Tag: personal finance

  • Money on My Mind: Global Happiness

    Money on My Mind: Global Happiness

    This week, we discuss recent reports on global happiness and starting families.

    We also discuss lessons from successful businesses that we can apply to our personal lives.

    The World Happiness Report 2025

    Since 2012, an organization known as The World Happiness Report (WHR) has studied global wellbeing and how to improve it.

    Each year, they analyze data from 140 countries and publish their findings in an effort to give everyone the knowledge to create more happiness for themselves and others.

    That sounds like a great mission to me.

    They also publish a global happiness ranking of all the countries studied. The rankings are based on answers to a single question:

    Please imagine a ladder with steps numbered from 0 at the bottom to 10 at the top. The top of the ladder represents the best possible life for you and the bottom of the ladder represents the worst possible life for you. On which step of the ladder would you say you personally feel you stand at this time?

    WHR explains that this “life evaluation” question empowers people to make their own judgments about what matters most.

    As part of its analysis, WHR uses economic modeling to explain countries’ average life evaluation scores. They look at six variables, and one of them jump out at me:

    “Freedom to make life choices.”

    What countries would you guess scored the highest on the 2025 rankings?

    The top five countries in the happiness rankings are:

    1. Finland
    2. Denmark
    3. Iceland
    4. Sweden
    5. Netherlands

    Each of these nations has ranked near the top for a long time.

    Where is the United States on the happiness chart?

    The United States fell to number 24, its lowest happiness ranking ever.

    The United States’ highest ranking was 11th place way back in 2011.

    I’m not totally surprised that the United States’ ranking is as low as it’s ever been.

    We’ve discussed some theories that may help explain this drop:

    I wasn’t surprised to see the United States rank 24th in the global happiness rankings, but I was shocked by the sub-ranking for this specific question:

    Are you satisfied or dissatisfied with your freedom to choose what you do with your life?

    The United States ranked 115th out of 147 countries in response to the freedom question!

    That ranking truly shocked me.

    It also helps explain one of the primary goals of Think and Talk Money: to help each of us reach financial freedom.

    When we are financially free, we can choose to live life on our own terms. To me, that sounds a lot like what the WHR freedom question is trying to answer.

    When you have financial freedom, you can make important decisions based on what truly matters. When you don’t have financial freedom, you risk making unsatisfactory decisions for money reasons.

    We can choose to spend more time with the people who are meaningful to us.

    We can choose to use our skills for work that is meaningful to us.

    Group of happy friends posing for a selfie on a spring day as they party together outdoors because they understand happiness is tied to financial freedom.

    Most of us grow up thinking that life only revolves around getting an education and then getting a job. We don’t allow ourselves to believe that financial freedom is possible for us.

    This was exactly how I felt before I wrote down my Tiara Goals one day on the beach in 2017.

    My goal with Think and Talk Money is to help us all realize that financial independence is within our reach. If we can think and talk about our money choices even a little bit every week, we can make sure our money life remains in balance with the rest of our life.

    By practicing strong personal finance habits, each of us can feel more satisfied with our freedom to choose what to do with our lives.

    How would you rank yourself on the freedom question?

    Are you satisfied with your freedom to choose what you do with your life?

    What are your core values?

    Have you ever written down your core values?

    Do you know what you’re striving for?

    Successful businesses look at these questions regularly. I find it helpful to learn how successful businesses operate so I can apply similar principles to my own life.

    For example, there’s a great business book called Traction by Gino Wickman. In the book, Wickman encourages businesses to focus on vision, mission, and values.

    It seems like a pretty good idea for all of us to think about vision, mission, and values as they apply to our own lives.

    For example, if you’re one of the nearly half of Americans not taking your PTO, are you making that choice based on your core values?

    It’s possible that you are. Perhaps you’re being strategic and have formulated a plan to benefit from all those extra hours at the office.

    Or, it’s possible that you’ve never really stopped to think about why you’re working so much. You’ve never paused to articulate to yourself what you want out of life.

    In Traction, Wickman makes a compelling argument why businesses should not skip this crucial step.

    We all should take the same step in our personal lives. In 2017, I wrote down my core values, what I call my Tiara Goals.

    Looking at the big picture, my Tiara Goals have helped me visualize what I truly want out of life.

    In the short term, my Tiara Goals help guide me through difficult decisions. As long as I’m clear with myself about what I want in the long run, I can make daily decisions to get my closer to those goals.

    Millennials want more kids but can’t afford them.

    According to a recent report from Business Insider, Millennials want more kids but can’t afford them.

    This makes me sad.

    The study points to rising costs, as well as the reality that Millennials are saddled with large amounts of student loan debt.

    Combined, it makes sense that Millennials are worried about money.

    If you want to start a family, or grow your family, what better motivation could there be to spend a little bit of time each week thinking and talking about money.

    If this is your reality, or you know someone in this position, establishing strong personal finance habits is crucial.

    Each week at Think and Talk Money, we focus on developing these strong personal finance habits.

    Please share Think and Talk Money with your friends and loved ones.

    I hope that in spreading the word about Think and Talk Money, we can all help each other make big life decisions without worrying about money.

    This is important whether you are hoping to start a family or have other life goals in mind.

    We can all benefit from making intentional and informed decisions with our money.

  • No Need to Obsess Over Credit Score

    No Need to Obsess Over Credit Score

    Your credit score is very important.

    And, you need to stop obsessing over it.

    Here’s why both those statements are true.

    Your credit history will touch almost every important financial transaction you enter into today. I don’t just mean credit cards and loans.

    If you apply for a job, need insurance, or want to rent an apartment, those companies are going to review your credit report and credit score.

    So, even if you don’t intend to take out loans, your credit history and credit score are still important.

    But, obsessing over your credit score is counter productive.

    Has obsessing over any number ever served you well, anyways?

    GPA…

    Weight…

    Social Media Followers…

    Yes, these things may be important to you. But, obsessing over the number itself is not how they improve. The habits behind the number are more important.

    If you want to improve your GPA, you need to study more.

    To lose weight, you need to practice healthy living.

    For more social media followers, you need to create better content.

    The same logic applies to credit scores.

    If you want a good credit score, the best thing to do is to practice strong personal finance habits that we routinely discuss in the blog.

    Obsessing over your credit score number is a waste of mental energy.

    With this backdrop in mind, we can discuss credit scores.

    What is a credit score?

    As we learned in our post on using credit the right way, credit refers to an agreement to borrow money with the obligation to repay that money later, usually with interest. 

    Credit also refers to a person’s trustworthiness or history of repayment.

    We then learned that a credit report is a document that tracks that history of repayment, as well as the current status of any loans you’ve taken out.

    Your credit report will typically include:

    • Personal information (name, social security number, current and former addresses)
    • Credit accounts (current and historical accounts, including credit cards and any other loans)
    • Collection items (missed payments, loans sent to collections)
    • Public records (liens, foreclosures, bankruptcies)
    • Inquiries (when you apply for a new loan)

    Now, we’ll talk about credit scores.

    A credit score is a three-digit number calculated based on your credit history that represents your present day creditworthiness. 

    Your credit score captures a moment in time. That means it will change over time, sometimes quickly and dramatically.

    We each have multiple credit scores depending on the scoring service. While there are many others, the two main scoring services are FICO and VantageScore.

    Keep in mind that your score may vary depending on the type of loan you are applying for. For example, an auto lender looks at different factors than a mortgage lender.

    For that reason, FICO alone has more than 50 different versions of your score that it may send to lenders.

    What is a good credit score?

    FICO and VantageScore each assign a score ranging between 300-850.

    For both services, if you’re around 800, you’re doing very well. If you drop below 650, you’ve got some work to do.

    Businessman trying to improve credit score with the lessons learned on Think and Talk Money.

    Before we look at the factors that go into your credit score, I can’t emphasize this next point enough:

    Don’t obsess over your credit score.

    You certainly want to pay attention to dramatic changes in your score so you can understand where you need to make adjustments. That said, you should not be concerned with slight movement in either direction.

    For example, FICO considers a score between 800 and 850 as “Exceptional.” Once you’re in that range, it makes no difference whether your score is 804 or 837. You may notice slight variation from month to month. That’s normal and perfectly fine.

    Instead of worrying about fluctuations in your score, spend your time and energy on more important financial wellness strategies, like writing down your Tiara Goals.

    What factors go into your credit score?

    Regardless of the scoring service, your credit score generally consists of these factors:

    • Payment history
    • Current unpaid debt
    • The types of loan accounts
    • Length of credit history
    • New credit inquiries
    • Amount of available credit being used
    • Collections, foreclosures or bankruptcies

    Of course, not each factor counts equally. For example, FICO weighs each factor like this:

    • Payment history: 35%
    • Amounts owed (credit utilization rate): 30%
    • Length of credit history: 15%
    • Credit mix: 10%
    • New credit: 10%

    VantageScore does not assign percentages to each factor, but does define the importance of each factor like this:

    • Payment history: Extremely influential
    • Total credit usage: Highly influential
    • Credit mix and experience: Highly influential
    • New accounts opened: Moderately influential
    • Balance and available credit: Less influential

    In comparing the two main scoring methods, we can see that both methods generally look at the same factors. They both also place the highest emphasis on payment history and place less emphasis on new accounts opened.

    Here’s all you need to know about each factor.

    There’s no reason to overcomplicate what each factor means.

    Here’s all you need to know:

    Payment history reflects whether you consistently make on-time payments.

    Amounts owed, credit utilization rate, and total credit usage refer to how much of your available revolving credit you are currently using.

    Revolving credit mostly refers to credit cards, but could also include loans like a line of credit.

    For example, if you have a credit card with a monthly limit of $1,000, and you are currently charging $300 per month on that card, your credit utilization rate is 30%.

