Latest / The Lila Rose Show / E18: How to Weather Financial Storms, with Rachel Cruze

Transcript

E18: How to Weather Financial Storms, with Rachel Cruze · The Lila Rose Show

0:00
Hello everyone, welcome to the Lila Rose show.
0:03
I hope everyone is having a good week with all the all the
0:06
challenging factors considered right now.
0:09
This is a chaotic, crazy time for so many people, but I hope
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this episode gives you a lot of hope and a lot of resources,
0:16
quite frankly, because this is something that I think is going
0:18
to be helpful to really everyone listening in one way or another.
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I'm really excited that we're going to have.
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I'll be talking with Rachel Cruz today.
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Rachel is a New York Times bestselling author and an expert
0:29
on personal finance. She's co-authored a book with
0:32
about finance with the guru himself, Dave Ramsey, and is
0:35
also the author of Love Your Life, Not Theirs, 7 Money Habits
0:39
for Living the life you want. She hosts her own show and she
0:42
shares other amazing resources which you can find on her
0:45
website, rachelcruz.com and that's Cruz e.com,
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rachelcruz.com. Rachel, thank you so much for
0:53
joining the show today. Yes, absolutely.
0:55
Thanks for having me. I appreciate it.
0:57
We're both sheltered in place doing this, so, you know, making
1:02
the most of the time. I'm sure you've been very busy
1:04
though because of your with your expertise.
1:07
I mean, a lot of people are looking for answers and help
1:09
right now in the area of finance.
1:11
Yeah, for sure. I mean, it is a crazy time
1:13
health wise, you know, for sure with the virus, but also the
1:16
economic impact is massive and it's just, it is wild.
1:21
And so people are, you know, in a sense, sort of scrambling,
1:25
especially if they've lost their income.
1:26
And it's like, what do I do? How do I, how do I continue on
1:29
with this life right now, considering my whole world
1:32
financially, it's just been turned upside down.
1:34
And so really giving people a plan and a purpose with what to
1:37
do is, is really important right now.
1:38
And so, yeah, we've been almost busier than ever.
1:41
Some people are like, wow, everything is slowed down.
1:43
And I'm like, oh. My gosh, not for not for you,
1:46
not right now. Well, a few quick questions
1:48
first on your background. So you've got quite a lot of
1:51
accomplishments and your expertise and how you've been
1:54
helping people. But a word has it that you
1:57
actually you are more than just a co-author with Dave Ramsey on
2:02
one of your books, but he was also he's also your dad, which
2:06
is very, very fun. So I'm just curious when you
2:09
were growing up with Dave Ramsey as your dad, who is this, you
2:13
know, obviously trailblazed so much in the world of personal
2:17
finance. Did you get an an allowance and
2:21
did he make you create a financial plan for your
2:24
allowance? Well, what's funny is no, we did
2:27
not get an allowance. We got a Commission, a
2:30
Commission. So OK, you work, you get paid.
2:33
You don't work, you don't get paid.
2:35
So his whole thing is like if anyone, if everyone could live
2:37
on Commission, that would be like his way to do it.
2:39
And. Is that like empty the
2:41
dishwasher work or what kind of work is?
2:42
Yeah. I mean, it was kind of all over
2:44
the place. There were certain things that
2:45
we did just because we were part of the family.
2:47
So almost, I remember, like, the kitchen growing up, for
2:49
instance, like we didn't get paid on that stuff.
2:51
Like we had to, yeah, take our dishes to the sink.
2:53
That's just. Civic duty.
2:56
That's right. Exactly.
2:57
That's because you're part of the family, you have
2:58
responsibility. But there are other things that
3:00
they for sure put us on every, you know, small things, feeding
3:03
the dog or, you know, making our bed, cleaning our room, like
3:06
those kind of things. Because you know, while there
3:09
are again, some things that your kids need to do around the house
3:12
because they're part of the family and you don't get paid on
3:14
everything in life that you know, you do.
3:15
So that's a good lesson to learn.
3:17
But also, I think you miss so many teachable moments when you
3:20
don't pay your kids for any kind of work because the earlier they
3:24
can grasp that money comes from work, money doesn't just come
3:27
from mom and dad's back pocket, the easier that transition into
3:31
adulthood is like when work has just been a part of your life
3:33
and you understand, here's the money for it.
3:36
It's so key. And then yes, kind of our quote
3:38
UN quote financial plan, We had three envelopes and they are
3:42
marked give, save and spend. And so we had to put money in
3:45
each of those every time we got paid once a week and.
3:48
Yeah, and and you were rich by the time you were eighteen.
