Revenge Spending: How It’s Sabotaging Your Financial Relationship

Mindy:
Welcome to the BiggerPockets Money Podcast show number 189, where we talk with Teri Slater about changing your mindset and habits in order to get out of debt.

Teri:
There was no question about what the end goal was, and the end goal was like, no more debt, right? Like, we’re paying this off, and there’s not any more debt. That was just like, that was a line in the sand that was drawn back when we first started, which was around 2012. That line had already been drawn, so we knew that we weren’t going to cross that. But I think even if it is kind of smooth sailing or you’re not facing $200,000 in debt, it’s a smaller hurdle. Either way, for some people they can go at it with an intensity that is just like, “I don’t care if I sleep at night, I don’t care if I eat, I’m just going to work, work, work and pay off the debt.” And for some of us, we really need to kind of build in these other tiny rewards. I’m kind of an advocate for that.

Mindy:
Hello. Hello. Hello. My name is Mindy Jensen and with me, as always, is my flipping awesome co host, Scott Trench.

Scott:
We really live in the moment for these intro analogist. Thank you, Mindy.

Mindy:
Scott and I are here to make financial independence less scary, less just for somebody else. To introduce you to every money story, because we truly believe financial freedom is attainable for everyone, no matter when or where you’re starting.

Scott:
That’s right. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, start your own business or pay off $200,000 in debt over six years, we’ll help you reach your financial goals and get money out of the way so that you can launch yourself towards those dreams.

Mindy:
Scott, I’m so excited to talk to Teri today, because like you said she had $200,000 in debt. You know what else she had? A degree in finance, which as she says, “I got a degree in finance, only to realize that it taught me nothing about personal finance.” After taking the class with her husband, she realized they had dramatically different spending habits, and a lot of expensive bills based on past decisions and commitments. Today, Teri is going to talk about a phrase called Revenge Spending, which I think is probably far more prevalent than we even recognize. I love that phrase, Revenge Spending. That’s so descriptive. We talk about being paycheck to paycheck, even when that paycheck is high. We talk about keeping up with the Jones’s and learning to say no.
Teri Slater, welcome to the BiggerPockets money podcast. I’m so excited to talk to you today.

Teri:
Thank you. I’m excited to be here. Thanks for having me.

Mindy:
Let’s jump right into it, because I know we’ve got a lot to cover today. Where does your journey with money begin?

Teri:
Well, I would say that my journey with money really begins by I got into some credit card debt really early on in college. This was back in the day when they would let you get a free baseball hat for a college credit application. So I racked up a lot of debt really, really early on in life. Student loans went on and on for a really long time. I was in school for like 10 years. So I ended up getting into a lot of debt. I paid off all of my credit cards at one point with the help of a credit counseling agency. The sad part about that is that, in hindsight, I thought I was out of debt because I had paid off my credit cards, but I still had a car loan, I still had student loans, so I wasn’t actually out of debt. And then once I bought my first house, I hadn’t had credit cards for a while at that point. And I still hadn’t dealt with my own behavioral issues. So I actually went back into debt, like tenfold.
After buying our first house, we really took out the home equity line of credit and maxed out credit cards and put vacations on credit. It all kind of started like way back when I had all this debt like early on in life. The interesting part of all of that was that when I eliminated my credit card debt The first time, I won’t say got out of debt. When I eliminated my credit card debt the first time, I learned a lot and I thought boy, I really want to teach other people about this. So I went to school and I got a degree in finance, which has nothing to do with personal finance at all. Kind of learned that. That’s why it really took me a long time to end up addressing all the behavioral issues as well.

Scott:
Yeah, these finance degrees are wack.

Mindy:
That’s a bit of foreshadowing, that behavioral issues. But I think that’s really important to realize that this is not… you don’t just pay off your credit card debt and then you’re done. Until you address those behavioral issues, until you address the reason behind the spending, it’s going to come back. It’s just like losing weight. If you overeat to compensate or you eat junk food all the time, you lose the weight and you don’t change the behavior, it’s going to come back. It’s going to come back tenfold, just like you did.

Teri:
Yep, exactly.

Mindy:
So what sort of debt load are we talking about coming out of college?

Teri:
Well, okay. Let me just preface this by saying that I didn’t get out of college until after I was already married and had a kid. So that was later. But my early, early years, I probably had maybe I’m going to say around eight to $10,000 in miscellaneous. I mean, I did it all wrong; I bounced checks, I had credit cards, I had different… I would get these checks in the mail, I don’t know if they still do this, I hope not. But I get these checks in the mail that’s like, “Just take this to the bank and cash it.” I would do that. And I didn’t realize that it was like 26% interest right away. So I had done that.
Yeah, I probably had about eight, 10, 12,000, something like that to begin with. Once we kind of get to the fast forward to the end of my story, that was over $200,000 in debt that were paid off over the course of about six years.

Scott:
Can you describe your situation, maybe in some detail, at that peak moment of 200,000 in debt? What was that comprised of? What was the income? What was that? Where were we at that point?

Teri:
At that point, I was still married. And so combined, we had over six figure income. I’m going to say it was probably in the neighborhood, ballpark like 130 to 150 a year, combined income. And the debt, interestingly, I mean, it started out I would say, as probably close to 140 to $150,000 in debt, but it was a six-year journey to pay off all of it. And so it was credit cards, car loans, truck loan, some old business debt that he had, or I would say, business loans that he had on equipment and things like that, too.
We had care credit accounts for our pets that were always going to the vet, we had a home equity line of credit that was on interest-only payments. I mean, the pinnacle of all that, I think, is that we were really making pretty good progress. I mean, paying several 1000 extra on our debts every month. And then one year, we got hit with a tax bill that was another 13,000. So it was just like, “Arg…” We felt like we were making good progress. And then it just like slipped back again.

Scott:
What was the moment in time where you kind of realized, “Oh, we’re going to stop accumulating debt and begin paying it off.” What was that kind of pivot for you guys?

