And I was like, you know what? I could use that because things look tempting, especially when you're hungry. But one of the things I really think you should try to avoid is that trap. What do you think, Craig?

Craig
00:04:43

Yeah, absolutely. You never want to shop hungry if you can avoid it. It's, even this, this is going to sound silly, but even drinking a big glass of water before you go to the grocery store can, you know, put off that hunger just a little bit, which can help because, boy, you have not only the financial guilt, but also the emotional guilt when you unload your groceries and it's, you know, $40 worth of candy and cake and cookies that you didn't really need.

So that's a great tip.

Ralph
00:05:17

Right. You're right. And the thing is a lot of people mistake hunger for being dehydrated. And you know, as I've been on my weight loss journey, one of the big things I found out is a lot of times when I think I'm hungry, I'm actually not hungry. I'm just thirsty. And so that is a very good point.

Another thing I'm going to bring up here is we talked about this a little bit, use those shopping clubs, buy those things in bulk, you know, consider store brand items. Craig and I talked a lot about that last week. You can catch all of our previous episodes, right at askralph.com, but you can buy those store brands.

You can buy in bulk. Another thing, a lot of people don't do Craig. And you and I talked about this last week as well is take advantage of coupons or cash back apps. There's a bunch of those out on the internet. Now be careful. You might end up getting spammed. So be aware of where you're putting your email address.

Now, here's another thing I'm going to recommend. Learn to cook with affordable staples. Don't buy the big, heavy, high price things. You know, one of the people like Dave Ramsey always says, you know, living on beans and rice. Well, you know, sometimes we have seasons in our life, well that's what we've got to do.

So you might want to look at your shopping and look at your, my wife use all these recipes. I couldn't think of the term, Craig. Use recipes that are using not the highest end stuff. You know, you don't need to buy filet mignon when you can do hamburger, ground beef. Here's another tip. One of the listeners sent me when I was talking about doing this show, he said, why don't you plant a garden?

I said, you know what? That's a great idea. It's something that's sort of going out of vogue. Now, I remember when I was a kid, my grandparents had, they had a plethora of stuff in their garden. They would grow their own fruits and vegetables. And that can save you money and help you eat healthy. Another thing they did, Craig, I don't know if you do this down where you're at in Louisiana, but they did a lot of canning and jarring.
So they would have that stuff all year long.

Craig
00:07:02

If I could throw in a little caution here though, my wife is a huge gardener. I figure it costs us about five times as much to eat things out of the garden as it does to buy them in the grocery store, but she gets so much pleasure and relaxation out of it.

It's worth every nickel. And to be honest, it's, well, not to be honest, but just to let everybody know the fresh stuff is so much better anyway. So run the numbers a little bit to see if it's really going to save you, but even, you know, growing things like fresh herbs. You know on a window sale. I mean that's one that'll definitely pay off if you cook a lot because those dried herbs can get pretty expensive and you can grow your own.
They'll be higher quality.

Ralph
00:07:49

You don't need a lot of space to do it either like you're talking about that herb garden could be I’ve seen some of them like you said in window sales. We were out at one of the home improvement centers and they had like the little starter plants for that this weekend, Craig. I mean absolutely true. You also need to prioritize your purchase. Buy those essentials first. Kind of like when I talk about doing a budget on the show. Start with your essentials.

And then you get down to those, you know, those needs versus wants. Another thing I, another person mentioned, I thought this was a great idea and that's, have a dedicated stock up fund. You know, put that money aside in that stock up envelope wherever you do it. And that way you can take advantage of those sales and stock up on essential items.

I know my mother's parents, my grandparents, this local grocery store to us used to have this can can sale every year and they would have all these things on canned goods. And we can argue about canned good for you, bad for you. But they would make a point of like, they would stock up on, I remember that they had the little dancing ladies with the can can, I can still hear it in my head, Craig, but they would take advantage of that.

And that would be like, they would have that budget money set aside to do that can can sale. Another thing you can do, and a lot of people, this is kind of out of vogue as well, is cook from scratch. You know, cooking from home is generally cheaper and healthier than eating out. Now I'm one that likes to eat out, but the truth is it does cost you more.

Another thing that my wife loves to do is slow cook or pressure cook. And that's one of the things, again, you can make delicious, affordable meals with the minimal effort. And like we said before, we talked about this last week, don't be afraid to buy cheaper alternatives, because you might be surprised just how good those store brands can be.
My big takeaway on this one is being mindful of what you're spending. A lot of people don't even realize how much that is. This one is Ralph talking about budgeting again and tracking your spending, but it's imperative that you do this so you know how much you're spending so you can look for areas to cut back.

But I think the big takeaway I have right now, Craig is to be content. Be content with what you have. Yes, we live in a time where things are more expensive and you may have to make some rice and beans or season of a little bit cheaper decisions, but you kind of try to find that contentment and it's not going to be found in material possessions.
It's just not. So I've got two reflection questions here. I want to ask the listeners, Craig, and that's the first, I'm sorry, go ahead, Craig.

Craig
00:10:08

Could I add a couple of things real quick?

Ralph
00:10:09

Oh, absolutely. That's what you're looking for, my friend.

Craig
00:10:12

So two things that kind of occurred to me as I was listening. One is sometimes we feel it at the grocery store, but the budget problem is not the food. It's the other things, you know, that groceries are just so in your face and you have to buy them all the time. And, but I wonder if maybe Lisa's problem isn't so much the grocery store. It's other things, you know, she mentioned her credit card receipts.