3:50
Well. It was funny as I think a lot of
3:54
people assume, OK, Dave Ramsey, you know, he's your dad.
3:56
They think that we grew up with like mutual funds, birthday
3:59
parties and we went to budget camps every summer and stuff and
4:02
that was not the case. They really did teach us kind of
4:05
in the end flow of life. So even just what I just talked
4:08
about the chores and the, you know, understanding that you
4:11
need to give, save and spend and all that, like that was just
4:13
like kind of just a part of life.
4:14
It wasn't like this big sit down money summit that we had every
4:17
week. So that's an encouragement to
4:19
parents too. You don't feel like you don't
4:20
feel like you have to, you know, teach them about growth site
4:23
mutual funds when they're poor, just just like very age
4:26
appropriately start to show them what money's like.
4:28
Yeah, and it's never too late to learn, obviously.
4:31
So if you regardless of how your financial, you know what your
4:34
education was on that growing up like this, we're going to get
4:37
into this podcast as what to do today for people that are
4:40
having, you know, big financial questions.
4:42
But, but I love that your work is not just for adults, although
4:46
a lot of it is, but you also address parents and kids
4:48
because, you know, I'm, I just, I have a three month old and I'm
4:52
already thinking, you know, how do I give him the best of
4:54
everything in education? You know, how do I help him be
4:57
well formed? So I love, I love that.
4:59
I love that he, you know, your dad did that.
5:00
It's very simple, but I see how powerful that can be for kids.
5:03
So yes, absolutely. So as you know, everyone
5:06
listening is, knows from the news, you know, our country's
5:09
really suffering right now and you know, not just because of
5:13
coronavirus. I mean, that's the worst of
5:15
people actually facing that illness and, and the death and
5:18
the loss and all that pain, but also those who are struggling
5:21
economically. And it looks like our country is
5:24
in a recession right now. Can you talk a little bit about
5:27
what that means? Because, you know, there's,
5:29
there's depression, the Great Depression, there was a 2008
5:32
recession and now there's this kind of unusual recession, which
5:35
seems kind of forced on us for a time, which hopefully can be
5:38
lifted. But can you talk to talk through
5:40
that a little for for our listeners?
5:42
Yeah, for sure. Well, there's kind of in a weird
5:45
way, there's different camps of how people define a recession.
5:47
The most kind of basic definition that's around is that
5:52
when the GDP is down to consecutive quarters.
5:56
So if you go by that definition, technically we're not in a
5:58
recession. So it will take until about
6:00
July, August to actually define those two quarters to say, OK,
6:05
if we are down consecutively those two quarters, then we are
6:08
technically in a recession. Some other people just say, you
6:11
know, recession is when you know the economy slows down and it
6:14
starts dipping. So no matter kind of how you
6:16
look at it, what you really have to realize is that there are
6:19
things that that you just don't control.
6:21
Like we don't control what's going on in Washington.
6:23
We don't control what's going on in our state level.
6:25
There are a lot of things that we cannot control, but there are
6:28
are a lot of things we can control.
6:30
And so realizing the controllables in your life when
6:33
it comes to your money is what's really important right now.
6:36
And so I always tell people like, don't worry what's going
6:38
on in the White House, worry about what's going on in your
6:40
house. So the income you do, you do
6:43
have coming in. If you do or if you're
6:45
searching, you know, for a job, you, you're in unemployment
6:48
right now, like no matter where you are, are being very, very
6:50
intentional with the money you do have, making it stretch as
6:54
far as you possibly can during this time, prioritizing, you
6:58
know, all of those things are the things that you can control.
7:00
So the recession, again, depending on the definition you
7:02
want to use, but there's not much we can control in that, you
7:06
know? And so really, really focusing
7:08
though on your life and your money and your house is what's
7:10
key. So I did a bit of a poll and
7:13
asked folks what kind of questions you know they would
7:17
want to ask you. And so these are some of the
7:19
things that I got got in. So 1st I'm going to go through
7:22
them and then I know you have some kind of big picture advice
7:24
for people financially, but especially starting with kind of
7:27
the immediate what we're facing right now.
7:29
And I know that'll be connected to that bigger picture advice,
7:31
of course. But for somebody who just lost
7:35
their job and they do not have, maybe it's temporary, maybe it's
7:39
not, they're not sure. Or maybe they do know, but they,
7:42
they don't have that job right now.
7:43
They don't have that income and they do not have this rainy day
7:46
fund, you know, the, the emergency savings funds, that
7:49
extra fine money in the bank. What, what would you recommend
7:53
for them? That's, that's probably the
7:55
toughest question. The toughest question.
