7 “Bad” Money Habits That May Actually Help You In The Long Run
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- čas přidán 6. 06. 2024
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In this video, Chelsea dives into the "bad" money decisions you've been warned about, and how they might actually help your finances in the long run.
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01:39 Editorial video begins
"Responsible" money decisions video: • 9 "Responsible" Decisi...
Investing vs. paying off debt:
www.fidelity.com/learning-cen...
studentloanhero.com/calculato...
Spending on short-term wants:
daveramsey/p...
rightasrain.uwmedicine.org/bo...
Holding more cash:
www.kiplinger.com/investing/6...
www.seattletimes.com/business...
www.investopedia.com/articles...
Earning over saving:
due.com/blog/should-you-focus...
Using a credit card:
www.ramseysolutions.com/banki...
geobreezetravel.com/
Missing out on investments:
www.thebalance.com/should-you...
• Everything You Need To...
Personal loans:
www.bankrate.com/loans/person...
money.usnews.com/loans/person...
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1:56 Habit #1: Investing before you pay off debt
4:05 Habit #2: Spending on short-term wants
6:34 Habit #3: Holding more cash than you "need"
8:54 Habit #4: Focusing on earning more instead of spending less
11:39 Habit #5: Putting every expense you can on a credit card
14:22 Habit #6: "Missing out" on investing opportunities
16:33 Habit #7: Taking out an "unnecessary" loan
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Thank youu
People like you are doing the lords work I swear😅🤣
Thanks 😊😊
Comments like these make me want to watch the video more. Chapters make it easier to rewatch the video instead of this guessing game of hiding content markers
I worked with a girl who worshiped Ramsey. She was so high-and-mighty about it too; she'd make everyone else at work feel bad for going out and enjoying ourselves while she was clearly the superior one for having no life and no fun ever. Meanwhile I will stay in my lane and make sure I allocate money in my budget that is specifically FOR fun things so I can preserve my financial and emotional health
Extremists like Dave Ramsey create that, a « culty » mindset of superiority for people who are « in the know » and who adhere to his principles as rigidly as possible. The « Oh you wouldn’t understand » type of people.
I worked with a woman who shared a minivan with her husband who didn’t work and she talked about how they did DoorDash as a family activity and she would tell me Dave Ramsey calls a lease a fleece and I got fleeced and it was like she would interrupt me to say it whenever I mentioned my car, but I was leasing a car and it was actually less expensive and more reliable than my 20-year-old Beetle and I was debt-free with $4,000 saved and no kids and no pets and almost an 800 credit score and multiple sources of income and no student loans and lived in a crappy 1-bedroom apartment and I was offering to drive this other woman who was a single mother whose car broke down. I was so tired of her. I did FPU twice at church because they had everyone pay $100 to do it and I thought it was a scam. Leasing worked for me. Don’t be jealous or preachy.
I've been doing #5 for years. I always pay the full balance every month, I never put more on the card than I could afford to pay in cash, and I basically just treat it like an ATM card instead of like a credit card. I never pay any interest or annual fees but I do get money back. I always have my credit card with me because I use it for most purchases but I don't buy any more using the card than I do when shopping with cash. It's just used for convenience, buyer protection and points, not to buy things I can't afford. My monthly statements also have useful graphs and stats about categories of spending.
I call myself the “Points Queen”. My husband and I own a business so I get points on personal and business expenses. I pay for Christmas with points and pay for large portions of vacations every year with points. It’s amazing how much those points add up over time!
The "No Credit Card" thing really gets me mad. In the UK we need them for mortgages etc. There's NO way to get one without a good credit score, and buying a house outright is absurd for most. We need to be taught to use them properly as tools should, not demonize them.
It's essential in the US as well. A friend of mine has been proud of never having a credit card... but she moved recently and has now learned that have "null credit" means she can't rent an apartment on her own. She's stuck in a sublease until she can establish enough of a credit history to qualify, which is not ideal.
don't forget section 75. I bless section 75.
Don't you think the credit score system is kind of making certain people fail in life?
In the Netherlands we don't have credit scores. You can have a mortgage based on your pay check (steady for three years for entrepreneurs). And you need a down payment of 10%.
The fact that one must have a credit card (a risk for people susceptable to the money rush), to get benefits like the ability to buy a house, feels weird to me.
We only have banks to deal with, no crazy dept percentages on credit cards. Here if people have money problems, they have to pay back the money they spend, no "interest" stuff like "credit cards with high interest rates to pay off first"
@@boeken9805 It absolutely does make people fail, no question. My issue is that people who give this advice assume you can get big things without one, like in the US, if you do well or make enough money. The advice just isn't practical for everyone, and people who don't know better assume it is. I wish we were all like you guys then. Would make it so much easier.
I love your counterintuitive contributions to the financial conversation. It drives me crazy when Dave Ramsey proponents don’t understand that it’s impossible to save your way to earning more in real estate by trying to avoid paying even mortgage insurance. Every $10,000 borrowed is $60 a month at 6% so it takes a lot of savings just to save a little bit. By the time you save $20,000 to avoid $120 in mortgage insurance, appreciation and the opportunity cost lost of not having been able to pay down the balance of the mortgage and by continuing to rent, make it hard to catch up to somebody who buys sooner and pays a little bit more monthly.
A trick I learned about not misusing my credit card (because I am a bit of a compulsive shopper) is to place the card in a sealed envelope and on it I wrote “Is this for an important purchase or are you buying something stupid”?
I also put that envelope in a safe that is hidden away with a bunch of other boxes so I would have to put effort into getting it.
It’s done wonders because it makes me think very well before I decide to buy something frivolous.
