Could a $15,000 Deductible, Rising Grocery Bills, and Medical Debt All Hit You This Year?

Juliet Chuang00:00:00

A listener wrote to us this week. He's 50, working extra shifts and still falling behind.

Ralph Estep Jr.00:00:15

And before we get to their letter, we're going to talk about what's putting pressure on people's finances. We're specifically going to talk about home insurance, grocery prices, and medical debt.

Juliet Chuang00:00:25

So let's get into it.

Ralph Estep Jr.00:00:28

Becoming Financially Confident.

Juliet Chuang00:00:35

Welcome to being. Becoming financially confident. Breaking free from money shame. One conversation at a time.We're live every Monday through Friday from 11:30am to 12:30pm Eastern.

Ralph Estep Jr.00:00:46

Yeah. And welcome to our first episode of the show live. We did release a transition show on Friday. I'm Rafi Stepp Jr. I'm a licensed public accountant. Yes.I've been doing this for 30 years. Been like I'm doing it for the rest of my whole life here.

Juliet Chuang00:01:00

You have. You have, actually. And I'm Juliet.I'm just like a regular person who's going to be asking Ralph all the questions that I have because you might also have them, too.

Ralph Estep Jr.00:01:09

Yeah. We're two very different people having conversations about the things that affect our money at the kitchen table.Now, I'm going to set some house rules here. Really important for our show. On our show, there's no shaming anybody about money. Nobody's going to be judged for what they didn't know.And what happened yesterday happened yesterday. And we're going to move on today.

Juliet Chuang00:01:27

Yeah.If you have any questions that you want us to have a conversation about on the show, send it to us@becomingfinanciallyconfident.com no question about personal finance is off limits.

Ralph Estep Jr.00:01:40

Yeah. Wherever you're on your financial journey, just know that you're not alone in any of these things.

Juliet Chuang00:01:45

Yeah. As you guys know, this is a live conversation. So if you want us, join us live.Join us Monday through Friday at becoming financiallyconfident.com live and you can be a part of the discussion. So the first one, consumer sentiment, fell again in August. And a J.D.Power survey found that 43% of people say groceries are their biggest financial stress and 77% of people say they've changed their day to day spending. Ralph, are people just feeling worse about the economy or are we actually seeing people change how they're living?

Ralph Estep Jr.00:02:20

Well, I think we're seeing two things. I think people do feel bad about where the economy is right now. And I think people are just having to make adjustments because things cost more.You go to fuel your car, it costs more. You go to the grocery store, it costs more. All of those things are actually happening right now and people Are struggling.You know, they did some research. 27% Of people cut groceries or skips meals last month. That's a real number.What that means is, yeah, one in four people are deciding to not eat as much. They're deciding to do less grocery spending. Nine percent of people missed rent. And that's like the main.You know, I don't know about you, Juliet, but, like, the main thing you want to pay for is a place to. You have a place to put your head down at night. 9% Mixed rent, a mortgage, utility bill. This is another scary statistic. 18% Borrowed from family.

Juliet Chuang00:03:09

Yeah.

Ralph Estep Jr.00:03:11

Yeah. 14% Sold belongings.

Juliet Chuang00:03:13

That's just so difficult because it's everything about the way we live. Right. I'm just thinking. I'm hearing this. I'm thinking it's gonna impact our health, our housing crisis. Family relations are gonna be strained.It's terrifying to hear.

Ralph Estep Jr.00:03:28

Yeah, it's a big deal because it's affecting so many things. So many people think, well, it's just the money. No, it's not just the money.It affects your mind, it affects your spirituality, it affects your physical behavior. I mean, when you got 14% of the people selling their bel, that's a big deal. And people aren't just borrowing more, they're cutting back.The problem is, cutting back is not the same as paying down debt. And that's one thing we need to be really focused on.That's one of the things we're talking about in this show every day, these headlines that we're going to talk about. This one, take a minute and pause here for a second. Just so you understand, this isn't the show to come here about what the bond market did.We're not going to talk about stock and bond purchase.We're going to talk about stuff that affects you, stuff that happens at your kitchen table when you're standing there trying to figure out, how do you make it through the next paycheck? That. That's exactly what we're talking about on this show.