Teri:
I would say that I hit what I would call kind of my rock bottom when… And this was really only like 10, 11 years ago, 2010. I knew we weren’t going to make a mortgage payment. And that was the first time ever that I thought, “Oh, I don’t know what we’re going to do anymore.” And so I called my parents and asked them if I could borrow enough money to make a mortgage payment. I said, “I’ll pay you back. I don’t know when but hopefully with my tax return next year,” and then that was when we got hit with the tax bill. So I wasn’t able to pay them off for over a year, I still hadn’t made a single payment to them. And while they didn’t care. It weighed really heavily on me. And so at that point, that was the pivotal change where I was working as a financial counselor at that time anyway.
My co worker had kind of handed me a CD and said, “This is Dave Ramsey’s Financial Peace, if you want to look into this.” I also took a part time job working overnights, so I was working full time. And then I would work overnights in a bakery for a few nights a week. And so with those weekly paychecks I would get from the bakery, I would send it to my parents. So it was kind of this big cumulation of a lot of things happening all at the same time where that was what it took to shake me to my core and make me really change everything that was happening.

Scott:
How do you think you were projecting outwardly to your friends and folks who weren’t aware of that, besides that one friend? Do you think they were able to see any of this? Or do you think that you looked like you’re really successful at that point?

Teri:
No, I think that everybody probably thought that we had it going on, right? Because we had a nice house and the two kids and a couple dogs and whatever. In my mind, I knew it was rough. We didn’t take vacations and we didn’t enjoy much of our life. On the outside it looked like we had good things, nice cars, what have you. But even that co worker of mine, I don’t think that she even fully knew what was going on with me. It was just sort of when the student is ready, the teacher will appear kind of a thing.

Scott:
Well, I have a billion questions on this. You said it was a set of things happening. Was there a trigger point or when did you sit down and say, “Okay, I’m going to begin intentionally planning paying this off”? Or was it more of a subtle shift, or how did that transpire where you actually began to stop accumulating these debts and begin paying them off?

Teri:
I had had a lot of conversations with my husband at the time. And we were just kind of starting to look at how are we going to address things. The communication between the two of us wasn’t always ideal. I came to the table with one perspective, and I think he felt attacked sometimes. It was just difficult communication in the relationship. That’s why I went through Financial Peace university with him, because I needed him to hear it from somebody else that wasn’t me. And then the messages really kind of started to sink in a little bit for him. It was still a very, very long road, but that was the pivotal moment where we wrote it all down. Even I didn’t do any budgeting before that prior to that. And so that was when I became super diligent. And I’ve made a budget every single month since then.

Mindy:
I have a comment. You have a degree in finance and $200,000 in debt, and you still didn’t budget. So people who are listening right now who are like, “I know, I need to make a change.” It’s okay to not know what you’re doing. Realizing that and making the change once you recognize is the only thing that’s going to help you out. You can’t beating yourself up, “Oh, I’d never made a budget before, so I guess I’m just never going to.” Or, “I should be doing this and I’m not, I can’t ever change.” Yeah, you can, but you have to make it work. And here’s Teri saying, “I knew what to do and I still didn’t do it. And it wasn’t until I missed a mortgage payment and had to borrow from my parents, that it really kind of kicked me into gear.”
Also that that comment about your husband, “He had to hear it from somebody other than me.” If you’re coming at this from two different points, it can be impossible sometimes to convince someone that you’re right. Don’t try. If you have the conversation and it’s not working out, find somebody else that they’ll listen to, so that you can get this. Ultimately, you want to get on the path. However you get there, it doesn’t matter that you’re right, or they’re right, or whatever. Figure out some way to get them to listen. Yeah, sometimes it’s not going to come from you. And that’s…

Teri:
It’s hard.

Mindy:
It’s hard, but…

Teri:
It’s hard. And I think that people will change when they’re ready to change. I think that the best thing that we can do in relationships is to not nag. We can bring up, I think, bring up concepts, right? So talking about what your goals are for the future. And if the two of you dream together and have these things together, that you both look forward to that’s beneficial. We were just not necessarily aligned in life anyway, so that didn’t work out. But still having these bigger goals and visions that you’re working on together and also coming at it from a position of curiosity, I think is really important, too.
So if you’re married to a spender, and they spend on all kinds of crazy, frivolous things, maybe approach it not from a point of, “I wish you wouldn’t do that,” or, “Why are you doing that?” But really learn and ask questions about getting at the root of why are they spending on what they’re spending on, because a lot of times it does cover up other insecurities, or they’ve got past issues that maybe they haven’t dealt with, like family money type history stories, and things like that, too. So come at it from a position of understanding and curiosity and patience, because it takes time to get the other person on board.

Scott:
How long between your decision point, your inflection point, and your husband’s?

Teri:
That’s really tough to answer. That’s really tough to answer because we’re divorced now. And so I’m just going to go on record and say that I still think that we don’t align necessarily with our financial goals.

Scott:
Sorry for the [inaudible 00:14:11] question.

Teri:
No, it’s not a problem at all. I just I want to be mindful of not speaking on behalf of him or anything like that, too.

Scott:
Makes perfect sense. You said you got the Financial Peace CDs from Dave Ramsey. I have recently begun learning about that in more detail here though, in the past couple of months. I think the great actually, and I think they’re a fantastic program. But I was wondering if you use that at all for your personal journey?

Teri:
Yeah. So we went through the actual classes in-person. And so I will also say that both my ex and I did not come from religious backgrounds, so that that environment was definitely just a little bit different for us to be… because it’s usually facilitated in a church frequently. oS we went through the classes and kind of followed the book and learned the lessons and the baby steps are like, really, it’s just a super easy way to break down the tactical part of personal finance. But there was also, when we went through that, there was also a part at the end of each meeting, where you got together in groups and would share and talk and discuss. And I did not want to do that.
I was super embarrassed and kind of had some shame around the whole thing. And I knew that he and I weren’t necessarily aligned on everything. So I didn’t want to come across as sort of putting that out there that things are hard, and like, we’re not just right next to each other alongside this journey, like happy go lucky, can’t wait to wrap this up. It was a difficult process. I would say that I took from that program, the tactical steps that just made it really easy for he and I both to have the tactical measures in place. It was still the conversational part between us the relationship that continued to be work after that program too.