    To maximize your credit score, aim for using 30% or less of your available credit. This ratio applies to each individual account and to your total account balances.

    Length of credit history refers to how long various accounts have been open.

    The longer the accounts have been open, the better your score will be.

    Credit mix looks at what types of loans you have open.

    Generally, lenders prefer to see a variety of loans, like credit cards, auto loans, and mortgages.

    New credit refers to how many loans you’ve applied for recently.

    Applying for too many loans in a short period can negatively impact your score since you may seem desperate for loans to fund your lifestyle.

    What factors are not considered in your credit score?

    Credit scores do not take into account personal information like race, gender, age, or marital status.

    Credit scores also do not consider income or employment history.

    Keep in mind that while personal information or employment history is not a factor in your credit score, it certainly will be considered as part of your application by lenders.

    For example, mortgage lenders and landlords will want to confirm your history of steady employment and income before entering into a financial relationship with you.

    Don’t get caught up in precisely how your score is calculated.

    FICO and VantageScore provide the above information as general guidance. However, each of our credit scores is determined on a unique set of circumstances that changes over time.

    While these factors are generally considered for everyone, specifically how each factor is weighed varies for each of us.

    As FICO explains:

    Your credit report and FICO Scores evolve frequently. Because of this, it’s not possible to measure the exact impact of a single factor in how your FICO Score is calculated without looking at your entire report. Even the levels of importance shown in the FICO Scores chart above are for the general population and may be different for different credit profiles.

    Like we mentioned before, it’s important to not get hung up on the different methodologies that each scoring service uses. For the most part, your score won’t vary significantly from one service to another.

    The key point is to pay attention to the general factors that impact your score but understand that your score is always changing. Don’t waste your energy trying to decipher how much weight is given to each factor.

    How to check your credit score.

    These days, it’s easier than ever to monitor your credit score.

    Most major banks offer free credit scores to their customers.

    You can also sign up for credit monitoring, including credit scores, with the major credit bureaus, Equifax, Experian, and TransUnion. Note that only some services are provided free of charge.

    Of course, there are also no shortage of apps and websites providing similar services, sometimes free and sometimes for a price.

    If you’d like additional guidance on how to obtain your credit score, please reach out on the socials or by replying to our weekly newsletter.

    What should I do instead of obsessing over my credit score?

    Instead of obsessing over your credit score, focus on the strong financial habits we discuss regularly in the blog.

    You should not have to worry about your credit score if you:

    When you can make these habits part of your regular life, your credit score will automatically rise along the way.

    Look at credit scores from a potential lender’s point of view.

    I hope this goes without saying, but lenders are in the business of making money. They make money by gauging risk. The lower an applicant’s credit score, the more the lender’s risk increases.

    When the lender’s risk increases, it may decide to not lend you money. Or, it may choose to lend you money and charge you a higher interest rate to compensate for that higher risk.

    The same logic applies when other entities besides lenders are reviewing your credit score.

    For example, an employer may check your credit score to determine your level of trustworthiness before offering you a job.

    A landlord may check your credit score before agreeing to rent you an apartment to confirm whether you are likely to make the required payment each month.

    Always remember why credit scores are used in the first place.

    If nothing else, remember why credit scores are used in the first place:

    Credit scores are used to measure how risky it would be for someone else to enter into a financial relationship with you.

    In other words, can you be trusted with money.

    If you have a history of not making on-time payments, or not paying loans back, that indicates you are not responsible with money.

    When you are using up most of your current credit and carrying high balances, that demonstrates that you have a hard time limiting your spending.

    If you are constantly applying for new credit, it shows that you may be dependent on credit to fund your life.

    In any of these scenarios, the risk of entering into a financial relationship with you increases.

    Credit scores are especially important before big purchases.

    If you have a big purchase coming up, like buying a home or a car, it’s important to have your credit score in a good spot before applying. This is because your credit score will impact the interest rate you are offered.

    For a big purchase, even slight variations in the interest rate can make a huge difference.

    Because it’s normal for your credit score to change frequently, it is worth waiting to apply for that loan until after you’ve improved your score.

    The best ways to improve your score in the short term are to pay off debt and avoid applying for new credit.

    By paying off debt, you’ll improve your payment history and your credit utilization rate, two of the most important factors in your score regardless of scoring method.

    The best thing you can do to avoid the costly consequences of a poor credit score is to implement the personal finance fundamentals we routinely discuss in the blog.

    Have you ever needlessly obsessed over your credit score?

    Let us know what that felt like in the comments below.

  • Great Talk: Money and Fences

    Great Talk: Money and Fences

    Know anything about fences?

    We need to replace a 20 year-old wood fence at our home that’s one strong storm away from falling over. In these past few weeks, I’ve learned more about fences that I care to admit.

    On the bright side, shopping for a fence has led me to think about and practice many of the personal finance habits we talk about in the blog.

    Let me walk you through my thought process to help you whenever you have a big expenditure in front of you.

    In the world of privacy fences, there seem to be three primary choices available: wood, vinyl, and composite. I won’t bore you with all the details. The key points to consider for our conversation are:

    • Wood is the cheapest, but requires the most upkeep and will eventually need to be replaced.
    • Vinyl (plastic) comes with a lifetime warranty, requires little-to-no upkeep, but is 30-40% more expensive than wood.
    • Composite is the most durable, looks incredible, requires no upkeep whatsoever, has soundproofing ability, is made from recycled materials, comes with a 25-year warranty, but is nearly 3x more expensive than wood.

    We’ve ruled out wood after doing our research and determining that we’ve got too much going on to worry about annual fence upkeep.

    So, that leaves vinyl and composite. From our research, both would be good options. However, there’s really no doubt that composite is the best overall option, if you can stomach the cost.

    Talk to your people about expensive purchases.

    This is a big financial decision, so of course, I’ve been talking to my people for weeks about what they would do.

    I’ve gotten three common responses that go something like this:

    • “You’re planning to live in this home for the long run, make the investment in the best fence possible and never worry about it again.”
    • “How much do you really care about a fence? I’ve never even noticed my fence. Think of what other projects you could spend that money on.”
    • “Dude, leave me alone. I don’t want to talk about your fence.”

    As you can see, talking to your people does not mean that you’re off the hook for making the decision yourself. You will likely get a wide spectrum of advice.

    However, you’ll gain invaluable perspective to consider so you can make the best decision for your personal situation.

    Expensive purchases test your personal finance habits.

    Whenever you have a big purchase ahead of you, many of the strong personal finance habits you’ve been working to establish will be tested. You’ll be asking yourself questions like:

    My wife and I have considered all these questions as we’ve talked through the options.

    Rear view friends sitting on chairs talking at the bar but hiding from each other that they are in credit card debt.

    As of this moment, we’re leaning towards the composite fence so we never have to think about fencing again.

    To help defray the cost, we’re considering a financing option that offers 0% interest for 18 months.

    Important side note: if you ever choose to go with an attractive financing option, always read the fine print first.

    The lender is hoping you fail to pay off the purchase within the 0% interest period so you’re forced to pay insanely high interest on the remaining balance. The financing option we’re looking at jumps from 0% interest to 26% interest if we fail to pay off the loan in 18 months. That’s a serious penalty.

    Financing aside, we’ve also concluded that other projects will have to wait for a while so we don’t crush our money goals for the year.

    We’ll make our final decision this weekend.

    What would you do?

    Leave a comment below to help my wife and I decide.

    Sharing Think and Talk Money with Others.

    Over the past couple days, I’ve heard from several readers who have shared Think and Talk Money with people they care about.

    One reader told me that he shared the blog with his 25 year-old son. The reader was very appreciative because he’s experienced how important personal finance is.

    He knows his son will only benefit in the long run if he implements strong money habits at the beginning of his career.

    Another reader shared the blog with a friend who is now tracking her spending for three months. This is the first time she has ever tracked her spending to learn where her money is going each month.

    She is using her phone and a simple spreadsheet to track her expenses. She reports that even though it’s only been a month, she’s learning things about her money choices she never knew before.

    I love reader stories like this because they reflect one of our core philosophies at Think and Talk Money:

    It’s not taboo to to talk about money.

    When you start the conversation, you’re not just helping yourself, you’re helping people you care about.

    It doesn’t matter if you’re talking about paying for a fence or starting a budget. We all could use help when it comes to making good, consistent money decisions.

    Your friends are likely going through the same money challenges.

    Since writing about my challenges with credit card debt at the beginning of my career, I’ve had some great talks with friends I knew back then.

    Multiple friends have shared with me that they were dealing with the same credit card debt issues at the same time that I was.

    None of us ever knew it at the time. We were hanging out with each other every weekend, spending money we didn’t have. The joke of it all is that we were likely encouraging each other’s poor habits.

    Learning that I was in the same position as my friends all these years later does make me feel at least a little bit better about the mistakes I made back then. But, that’s not the important takeaway.

    The big takeaway for me is that if my friends and I were dealing with the same money challenges back then, we’re probably dealing with similar money challenges today.

    It might not be credit card debt from our social lives, but it might be something like saving for college or paying for a home. Maybe it’s what we should do when the stock market slumps.

    Just like we mentioned above, my friends and I will only benefit from having these kinds of money talks.

    Instead of just talking about mistakes we made in the past, we can talk about how to get it right as we move forward.

  • Why Credit Reports are So Important

    Why Credit Reports are So Important

    I first learned about credit when I was in law school. My teacher wasn’t a professor, though.

    My teacher was a surprisingly pleasant debt collector.

    I spoke to this debt collector after breaking my wrist snowboarding.

    For the second time in a year.

    Let me explain.

    About six months earlier, my friends and I took a road trip to go snowboarding in Wisconsin. I had never been to this location before and wanted to explore the entire ski area. After a few loops on the main run, I found my way to the terrain park.