7:57
I'll start with that one. Yeah, for sure.
7:59
Well, here's the thing with money, No matter coronavirus or
8:02
not, money really flows in two directions.
8:04
It flows in and it flows out. And if you don't have money to
8:07
be able to flow out, then yeah, then they're kind of as a red
8:10
flag of like, OK, what do I do? So you have the option of filing
8:13
unemployment if you wanted to go that route.
8:15
But I just, I'm under the impression and, and I see the
8:18
facts that there are companies and there are industries hiring
8:22
right now like crazy. So there are some industries
8:24
that are completely, I mean that they're gone basically it seems
8:27
like restaurant industry, you know, for the most part
8:29
hospitality, I mean there's a lot of sectors of the economy
8:32
that are basically done right now in retail.
8:34
Is. In retail, yeah.
8:35
Absolutely, in brick and mortar retail.
8:38
That's right. But there are a lot of
8:39
industries that are completely thriving.
8:41
So everything from like delivery services, grocery stores, Zoom
8:46
actually is hiring a ton of people.
8:47
That's what we're using right now.
8:49
A lot of online services are just like scraping at the at the
8:52
bit to get other people on board because they're so overwhelmed
8:55
with work. So that's the good thing about
8:57
what's going on right now. If there is a silver lining in
8:59
the workforce is that there are places hiring and it may not be
9:03
of course, your dream job. It may not be the job that you
9:05
thought you'd have, and you may end up having two of these jobs
9:07
right now just to supplement the income, but whatever you can do
9:11
to bring that money in because I want you to be able to cover
9:13
what I call your four walls, and that's food, shelter and
9:17
utilities. Shelter, utilities and
9:19
transportation. Sorry.
9:20
So food, shelter, which would be rent or mortgage?
9:23
Mortgage, your utilities and your transportation, making sure
9:26
those four things are covered. So I do not want you to try to
9:29
stay current with your student loan or MasterCard and not feed
9:32
your family. So those are your priorities
9:34
right now. And it's kind of one of these
9:36
times, man, that you kind of have to grip down and say, you
9:39
know what, I'm going to do whatever it takes to bring some
9:41
kind of income in. And my encouragement to the
9:44
people is that this shall to this, this will pass like this
9:48
is temporary. I'm praying it's a shorter short
9:52
term thing that a long term thing.
9:54
You don't know, none of us have a crystal ball.
9:56
But at the end of the day, I just believe in the American
9:59
economy enough to know that we are going to come back from this
10:02
and that life as we know it, you know, may forever change in some
10:05
parts of our lives. But in other parts, I think
10:07
we're going to go back to it because we did have such a
10:09
strong economy going into this. I mean, unemployment was at a
10:12
all time low. And so I'm praying that that,
10:15
you know, momentum that we had before this kind of picks up
10:18
after this coronavirus stuff is all done with.
10:22
But again, my encouragement for those that have no money coming
10:25
in that you have, you have to have something coming in at some
10:28
level. So again, whether that's through
10:30
unemployment, I would prefer if you can go get one of those jobs
10:33
of of sectors or industries that are hiring.
10:36
You have any, I mean, this might be on your website, but any tips
10:39
for even that job hunt? I mean, I, I've heard about
10:41
Amazon hiring like you said and food delivery services and
10:44
things like that. Is that is that?
10:46
Do you have any tips for that? Yeah, you know what Ken Coleman,
10:48
who's one of our other Ramsey person personalities, his whole
10:51
focus is on jobs and your purpose in life.
10:54
And so seriously, go check out his website.
10:56
He has so much content around what it looks like to even buff
11:00
up your resume to, or beef up your resume to, you know, with,
11:04
with that interview process. If you, you know, haven't had an
11:06
interview in years because you've had the same job, but
11:08
then you've been let go, you know how to walk through those
11:11
steps effectively. So definitely check out
11:12
kencoleman.com. That's awesome.
11:14
And I'll include that in the show notes too for folks, your
11:17
website and Ken. So a few other quick like kind
11:20
of popcorn things here about immediate questions people might
11:23
be asking. So for example, eviction
11:25
moratoriums that has been put in place at least in California and
11:29
some other regions. If there is an eviction
11:32
moratorium, do you encourage where someone lives?
11:35
Do you encourage that they not pay their rent or should they go
11:37
on as if they are, you know, as before and try to pay rent?
11:41
Yeah, I would just say just try to stay current.
11:44
And I think state by state it depends.
