To wrap up Season One, the Talk Wealth To Me podcast team "replies all" to questions we've received during Season One from our listeners.
From paying off credit card debt to saving money on groceries to building credit, you've got questions, and we've got some answers.
About the Show
Comments, questions or suggestions for the show? Email us at talkwealthpodcast@gmail.com.
To learn more about DebtWave Credit Counseling, visit our website or connect with us on Facebook, Twitter, Instagram, and LinkedIn.
To learn more about the San Diego Financial Literacy Center, visit our website or connect with us on Facebook and Twitter.
To wrap up Season One, the Talk Wealth To Me podcast team "replies all" to questions we've received during Season One from our listeners.
From paying off credit card debt to saving money on groceries to building credit, you've got questions, and we've got some answers.
About the Show
Comments, questions or suggestions for the show? Email us at talkwealthpodcast@gmail.com.
To learn more about DebtWave Credit Counseling, visit our website or connect with us on Facebook, Twitter, Instagram, and LinkedIn.
To learn more about the San Diego Financial Literacy Center, visit our website or connect with us on Facebook and Twitter.
Welcome to Talk Wealth to Me a safe space podcast where we chat about anything and everything related to personal finance.
Felipe Arevalo:The information contained in this podcast is for educational and entertainment purposes only. It does not constitute as accounting, legal, tax or other professional advice.
Chase Peckham:So this is going to be fun. I can't believe that we are what, roughly 25 episodes into our podcast, which congratulations everybody. Quarter of a hundred and, and this is going to be a really fun podcast for us because we're going to be able to answer up some questions that listeners have written in and asked us. And so instead of the normal format of having a specific topic, uh, on, on mind, um, or a specific person that we're going to interview, we're going to answer those questions today. And Katie's got quite a few. So Phil, this is going to be kind of fun and I wonder if she's gonna answer any of the questions since it seems she's going to ask them all.
Katie Utterback:Yeah, I'm going to be asking.
Felipe Arevalo:maybe we could put her on the spot.
Chase Peckham:I was going to say she's going to have to answer something.
Katie Utterback:Okay. Question number one. Hey, Talk Wealth to Me. Should I pay off all my credit card debt at once even though it will totally wipe out my savings. This past year I've had some car troubles and medical bills that have caused me to eat into some of my savings as well as stack up about$2,000 in credit card debt. I've never owed that much on a credit card before and I've been wrestling to get it down slowly. But it's been driving me absolutely nuts that I have that debt. I could pay off the whole$2,000 but it would wipe out the little savings that I have entirely. Not having anything in savings absolutely kills me. But so does seeing that balance on my credit card, should I just bite the bullet and pay it off or pay it down slowly with each paycheck?
Chase Peckham:So the answer to that is, is two fold. I think. One, what are the interest rates on the credit cards that you have the debt with? Um, look that we get that question a lot. Whether they should, you should deplete all your savings and put it all towards the debt and, and you know, the easy answer would be you need to get rid of the debt, but the honest truth is that you need that savings there. You need an industry would say that it's good to have three to six months of your monthly salary in savings in case and calling it a rainy day fund or whatever you want to call it. Um, but it's just a good idea to have that in place. With that in mind, I understand completely what you mean by wanting to pay that off. And this is, I would say one, I think it's going to matter how much the interest rates are. If your interest rates on your credit cards are in the 20s, you're going to be paying. If you go, if you take a long time to pay it off, you're going to be paying quite a bit in finance charges. And that's never a good thing either. So you can do it one of two ways where you can pay it off and then with your bill you can then know that I am going to spend that same amount that I was paying monthly into your, to your debt, to your savings and that you're doubling up the amount that you normally put to savings. And you do that at the beginning of the month. You literally have that come out of your paycheck. You can have your HR department, your, your payroll department, however it's set up for you, put into that. If your interest rates are lower, um, then it would be a great idea to come up with a plan that you're going to spend so much on that monthly. You're not going to spend on the credit card anymore and you're going to figure out timeline that you could have it paid off in what, five months, six months. And if that's the case, then you have your interest rates low. You don't want to deplete everything. It's honestly going to be, we would, and I know Felipe, you can chime in here, but a lot of times when you get a blanket question like that, you need to dig a little bit deeper to figure out what situation you're in before we can in. I kind of gave you both scenarios in that case. Um, but you really have to want to take a look deeper into what is the best thing for you. If you go to now where you have no savings but you have no debt, what if something happens, you're going to have to put it back to that debt again instead of taking it from the savings. So
Felipe Arevalo:yeah, there's always more research to be done in a lot of the scenarios and then we get those questions a lot. Where, uh, during presentations where, what should I do? A or B? Well, first of all, you do have other options. You have C and, but to give you the best answer you need to, I, I, you need to know some of the backstory like Chase was mentioning if you have low interest rates, um, you know, that's definitely something where you maybe you can hold off and pay it off like you were saying a time frame, whatever the case is. You do not want to get in the habit of making like the minimum payments because then it becomes something where you might be paying back that$2,000 for years and years and years to come and end up paying far more than you originally bargained for.