Scott:
Okay. Can you give us maybe some indication of the milestones or how things changed following this and your journey in eliminating the debt?

Teri:
Yeah. I would say that mostly the whole thing kind of felt like a grind. But we definitely changed in that we became better at saving money for bigger things that we needed and saying no to other things. One of the really interesting pivotal moments was that the house that we lived in actually had two furnaces, and so one of our furnaces went out. We had been saving money to replace it. It wasn’t an emergency, because it went out in the spring, late spring, so we knew we had until the next year to replace the furnace. So we were saving up cash to get a new furnace. I would say that we probably had around $4500 in the bank saved up, and it was starting to come into the fall. And then lo and behold this stupid monster truck that ended up costing us over $80,000 in just miscellaneous repairs, it lost its transmission at about the same time as we were about to buy this new furnace. So that savings had to go from the furnace to now repairing the truck.
We heated our house with space heaters that winter. So little things like that, they were just huge mindset shifts. I mean, we could have financed the new furnace or put the truck repair on a credit card. But we just had a lot of little moments like that, that were cash flowing braces and dogs having cancer and all these things that we just ended up paying cash for as we went along. So like I said, it was a long, slow grind. But yeah, it was six years. I mean, thankfully… So we got a debtor on 2018. I use credit cards still, but I pay them off every month, so I don’t have any debt to speak of now, which is really nice. That’s how it’s been since then.

Mindy:
It sounds like on almost any journey that you’re changing mindset and changing the way that you act and behave, in the beginning, it’s one step forward, two steps back.

Teri:
Mm-hmm (affirmative). Yeah.

Mindy:
One step forward, two steps back. And you’re like, it’s so easy to throw in the towel and be like, “Oh, forget it, I’m not making any progress. I might as well… I’m always going to be a debtor,” or, “I’m always going to be overweight,” or, “I’m always going to be whatever that I’m trying to change.” How do you stay committed when you’re about to pay cash for a furnace and then everything’s going to be great, and your truck drops the transmission?

Teri:
Yeah. I mean, it’s hard. But there was no question about what the end goal was, and the end goal was like, “No more debt.” Like, we’re paying this off, and there’s not any more debt. That was a line in the sand that was drawn back when we first started, which was around 2012. That line had already been drawn, so we knew that we weren’t going to cross that. But I think even if it is like kind of smooth sailing or you’re not facing $200,000 in debt, it’s a smaller hurdle. Either way, for some people they can go at it with an intensity that is just like, “I don’t care if I sleep at night, I don’t care if I eat, I’m just going to work, work, work and pay off the debt.” And for some of us, we really need to kind of build in these other tiny rewards. And so I’m kind of an advocate for that, like, if you feel like you need to reward yourself every now and then for making progress to help keep you on track, then that’s a really good way to go.
So take yourself out for a nice Dinner only after you’ve paid off something. Just don’t make it as frequent, so it doesn’t become your new normal. I think one thing that I look at is whether or not people get out of debt, only to then still just go ahead and spend all their paychecks. Maybe they don’t have any more debt anymore going forward, but still spending everything that you make is still a dangerous game to play.

Scott:
I think a big elephant in the room here potentially is, you mentioned earlier that you got divorced, did that happen during or after your debt payoff journey? And were there any root causes about this journey that contributed?

Teri:
Oh, yeah, that’s a great question. It happened after. We got out of debt in April of 2018, and then we divorced in late 2019. So it was, I would say, like a year and a half later. Sorry, what was your other question about that?

Scott:
Was it already financial conflict that maybe he was…

Teri:
No, it really wasn’t. I mean, as much as this was a really challenging part of our lives, the money didn’t cause any fights. Like I said, it was just more like, what was important to me wasn’t important to him. And what was important to him wasn’t important to me. So it was just misaligned values that ultimately ended that relationship. And so, thank goodness, we got our debt beforehand, because that really made everything pretty easy when it came to just finalizing that.

Scott:
When you go back to beginning your journey, what were kind of the biggest debts that were in your… Like the ones that maybe were the real grind at the end, because of the snowball method, the Dave Ramsey, you’d have the small ones, but what were some of those big ones that really took the bulk of that time?

Teri:
I would say, among the largest were… I mean, I had a credit card that was well over $25,000. So there was that one, and it very, very closely aligned with the truck loan that we also had, which was also kind of… That, and the credit card sort of ran tandem. And so those two were kind of the long haul. That whole snowball method is really interesting, because you can see some quick wins in the beginning, which is great for keeping up the momentum. But when you get to the big ones at the end, we’re like, no matter what. Like I said, we were paying like $3,000 a month on some of these debts. And even then, when it still takes almost a year to pay off one credit card at $3,000 a month, that’s a little tough to take some time. So those were the big grinds.

Scott:
One of the things that Dave Ramsey suggests is that baby step one is for example, save $1,000 emergency fund. Baby step two is the Debt Snowball, which in your case took six years, right? And then baby step three is the three to six month emergency reserve. One of the things I was thinking when you were sharing your story is that you had, it sounds like a big house with two furnaces and a big truck there and a couple of other things like that. Do you feel that in your case, a bigger baby step one would have been beneficial? Do you think that there’s nuance there? Or do you think that the low reserve kept you uncomfortable and ended on the on the program?

Teri:
Yeah, that’s a really great question. Okay, let’s just be clear, and say that having $1,000 in the bank was more accomplished than we had been for most of our adult life anyway. So I mean, let’s just call that what it is. That was good that we even had that. Do I think that having more would have been helpful? Maybe. So two things to say, yes, I think it’s flexible. I also see a lot of times when people are self employed or have very, very, like unstable income sources, or their job is always kind of in limbo, then yeah, I think having a bigger emergency fund is a good idea. With ours, we had enough disposable income that whenever other things came up, we were able to cash flow them. So basically, our debt payments would scale back a little bit while we paid cash for the other thing that was going on at the time.
So I think as long as you can kind of balance that out, you don’t necessarily have to have a big beefy or emergency fund. I would say we didn’t really necessarily, we didn’t deplete the emergency fund and then stop paying on debt to build it back up again. We didn’t keep doing that. We just basically scaled back the debt payments while we increased the cash flow for whatever else was happening.