11:45
I'm not sure in California, but for a lot of these for a lot of
11:48
states, you know with their mortgage or their rents this
11:51
grace period, if you still have to owe that money at the at the
11:56
end, right. So once this is over, you're
11:58
still going to owe your mortgage payment and the interest.
12:01
So as quickly and as current as you can be with your rent and
12:04
mortgage is what I would encourage.
12:06
But if you but like I'm saying though, but if your rent is due
12:09
next week and you don't have a job and you don't force see
12:11
having one in the next 6 days then yeah take that grace period
12:14
if you need it. And would you use emergency,
12:16
let's say someone has the emergency emergency fund, but
12:19
income has dropped or they've lost income altogether.
12:22
Do would you recommend using emergency fund for that?
12:26
100% OK, yes, because this is, this is an emergency.
12:29
So we always say an emergency is when it's unexpected and when
12:32
it's urgent. And that's what this is.
12:34
I'm like, man, I never knew a virus was going to be an example
12:37
of what to use your emergency fund for, but that's where we're
12:40
at in life right now. Like wow, it's crazy but but no,
12:43
that's what it's there for, so use it.
12:45
And two more kind of really specific questions.
12:47
So you as, as everyone knows, the government passed recently
12:50
the $2 trillion stimulus package and it's meant to, you know,
12:54
help people struggling, small businesses, individuals.
12:57
What should the people receiving stimulus checks, you know, that
13:01
could be, I don't know, 1300, I think 500 for kids, you know,
13:04
double for a household. For those that are receiving
13:07
those checks, what do you recommend that they do with the
13:09
money? Sure, once you've lost your
13:11
income, use it to live off of use it if you need to buy food,
13:14
if you, you know, need to pay your rent or mortgage,
13:17
definitely use it if you need to.
13:18
If you, if your income is still coming in and you're in an
13:22
industry, maybe you're a FedEx driver and your wife's a teacher
13:25
or who knows, you know, like whatever industry you're in and
13:27
you know, you know, I'm not going to lose my job during all
13:30
of this, Like my job will stay current.
13:32
I, I will continue to get a paycheck then for that stimulus.
13:35
Then you can throw it at your debt if you want.
13:37
But if you don't have at least $1000 saved in the bank cash,
13:42
make sure to build that up first and foremost.
13:44
So if you've lost an income, use that money.
13:47
Save it if you can, but if you need to use it to live off of,
13:49
use it. But if your income is still
13:52
coming in and it's still pretty predictable, make sure you at
13:54
least have $1000 cash in the bank and then you can use it to
13:58
pay off some debt. So it's not the time to go
14:01
shopping online. Exactly.
14:03
That's my question. Not because, I mean, some of the
14:06
politicians were kind of, I mean, even the president was
14:08
sort of like, let's get the economy moving again.
14:10
And like, obviously there's money for necessities, but also
14:12
like go shop like, you know, go go on like a little shopping
14:16
excursion online. I know and I, I just don't agree
14:19
with it. When I heard that, I was like,
14:20
oh man. And I've had a, and I've had
14:21
that question though, genuinely from people like, do I need to
14:23
help stimulate the economy? Check.
14:26
And I'm like, no, it is not your job right now specifically to do
14:29
that. It's your job to take care of
14:31
your household. And a lot of people are in the
14:33
pinch right now. And so use it to better your
14:36
household because the economy becomes strong when we become
14:39
strong financially, you know, as you know, households all across
14:42
America. So take care of your household
14:43
first. Right.
14:44
And that's such a good point, Rachel.
14:45
The stronger we are individually in our households, the stronger
14:48
our economy will be long term. So you know that.
14:51
Just dump it all into cash on it.
14:53
Yeah. As much as it breaks my heart to
14:55
say you go, buying a new j.crew dress is probably not really
14:57
going to stimulate the economy that effectively.
14:59
So, well, there you, there you go.
15:02
But maybe warding off another crises or just investing it or,
15:06
or saving it, I should say, is going to, you know, be healthier
15:09
for your family. That's, that's, that's really
15:11
good. So, and then on the stock
15:14
market, you know, the stock market, I, I kind of look at it,
15:17
my husband and I and we're like, wow, it's so up and down.
15:19
It's like this little roller coaster you're on, you're not
15:22
sure where you're going to go for.
15:23
For those who are looking at that, do you recommend selling
15:26
stocks right now? I don't know you need to be
15:29
looking at specifically your retirement, OK.
15:33
So I'm talking about four O 1 KS Roth IRA where a lot of those
15:35
are invested in mutual funds, which is 90 to 200 stock is
15:39
considered a mutual fund. And so that's where most of our
15:41
retirement is most people in America.