Chase Peckham:Yeah. And if you do have high interest rates, call your call your creditor and say, and ask, can I get a rate reduction? You know, maybe you've got a good history. And, um, they, believe me, they all are set up and ready to lower interest rates a little bit. If, if your credit score and your credit rating with them is decent, um, they will make those maneuvers. If you know, you can also call'em organizations like, uh, uh, nonprofit consumer credit counseling company. They might be able to help you with, uh, something that you know, with much, much lower interest rates. So there are different options out there. Um, and believe me, I understand completely than not that debt driving you crazy. Um, but really, I mean, just take a look at those things first before you decide.
Katie Utterback:Okay. This is kind of a related question. My significant other is in$10,000 worth of credit card debt upon discovery of the debt my first thought was a balance transfer to a new card with a 0% APR promotion for a year or more. But I'm unsure if they would be qualified for a card like that at a 650 credit score. Thoughts on that? If my spouse can't get approved, could I balance transfer some of their debt onto my new promotional credit card? I have a seven 50 score or doesn't have to be the same person. I know I won't find a card with a$10,000 limit to start, but even a few thousand would help with the interest. I haven't looked into loans yet either. I was just analyzing the credit option first. Any advice or knowledge at all would be appreciated.
Felipe Arevalo:Well, as far as whether or not they're going to be able to find a card in front pending on the credit score,
Katie Utterback:what is a balance transfer card?
Felipe Arevalo:So a balanced transfer is when you basically take one credit card to pay off the other credit card. Now it's not free. You end up paying usually at 3% is what it's about. Balance zero transfer. Ah, those are kind of rare now though, I think. Uh, but then you may pay that one time, 3%, but then you might get 12, 18 months of no interest if your interest rates were significantly were were really high and that 3% gets made up pretty quickly. Um, depending on the, you know, as far as will they be able to find one, it just really depends on what the lenders are offering these days because the market changes. So, um, as far as the credit score, getting them, that card that they're looking for, the lower score will be a significantly smaller card amount.
Chase Peckham:Yeah, it definitely will. And in the[inaudible] look, there's one issue that I have transferred debt from one credit card to another where there were, I didn't have to open a new credit card to do it. It was something that was available to an already established card. And believe me, they were looking at my credit or credit reports and they knew when I was paying off debt. So I did do the 0% transfer. There was a different time. But I also want to warn people that that can be excrutiatingly dangerous in that you are adding a new credit card, you've got debt, you're adding a new credit card to the void and if you pay all that off on one, that card now is sitting there with a zero balance and it's like, Oh, I don't have a balance on that anymore. So you can add to the debt very quickly if you're not careful. Um,
Felipe Arevalo:yeah, I did a couple balance transfers in college. Um, and the first time I did it I realized not quickly enough that I did exactly that and I did one balance transfer, but then that card didn't have a balance. So I started using it again and then it turned out before I realized that, Oh wow, I haven't paid off the new one and now the old one has debt on it again. So I just kind of really messed that up. Um, the appeal to the 0% is awesome because you can't beat 0%, but if you don't change the habits that got you into debt in the first place, that's what makes it difficult. And that kind of goes back to it's the significant others debt. If they balance transfer it to their name, you know? Yeah. As a unit, that may save you on your APR, but if the person who fell into debt to begin with isn't disciplined enough to continue and to not overspend, that's exactly what's going to handle his lead. They're going to have much debt or that's the other person. Right.
Chase Peckham:Even though what it was is you're taking on the responsibility of putting it on your card. Unfortunately, it's never going to be a quick fix unless you come into, you know, with$10,000, right. Windfall. Right. It's so it's, it's coming up with the plan pay it down, try to again try and get that interest rate lowered. Um,
Felipe Arevalo:yeah, at 10 K there are programs out there that could lower the interest rate significantly. Ah, it's just a matter of finding them and then you know, exploring if you're a good fit for those programs and those programs that are a good fit for your particular credit profile. Right.