    My plan was to scout out the terrain park and report back to my friends. I must have forgotten the plan as I approached a jump that I had no business approaching. That turned out to be a mistake.

    Heading towards the jump, I had too much speed and, for lack of a better word, panicked. My friend reported afterwards that as soon as I jumped, my body and snowboard turned parallel to the ground like I was lying in bed.

    After all these years, It almost seems peaceful to picture myself lazily flying through the air on a beautiful, blue sky, sunny day.

    Almost.

    To state the obvious, this was not a good position to be in since I needed my feet and snowboard to hit the ground first and land safely.

    I ended up landing on my backside with my hand and wrist hitting the ground first. The unpleasant result was a trip to the emergency room and a broken wrist.

    My reputation for having fragile wrists was secured.

    OK, back to the debt collector.

    A few weeks after returning to Chicago, I received a bill in the mail from the emergency room for approximately $200.

    I didn’t understand why I was receiving a bill since I had insurance and provided that information to the emergency room. I figured it must have been a mistake to send me a bill, and that my insurance company would pay for it.

    So, I crumbled up the bill and threw it in the trash.

    Healthcare and medicine. Medical and technology. Doctor working on digital tablet on hospital background illustrating how I first learned about the importance of credit history.

    Before you shake your head, remember that I was still in school and on my parents’ insurance. This was my first interaction with a medical provider where the bills came to me instead of them.

    I didn’t know at the time that even with insurance, I could potentially be responsible for some portion of the bill.

    For the next few months, I continued to receive bills from the emergency room. And, I continued to throw these bills straight in the trash.

    At some point, I received a new type of letter in the mail. This one caught my attention. It was from a collections agency.

    The letter said something to the effect of, “Call us immediately to dispute or pay this medical bill before we are forced to take action against you.”

    The scare tactic worked.

    I picked up the phone and had a surprisingly nice conversation with the debt collector. The debt collector explained how the collections process works and the potential impact failing to pay would have on my credit report.

    Credit report?

    Never heard of that before. Don’t think I have one.

    After hanging up the phone, I did some research and realized the debt collector wasn’t scamming me.

    I certainly did have a credit history, as reflected in my credit report, that I needed to be mindful of.

    I wrote a check to pay the bill the next day.

    This is how a broken wrist and a debt collector first taught me about credit reports.

    What is a credit report?

    As we learned in our post on using credit the right way, credit refers to an agreement to borrow money with the obligation to repay that money later, usually with interest.

    Credit also refers to a person’s trustworthiness or history of repayment.

    A credit report is a document that tracks that history of repayment, as well as the current status of any loans you’ve taken out.

    Your credit report will typically include:

    • Personal information (name, social security number, current and former addresses)
    • Credit accounts (current and historical accounts, including credit cards and any other loans)
    • Collection items (missed payments, loans sent to collections)
    • Public records (liens, foreclosures, bankruptcies)
    • Inquiries (when you apply for a new loan)

    Every time you open a loan, like a credit card, auto loan, or mortgage, it will appear on your credit report. Likewise, whenever you make a payment or miss a payment, that information will be reflected on your credit report.

    When someone has “good credit,” it means they have a reliable history of repayment. When someone has “bad credit,” it means they have not previously demonstrated a reliable history of repayment.

    Remember this key point: your credit report represents a complete picture of your interactions with credit over an extended period of time. Your credit report will include information about you going back years and years.

    This means that the information reflected on the report will follow you for the long term. Any negative information on your credit report will typically stay on your credit report for 7-10 years, depending on the credit reporting agency.

    What is a credit reporting agency?

    In the United States, there are three credit reporting agencies:

    • Equifax
    • Experian
    • TransUnion

    By law, you are entitled to receive a free copy of your credit report from each credit reporting agency every year.

    To do so, simply visit annualcreditreport.com.

    If you haven’t obtained your credit report recently, I highly encourage you to do so.

    Regularly checking your credit report is the best way to make sure that nobody has fraudulently opened any accounts using your social security number. It’s also the best way to monitor all the loans you are currently responsible for.

    Believe it or not, it’s not uncommon for people to forget about loans they have previously opened.

    Did you ever go to a Cubs game in college and sign up for a credit card just to receive a free XXL white t-shirt with a blue W on it?

    No?

    Uhh… me neither.

    How about signing up for a new credit card while making a purchase at your favorite store to save a whopping 10% that day?

    You may never end up using these credit cards and completely forget that you opened them. They’ll still appear on your credit report, and you are still responsible for those credit cards.

    Is a credit report different from a credit score?

    Yes, credit reports and credit scores are different.

    We’ll soon discuss credit scores in detail. For now, understand that a credit score is a number calculated based on your credit history that represents your present day creditworthiness.

    Your credit score captures a moment in time. That means it will change over time, sometimes quickly and dramatically.

    Unlike a credit score, your credit report does not change quickly. Like we mentioned earlier, any negative information on your credit report will typically stay on your credit report for 7-10 years.

    Why does my credit report matter?

    We typically rely on our ability to borrow money to make our biggest purchases in life. When you take out a mortgage or finance a car purchase, you are relying on your ability to borrow money to make that purchase.

    In these scenarios, lenders will “pull your credit” or do a “credit check” before agreeing to give you a loan.

    If you have a history of responsibly borrowing money and paying it back on time, a lender is more likely to lend you money.

    On the other hand, if you have a history of falling behind on payments, a lender may choose to not lend you money.

    Or, a lender may agree to give you a loan and charge you a higher interest rate to compensate for the increased risk. This could end up costing you lots of money.

    Poor credit history can lead to lost opportunities.

    Besides just financial consequences, a poor credit history can also lead to lost opportunities.

    As an example, it’s common practice for landlords to check an applicant’s credit history before renting them an apartment. Most major rental property search websites, like Zillow and Apartments.com, offer credit checks as part of the standard application process. My wife and I require a minimum credit score for all potential tenants.

    It makes sense why a landlord would pull an applicant’s credit. When you rent an apartment, you are signing a contract (a lease) to pay a predetermined about in exchange for a place to live.

    Landlords rely on those rent payments to pay for the property’s mortgage and upkeep. These rent payments can also directly impact the landlord’s livelihood.

    It should be no surprise that landlords are hesitant to rent apartments to people who have a poor track record of paying for things.

    Just as a landlord is sizing up your ability to pay the rent each month, other lenders, like a car dealership or mortgage lender, are sizing up the likelihood you can repay its loan.

    Don’t ignore your credit history.

    Have you checked your credit report this year?

    My wife and I check our reports at least once per year to make sure there are no red flags.

    Fortunately, I realized my mistake with the debt collector before that red flag ended up on my credit report.

    If I hadn’t, I would have seen that negative mark on my credit report for 7-10 years. This would have severely impacted my ability to qualify for mortgages and grow my real estate portfolio.

    I’m glad I learned that lesson about credit reports.

    I’m also glad that I haven’t been back to a terrain park since law school.

  • Good Credit with Unicorn Cake

    Good Credit with Unicorn Cake

    Something can be good and bad at the same time.

    I’ll give you an example. This weekend, we hosted a birthday party for my five-year-old daughter. She wanted a rainbow unicorn theme.

    When asked what she wanted for a present, she would unhelpfully respond, “No clue.”

    OK, great.

    Fortunately, the local toy store was stocked with rainbow unicorn items: puzzles, books, stuffed animals, craft kits, etc. The kids at school must be on the same page with their interest in rainbow unicorns this year.

    The rainbow unicorn party went well. We started with pizza, decorated cupcakes, and had a unicorn egg hunt.

    The highlight of the party?

    The birthday cake.

    We ordered a rainbow unicorn cake from one of the most popular bakeries in Chicago, Sweet Mandy B’s. The next time you’re in Chicago, do yourself a favor and pop in for a cupcake or cookie.

    After singing “Happy Birthday,” I started cutting pieces of cake for the kids. A few jumbo pieces of cake later, one of our guests came to my rescue and showed me how to cut smaller, kid-appropriate pieces.

    It’s a good thing she did because with the way I was cutting the cake, we were going to run out before all the adults got a piece. And that would have been a bad thing.

    See, this cake was incredible. I’m not always a cake guy (unless it’s ice cream cake), but this one was special.

    Vanilla confetti cake with buttercream frosting. It had the perfect balance of cake and filling. Sweet, but not too sweet. Soft and also firm.

    It wasn’t just me. I never saw a cake disappear so fast. Usually, we end up with so much cake leftover that I’m sneaking bites every time I open the fridge for the next week. Not this time. Sadly.

    By the end of the party, we had barely a single piece left (which was devoured within 24 hours).

    Half eaten cake on a plate symbolizing too much of a good thing like using too much credit can lead to debt which would be a bad thing

    There is a bright side to finishing the cake, though.

    If I had an unlimited supply of this cake, I’m not sure I could stop myself from eating it. The temptation would be too strong to sneak back to the fridge all day long, fork in hand. One little bite at a time.

    It’ll be fine.

    What does birthday cake have to do with personal finance?

    You know where this is going.

    Eating a wonderful cake at a birthday party is a good thing.

    Eating cake every day for the next week, no matter how good it is, would be a bad thing.

    You see? Something can be good and bad at the same time.

    And that leads us to our next major topic in the blog: the responsible use of credit.

    What is credit?

    Credit refers to an agreement to borrow money with the obligation to repay that money later, usually with interest. In this context, think of “credit” as another way of saying “debt.” When you use credit, you’re taking on debt.

    Credit also refers to a person’s trustworthiness or history of repayment. When someone has “good credit,” it means they have a reliable history of repayment.

    It’s important to always remember that credit and debt go hand-in-hand. That’s why before we discuss how credit can help us, we learned scary stats about debt. We discussed three big reasons why we’re in debt. And, in a preview to our conversation on credit, we learned the difference between Good Debt and Bad Debt.