15:44
And so making sure you ride off the way, do not cash out
15:48
specifically retirements, because listen, it is an up and
15:51
down ride and your retirement is not for next month.
15:55
And if it is, then talk to your financial advisor and you know,
15:58
financial planner and see what they would advise.
16:00
But for most of us, we still have, you know, some people it's
16:03
another two years, other people it's another 30 years.
16:05
Like depending on your age, this is a long term play.
16:09
This is not for the short term. And here's what's hard is a lot
16:11
of people make really bad decisions for fearful
16:14
specifically with their money. And fear is a terrible financial
16:18
advisor. Do not let fear drive it.
16:20
And if fear drives it, then you're going to say, you're
16:22
going to see the stock market and be like, Oh my gosh, this is
16:24
terrible. I got to pull my money out.
16:26
Listen, no, ride it out. Because again, after all this is
16:29
said and done, I believe that we're going to go back to maybe
16:32
not exactly where we were, but I think eventually we'll get
16:34
there. Like we have a we had a booming
16:36
economy and your money is going to come back.
16:38
And, and some people even say the idea like, Oh, I lost money
16:42
in the market, but a lot of people had more money in the
16:45
market just from their returns than they did even what they
16:48
invested their principal. So remember that too.
16:52
So just remember, write it out. This is for the long term.
16:55
And, and for those that are able to right now are interested in
16:58
it, what about buying stocks? I have a a girlfriend who's
17:01
like, now's the time to buy Costco, the Costco stock because
17:04
everyone is going to Costco. But what are your thoughts on
17:06
buying stocks right now? Yeah.
17:08
I think if you're in a financial position to do it, then yes, do.
17:10
So I want you first totally added debt and I want you to
17:13
have a three to six month emergency fund and cash in the
17:16
bank. Once you have that and you have
17:19
some money, yeah, you can buy a little extra if you want.
17:21
I I recommend that for that to fund 15% of your income into
17:25
retirement. So maybe you just are more, you
17:27
know, diligent about where you're putting that money for
17:29
retirement because, yeah, the stock market, it's on sale right
17:32
now. So those people that have no
17:34
debt, you have that fully funded emergency fund and you have some
17:36
spare cash, you're like, you know, I want to throw it at the
17:38
market right now. Then yeah, you can definitely do
17:40
it. That's not where a lot of people
17:41
are specifically. So I'd rather you take care of
17:43
more the short term things in your household versus that long
17:47
term play. But again, those that are in the
17:49
financial position that throw some extra cash in the market,
17:51
do it because it's on sale. And when you say no debt, does
17:55
that include mortgage debt or that is just a credit card debt
17:58
or car debt or student loan debt?
17:59
Yeah, great question. No, that does not include your
18:01
mortgage. OK, so and anything else beyond
18:04
besides. Mortgage exactly, yes.
18:06
Got it. And, and then what do you say to
18:11
somebody who, you know, has an emergency fund right now and but
18:16
they are living paycheck to paycheck and they're worried
18:20
about their, you know, the economy and like what's going to
18:23
happen, but they have not lost income yet.
18:26
What would you say to them? I mean, they have some money as
18:28
emergency fund, but it's very tenuous otherwise because they
18:31
see what's happening around them.
18:33
They're not sure what, where, how, what's going to happen with
18:35
their job. Yeah, absolutely.
18:37
Well, I think again, if you're in an industry or you, you know,
18:40
your boss has talked to you about your company and you know,
18:43
if, if you have facts that, well, my job, I really, my job
18:47
may get cut loose in the next month if things don't turn
18:49
around like that. You have factual evidence of it.
18:52
Then if I were you, I would stockpile as much money as
18:54
possible. Do a budget, cut out all
18:57
unnecessary expenses and just stockpile more money for that
19:00
emergency fund when that job loss happens.
19:03
But if you're just fearful in general about, you know, what's
19:06
going on right now and there is nothing specifically happening
19:08
to you, that's again where I'm like, no, don't let your
19:11
takeover facts are your friends. And so if you are living
19:14
paycheck to paycheck, but you have that emergency funds and
19:17
you don't see your, your industry, you know, going down
19:20
and you don't think, OK, I'm probably not going to lose my
19:22
job. Then continue to again, live on
19:25
a budget. Be really intentional with your
19:26
money, but continue to pay down the debt that you have because
19:29
the less that you have in general, the less risk you have
19:33
as well. So basically no reflexive moves
19:36
right now based on just the fear of the economy not recovering or
19:40
maybe there will be layoffs. I mean, it sounds like it.
19:43
I love it. The message is very hopeful.