Katie Utterback:Speaking of credit profiles, we have another listener who wrote in, she said she's 20 and she doesn't have any form of credit. I have a debit card from my bank, but no credit card. What's the best way for me to start establishing a credit history?
Chase Peckham:So she said it right there. So first of all, a debit card, even though it acts just like a credit card is not a credit card and will not build your credit profile at all. Um, the best way for a student is this a student? I didn't, I missed that question.
Katie Utterback:I believe it doesn't say she's just young.
Chase Peckham:She's 20 years old. Okay. So it doesn't really, we get this question all the time. Are we presenting at the community colleges? Yeah, we do. And in believe it or not, the best way to establish credit, credit cards are the fastest way. They are measured, the most easily measured. Um, they're the most easily obtainable and you don't have to go on a significant amount of debt to build your credit. So you can do it a couple of different ways. If you're a student you can go into if, whether it's your bank or your credit union, whatever it might be. Typically these institutions have a product called a student credit card and you can't open that student credit card. Um, it'll give you a low, um, a low limit. So typically 300 to$500, um, and you can use it, you can use it once a month for something like a cell phone bill. It's just say something that you already pay for. Use the credit card to pay for that, pay it off every month. And then right away you're going to start establishing your credit. And by paying it off every month, you're going to have what considered are low limits, um, or low balances, which is good for your credit to debt ratio, um, which helps build your credit score. You pay me, you're making your payments on time by just get your low debt to credit ratio and making payments on time is 65% of your FICO score. So just by doing that, you're going to be establishing credit pretty quickly and I think you'll see it rise pretty quickly. Um, another product if you don't get a student credit card that are really, really good, um, it's like a student, it's like a credit card on training wheels called a secured credit card. And this is good for people, um, that have gone through rough patches and hurt their credit as well. Uh, but basically it's a credit card product that you basically put down$300, um, like a down payment and then you get a$300 limit and after anywhere from six months to a year of you using that credit card, just like you would a regular credit card, they'll give you that money back and it'll become a regular credit card. So they, that's typically a really good way to do that.
Katie Utterback:Sounds good. Next question. Help me talk well to me, my parents are unwilling to help my fiance and I pay for our wedding next March. Ooh. My fiance and I are both working full time right now, but we don't have the money to pay for the wedding we want without their help. Should we take out a personal loan to help us cover the expenses?
Chase Peckham:Okay. You guys are the most recently married? I got married like 14 years ago.
Felipe Arevalo:Long time ago. Yeah.
Katie Utterback:I would say no. I would postpone your wedding or DIY, anything to try to make it what you want. I would not take out a loan.
Felipe Arevalo:I would agree. And, and it's, what do they call them? Instagram. Weddings. Yeah. What's the correct term? Um, so it's definitely something where if you can't, uh, afford it, maybe you should explore other options, whether it's a less expensive route, um, postponing it if need be. But I would say, you know, just maybe looking at yeah. Do it yourself things. What can you get someone to help you out with? Um,
Katie Utterback:you can also cut down your guest list too, I don't know how big the guest list is, but.
Felipe Arevalo:you could, yeah. You could do that as well.
Katie Utterback:We only had like 80 people at our wedding and I loved it.
Felipe Arevalo:Only 80. Huh?
Chase Peckham:Less stress.
Katie Utterback:I don't want to say only cause honestly that was still kind of overwhelming, but I only had one person come up to me and asked me who I was. Yeah.
