Many adults learn the true cost of credit through expensive mistakes. Esther makes the case for proactive education, equipping your children with a foundational understanding before they ever swipe a card.

At the table

Esther, joined by her children, demystifies the mechanics of credit scores, the insidious nature of interest, and the critical distinction between debt that builds and debt that depletes.

What this conversation covers

• The five essential factors that determine a credit score
• The hidden cost of minimum payments on high-interest debt
• Understanding how interest can destroy or build wealth
• Differentiating between good debt and bad debt
• Equipping children to evaluate debt's long-term impact

A line worth keeping

Interest is a tax on your money, and it will destroy your wealth.

Mentioned in this episode

• Credit scores
• Payment history
• Credit utilization
• Good debt
• Bad debt
• Mortgages
• Car loans
• The Broker's Table community, for women building faith, family, and lasting wealth

The Broker's Table is hosted by Esther Jackson-Stowell. New conversations on faith, family, and the kind of wealth that outlives you.

When I was 19, I thought making minimum payments on my

credit card was responsible.

I didn't understand I was paying hundreds of dollars in interest

just to avoid paying attention.

It's something that the credit card companies don't teach you, huh?

And it's not something that is really taught.

It's something we had to learn.

Our kids are going to understand this before they ever swipe a card, and today

you're going to learn how to teach them

Welcome back to Legacy at The Table.

Last episode, we showed you how to build credit profiles for your kids.

Today, we're making sure they understand what credit actually is.

Today, we have our two most creditworthy kids with us, and

they're gonna tell us what they've learned about building credit.

But we're gonna start with a quiz.

Are we starting with a quiz, or is the quiz later?

I'm not sure.

Here's the truth: giving your child good credit without teaching them how

it works is like giving them a car without teaching them how to drive.

Access without understanding can lead to disaster.

We know that one of the biggest afflictions of Gen Z's, financial

health is debt and poor credit.

So we are going to clear some of that up with our kids and with you today.

So today is about education, the concepts your kids need to

internalize before they're ever responsible for their own credit.

So kids-

Yay.

Let's start here.

What is a credit score?

It's like a grade for how you handle borrowed money

No cheating

No He did not cheat.

He remembered.

Oh

Exactly.

It is a number between 300 and 850 that tells lenders how likely you are to

pay money back if they lend it to you.

Hmm.

So you're right, it's a grade.

Like a grade.

Good job, Gabriel.

Higher is better.

700-plus is considered good.

750-plus is excellent.

Below 600 is going to make life harder.

Okay, let's break down how the credit score is calculated.

The biggest factor, 35% of that credit score, is payment history.

Do you pay back your debt on time, every time, regularly?

Number two, 30%, credit utilization.

How much of your available credit are you using?

Under 30% is the rule.

The third factor is about 15%.

It is length of credit history, so the longer you've had

access to credit, the better.

This is why we've talked about adding your kids as authorized users to

credit accounts early on so they can build that length of credit history.

Number four, 10%, credit mix.

Different types of credit.

Cards, loans, mortgages.

And number five, the fifth factor, is about 10% of that credit score.

That's new credit.

How often are you applying for new lines of credit?

Here's something you need to understand viscerally.

Say you buy a $1,000 phone on a credit card with 24% interest.

Yeesh.

24%. Yikes.

It's terrible.

Okay, quiz.

You ready, Naomi?

Yeah.

If you only make the minimum payments, maybe it's like $25, how long will

it take to pay off that $1,000 loan?

Mm. Uh, a… It's a pure guess, but let's see how good at guessing you are

Like at least 10 months At least 10 months, you are correct.

Five years.

It'll take you five years to pay off thou- a $1,000 loan- $1,000 … at 24% interest.

With a 24% interest.

That, that is crazy, and that math does not, it doesn't like, it's not intuitive.

You don't think like, "Oh yeah, five years I'll pay that off."

It's math that almost always works against you.

And one thing that we didn't talk about earlier, this is the point that I wanted

to make- Interest is a tax on your money, and it will destroy your wealth.

It just, it just eats away at your wealth.

If wealth is you accumulating value and saving money, lenders

will charge you interest.

That just eats away, it's like a cancer, at your money.