Love this!! I am going to try🙌🏾
You can also put your CC in a freezer bag with water. By the time you defrost the bag, you'll probably see that whatever you wanted was unnecessary
But it's so easy to memorize the number for online shopping, I don't need the physical card in my hand to use it.
@@one4blondes I’ve never liked that idea, something about it feels icky to me, plus I don’t live alone so I don’t want to temp anyone.
@@lestranged At that point you should just close your account if you can’t control your spending. I don’t do as much online shopping as I do in stores and I make sure I don’t have my card information stores on websites so I can’t just buy stuff when I’m bored. I only have it stored for my car insurance, rent, utilities, etc on autopay and pay them in full before the end of the cycle so it still get’s significantly used.
I didn’t pay off my low interest, low payment student debt until my son was in college. Imagine if we had spent his entire childhood never going to restaurants! Dave Ramsey offers one-size-fits-all advice based on being burned by debt when he was younger. The world has changed since then, and everyone’s situation is unique. Dave needs a dose of Chelsea’s common sense.
He’d probably be a lot healthier.
I mean, if you had really focused on it and made more than minimum payments, you would have paid the debt in a shorter amount of time and would still have had the chance to take your child to a restaurant.
I am making assumptions here, since I don't know how much student debt you had, how much you paid each month and your income.
Dave Ramsey is controversial and I don't agree with many, many things he says, but the sacrifice part should last only a couple of years or so, the time necessary to pay the high interest debt(not the mortgage) or put the money aside for a big project, such as a downpayment on a house.
@@liviaclaire We actually lived very conservatively. We had a budget which allowed for a diner visit once or twice a month. Many good memories were made. We were very intentional with every penny spent. It’s all about personal choice. We didn’t have cell phones or cable TV in the early 2000’s and were fine. Other families might choose to give up restaurants. For us the opportunity cost of giving up restaurants was not worth paying off the low payment, low interest loan.
I love how you take human nature into account! Personal finances aren't just math.
I would add that far too many people treat economics as a morality play. "If you don't have money, that's a moral failing." The truth is that life is complicated
Credit cards: I know a guy who puts everything possible on his one credit card that gets him airline miles. And he's fortunate to live in an apartment complex that lets him pay his rent via credit card. The guy travels, for fun, all over the world all the time and I don't think he's actually paid for a plane ticket in over a decade.
Be careful with putting rent on a credit card tho cause some places will charge u extra for using a credit card 😩
Most places let you pay rent via credit card, but charge a percentage.
Rent via credit card is usually a 3% fee, that you dont read in the fine print and they dont charge all at once, so it's barely noticeable. In Dallas, that can be around a $658 fee in a middle-class rental area.
I do the same. If I can pay with a credit card with no added percentage charged, then I do, and then I pay off the full balance each month to collect the rewards. My husband had to buy a car recently, and they even let us put a portion of the down payment on a credit card with no additional charge (there was a charge if you put more than that amount on a credit card), so we got a big cash back reward from that. The rewards we collect throughout the year do cover our plane tickets and a little bit of our lodgings costs when we go on vacations. It's nice.
@@thatjillgirl that's great. I'm looking forward to doing the same thing next time I buy a car, myself, but I only buy a car every 12 years or so. I definitely put medical and dental bills on my cashback cards, though.
I broke my finger and the cashback paid for Xmas in Ireland.
I have an ordinary job in the education sector but I threw everything I had at the mortgage and paid in off in 10 years. There is a huge psychological benefit of becoming debt free which is difficult to put into words. Once the mortgage was gone I then started my dividend portfolio in 2009 which I have been compounding ever since.
I did something similarly with my student loans. The relief I feel is unmatched, but now that I invest, I wish I could’ve been the kind of person to juggle two goals (debt repayment and investing) at the same time.
interesting. For my economist husband is the exact opposite. He says there are definite advantages at paying back slowly.
I think it’s important to include a couple things when we talk about things like using a credit card-1) if you have a neurodivergent condition such as ADHD (which TONS of people do), using a credit card responsibly can be quite difficult for a couple reasons-it is hard to remember that you have not already spent the money in your bank account, and it is very easy to space out on a payment or miscalculate your spending and over spend.
2) If your finances are a huge mess, or your life is otherwise chaotic, it might not be a good time to start (or even continue) using a credit card. They work well when you have the mental bandwidth to start or maintain good habits. But if not, they can quickly add to an already stressful and chaotic situation, and nothing snowballs faster than overdraft fees, bouncing rent checks, eviction notices, etc.
I have a little workaround for your first point! Set up a recurring bill to be auto paid by your credit card, and then set up a recurring payment from your chequing account to your credit card for a couple days after the bill payment. It’s an annoying thing to get around to, but once it’s set up it’s great!
I really appreciate this comment. A lot of financial advice (and even economic theory sometimes lol) assumes that humans are 100% rational 100% of the time which is incredibly short sighted. The best strategy is the one that plays to your strengths and accounts for your “weaknesses” (human-ness!)
I was going to comment something about actually remembering to pay your credit card balances! Thank you!
Your point about building in a budget for enjoyment at while you're paying off debt reminds me of a common weight loss/health tip I hear (and one I follow): The best plan is the one you will follow through on.
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I was really into Dave at the start of my money journey, but the more you learn, the more you realize how reductive the advice really is. People learning "how to money" should have all of the options laid out in an objective way. Even if it's a little overwhelming and forces people to make tough decisions.