    We typically rely on credit for big purchases.

    We typically rely on our ability to borrow money, or our credit, to make our biggest purchases in life. When you take out a mortgage or finance a car purchase, you are relying on your ability to borrow money to make that purchase. That ability to borrow money is known as credit.

    If you have a history of responsibly borrowing money and paying it back on time, a lender is more likely to lend you money.

    On the other hand, if you have a history of falling behind on payments, a lender may choose to not lend you money. Or, a lender may charge you higher interest rates to compensate for their increased risk.

    This could end up costing you lots of money.

    Poor credit will cost you more than just money.

    Besides just financial consequences, a poor credit history can also lead to lost opportunities.

    As an example, it’s common practice for landlords to check an applicant’s credit history before renting them an apartment. It should be no surprise that landlords are hesitant to rent apartments to people who have a poor track record of paying for things.

    These reasons, and other reasons we’ll soon discuss, illustrate why it’s so important to responsibly use credit.

    In our initial series on credit, we’ll discuss:

    • The basics of credit reports and credit scores and why they each matter.
    • How the responsible use of credit cards can fit into our personal finances.
    • What you need to know to maximize the benefits of credit card reward programs.
    • How to use other forms of credit, like a Home Equity Line of Credit (HELOC), to accelerate your progress towards financial freedom.

    By understanding what credit is and how your credit history is tracked, you’ll gain the confidence to use credit responsibly as part of a healthy financial life.

    I am in favor of the responsible use of credit.

    As I previewed in our discussion on Good Debt, I’m in favor of people responsibly using credit as part of a healthy financial life.

    That applies to our every day choices, like using credit cards to track our spending. It also applies to other forms of credit, like Home Equity Lines of Credit (HELOCs), to acquire assets. We’ll discuss these and other benefits of responsibly using credit in our upcoming posts.

    The important caveat, however, is that like the Sweet Mandy B’s birthday cake, we have to know when a good thing can become a bad thing.

    If we abuse the privilege of credit, the consequences can be severe. I abused the privilege of credit cards at the beginning of my career, and it took years to dig out of the hole.

    By understanding how credit works and how your credit is tracked, I hope you can avoid falling into a similar mess.

    I want you to happily enjoy the cake without the potential negative consequences.

  • Powerful Money Lessons from Alone

    Powerful Money Lessons from Alone

    One of my favorite shows is Alone.

    I’ve been talking about it a lot lately with anyone willing, or in the case of my students, with anyone without a choice but to listen.

    If you haven’t seen it, the show is a competition between 10 survival experts who are dropped off in the middle of nowhere, completely isolated from all human contact. Each person is allowed to bring ten survival items, some clothes, and a safety kit. They all have cameras to film their journeys. Whoever survives the longest wins $500,000.

    It is astonishing what these people are capable of. They build their own shelters and catch all their own food. On a daily basis, they’re forced to solve problems. They have no one to help them, or to blame, but themselves.

    My favorite competitor is an Australian guy named Outback Mike. I was blown away by the ideas he came up with and the things he built. There was no mental or physical challenge that he backed down from.

    My wife and I first discovered Alone during the pandemic. It was the perfect show during that time of immense mental and physical hardship. There was something about the way each survivalist focused on that day’s tasks, and blocked everything else out, that resonated with us.

    Watching the latest season of Alone these past few weeks, it occurred to me that the show is full of analogies for the personal finance topics we discuss in the blog.

    I’ve found analogies to be great teaching tools, so here we go.

    1. Not all calories are created equal.

    The major challenge in Alone is getting enough calories to survive. Food is not exactly plentiful in the remote locations where the competitors are dropped off.

    To survive, competitors dedicate endless hours strategizing and looking for food. Common strategies include fishing, trapping, hunting, and foraging.

    One of the first things you learn is that not all calories are created equal. Calories from fat and protein are at a real premium. Even with an unlimited supply of berries and greens, the competitors make clear that you cannot survive for long periods without fat and protein.

    Besides the importance of the type of calories, the way the calories are procured is just as critical.

    This makes perfect sense in a survival scenario. If you expend 2,000 calories of energy to catch a fish, and that fish only provides you 1,000 calories of food, that is a losing proposition. If you continue on that trajectory long enough, you’ll starve to death.

    This is why contestants on the show always think about ways to passively procure food, such as setting traps or using gill nets. If they can obtain food passively, they can then use that time to rest (save calories) or on other necessary tasks.

    In the show, most competitors eventually tap out, on the brink of starvation, having failed to obtain enough food. It’s never for a lack of effort. It’s just really hard.

    So what do calories have to do with personal finance?

    Just as not all calories procured are created equal, not all dollars earned are created equal.

    This begs the question:

    If you think about what you do to earn money, are you the contestant trading 2,000 calories of energy for 1,000 calories of food?

    In other words, are you always working?

    landscape photo of man fishing on river near mountain alps symbolizing that not all dollars are created equal as discussed on Think and Talk Money.

    Let’s look at two hypothetical professionals.

    The first professional works 80 hours per week and earns an annual salary of $200,000.

    The second professional works 40 hours per week and earns an annual salary of $120,000.

    Which one would you rather be?

    Would your answer change if we convert the annual salary to an hourly rate?

    On an hourly rate, the first professional ends up earning $48 per hour.

    The second professional earns $58 per hour.

    If you’re still leaning towards the first professional who earns more overall but less per hour, did you think about how valuable that extra 40 hours per week could be?

    That’s time that could be spent on your true passions. It’s time that could be spent with friends and family. That’s time that could also be spent developing a skill or earning income through a side hustle.

    Looking at it another way, what if you could earn the same $200,000 without having to work 80 hours per week? This is where passive income streams come in.

    Like the gill net that catches fish without the active involvement of the fisherman, have you explored ways to make money while freeing up your time for other worthwhile pursuits? This is an unavoidable step on your way to financial freedom.

    For what it’s worth, I’m confident that the survival experts would all choose to be the person who makes more money per hour while also having more time available for other pursuits.

    2. Attitude is everything.

    Watching Alone, you see a wide range of personalities. While each contestant has the resume of a survival expert, one attribute always separates the winners from the losers: attitude.

    The contestants are forced into what would be impossible survival scenarios for the average person. It’s completely understandable to have tense, frustrating, and stressful moments.

    This isn’t me judging the contestants who have poor attitudes. I wouldn’t last an hour in the woods by myself. I’ve never even been camping. My wife caught more fish when she was six than I’ve caught in my whole life.

    This is just my observation that most of the time, contestants have similar survival skills. What separates the winners is their attitude and ability to recognize that things will go wrong.

    When things go wrong, they don’t blame anyone else or play the victim.

    Instead of getting frustrated and quitting, they think of solutions to the problem at hand. This is what so impressed me with Outback Mike.

    Yes, we all need a bit of luck in life to thrive. But, we need to put ourselves in position to benefit from luck when it comes our way. That takes intentional thought and effort.

    I’m guessing we all know very smart and talented people that have bad attitudes. When things don’t go their way, they immediately blame other people. Nothing is ever their fault. They feel entitled to success without doing the work.

    That type of person usually doesn’t lead a very happy or fulfilling life.

    For sure, that person would not last a week on Alone.

    3. Along with starvation, missing family is the hardest part.

    If it’s not starvation, odds are contestants will tap out because they miss their families. The physical challenges of being forced to survive on limited food in rugged conditions is hard enough.

    To do it alone and isolated from your family makes it nearly impossible.

    One of the most enlightening parts of the show is when the contestants reveal their mental struggles to the camera. Since they’re alone, and typically starving, we get to see raw emotion in real time. You learn a lot about the human condition in these moments.

    One unavoidable truth is that us humans are social creatures.

    We need our people. We need love and support and connection. Going through life alone goes against our DNA.

    Even the chance at winning more money than the contestants ever dreamed of is not nearly enough to keep them away from their families any longer.

    This is why I want to encourage you to not isolate yourself with your money decisions. Money touches all aspects of our lives. Don’t try to go it alone. Include your people in your money life. Talk to them. You will only be better for it.

    There’s one other lesson Alone teaches us about the importance of family. A lesson that is extremely relevant to me right now.

    When each season begins and the new contestants are introduced, my wife and I know right away who isn’t going to make it: the people with young kids.

    These people have all the skills necessary to survive. But, those skills don’t matter when they start missing their kids. The emotion is too strong. The longing to be with their kids overcomes all else. They simply do not want to miss another day of their kids’ lives.

    I think about this lesson in the context of our daily lives. Like the professional in our example above working 80 hours per week, at what sacrifice do all those hours come? How many hours away from home is that? How much time away from our kids?

    When I think about those questions, I again think about what I would do with my time if I was financially free.

    I think about my Tiara Goals.

    Have you watched Alone?

    Do you agree with my observations?

    Let us know in the comments below!

  • Debt Snowball or Avalanche Better?

    Debt Snowball or Avalanche Better?

    Let’s take a deeper dive into the two most common strategies for paying back debt when you have multiple loans: Debt Snowball v. Debt Avalanche.

    In our post on how to confidently tackle debt, we discussed that it’s a smart idea to apply one of these strategies. Here, we’ll see why.

    You’ll notice we have lots of charts and numbers in this post. Don’t worry, you don’t need to do any math. I’ll show you how to use a simple online calculator to help you decide with strategy is best for you.

    Before we look at the strategies, always keep in mind the number one rule:

    Always pay the minimum required amount on every loan no matter what.

    Whatever strategy you end up using, always pay the minimum payment on every loan. If you fail to do so, you will be charged penalties and your credit history and score will be negatively impacted. You will also accrue interest on those penalties, compounding your mistake.