Scott:
Got it. After you began that journey with Financial Peace and those types of things, how much were you able to start paying off immediately and how did that scale or change over time? If you were to say like, “Hey, over the last six months, I paid 5000 the first… At one point was able to get that to 30 or a 40.” How did that work for you guys?

Teri:
I never necessarily felt like we had any big sweeps of momentum. The only one caveat to that I would say is that we did have a car accident that all four of us were involved in, in my family. And luckily, we walked away from it. But we did get a big insurance settlement from that. That was kind of a chunk of money that we were able to sort of put towards some of the debt in one fell swoop. But aside from that, I would say everything else was mostly just kind of a grind. We paid about $30,000 a year on debt. And so that’s not only just like the minimum monthly payments, but also whatever extra we’re paying.
We definitely had job changes in there that increased income too. He was self employed for a lot of time, and then decided to stop the self employment and go back and take a regular job. So there were things like that that also impacted our income, but it was still, the rate was pretty generally 30 to 35,000 a year, was being paid on debt.

Scott:
Awesome. Thank you. That’s really helpful with that. It’s interesting, because in a lot of other stories we’ve heard, there’s been kind of a… it takes a good six months to a year to really get into the momentum of paying it off. And then however long it continues after that, it continues. Some cases are 18 to 24. Some cases are six years, some cases are 10 years with the debt payoff.

Mindy:
Did you put yourself on a budget when you decided, “Okay, we’re going to stop accumulating debt, and we’re going to pay it all off”? Did you track spending or say, “Okay, we only have this much money for each of these categories.” Or was it just kind of loosey goosey?

Teri:
Yeah, for sure. I’ve always done the bills, the finances in the relationship. And so, yes. I said I had never done a budget really prior to then. To me, the most important first step really was just to even see where we were spending. So once I had that, because I mean, a budget means almost nothing when you don’t even know what you’re currently spending. So once I had that, then we had a framework from which to work from where we could really kind of say, “Okay, that number for groceries seems about right. I don’t think I can make any adjustments there.” Or, “We’re going out to eat way more than I think maybe we should be. So let’s see if we can just scale that back.”
So it helps you to at least determine where you can cut back. So yes, what I did was I found online, and I still use this for any of my clients that want a tool to visualize the debt. There’s a spreadsheet that’s like a debt snowball calculator, and you basically just kind of plug in the numbers on all your debt, and then how much extra can you pay? And it shows you the payoff timeline in spreadsheet form. It’s kind of an overwhelming spreadsheet, but I think it’s super awesome, because it shows you everything. So yeah, I was able to say, “Okay, this much extra will go to this.” And we can see it month by month to be able to kind of track how we’re doing with that.

Mindy:
Sometimes the spreadsheets are overwhelming. But if you don’t look at everything, you’re going to miss something. And, “What are you spending on?” “Well, here’s what I spend on groceries and gas.” “Great. Where does the rest of your money go?” You have to look at everything. And that first month, when you first start looking at where your money’s going, that is shocking. That is like, “Oh, wow.” Because you think you’re good with money, or, “I’m making a lot of money. I don’t have any problems.” And then you start realizing, “I actually do have some problems, I need to change this.” And that is, in my opinion, the most important thing you can do once you decide to get out of debt, or when you decide to go into define movement and pursue financial independence. Track where your money is going. Without judgment, just write it down. And I am like old school notebook, write it down. How much I spent, where I spent it, about what it was like groceries at Target. It could be other things too, but it’s groceries.
And then you watch. You total it up as you go, you watch. “Oh, it’s the sixth of the month, and I already have spent $1,000, not including my mortgage.That’s a lot of money. I need to stop that.” So yeah, that is powerful. And I love that your spreadsheet is overwhelming. If you want to get out of debt, it’s overwhelming at first. And it gets easier every day that you commit to taking the steps to doing it. When you-

Teri:
And able to see that timeline of when it’s going to end too. Like knowing exactly when this is going to be over was super helpful.

Mindy:
Yes. Yes. The light at the end of the tunnel.

Teri:
Yeah.

Mindy:
So when you were in the middle of your debt free journey, were you saving and investing anything? Or were you just paying it all down? I see you shaking your head. So if you can go back and do it differently, would you have changed anything?

Teri:
Yeah, so this is such a great, great question. No, we were not putting anything into our retirement accounts at all. Save for in 2013, I got a new job. And at that point, it was mandatory that I had to put money in for a pension, as it is government work. Then I started putting in, but that was a few years really prior to the end. So, yes, in hindsight, looking back now… I mean, it’s one thing to say don’t put money into retirement while you’re trying to get out of debt, because you can look at the math and the equation there and just try to figure out what’s what. But when you think about that time value of money, we lost a lot of time there. I mean, that was six years. But let’s be honest, we weren’t putting a lot of money away before we were getting into debt either. But we did definitely lose a lot of time. And I’m not as young as I wish I was. Now I’m scrambling and trying to make up for that now.

Scott:
What happened after… You get back to zero in 2018. First of all, how does that feel? Are things improving in general in respect to your outlook on your financial position at that point? And then, what happens next?

Teri:
Yeah, so it definitely was such a celebratory moment. And we really brought our daughters along on this journey with us. We would have monthly budget meetings with them too. I wanted them to understand why we’re saying no all the time, to whatever little requests they had. We brought them along that journey too. They definitely understood that it was a big deal. It was a huge celebration after the fact. I don’t even think that we had any particular like a big dinner or trip or anything like that. We really just shut off confetti in the house and screamed at ourselves, “We’re debt-free.” That definitely was a pretty interesting moment. And it was nice to bring them along board with that too. You asked me another question about that?

Scott:
I have this annoying habit of asking six questions in a row.

Teri:
It’s okay.

Scott:
So the next question is, what did you do next? Did you continue with the baby steps? Or did you begin doing something different?