It's like, okay, what else are you spending money on? So it's a bigger picture thing. The other piece that we kind of talked around is that healthier, more nutritious foods are more satisfying in the long run. So what, one of the things that exists with junk food is it's this kind of cycle, you know, the junk food is immediately satisfying, but not satisfying in the long term.

So you get hungry again, so you get more junk food. Ask me how I know this. And you just keep in that cycle.

Ralph
00:11:13

This comes from experience, doesn't it?

Craig
00:11:15

Correct. Yeah, it does. So maybe if you just planned healthier meals or even healthier snacks to begin with you'd feel more full and more satisfied because you're actually getting nutrients that your body needs. So just something to think about in it. It'll make you
healthier anyway.

Ralph
00:11:32

And it's true Craig. I think about around the farm here and I know you got a farm where you're at too. If I find an old piece of dried out wood and I throw that on the fire, I mean that thing is consumed quick. But if you find that old piece of hickory or that old piece of oak, that's this better, you know, it's more fortified.

It's exactly what you're talking about with food. If you find those foods and they say all the time, you know, shop the perimeter of the grocery store, because that's where all the fresh stuff is, but you're absolutely right. Like very good points.

Craig
00:11:58

I'm very, very impressed you could tie that to firewood.

Ralph
00:12:02

That was a good one. Wasn't it? I've been working on my tying stuff together. So I got two reflection questions. That is this, you know, cause we want to help our listeners. First one, what areas of your spending can you cut back on to save money? Look at your grocery list. Ah, you notice what I said there.

Look at your grocery list. Just means you have to make a list. You got to plan those meals out ahead of time so that you can say, Hey, maybe we won't do this. Maybe we won't do that. But Craig, you nailed it on the other side of this. This is systematic of a bigger issue. And it's not about the groceries.

It's about where is your money going? And people are always amazed when I work with them, the first 30 days, I tell them, Craig, write down every single dollar you spend down to the piece of bubble gum. And then they come back 30 days later. And I'm like, Ralph, I had no idea. I was spending this much on this and this much on that.

Cause Craig, you're absolutely right. It's not, it's not the issue of the groceries. It's the issue of where is your money going? How many times are you hitting Starbucks this month? And I'm not picking on Starbucks. But no, does the Amazon, you know, does the Amazon delivery driver have a registered spot or reserve spot at your house?

I mean, those are the things that can really trigger those things and that's a very good question. A very good point.

Craig
00:13:10

It's really bad when the dogs don't bark at the Amazon guy anymore.

Ralph
00:13:13

Oh, yeah, they see that blue van and they're like, oh, that's a friend of ours.

Craig
00:13:18

So I have another real quick tip that might help. Take a look at your credit card bill. You know, I'll get a big credit card bill and I'll think, holy moly, what did we spend all this money on?

And expecting to see some, you know, a hundred dollars, a thousand dollars purchases on there and it's just one $10 or $20 or $30 purchase after another, after another, after another that can be really eye opening and I know a lot of people don't even look at their credit card bills.

Ralph
00:13:45

It's what I will call compound spending because it's $5 here.

It's $7 there, but then you get to the end of the month. You're like, wait a minute. I spent $300 on superfluous. That's a big word. I don't know where that came from, but anyway, superfluous stuff throughout the month. And it's like, you're right though, Craig, but until you look at that, and I say to people, read every line of your credit card statement, read every line of your bank statement and start to make some notes on that stuff, because you're right.

It's the nickels and the dimes that add up to dollars. Very good. Well, if anybody's in the chat, you want to leave a question there. You want to comment. We're going to move on to our second question for today. And the second question comes to us from Mark. So we're changing around a little bit, but there's definitely a theme today, Craig.

And this is what Mark wrote. He said, "Ralph, I've got a mountain of debt that seems impossible to pay off. Every month, I feel like I'm just treading water, paying the minimum on my credit cards and loans. I am constantly stressed out about my financial situation and it's affecting my relationship and my overall wellbeing.

I'm feeling overwhelmed and unsure where to start. Ralph, what are the best strategies to pay off debt faster?" Now that is the question. And Mark, so again, I thank you so much for your question and listen, I get it, Mark. I've been where you are. I understand how overwhelming debt can be. I remember at a time when I was just that close to being not able to pay all my bills and that's tough.

And it can feel like this never ending cycle. It just, you pay this debt with this debt. I remember when I was in college, I was just getting out of college and Craig, you might appreciate this being a university professor, but I remember I went to University of Delaware and these credit card companies was big back in a heyday when MBNA was a big one around here.

Now it's Bank of America. But they would come on campus. They would set up these tables and they knew we didn't have any income, but they knew we had the capacity to make income. And they'd give out those credit card applications. I remember one day I was walking out of a lab or something going from one class to the next.

And this person was set up with this credit card booth. And I said, all right, I'm filling this application. It says, how much income do you have? I said, can I put a negative number on here? And they said, Oh no, no, just put you know, what do your parents give you for spending money here on campus?

I'm like, well, first of all, I live off campus. So not a whole lot of that, but Oh, whatever. I picked a number $200. You've been approved. You've got a thousand dollar credit limit. I'm thinking, wow, I don't even make any money. And so that's the problem. You find yourself in that debt. So then you get that thousand dollar credit card, you run it up.
You still have those demands. You want those things and you get another one, you run it up. And listen, I've seen that you can turn things around because there is a way to fix this. There's a way to pay off debt faster. So I want to start by going through this and talking about what we can do to make that happen.