    Don’t worry if this sounds confusing right now. We’ll discuss credit cards and the responsible use of credit in detail in upcoming posts.

    The below strategies apply to any excess funds you have left after paying at least the minimum on every loan balance. No matter what, you need to make the minimum payment on each loan every single month.

    What is the Debt Snowball method?

    The first strategy is known as “Debt Snowball.” When you apply the Debt Snowball strategy, the idea is to focus on the loan with the smallest balance first, regardless of interest rate.

    Remember, these strategies are for helping you pay back multiple loan balances.

    Once you have paid off the first loan in full, you move to the loan with the next smallest balance, again regardless of interest rate. The money you had been paying to the first loan can now be rolled into the second loan.

    What is the Debt Avalanche method?

    The second strategy is referred to as Debt Avalanche. With this method, you will prioritize the loan with the highest interest rate, regardless of the balance.

    Once you’ve paid off the loan with the highest interest rate, you move to the loan with the next highest interest rate. Just as before, the money you had been paying to the first loan can now be applied to the second loan.

    You can apply either of these strategies in the same way no matter how many loans you have.

    The first step in choosing a debt payoff strategy is to gather some basic information on each loan that you have.

    For each loan, you’ll need to find the outstanding balance, the interest rate, and the minimum required monthly payment. You can pull this information from your most recent monthly statement.

    Once you have this information, you can plug the numbers into a simple online calculator. By doing so, you’ll get an idea of how much it will cost you (in terms of time and money) to pay off these debts.

    I like using calculator.net.

    They have calculators for all sorts of different purposes, including a Debt Payoff Calculator. Using the Debt Payoff Calculator, you can decide the best payoff strategy for your personal situation.

    You may prefer the quicker emotional wins that come with the Debt Snowball method. Or, you may prefer the savings that come from the Debt Avalanche method.

    There’s no wrong answer. The choice is yours.

    Let’s see how Debt Snowball and Debt Avalanche work in practice.

    Note, for simple illustration purposes, the minimum payments in these examples remain the same throughout the life of each loan.

    Example 1: Two Different Credit Card Balances

    Imagine you have two credit cards with balances owed.

    Credit Card 1: $5,000 balance with a 15% interest rate and a minimum required payment of $150 per month.

    Credit Card 2: $10,000 balance with a 20% interest rate and a minimum required balance of $200 per month.

     BalanceRateMin. Pay.
    Credit Card 1$5,00015%$150
    Credit Card 2$10,00020%$200

    After creating a Budget After Thinking, you’ve determined that you have $1,000 per month to put towards these two loans. Because you have to pay a minimum of $150 to Credit Card 1 and $200 to Credit Card 2, you have $650 left to deploy.

    How should you do it?

    Debt Snowball

    If you apply the Debt Snowball approach, you prioritize paying off the loan with the smallest balance. That means paying $800 to Credit Card 1 ($150 minimum payment plus $650 remaining funds) until that loan is paid off completely. The remaining $200 needs to be applied to cover the minimum payment on Credit Card 2.

    Once Credit Card 1 is paid off completely, you will add that $800 payment to Credit Card 2 for a total payment of $1,000.

     BalanceRate.Min. Pay.Snowball
    Credit Card 1$5,00015%$150$800
    Credit Card 2$10,00020%$200$200

    Using calculator.net, you’ll see that it will take you 18 months to eliminate both loans with the Debt Snowball approach. It will cost you a total of $17,303.70, of which the total interest is $2,303.73.

    Importantly, Credit Card 1 will be completed paid off in 7 months.

    Debt Avalanche

    Now, let’s see what happens when we apply the Debt Avalanche approach. Under this approach, you would prioritize Credit Card 2 because it has the higher interest rate. That means you would pay $850 to Credit Card 2 and only the $150 minimum payment to Credit Card 1. Once Credit Card 2 is paid off, you would pay the full $1,000 to Credit Card 1.

     BalanceRateMin. Pay.Avalanche
    Credit Card 1$5,00015%$150$150
    Credit Card 2$10,00020%$200$850

    Using calculator.net, you’ll see that it will take you 18 months to eliminate both loans with the Debt Avalanche approach. You’ll end up paying a total of $17,071.84, of which the total interest is $2,071.87.

    It will take you 14 months to eliminate the first loan, Credit Card 2.

    Now, we can compare the results of using Debt Snowball or Debt Avalanche.

    Under the Debt Snowball approach, you’ll pay $231.86 more in interest. It will take you 18 months to eliminate both debts under each approach.

    However, under the Debt Snowball approach, it will only take you 7 months to completely erase one loan. Under Debt Avalanche, you will not erase the first loan until 14 months have gone by.

    Now that you have this data, you can decide whether you prefer Debt Snowball or Debt Avalanche. Some people may prefer the emotional win of eliminating one loan completely after 7 months using the Debt Snowball method.

    Other people will prefer the Debt Avalanche approach, which results in more savings. The tradeoff is that they won’t eliminate any loans completely until month 27.

    As we said before, there is no right or wrong answer. It is entirely a matter of personal preference.

    Why not just pay the same amount to each credit card?

    If you pay $500 to each credit card from the beginning, let’s see what happens:

     BalanceRateMin. Pay.Equal
    Credit Card 1$5,00015%$150$500
    Credit Card 2$10,00020%$200$500

    You will end up paying off both loans in 18 months and paying a total of $17,249.39, of which the total interest is $2,249.42. You won’t eliminate any loans completely for 11 months when Credit Card 1 is paid off.

    Compared to the Debt Snowball approach, splitting the payments evenly means four more months to pay off the first loan completely. That means you’re waiting longer for your first emotional win.

    Compared to the Debt Avalanche approach, you’ll end up paying $177.55 more in total interest. If you’re looking to maximize your savings, splitting payments is not the way to go.

    As you can see, whatever your preference is, it makes sense to pick either Debt Snowball (fastest emotional win) or Debt Avalanche (most money saved).

    Personally, I prefer the Debt Snowball approach.

    I prefer the Debt Snowball approach because of the emotional win that comes with eliminating a debt in less time, sometimes even twice as fast.

    That victory is more important to me than saving $231.86 spread out over 18 months (the length of time it takes to eliminate both debts).

    If you prefer paying the least amount in interest, I won’t argue with you. There’s nothing wrong with saving money. It’s a personal choice.

    That said, there is one instance where I prefer Debt Avalanche to Debt Snowball.

    If you have Bad Debt, like credit card, always pay that debt first.

    Bad Debt typically has significantly higher interest rates than other forms of debt, like student loans, auto loans, or mortgages.

    Compare these current (February 2025) average interest rates for various types of loans:

    It’s not hard to see that credit card debt comes with a significantly higher interest rate than any other form of common debt.

    This is why I recommend you always pay your credit card debt first.

    Let’s look at a second example to illustrate this point.

    Example 2: Auto Loan and Credit Card Balance

    Auto Loan: $8,000 balance with an interest rate of 5% and a minimum required payment of $50 per month.

    Credit Card: $20,000 balance with an interest rate of 20% and a minimum required payment of $400 per month.

     BalanceRateMin. Pay.
    Auto Loan$8,0005%$50
    Credit Card$20,00020%$400

    Just as before, you’ve determined that you have $1,000 per month to put towards these two loans. Because you have to pay a minimum of $400 to your credit card and $50 to your auto loan, you have $550 left to deploy.

    How should you do it?

    Debt Snowball

    If you apply the Debt Snowball approach, you would prioritize paying off the loan with the smallest balance. That means paying $600 to your Auto Loan until that loan is paid off completely. The remaining $400 needs to be applied to cover the minimum payment on your credit card debt.

    Once the auto loan is paid off completely, you will add that $600 to the credit card debt for a total of $1,000.

     BalanceRateMin. Pay.Snowball
    Auto Loan$8,0005%$50$600
    Credit Card$20,00020%$400$400

    Using calculator.net, you’ll see that it will take you 37 months to eliminate both loans with the Debt Snowball approach. It will cost you a total of $36,753.16, of which the total interest is $8,753.18.

    Importantly, the auto loan will be completed paid off in 14 months.

    Debt Avalanche

    Now, let’s see what happens when we apply the Debt Avalanche approach.

    Under this approach, you would prioritize the credit card loan because it has the higher interest rate. That means you would pay $950 to the credit card and only the $50 minimum payment to the auto loan. Once the credit card is paid off, you would pay the full $1,000 to your auto loan.

     BalanceRateMin. Pay.Avalanche
    Auto Loan$8,0005%$50$50
    Credit Card$20,00020%$400$950

    Using calculator.net, you’ll see that it will take you 34 months to eliminate both loans with the Debt Avalanche approach. You’ll end up paying a total of $33,822.14, of which the total interest is $5,822.17.

    It will take you 27 months to eliminate the credit card debt.

    We can again compare the results of using Debt Snowball and Debt Avalanche.

    Under the Debt Snowball approach, you’ll pay $2,931.01 more in interest. It will also take you three months longer to eliminate both debts.

    On the plus side, your auto loan will be completely paid off in 14 months, which is nearly twice as fast as with Debt Avalanche.

    Some people may still prefer the emotional win of eliminating one loan completely after 14 months using the Debt Snowball method.

    For me, the price of that emotional win has gotten too expensive. I would prefer to save the $2,931.01 and have both loans paid off in less time, even if that means waiting longer to pay off a single loan.

    If you do this exercise with any normal credit card compared to another form of loan, you’re likely going to find that the credit card interest rates are so high that you should target those loans first.

    Do you prefer Debt Snowball or Debt Avalanche?

    As we said before, there’s no right or wrong answer. Money decisions are emotional. Paying off debt is the perfect example.

    Using a simple online calculator can help you make the best decision for your situation. All you need to do is find the balance, interest rate, and minimum payment for each of your loans and the calculator will do the rest.