Juliet Chuang00:04:15

So, Ralph, a question for you is, you know, people are cutting back. Have you cut back in any ways since the economy has taken a turn?

Ralph Estep Jr.00:04:23

Oh, absolutely. I think all of us have to. We have to pivot, and we have to look at the real numbers, and we're going to talk a lot about that on this show.How to really know what's going on.Because it's one thing to say, well, yeah, I'm not spending as much, but you got to measure those things, and you've got to build margin into your life. One of the things I'm working on, my fourth book, actually, right now, and it's all about giving every dollar a job.And that's really what we're going to talk in the book. But we're going to talk a lot about that on this show here, too, because the truth is, that's the way we have to be intentional in our spending.I don't like to use the word budget so much. People hear budget and they all restriction. I'm not going to do that. I like the word intentional spending.And when we're in economic times, like we're in right now, intentional spending is so really important. It really is.

Juliet Chuang00:05:05

Do you have any suggestions of what people should pay attention to during a tough economic period?

Ralph Estep Jr.00:05:11

Well, I think right now you got to pay attention to everything. I mean, I think you just need to be super sensitive about what. No, but seriously, I think you need to be sensitive about where your money's going.That that's the one takeaway I would say is our first head on here. Number one thing, know what's coming in and know what's going out.

Juliet Chuang00:05:24

If you don't measure it, then you don't know what's happening.

Ralph Estep Jr.00:05:26

It's all about having clarity. You know, I'm not sitting here judging where you're spending your money. That's your choice. You're. You're an adult.You do what you want, but know where your money's going. Because what they found is about 30% people say, I didn't realize where I was spending money. It's a big deal.

Juliet Chuang00:05:40

Yeah.

Ralph Estep Jr.00:05:41

Let's move on to our second headline of the day.

Juliet Chuang00:05:47

So the national oceanic and Atmospheric Admin says this hurricane season is expected to be more quieter than usual. They forecast seven to 13 named storms, but so far we've only had two, and neither actually became a hurricane.But home insurance is still getting super expensive, with the average premium expected to rise about 4% this year. So, Ralph, if the hurricane season has been relatively quiet, why are homeowners still paying more?

Ralph Estep Jr.00:06:15

Well, it's because of the general cost of everything. That's what it comes down to.I mean, it's really a simple situation in that if stuff costs more, if it costs more to repair your home, if it costs more to do those renovations to your home, all those things push back to the insurance carriers. And, hey, this is a great thing that we're not going to have as many named storms. My oldest son is in the Coast Guard.You know, that's the kind of thing that he would be involved in. That's a good thing. But you have to understand something.Insurance carriers, price for future risk, they're looking out a year, two years, three years down the road, they're not looking at this year. So you might be saying, ralph, wait a second. Then they should send us a refund. Yes, they should. They're not going to, but it sounds good.But the cost of rebuilding is so much more. Now you think about the trickle down of this.One of the things that I'm not a huge fan of them making just this arbitrary, you know, minimum wage because all it did was inflated prices in everything. So that contractor that used to do the job for X is now charging Y all the reinsurance costs. All those things go into all that.So you gotta really understand that even though we have less named storms, which is a good thing, I mean, hopefully people won't lose their lives, people won't lose their property. We won't have those big evacuations like we've seen from year to year.But unfortunately, in the insurance market, that really doesn't affect the premiums. I think we're just on a rocket ship of the price, prices going up.

Juliet Chuang00:07:37

And this is only, we're only talking about hurricanes right now. There's still so many other kinds of natural disasters that insurance usually have to look out for and take into consideration.

Ralph Estep Jr.00:07:47

Right, Absolutely. And that's one of the reasons you really want to check your policy and make sure you understand what you're being covered for.

Juliet Chuang00:07:53

Yeah.I think one thing we discussed is that just because your homeowner insurance policy covers hurricanes, it does not necessarily mean that like floods are covered.