Chase Peckham:That's a whole different story for another day. We might have to touch on that. Um, I would say good rule of thumb is, um, when you're starting out a life together, um, well there was money. Money troubles tend to be the biggest stresses on couples, um, and relationships. And I don't know if if opening up an account and taking a loan to for a wedding is going to add stress to your life that that's something that you, you want to start right away with. And you don't want to hold anything against that wedding day, right? You want your wedding day to be a day that you can remember in love and look back on with, with adoration where if you're going into debt and it stresses you out, you're going to look probably back on that day. And it's not going to be as favorable a of a memory as it would be normally. And you really want it to be that. So there are many, many different ways to do a wedding. I can, I mean, all three of us are sitting here, we've all been married, some of us more recently than others, but I think we can all say that we loved our wedding day and I really, really, really did. Um, we were lucky. We did less things. We, we were lucky that we got to get married at a friend's or my parents' house. So we took away venue costs, all of that. I mean, it's about the people and the party. Realistically, I think if you're religious, you can go to a church and it's not going to be typically very expensive if not cost you anything and then have a party at somebody's house afterwards because they're there to celebrate you and your union together. Um, and I think we all get really, really caught up in the, in the party of it, in the, in the day, the spectacle. Um, you know, I'll be, I don't know if Keri's going to be thrilled with doing it, but we went to, um, a bridal shop. She looked at what the dresses that she wanted and then went and found that exact dress at like a, uh, I think it was a, a dress like factory. Um, and it, she got it for way, way, way less than the, I mean it was cheap. I mean, it was like less than a normal outfit and yet you would never know. She was absolutely gorgeous, but there were a lot of things that you did. You don't, I, I would recommend, and we talked about the last, you'll enjoy joy. It's so much more if,
Felipe Arevalo:if you're not falling into debt to do it.
Chase Peckham:Yes. Yeah. And, and don't look at it as cutting a few corners. You're being creative, right? Don't think of the negative part of it. Think of the, you are having the wedding that you would want to have. Don't have that money in the back of your head that you're going to have to be paying off for the next couple of years. You don't want that way. Not yet.
Felipe Arevalo:When we talked about it just in the last episode and we were trying to figure it out, and there was three things that cause people to, uh, fall into poverty. And one of them was marriage and we were trying to figure out where that's coming from. And it's coming from this question. If you do go out and you get that loan, well there you go. That that in itself can put you in a hard spot from the GetGo.
Chase Peckham:Yeah. Yeah. I'd I'd recommend against it.
Katie Utterback:Oh yeah. I will say too, cause when we were planning our wedding I asked AJ what was most important to you and you said an open bar. I was like, no, I'm not going to prioritize other people drinking over like flowers or a venue or something.
Chase Peckham:I'm with AJ.
Felipe Arevalo:Yeah that's not a bad call.
Katie Utterback:Well in the end he got his way. Okay, next question. I'm seeking advice on how to pay down$26,000 in credit card debt without getting a second job.
Chase Peckham:That sounds familiar.
Katie Utterback:My debt is a combination of medical bills, fees from several abrupt moves, car repairs and consumer purchases. I have always been a someday girl. Someday I'll have more work life balance. Someday I'll eat better. Someday I'll pay off that credit card with Phantom money. That breeds in my wallet at night. I guess. That's funny. I've also been in, I work hard. I deserve this bag.$40 sushi, neck massager girl.
Chase Peckham:There's a lot of different personalities in that girl there.
Felipe Arevalo:It's all gonna. It's going to be a starting point as we've mentioned it with many of the episodes that we've done is develop a plan a find your plan of action. Start a budget and really analyze what your expenses are, your needs versus your wants, and try and identify exactly how much money you need for your everyday expenses. And then taking a lot of those wants, removing them to clear up as much capital so that you can start liquidating some of these debts, uh, and then coming up with a plan and a timeline so that you can accomplish it in the quickest way possible. And look at different options for different types of debt.
Chase Peckham:Yeah, the, the, the medical bills are an interesting, they're always kind of a conundrum. I mean, that's something that you're going to have to pay back. Um, and, and it gets a lot of people in trouble. So I would take a look at that, but take a look at it, the whole of it, you know, and what is possible to, to, to pay down. What are your, uh, you know, we talk about this a lot, but, uh, track your spending. What, what is it that you're spending your money on? And I'll guarantee you you're going to find that there is money there to put back against your significant debt. However, you know, you're going to have to ask yourself if, if you want to do that, because the honest truth is there's no super quick fix or just isn't. Um, so the biggest and the most difficult step is just looking in the mirror, creating that plan, that leap I talked about, um, and putting it into action. And once you put it into action, you see the debt starting to fall off. So for instance, if you have credit cards and you, you decided to do the snowball method, which, um, a lot of our cohorts discuss, um, it's a great practice and it's great way to go. And you'll see credit cards start to fall off. Um, and you'll see the, the, the damage that you're putting towards the, the debt and you'll, you'll be kinda thrilled and motivated that you're getting somewhere. Um, sometimes half the battle is literally just looking at all of it and kind of taking a step back and looking at it from a 30,000 foot level and saying, if I were helping somebody to tackle this, how would I do it? Instead of it being this giant mountain that you feel like you're going to climb, take a DEP, step back, look at above it and go, okay, I can do this and it won't be quite as overwhelming. Um, and I would first I make sure that you pay, you know, the bills that you need to pay. Um, and then uh, tackle each of the debts. Um, kind of evenly cause some of them like credit. You can work out things with workout payment plans with your medical bills and so you'll know, okay, for the next five years I'm going to pay$30 a month to the medical bills. Credit cards are kind of a different deal than that because you don't really make that, you're, you're on your own. So then it comes down to figuring out how much you can afford above that. Minimum payment is Philippe has mentioned before and coming up with that plan and paying that every single month instead of just kind of Willy nilly going, well my, it's$85 minimum payment this time. I'll pay 90 you know, come up with something that you know you can afford to pay every month and it'll get easier and easier and easier to do.