The first thing again, Ralph's going to talk about budgets. Have that intentionality, have that intentional spending plan, because again, this is going to show you where your money's going. And then the next piece of this, and this is crucial. You got to have a debt repayment plan. A lot of people don't think about that, but put it into writing and focus on one debt at a time.

There's a bunch of different ways. You know, there's the snowball method, there's the avalanche method. All of them are equally valid. Some people could argue, well, pay off the highest balances first, pay off the highest interest rate first. To be honest with you, I don't really care what you pick. The idea is to be intentional because here's the deal.

If you only play the minimum payment, somebody said this once and I didn't run the numbers, but it's probably true. If you pay the only the minimum payments, whatever the interest rate is, that's the number of years it's going to take you to pay it off. So if you've got a 24.99 percent credit card, yes, you're right.

If you just pay the minimums, it's likely to take you 24 years to pay off that debt. And the banks love you, the shareholders at the banks, the shareholders at the credit card companies, they want to give you a big hug because you're making mountains of money for them. But think about what I just said, that minimum payment, even if you can only make a little bit more than the minimum payment.

You can get somewhere with it. Maybe you use like a tax refund. Maybe you look for a bonus. Maybe you get that side job. Anything you can do to start accelerating that debt payoff. Because and you know, like we talked about a few minutes ago Craig. Systemic of Lisa’s issue at the grocery store. If I had to guess, if I looked under the hood I'm probably going to see debt there, too. What do you think Craig?

Craig
00:18:05

Oh, yeah without a doubt. You know, that's your little tip about the interest rate is a great way to avoid excess spending. You know, when you get ready to buy that, whatever, that little, superfluous to use your word, purchase, think about the fact that you're going to be paying that for the next 25 years. I'm going to be paying for this for the next 25 years And that's, that might let you put it back on the shelf a little more easily.

Ralph
00:18:34

Especially when you look at and you say this thing isn't going to last 25 years. Like how much of a thrill are you going to get from this expense?

I think about a lot when people, you know do a lot of putting credit cards for entertainment and travel and all that kind of stuff. Yeah, that could be that once in a lifetime vacation. I'm not saying don't take it. I'm just saying you've got to understand that by making that decision, the domino effect is it affects this and this and this.

And if you don't have that emergency savings fund, then guess what happens. When something comes up, you have the HVAC breaks, the washing machine blows up, whatever those things are. You know, if you own a home or you've got a car, anything, things happen. And if you're hitting that debt every time, one of the other things, big things I'm going to recommend here, Craig is keep an eye on your credit reports and scores because this will dramatically impact those interest rates.

And the problem is this is a spiral too, because once you start to have problems with your credit, you get over that capacity, what I'm talking about there is here's a little tip, pro tip. On your credit card, you should never go above 30 percent of your credit utilization. You're thinking, Ralph, what in the world does that mean?

Simple example, if you've got a thousand dollar credit limit, you should work to never owe more than $300 on that credit card. You might be saying, well, what's the point of having a credit card? Well, the bottom line is that that's one of the things that the Fair Isaac and the credit scoring bureaus look at is your capacity.

When I used to run a credit union, one of the things that I looked, I didn't really care about debt ratios so much. I cared about unsecured debt. I cared about how much people had in credit card debt. And that was the decision maker for me because I would be able to tell you, Craig, at the beginning of looking at a person's credit, look at it, they're unsecured, whether they were going to be a problem.

Because when I saw that proliferation of unsecured debt, those credit card debts, I knew it was just, we are throwing back to wood. We're throwing wood on a fire. And the more we threw in there, the more fire was going to because it was this debt spiral. And it just happened like that. So and then the problem is my son brought it to my attention the other day.
You're paying interest on interest.

Craig
00:20:37

Yeah. Capitalization of interest.

Ralph
00:20:41

Oh, absolutely. So you've really got to focus in on getting out of debt, which is, it leads to that other thing we talked about is like, we can talk and we're gonna talk about it in our third question.

But it all comes down to like making those decisions. You know, do you need that thing right now? What is the cost of that going to be? And if you put it in terms like we talked about. Let's say you're buying a lot, I'm sorry, go ahead.

Craig
00:21:00

I was going to say, one of the things that I wish I had learned earlier on in life is that the best strategy to avoid debt is to not have debt in the first place.

And you know, I made that mistake when I was younger and it took a while to pay off all those bills and that sort of thing, but it would have been a lot easier just to not incur that debt to start with.

Ralph
00:21:21

Culture, Craig, where everybody has to keep up with somebody else, you know, and the proliferation of credit is so easy.

It's so simple. I mean, you can go online right now. I was doing some online shopping yesterday and just about every single website I went to said no payments for a year, you know, we'll finance your payment, all this kind of stuff. And it's so easy especially when you're struggling, you're thinking, well, I really need to get this new washing machine.
Oh. And the home Depot says I can have no payments for a year. And that sounds great. You know, you've got an immediate issue. You got a water or a dryer or washing machine does not work and you got to get it fixed. And you go to the store there. I don't even know what they cost.

$700, $800. Now I think everything is at least that or more. And it's like, okay, well, I don't have that cash. I don't have that emergency fund. Well, they're going to offer me same as cash for 12 months. Hey, fantastic. Thumbs up. Where do I sign? Then the problem is if you're not diligent in making those payments, we talked about this again, last week. If you're not diligent in making those payments, then all of a sudden comes at the end of the year.