Teri:
Yeah, so that’s interesting, let me relate it to the baby steps. Afterwards, the three to six months of living expenses. And I would say that there was work in progress on that. But that was also a little bit slow going. Kids in college, I think, is also a really interesting and very personal topic. So I have never told my kids like, “It’s mandatory that you go to college. I want you to know, what your life is going to entail before I want you to just spend a bunch of money on a degree that you don’t even really know what you’re going to do with or what have you.” So we told our kids both, that we would pay for their first year of college and there’s enough money to do that.
I wasn’t trying to beef up a big college savings. As far as paying off the mortgage, the timeliness of that didn’t necessarily work out that we were working together on that. After our divorce, I did sell the house. That was about a year ago now that I sold the house. So I can totally say, “Debt free,” because there’s no mortgage now either. Now I’m just like, I am piling money away as fast as I possibly can.

Scott:
Awesome. I would love to know what that outlook is now. So you’re debt-free, I assume you have the emergency fund set up, how are you investing now and going after it?

Teri:
Now I’m fully funding my Roth every year. I’ve got a taxable account just at Vanguard and it’s just index funds. Boring but reliable. It’s done well this past year, so that’s good. Then I do have existing employer, other money that’s still sitting off to the side there. There was a Roth 401K option available. That’s something that I also max out as well, too.

Scott:
Nice. Well, it sounds like you’re after the recess with all this stuff. And you have a business now that you run, is that right?

Teri:
Yep, absolutely.

Scott:
Do you want to walk us through how you started that or how you got into that? Was that simultaneous with all this or in progress, or how did that get going?

Teri:
Yeah, so like I said, when I was first learning about personal finance and got a finance degree and realized that really wasn’t it, I called a nonprofit and asked them if I could just come and teach high school students. I wanted to teach other people about personal finance. And they brought me on just kind of on a volunteer basis to do teaching. I would go to senior centers and community centers and high schools and teach basic personal finance stuff. And then I became a financial counselor for this nonprofit, back in 2009. You can imagine I did a lot of foreclosure counseling, I did a lot of bankruptcy counseling. That was work that I had done previously with the nonprofit.
Now I have shifted into my current financial coaching business. I’m a very detail-oriented person, so I’m still very tactical in teaching people how to move forward in their personal finances. But I really focus a lot now on the behavioral stuff and helping them to have productive conversations. A lot of it is just guiding conversations. A lot of couples have one person that does the money, if you will. And so that person can come out the picture with I would say a jaded view. Right? Sometimes we can get automatically defensive about what the other person is doing, or spending, or what have you. And sometimes the other person just needs to be brought on board. So I help to facilitate those conversations to make sure that they are calmly working together on the same goals.

Scott:
All right, do you have any experience working with… I’m asking this because I have personal curiosity here. But do you ever get people who have weird situations with debt? Where like, “I think I owe this person money.” Or, “I don’t have that.” Or… Is that something that you help with? Or is it more of a conversation facilitation?

Teri:
Yeah. All the time. So I generally will tell people first of all, if you don’t even know what’s out there, go pull a credit report. That’s first and foremost, because a lot of times, there’s things that we’re not aware of or sometimes people don’t realize that they had things that went to collections. And no one’s reaching out to them, so they don’t know that’s there. It’s also a good fraud prevention tactic too, because I’ve certainly seen… It’s really sad when you see this, but I’ve seen a lot of families where even especially if a couple of people in the family share the same name, you can see some sort of family financial fraud happening. So yeah, I do walk through that with people to be able to see everything. That way, you can map it out, because you need to have the whole picture to start mapping it out.

Scott:
Yeah, I’ve taken a big interest in this, especially with some folks that have a checkered past. In some cases, there can be a lot of weird stuff going on. Right? So like, “Hey, here’s a loan that’s not kept on the books.” Or, “Here’s a friend or family member who has impersonated me.” And so it’s literally cases of fraud in some cases, but we’re not willing to press charges because it’s friends or family and those types of things. And I think the biggest question overall that at least I’ve seen that defer to your experience, but is around this big question mark of the statute of limitations on old debts. And so have you come across that? And how would you advise somebody who’s got an old debt that they’re afraid to talk to, because they don’t want to restart it or whatever. How does that work with the statute of limitations on old debt?

Teri:
Yeah. So truthfully speaking it’s been a long time since I’ve come across that situation. I’m always like, I don’t necessarily keep up with all of the laws. So I’m always a little hesitant to answer anything that could be construed as legal or accounting advice, which it’s not. But a lot of times, maybe if I can also talk about family debt to things like that, it’s known that they don’t expect to get that money from me or sometimes it’s the opposite of like, “I know, they don’t want me to pay them back. But I want to pay them back.” And so a lot of times, the conversation can be just about integrity as far as what you want to pay back. But when you’re dealing with old debts where you’re afraid of what might happen, I always say that communication is key all the time.
And so number one, have a plan before you make the call. There’s a lot to watch out for as far as shadiness, right? So if you’ve got an old debt and you call and say, “Hey, “I want to pay this off.” And they tell you that they’ve added eight times the amount because of interest and fees, that’s not the end-all, be-all, you can have other conversations and wiggle that down and find a meeting point or something like that. Don’t pay on anything until you’ve got the agreement in writing, right? And don’t allow electronic access to your bank account, because that’s when it gets real nasty. But I think a lot of times people are also really afraid of someone coming after them. I always say there’s a court process that has to happen. If someone’s going to garnish your wages or come after your bank account, they have to go through a court process at least in Colorado, in order to get the judgment, in order to move forward with that too, so there’s a big process involved there.

Scott:
In general, one of the fears is, hey, if I call a creditor, and it’s five years and the statute limitation of my status is six. And I even admit that it’s mine, I restart the statute of limitation. So I don’t even want to pick up the phone or answer the mail or whatever because I’m letting that expire. Any general advice there? And this is entertainment and entertainment purposes only with this. But any general advice there?

Teri:
Yeah, I don’t even know if I want to give any general advice on that. I’m so super careful about anything that could even crossed the line for legal that I just… We’ll defer to Mindy.