19:44
Like just hang in there, you know, ride the wave and you
19:47
know, maybe cut back on spending if you can reorganize that
19:51
budget, but don't don't freak out.
19:53
It's going to be, it's going to be okay.
19:55
Like my husband and I, for instance, like we're continuing
19:57
on what we've always been doing, but we did look at our budget in
19:59
April and we were like, okay, we could probably lower.
20:03
This category a little bit that, you know, just to say, OK, is
20:05
there any other places that we can really save some just in
20:08
case? So like there, there's a,
20:09
there's a smart way to go about it, but we're not in full blown
20:11
panic mode, freaking out and just, you know, thinking the
20:14
whole world's going to end because that's not the, the
20:17
mindset that you need to be in. So again, depending on where you
20:19
are financially is is where you need to be with your with your
20:23
emergency fund for instance. Yeah.
20:24
And I think, I mean, what's been very helpful for me, I mean, the
20:27
bad news obviously is a lot of people don't have jobs right
20:29
now. I mean, a lot of, I mean,
20:30
obviously with the virus, people are being hurt, people are
20:34
passing away. I mean, we have a death toll
20:37
that's rising and that's just so horrific.
20:39
And on the economic side, people are struggling.
20:42
But then the good news is, is that the, the response that
20:45
we're taking in these measures of stay at home, shelter in
20:47
place to try to, you know, stop the spread of the virus,
20:50
etcetera. Those are actions that can be
20:52
lifted. And so this isn't some, you
20:54
know, underlying economic crisis that happened.
20:56
It's something that you know, hopefully can, like you're
20:59
saying, go back, maybe not immediately to where it was.
21:02
It might take time, but there's a there's a lot of hope in that.
21:05
Yeah, there was like back in OA and O 9, if you guys remember
21:08
that, especially in California. I know your housing system got
21:10
just hit so hard there. Yeah, that was a whole debacle
21:14
with the economy. Like you're saying, this is an
21:16
outside force coming in and having to pause our economy for
21:19
a period of time in order to get the health stuff, you know,
21:22
controlled and all of that. So yeah, you're exactly right.
21:25
I think that's a great point that that the economy is not was
21:28
what affected, you know, what's going on with our money today.
21:31
It was something else and so hopefully once those sanctions
21:34
are lifted and we can hopefully go back to somewhat of a normal
21:37
life. Now looking at really big
21:41
picture on this stuff because we have folks who are listening who
21:43
are teens and then we also have, you know, adults and some folks
21:47
who are even looking at retirement.
21:48
So it's really a gamut, but especially for younger people
21:52
who are listening. What would you say are the top
21:54
three things? Like whether you're a teen or
21:57
you're in college or you're in your 20s or 30s, what are the
22:00
top three things that you would recommend that we do to manage
22:03
finances, especially if there we haven't already spent a lot of
22:07
time working on it yet? I mean, maybe we've done some a
22:10
little bit of research or have maybe taken a class or we've
22:13
done a little something, but what are those top three things
22:15
that you think are important for those who are younger to do
22:18
financially? Yeah, I'd say first and foremost
22:21
the budget and that's kind of like a womp, womp word.
22:25
I feel like you're like what? Beautiful.
22:28
Yeah, that's it. I know they seriously being
22:31
intentional with where every dollar is going.
22:33
If your income is going to help you build also over time, I
22:36
mean, this is so, so important. So many people, their paycheck
22:39
comes in, their paycheck goes out and they're like, I have no
22:42
clue where my money went. That's how a lot of people feel.
22:44
You do taxes, you know, and you turn everything in in April and
22:47
you think, well, now July for this year, but in April and you
22:50
think, where did all my money go?
22:51
Like I made all this money this year, Where did it all go?
22:53
That's how a lot of people live. And so being very, very
22:57
purposeful with where your money's going.
22:59
And you can download, we have a free budgeting app called Every
23:02
Dollar Download that and really a simple budget.
23:06
I always recommend a 0 based budget where your income minus
23:10
your expenses equals 0. So every dollar coming.
23:14
Yeah, that's right. Every dollar coming in is
23:15
assigned to category. Yes.
23:16
Live on less than you make and the budget will help with that.
23:19
Number two, I would say stay away from debts.
23:21
Debt is so normalized in our culture today.
23:24
And you know, all the credit card debt to car loans,
23:27
especially student loans. Oh my goodness.
23:29
You know, like the average student loan, I think it's
23:31
$32,000 now at graduation. And I mean, debt has just become
23:35
so normalized. But if you can imagine living
23:38
your life where you were making a paycheck and you owed no one
23:42
anything, like no money was going out to debt that you
23:45
literally controlled every penny of your income.