And all that interest that you didn't pay is thrown onto the back of that. And it, that's what creates that spiral Craig. And it's like, I see so many young people who get stuck in that. And 9 times out of 10, and this is going to be sounding like I'm being very judgmental. I don't mean to be this way, but look at their parents.

Because chances are you're going to find that they inherited bad financial skills from the people before them. Because unfortunately, I'm going to make a very, a brash statement, but we do a terrible job in this country of teaching people financial regimen. We do a terrible job of teaching them how to not get in debt in the first place.

There are places for debt. I think having a mortgage is a good debt. I had a client in the other day. They said, Ralph, you know, I'm thinking about paying off my mortgage, but then I'm going to lose a tax deduction. And I said, okay, let's talk this through. So I'm gonna take a little sideline here. It's gonna be a Ralph rant.

So we'll take a little side because this client was serious. They said, no, no, no, you don't understand. Ralph, we got to have that write off. And I said, okay, let me ask you a simple question. I said, that write off, how much of that write off is it? Well, it's a tax deduction. It's okay. Let's break this down. So your tax rate's 22 percent.

So even if you're paying a dollar in interest, yes, you're saving 22 cents but you're paying the other 78 cents. He looked at me like where did that come from? So i'm not saying that having debt is necessarily a bad thing. Good debts. Having a car loan is not necessarily a bad thing. But I remember a few years back Craig where people were taking out home equity loans to pay for cars. And they were taking that 5 year car note or that 4 year car note and they were making it 15 years while trying to get that payment down, right?
Oh, and it's tax deductible. So this is a great decision.

Craig
00:24:05

My older brother who's pretty savvy about these kind of things, had a saying, he said he wants more write ons, not more write offs.

Ralph
00:24:12

That's right.

Craig
00:24:13

You know, he wants that more income coming in, the write offs, yeah, he'll take them when they come, but he's right in line with you.

And you brought up cars. I think that's a huge problem for people in this situation. You can almost always, I'm guessing here, but I'm guessing if you talk to your clients that are in these kinds of situations and go out and look in your parking lot, you're going to see a lot more car than they need.

And I say that driving a very expensive truck, but I paid cash for it too. You know, I made that as another mistake I made back in the day, you know, I had a really nice infinity in my younger days, but boy, I sure would have been a lot better off with a Toyota.

Ralph
00:24:56

And I think that's Keeping up with the Joneses mentality.

I've got to have the car that has all the bells and listen, I'm guilty of that. I get it, but you're absolutely right, Craig. I can show you the people who are struggling financially. If I drive through the neighborhood, I can pick them out because they're going to be the ones that I'm going to pick on some name brands, BMW, Mercedes, high end, I'm just being, I'm being real here.

I think it's Warren Buffett I read somewhere drives a Subaru. Now that's a guy that's not hurting for money.

Craig
00:25:25

Those are great cars, by the way.

Ralph
00:25:27

And I'm not picking on Subarus. I'm just saying they are good cars. Toyotas are good cars. My wife and I, we have a couple of cars. And one of the things we drive all the time, we drive a Toyota Sienna minivan. Very affordable.

It's a hybrid. It gets good gas mileage. But you're right, Craig, and it comes down to that same thing we talk about week after week, and that is needs versus wants. And this is what it comes down to, because what happens is when you're always searching after that need, that need, that need, well, what fuels that?

Because you run out of income. What fuels that need is that debt. And it's so easy to get it. And now, you know, we just recently bought a new truck. I bought a truck here for the farm. And when I was in the finance manager, he goes, you know, we can write this as a nine year or eight year loan. I think it was, I'm like, wow.

And of course, most people don't ask this and I've done shows about this Craig cracks me up like okay well, what's the interest rate on the three year loan? What's the interest rate on the four year loan? And what's the interest rate on the eight year loan? And it was like something ridiculous. I want to say the four year loan was like maybe five percent, the eight year loan was like twelve percent, but of course, you know the way they sold it Craig goes.

Yeah, but Ralph your payments only gonna be X. Oh, that's great.

Craig
00:26:35

That's something I tell my undergraduate students. As soon as you start being enticed by a monthly payment you're getting ready to make a mistake or as we say down here, you're fixing to make a mistake.

Ralph
00:26:45

Fixing. I like that. No, but it's true and see that's the thing when I used to run the credit union, I used to train my loan officers for this. I would say to them the member doesn't care about the amount they're financing.

They don't care about the interest rate. They care about the payment. Well car dealers know this. The first thing a car dealer says to you when you walk in the showroom, how much were you looking to spend? And they're not asking you for 40 grand. They're saying $400 a month, $500 a month. That's what they want to know.

Because as soon as you say that, guess what? They set the hook and they're just reeling you in. And it's true. And it's just the debt spiral starts there. So here are my two reflection questions for this one. So which debt payoff strategy resonates with you the most? Is it that avalanche method?

Is that snowball method? Pick whichever one you want, but start with something. And then the other thing I want to say at the same time, we're going to get this on our next question, but how can you incorporate small savings into your daily habits to accelerate that debt payoff? I did a little short the other day I recorded these 45 second shorts to send out on reels and all this kind of stuff. And I said, one is simple as have a no spending day. And don't spend on anything. You got to plan ahead of that one. You know, if you have a car with no gas in it, you might not be a good day to do it. No spending day. But take that money.

Don't just say, okay, I'm going to just throw it away, but use that to pay off that debt. Because listen, even if you can add 10 bucks to that credit card, if you can add 10 bucks to your mortgage payment, if you can add 10 bucks to your car loan, get online, there's a bunch of financial calculators out there where you can look at extra payments. And it is an absolute snowball effect of how that reduces that debt quickly.

