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Navigating a Mountain of Credit Card Debt: Tips for Debt Management and Recovery | Ep. 298
Episode 29830th January 2024 • Money Talk With Tiff • Tiffany Grant
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In this episode, Tiffany Grant, your money nerd and financial coach, answers a crucial question from a listener: "Tiffany, I have over $50,000 in credit card debt. What do I need to do to get out of this?"

Tiffany provides a comprehensive response, delving into the emotional and mental burden of debt, understanding the root cause, and actionable steps to take. She emphasizes the importance of setting achievable goals, building a support network, and staying consistent in your debt repayment journey.

Dive into the episode to gain valuable insights and practical tips to tackle massive credit card debt. Don't miss out on these empowering strategies to take control of your financial future.

Timestamps

[00:00] - Tiffany's podcast answers questions about personal finance.

[05:31] - Learn budgeting, reducing debt, and debt consolidation.

[06:44] - Analyze debt before considering consolidation, set goals.

[10:24] - Seek professional help, connect with similar experiences. Celebrate frugally.

[14:11] - Show notes link to resources, encouragement given.

Key Takeaways

  • Emotional burden of debt: Acknowledge and understand feelings.
  • Identifying the root cause of debt: Unchecked spending, job loss, medical bills.
  • Debt repayment methods: Avalanche vs. snowball method.
  • Importance of budgeting: Track expenses and prioritize debt payments.
  • Debt consolidation options: Assess suitability and benefits.
  • Setting achievable goals and celebrating milestones.
  • Building a support network and staying consistent.

Additional Links & Resources

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Copyright 2024 Money Talk With Tiff



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Transcripts

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You know what it is. That's right. It's time to talk money with your

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money nerd and financial coach. Now tighten those purse

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strings and open those ears. It's the money talk with TIFF

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podcast. Hey, hey, and welcome to

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Tiffany's take, where I answer your questions right here on the podcast.

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If you would like your questions answered, just go to ww

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moneytalkwitht.com forward Slash x, Tiffany,

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and I'll be more than happy to answer. Think of it like a one on

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one session before everybody to listen to, but nobody knows

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who you are. But anyway,

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today I wanted to talk about a question that I received, and

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someone asked Tiffany, I have over $50,000 in

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credit card debt. What do I need to do to get out of this?

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Okay, so I wanted to focus on this question

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because, actually, I've had quite a few conversations lately with

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people in quite a bit of credit card debt, which is not

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surprising, honestly. You have to realize that

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it has been the perfect storm for credit card debt to

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continue to rise. And if I'm not mistaken, I would have

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to check my stats on this. But I think we're at or

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almost at a record breaking amount of debt,

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not just as a country, but also as consumers. Right?

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So if this is something that you're going through, I know it's a

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tough situation, and it weighs heavily on many of our listeners

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hearts, but just know that you are not alone,

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okay? And so that's why I wanted to do this episode. So maybe I can

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help a few other people that may be going through this situation,

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because I know that it's out there. So, first,

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you want to acknowledge the emotional mental burden that comes with this level

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of debt. So it's important to understand that the stress you're feeling is completely

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normal. Behavioral finance tells us that our relationship with

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money is complex, and it's tied to our emotions, our upbringing, and our

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experiences. You hear me talk about that all the time. So you're

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not just dealing with numbers here. You're also dealing

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with feelings, too. So you need to acknowledge those feelings.

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And it's even good to maybe even write down how

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you're feeling about this debt. And one thing that I worked with my

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therapist on was using a feelings wheel, and you can

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just google one because that's what I did, and I printed it

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out. And I use that occasionally to say,

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how am I really feeling? Because we usually default

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to, like, okay, stressed or mad

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or sad. But feelings are a little more

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complex than that. There are different levels to med. There are different

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levels to said there are different levels to stressed. And

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so when you have a feelings chart, you can kind of see,

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okay, I'm mad, but what is beyond that

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mad? Are you feeling disappointed? Are you

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feeling betrayed? What is

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behind that mad? So I highly recommend getting a feelings wheel

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because that might help get to the root of how you're feeling about

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this. Then next, you want to start digging deep and

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understand how you got into this debt in the first place. So was it due

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to an unexpected medical bill? Was it job loss?

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Unchecked spending habits? Did you have a

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pet that needed care? What was the reason

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that you got into this debt? So, identifying what the root cause

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was can help us create a little more effective plan to tackle

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it. Because remember, this is not about blame. It's about

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understanding and learning if it was something medical

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related. Okay, cool. That just comes up every now and

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again. And so when we develop our plan, that's not something we have to take

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into consideration too much. But if it was job

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loss or if it was like, unchecked spending habits, that's something that

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we need to consider as well because that'll affect how we

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develop our plan later on. So I hope that makes sense.