Mindy:
No, I’m not going to give legal advice either. I know I’m not qualified. Who is somebody that someone can talk to about this to get the information? Is this a CPA or an attorney, or a credit counselor? Because I know that there’s a lot of people out there who are like, “Oh, I just want to ignore it.” Or like Scott said, “If I talk to them, that is another hit on the B account and then it restarts from there.” I like your comment about integrity, “I want to pay off my debts. But also if they’re going to write it off tomorrow. Like…”

Teri:
You don’t want that, you don’t want to wake a sleeping giant.

Mindy:
How do I find out about that? Who’s a good person to reach out to?

Teri:
Yeah, great question. So I would say that there’s a lot of different professionals that are able to answer that within the scope of their own role and credentials. So yes, I do believe a lot of CPAs would have that information. But I would probably say first and foremost, you can always get a free consultation with a bankruptcy attorney. And they’re going to know the law when it comes to debts. That might be one option. I would go in prepared again, having like a credit report or something handy so that you can give them the full picture. But you should always be able to get a free consultation with a bankruptcy attorney. And then also, in most areas, you can find a nonprofit, like a Consumer Credit Counseling Service.
If you’re not sure where to find one on your credit card statements, there’s a section that says, “If you’re having trouble paying your bill or need help talking to someone, there’s an 800 number.” And that’s the National Foundation for Credit Counseling. I would say call that number and they can hook you up with an accredited counseling agency. Most of the time, you’re going to be able to meet with them at no cost. They do generally have debt management programs that will have a fee to them. But you should be able to get the counseling at no cost. So I think they would know that too.

Scott:
Can you state the name of that foundation one more time and we will link there in the show notes. This is really helpful. Thank you.

Teri:
Yeah, absolutely. It’s the National Foundation for Credit Counseling.

Scott:
National Foundation for Credit Counseling. And we will link to that in the show notes. And hopefully, there’ll be a number involved after we do some digging as well, that we can just post there. Yeah, that’s great, because it just seems like from my seat, I’ve got a couple of rental properties and these large mortgages associated with that. And it’s all very simple and very clear. I understand it perfectly with those types of things. But it seems that the people who most need this help have the most complicated and nuanced situations with, again, family debts or old debts or… And it’s like, “Do I even contact? If I have a problem, I know exactly who to call and how to get up. And I know I’m going to have to wait on the phone, the customer support line or whatever and be annoyed.”
But it’s not like a black box. And so, “I’m in 30,000 in debt, and it’s across all these different things. Do I now pay $500 to an attorney to figure that out?” No way. And so that’s where I think this is so helpful as far as finding these resources and aggregating them so that people can call somebody and get confidence before they go after that.

Teri:
Yeah, absolutely.

Scott:
I want to go back to the complicating factor in many people’s financial journey, which is the relationship with the spouse and finances there. There’s always going to be this case, often going to be this case where one spouse decides to begin the journey with money, or make a hard pivot, or begin changing outlook before the other. That’s just how it’s going to be in many cases. Nothing wrong with that, doesn’t say anything good or bad about either spouse. But how do we helpfully begin broaching that conversation? If you’re the one listening to the BiggerPockets Money show and your spouse maybe isn’t. Or they’ve dragged you along to listen to this [crosstalk 00:44:53].

Teri:
Listen to this episode. Again, like I said, a lot of times in couples, one person handles the money. And so the other person, whether they want to be or not, they may be in the dark about things. And so I think the way that you present the material needs to be coming at it from, “Let’s look at this as we’re a unified couple, and I want us to move forward on a unified front.” Not accusatory or, “Gosh, I found out that you spent like $500 on Amazon, what were you even buying?” That’s going to set the tone wrong right away. So I think that one of the best things that you can do is come at it calmly patiently. Make it a fun date night, right? Like, don’t say, “We need to have a budget meeting.” That’s not going to resonate with people.
So just approach it in the normal loving way that you would have any other big conversation in your marriage or relationship. And just come at it from a place of again like I said, listening, and learning and growing together. And if you present, “I’ve got these goals for us, I’m not sure that what we’re doing today is going to help us meet those goals. What are your goals for us? Where do you see us in 10 years?” Those kinds of things, open up a dialogue that take your defenses down.

Scott:
Who was it Mindy that suggested that you trap your spouse in your car while you’re on a long drive?

Teri:
Oh, I heard that.

Scott:
[crosstalk 00:46:21] coming with this discussion. I love that as well.

Teri:
I heard that, I remember that. I love that [crosstalk 00:46:29]

Mindy:
We’re going to have the money talk right now.

Scott:
What’s your advice for somebody who is receiving now conflicting arguments? You’re saying bring it up in a nurturing fun way that makes the person excited. The other person was like, “Knock them in the car, where they can’t escape.” What do we do there?

Teri:
Yeah, I mean, that’s tough. And I think that really when people don’t see eye to eye, we have to… Sometimes it does involve seeking the counsel of a third party, potentially. But also, can you maybe try to figure out and understand why. Sometimes there’s just some family background. And it’s not always the money scripts of like, “Oh, I grew up poor. So I want to save everything I earn.” Or, “Oh, I grew up poor so now I feel like I deserve everything now that I’ve got money.” I mean, first of all, those things can play out very differently for a lot of different people. But also finding out what are people doing with their money? Because let’s be honest, sometimes we’re mad at the saver also.
Sometimes people say, “You’re not any fun.” Or, “You’re not letting me have any fun.” The conversation can go both ways, you can be mad at the spender or mad at the saver. I think it just comes down to getting at what are the root, root, root causes which can go back to some family dynamic. “I don’t want to disappoint my parents, that’s why I have this big house,” things like that. You have to figure all that out together.

Mindy:
Yeah, I like the way you phrased it, “These are my goals, and what we’re doing isn’t going to get us there. That’s not what you’re doing. Everything you’re doing is wrong. Together we’re a team, and our actions as a team aren’t aligned with our goals.” And that phrasing is really important. If you’re the saver and you’re listening and you want to talk to your spouse about the spending, it’s not their spending. It’s your spending. Together. Combined. And the goal is the focus. The goal should be the focus. I really, really like that, “What we’re doing isn’t working.” I don’t even know if we said that during our conversation about having a money date, Scott?