So we're talking about trying to avoid having to pay that interest,

and one of the best ways to avoid paying interest is following these

tips and being credit-worthy.

Right.

And just as we talked about $1,000 for that phone for 24 months, by the time

you pay off that, $1,000, you would've paid 700, $700 more because of interest.

So your $1,000 phone will now cost you $1,700, and that's not the best interest.

Interest.

So interest, if I lend you money, it's called principal.

I give you, let's say I lend you $100, okay?

But banks don't just lend you money for free.

They also charge you a little bit extra for the privilege of borrowing that money,

because it's now money that they don't have 'cause they gave it to you, right?

Mm-hmm.

So that, that extra fee is called interest, and it doesn't sound like a

lot, but over time it adds up a lot.

So you wanna avoid high interest rates if you're borrowing money, but if you

are the lender, then high interest rates work in your favor, like Mom said.

Now flip it.

If you put that same $1,000 in an investment earning 10%.

In 30 years, that 1,000 becomes 17,000.

So it's the same principle, but it's working in the opposite

direction, in your favor.

Do you understand that so far?

Yeah.

Very cool.

Sweet.

Credit card interest takes from you.

Investment returns give to you.

Understanding this changes everything.

We all need to make a distinction.

Not all debt is equal.

Good debt helps you acquire assets that appreciate or generate income.

A mortgage on a rental property, a business loan, or a wise student loans.

Bad debt is for the things that don't hold their value.

So think of, like, credit card debt for a vacation or excessive car loans or

consumer debt loans, the credit card debt for things that are just wants.

Question to ask: Is this debt going to make me money or cost me money long-term?

All right, another quiz for the kids.

What debt does Mom and Dad have right now?

What are we paying for that, that we pay for using debt?

Our house.

Bills.

A house bill.

Okay, the house.

Now, in, in the United States, most people will buy a house using debt.

So meaning like Mom and I did, we found a house, we didn't pay for it all at once.

Instead we went to a bank and we say, "Hey, can we borrow money to buy this

house?" So the bank lends us money, we use that whole loan amount to buy the

house, to, to give that money to the previous owner, and then we just pay

the bank back over 30 years in our case.

So we have a 30-year loan.

What's our interest rate, around five and a half?

Mm-hmm.

Okay, so five and a half percent.

We're gonna pay a lot of interest because every single month that we pay-

Mm-hmm … the bank charges us interest.

Right.

So over 30 years, that's a lot of interest that we're paying back the bank.

However, it makes it manageable for us, and when I make money or when Mom makes

money, we can use some of the excess that we make to invest in other things, and

those in- excess investments might yield more than the five and a half percent.

So what's, what's one good thing about a house that makes it

okay for us to go into debt for?

'Cause we live in it.

We have to have it, right?

So you have to pay for housing somehow.

You're either renting it or you're buying it.

So what is bad debt again, Naomi?

Things

that don't have value or don't hold value.

Yeah.

Our home holds its value very well.

So it's okay, that's the good kind of debt.

It's okay to go into debt for a home if your home is gonna hold that value.

In 30 years, or even long before then, if me and Mom decide to sell

that house, it's, gonna have the same value or, or probably more

value than what we bought it for.

It will most likely have more value because homes appreciate in the long run.

And you add, like, things to it.

Mm-hmm.

And that's why we fix things and keep it.

We don't let it fall apart because we want it to hold its value.

Or go up by 1,000 bucks.

Right.

Can I have that 1,000 bucks?

Okay, what else do we- That's another episode, sweetie … what

else do we have debt for?

Food.

No.

No.

Our car.

Cars, yeah.

We have car payments.

Now is that good debt or bad debt, do you think, based on what we've talked about?

Good It's okay.

It could be bad It depends, right?

Because we have a car that does what we need.

We don't have an excessive car.

Like, we're not buying an incredibly fancy car for no reason.

Yes.

We have a car that takes us to and fro- We don't have fancy cars … like from

school, from work, and home We don't.

So it depends on the car, and it depends on the debt that

you're having for the car.

So a car could be a good or a bad debt, just depends on what, how you're using it.

And we, have a car that helps us accomplish our goals, right?

And not, like you said, not to be flashy.