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So now that we got those two things out the way, because those are super

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important to start with, let's dive into some actionable steps

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you can take. So let's say you checked your emotions, you

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checked your mental around this, you understand how you got into this

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debt. What's the first thing you need to do? So first,

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list all of your debts in their interest rates.

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Prioritize paying off the ones with the highest interest rates first. This

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is known as the avalanche method. Now, this method will save you

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more money. So that's why that one is preferred.

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But if this is something where you find yourself

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continuously in debt and it's something that you need more of, like a

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psychological boost, then you can always do the snowball method, which

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is listing the debts in order from least amount to

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greatest amount. And then starting with the smallest one and

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working your way up. That'll give you a psychological boost and

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help you keep on the journey. Sometimes if you do

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the avalanche method, which is the highest interest rates, first, it

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can feel overwhelming. Because what if your highest interest rate

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debt is also the highest amount? You'll feel like you're working on that

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forever. So I'll make sure I put in the show notes, a

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link to my methods to pay off debt article because that'll

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be helpful to go into more detail about what I'm talking about. With these two

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methods, and then I also do another method with my

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client, which is kind of like a combination of both. So I'll make sure I

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have that in the show notes. Make sure you check out that if you're interested

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in learning the different methods to pay off debt, the second

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thing you need to do after you got everything laid out is to create

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a budget. And I know y'all are probably like, Tiffany, I'm tired of you talking

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about budgets, but if you hear me talking about it, you

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see how crucial it is to your financial

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wellness. And so knowing where your money is going

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each month can help you identify where you can cut back and

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put more towards your debt. This is actually what me and

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my clients go through, so we kind of go through all of these things

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in order. So you're getting like, a free session right now,

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but when you are able to see where your money

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is going, we can go line by line and see. Okay,

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does this need to stay the same? Can we cut out a little bit of

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this? Can we add more here? You can kind

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of start playing with the money and moving it around to reach your

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goals. Number three, you may need to

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consider debt consolidation options. So if you have

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multiple sources of high interest debt, maybe

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consolidating them into one lower interest loan can save you money

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and simplify your repayment. And this is also why

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I went over number one first and listing out all the debt, because

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then you'll get a better understanding of if debt consolidation

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will help you or not. Sometimes it doesn't help everyone.

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Okay? And it makes no sense if you are

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to consolidate into a loan where you'll be paying more

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interest or it's a monthly payment that you can't afford.

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So it's good to know all your debt and really

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take an analytical look at it. And if you're interested in debt

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consolidation, I'll also put that link in the show notes as

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well. I actually have an article for all of these

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things that I'm going over, so I'll make sure I'll put all of

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that in the show notes so you can read a little more in depth because

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that kind of expands beyond the purpose of this episode.

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So if you're interested in debt consolidation, check that out next,

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you want to set small, achievable goals. So people come

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to me and they're like, tiffany, I want to get out of credit card debt.

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I owe like 70, 80, sometimes even 100 plus

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thousand in credit card debt. I get it and I understand,

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and we will get there. But it's important that

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you set small, achievable goals. So don't just aim for that final

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zero balance. Celebrate smaller milestones along the way.

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So maybe every $5,000 you pay off, make

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sure you celebrate. This way you can keep your motivation

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high. That's one thing that I did that was really helpful

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for me when I was on my debt repayment journey. I mean, I still am.

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Don't get me wrong, I still have debt as well, but

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it really helps to keep my motivation. So when I used to

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get those little paid in full letters, every time I would pay off a student

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loan or pay off a car, whatever, you get these

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little letters in the mail and I'm like, oh, yay. And then

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even when I go and I update, because sometimes I update my net

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worth numbers, too, it made me realize that, oh, I'm

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making a lot of progress. I actually just posted about this over the weekend because

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I updated my numbers on Twitter and I'll have a link to

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that post as well if you want to check it out. But I was five

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figures in the negative when it came to my net worth back in 2017.

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And I started this journey. And when I looked over the weekend,

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guess where I met you all. Almost to multiple six

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figures in net worth. And so not only did I turn my

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ship around to get out of the negative, but I'm also

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six figures plus. And so that's why it's

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important to check on your progress and celebrate those small, achievable

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goals. Am I at no debt?

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Absolutely not. That is a goal that I would like to have. But in the

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meantime, in between time, I celebrated getting to zero

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net worth. I celebrated when I got to five

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figures net worth. And now I'm celebrating at over six

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figures net worth. So set those small achievable goals so that

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way you can get those extra boosts of motivation.