Craig
00:28:25

Hey, I have another strategy I want to ask you about, because I know you used to run a credit union. Don't a lot of credit unions offer debt consolidation loans that may be at a much lower interest rate than what you're paying on those stupid credit cards?

Ralph
00:28:39

Absolutely. And I'm a huge proponent of credit unions. I used to run a credit, you know, I was Executive Vice President because here's why Craig. I think they have a different perspective. It's, they're not, it's a funny thing, but they're not nonprofits. There's a big distinction. They're a not for profit.

And there's a distinction there. They're not nonprofits, so they have to make money. They have to, what the goal though with them is to reinvest it in their members. So absolutely. Yeah. If you're paying 20 percent interest, 25 percent interest, look at debt consolidations, but I'm going to, I'm going to warn the listeners a little bit.

You got to be really careful about this. Because sometimes there's a bunch of unscrupulous morons out there on the internet with these credit repair scams and this credit consolidation stuff. And you got to read the fine print, but yeah, go to a reputable credit union and say, here, this is what I got.

And most times and it depends on your credit score, depends on how bad it's gotten. They might be able to consolidate that and listen. Hey, look, maybe they consolidated an 18% interest but if you're paying 30% interest, guess what? Bonus you just saved a ton.

Craig
00:29:43

Well the other side benefit, especially if it's a community based true, I call them true credit unions not some of these mega credit unions like they have today.

Ralph
00:29:52

There are some mega ones out there now, that's true.

Craig
00:29:55

But a lot of those people are trained in consumer counseling. So they may be able to help you figure out some other strategies to lower your debt, lower your interest. And so even if they won't give you a loan for some reason, it still might be worthwhile.

Ralph
00:30:13

And we did a lot of that. I remember my loan officers would be like, I would say to him, okay, take your loan officer hat on and put your credit counselor hat on because it's true and funny, it's funny.

I'll tell another story about that. Like, so we also had collectors. Of course, sometimes people couldn't pay. And I, you know, when I first started there, we had a really high delinquency rate. Our credit union was based on the Chrysler assembly plant here in Newark, Delaware, and they had gone through this changeover.

So everybody was laid off. Well, everybody figured, Hey, I'm not making any payment. I don't have to pay the credit union, which was insane, but that's what they thought. So I had this line of repo cars out front. It was like my, anyway, That's a whole another story. But the thing is, sometimes you have to do counseling.

So anyway, I had these collectors and I said, collector has such a terrible name to it. It just sounds bad when people, I'm Ralph and I'm calling, I'm the collector. So what I did, Craig, I renamed them member advocates. Because really the point of it was I was advocating for the members. I wanted them to pay the loans because look, I really believe this.

I think the nature of people is they want to pay their bills. I really believe that. I think there are some scoundrels out there. There are some rascals out there, but for the most part, most people want to pay their bill. A lot of times their decisions from the past, things that are going on in their life, make it so they can't.

So I agree with you, Craig. And if you, even if you don't refinance them, reach out to the lenders and say, listen, I'm struggling. I can't afford to pay this. A lot of times they have programs for that.

Craig
00:31:37

Well, especially if you're dealing with reputable, honest institutions to begin with, because I know the credit unions don't want your car back.

Ralph
00:31:46

Absolutely not. I didn't want to repo cars.

Craig
00:31:48

It's a pain for them to have to, they're not in the business of selling cars, so they don't want it back. They will absolutely try to work with you within limits. I mean, they've got regulatory limits and boards to answer to but they will try to work with you because they don't want your car.

It's just a pain for them to have to sell it, despite what you might think.

Ralph
00:32:07

You talk about examiners. So let me tell that story. So when we were going through this downtime with the Chrysler employees. A lot of times we did this thing where we were letting them have a payment holiday.

So they weren't making any payments. Oh man. Our NCUA examiners that's a National Credit Union Administration came in and boy, they had a field day with me. They said, Ralph, you have more loans in negative amortization than we've ever seen. Negative amortization means actually, the loan balances were going up instead of coming down.

I said, okay, Here's the deal guys. And I said this to the examiner right to his face. I said, would you rather I charged it off? Would you rather I wrote it off or let that balance grow a little bit and then when they go back to work, because these guys had good jobs, ladies and men, they had good jobs. It was just a timing thing.

And I said, listen, Oh yeah, they wrote me up, dude. I was tarred and feathered from one end of Washington to the other. Can you believe what this guy is doing? But you know what happened, Craig? When they went back to work, our delinquency ratio was up to close to 10%. Which is a big number. It was 1 percent within six months of them going back to work because I knew it.

They were going to get back to work. There was going to be a ton of overtime because Chrysler need to turn out back and they were building a Durangos. I'm not sure if you remember that or not, the Dodge Durango was built right here in Newark and they had, they redid this, made it the best paint, these guys are making money. A year after that shutdown, they did this major bonus.

The average line worker got a $30,000 bonus and see if I had just charged that stuff off, they would have walked away from the credit union. They would have given me the double barrel. You know where I'm going with that and said, you don't want to work with me. Fine. So that's one of the things, I work with people.

So Craig, that is a very valid point. Well, let's get to our third question before we run out of time today. And this one comes to us from Emily and Emily writes this, and this is great, Craig. Says "Ralph, I'm torn between investing and paying off debt. I have some high interest rate credit card debt, but I also want to start investing for my future.