Scott:
What are some unhealthy responses from a spouse or yourself that you can look out for when it comes to these types of conversations and discussions?

Teri:
Yeah, I mean, this is… And I’m not a licensed therapist or anything. But this goes back to those words that you can use attacking. Of like you this, you that. Where you should come from everything is like, “I feel this way when you do that.” Those are the ways that you’re supposed to approach conversations. But when you say unhealthy behaviors or unhealthy responses, that can manifest in so many different ways. Not only can the conversation become ugly and hurtful if you’re just saying mean things or attacking someone’s character. You want to attack the problem of the money going out, not the person’s character, because their character is probably good, but there’s something else happening.
And then there’s other times where I’ve seen and been a part of what I refer to as Revenge Spending. Which is when one person… Maybe if both parties make good money, or if just one person is making a lot of money, and so they spend a lot of money because they deserve it or what have you. Sometimes the other person in the relationship who might be more inclined to be the saver or not spend as much can actually start spending as revenge. I know that this is something that I participated in a little bit and I’ve seen other people participate in that as well. You get mad at the other person for spending so much money, so you think, “Well, they spend $1,000 a month on whatever, then I’m going to spend $1,000 a month on whatever.” And so it’s like, you’re almost like tit for tat and it’s not going to be super beneficial to the end game either.

Scott:
I just never heard that term, Revenge Spending. That’s like an interesting one to internalize.

Mindy:
Yeah. I’ve never heard that term, but that’s a really powerful term, Revenge Spending. I can see this being something that happens a lot more than people are willing to admit. Because I don’t want you to tell me what to do. I’m the boss of me, not you. So if we’ve decided to do something together and then you make a mistake, well, I’m going to go do that too. I could see that happening a lot. And, boy, I can see a lot of tempers flaring in that situation. The best thing to do, I think, would be to just stop, step back, hey, calm down, what’s done is done. Let’s [crosstalk 00:51:47] here and move forward.

Teri:
Yeah. And it can be really hard to have an honest look at yourself too and what role you play. I think that that was something that I definitely had to deal with, was what role am I playing in this? How am I not facilitating these conversations very well? How am I maybe trying to be too restrictive? And how am I also spending some money that isn’t aligned with our goals either? So it’s tough, but you have to be willing to look at both sides and see, because often you’ve got to have a balance in where you come to the table together.

Mindy:
Oh, that’s a good quote. I like that. Scott, we’ve touched on the financial scan. Oh, I’m sorry, do you have other questions?

Scott:
No, I was just saying I think we should go to the famous four unless there’s other things that we should ask you about Teri?

Teri:
No, I think that covers it.

Mindy:
Yeah, I love the Revenge Spending phrase a lot, because… I’ve never heard that name before. And I can see a lot of people being like, “Oh, well, I’m just going to do this,” then, “Oh, oh, that’s me. I should stop. That’s not furthering our goal.” I can see that. Teri, this has been fantastic. I think that people are going to listen to this. There’s going to be a lot of listeners thinking, “Oh, Teri is me,” “Teri’s talking about me.” “Teri’s in my relationship with me.” This is pretty spot on. And I think a lot of people are going to get a lot of value out of this. So thank you for your time today, but we’re not done with you yet. We still have the famous four. Are you ready?

Teri:
I am.

Mindy:
Teri, what is your favorite finance book?

Teri:
Okay, so this is a little bit funny. And it’s so maybe outdated. But Beth Kobliner wrote a book called Get A Financial Life. And the subtitle is Personal Finance in Your Twenties and Thirties. And so that’s how long ago I bought the book. But it’s so good on just a fundamental level that I don’t care what age you are, if you feel like this finance stuff is too much, that is a really fantastic book and it’s just uncomplicated. And it covers all of the basics.

Mindy:
That’s awesome. I’ve never heard of that one either. Definitely going to check that one out.

Scott:
What was your biggest money mistake?

Teri:
I’m going to say the biggest money mistake was probably the home equity line of credit that we took out, because when we bought our house, it was the year 2001. And we bought it on a foreclosure. But it was only a two-year-old house. So it wasn’t like it was this broken down decrepit house or anything. It was just undervalued because the market wasn’t moving. So we got all kinds of financial advice that we should just take out a home equity line of credit to do any upgrades or what have you. Let’s be honest, we just took out all the money to spend it and live on it. So we had like a $50,000 line of credit that was on interest-only payments for 10 years. So ouch, we eventually refinanced it into the mortgage to finally get that paid off.

Scott:
Now that’s a great story and I think with home equity line of credits, we have lots of discussions about those over the course of the money show. Fundamentally, you use the home equity line of credit for a short term purpose and pay it off and you use the mortgage for the long term stuff. And so if you’re listening, there’s a whole bunch of things there. Maybe not spend it in general but the short term versus long term nature, I think, really has to come into play because it is interest only.

Teri:
Yeah exactly. And that tells you that we didn’t address all of our behaviors. That’s more of what kept adding on to the debt too. So Yep.

Mindy:
Yeah. What is your best piece of advice for people who are just starting out?

Teri:
I would say, don’t get too hung up on the term budgeting, I know that a lot of people have resistance to the word budgeting. I think it’s more important to track your spending. If you really have not started doing that at all, I’m going to say, just writing down where you spend all of your money will at least give you the guide rails so that you can start to look at where you can make changes. And then again, if you’re in a relationship, and you’re having these conversations with somebody to try to make changes, understand that it’s not going to happen overnight. I would say, be kind, be curious, and be patient with your significant other so that you guys can eventually move towards the same goals.

Scott:
What is your favorite joke to tell at parties?

Teri:
All right, I’m going to give you bonus points if you can identify what movie this is from. And you have to play along because it’s a knock-knock joke. Okay?

Scott:
All right.

Teri:
Knock, knock.

Scott:
Who’s there?

Teri:
Nobody.

Scott:
Nobody who? Okay.

Teri:
Do you recognize that? It’s from a movie. It’s from the Pursuit of Happiness with Will Smith.

Scott:
Yeah.