Exactly! With Dave, it's his way or nothing. He demands compliance with whatever he says no matter what it is simply because he has more money than you, so that really sucked some of the life out of me
@@EllieofAzeroth I find the baby steps (being a different country, not all his advice applies) to be good for basic money advice if you aren't that great with money and just want basic advice to help you get your cash straight, it's very much what my parents taught me. but if you want to fine tune it, then he's no good in either country. He's preachy as hell otherwise and I don't have time for that crap in my life. I found MSE in the UK and used that fine to tune my finances. I pay less taxes than my colleagues because i found expenses i could claim they didn't know about, that kind of thing. I like MSE because he sets out how to spend and save for your circumstances,
I would love to do some passive investing and just pick a fund, but I have issues with potential unethical companies included in the fund. Perhaps a video on ethical passive investing could be interesting? I imagine there are many more people like me, shying away from investing for this reason.
There are online investing companies like ellevest that have portfolios that are eco friendly or all women owned brands!
@@elizabeth123854 it seems I'm not eligible as a non-US resident. But perhaps your tip can help someone else reading this.
Ethical companies tend to get overrun by less ethical corporations. You can vote with your wallet all you want but at the end of the day having children overseas manufacturing your stuff and exploiting loopholes to avoid taxes and fines is just pushing ethical companies out of the market. Profit tends to happen by selling goods and services for more than they're worth to you so being fair and ethical is not profitable.
You may wish to look into Triodos bank. They have some ethical investing options.
@@tineputzeys i don't currently use it myself, but someone close to me does, nordnet (works at least in the nordics, not sure about other countries but it can't be the only company doing this) let's you pick certain things off of your portfolio, like guns, and has green options for example.
That "Focusing on earning more..."-part is so true for me. Growing up, I was always picked on in my family for being careless or bad with money and should be saving more. Now, before even turning 30, I have the highest income of us all by far. Feels great!
I recently figured out something personal related to this. I was having a really hard time with my food, knowing what to cook and eat everyday. One day I was watching an ADHD video here on youtube and one of the comments mentioned going to the store every day, and I realized I could do that! It's funny because in my brain, going to the store everyday is an irresponsible thing to do, I should plan ahead, but I've been doing it a couple weeks, and I think it's going pretty well. Many short trips will cost me the same as what I've been spending on big infrequent trips, and it will stress me out a lot less.
I totally agree TFD. I used to follow DR, not anymore. It got to the point where I felt bad for spending any money, no matter how small the amount was. 🙄 Life is so short & it is to be enjoyed. There is no reason to feel bad & shamed about money, especially when being responsible & reasonable with it.
It has taken a lot for me to not only realize how debt-phobic I was, but that I need to change my thinking to not be so phobic. I saw (and sometimes still see) everything as an almost certain financial disaster. I don't know if it's a result of graduating from college into the Recession and never making ends meet until just this year, or hearing crazy things from news outlets or a combo of the two, but I definitely would rather be debt-critical going forward.
I really agree with #2, just because we have long term goals doesn’t mean we can’t have fun in our day to day life
Why does "spending money"="fun" in the first place?
In the restaurant example, eating nice food in a nice environment with friends or family could also be experienced at home for fraction of the cost, if you just bothered to put in a little effort.
@@villevalste1888 but then, you spend money on having a house and on the food and cooking implements anyway. You make a good point, but going out once in a while shouldn't be demonised.
Ville Valste you can have fun both ways. If I am meeting my savings goals and paying all my bills, I am not going to force myself to only have fun inside my home lol
@@elizabeth123854 Still, I don't see why that necessitates spending money? Sure, if you're set and don't need to save extra money, spend your money in whatever way that makes you happy. But for me "buying happiness" just doesn't work.
I can spend time with your friends in lots of places and ways without spending a lot of money, but many still elect to go to expensive restaurants or bars, which I don't see making myself particularly happy compared to spending time with my friends in ways that don't require a lot of money.
For me, simply having conversations or playing video or boardgames with my friends is a great time. Eating at a restaurant or drinking at a bar simply doesn't add any more enjoyment for me, even though the cost in money is several times as much.
Ville Valste then go ahead and do that lol. Who are you to judge what other people do with their free time? If you’re happy then just keep doing you, it’s not your job to tell others that they could be happy if they were more like you
To me, Dave’s message works for people who are up to their eyeballs in debt and will never get out of it unless they get hyper focused. The phrasing is wild but I think in some cases it helps these people finally get serious about their debt (and many of they come to Dave already aware he’s this intense)
that doesnt change the fact that its objectively not good financial advice. it leaves a lot of money on the table and doesnt allow a savings cushion. being debt free means nothing if you cant put food on the table
@@sarahweigel4361 he advises you set up an emergency fund before paying down debt. Granted he says save $1000 and that’s way too low IMO.
@@bigtittiedsaint yes it is entirely too low. $1000 won’t even cover one months rent in most places.
@@sarahweigel4361 And it's not hard to have a repair to your car or home cost that much, let alone getting sick and having to pay your medical deductible.
I just think it's really weird that he expects people to follow these strict saving and debt payoff rules, but he doesn't expect that they can be trusted to responsibly follow advice that will net more money in the long run. It's simultaneously too intense and yet not intense enough.
THANK YOU. I've been telling people they're leaving money on the table now and in the future by not using a credit card like a debit card. I pay off purchases right after I make them, so I'm looking at how much is in my bank first. I also always find that once people understand credit cards don't only make money off interest that it clicks on why you and the credit company benefit, and you can use a credit card without getting screwed
Our credit card points cover our beach rental every summer. Careful and conscious credit card use is a small (but significant) income source.