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Number five, make sure you reach out and build a support network.

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So talk to people that have been in your shoes or consider seeking

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professional advice. There's no shame in asking for help. And if you

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listened to the episode last Tuesday, I talked about financial shame

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and guilt. If you haven't listened to it yet, highly recommend listening to that

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one as well. But it's important to talk with people that

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are in the same shoes or talk to people that have seen

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it before, like myself, and have the

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tools that are able to help you, whether it's

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psychological, mental, or just tactical. Some people,

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they already have tapped into the psychological side. Maybe they already have a

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therapist or what have you and so now they just need the tactical steps to

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take. Right. So talk to someone that's a professional

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or see if there's someone in your community or in your network

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that are going through the same thing. I can almost guarantee

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that if you have a lot of credit card debt,

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there's probably someone in your circle that does as

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well. It's just that nobody talks about it, right? So

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it's hard to know. But once we start having these conversations

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openly and more frequently with our loved ones, friends, family,

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whoever, then we'll understand that we're more alike

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than we are different. Number six,

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when you do celebrate those milestones, like I said in number four,

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make sure you do it frugally, because I want you to

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celebrate. But remember, do it in a way that doesn't involve excessive

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spending, because that's how we got here in the first place. So a small treat,

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a dance in your living room, or even just taking a moment to acknowledge your

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progress can be enough. And that's one thing that I do with my clients

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in our meetings. Whenever we have a meeting and they've

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implemented our plan and they've took the next steps, I'm like,

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let's take a moment and let's just acknowledge that

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it's easy to glaze over it. Like, okay, I did this. I did this, I

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did this. What's next? But I'm like, no, let's pause on that

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real quick. Let's celebrate that. Let's talk about how we feel about

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that, and then we can talk about what's next. Because if you

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tap into that instead of being on autopilot, and the same goes

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for when, let's say you're dieting,

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right? There's a lot of information out there

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about being mindful about when you eat and how that plays a

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role in lowering your calorie

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intake. Well, it's the same here. If you're mindful about the progress that

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you make, then you can use that

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motivation to get you to the next step. So

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definitely celebrate those milestones, but do it in a way where it's

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frugal, because think about it this way, too,

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y'all. The least money you spend on celebrating, the more you can

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put towards that debt. Okay? All right.

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And then number seven, my last thing, well, second to

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last, is to stay consistent. So paying down debt is a marathon,

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not a sprint. So stay consistent with your payments, no matter how small

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they might seem. There have been times where I was paying only the minimum payment

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on all of my debts because that's all I had at the moment. But I

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stayed consistent with that. And even if you do that, you don't

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make too much headway too fast, but you are making some headway,

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believe it or not. So you can pay a significant

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amount just by doing the minimum payment over

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time. But if you wanted to put pedal to the metal, of course you would

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have to pay more than that. But as long as you're doing what you

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can, you're keeping up with your payments. Sometimes you hit rough spots, and

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it's okay to pay the minimum balance. I mean, pay the minimum payment,

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it's okay. But when things get back good, just bump those

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payments up and get back on track. So remember that

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the most important thing, and this is the last thing, is to take

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action. So start today, even if it's just one tiny step,

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like creating a budget or calling your credit card company to negotiate your

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interest rates or figuring out what your goals

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are for your financials. Take one step

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today, because every step you take is a

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step closer to being debt free. And once you're there, let's work together

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to make sure you stay there. So learn from your past

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experiences, build good financial habits, and

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maintain a healthy relationship with money to avoid

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falling back into the same debt cycle. So I am here with

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you every step of the way. I will make sure that I have all the

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links in the show notes to all the articles about all of these points

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because I have one for pretty much all of them. So that way, wherever

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you are in those steps, there's some

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resources for you. Okay? So thank you so much for

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listening to today's episode. And if you are in massive amount of debt, don't

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worry, you are not alone. I am right there with you

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actually, and we are going to work through this together. Now,

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if you enjoyed this episode, be sure to share it with your family,

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friends, whoever you think might need it. But also rate, review

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and subscribe to the podcast so you don't miss another one. Until next

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time. Bye. Thank you for

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listening, joining and being a part of the money talk with TIFF podcast this

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week. You can check Tiff out every Thursday for a new money talk

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podcast. But if you just can't wait until next week, you can listen to

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previous podcast

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episodes@moneytalkwitht.com

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or follow TIFF on all social media platforms at

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moneytalkwitht. Until next time, spend wise

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by spending less than you make a word to the moneywise is

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always sufficient.