Katie Utterback:All right. This one's a little bit of a different, uh, tilt I guess in the finance world. I spend way too much money on groceries. I got food a week ago and spent$120 and the week before that I spent$238 I wasn't going to make a trip last week, but I did because a friend needed a ride to the grocery store. I won't be getting groceries again for a while, at least until I get paid at the end of the month, depending on what's on my list and how much money I have after paying my credit card bill. if you have any tips for grocery shopping, please help. I tend to just buy whatever I want.
Chase Peckham:We're going to say that plan word more than we'd like to, but it comes up every time. The grocery store is like anything else you do, right. I mean it's, you've got to go in and say, what is it that I need planted out for the week? A lot of people don't like to do that cause they don't know what they're going to feel like. Well still take the things that you like, but know what you're gonna do. Spell it out beforehand, have that list and know what you're going to eat Monday, Tuesday, Wednesday, Thursday, and then maybe you have a cheat night Friday. But if you just go into the store and start picking away at things that look good. Yeah. You don't have a grocery list that you're going to a dangerous place to be. Yeah. The groceries. And believe me, I'm, especially if you're hungry. Yeah,
Felipe Arevalo:go in there. Yeah, definitely make a list. Don't be hungry when you go in there. And if you're in one of these places that gives you samples, just because they gave you a sample doesn't mean you have to buy the item. Um, yeah. Come up with a plan for for every day. Maybe you have a few backup things that have longer shelf life that you can just kind of put on the side for those days where life happens. All of a sudden you're home an hour and a half later or you get stuck in traffic and now you don't feel like cooking and say, you know what? I'm just going to turn this into a spaghetti night and cause you can keep a jar of the marinara or whatever your favorite spaghetti sauce in the cupboards for awhile and pasta is not really going to go bad on you and boom, it's easy, you're done and that gives you the option to have that lazy meal but not actually going out to eat and that kind of thing and it's relatively inexpensive
Chase Peckham:and you're going to eat better. Fair yourself if you do that. I mean, if you're just buying things when you're hungry, if you're anything like me, you're going to, you're going to start buying food that is not really good for you because you just, you just like, Oh, I'm hungry. I want a snack that looks delicious. You need to have it planned out and know what you're going to eat, um, ahead of time and it, it just becomes way, way, way easier.[inaudible]
Katie Utterback:all right. Can we talk about holiday spending now? Hey y'all. I wanted to get a conversation going about holiday spending. Christmas is extremely important in my family and therefore we tend to spend unreasonable amounts of money. November through new years. We bought a house three years ago and ever since we have hosted my immediate family for Thanksgiving. My parents bring the Turkey, which helps, but hosting still ends up costing a few hundred dollars. My sister offered to host Thanksgiving, but that still leaves Christmas and new year's. How much do you spend per person on gifts? How many people do you purchase gifts for? Do you host travel? It would be really nice to see how much people spend on holidays, travel, gifts, food, et cetera, and how you financially prepare for this time of year. Any tips?
