Don’t Fall for These Money Traps!

coming up on this episode I am gonna talk to a caller that wants to know did her husband make a bad choice when he cashed out the 401k oh hold on and I'm also gonna talk to a gentleman that was homeless but now his income is growing and it's going to the point that you can't even imagine wait till you hear this guy's level of gratitude tuned in you don't want to miss it [Music] welcome to the Chris Hogan show home of everyday millionaires I am Chris Logan your host you have to remember this is the show where your life and your money takes center stage and remember it's your life VIPs take charge well I'm excited to be back with you we've got an action-packed show where we're gonna dive in and take your calls about your life and your money but what you have to do is call us I can't have a show without you so the number to call is eight four four two eight three nine three eight three again that's eight four four two eight three nine three eight three or if you prefer you can send me an email the email addresses ask at Chris Hogan 360 comm we'd love to get your calls and love to be able to talk with you and that's what it's all about this show is about community that's what we do here I don't want people to think that they're alone or that they're wrestling with something so we're gonna dive in and I'm going to the phones right now first up I've got Jen and Pennsylvania Jim how are you my question was about two years ago my husband cashed out his 401k to pay for school and our credit card debt and I'm just wondering if that was a big mistake okay so about two years ago he cashed out 401k how much student loan did you guys pay off it was about and so there was 35k in student loans and what else it was about 15k all right and so do you remember how much did he catch the whole thing out or just enough to be this fifty thousand to pay off this debt yeah that's full amount it was sixty thousand because he also got hit was like a five thousand dollar penalty plus you gotta pay five thousand in taxes roughly so yeah we use the fifty that we actually got towards paying that off so he has a pension now with his new job and I have a 401k so we have about 25 escapes a little between us and 401k okay and now I'm working part-time so I'm not even contributing to the trip how old are you all Jen okay okay and let me ask you this this is going to be the million dollar question literally the credit cards that you all paid off do you have credit card debt right now no we're actually a set except for a car lease I'm trying to figure out how to get out okay all right now we'll talk about that lease here in a second but so to answer your question was it a bad idea to pull money out of the 401k the direct answer is yes okay and that's because of the fees and everything that you you all saw and you dealt with in the taxes and everything plus the money you stopped it from growing right so listen in the past I have done that as well here's what I've learned we're not gonna cry over spilled milk what I mean by that is it's done right it what's done is done you all paid off debt less and learn now you're about to grow in money and moving forward so it's really one of the things where I would tell people out there not to do that but you've already you've done it you've stayed out of debt you closed out the credit cards I'm proud of you for that and you go forward but let's talk about this lease whose car is that yours are your husband's oh did you go Lisa's car Jim okay all right so it was B D and pre Chris okay it's fine but we gotta get out of this thing it's the most expensive way to have a car so do me a favor do you remember how long do you sign the lease for yeah it's up in May of 2020 okay right so and how much are you paying on at each month okay all right what kind of car is this okay all right so here's the mindset you could call them and ask them what you can do to get out of that what the payoff is on that lease but the other side Jen is this as you're sitting several months away from this you've got to figure out what are you gonna do when this is up okay so this is where you really start to zero in and you save up money and you just get you just a thousand-dollar car get something without a payment associated to it then you continue to save each month inside of your budget and now you save up a car payment each month and then you sell that car for $800 plus whatever you've saved and you upgrade see the problem Jen is that everyone's trying to speed upgrade with vehicles vehicles are depreciating asset right the goal is to get you from point A to point B so just settle down B focus zero in on what your target is and continue to walk this through you guys are 32 and 34 you can fix this it's a matter of don't want to go backwards want to keep investing and stay focused you know why cuz you're not finished Jen thank you so much for your call now listen out there VIPs if you're about if you've got debt right now and you're contemplating whether to touch your 401k or not don't do it leave it alone right don't stop the money from growing leave it there I would rather you zero in and get focused on attacking the debt slowly I know people will talk about it and you see it but Jen just told us they had to deal with fees they had to deal with taxes it's not drama that you want leave it there and let it grow all right I'm back to the phones I've got Julie on the line in San Antonio Texas Julie how are you good to talk with you how are things in Texas okay all right so Julie's on the line in San Antonio Texas she is wanting to max out she's maxed out her 401k but she's trying to hit 15% so what do you do Julie this is thank you very much for this call because a lot of people aren't aware of this that you have an option the next step is you go to the Roth IRA that's the goal where you're able to put money aside from in there if you've maxed out 401k you can go into the Roth IRA and guess what once you hit that max then what you can do is look at investing in growth stock mutual funds outside of retirement see the mindset is is we still have opportunities and tools available to us