23:48
That just puts the power back in your place.
23:50
So instead of paying out interest, that you can actually
23:53
earn interest by investing and doing different things.
23:56
So, so being really intentional with avoiding debt and getting
23:59
out of debt if you have it. So we recommend getting out of
24:01
debt by paying off the smallest amounts to the largest amounts.
24:06
Forget the interest rate, all that, pay minimum payments on
24:08
everything and pay off the smallest debt 1st.
24:10
And then once that's paid off, take everything you're paying on
24:13
that, roll it over to the second smallest debt.
24:15
So getting out of debt and letting your income work for you
24:18
instead of you working for the bank basically your whole life
24:21
is a really tremendous habit to do.
24:24
And then I would say, I would say the third thing, it's a
24:26
little different and it's going to be hard for some people
24:28
during this time, but I, I would recommend giving.
24:32
Giving is a part of money that a lot of people don't talk about,
24:35
But there's a character issue when it comes to money.
24:38
A lot of people think, oh, if I just had more money, I'd be
24:40
happy. If I just could buy more things,
24:41
I'd be happy. And that's what ends up with
24:44
$15,000 in credit card debt with a bunch of crap that you don't
24:46
need and it's not made you happy.
24:48
And so realizing as early as possible in life that that
24:52
stuff, it's fun and I'm great with you having stuff like get
24:55
some nice stuff, that's fine. But to understand that like your
24:57
joy and your happiness cannot be wrapped up and things because if
25:02
it is, you're going to be a rat and a wheel for the rest of your
25:04
life. You're going to run, run, run to
25:06
the next car, to the next piece of clothing, to the next
25:08
vacation thinking that something's going to satisfy
25:10
you. And I think we are all built and
25:15
who we are to be givers. And when you start to give an
25:19
actually help people that are in need, that is a joy that you can
25:23
have with money that you can't experience anywhere else.
25:25
And so I encourage people to give a little until you can give
25:28
a lot. And so start where you are, but
25:30
just make that a habit in your life.
25:32
And the earlier you do that, I promise, I think, I think the
25:35
more joyful your life is when you just serve and give to
25:38
people. I love that.
25:39
And it's hard because our culture is so oriented in the
25:43
other direction as far as consumption.
25:45
So we're, you know, being encouraged constantly to spend,
25:48
spend, spend and spend. And so it's hard to reorient
25:52
that towards maybe I don't need that.
25:53
I'm going to instead give, give, give.
25:54
You know, instead of that latte, that's the $5 I can give to, you
25:59
know, you know, homeless ministry or instead of that, you
26:02
know, new dress, that's $100 I could give to a pro-life
26:06
ministry or whatever it is. Like there's a lot of other,
26:08
other places that money can go now that's really good.
26:12
And then what would you say? And I and we're, I know we're
26:15
close out here, but what would you say are the 01 other have a
26:19
question on student loans Actually, yeah.
26:21
Do you recommend student loans if if that's the only pathway to
26:25
college? And I know there might be a
26:27
whole other, that's a whole other conversation possibly.
26:29
But what would be a resource on that end?
26:31
Because I do know that's a decision a lot of folks are
26:33
making or they're now stuck with the student loan and having to
26:35
pay that off. But what is your take on that?
26:38
Well, real quick, yeah. So those students that are going
26:40
into college, yeah, I have a pretty hardcore line where I say
26:44
just don't borrow money because there is a way to still go to
26:46
school without debt. So #1 your state, your school
26:50
choice is what's important. So staying in states, taking in
26:53
state tuition, even a Community College for the first year or
26:56
two, go get your prereqs at a Community College.
26:58
It's fine. Then transfer if you want.
27:00
Yes. Don't pick a school that you
27:02
can't afford. It's the biggest mistake people
27:03
make #2 scholarships and grants still out there.
27:07
Go make that your part time job. And then #3 speaking part time
27:11
job, work, work while you're in school.
27:13
And so these three things, we are, we are having so many
27:16
success stories of young people graduating actually without any
27:19
debts because of these three things that they implemented
27:22
and, and makes it. It'll be sacrifice on your end.
27:24
And that's what's hard as I feel like you paint this picture to
27:27
an 18 year old. Yeah.
27:28
You can go to whatever college you want to go to, go study,
27:30
whatever you want to do, live it up.
27:32
It's going to be great. And that's their expectation of
27:34
college. Where our message, it's
27:36
different. Like you may have to sacrifice
27:38
your quote UN quote dream school, but I promise when
27:40
you're 32, you don't really care where you got your diploma.