Now in her 70's, my mother has always used an Airmiles Mastercard probably for as long as it's been around, but now that they're pulling out of a major grocery chain, they're basically useless unless you use it for travel. So I talked to her about my Cashback Visa and how since switching from the airmiles card to cashback just 3yrs ago, I've earned over $400 in cashback, with a free card (because I have a chequing account with the same bank) and have never paid any interest. Using a card to get miles and points may not be right for you, but there's other rewards you can get when you're responsible.
i'm a cashback credit card man, m'self. I get about $900/year cashback
6% cashback -groceries only -with American Express ($95/fee pays for itself)
5% cashback - Chase freedom card - rotating between restaurants, paypal, amazon,travel etc....
2% cashback - Wells Fargo....for ANYTHING
I think Dave Ramsey is coming from the accurate reflection that most people are not responsible enough with or just don't understand enough about money. Chelsea your advice in this video I think is great for people that have already overcome the psychological and behavioral reasons why they aren't good with money due to impulsive spending, not saving, etc. Additionally I think your advice is for those with a good handle on their finances and ready to make tweaks that will help them even further. I like you both and think there is a need for both voices in this financial space.
That makes sense to me .
The only one of these that I firmly reject for myself is #4, focusing on earning more. For one thing, side-work is just more work if it's not needed just to stay at a basic "staying afloat" level, and overworking drains quality of life away. Also, I've worked at too many terrible work environments in a row (even forgetting for a while that finding one that isn't like them could even be possible) to leave a good one now and risk stumbling into another bad one. In the last few years since I started where I work now, I can actually feel my mind clearing up and shedding the clutter of past negative stimuli. Getting more money by either moving to a worse work environment (which most are) or throwing away a bunch of my free time outside that job would be an example of "Money can buy unhappiness".
Chat me up👌
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I would definitely make more money working almost anywhere else with my degree and certifications (I'm a business analyst.) However, my current position is low stress, enjoyable, and lets me work from home. I literally lost a hundred pounds since I started working here, since the stress levels reduced enough to put me in a place where I could prioritize my mental and physical health. I'm not sure even doubling my salary would be enough to drag me back into a high stress, 60 hour a week position with an hour long commute.
I refer to it as not getting paid enough to be miserable. Positive vibes from New Hampshire, remember to be kind to each other and yourself during these trying
I got it, be very careful with my credit card.
If you want to increase your net worth, investing in the stock market is an excellent way to make that dream a reality. The stock market isn’t just a get-rich-quick scheme; it can be a way to build sustainable wealth.
However, it is possible to lose (rather than gain) wealth through the stock market. It’s essential to have a strategy in place and to invest in suitable securities at the right time.
You also need to know that it’s possible to lose money, since stocks don’t have principal guarantees. If you’re looking for a guaranteed return, perhaps a high yield CD might be better.
With Clemans' oversight, I’ve been able to select well run companies with strong finances and a history of shareholder friendly management practices that have made me good gains in the past months.
@@Baptisizm Right? I think I’ll have a look at that and maybe add it to my portfolio. But is it possible to beat the market?
The stock market offers no guarantees. While successful stock picking requires considerable dedication and effort, it’s not necessarily the case that considerable dedication and effort always leads to successful stock picking.
With strong financial knowledge, works on fundamental analysis and strong DD, one can beat the market. Investing in VOO/QQQ and sector efts I have somehow beat the market, because of Levi’s stellar help.
Love this!!! You answered the exact question I was contemplating this morning. ❤
Another added reason to consider utilizing credit cards (responsibly) for all purchases aside from credit building, is the security aspect. About a decade ago I suffered from theft, I use to use my debit card for every purchase and someone stole the card and wiped out my account. Granted, I was eventually able to get my money back, but it took an ENTIRE MONTH for the investigation. From that point on I strictly used credit cards with high security features to make sure my bank account was never exposed to unnecessary transactions. I highly recommend it and the rewards can be beneficial.
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My own approach to earning more: 1. learn to negotiate, even if this means taking a course; 2. acquire a marketable skill (i.e. programming or hvac tech etc.); 3. get some therapy for one's inferiority complex. These would be acquire as you go, piece-by-piece, and sooner or later it will come together.
Oh , Yes! I love this concept because there's so much research to support ideas like this. Especially debunking the ideas that you need to pay down all debt before investing and, under no circumstances, should you use a credit card. Like...false. When you look at the raw numbers it's wild how much money you can make comparatively with an investment that generates an 8% percent return, even with a 4% mortgage. And rewards credit cards? Worth. The. Hype.
I recently learned that, while the average merchant fee for American Express cards is higher than Visa and Mastercard, the difference disappears when you only look at premium Cash Back Visas and Mastercards that are comparable to Amex. The idea is that holders of premium cards have a lot of money, and businesses can't afford to not accept the cards they carry. In other words, cash back credit cards are literally "I am a more valuable customer, so you need to give me a better price" privilege cards for rich people.
With that being said, I pay cash at small businesses because I'm not a psychopath. Or, if I am, I'm an ethical psychopath.
Using a cash back/flight points credit card allowed me to fly free to my best friend’s graduation when I was making under $25K, and I’ve traveled at step discounts since then. Responsible credit card use is for more people than some may think, and it’s better to get your practice when you make less, so you won’t fumble a bigger bag when lifestyle creep comes knocking.
Another perk of using a credit card for something like groceries is that you can sometimes skip a line in the store to pay at a card-only kiosk such as a self-checkout lane since others will be paying with cash only. Very convenient.
Debit cards also work at these kiosks.
Having me look at the last habit mentioned
Cause I had decided not to take a loan to improve my house that I just bought, and now I'm reconsidering it
I loved this video! So helpful!
Have you considered having Madeline Pendelton on for the financial confessions? She gives a lot of tips on personal finance-related things based on her experiences of growing up broke on Tik Tok and I would love to hear a conversation between her and Chelsea! She's also grown a clothing brand from scratch and has a very unique business model that I think would be incredibly interesting to hear the two of you talk about
I love Madeleine! It would be interesting to see Chelsea’s take on her money philosophy too.