to be able to invest so if you want more information on that go to my website chris hogan 360 com I've got several blogs on there also my youtube channel listen VIPs if you are listening to the show you need to know I've got a YouTube channel like you can see me as I'm talking to you you got an opportunity so subscribe on there I also talked about some investing steps and tips that you can take on there as well and it's really important for us to keep our minds focused on the future because see retirement is not about just just stopping work no retirement is about you moving forward to do your dreams and that's what I want people to tap into but I need to talk about something because see there's a thing out there that's getting in the way of people living their dreams it really is and and it's blocking them and I want to talk to you about it I did some little research and I reached out and I wanted to to kind of find out about this one area why are people still falling for this like what's going on what's causing people to keep signing up for this thing that's preventing them from living more of their dreams because see anything that takes your income away is a thief but sometimes we're allowing ourselves to get robbed listen to this Federal Reserve says that Americans are facing over 1 trillion that's what the t 1 trillion dollars in credit card debt a trillion it's the average credit card balance right now in the u.s. the average u.s. household is carrying a credit card balance of get this over $16,000 $16,000 interest rate can be anywhere from 12 to 25 percent it is absolutely absurd and I'm gonna tell you this this little card is getting in the way it's the people using the card so what we have to do is get smart you see a lot of people get determined to take control of their money but the bottom line is is if you're living beyond your means and you're supplementing income with this credit card what you're doing is you're setting yourself up for failure you're blocking yourself from reaching the destination that you know you want okay let's stop making the credit card industry all this money they're making billions of dollars an interest in fees throughout the year so I did a little research and I wanted to know some myths I wanted to know what are people thinking about credit cards and so I reached out and I was just asking people get this this is some of the myths that I hear according to my research all right this one it's easier to use than cash the credit card for real you kidding me right listen bottom line is you can use your debit card it's attached to your bank account you use it the debit card and you spend money you're not getting charged interest a credit cards charging you interest so that's false it's it's not so easier to use than cash you're kidding me no don't fall for that another myth it's safer isn't it safer than my debit card safer no not at all how can something that blocks your dreams be safe for you right no debt is a negative it steals from us so it's not your debit cards attached to your bank the bank is insured it that's that's false don't fall for that oh this one I knew people were gonna say this one VIPs listen to me here it is the next myth about credit cards they're good for emergencies no they're good for going into debt they're good for delaying your dreams they're good for making the credit card industry money don't fall for that anymore you know why because we have an emergency fund for your emergencies so we're not falling for that don't believe that myths anymore the next myth about credit cards I get rewards points and cash back here we go here we go with the points okay listen to me all right let me calm down alright cuz this point thing gets me riled up alright it really does so here's the deal I time remember coaching a guy and he had about twelve thousand in credit card debt and his whole thought process was the points Hogan I'm getting points okay I'm like you're spending almost a thousand dollars a year in interest you're doing all this so you can get a free hotel room somebody help me here somebody help me do the math right he's spending a thousand and interest for a free hotel room a two hundred dollar hotel right that's marked up probably it's probably hundred fifty right that's bad math I'm not trading a thousand dollars for $150 right I know how to count I'm from Kentucky I know how to count right that doesn't make any sense don't fall for that anymore that's a lot all right listen another one I pay mine off every month Chris up here my credit cards off okay well welcome to the two percent of people that actually do that did you know that 98% of people don't pay off their credit card each and every month so they're getting charged interest so if you're that in that 2% great job I'm talking to people everyday that are battling to get themselves out of debt so if I can prevent young people on a college campus from signing up for this credit card to get a free pizza because I know what it's gonna cost I was the person that did that kind of stupid years ago right I don't want to do that I want to help people get to their dreams not be delayed and the final one the final myth about credit cards is that I don't I need a credit card to build my credit score that was a growl the credit score right FICO score you kidding me listen to me this whole building the credit score thing is a farce right the banking and lending industry has made a mint off of this we don't need it so the bottom line is your FICO score is a matter of how much debt you have how well you've paid it I like it they're gonna give you more debt and the types of debt that you have right maybe I said that one twice the bottom line is it's not necessary okay you don't want to build your FICO score you want to build wealth so bottom line this is the deal about credit cards I don't want people falling for this anymore why because it's just not full it's not right I want people living and building their dreams not building up credit card debt that's gonna keep you from living dreams no more so if you're out there and you've got to get intentional get plugged in the Financial Peace