    Whichever method you choose, stick with it. Save yourself the stress of doing mental gymnastics each month.

    The most important thing is that you are making your payments every month.

    Have you used Debt Snowball or Debt Avalanche?

    Which method do you prefer?

    Let us know in the comments below.  

  • How to Pay Off Debt on a Budget

    How to Pay Off Debt on a Budget

    In this post, we’ll learn how to pay off debt on a budget. In our initial series on debt, we first looked at some scary stats about how common debt is in society.

    We learned that 8 out of 10 people have some form of debt. We also learned that nearly half of credit card users carry a balance. Finally, we saw that consumer debt is a worldwide problem.

    By recognizing that debt is something that impacts nearly all of us, I hope that you stop feeling alone if your’e in debt. There’s no reason to be ashamed. You are not a bad person.

    If people were more willing to talk about money, you may not have had those feelings in the first place. You may have already learned how to pay off debt on a budget.

    Understanding how you got into debt is the first step in working your way out. That’s why we next looked at three big reasons why people are in debt.

    Of course, there are other explanations, but in my opinion, these three explanations sum it up:

    1. We can be careless with our money.
    2. We don’t plan ahead for emergencies.
    3. We try to keep up with the Kardashians.

    With these common causes in mind, we can now start focusing on how to pay off debt on a budget.

    These strategies can work whether you are trying to eliminate Good Debt or Bad Debt.

    In my experience, both Good Debt and Bad Debt can feel heavy. While Good Debt can help you achieve financial freedom, the debt will still hang over your head until it’s paid off.

    Before we get to my top 10 strategies to eliminate debt, let’s get one thing straightened out:

    If you’re looking for a magic wand to immediately erase all your debt, you’re in the wrong place.

    Paying off debt takes time. It requires patience and discipline. You may not notice much progress in the beginning, but you need to stick with it.

    It most likely took you years to get into debt, so be reasonable with your expectations of how long it will take to pay it off.

    My top 10 strategies for how to pay off debt on a budget.

    1. Write down your Tiara Goals.
    2. Create a Budget After Thinking so the debt stops growing.
    3. Prioritize Later Money funds for debt.
    4. Apply our Top 10 strategies for staying on budget.
    5. Talk to your people about paying down debt.
    6. Track your net worth and savings rate for small wins.
    7. Pick a strategy and stick with it: Debt Snowball v. Debt Avalanche.
    8. Think about loan consolidation.
    9. Get a side hustle.
    10. Don’t let yourself fall backwards.

    1. Write down your Tiara Goals.

    Have you ever asked yourself what you would do with financial freedom?

    I asked myself that powerful question on a beach years ago and came up with my Tiara Goals.

    Debt is a major obstacle on the way to financial freedom. To help you stay motivated to eliminate debt, write down your version of Tiara Goals. By reminding yourself what you’re actually striving for, you’re more likely to stay on track.

    Whenever we talk about good money habits, it always starts with establishing strong motivations. This is especially true when it comes to debt. There are too many temptations that can push us off track.

    When you’re faced with these inevitable temptations, take a look at your Tiara Goals. I keep my Tiara Goals in my notes section on my phone. I also have a picture on my phone of the original sheet of notebook paper I scribbled on.

    All it takes is a quick glance at my most important life values to overcome whatever temptation is in front of me.

    Getting out of debt is not easy. Make it easier by regularly reminding yourself what you would do with financial freedom.

    2. Create a Budget After Thinking so the debt stops growing.

    If you’re currently in debt, it’s crucial that you stop that debt from getting larger. Think about it. If you’re paying off $1,000 of credit card debt each month, but you’re still spending $1,200 more than you earn, your efforts will be for nothing.

    Your debt is growing faster than you’re paying it off. You’re not getting any closer to being debt-free.

    That’s why to eliminate debt, you need to first create a Budget After Thinking.

    Once you’ve stopped the disappearing dollars and learned where your money is going each month, you can make thoughtful decisions to pay off debt on a budget.

    Then, you can be confident that any money you allocate to debt will actually lower your debt balance.

    3. Prioritize Later Money funds to pay off debt.

    As we’ve discussed, the art of budgeting is to generate fuel for your Later Money goals. The more fuel you can generate each month, the faster you will achieve your personal finance goals.

    There are lots of options on what to do with your Later Money. For example, you can invest in real estate or the stock market.

    When you’re in debt, I recommend you prioritize using your Later Money to eliminate that debt. This is especially true if you have Bad Debt, like credit card debt. Your number one money focus needs to be to eliminate that debt.

    This is the key to learning how to pay off debt on a budget.

    There’s a good reason to focus on paying off your Bad Debt.

    The interest rate on Bad Debt is generally very high. The amount you pay in interest each month will be significantly greater than what you may reasonably expect to earn through investments.

    If you only have Good Debt, like student loan debt, you have some more flexibility in whether to focus on that debt or your other investment goals. This is because Good Debt generally carries lower interest rates, so your investment returns may match or even exceed what you’re paying in interest.

    In this scenario, I suggest that you consider splitting your Later Money between debt pay down, savings, and investments. This is what my wife and I are currently doing in 2025.

    Seeing your savings and investments grow while focusing on how to pay off debt on a budget can provide an emotional lift. Establishing good savings and investment habits now will also have longterm benefits that should survive your debt phase.

    4. Apply our Top 10 Strategies for staying on budget.

    Our Top 10 Strategies for staying on budget will help you generate more money to allocate to debt. These tips are crucial if you’re trying to learn how to pay off debt on a budget.

    For example, when you see something that you might want to buy, make a note in your phone instead of buying it right away. After a couple weeks, you probably won’t even want that thing anymore. Take that money you didn’t spend and put it towards your debt.

    As another example, how about playing The $500 Challenge Game? When you come in under budget that month, use the excess funds to pay down debt.

    When you have debt, applying our Top 10 strategies to staying on budget can teach you something powerful. You’ll see for yourself that the emotional high of paying down debt is better than the feeling you’d get from spending that money on things you don’t care about. It’s important not to ignore these emotional wins when learning how to pay off debt on a budget.

    5. Talk to your people about how to pay off debt on a budget.

    Stop me if you’ve heard this before:

    Why do we insist on struggling with our money choices alone instead of talking to the people we trust and love?

    Talking money is not taboo. That includes talking about our current money goals and money challenges. Of course, it includes talking about how to pay off debt on a budget.

    I’m currently focused on paying down HELOC debt, building up my emergency savings, and funding my kids’ 529 college savings plans.

    What are your current money priorities? If you don’t want to share with us, are you sharing with your friends or family?

    I struggled with debt when I began my career as a lawyer. For years, I kept that to myself. I wish I had been more open. I’ve recently learned that many of my friends were struggling in the same way.

    The problem was that none of us talked about it. I think about how much stress we could have saved each other if we were just willing to talk about money like we talked about everything else. Instead, we hid our truths from each other. Even worse, we likely enabled each other’s poor spending habits.

    I now know that it didn’t have to be that way. I would have been better off if I was open about it.This part still bothers me today: I also might have helped my friends facing the same challenges just by starting the conversation.

    6. Track your net worth and savings rate for small wins.

    Remember that your net worth grows when you reduce your liabilities, meaning debt. When we think of net worth, it’s common to focus on growing our assets. Don’t forget that reducing your debts has the same impact on your balance sheet.

    For example, when tracking your net worth, eliminating $1,000 in debt is the same as an investment that grows by $1,000.

    Even when you’re focused on how to pay off debt on a budget, tracking your net worth can be very motivating. Every payment you make to reduce that debt improves your net worth.

    This is especially helpful if you are focused on paying off student loans or paying down a mortgage. You may not have many appreciating assets, but you can still make a positive impact on your net worth by reducing your debt.

    The same logic applies to tracking your savings rate. Measure and feel good about each additional amount you dedicate to eliminating debt. The goal is to stay motivated while you pay off debt on a budget.

    7. Pick a strategy and stick with it: Debt Snowball v. Debt Avalanche.

    There are two common strategies to consider when you hope to pay off debt on a budget. These strategies are referred to as “Debt Snowball” and “Debt Avalanche.”

    Debt Snowball means paying down your smallest debt balance first, regardless of interest rate. When you’ve paid off that loan completely, you then move to the next smallest balance, again regardless of interest rate.

    Debt Snowball is ideal for people that are motivated by the emotional wins that come with eliminating a loan completely, even if it costs more money in interest in the long run.

    Debt Avalanche means you pay down the debt that has the highest interest rate first, regardless of the balance. Once that debt is gone, you move to the loan with the next highest interest rate.

    Debt Avalanche is for people who would prefer to pay less overall interest, even if it will take longer to pay off a single loan and receive the emotional win.

    A snowball has grown large due to the force with which it rolls, tumbling down a forested mountain during the snowy season, lifting small amounts of snow along its path, illustrating the preferred method for how to pay off debt on a budget.

    We’ll discuss the pros and cons of each strategy in a subsequent post. Some people will prefer the emotional wins of the Debt Snowball method, while others will prefer the mathematical advantage of the Debt Avalanche method.

    Personally, I use the Debt Snowball method.

    I value the emotional wins of eliminating a debt entirely, even if it ends up costing me more in the long run. I am currently applying the Debt Snowball method to pay off HELOC debt.

    I’ve experienced firsthand that our money choices have more to do with emotions than they do math. If you prefer to play it strictly by the numbers, I completely understand.

    The key is that whichever strategy you pick, stick with it. You’ll save yourself a lot of unnecessary mental gymnastics by choosing one approach and then moving on.

    One word of caution: whichever method you choose, be sure to always pay the minimum on all of your loans. Otherwise, you’ll be in violation of your loan terms and face devastating penalties.