I worked with this girl who once gossiped about her boyfriend’s parents for going overseas while they still had debt. At the ripe old age of 19, she was telling everyone that you should pay off your mortgage before going any holidays except camping 😂😂 Get outta here!
This is actually very funny lmaoo
Now she probably goes to Disneyland on an annual pass while paying off her student loans smh
Sometimes I just think, "You know, I'm going to die someday, and at the end, I think I would rather have gone on the trip than paid off my loans three months earlier." I'm not saying be irresponsible about it, but there is definitely some benefit to balancing one's financial priorities.
II keep talking about investing, and my boyfriend seems to think that it's only something rich people do. I'm about to make us those rich people.
Make *you* a rich person
Do it. You can make it happen.
I was paid pretty low for my position in my first job, but I got a lot of flashy projects, and even a raise after the first year. After four years I've switched and asked for at lot higher salary, which I got. Switching jobs is 100% the way to get what you're worth
Fav video format from Chelsea woohoo!
Looking good Chelsea! Love this dress
🥰🥰🥰🥰🥰🥰🥰. Thank you Chelsea
Really hard to focus on this video because I love your dress/shirt so much
Thank you! This was great advise!
#2 yesssss 🙌🙌 comparing this to restrictive dieting is a great analogy. Super helpful video. 👏👏👏
Very on brand for The Financial Diet 😏
@@DemureSpectabilis of course! Makes sense! 😄 I’m a relatively new subscriber and greatly enjoying their videos!
Got it don’t be debt phobic but debt critical.
I absolutely saved up before I paid off my medical debt. I had to pay more interest but I was able to feed myself and maintain my health so that I didn't dig myself into deeper medical debt. Edit: But I paid off ally debt three bug payments. It was nice.
#2 I definitely didn't give myself a lot of enjoyable things while getting out of debt but I did do a couple nice things for myself while getting out of debt to keep me sane.
#5 Credit Cards
I have a secure credit card and I am scared to get a real one. 😅 In the 7 years I have had my secure credit card, I have paid ~10 of interest. I know that isn't a big deal but still scares me. ...I feel the tides changing though. I may soon be at a place where I can credit card.
i used to watch David's video. most of the time, i feel shame after watching a video. when i discovered this channel, i feel more supported and actually got motivated to improve my finances. thank you TFD team!! 🥰
He's condescending and a lot of his advice does not apply because it's outdated. He straight out shamed an adult wanting to move back with his parents to pay his debt faster. To me, there's nothing wrong with someone who moves back with their parents to pay their debt faster. The housing market is unstable and very inflated. Of course renting in a big city in 2022 is very different than renting in a big city in the 80s when Dave wanted his independence. He's such a jerk.
If he advises people to give away all their furniture and eat beans and rice ‘til they’re debt free, idk why he would shame someone for moving in with family, especially since they may be able to live more comfortably as they pu down debt/save up. To Chelsea’s point earlier in the video, this could allow the caller to have a more balanced life while he tackles these goals, mitigating the risk of him falling off the wagon and going spend crazy.
I don’t follow Dave’s advice for a lot of reasons, many of which are mentioned here. He probably advises to not eat in a restaurant until debt is paid off because he assumes people can cook and have the time. But what he’s missing is that cooking at home isn’t free. You’re still paying for food and your time is taken up by the cooking. There’s no free meal. Someone has to make it.
@@shartman2150 There's no need to feel guilty about treating yourself to a restaurant from time to time even if you do have a debt. You can make room for fun money while being on a budget and respecting your debt payments. 😊 I think there's a way of being realistic without completely depriving yourself.
Double income no kids, best financial advice ever.
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Ïñböx thē ñümbêr åbøvê ī gôt sömēthîñg tø shōw yåh....
You should get the debt collective on your show!!
Number 4 is a big deal in America. It is easier to get a 100k job than it is to save 30k while making 50k.
Chat me up👌
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Chelsea I caght your NPR interview, very cool and great job!
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Chelsea have you heard abt putting money in the dept of treasury which grows in interest in a larger percentage than in a bank every 6 months?
My husband and I have pretty substantial credit card debt because I haven't always had good or consistent income and he is in grad school. We are also privileged in having a good credit score so are able to have pretty substantial limits on those cards. Because of that, we are privileged to be able to do a balance transfer as needed to keep interest payments on that debt very low. Because of that, we have had more money to be able to set aside in investment accounts, retirement accounts, and savings accounts.
Due to inflation, and the dividends earned on stock and the interest on our high yield savings, it makes more sense for us to be investing and paying the minimum on our debt. We are also privileged in that I have a BS in Finance so i have knowledge we can use to leverage our finances very well given circumstances.
Not counting retirement savings, our debt is still higher than our investments and savings, but being closer to debt free would not put us in a better financial place. Our total dividends and interest earned is still less than interest paid, but each "new" or "extra" dollar is better put toward investments because it will earn more. ... (I own a few high yield ETFs)
I also don't let things work on autopilot. Not really at least. I have auto pay set up on many bills but I am so also constantly checking to make sure i calculated things right and have enough for the next wave of bills and also analyze what is better, investments or debt payments. I make sure I know when the promotional period on my credit card low interest will end so I can transfer. Note: do not transfer in the middle of a period for a lower rate unless you know the cost of that will be less than what you are expected to pay for the remainder of the current promotion. Smh. I have made mistakes before.
We are also privileged in that we have one credit card that is dedicated to monthly spending, earns points, and is paid off in full each month. I even have a few bills auto pay using it, FOR THE POINTS BABY!