University let's attack your debt using the debt snowball if you here the debt snowball you go oh what is this thing I want you to check it out on YouTube I walk people through it and you can learn more information okay all right gotta move on from that because guess what it's now time for panicked or pumped this is where I coach you right where you are this is where I talk with you and if you're feeling stressed out about something guess what I'm gonna talk with you I'm gonna put on my coaching hat and walk you through it and if you need to celebrate something guess what we're gonna celebrate it because this is a safe place for you VIPs all right so I'm gonna dive in this one is from Jim jim says he's panicked jim says we've been working on baby step number two and we have 33,000 in depth 17,000 of that as a personal loan 16,000 is left on the car we have a gross annual income of a hundred and fifty four thousand we're 50 and fifty-four years old we've been date ish mm-hmm Dave ish with respect to stopping retirement we're very scared to stop saving for retirement as we would get hit with heavy taxes I understand it's a proven plan but we're in a higher tax bracket and it seems we would be better off reducing our tax income while paying off debt with our plan we will be debt-free before November 2020 what advice would you give us okay Jim listen I'm sorry you're feeling panicked right now what I want you to do is to stop trying to get creative and understanding your situation the bottom line is I need you to get frustrated with the debt I need you to get serious you see quit doing ish and do it okay that's the difference right there we got over five million people that have been through Financial Peace University that they've attacked that they've been serious so I want you to get serious stop feeling panicked and get focused get this debt out of your life we say pause investing while you attack debt you know why when you pause investing you gives you more money to throw at the debt you get out of debt sooner you then build up your fully funded emergency fund and then used to go back to investing you guys are fifty two and fifty fifty and fifty four get serious let's get this debt out of your life you've got seven seventeen thousand dollars in personal loans sixteen thousand left on the car sell the car paid the thing off get focused okay don't be panic get more focused you can do this thank you Jim for your email I appreciate you next up I've got a pumped email in from James James says writing just to say how life-changing the Ramsey solutions team is my friend and I were in processing here at Fort Bragg when we randomly started talking about finances he eventually told me about the Total Money Makeover and offered to buy it for me if I read it it was the quickest shipping ever it was at my doorstep the next day after I read it I set up my budget I ordered your books every day millionaire and retire inspired he says he's almost done with retire inspired he says he's on baby step number two and he's just started he said I've kind of been following the steps but never did the snowball thankful for baby step one because I had the money ready when my cars alternated gave up two and a half hours from home that fund that emergency fund is quick and easy to replenish and then it's I'm gonna replenish it then it's a full gone baby step number two I'm ready to experience this debt-free life well James listen number one thank you and your friend for your service I appreciate you and thank you I know freedom isn't free it takes people that are focused and not finished and keeping us all safe but I'm proud of you I'm proud of you that you not only read the book but you started to apply it and I agree when you have that starter emergency fund of $1,000 and something happens now you don't have to stress or panic or reach for a credit card you have an opportunity just to be able to take care of business as you should and I want you to attack baby step two with full fervor like I want you to get after it because you know why when you get out of debt VIPs you get your money back you ever thought about that you give yourself a raise without having to go talk to anybody you don't have to ask for more money you give yourself more money when you get out of debt all right listen if you're out there and you're feeling panicked or pumped I want you to email us okay all you have to do is send me an email ask at Chris Hogan 360 calm in the subject line put panic for pump tell me what's on your mind I want you to do it for a couple of reasons VIPs when you do it number one you realize you're not alone if you're feeling panicked and you're not alone if you're feeling pumped because they're gonna celebrate it but I also want you to do it for this reason you're helping others you see as you talk about your situation you're encouraging other VIPs to ask about theirs and again that community mindset is absolutely crucial because I think the more that we're open and we talk about stuff the more encouraged we can feel as we all grow forward so if you're feeling panicked or pumps send me an email I would love to be able to talk with you alright I'm gonna get back to the phone here oh I got Nikolas on the line Nikolas calling here from Tennessee Nikolas how are you I'm doing fantastic how are you doing this morning oh I'm focused and not finished my friend how are you I am doing wonderful I cannot believe the actual opportunity that I've had and I'm having to get to be on the show so thank you so much for having well you are very welcome my friend what's on your mind how can I help you today so me and my wife we actually went through a pretty good struggle we were homeless for about a year and a half and yes it was very tough on us we didn't know where we were going we didn't know what we were doing we were trying to figure out what was going on what were we doing wrong and then we just really got in contact with guy with we prayed together we want the charge together and we started listening to Dave Ramsey auntie your show and about six months ago well in February we actually became truck drivers and we went from making