    The idea with either of these methods is to allocate whatever funds remain to the single loan you have prioritized after paying the minimum on all loans first.

    8. Think about loan consolidation or balance transfers.

    Whether you have credit card debt, student loan debt, or even mortgage debt, you may have the option to consolidate each type of loan into a single loan. If you do your homework, you should end up with a lower overall interest rate and have only one loan payment to make each month.

    If you choose to go this route, make sure you fully understand the fine print involved.

    For example, if you’re thinking about consolidating your student loans, you’ll end up sacrificing certain loan forgiveness provisions that accompany federal loans.

    The same caveat applies when considering a credit card balance transfer. A balance transfer is when you move the balance from one credit card to a different credit card with a lower interest rate. Most major credit cards accept balance transfers from other banks’ credit cards.

    The main reason to consider a balance transfer is if the card you are transferring into carries a significantly lower interest rate than your current card. In some instances, you may even qualify for a promotional rate with no interest charged for a limited period of time.

    I used balance transfers when I was focused on eliminating credit card debt at the beginning of my career. I did my homework and found a card that was advertising 0% interest for 12 months with no balance transfer fees. That meant that for an entire year, I paid no interest. Every payment I made went directly to lowering my overall debt.

    If you’re considering a balance transfer, be mindful that there are usually upfront fees involved, usually around 3%. That fee may end up cancelling out any benefit from doing the transfer in the first place.

    9. Get a side hustle to help pay off debt on a budget.

    You’re not too busy or too important for a side hustle.

    At the end of the day, there are really only two ways to more quickly pay off debt on a budget: spend less money and/or make more money.

    We already talked about creating a Budget After Thinking to help on the spending side.

    If you really want to get rid of your debt faster, earning more money and the same time you’re spending less money is a dominate combination.

    If you take on a side hustle, you can use every dollar you earn to pay off debt. Since this is new money you’re earning, you shouldn’t need it to fund your Now Money or Life Money.

    Avoid the temptation of using that money on things you don’t really want anyways. Think about how much faster that debt will disappear if you’re able to throw additional money at it each month.

    If you’re not ready for a side hustle, the same logic applies anytime you earn a bonus or commission at your primary job. Put that money to good use by paying down your debt.

    10. Don’t let yourself fall backwards while you pay off debt on a budget.

    When you do succeed in eliminating a debt, don’t let yourself fall back into bad habits. It’s hard to pay off a debt. It takes time. It takes patience and discipline.

    Don’t let it all be for nothing.

    When you pay off a loan, celebrate that accomplishment!

    Be proud of yourself and let that good feeling motivate you to continue on your journey towards financial freedom.

    Before you know it, debt will be part of your past life. You can shift all your attention to the opportunities that comes next for you and your family.

    Let us know in the comments below:

    Have you used any of these strategies to pay off debt on a budget?

    What about any other strategies to pay off debt on a budget that have worked for you?

  • Financial Freedom and Tiara Goals

    Financial Freedom and Tiara Goals

    A few months before we got married, my wife and I took a trip down to Florida. One afternoon, I headed out to the beach with a book, a notebook, and a few ice cold beverages.

    The weather was perfect. It was sunny but not too hot. Blue skies and just a slight breeze. The beach was quiet that afternoon. I set up my chair to face the ocean and started reading. This little break was exactly what I needed in the middle of “wedding planning.”

    I don’t recall the book I was reading that day. I’ve been meaning to look back at my journals to see if I can figure it out. Anyways, I’ll never forget what I learned about myself that afternoon.

    The author wrote about the power of financial freedom. We’ve discussed financial freedom in previous posts. The basic idea is that when you are financially free, you can choose how to live your life on your own terms. You can make important decisions based on what truly matters to you, as opposed to being forced down a certain path for money reasons.

    On the beach that day, the concept of financial freedom was not new to me. I had read about it for years. The concept really hit home that afternoon when the author asked a simple but powerful question:

    What would you do with financial freedom?

    Maybe the question really resonated with me because I was about to get married. It’s only natural to daydream about what life would be like after the wedding, even though my wife and I had been a couple for six years by that point.

    Over the years, we had talked a lot about what we wanted our lives together to look like. We knew long before the wedding how we each felt about major topics like starting a family and where we wanted to live.

    We were also on the same page when it came to money decisions. My wife and I met early on during my personal finance journey, not long after I had determined to get my money life sorted out. My wife still jokes that she was my first personal finance student.

    By the time we got married, I had been on my personal finance journey for about seven years. I was out of debt and was starting to think about the options that were now available to me. It was around this time that I learned one of the most powerful words in personal finance:

    DINK

    Back then, my wife and I were both working as lawyers in Chicago. We didn’t have any kids. I didn’t realize it until later on, but we were DINKs.

    DINK means “Dual Income No Kids.”

    When you’re in a relationship where you have two incomes coming in and are sharing financial responsibilities, you have the opportunity to supercharge your Later Money goals.

    If you are currently a DINK, or will soon be a DINK, please pay extra attention here.

    Don’t waste this powerful opportunity to supercharge your Later Money goals.

    This is what my wife and I were able to do, even if we didn’t know what a DINK was. We each had good incomes coming in and our monthly expenses were low. The two of us could comfortably share an apartment, instead of each paying for an apartment separately. That’s major savings each month.

    We didn’t have to worry about childcare. We were young so the odds of unexpected medical care were lower. All things considered, it was pretty easy to keep our Now Money to a minimum with plenty to spare for Life Money.

    This allowed us to fuel our Later Money goals, like having a nice wedding and saving up for a home or rental property. We had money in the bank and seemingly endless choices.

    And, I didn’t want to screw it up.

    Which brings us back to me sitting on the beach, thinking about what I would do with financial freedom, with maybe 1 or 2 less beverages in the cooler.

    What did I really want out of life?

    I put my book down and looked off into the ocean, thinking about what I wanted out of life. I started thinking about what my ideal life would look like. By this point, I was engaged in the type of deep thought where you don’t even realize what’s happening around you.

    It quickly occurred to me that I had never truly thought about what I wanted in life. Sure, I had thought about things like having a family and being able to take vacations.

    But, I never carved out time to purposefully think hard about what I actually wanted. I had never asked myself what truly motivates me.

    Without a doubt, I had never written down the answer to that powerful question: what would I do with financial freedom?

    I hadn’t ever allowed myself to dream about financial freedom.

    The truth is, I don’t think I had ever visualized a life that wasn’t dominated by a full-time job. Up to that point, my whole life had revolved around getting an education and then getting a job. I never pictured a world where I might not need a full-time job to provide for myself and eventually my family.

    I had read about the concept of being financially free, but it always seemed like a possibility for other people, not me. Writing this years later, I feel sad for that version of myself for having such limiting beliefs.

    That said, I completely understand why I felt that financial freedom was unattainable for someone like me. This was in the phase of my life where I had been preoccupied with eliminating debt. Because of that debt, I didn’t allow myself to dream about what life could look like if money wasn’t holding me back.

    This was also before my wife and I had rental properties. It was before we recognized the impact of side hustles and multiple streams of income. I had read about and understood these concepts in theory, but I hadn’t put what I learned into practice.

    That day on the beach, it was like a light went on in my head.

    After years of patience and discipline, I had climbed out of debt. I was now a DINK with Later Money in the bank waiting to be deployed. That meant I had created opportunities.

    I wasn’t financially free, but for the first time in my life, I allowed myself to accept that financial freedom was possible for me.

    This was one of the most powerful moments in my life.

    With that realization in my mind, I walked into the ocean to cool off and think some more.

    What would I do with financial freedom?

    There in the ocean, I wasn’t thinking about dollars or career goals. This was more important than that. I was thinking about what I wanted my life to look like if money was not an issue. I was thinking about what I would do with my time if I was in complete control.

    Floating there in the water, it was like I had an epiphany. Everything suddenly became clear to me. I ran out of the ocean to get back to my chair before I forgot what just popped into my head.

    I whipped out my top bound spiral notebook and started writing with a blue pen. Minutes later, I had written down seven answers to the question: what would I do with financial freedom?

    My “Tiara Goals” were born.

    Nearly eight years later, I still have that sheet of notebook paper. I keep it safe in a leather binder protected by a laminated page holder. It has those familiar tear marks on the top of the page where the paper connected to the spiral binding.

    Even though I have these seven goals memorized by now, I still look at this sheet of paper every month. Looking at this sheet is an incredible reminder of that day on the beach when everything became clear to me.

    A quick aside, I call my goals “Tiara Goals” because it’s a silly, but meaningful, description to me. Have some fun with what you name your goals. If you do it right, you’ll be thinking and talking about these goals a lot.

    What are my Tiara Goals?

    So, here are my original Tiara Goals from 2017, as scribbled on that sheet of paper and edited for clarity:

    1. Be with my wife and kids as much as I want. Dad never missed a game. Mom never missed a game. Nana never missed a game.
    2. Not be forced to commute to work on Friday or Tuesday or whatever day, if I need that day for myself.
    3. Choose how to spend my working hours (representing clients, teaching, volunteering, building a business, etc.).
    4. Continue to study and learn constantly.
    5. Take at least one big trip every year.
    6. Never turn down an exciting or smart opportunity because I can’t afford it.
    7. Work alongside people that value my contributions.

    Keep in mind that I wrote these goals before I had kids and before I was even married. This was also years before the pandemic when working from home was a foreign concept to most of us.

    I think it says a lot that I was thinking about these things way back then.

    Travelers couple look at the mountain lake. Adventure and travel in the mountains region in the Austria after thinking about what to do with financial freedom.

    In a future post, we’ll unpack each of these goals.

    While I haven’t reached financial freedom yet, I think I’m doing a pretty good job already living by these fundamental values.