Ralph Estep Jr.00:08:05

Yeah, that's a big deal. A lot of people don't know that.They just assume, well, if my house is in a place where it gets hit by a hurricane and all of a sudden the water comes rushing in. The problem is if you don't have flood insurance, you're not covered. And that's a lot of things people don't understand.I'll give you a great example. This, we talked about this last week.We were doing some planning for the show and I said to Juliet, it's even a thing where, like, if your washer all of a sudden explodes in your house and floods your house, most homeowners policies don't cover that. A lot of people don't know that. Now if you're not in a flood zone, you're not in a flood, then you can get relatively inexpensive flood insurance.That's one of the things to talk to your agent about, because that's one things a lot of people don't know. Now, if you're in that flood zone, it's going to cost you more. In fact, right now I've got clients that live in Florida.They're having a hard time even getting flood insurance because the insurance companies are leaving because they know they're going to lose. They know that these hurricanes come. They know that there's going to be flood premiums, and they've basically taken themselves out of the market.But I want to give you a couple of things here.As the prices of homeowners insurance go up and the numbers have been going up year after year, don't drop coverage because the premium went up, there are things you can do. Maybe you have to increase your deductible. Check the declarations page if you don't know anything else about insurance.And we're going to talk about this. And we have a segment coming up in the next few days called the Envelope.And basically in the envelope section, we're going to talk about how to read these things that get sent to us because so many of us get these things. We're like, what in the world is this even telling me? When you have an insurance policy, there's a thing called a declarations page.You don't need to be an insurance expert, but you need to understand what's on that declarations page because that's going to tell you what you're covered for and what you're not covered for. And those not covered for things are the scary things. Like a lot of people don't understand. There's hurricane, there's windstorm deductibles.And these numbers can be high. They can be from 1 to 5% of the dwelling coverage, not a flat dollar amount. So what am I talking about there?I mean, you know, on the show also, I want to break it down. If you've got a $300,000 home, okay, 5% of that, let's just say that you have a flat dollar amount of coverage for this for hurricane.

Juliet Chuang00:10:13

Okay, okay. Flat dollar amount.

Ralph Estep Jr.00:10:14

So they're going to basically say that you have a $15,000 deductible. And a lot of people are like, wait a minute, what? I thought my deductible was $500. I thought my deductible was $1,000.Yeah, that's why you've got to look at that declarations page. Because wind, hurricane, those type of things, the insurance companies know they lose on these things.So you're going to have more money out of pocket. That's 19 states plus the District of Columbia have that same situation.And like you talked about, flooding, Flooding coverage is generally not covered by standards. Homeowner insurance policies. You've got to get a separate flood insurance policy.I learned that the hard way here on the farm because the back of my farm is. Is actually in what they call the hundred year floodplain. So when we, when we bought the house, we had to get insurance.I guess about six months into this, I got a call from the lender and said, hey, Ralph, guess what? One of your buildings is sitting inside the flood zone. So now all of a sudden, you've got to go get flood insurance. What a disaster that is.

Juliet Chuang00:11:11

I have a question here. So you mentioned a 15,000 deductible. And this is for like a flat fee insurance, Right. Does it work?Kind of similar to health insurance, which means you have to pay for up to, I don't know, $15,000 worth of damage before the insurance kicks in.

Ralph Estep Jr.00:11:26

Yeah, basically what they're saying is because. And I think the average flood claim is like $68,000 when they look at the numbers. But basically, yeah, just like your.Just like your health insurance. Like my youngest son learned this the hard way a couple weeks ago.He had to go to the doctor and his out of pocket or his deductible was $6,300, which basically means that the insurance company doesn't pay a dime until you pay the first $6,300. Well, this policy works the same way. They're not going to pay a dime until you meet the first $15,000 of that policy.And that's a big deal because a lot of people don't have. I don't know about you, but a lot of people don't have $15,000 just sitting on the sideline going, hey, I can use this if I need to.

Juliet Chuang00:12:08

That's a lot of money. I see that in the chat Turning the tide tutoring. I believe you mentioned that you are also. Your home insurance is also covered with the hurricane.Well, you know, like Ralph said, definitely take a look at your declarations to see what is covered and what isn't.

Ralph Estep Jr.00:12:25

Yeah. And that's Nikki. So thanks for joining us on our inaugural live show. So let's get on to our next headline. How's that sound?