I'm feeling unsure where to start and how to balance these two important financial goals. And she asked this question, should I prioritize investing or paying off debt? I'm feeling confused and I need some guidance." Well, yeah, you do need some guidance. That's fair. And this is a, first of all, Emily, I thank you for your question.

And this is a confusing thing. A lot of people, you know, they hear it ingrain, start saving money, save money. Like I had somebody in not too long ago, Craig, and they were so excited. They had just gotten a CD and that CD was paying five and a half percent interest. And I said, that's fantastic. I said, you know, do you have much more to invest?

And they said, well, if I didn't have this 40 grand in credit card debt, I'd have more to invest. And I said, Whoa, break, put the brakes on, hard stop here. And I said, what are you saying? They said, Oh yeah, Ralph, we've got this great CD. It's paying five and a half percent. I said, what are you paying on your credit cards?

Oh, those aren't too bad. They're only 22%. I said, do you understand? And I'm not, I felt kind of bad afterwards, Craig cause I feel like I like hit them like Tyson. Like I've knocked them down and that wasn't my intention, but it's a simple thing for me to understand, but they didn't get it. Ralph we did this great investment, but if you're bleeding 22% and you're getting five and a half percent of infusion, guess what? The net effect is you're still down 17%. If I do my math quick or 16, whatever that number is, don't do math on podcasts, what they say, right? But that's the thing. So that's the first thing I'm going to say to you, Emily, look at the interest rates.

It's a comparison thing. If you're earning 5%, but you're paying 12, guess what you should do? Pay off the 12 percent debt. That said, I still believe there's a balance here. I still believe putting a money aside to put into an emergency fund makes sense. Another thing, a lot of people will disagree with me on this one.

If you've got a 401k at work at least be putting in up to the match because if not, you're leaving money on the table, but pass that, man, Emily, I'm telling you, focus on debt repayment. You have, you gotta get past that first. Because that is growing and growing and growing. And chances are, unless you know some stock tips and you can send them in the chat, some stock tips of where you're going to get more than what they're charging on interest,

I doubt that's happening. Your interest rates that you're paying are always, I won't say always, generally higher than what you're going to pay than what the investments are paying. But that's what it really comes down to. It's a real simple comparison.

Craig
00:36:34

Well, there's a huge piece of this that I think a lot of people don't think about, and that's peace of mind.


I can remember the day that we paid off our tractor. It was my last non mortgage significant debt. It's like now all we have is our mortgage and it's, I think it might even be a little below 2%, so I'm not paying at all. But it's like, okay, we don't owe anybody other than the mortgage company a nickel. And it didn't really make much difference to my day to day life or the feeling of just peace of mind to not have that debt.

And it's so much worse if you're struggling to pay the debt, just knowing you're chipping away at it, you're making progress. People forget about how important it is to even make a little bit of progress every month will make you feel a lot better and reduce that stress level.

Ralph
00:37:29

Yeah. And Craig, what you just said is brilliant. You said, and I'm not paying off that 2%. Why? Because you realize that you can earn more using your money in other things than what you're paying on mortgage. That's a brilliant place. But that you see the difference there is you're saying I'm in the opposite situation. My interest rates are lower than what I'm getting on my investments.

A lot of people don't find themselves in that position, but Craig, that is brilliant. And that's the key to it. And what you just went to, as I'm going to talk about this anyway, is these emotional factors. They put you in a dark place. I know, listen, I've worked with people who the only thing left was declare bankruptcy and I counseled them to do that.

I said, listen, you need to stop the bleeding. I'm not a huge proponent of bankruptcy, but I have seen situations where they didn't have any other choice. And just the emotional break that brought to them. I mean, the guy talked about it a little while ago in this question, it affects your marriage.

It affects your relationship with your children. It affects your relationship with everybody around you, because I don't know about you, Craig, but when it's like, they see you when you're hungry, you get hangry, right? You get that. It's the same thing with debt. If you're constantly getting phone calls from creditors, if every time you go to the mailbox, you're pulling out what they call dunning notices. That's a term nobody uses anymore. But if you're pulling out those collection notices, or now I guess they send texts and they send emails, if you're constantly getting them, you're going to feel like the walls are closing in around you.

So even a little bit of effort, and that, and what happens is, and this is what you're talking about Craig, you celebrated when that tractor was paid off. And that's the thing I tell people all the time is celebrate your victories. Because once you start to celebrate because then all of a sudden you're at the store and you go wait a thing I'm, I gotta buy this thing. But if I took this hundred dollars and paid towards my credit card in two months, i'd be debt free. Well, then all of a sudden you're operating under a different paradigm. You had a complete paradigm shift and I think that one is huge.

Craig
00:39:31

Well, can I go on a little mini rant here?

Ralph
00:39:33

Go right ahead. You're entitled to that my friend.

Craig
00:39:36

So I really, you changed my mind about bankruptcy over the years. I used to think it was kind of immoral, but the fact of the matter is that the credit card companies are often kind of predatory in the way that they make their documents, the way that they charge interest and that sort of thing.

And so they, you have a business deal with them and they won't hesitate to use the laws to their advantage. And you shouldn't either. If you have to declare bankruptcy, you don't want to get in that situation, but if you have to stop the bleeding, you should not hesitate because of some moral stance against, you know, not paying off predatory credit card companies.

I mean, I went through this with a relative, thankfully it wasn't with me, but they were really upset that they weren't going to get paid. And I said, well, when you gave somebody with bad credit, in poor health and an advanced age, a huge unsecured line of credit. You're in business, you should make better decisions about this.