    How do my Tiara Goals help me today?

    My Tiara Goals motivate me to continue striving for financial freedom. We’ve talked extensively about the importance of having strong money motivation in our lives. When we have these powerful motivations, we can stay on budget, get out of debt, and fuel our Later Money goals.

    We can obtain Parachute Money. We can choose to do meaningful work and choose to spend more time with people who are meaningful to us.

    No, it’s not easy to achieve financial freedom. But, it is a whole lot easier when you know what you are striving for in the first place.

    That’s why at the beginning of my financial wellness class, I ask my students to write down their own versions of Tiara Goals. I want to help them avoid the limiting beliefs that I had before that day on the beach.

    My favorite part of class is when my students share their Tiara Goals.

    Without a doubt, this is always my favorite part of class. When I say I’m on a mission to convince you that talking money is not taboo, I think of my students sharing their goals. I get so energized by hearing their goals. My students report the same sentiment after learning what drives their friends and peers.

    Over the years, my students have shared countless impactful stories. As unique as these goals can be, it’s remarkable how most of us want the same things in life. Year after year, I hear the same motivating forces:

    • Spend more time with my family.
    • Travel and enjoy experiences around the world.
    • Stay healthy and fit.
    • Provide for my children and my aging parents.
    • Work for a cause I believe in.
    • Have time to volunteer.

    I also regularly hear one thing that my students, and the rest of us, don’t want:

    • I don’t want to be stressed about money.

    Isn’t it telling that year after year, most of us want the same things in life? I’ve yet to hear anyone say that they dream about working endless hours and not taking their PTO.

    Be specific, but not too specific, when you think about financial freedom.

    When we talk about what we do with financial freedom in class, I encourage my students to get specific without being so precise that the goal becomes restrictive. When we’re thinking about goals related to financial freedom, the idea is to focus more on big-picture, core values.

    There will be a time and a place to strategize how to get there. The point here is to help define what you’re even trying to get in the first place.

    For example, instead of “spending more time with family,” I would suggest something like, “never miss my child’s soccer game or dance recital because of work.”

    Instead of “travel around the world,” I would suggest “at least one overseas trip of at least 2 weeks per year.”

    Adding that little bit of specificity will help you visualize what you’re striving for with your money decisions.

    Don’t get discouraged if you think you are not close to financial freedom.

    Even when you feel like financial freedom is only a distant dream for you, it’s important to actively think about what you want out of life. I’d even suggest that the further away you feel from financial freedom, the more important it is to think about what it would mean for you.

    When you’re at your lowest point, visualizing what you would do with financial freedom is a helpful escape.

    If you haven’t ever actively thought about what you would do with financial freedom, hopefully this post will encourage you to do so.

    Don’t forget to write down whatever you come up with.

    I suggest you share your version of Tiara Goals with your friends and loved ones. It’s OK to keep some of your goals private. By sharing, you will get the benefit of them cheering you on. You’ll also hopefully encourage them to share their goals with you, which can be very inspiring.

    Have you thought about what you would do with financial freedom?

    Have you ever written it down or shared your answers with others?

    What are your Tiara Goals?

    Let us know in the comments below!

  • Money on My Mind: Always Working?

    Money on My Mind: Always Working?

    Simple question. Don’t lie to yourself.

    Do you work too much?

    I’m not asking if you work too hard.

    I mean too much, as in too many hours of your life dedicated to a job.

    I started thinking about this question after recently coming across a few surveys.

    Let’s talk it out. Let me know what you think in the comments below.

    I am shocked by these survey results.

    I’m not often surprised by survey results. This is one of the rare exceptions.

    According to a recent report from MyPerfectResume, 81% of workers worry they may lose their jobs in 2025.

    8 out of 10 people! Is it just me, or is that mind-boggling?

    On the flip side, only 4% of workers report no concerns about losing their jobs.

    These numbers are shocking to me, but maybe I shouldn’t be that surprised. As Yahoo Finance explains,

    Many large corporations have already announced or kicked off a round of layoffs, including Chevron, CNN, Estee Lauder, Meta, and Southwest Airlines. And that, of course, doesn’t count the thousands of workers terminated under Elon Musk’s campaign to reduce the federal workforce.

    My mind immediately jumps to a follow-up question:

    How many of those people worried about losing their jobs have an emergency savings account?

    Sadly, the answer is probably very few people have meaningful savings.

    Surveys like this one motivate me to continue bringing attention to core personal finance issues, like having adequate emergency savings. This is why I so strongly believe that talking about money is not taboo.

    Life is too short and too precious to be in a constant state of worry. Is there any sense worrying about something, like getting laid off, when you have practically no control over whether it happens or not?

    Instead of worrying about what we can’t control, I think it’s better to use our energy on what we can control, like saving up for emergencies.

    Hopefully, you’re not one of these people worried about losing your job. If you are, there’s no better time than right now to prioritize your savings.

    If the first survey shocked me, this one just makes me angry.

    According to this Pew Research Center study, 46% of US workers take less paid time-off than they’re offered.

    I need to say that again.

    Nearly half of US workers choose to work more days than they are required to!

    And, it gets worse if you’re a high earner or highly educated.

    According to the same study, the more money you earn, the less likely you are to take your full paid time-off.

    The more educated you are, the less likely you are to take your full paid time-off.

    The more senior you are, like being a manager vs. non-manager, the less likely you are to take your full paid time-off.

    If the first survey mentioned above surprised me, this one just makes me angry.

    Do you recognize a difference between working hard and always working?

    Don’t misunderstand why these results make me angry. It’s not about working hard vs. slacking off. It’s not about being a good employee vs. a bad employee. I am 100% in favor of people working hard and working with integrity to get the job done.

    My frustration is that somewhere along the way, “working hard” turned into “always working.”

    By the way, before you accuse me of being a slacker, I am no stranger to working hard.

    I work full-time as a lawyer, manage 11 rental properties, teach law school courses on Wednesdays and Sundays, and publish three blog posts per week. Still, none of these things are more important to me than spending quality time with my family.

    Years ago, I first read Tim Ferris’ game-changing book, The 4-Hour Workweek. Ferris described how his small business took off as soon as he started doing less, not more. He empowered his staff and stopped himself from getting in the way. Not only did his company thrive, he had more time available to pursue what really mattered in his life.

    Since writing The 4-Hour Workweek, Ferris has become one of the most influential thought leaders around. To learn more from Ferris, visit his website here.

    Why do you work so much?

    If you’re one of these people choosing to work more hours instead of taking your earned vacation time, have you ever asked yourself why?

    Keep in mind, these are days off that your company has already agreed to give you. You earned them. Why are you not taking them?

    Are you worried about getting fired? Passed up for a promotion? Is your self-worth tied to how many hours per week you work?

    Years from now, when your grandkids are huddled up for story time, do you plan on telling them how much you worked and how many life experiences you skipped out on?

    These are hard questions to truthfully answer. If you’re being honest with yourself, you may start thinking about another set of questions:

    Is this job the right job for me? Do I want to spend my life stressed from working too much? What would be a better use of my working hours so I can spend more time doing the things that I love with the people that I love?

    I’ve spent a lot of time thinking about these questions. I’ve realized that I’ll never understand what the point is of working so much at the cost of spending time with the things and people you love.

    Maybe I’m the weird one. But, I don’t think I am. Unfortunately, the data backs me up and confirms that working too much can have series consequences.

    Fortunately, we can learn from strategies geared towards retirees. Let me explain.

    Apply lessons for retirees to your life today.

    Writing for BBC Science Focus Magazine, Hayley Bennett shares 5 expert tips for a healthy post-work life.

    The tips include finding a purpose, strengthening your body, and rebuilding your brain.

    Woman on beach in summer thinking about spending more time during her working years living with purpose and focused on health as learned on Think and Talk Money.

    When I came across this story, I immediately thought that we shouldn’t wait for retirement to do these things. This is solid advice for all of us, at any stage in our lives.

    Do you know what sounds pretty great to me?

    A life filled with purpose sounds pretty great. The same goes for being fit and smart.

    The challenge is that work often gets in the way.

    When we let this happen, the consequences can be catastrophic.

    As just one example, lawyers as a profession have long struggled with mental health issues. I first learned about these challenges during law school orientation. Today, I see it in practice. Being a lawyer is a hard way to make a living. When you work as a lawyer, the hours are intense and stress levels are consistently high.

    In 2023, the Washington Post analyzed data from the U.S. Bureau of Labor to determine what the most stressful jobs are. The study confirmed that lawyers are the most stressed.

    Of course, lawyers are not alone in struggling in this regard due to long, stressful hours. The same study showed that people working in the finance and insurance industries were right up there with lawyers as being highly stressed.

    Anecdotally, I’ve personally talked to people recently in a wide variety of other fields, like consultants and small business owners, who are frustrated for the same reasons.

    The point is, regardless of industry, many of us struggle with work stress.

    What can we do about it?

    That’s a complicated question with many possible answers. For starters, I firmly believe that by building strong personal finance habits, we can create more opportunities to find purpose and practice good health.

    I recommend you think back to our conversations about Parachute Money and why you should want to be good with money. When you’ve made thoughtful money choices, you can choose to live a life right now on your terms rather than waiting until retirement.

    I agree with what you’re probably thinking. These are not easy or fun topics to think about. However, in my opinion, it’s much worse to let life go by while failing to take responsibility.

    Am I wrong about people working too much?

    Maybe I’m wrong about people working too much?

    I don’t think I am.

    The data paints a very sad picture for lawyers, and I have to believe anyone else working long and hard hours. If you have similar data about your profession, please share it with us. I hope I’m wrong about what that data will show, but I fear I’m right.

    As always, let us know what you think in the comments below.

    And, thank you for continuing to share stories you’ve come across that would be good to discuss here.