Also this planning, and knowledge gives us the privilege to make "dumb" decisions like paying an extravagant vacation with a credit card and making monthly payments. Was it the best financial decision, no. Are we able to afford it anyway, yes.
I love your channel. It helps me stay focused and make knowledge based decisions, even when they are not "good."
Excellent advice. Thank you. I agree with all of your points. Some I knew for a while, and some only as I got older.
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Love the ‘fit today ! 😎😍
And great advise as always lol
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I needed to hear that but about deserving to enjoy life before having zero debt. Thank you.
Excellent.
Debt is a tool and you accrue cost quantifiable risk by being alive because of entropy.
You need the cash in your emergency fund for sure ♡ and all of the investments. And the occasional ice cream or latte. Balance is great
Also , yes ! Make more money
Love your videos
I put everything possible on 2 credit cards. I average just over 3 percent cash back. About $1,200 back in past year... Yeah, it is worth it...
No but having a credit card is very essential
I think its better not to eat out because i end up spending $20+ on food that is usually not healthy and you risk making it a habit. I can agree with Dave’s plan on not eating out on a restaurant, but im sure he doesn’t expect followers take every word literally ( although that would help get outta debt faster)
The key here is moderation, I generally don't eat out much; only for special occasions or treats (birthdays, celebrating finishing a semester well, occasional mental health days). I end up averaging eating out about once every 1-4 months and tend to avoid places that will cost more than $25 for a meal. This is a more sustainable approach & probably more in the spirit of what she meant for habit #2.
#3! Yay! Love the Financial Diet!!!
Hey, Chelsea, just a bit of a special request here - any chance you could give good recommendations for investing apps based outside of the US? I know most of your fanbase is in the US, but still it would be super nice to have some ideas of what are good services elsewhere :)
I invested, and then I was able to take a small loan out of my 401K to pay off my little bit of debt I had left after paying only minimum payments for a while! Now I’m paying myself back the interest and I feel like this is a life hack for small amounts of debt.
Love the glasses Chelsea
You may say it's a myth but my credit score dropped when I became debt free.
It does! To me a credit score shows how good you are at being in debt lol. I always thought it was odd. But hey they are all in it together and want to make money from you
I recently received a credit card, and I am trying to use it in that manner. To see if that would work for me. Also they gave me 0% financial, if not that way I would definitely not use.
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Who would have thought that the best "rule of thumb" is to think and analyze what you are actually doing. Crazy thinking! Darned logic with data works every time.
I'm really curious about your opinion of Die with Zero by Bill Perkins. I've seen a lot of people talking about it lately, which always makes me wary of books about finances.
I haven't heard anything about it, how insane is it?
@@EllieofAzeroth from what I can tell its mostly along the lines of avoiding just collecting money and nit using it to do things that would fulfill you vs using your money actively. The idea I guess is to due wuth $0 in your bank account because instead of waiting until the end of your life to leave people money and only take trips after retirement, you've done thise things throughout your life?
It sounds like a lot of unaddressed priveledge to me, tbh
Agree on not cutting back on short-term wants. I have been keeping my savings rate at 40-45% of my pay for a long time but I initially started at 35%. However, my budget for leisure spending became way too thin that I usually cheated on my budget for going beyond what I allocated for leisure spending. Counterintuitive as it may sound, I decided to lower down my savings rate to 33% (1/3) and double my budget for leisure spending. In that way, I get to maintain my leisure reserve fund and not let it dwindle for larger spending but casual weekend treats becomes fully guilt-free.
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I like to use my credit card points to buy Christmas presents each year! That way I don’t have to allocate as much from my usual budget to do so!
I do my xmas shopping in April and September, when the prices are ACTUALLY lowest. It's when the seasonal stuff first arrives and the store is overstocked and trying to keep from shipping last year's stuff back.
it's so stress free to have the gifts already bought and wrapped and at the best price. December is practically stress free
@@slchance8839 I wish I could do that! I can’t tell you the number of times I’ve been thankful I waited to get someone a gift they need because they decide to buy it for themselves before the holiday. So I feel obligated to wait to make sure they can still return it lol
@@karinagutierrez7134 i know what you mean. I used to have that problem.
Then I decided to buy things that cant be "doubled up." Sweaters, scarves, tiny drones, pocket knives, etc...
For me, i know most people I gift for buy whatever it is they need, so I get them things that are....really tokens of affection.
I KNOW no one needs a pocket knife or Star Wars Death Star ice cube tray, but most men LOVE getting weapons they never use and toys they never play with.
I have a friend who's been a Hello Kitty fan for 30 years. So....Hello Kitty key chain, pen, pencil set, gym bag....she LOVES the idea that i remembered. (Also Hello Kitty is super cheap at the Asian markets, for some reason)
My husband is an economist and he never gets why people want to pay off their mortgage super fast, he says for us it makes way more sense to take longer to pay it off.
Video Topic Recommendation: Could you do a video that talks about the possible pros and cons for auto-investor controlled portfolios ?
I really love all your videos and have been a growing fan over the past few years. 😁
My dad has so much cash and it's a great way to save money in interest. He's not rich but buys used cars in full, and foreign real estate, without having to deal with capital gains taxes that investors have to suffer when liquidating assets.
I just took on more hours at work. We have a very structured “step” system that dictates our starting pay and raises though
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Here she is again with the leopard print on leopard print. Chelsea your style reminds me so much of Brianna from Grace and Frankie, so chic!
I had cash to buy a car but decided to finance to build credit. Paid the car off as soon as I could and got an excellent credit score which helped me get my home.
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The debt thing is a bit frustrating as at least right now while I have little income, I'm literally not allowed to have investments or savings beyond a certain amount while maintaining my medicaid eligibility, something I absolutely need until I can earn $40k due to chronic conditions.