So you know, I felt zero sympathy for. So, you know, you should try to pay the money that you owe, but the bankruptcy laws are in place for a reason.

Ralph
00:40:51

My grandma used to say, you got to put your big boy britches on. And if you want to get in there in the lending field, you want to do these, what I'll call predatory loans.

Because the truth is Craig, like I said, when I'm walking out of the lab, when I'm 19, 20 years old in college, I don't have a job and this person's out there going sign up now because they're getting a bonus. Beautiful. I love capitalism is great. But guess what? I blame the lender. You gave me a loan I remember going to a Sears store back then. And I wanted to get this new Hi-Fi thing was when CDs first came out. Man, I'm making myself feel old now, but the little CDs first came out and I saw this thing was like, it was like cool It's like from the you know from the new age, all slick a couple hundred dollars. And the guy says oh you don't have to pay for it today. You can sign up for a Sears credit card.

And I literally wrote on the top of the application, "I do not have a job." And I said, this is going to be funny, but you get like a discount if you apply for a credit card. They put it in the machine, fax up 10 minutes later, you've been approved. I said, what? I said, I do not have a job. And he's like, no, you've been approved. I'm like, this is insanity. So you're right, Craig.

And I'm not saying that people go file bankruptcy for the sake of filing it, but there are circumstances you've lost your job. You're disabled. Things happen. Life happens to people and you just can't, that stigma I think that was around that has been completely dissipated because you're right.

I mean, they are making these decisions and guess what? Here's the thing a lot of people don't know. Having worked on the inside of this, we priced our loans based on the understanding that a certain percentage of people were going to default. It was just the truth. I did what's called risk based lending.

I was the first credit union in Delaware to do that. Now let me explain what that looks like. Risk based lending basically is you come in, I pull your credit score. If your credit score is X, you're A paper, you get the best rate. If your credit score is this, you're bad paper, you get the worst rate. Well, somewhere in the middle is where most people land.
But I knew if I was writing that car loan for somebody that had a 500 credit score, probably wouldn't have done it that case, but really low credit score. But if they had a good job, they needed a car. It was one of those essential purchases. I know it's going to get paid, but I also knew, Hey, they're paying into 18 percent interest.

So if that charge is off and I got to roll that car back, guess what? I knew what it was going to happen.

Craig
00:43:09

Well, and if the credit card company has found it advantageous for them to file Chapter 11 and walk out on some debts, they do it in a heartbeat. So again, I want to be really clear, I believe that you should pay your debts, but I also believe that bankruptcy laws are in place for a reason.

And if you need to use them, get some good counseling, talk to Ralph. Ralph, they should talk to you absolutely. But if you need to, you need to. It can literally kill you
to have that kind of stress.

Ralph
00:43:38

This stress will cause heart attacks. It causes heart disease. It causes diabetes. It causes all, people don't think about that, but there is such a huge, this is why I do a faith and finance show because the two things are connected.

Well, guess what else is connected? Health and finances. It's just true. So let me throw out those two reflection questions on this. First question is how will you balance paying off your debt and investing for the future based on your individual circumstances? What Craig was talking about is exactly right.

Sit down with somebody you trust. You can book a call with me. I'll talk about that a little bit later, but do that. And then the second thing you're going to do is what steps can you do or what steps can you take to prioritize your financial goals and find peace of mind? Because the thing that Craig and I are talking about. Part of it's finance, but what you hear us saying more and more of is that peace of mind.

Like when Craig paid off that tractor, that peace of mind, knowing that the only debt him and his wife had was that mortgage, that is huge. It absolutely is. Well, one of the things I want to bring to everybody's attention is I do write a blog post and you can get to our blog post. It's really simple to get to.

Just go to askralphpodcast.com/blog. And in that blog post, I do one of these every day for the daily show and for the weekly show as well, the live show. I put in there a bunch of resources and a bunch of things like that. So you can go and see what we've got. I get into some more ideas and things like that, that we can't cover on the show.

And the other thing I want to mention is if you're interested, you can support the show. If you support this show, you can do a one time support. You can do a recurring support. You go to askralphpodcast.com/support. It's a way to sort of get back. It's a way for us to go and reach new people with a message of hope and all that sort of thing.

So if you want to do that, I firmly would appreciate if you got to doing that. Now Craig, I want to share a couple of things. I haven't done this before on the live show, but I'm starting a new thing on the daily show and it's called the mailbag. And I thought, you know, I'm starting to get a lot of emails and people send, you know, Ralph, can I share this with your people?

Can I share this with the show? And I'm just going to throw, we have a bunch of them here. I'm only going to, I'll have time for a few, but I just want to throw these out because I want people who are tuned in to understand that, that what we talk about here on the show every day and when Craig joins me weekly, these things can be impactful.

And I wanted to share some of the ways they were impacted. So this one comes from Abby. It says, "Ralph, your advice on budgeting has completely changed my life. Hey, what do you know? Budgeting works. I was constantly overspending and never had any money left at the end of the month. After listening to your podcast, I started planning my meals and creating a shopping list.

I also started using coupons and cashback apps. And within a few months, my grocery bill, listen to this one, Craig, my grocery bill was cut in half, and I was able to start saving money for the first time in years." Thank you so much for your guidance and support. Abby, thank you for sharing that. There are people that will hear that and they'll say, you know what?

There is hope for me. This one comes from Zed. I thought this was a cool name. I never, this one Zed. I was like, that's a great name. He said, "Thanks for the show. I started paying off my debt and feel more in control of my finances. See, that's what it comes down to. It's that being in control. He says, I was drowning in credit card debt and didn't know where to start.