27:43
The fact that you don't have loan payments is like, so gosh,
27:47
I've talked to so many of my own friends and they're like, man,
27:49
if I only stayed in state, like why did I step over a state line
27:52
and pay three times as much? So, so you may sacrifice your
27:55
time by working, you may sacrifice your dream of that
27:58
specific school, but listen, getting to college that that's a
28:01
great, that's your key, That's what you're going for.
28:03
So really focusing on that. But Anthony O'Neill, he has a
28:07
book called debt free degree and it's all about how to go to
28:10
school debt free. So check that out.
28:11
And then those of you that are already have student loan debt,
28:14
you've graduated, just put that in your debts, the ball, the
28:17
thing that we talked about earlier by paying off your debts
28:19
and if it's broken up into multiple payments, keep it
28:22
broken up so you can get those quick wins by paying it off.
28:25
That is awesome. And what is last question for
28:28
you and I know we got to go here, but what are the biggest
28:31
mistakes? I mean not just generally but
28:33
maybe even right now we talked about you already talked about
28:35
fear like being fear based and just making decisions
28:38
financially based on that right now.
28:39
But any other mistakes that you would caution people from making
28:43
right now? Yeah.
28:45
I think I would say, you know, do the things you have to do in
28:49
the short term to get by, but don't make decisions with your
28:52
money that is going to affect your long term, kind of like we
28:54
talked about like with retirement.
28:55
Right. Don't cast it out and young
28:57
people be thinking about retirement, be thinking about
29:00
the long term as well. And like what are things you
29:01
could be doing now to set yourself up really well for the
29:05
long term? We're just such a short term
29:07
mindset culture. It's like instant gratification.
29:09
I mean, everything is just right here.
29:11
We just want to feel good in the moment.
29:12
But you really have to push against that and look at your
29:14
long term from landscape of your finances, not just what's going
29:17
on today. Well, and hopefully this kind of
29:20
whole pause we're in right now, everything that's happening can
29:22
be an opportunity for some folks to really relook at their
29:26
finances and the way they're living financially and be
29:28
healthier, you know, and so. That's a great point.
29:31
Seriously. Like if you, if you find
29:33
yourself living paycheck to paycheck right now and you don't
29:35
have an emergency fund, you have a lot of debt and you've lost
29:38
your job. Like there are things to do
29:39
right now to keep you about your head above water 100%.
29:42
So don't lose hope, but also don't lose that intensity that
29:46
you're feeling because you can take that feeling after all this
29:49
is over and say, you know what, I'm going to clean up this mess.
29:51
I'm going to quit living the way I've been living with my money.
29:54
And I'm actually going to be really purposeful and get myself
29:56
out of debt, get an emergency fund in place.
29:58
So use this time, you're exactly right to really learn to, OK,
30:02
what I've been doing with my money isn't working now.
30:05
So what can I do to set myself up for success in the future?
30:07
That's great. And So what I know you have a
30:09
show and all kinds of amazing resources.
30:12
Can you just share it to close, close us out where people can
30:15
find, I mentioned your website beforerachelcruz.com, but
30:18
resources and you've mentioned some great books and other
30:20
folks, but top resources for people to be checking out right
30:24
now. Yes, so the Rachel Cruz show, we
30:26
have it's podcasts and video, so you can watch it on YouTube or
30:29
Facebook, so you can check that out.
30:31
We have a lot of messages of hope.
30:32
We're calling it a whole series from all the Ramsey
30:35
personalities going out, talking specifically about everything
30:37
going on with COVID-19 and your money.
30:39
So you can check that out as well, and books and all of it,
30:41
but you can find it all on rachelcruz.com.
30:44
Awesome. Thank you, Rachel.
30:45
I hope this is, I hope this is encouraging for folks listening
30:48
and I'm so appreciative of you for taking the time and looking
30:51
forward to checking out all that stuff.
30:53
Thank you so much for joining. Thanks for having me Lila, I
30:56
appreciate it. Thank you so much for listening
30:58
to this episode of the Lila Rose Show.
31:00
If you enjoyed, if it was helpful, please share the
31:03
podcast, pass it on. You can leave a review or give
31:06
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31:10
I'm really excited to tackle more episodes in coming weeks.
31:13
You can contact me at any point. I love hearing from you guys
31:16
with ideas about the show feedback you have for me.
31:18
You can contact me at thoughts@lilaroshow.com,
31:22
thoughts at lilaroshow.com or contact me on Instagram.
31:25
I love hearing from you and I hope everyone stays safe.
31:28
I hope that you keep the faith, keep the hope, and I look
31:31
forward to talking to you all soon.