Juliet Chuang00:12:31

Sounds good. All right, the next headline. This one sounds maybe good, but let's dig into it. Eggs are actually down 25.7% from one year ago.That's about $2.19 a dozen. But milk is $4.31 a gallon and up 5.1%. And fresh fruit is also up by 4.9%. Groceries overall are up 2.7%.Ralph, if groceries are up 2.7%, how come that number feels so different from people's lived realities?

Ralph Estep Jr.00:13:06

Well, this is the issue, because we see these numbers in the press and we go, oh, okay, we go to the grocery store, we'll buy less eggs, we'll buy less milk. But what you don't take into consideration is we all just don't live on eggs and milk. All of those things are. No, it's true.But all of us have different realities in our lives. And the thing you need to understand is overall, groceries might be up 2.7%. Sure. But your groceries might be up 20% because of what you eat.And that's where, you know, one of the things I recommend on the show I was doing before, I talked about how to save money at the grocery store. And we can put a link in the show notes to go back and listen to that one, because it was very valuable.This is where sit down as a family and decide the meals that your family is going to eat. And you may have to pivot right now. If beef, I think beef prices, the number I was looking at the other day, is up like 15%.Well, you might not have beef for a couple weeks, maybe. You do chicken, you do fish, you do pork. You know, we talked about lettuce on the show Friday.You know, now's a great time to eat a salad because the prices for lettuce are down through the basement. But you have to be willing to pivot a little bit. It's not. You go shop for what you want.And this is going to sound kind of harsh, but you got to have right now shop for what you can afford and build your. And that's why I said, these are kitchen table items.People understand what we're talking about here because this is affecting them when they go to the grocery store. And you just have to be willing to pivot sometimes and say, yes, my family will eat this. No, my family won't eat that.I mean, don't buy stuff your family's not gonna eat. That's certainly not gonna help anybody.

Juliet Chuang00:14:31

I think right now, another hard consideration, especially for shopping for groceries, there's a bunch of food that. It's not just the lettuce, but there's so many things. I think the other day I saw there is a brand of rice that has been recalled that's terrifying.Like, you you should definitely check because it's either.Oh, you're going to buy it because it's cheap, but you should also check whether it has been recalled because do you want to risk your, you and your family's health?

Ralph Estep Jr.00:14:58

Oh, no, I hear you walking through the store. And like I usually buy this in ballot, it's like half price. Why is that? I think your antenna needs to go up and say, oh, yeah.I think my grandmother used to say, if it's too good to be true, it's probably a problem. And I think that's what you're talking about there.My big takeaway here is, like I said, shop your budget, understand things are costing a little bit more, but find the things that your family will. I use the word tolerate. I just be honest with you. That's what we come down to. And if you like sirloin steaks, you might be liking pork roast instead.And that's just part of what we're living in right now. But let's get to our fourth headline today.

Juliet Chuang00:15:33

Our last headline today. If you've ever had a medical bill go to collections, this could actually affect your credit report.The federal government tried to remove medical debt from credit reports, but that rule was thrown out. The good news is the three major credit bureaus still have their own protections and some medical debt shouldn't be showing up on them at all.So, Ralph, let's get into it. What should people know if they have medical debt on their credit report?

Ralph Estep Jr.00:16:00

Well, the first thing you need to understand is if you have medical debt on your credit report, know what that medical debt is, this is a big deal because people don't understand how did it get there? At some point someone sent you a bill. You need to understand how that got there. But let me give you a couple of things.Current rules right now, they tried to enact a thing at the federal level where they said they can't report medical debt. This is a big deal because a lot of people don't know about this.A lot of people don't understand that when your insurance company doesn't pay, the doctor's office sends it to a third party collection agency. Well, this is what the administration tried to do, but then a federal court came along and said, no, you can't do that.So right now, there is no federal ban right now. Now, that said, the three major credit bureaus, Experian, Equifax and TransUnion, have set their own rules.So you know how that is like the Wild West. So there's nobody that's really policing this. But that means that there you could be. It could be on one credit report and not on the other one.It could be on this one or not on the other one. There's paid medical collections, which means that it hit the credit report, you paid it, but it still shows up on your credit report.Now what I have found out with a little research here, in general, all three credit bureaus are generally removing medical collections if they're under $500, even if they haven't been paid.So that is a big help because if you're going to get a mortgage, if you're going to get a car loan and your credit score is affected by this, it could affect your ability to borrow.