Chase Peckham:That's a really long question. Um, yeah, I've got a couple thoughts. I know what they're talking about now. Again, what do most people spend? And that is very relative to what people's incomes are. Um, but I would tell you that most people when they're hosting the event, take on the burden of most of the financial costs. Um, and that's typically not very fair. So one thing that we've done in my family and that we recommend highly is if everybody's responsible a dish, right? And the Turkey, which is the big cost, I mean, we're talking hundreds of dollars, right?$100 around for, for a big Turkey, big family and hard to make a, yeah. And it takes a long time. Yeah. We actually, we all split the cost for that. So we, we just go, you know, grandma, what did it cost? Even though she didn't want to do it, we would, my, our families would, would split that cost and then everybody would bring a different dish, kind of like a potluck that helped ease the burden of that. Um, so that, that helps quite a bit. But most of the people that are just arriving and showing up for the Thanksgiving dinner tend to take a free ride. Uh, most of the time and that it's, it's not fair to that person. Same thing with Christmas. If you have a large group of the family, um, over, uh, I would set it up, sit down and just have a conversation with your family and friends, whoever it is that are coming in. Say, you know, all of us want to have a great Christmas. We all want presents for our kids. We all want to enjoy Thanksgiving and what that brings to our family, uh, we're going to have to share the cost.
Felipe Arevalo:Yeah. I think that the potluck is a great idea, especially if you're in a family like mine that sometimes tends to lean towards the ginormous side. Um, if you're trying to make, and you might need two turkeys and if one person's hosting and try and make, or a Turkey and a ham and if one person is trying to cover all those expense, now they're hosting, which all the other little things that you may need when you're hosting. Uh, but definitely do the potluck style is great. No one, number one, provide one person and then have everybody bring something. And, um, you know, you may have some family members who just are not as proficient in the kitchen and maybe you have them bring drinks or chips or snacks. So everybody could still participate. Even if, you know, my wife used to always get stuck before me, you still always get stuck with, okay, well you bring soda and chips and nothing that you cook that's, but now they're like, Oh, you think Felipe can bring some Mexican food dish. Um, I like to play around in the kitchen and I watch too much food network. And so I, I take a stab at it sometimes. Sometimes it comes out more successful than others, but even the person who doesn't cook can still contribute and bring things in.
Chase Peckham:Yeah. As far as the, the presents, um, that, that's something that comes up all the time and we recommend highly that you start making a list, uh, in January, just kind of what you're thinking are, who is it that you want to give to? Um, but one thing that has really worked out well in a lot of our family, um, situations and families I know is if you have a big group that comes together during the holidays, you know, it's hard to buy for every aunt Joe and aunt Joe, aunt Josephine, and you know, uncle Joe. Um, so having kind of like a, like my, my wife does on these girls nights, they have, um, these present parties where they, um, what do they call it? Like a white elephant elephant. Yeah. And you're able to steal the present and do all that and it could be really fun. And then everybody feels like they're involved in it and they get the presents outside of the little kids, which everybody wants to give presents to. Um, you know, that can save a lot of money, set a price limit on it. Um, that'll, that'll help a lot outside of that spouse and your kids, maybe your mom. Um, I think everybody would be pretty open to the fact that, you know, nobody wants to go into debt to buy these presents, but yet nobody wants to feel like they're not contributing to Christmas in those kinds of things. So just purely having those conversations with the family, because there's going to be people in the families that make some money and they'll have the means to go by everybody presence and then they get, you know, then they can make everybody else feel very uncomfortable because they all feel like they have to keep up with these people, have that honest conversation and just say, look, you know, we, this is about the holidays. The whole cliche of it's supposed to be about the family. It is. So come to an understanding on what works for everybody and keep, you can keep the costs way down by investing in it, in the food and making sure that, you know, have a, have a white elephant party or um, uh, you know, secret Santa kind of deal is that.
Katie Utterback:we actually had a, um, an episode about how to save up money in preparation for the winter holidays and we had a listener write in and share a suggestion. She said that throughout the year when she goes grocery shopping, she stops by the gift card section and buys gift cards to be more precise. I buy cards from stores. I know I'll buy gifts from when Christmas comes around. My gifts are already paid for. I'll have to do is order them using the gift cards.
Felipe Arevalo:Ah, sending the smart way, spread it out throughout the years. Same idea is saving it, but you, as long as you buy them to stores, you're going to shop at anyways.
Chase Peckham:People love gift cards.
Felipe Arevalo:Yeah. You could just give them away. You don't even have to go buy anything. You just give away the gift card. Yeah. Smart, good store.
Katie Utterback:Do we have time for more questions?
Chase Peckham:Sure.
Katie Utterback:Okay. How about the last question, the awkward art of lending money to family members. Is this a good or bad idea? Why or why not? If you're going to go ahead and lend the money to a family member, what's the best way to handle the loan? Do I have them sign a contract set terms, install penalties? If it's a bad idea. What's the best language to use to term to term to loan to term the learn to turn the loan request down. Is there an adequate plan B in lieu of an inter family loan? I guess overall, how do you say yes or no?