Mm-hmm.

We could pay off the car, but we could also do other stuff with the money that

we would use to pay off the car, and that other stuff is gonna give us more money

than the interest we'll save on the car.

So sometimes it's good to go into debt because it helps you get the things that

you need immediately- Mm … and it helps you manage your payments for those things.

But you gotta be very careful about debt, 'cause it's all very tempting.

Mm-hmm.

It's easy when you go… Here's something what happens when you go buy a car.

They'll say, "How much can you afford every month?" They'll never tell

you how much interest you're paying.

They'll say, "What can you afford to pay every month?" And they'll structure a loan

for you that keeps you in that monthly payment- In that budget … but it might

take you seven years to pay off, or it might have a really high interest rate.

Mm-hmm.

So be careful about that.

Always look at the interest rate, the total amount that you're

paying, because remember that interest rate destroys wealth.

Interest can destroy that wealth.

So now, let me ask you a question, Naomi.

Credit card for a TV, is that a good or a bad debt?

Uh, bad.

Why?

Why is it bad?

Because it's some- it's, like, ki- it doesn't really hold

its value most of the time.

That's right.

Am I, is my high five gonna let me down?

Okay.

Also, TVs don't help you make money.

They don't.

A car helps us make money how?

By driving to work.

Yeah, we gotta drive to work, or Mom needs to drive to see clients.

Gabe, another quiz question, good or bad debt: a loan to start a business.

It depends on what business

yeah, every business is a risk.

Every loan is a risk, right?

But if you have a, a good business idea and you believe in yourself, and you

got a good plan, and you have a good worth e- work ethic then yeah Mm-hmm

a business can make you money so financing it is a good investment

These kids are going to be fine.

Naomi, good or bad debt?

Student loans.

What's a student loan?

You don't know yet, huh?

So when you get to college, this is what we'd have to break down

to you, when you go to college you will need money to pay for college.

Because unlike your 12 through, your K through 12, education

in the United States, you actually have to pay for college.

So because we can't just afford 24 or how- however much your college will cost,

you will need to take out a loan, okay?

You can do scholarships, but you're gonna ne- need to take

out a loan to pay for that.

So

You could.

You could.

That's a good place to start.

But what if you didn't h- have any savings and you had to take out a loan?

Would that be a good debt or a bad debt?

I think it could be, like, in between because it depends

what you're, like, studying in.

Another good answer.

Depends on what you're studying.

I can't, I can't handle this, Naomi.

Where do you get these, these answers from?

Teleprompter.

Why would it be good- From what?

Teleprompter.

If,

like- She's on- … you're doing the, a doc- like a something in doctor thingies.

Yeah.

I mean, if you're in, if you are learning something that's gonna

help you make money later in life, that's a good investment, right?

Oh.

Yeah.

Lots of careers, right?

Lots of careers are good money makers, and generally, investing in yourself and

your own education is a good investment.

Now, you do have to weigh, like, how much the school costs.

You don't wanna go to a super expensive school- Oh … if you can get the

same education at a cheaper school, but maybe the really expensive school

is gonna give you the best education.

So there's a lot of factors that go into it, but generally, investing in

your own education is a good investment.

Investment.

As long as, again, it's like the business you said, Gabe.

As long as you have a plan and you have some discipline and you're

willing to follow through on that plan.

So community college?

What's that?

Mm-hmm.

So community college?

Hey, community college- Yes … for me, was I think it was a great investment.

I went to community college for two years.

It was… I did not pay for it 'cause I, ended up getting a scholarship.

Because he was a scammer.

I was a scammer.

But, but I mean, that for sure, if you are looking at return on investment

and, and cost, like, a good ratio for, like, your cost to what you're

getting out of it, yeah, community college could be a really good deal.

I mean, I went to community college, and then I went to a four-year college, and

then I, got a master's degree, and then I got a PhD. So I just kept building up.

Six years old, seven?

Oh, I was, like, 12.

Oh.

Your homework this week is to teach, not just talk Activity one, show

your kids a credit card statement.

Point out the interest rate, the total interest accrued, the total

balance and have a conversation about the minimum payment trap.