Juliet Chuang00:17:29

Right.

Ralph Estep Jr.00:17:29

Also, medical debt less than 12 months old is actually being removed if it's going on the situation. So you might be asking, okay, well what do I do if this happening to me?First thing you want to do, and we talk about this all the time, is pull your credit report. You can go to annualcreditreport.com we'll put a link in the show notes, it's absolutely free.Read that thing line by line and understand every single thing on it. Look for medical collections or hospital medical providers listed as a collection agency.When you see those things, check the amount, check the status, see how old it is if it's paid. If it's under $500 or a year old, dispute it. Because what we're finding is if you dispute it, generally the three bureaus are taking it off.

Juliet Chuang00:18:11

Now I have a question here.

Ralph Estep Jr.00:18:13

Go ahead, shoot. Right in there.

Juliet Chuang00:18:14

Yeah, yeah, yeah. You mentioned that look for the hospital, the medical provider listed as a collection.But then you also mentioned if you have medical debt, usually the hospital gives it to a third party provider. So then is it possible to also look like, is it possible to have a medical debt that's not listed underneath the hospital name?

Ralph Estep Jr.00:18:33

Oh, absolutely. And see what happens a lot of times is the hospital will try to collect the debt first.

Juliet Chuang00:18:38

Okay.

Ralph Estep Jr.00:18:38

So they'll try to work it in house. They might get to the point where you're not paying them, you're not returning their calls. We can have a whole discussion about that at another time.But let's just say that you get to that point, the hospital might actually report that to the credit bureau. So that's option one. Then they might, somebody might come along, a third party collection agency and say, hey, we'll take over your debts.Now they don't sell the debts, they assign the debts to a third party collection agency.So then all of a sudden you're starting to get phone calls, you're getting emails, you're getting letters in the mail, and you're like, wait a minute, I don't even know who this person is. They're collecting on behalf of the hospital. So potentially you could have this. And here's an even worst case scenario.Then that first credit collection agency starts looking for it. They can't collect from you. So the hospital says, oh, this, this, this collection agency is a dud. So they go hire a second one.So you could potentially have that same debt on there three or four times. And that's why it's so important to dispute every single one of those things on there.But before we even get to that point, don't let it get to that point. If you get a bill for a medical thing, call them, pick up the phone and say to them, hey, I just got this thing. A lot of people don't realize this.You can negotiate that. A lot of them have hardship plans. Don't let it get to this point. But if you have to dispute it, disputes are absolutely free.Don't pay anybody to dispute stuff on your credit report because they can't do it anyway. But they'll tell you they can and they'll charge you a nice fee to do it. Here's the thing that you need to understand, Juliet.I spend a lot of time working as an executive vice president of a credit Union. They have 30 days, the credit companies to. To answer your dispute. So if you see something on your credit report, There's a dispute.

Juliet Chuang00:20:13

TransUnion or Equifax, right?

Ralph Estep Jr.00:20:16

Yeah. The lender has 30 days. Well, if the lender's out of business, guess what? That puppy's probably coming off of there because nobody's going to respond.So if it still isn't corrected, there's state laws, all those type of things. But just pay attention to this and really understand there are things that you can do to improve this situation.

Juliet Chuang00:20:33

Sounds good.