Felipe Arevalo:I would be very cautious to loan money to a family member. You could put yourself in a situation where you cause caused a rift or um, it just so much potential for it to go sideways. Uh, I think the language as far as if you're going to decline a loan would be honesty and just say, you know, complete honesty and say, you know, I don't think that this is a good idea at the moment. Um, now it does vary situation to situation. Um, obviously there are some extreme cases where, you know, if you can do it then, then yeah, you can go ahead and, um, support. But if someone's saying, Hey, I need to buy a car, I need down payment money, that's a no, um, you know, there are other options, uh, as well, but if the language is just being honest and for alternatives, I mean, uh, you have anything in the traditional banking system, they could maybe go look you for a personal loan or something like that. And now that's not on your plate to try and collect or try and set up contracts. It's a traditional bank or credit union type of thing.
Chase Peckham:I think as a general rule, it's probably not a good idea. I remember when I went to my father to help me pay off my debt and I said, I'll take out, you know, it's a loan. And you know, he turned it down. I think he did that because I was a young, middle twenties, and he's a father trying to teach me a lesson, which was a good one. Um, so I think every situation is individual. Um, if it's, you know, you've got to go into it if you're going to loan the money and it depends on what it's for. I mean, what, what you think is important. Um, you just have to know that if you don't get paid back, you're going to be okay with it because if you're not and you can't afford to do it and you're going to put serious stress on that relationship, um, that sometimes won't be mendable. Um, so I would be very conscious of that, uh, into itself. Um, and you don't as a, as another person, you don't want to go to your family. Do you want that over your head that I owe every time you see them, you owe that family member? Oh gosh. Money. I mean, no, I wouldn't think so. I know I wouldn't. Um, but I know that I would be the first one there that if my brother needed money or somebody, we would be there to help if we could. Um, but I wouldn't do it to the detriment of my family either. So it really, again, it's got to be a situation that you're very comfortable with if you decide to do it. I would very much set up a game plan and a payment plan and say, you know, whether you decide to charge them interest or not charge them interest, that's up to you. But I would step it up and say, look, I'll give you a three month grace period because you've lost your job or whatever. Once you get your job and you start making, let's just say it's close to what you've made before, you're going to pay me a certain amount every single month until it's paid off and have it in writing. And yeah, I would do that. And I think that just the fact that you are taking a chance that you know, for this family member that, believe me, they are gonna, they're gonna want or should want to pay you back more than they ever would even a bank or something like that. Just because you're taking a risk, you're taking a giant risk at doing that. And I would have a clear conversation and come up with a clear plan on how you don't just hand them over money and say pay me back when you can because that's a recipe for disaster. That's basically telling them, here you go, don't worry about it. Yeah.
Felipe Arevalo:Cause there are some scenarios where it may be in like you mentioned, don't lend out money that you wouldn't be okay with losing. Not that you're going to raise it and you don't go sit down at the tables if you know you're not going to, you know, we weren't willing to lose that money. Yeah. And but something like if someone was stuck in a cycle of payday loans and it was the history, right. And well not just that, but if, if maybe they, for whatever reason, now they're stuck in the cycle. A loan from a family member, even if a normal interest rate could be a huge Oh yeah. Stepping stone out of that situation. Sure. And if it's something that at the moment you're able to do, you know, that assuming that they don't fall back into what got them into that, some of the begin see do that with credit cards too, because they have huge interests,
Chase Peckham:right? They have a huge amount of interest in. So the family members will pay off the credit card debt and then set up a payment plan and you know, that works for some, for some people. And if they can afford to do that, what they were doing is they were drowning in the, in the finance charges. Um, and that happens to a lot of people, a lot of people. But here's, you know, if that's the case too, you tell them you can keep every credit you kind of get rid of every credit card, but one, and if, and if I'm going to pay this off, you're cutting them up, they're gone, you'll pay me back. You can keep one for emergencies or whatever. But I mean, again, that's, this is completely depending on how close this relationship is and what you're willing to yeah. The situation. Yeah. Yeah. Right. So many variables. There are. There are absolutely.
Felipe Arevalo:That's why we get to keep making so many episodes. There's always so many variables. Absolutely.
Chase Peckham:That was fun. I think we need to do this more often. I hope that a keep to keep writing in it. Yeah. Keep writing to us.