basically $40,000 combined to making $100,000 together combined Wow next year we have the opportunity to make nearly $200,000 combined and so we're saving aggressively very aggressively we have $3,000 in our emergency fund mm-hmm so we have a bit of a dilemma okay with us being on the road nearly seven days a week 24 hours a day we don't know how to really pay off our debt we have thirty thousand thirty four thousand dollars in debt combined no credit cards no cars it's really good collections and my wife's student loans okay okay how much of the thirty four thousand is student loans Nikolas okay so the rest of it is collection accounts okay all right don't call me sir you call me Chris friends brother we are brothers in this okay so we're gonna walk through that here in a second do you hear you all were homeless for a year and a half that is correct where were you sleeping Nikolas we had to sleep in our car and just try to find parking lots that we felt was faith and that's no way to live we had a lot of sleepless nights we have several hungry and no food nights and now we have more money than we can really see in I can't even begin to imagine how you how you all revealing trying to find safe parking lots to sleep in and what happened what caused you all to going from homeless to then look at truck driving as an option well my wife was going up we come from two completely polar opposite families and neither one of us really got taught anything about money well money management right as well as we would have liked and so we didn't know what to do with our money and I had always thought about being a truck driver but I never just felt right and then once we became it was we got married it was so much easier because you have your spouse on the road with you not just some random person that's right and you're both getting a page take a week each and it's just one household that's wrong we both have learned I said being homeless was actually the greatest gift that God could have gave us because it taught us how to manage our money better and it taught us how to trust him yes yes gave you some awareness you are grateful now you know that you don't have a gratitude problem you you are aware and I love that I love the lesson in that I love the spirit in that Wow I'm impressed with you listen here's the deal what I want you to do you guys the best way with this student loan debt is with the income you're bringing in I want you guys to call them and ask them what the payoff is I want you guys to get intentional in your budgeting Nikolas and start to throw money at theirs 13,000 the student loan debt but here's what I want you to do on these collection accounts this is big okay the collection accounts what I want you guys to do is to get a copy of your credit report both of you need a copy of your your your try merge report now when I say try merge that's all three that's experian equifax as well as TransUnion get a copy of that you're gonna understand what the collection accounts are then you'll start to reach out to them these debts have been sold off to other collection agencies you'll start to reach out to them first thing you're going to do is ask for debt verification debt verification is where they're gonna actually go back search the records and verify what it is that you owe next step is once you get that in writing then you can start to communicate with them about settlement now nicholas here me with this settlement this is a process and what you're going to want to do is talk with them whoever has the debt right now and they verify it then you can talk with them about what's owed you can ask them about settling they'll start to give you certain dollar amounts but this is the big point don't hear what they say you only act on what they send what I mean by that is it's not a settlement offer if it's not in writing okay now they're gonna ask you and try to get all this information about your income and everything it's none of their business bottom line is you're trying to figure out what's owed and then you can start to talk with them about settling keep in mind they don't have to settle and if they don't put it in writing it's not real if you do get a settlement offer and it is in writing I want you to get a certified check made payable to them and you overnight it to them I want you to overnight it because they don't want someone signing for this thing so they don't play the game that they didn't get it so not only do you know who got it you know who signed for it in the time that it arrived okay Nicholas that's the key now I'm proud of you all I want you all to stay focus don't go backwards I love to how grateful you are don't go backwards what you've been given is an opportunity and I want you two guys to get yourselves completely out of debt then build up a three to six month emergency fund and then start to invest I'm gonna send you Dave's book the Total Money Makeover it's a game changer it's a game it's the book that changed the game for me but also I'm gonna send you retire inspired and that's the book I did in 2016 America's wake-up call because see your awareness right now is gonna propel you forward you and your wife both and I'm excited as your income grows but just make sure that your knowledge grows each year Nicholas thank you so much for calling in that is fantastic VIPs hear me you've got a gentleman he and his wife they were homeless for a year and a half now what they've done is their income is growing probably approaching a hundred fifty to two hundred thousand and they're being intentional about attacking debt and taking care of the things they want to take care of that's huge see it ain't over till it's over and we all have some challenges and we all can deal with different things in life but we are the referee nobody else gets to count us out we're the referee and we've got an opportunity to stand up dust ourselves off and to be able to focus forward I love that story listen to me if you're out there and you've got a money question if you're out there and you've got a success story and you want to share it I want you to call me okay give me a call let me know