Ralph Estep Jr.00:20:34

All right, well, let's get into. One of the things you're going to notice on our show is we have some affiliate links.And the first one we're going to talk about right now, if I can find it. See, this is where we, we have to go to. We are going to Quicken. Yep. Okay, so let's talk about this.So 77% of people told a survey they change what they spend day to day. And we talked about this at the beginning of the show today. And I would bet almost none of them could tell you the number they actually landed on.And that's the next thing I want to talk about. Now I want to say right from the beginning, I want you to try something and just answer this. What did you spend last month?Julie and I talked about this a few minutes ago. How much did you spend on groceries? How much did you spend on gas? On those kids? Cleats on the thing you told yourself was a one time thing?Just think in your mind right now, what did you spend? Whatever number you landed on, I guarantee something, it's lower than you thought. When you go actually look at the real numbers.And I've done this for 30 years and I've never had a person guess their own spending high. You know, people never say, well, I spent this much. And it's always lower. And it's not because you're careless.It's because the money doesn't leave in one piece. It leaves $9 here, $14 there. A renewal you agreed to tears two years ago that haven't thought about since. Nobody can hold that in their head. Nobody.And that's why we partner with a company called Quick and Simplify. It holds it for you. It connects your accounts, it sorts what's coming in and what's going out and does the part that actually changes behavior.It shows you what, what's safe to spend for the rest of the month after your bills and after your savings goals are already set aside. Not how you did last month. What you can spend this Saturday and it'll service those subscriptions you forgot you were paying for too.I've watched people find two and three of those in one sitting. Now if you want to test this out, you can go to our website becomingfinanciallyconfident.com quicken again. We'll put that in the show notes.But it's becoming financially confident. It's a paid subscription. It's billed for the year with a 30 day money back guarantee.Now this is an affiliate link, which means our show earns a small commission, but it doesn't cost you anything to do that. So if you're interested in doing that, go ahead to becoming financiallyconfident.com quicken. And I think it's a great program.I actually used it myself. It's very, very good. Well, let's get to our mailbag section.

Juliet Chuang00:22:57

Yeah. So on Mondays we have this segment called Monday Mailbag where we just talk, we just go through one of the listener mails.So just a quick reminder, if you want to drop in and ask us a question to Have a conversation live. Definitely do that on becomingfinanciallyconfident.com okay, so let's get into John's letter. This is what he said.I am a recent subscriber to your podcast and I am becoming a big fan. The Bible verses are a tremendous comfort in addition to your wealth of knowledge. My name is John. I'll be 50 in two months.I have always been good with money. The past few years have taken a huge toll on my family and I.Loss of family members, funeral costs, unexpected events, vehicle repairs, increase in everyday cost like fuel, energy, etc. I have never had an emergency count. Crazy. I know I am now more than ever looking to start one. I just feel like I'm doing something wrong.My wife and I are paycheck to paycheck at this point. We both have decent paying jobs, we have a 16 year old boy, and I also have my parents living with me.I look at some of our friends and question myself and the man upstairs. What did I do wrong? What can I change? Is there enough time before things get really bad? Things I am sure many families are dealing with.I can't afford a financial advisor currently as I am beyond overwhelmed with finances, late car and utility payments. I'm working extra shifts trying to catch up. Every time I do, something else happens. I am doing my best not to give in.I just feel like there's no way out. I pray and read my Bible every day since the age of 13. I am Christian. That helps at our local church in any way I can.Yet I feel like I am failing every way I turn. Ralph, that. That's like so much to handle. I mean, John is going through a lot.Would you say that John is actually failing or is he just having an unusually difficult season?

Ralph Estep Jr.00:24:51

No, I just want to commend John for sharing that with me. Number one, that was an amazing letter. When I got that, I was like, you know, it's funny, we talk in the podcast.I have a lot of friends in podcasts and we talk about how do you stay engaged in podcasting. You get letters like that and it makes what we do every day worth it. So no, John, you're not alone in this. You're not failing. You're actually.I think you're doing better than that because I think you're actually able to see with clarity what's really going on. And that's super important. It is. And I say this to people all the time. The number one thing is to have clarity about what's going on.John has Had a rough road to hoe, as they say. He's had this issue that he was raising a 16 year old. He brought his parents in. There's all kinds of things. And John, you're not alone in all this.A lot of people, I guarantee people in our audience right now are going, john, I'm right there with you, dude. I'm right there with you. And it's so true. But no, it's. The reality is this is a difficult season he's in. Absolutely.But we're gonna give him some things he can do today to take away and feel better about the sit.

Juliet Chuang00:25:48

Yeah. Before we get there, though, you know, he did ask, is there enough time? And I just feel like 50, you're still very young.There's always more seasons to a person's life. There's always like third wind, fourth wind, fifth season. What would you say about that?