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The thing is, there needs to be a government regulatory agency that sets limits on the interest rates credit card companies can charge people on interest. Most credit card companies practice predatory lending because they know a lot of people who are living below the poverty line, or their only income is H.R.A or S.S.D benefits pretty much have to rely on a credit card because their benefits do not last them the whole month. This is how credit cards make their money because, more often than not people who don't have a lot of money or rely on benefit programs cannot afford to pay their credit cards in full every month and are charged interests that are sometimes high as their minimum payments. Then there are the credit card companies that help people with bad credit rebuild their credit, they are predatory lenders as well who have the highest minimum payments per month and their interest rates are higher than ordinary credit card and when you call them to make a payment arrangement the reps talk down to them and stop short of calling them low life's. During the pandemic when other card companies were putting peoples payments on hold they most often would not. Then there are the cards that offer rewards every time you pay with their card. in order to get an upgrade to "first class"The percentage on the awards they give are very little 1200 points on a Citi Card amounts to roughly $2.00 but, peopleo the numbers and put all their purchases on these cards not realizing that it will take years to accrue hat many points. This too is predatory lending as well.
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Chelsea and TFD team, you are so awesome! Seriously! I always have to take issue with one point, that's all the asking for a raise stuff. Totally not an option for a state worker whose salary or wage is decided in some committee meeting somewhere outside your agency. I'm going to assume government or municipal jobs are the same, but fact check me on that for sure. It is super, super frustrating. I'm just a blip on some spreadsheet somewhere. No one assigning the pay to that blip even knows the first thing about what I do.
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I leave $100 balance on my credit card... idk it just works out
My late father, who grew up in a very poor family, and became insanely greedy&cheap, was notoriously bad at prioritising, also regarding spending vs. investing. For example, he not only tried to convince us, that everything beyond the most necessary things (bread, milk, porridge, cheapest clothes) is a sin to desire & buy, but also often deprived me, my siblings & our mother (who was working very hard) even those necessary things, - like winter boots, for example. Well, as a result, both me, my siblings & my mother were often cold, hungry & therefore getting sick with respiratory deseases. Finally, after several bad cases of severe flu, my mother got serious respiratory condition and finally died. Forced by the old friends of the family to finally spend money for the spose, my fater had to pay at least part of her huge medical bills. At the same time, my sibling got sick as a result of malnutrition in the childhood, - so, my father had to pay his child's big medical bills too. And at the end, my dad himself got sick with a very seriously respiratory desease, and yes, you gueesed right, - he died. Only after his death we have found out, that he, who has always used to say sotheing like: "I am a poor man, and you all (family) are ruining my with your grocery bills!" - had in fact much higher incomes, than he said! And big part of that income he has invested trough the life, but so unsuccessfully, that he was often loosing money on those failed investments. His papers have proved it. If it is not a God's punishment for starving his wife & children and making them sick, - then I don't know, what is.
My dad is like that rn, I am transferring to uni and living in an apartment. He asked me why I need internet and a computer chair. Why not just sit on the floor? I asked him when is the last time he sat on the floor, and he threw a fit. And yes, he is sick all the time and the only times I get sick is when he gives it to me. He also doesnt believe in cleaning, which has given me OCD tendencies about handles and doorknobs that are always greasy or visibly dirty.
So glad my school has free therapy….
@@borkbork4124 I feel you! My father was always making a mess, but blaming others for not being tidy. In his room the floor has been covered by crumpled papers, nut shells and other random stuff. He didn't like his bedlinen to be washed, and almost never used new clothes my mother gave to him, - wearing mostly old, worn out ones. We, to the other hand, always tried to keep home clean, - but even then he was complaining, that we were cleaning "in a wrong way".
Just to clarify, Fico scores are affected by your overall remaining balance on credit cards at the time they are reported to the credit bureaus. If you have between 1% - 6% credit usage at the time the creditor reports, you could get a maximum of 10 more points than having 0%. After 6%, the points go down below what you would get at 0%. I find that creditors usually report 4-7 days after your payment is due (though this is different for each creditor). If you pay off the credit card on time, you can avoid interest, then make a small payment on something before the balance is reported to the credit bureau's. Really, the difference is so small, and can easily be offset by other factors, that your much better off just making sure that your cards are paid off on time, and that you don't spend more than 9% (or anything) until after the reporting date. The most important factor is paying at least the minimum required payment on time on ALL your debts and bills.
Chat me up👌
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You sound like the ALUX voice
Hiii TFD Team! I’ve been watching your videos since 2018. Love them! I live in Latin America and would love a video on how to invest from outside the US! Thanks
Can you make a video on investing? I just now am at the point in my life where it is even possible (worked hard to get off the paycheck to paycheck life) and I dont know anything. Like is a retirement the same as an investment account...how to trust an investment service, how risky is it...etc
Yes. I think following Dave Ramsay is a mistake.
He says you don't need a credit at all and to just get manual underwriting for a mortgage but he never explains what manual underwriting is or how to get it.
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I think it's his target audience. He's not going to get into the nitty gritty details because of his target audience. There's a lot financially irresponsible people out there that need all his stringent plans and rules even though it doesn't make sense on paper. TFD probably has a more educated audience on average. Ramsay tries to break it down so anyone can do and understand even those with no financial education.
Glad you think the same about Dave Ramsey
The credit card one is something I do. Since all my bills come out at random times during the month I just have them all charge to my credit card and pay it off on payday. Then any accruing rewards points I get I use to get myself something nice like a game or a book without spending any extra money
The FIRE movement does often seem to have very Calvinist undertones (if not the investo-sphere as a whole).