We have a rule in our family for our credit card statements, we pay

the balance in full every month so as to avoid any interest charges.

Okay?

Mm-hmm.

It's, it can sometimes be tempting to make a minimum payment And

that's okay for … it doesn't get you into trouble to make a minimum

payment with the credit card company.

They'll continue to lend you money- Mm … but your interest will build up.

The interest payments that they are demanding will build up, and then

eventually you won't be able to catch up.

use an online calculator to show them compound interest.

Let them plug in numbers.

Okay, I did this once with my, high school math class.

Mm-hmm.

We had a scenario where we pretended that as a high schooler, you

were interested in buying a car.

So we looked at cars, and this was years and years ago, but let's say

that you found a car that cost $20,000.

I mean, if you went to a used car dealer there's lots of good used cars, but

that, that would cost around $20,000.

So then we looked up the interest rate at the time, and let's just say it was,

5% for really credit-worthy people, okay?

And because you're in high school and you don't have a ton of money, you have

to finance the whole thing, so you need to borrow $20,000 at a minimum of 5%

interest to pay for this car, okay?

And let's say you finance that over five years.

So you could pull out a calculator and figure out what that would be.

Well, what we learned is because you are brand new to the credit scene,

or most, most high school people are brand new to the credit scene,

they're gonna get charged 6% interest.

A little more, 'cause the banks are like, "Ooh, we don't

know if you can pay it back."

So you're now having to pay 6% interest.

And they're financing the whole thing.

So we calculated how much that would cost, and it was a lot.

It was around probably $30,000 total, okay?

20,000 on the principal, and then 10,000 on the extra, on the

interest over a five-year period.

Then we compared that to an alternative.

We said, "Okay, what if you could just tough it out for one year without a car?

Just one year.

And instead of making a car payment for that one year, make a payment to yourself.

Figure out what that car payment would be, and instead of paying

the bank, pay yourself for a whole year." At the end of a year, you'd

probably have around three or $4,000.

What do you mean by that?

Maybe, maybe five or $6,000.

What d- what do you mean by that, like pay yourself?

Pay yourself.

So take the money- Instead of paying the car- … you would've paid to the bank-

Mm-hmm … and just, and just save it.

Put it in an envelope or in a bank account.

We don't recommend envelopes.

But it- An interest-bearing account

So you put that money in a bank account, all of a sudden you're

getting some interest, maybe 1%.

You can put it in a CD, maybe 2, 3%.

And at the end of the year, you have several thousand dollars.

Now, you could go back to that same car dealer, have that $3,000.

All of a sudden, you can make that down payment.

Your principal goes down, so instead of borrowing $20,000,

you only have to borrow $17,000.

And because you've come with a down payment, they lower your interest rate.

And all of a sudden, your total payments over to them over the

course of, you know, five years goes down by thousands of dollars.

And you have more options, too, because you already have the $3,000.

Maybe you can get a four-year loan instead of a five-year.

Or maybe you can get maybe you can afford a three-year loan

instead of a five-year loan.

That also reduces the interest rate, and it reduces the total interest

owed over the life of the loan.

So there's some interesting things you can do once you pull out that

calculator and go over it with the kids with some scenarios.

Credit can be your greatest tool or your heaviest chain.

The difference is understanding.

Teach your kids the math.

Show them the statements.

Make it real, because as adults, the lessons get much more expensive.

Next week, we're talking about starting businesses before the age of eighteen.

Our kids have some entrepreneurial projects that they're

eager to share with you.

We're gonna go over those and teach you how your kids can make income at home.

Until then, teach the math.

Change the trajectory.

Legacy isn't accidental.

It's built on purpose.

The content shared on the Broker's Table: Legacy at the Table podcast

is intended for educational and informational purposes only.

While we discuss principles, strategies, and real-life experiences

related to finance, family, and faith, watching or listening to this

content will not make you rich or guarantee immediate financial success.

True growth and lasting results require consistent effort, discipline, and wise

application of the knowledge gained.

The insights provided are meant to guide, inspire, and equip you to make better

decisions over time, not to serve as quick fixes or promises of instant wealth.

We encourage viewers to thoughtfully apply what they learn in ways that

align with their personal circumstances, values, and long-term goals.