Ralph Estep Jr.00:26:03

Well, yeah, being 53, I'm glad you said that because if you would say there's not, there's always enough time as long as you've got, you know, air in your lungs and the ability to get up the next day. Like I said at the beginning of the show, we all go through difficult seasons in our lives. We're all going to have setbacks.We're all going to have things that. I'll give you a great example of this. I'm an accountant. I do this for a living.I didn't start my really eager retirement planning until I was 47 years old. It's funny, I just had a conference call this morning with a client. She said to me, she said, ralph, she says, I'm 36.I still haven't put anything in retirement. She goes, I know I'm a big failure. I'm like, no, you're not. I waited to 47. Now, should I have done it sooner? Yeah.If I had done it at 25, would I have been better off? Absolutely.But John and everybody else, today is the first day of the rest of this is when you can make decisions, when you can make a dynamic impact on your life. We're going to give you some practical ways to do that here in just a second.

Juliet Chuang00:26:59

Yeah, all of us. All of us. Yeah. So one of the things he. I mean, it sounds like in John's letter, we have to get really practical.It's very important that John feels like his household is stabilized. So, Ralph, what advice do you have for John?

Ralph Estep Jr.00:27:14

First thing you've got to do, Johnny, you got to stabilize your household. I'm going to give you some Immediately practical actions. Because a couple of things you mentioned kind of alarm me a little bit.This is a time for triage. Picture you just got out of the ambulance, you're at the ER when you go in those doors, the doctors are triaging you.They want to understand what's going on. And you're going to have to do the same thing with your finances.And, and the best way I can tell you to do that is triage, or let me say that 10 times over. Triage your bills by consequence, not by who's calling the most.Because you could have bill collectors that are calling, but they don't have any consequences. And what I mean here, Juliette, is protect your essentials. Housing. You want to have a place to live.You've got a 16 year old, you've got a wife, you've got your parents living with you. That needs to be number one thing. You need a roof over your head. That needs to be protected. Second thing, utilities.Unless you want to sit in the dark and not have running water, you got to pay attention to your electric bill, your water bill. All those things are super critical. Another thing a lot of people don't think about is transportation costs.You have to get to and from work because you got to make money, right? If you want to pay for your housing utilities, you got to pay for transportation. And then last but not least, food.So the four things are housing, utilities, transportation and food. So address that car first. You mentioned in your note, you're falling behind with your car.You don't want to get to the point where the repo man is out to get you. I used to do that work. That is not fun.

Juliet Chuang00:28:40

So the first repo cars.

Ralph Estep Jr.00:28:42

Yeah. So actually, as the executive vice president of credit union, I was in charge of our collections department.We actually renamed them because I'm not a big fan of. We named them member advocates. But one of the things that I had to do was go repo cars.Now, I didn't physically go out there with a tow truck, but a lot of times I rode shotgun with the guy. It was kind of interesting. But you got to understand something, my heart in all this. I want to work with people. I want to help you.And that's why, John, the first thing I would do is pick up the phone and call the lender for your car. The lender has hardship options, they have deferment. They can put you on an extension.All of these things would be huge to help you get to where you need to get to. And I see we've got A comment here from PR show. Let me read this. The analogy of triage is so smart. Never thought of prioritizing by consequence.But it's so clear and obvious now that you say it this way. Yes, triage, absolutely. And I appreciate Cindy saying that. That is so important. But call the lender, ask about hardship options. Almost.I'll give you an example of this. Like, I had one guy, hadn't paid his car loan in six months, and I was chasing this dude down. I'm calling Grandma. Grandmas are great.Because grandmas would be like, he hasn't paid you. I'll get him to call you. He called me like the next morning.

Juliet Chuang00:29:49

How did you get grandma's phone number?

Ralph Estep Jr.00:29:51

Oh, so that's what we do a little called skip trace work. So what we would do is we pull credit.We see who they lived with, who they were associated with, and that was my ace in the hole with collection work. I call grandma and grandma and say, that rascal, he'll call you tomorrow. Anyway, this guy hadn't paid me for six months, Juliet.He calls me and I said, listen, you haven't paid me for six months. Yeah, bring the car in. Surrender the car. He goes, well, Ralph, I need a car to continue to drive. I'm like, okay, well, let's work something out.And I did. I said, look, I'm going to take all the money that you owe me. I'm going to put it to the back end of the loan.What I need you to do is pay me every single week, every Friday, I want you to pay me. And he goes, wow, you're willing to do that for me?I said, yes, because at the end of the day, Juliet, I didn't want to have a losing loan on my books because I would have lost money on that. So there are options for the lender.