Teri:
I love that.

Mindy:
I didn’t see that movie.

Teri:
Oh, it’s so good. It’s so good. Another money movie.

Mindy:
Oh, that’s a money movie?

Scott:
I actually know that movie. Yeah, that’s a great one. I have to rewatch that and figure out where that… Joke away.

Teri:
Yeah, it’s at the very, very end. It’s like the last clip of the movie. It’s my favorite joke of all time.

Scott:
All right.

Mindy:
We are hitting upon a Snowmageddon. We’re recording this in the beginning of March and we’re all in the Denver area. And we’re supposed to get something like 40 tons of snow. So I might watch that movie this weekend along with 100 others. Not going anywhere.
Okay, Teri, I first came in contact with you through your new video series. Can you tell people where they can find that and where they can find more about you?

Teri:
Yeah, absolutely. So if you go to my website, it’s terislater.com. I’ve just launched a free mini-course, it’s a three-part video series. It’s designed to really just give you the three basic steps on how to get started. But the benefit for me there is that I like to interact with as many people as possible with a low barrier to entry. It’s free because I just want to be able to talk to as many people as I can so that I can really figure out what everybody’s different stories are and how we can best help them moving forward. You can find links to that on my website at the bottom of the website is where you can find me on all the different social platforms as well.

Scott:
Great. We’ll-

Mindy:
Thank you.

Scott:
[crosstalk 00:58:24] a link to all those in the show notes.

Teri:
Awesome.

Mindy:
Yes. This is awesome. Teri, thank you so much for your time today. This was a lot of fun and I learned a lot from you. Ooh, Revenge Spending.

Teri:
Awesome. Thank you guys so much for having me.

Mindy:
Okay. And we’ll talk to you soon.

Teri:
All right, thanks.

Mindy:
Okay, that was Teri Slater. Scott, what did you think of Teri’s story?

Scott:
I thought it was fantastic. I think it was a great debt payoff story. And it talked about the emotion and the challenge, and the Baby Steps of Dave Ramsey, which I think are just such a powerful tool for that purpose. I learned a lot from Teri. And I think she’s in a really good place financially with what she’s doing right now. And I’ll be interested to see how her journey evolves from here.

Mindy:
Yeah, I really liked her story. And I love focusing on changing your habits because, like she said, if you don’t fix what the underlying problem is, you’re never going to fix your finances. You might get out of debt, but you’ll find yourself in even more debt very closely down the road.

Scott:
Yeah. I think it’s interesting too, that there’s probably a lot of people out there who have a pretty high income and a lot of debt. I think they’re doing fine and need to kind of self actualize this like, “No, it’s not fine to have lots of consumer debt.” If you have a high income, it’s time to kill that get back to zero or eliminate the consumer debt and begin building wealth. Because I mean, it’s just so much more freeing and I don’t know, it’s something that that I think you need to wake up and get going with that. That’s exactly what Teri did, and then I think together, her and her husband were able to knock that out. And so if they can do it, a lot of other people can do it too.

Mindy:
Exactly. The Revenge Spending, that phrase, whoa… When she said Revenge Spending, I was thinking, oh, the spender is revenge spending because you’re making them not spend any money and they’re not having any fun so they’re going to have revenge. And she’s like, “No, it’s the saver saying, you’re not doing it. Why should I? I’m going to go and get revenge on you.” And really the only person you’re hurting is yourself. But that phrase is my new favorite phrase.

Scott:
Yeah, it boils down to an interpretation of fair and unfair, which I think is a really unhealthy thing to be thinking about with respect to your finances. Not fair, finances are not fair. Capitalism, not fair. Doesn’t matter. The rules do not change. You have to spend less than you bring in. And if you’re spending equal to your partner, because you feel like that’s what your right is, you’re just compounding the problem. That’s where I think the Revenge Spending comes down to. And the fair-unfair word, I think can really disrupt your life and your finances and probably other parts of your life too. But again, I like Teri, I’m also not a therapist.

Mindy:
Yeah, that’s a really important thing to talk about, Scott, is the fairness. Don’t keep track, don’t keep score. It is not about keeping score, it isn’t about, “Oh, you spent $12 I only spent 10, now I need to go spend two.” When you start keeping track of things, you are going to really seriously cause problems in your relationship.

Scott:
It’s not you against your spouse, it’s you and your spouse against the world.

Mindy:
That was what I was going to say.

Scott:
I had to cut you off and steal your phrase because I love it so much.

Mindy:
It’s not my phrase, I got it from somebody else who I cannot remember, who said that. But yes, that is something I’ll remember and I will give credit where credit is due. Okay, Scott’s we get out of here?

Scott:
Let’s do it. Before we get out of here though, I want to give a shout out. I’ve been to Mindy’s house, but not since I think she completed it. Mindy has the most remarkable transformation of a live-in flip with it. And these two pictures really summarized it. So if you want to go see those, join the Facebook group on BiggerPockets and go check them out. One of the posts there shows her remarkable live-in flip which profited $100 million off of last week. So-

Mindy:
$100 million. Yeah, slightly less than that, IRS don’t come knocking on my door for that money. So you had seen the middle of that journey. You hadn’t seen the beginning. I don’t think you knew what a dump it was when we bought it. Well, thank you, Scott. That was…

Scott:
It’s very impressive work. Mindy is a true professional when it comes to these kinds of rehabs.

Mindy:
My husband helped a little too. He put a couple of pieces up.

Scott:
And her husband Scott. Thank you to whoever it was. That was the listener that emailed Carlo informing him that Mindy called him Scott on one of the podcasts. That was fantastic.

Mindy:
No, called you.

Scott:
Oh, yeah. He called me Carlo. Yeah whatever it was. Mindy had a lapse there and it was hysterical. Thank you to whoever called her out to her husband directly to his email. That was fantastic, made my day.

Mindy:
Yeah, thanks a lot.

Scott:
Should we get out of here, Mindy?

Mindy:
We should. From Episode 189 of the BiggerPockets Money Podcast, he is Scott Trench. And I am Mindy Jensen saying, “Okay, bye, fry guy.”