leave me a voicemail tell me about what's on your mind the number to call is eight four four two eight three nine three eight three again that's eight four four two eight three nine three eight three or if you prefer send me an email at ask at Chris Hogan 360 calm that's all you got to do I absolutely love that and it's fantastic okay listen to me I want to tell you about a community I like us being connected because it helps us to stay aware stay motivated and understand exactly what's going on but we've got an everyday millionaire Facebook group this group is fantastic they are plugged in they are cheering each other on they're encouraging each other they're answering each other's questions it's fantastic so here's the deal if you're not a part of that group you need to be go to facebook.com slash Chris Hogan 360 click on the group's and then search for Hogan's everyday millionaires it's all you have to do the group is growing I think we're at almost 75,000 people now and I've got some special things that I'm planning I've talked with Jackie my social media person and Amanda and we're just kind of brainstorming some new stuff to do in this group so you need to get in there again go to facebook.com slash Chris Hogan 360 click on groups and you can search for Hogan's everyday millionaires but I want to give a shout out here and take a question from this group let's see here the group says this one is from let's see here from Susan Susan says Chris I'm 21 years old and I'm stuck on baby step number 4 I'm a first semester nursing student so only work over the summer how do I invest if I'm not working doesn't investing mean that one has to be consistently working in order to invest okay well here's the deal Susan you you are in school right now so you're technically considered a full-time student but you've got an opportunity right if you aren't working over the summer you have some earned income so you have some options available to be able to invest and so again looking at this whether it's looking at a Roth IRA whether you are investing in growth stock mutual funds on your own so it doesn't have to be that you are connected with a company to have a 401k or 403b or anything like that so you've got options what I want you to do is go to my website chris hogan 360 com click on dream team the button on there and you're gonna get connected with a smart investor pro the smart mr. Pro will be able to walk you through and guide you on hey what are options that are available to you that you can connect with and start to learn more so again this is an excellent first step for you that don't put you in a better position to be able to kind of understand what it is that you're doing and I just I want to unpack this as we start to talk a lot of people have asked me you know Chris I look at this and I know that I have things that I want to do right and I love for people to tap into those dreams because the dreams are what wake us up it what's it's it's gets us to start to think a little bit different and I think it's so important for us to start to clearly visualize what are the things that we want to do later in life or what are the things you want to do a few years from now I think these goals are massive and so as I talk with people as I was doing the working on the book retire inspired and talking with people about what it is they wanted to do and so I want to encourage you if you've not thought about this I want you to visualize a couple of things number one one of the most exciting things that I hear people talk about is that they loved the idea of giving they want to put themselves in a financial position to be able to give back to the charities that they believed in to be able to support the causes that matter to them so I want you to think about what are those things that matter to you what are the charities what are the causes that you really and truly want to give back to in a very generous way brainstorm that write that down number two I want you to think about the things you'd love to be able to do for your family the things that that you have this mind of doing whether it's a family reunion or whether it is a family picnic or a family trip I was talking with a gentleman that took a family trip his parents took all the grown adult kids on a cruise and they had a great time another one they all went to a destination out west options right think about the things you want to do for family then I want you to think about the things you'd like to do for yourself what are the places you want to travel to you know we all have places we want to go where are those I've heard people tell me all types of things over in Europe or around the world or you know places they'd love to go visit Alaska Hawaii are some of the top places that I hear well what is that for you I want you to write that down because see when you have those clear understandings of those goals and the things that motivate you that's what helps you stay clued into the plan that's what helps you stay focused because you're not finished because you have things you want to accomplish for yourself as well as your family so think about that what are the things that gets you excited what are the things that you're working toward write those things down they help you stay motivated and to help you stay aware all right listen I want to thank all the callers for calling in and given the questions and sharing the stories thank you so much I want to thank the entire Chris Hogan show production team and listen until next time remember don't make excuses make progress

Channel: Chris Hogan

Views: 26,916

Rating: 4.8942151 out of 5

Keywords: money, retirement, planning, chris hogan, dave ramsey, Don’t Fall for These Money Traps!, how to save money, money mistakes to avoid, money traps to avoid, personal finance, saving money, money traps, money mistakes, save money, how to invest, money tips, financial mistakes, financial mistakes to avoid, how to invest money, money management, money pits, learn to invest, how to start investing, how to make money, rule one investing

Id: Yfi7JIi4dOY

Length: 32min 14sec (1934 seconds)

Published: Mon Aug 12 2019