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Spending $10 per week at Starbucks as my only entertainment and treating myself isn’t going to pay for a trip to Europe or buy me a house.
Long-time viewer/listener with a request for content on 3 themes I think the TFD audience would be interested in: 1) an in-depth examination of policies and actions that make workplaces more holistically humane and with better equity, particularly for women, and 2) interviews with women at the precipice of motherhood and confronting financial and work division of labor conundrums with partners, and 3) experiences (including prejudices against) parents who leave the workforce and try to return to it, especially in their 30s and 40s currently.
Another form of debt that can be a good idea is for renovations to make your home more energy efficient. Better insulation, solar panels, heat pumps, and anything that can lower your monthly bills over the long term might be worth the initial investment. There are often government incentives to reduce the cost as well. It is important to run the numbers to see what works for you, but sometimes these investments can pay off in a big way.
I think interviewing Luck Senn would be interesting for you. She's on CZcams.
I think Dave Ramsey is irresponsible to advise people to have an emergency fund of no more than a thousand dollars until they repay every penny of debt. ONE smallish emergency can eat up that much. What if you get two in a row? Even after paying off debt, he preaches just a few months' living expenses. Indexing your emergency fund to your current spending is crazy. The lower your income, the bigger your emergency fund needs to be, because you have very little discretionary spending that can be cut to get you through a temporary crisis. I have NEVER understood the cultish following Ramsey has. The closest I can come to a guess at the explanation is that his followers have such a deep self-hatred that they really want someone to shame them.
"But it's not supposed to be a safe emergency fund! It's meant to get you GAZELLE INTENSE!" -Sincerely, everyone who drank the Kool aid
Well because he is overtly religious, he gets spread a lot in churches, especially those of an evangelical persuasion. That's part of how he has such a following. He gets adopted in as "one of us" and is given more trust on that basis alone. And yes, he's also appealing to people who really enjoy the martyrdom of sacrificing all leisure spending in pursuit of strict debt payoff (some people really are into that).
@@thatjillgirl And in fact, the thing that first raised my hackles about him was that religious angle. My own background is in ministry, and I immediately saw it as a misuse of religious terminology and a religious setting to suck people in. I'm not sure I'd go so far as to call it affinity fraud, but certainly spiritual abuse. He uses people's religion to manipulate them into idolizing him. The fact that the program is offered at their church gives congregation members the sense that it carries an implicit 'imprimatur" as reliable Christian teaching, but it DOESN'T have a literal Imprimatur. As someone who has published things that DO carry my bishop's Imprimatur, I find the Ramsey business's impersonation of a ministry sleazy.
@@trishoconnor2169 Agreed.
I'm not sure how fast I should pay off my debts. Any tips? My student loan is small (6k left, will be done end of next year, very low interest rate so no rush). My morgage is at 60k, I know this is not a lot of debt so I'm lucky (thanks to inheritance and splitting the morgage with my partner), and its an ok ok interest rate (for Norway) at 2,65%.
Right now I do have enough in my investment funds and in cash to pay off all debt if I wanted to - But I also don't like that idea. I've been saving each month in investment funds and I just don't wanna take anything out there if it's not neccessary. That is for future me when I need it, maybe for the next house me and my partner will buy. Looking at the market history, having the money in funds is growing them faster, faster than the rate of my morgage. So it makes sense I don't wanna pay of my morgage with that money.
Even though I'm saving in funds each month, I've also saved up more cash and continue to do so. In my funds I have about 40k, and in cash 30k. Should I keep that 30k cash as an emergency (lasts me 1 year with todays expenses), or maybe half that, put 15k into my morgage, and keep growing my emergency?
I know it's not a "bad" struggle to have, but I am feeling a little lost as to what is the right thing to do.
Well, I think you’re in a unique and awesome position because the debts you have are also considered assets. If you can afford them while also being able to afford to save, don’t take risks just to pay them off. If you pay them off in a hurry (which would be great) you will probably see your credit score drop (which may or may not be an issue). You should identify what your short and long term financial goals are and what is most important to achieving them because it sounds like this debt, despite being debt which sucks, is not actually harmful to your financial situation and may not need to be paid off expediently unless you’d just prefer to be “debt free.” If I were you I’d probably hold on to that emergency fund and use newly acquired money that would otherwise go toward the fund to pay the debt faster, but I’m very cautious with money.
@@Ineverusemychannel thanks for your reply, I didn't know someone would actually read my whole essay!
And thanks, I will spend more time thinking about my long and short term financial goals. I don't think being debt free is the right goal to have always. If I can make the money work for me with sound investments, financially it makes more sense to have it there than pay everything off.
Side note: I don't really know how credit score works, but it's more important in the US than in Norway I think. In Norway as long as you have assets to your name (house, cash, funds, other..) it's pretty easy to get loans as long as you dont have history of not being able to pay your debts.
I would agree with the other reply. Set up a balanced budget paying equal each month towards savings/investments/debt and including things like little luxuries and just stick with it.
I think a lot of the FIRE movement doesn't see Ramsey as a part of that. He's more of a "right direction for most people, but kind of has bad fundamentals"
Do you need a financial nemesis, Chelsea? Dave Ramsey was born 30 years before you and looks like he was born and lives in Tennessee. Maybe he's just coming from a different place then you.
My grandparents never ate in restaurants because they simply couldn't afford them. My grandparents cooked and socialized by having people over to their house or going to other's houses. For trips, they went camping on the weekends or drove to visit family.
With inflation and even before that somewhat with the pandemic, eating out is quickly becoming a rare thing for my family. Going to other's homes or having people over is just making a lot more sense. (As well as packing as much food as we can to take on day trips or overnights.)