And after listening to your podcast, I created a budget and started using that debt snowball method. So he chose one of the ones we talked about and he says, I've already paid off two of my credit cards and I feel so much more confident in my ability to manage my money. And he says, keep up the great work."

I say, Zed, you keep up the great work because you're the one doing the work. Now, this one came to us from Yvonne, and this one was a great one to kind of ties right into what we talked about today. She said, "I never knew how to balance investing in paying off debt until I listened to your podcast. I had a high interest credit card debt, but also wanted to start investing in my future.

After listening to your show, I decided to prioritize paying off my high interest debt first and then started investing. Good job. I also took a balanced approach and started putting a small amount of money into investments each month. It's that habit that we create. I talk about that on the show all the time.

And then she says this, she says, now I have a clear plan. Beautiful. That's what it takes. And she feels confident. Craig, as we talked about all show today, it's that feeling of confidence. It's that feeling of peace and she's confident making financial decisions. Thank you, Ralph, for your wisdom and guidance."

Let me share one more Craig. And this is one that comes to us from Frank and this one's a little bit longer, but I thought this one, this is one of those things. Craig does a podcast too. And as a podcast host, you always like to get feedback. Cause sometimes I don't know about you, Craig, but I feel like I'm talking to nobody. You know, no one's out there.

And when you get one of these, so let me share this one. This one says "Ralph, your show has been a game changer for me. I was always stressed about money and I felt like I was never going to get ahead. Excuse me. After listening to your podcast, I started implementing the strategies discussed. I created a budget.

I started tracking my expenses and cut back on unnecessary spending. I also started paying off my debt using the debt avalanche method. So he used the avalanche. The other one used the snowball. And within a few months, I had paid off a significant amount of my debt and felt so much more in control of my finances.

Thank you for your amazing advice and support." That was signed David. So listen, if you're tuned in today, if you're listening to this on the audio release, if you're watching it on YouTube or Rumble, there is hope. Every one of these stories, basically you could sum them up into a couple of things. They took small steps.

They started it because look, I say this on the show all the time, Craig, is, you know, you don't have to do it all today. Like I talk about these emergency funds, everything,

Ralph, you say I need to have three to six months worth of emergency funds. Ralph, I can't afford to put food on the table. Start with a dollar, start with $5.

But every one of these people said the same thing. What'd they say? They felt more in control, they had peace of mind and it started small. You want to add anything to that, Craig?

Craig
00:49:25

Just to reinforce that, you know, $5 in a savings account is better than zero.

Ralph
00:49:30

And that's what it comes down to because it's that inertia. I say this to clients all the time. They come in a lot of times, and if you want to book a call with me, I didn't even mention that today, you can book a call with me, and you can do that by going to askralph.com. And when you get there, you'll see a little button at the top that says, Book a call with Ralph, because this is what I do every day. This is what I live. I've been doing this for 30 years. People come down and sit with me, and the first thing I tell them, Craig, is let's start with where are you today?

I had somebody say this to me the other day and it was brilliant. They said Ralph think about this. If you want to take a trip, you live in Louisiana. If you want to take a trip to New York City, well, the first thing you got to do is you got to figure out where you're at. Because you're not going to find a map or you're not going to use one of these online Waze or Apple maps or anything if you don't know where you're starting. So I do the exact same thing when I counsel people Craig.

I see you laugh and I think you got something.

Craig
00:50:18

That's a saying down here in Louisiana. Where ya at? Where you at?

Ralph
00:50:25

But the finances work the same way. If you don't know where you are, if you don't know what you're spending, if you don't know what income looks like, if you don't know any of those things, you don't know what your debts are, you don't know what the payments are, you don't know what the rates are,

you can't get anywhere until you first start off with, where am I now, what am I gonna do? It all starts there. It really does. So Craig, I just wanna thank you for joining. It's been great having you every week on the show. I think you've been a good part. You've given us some great ideas today. And again, I want to thank you for taking your time.

If you want to know more about Craig, I'm going to put up Craig's info there. You can check out his aigoestocollege.com. It is a great podcast. If you're into AI, Craig, I don't know if you had anything you wanted to say here as we wrap up.

Craig
00:51:09

No, just thanks again for having me. And remember, small steps, getting started, you'll feel better.

Ralph
00:51:14

That is sage advice my friend. Sage advice. Well, thank you for your time and support in the show. Like I said, if you want to support the show, you get to askralphpodcast.com/support, check out our blog articles. And remember, as I close today. My passion is to help you achieve financial success.

That's why I do what I do. This is my mission field. I want to see you live out your dreams and I want to see you grow in your faith. And like Craig said today, we both want to see you find that financial peace. And I know working together, we can master your finances from that Christian perspective. So as I always end this show, I encourage you stay financially savvy and may God bless you.

Podcast Announcer
00:51:50

Thank you for joining us on the Ask Ralph show. And with a simple click to subscribe, we'll invite you back to our next episode. And remember, financial issues don't have to be complicated. Just Ask Ralph.

The information contained in this episode of Ask Ralph is based on data available as of the date of its release. Saggio Accounting Plus and Ask Ralph Media, Inc. Is under no obligation to update this content if changes occur.

Applying this information to your specific situation requires careful consideration of all facts and circumstances, and any information provided is not to be considered as financial, tax, or legal advice. Please consult your tax advisor or attorney before acting on any material covered.