Juliet Chuang00:30:38

Yeah. Okay, I know we want to get back to John, but I just want to ask one question here. When the person.There must be a reason why he didn't have money to pay you. So then when he's paying weekly, is he paying just as much as he could afford?

Ralph Estep Jr.00:30:53

Well, so at that point, Well, I used to get in a scrap with the examiners for the credit union because I would like people to pay what they can afford. But you know, of course, there's a thing called negative amortization where the loan is actually increasing in value.So I have to get them to pay at least enough to cover the interest. But I just needed him to be intentional. So like I said, every Friday, because I Asked him, I said, when do you get paid? Because I get paid Friday.I said, great, every Friday I want you to give me X number. And it might have been $400 a month. We're not talking about a big number here. I said, Give me $100 every Friday.He goes, you're willing to do that for me? Like, of course I'm willing to do that. Yeah, the lenders will do that. Get that in writing. That's number one.Second thing you mentioned that your utilities are behind. Again, call the utility. There are people that work for utility that will set up payment arrangements. How do you get yourself.You don't want that, that thing getting shut off in the middle of the night when it's cold. There's rules against it. I was saying, but call them. Another thing you might want to consider is budget billing for your utilities.Basically what the utility will allow you to do is spread the cost over equal payments. So let's say that you live in the Northeast like I do. In the summertime, your electric bill is higher because you're running the air conditioner.In the wintertime it's not as high because you're not running the air conditioner. Well, a lot of utilities because they're state licensed will give you what's called budget billing.So if they look at your whole year and say, well, you spend about $200 a month on your electric bill overall, we'll just give you a budget of $200 a month. And what that does is it smooths it out because most people's income isn't up and down. But your electric bill could be.There's energy assistance programs, there's the liheap. Some states you can call two one, one, but those things are all important.

Juliet Chuang00:32:33

So I'm hearing.

Ralph Estep Jr.00:32:33

Yeah, good.

Juliet Chuang00:32:34

What I'm hearing over here and recap for John.Okay, so you know, call the car company, call the utility bills and basically see what other programs or ways you guys can work order to be able to keep the lights running, be able to keep your car, but still make some payment towards it so they don't reap. The repo man doesn't come.

Ralph Estep Jr.00:32:54

It's all about good faith. And if you talk to the lender and they understand you're trying to. That's the thing.Like I tried to explain this to people when I worked at the credit union. Just call me. Yeah, I get it. Things happen in people's lives, things you don't have the ability to control. Call me. Let's have a conversation.Now, one of the other things that John mentioned is he never had an emergency fund. And I hear this all the time.And honestly, Julie, I think the biggest struggle for people is they hear, well, you need a three to six month emergency fund. And they go, that'll never happen. They don't ralph, they don't understand what my life is like. I don't have a three days emergency fund.So people here three to six months and they just shut down. They feel overwhelmed.

Juliet Chuang00:33:32

Yeah.

Ralph Estep Jr.00:33:32

Start with $10 a week, build some small buffer, work extra shifts, get extra income, start paying down those things. Now, John, one of the other super practical things that I want you to do and app like simplify is great for this, by the way.

Juliet Chuang00:33:48

Yeah.

Ralph Estep Jr.00:33:48

Look at the last three months of your spending to find out where your money is actually going. This isn't a judgment call, John, but I don't know that you understand where all your money's going. You got a lot of work and stuff. You got lost.You got parents living with you. Got a 16 year old. Your money is going in 15 different directions. And I'm not sure you know exactly where it's going.So that's another key takeaway, is go for the last 90 days and write down every single dollar that you spent and then put it in that triage that we talked about. If it's going for food, housing, utilities, or transportation, that's safe spending.But if it's going for trips to Starbucks, if it's going for another Amazon call, then you got to start looking at those things. Yeah, absolutely. And start making decisions. Yeah. Subscriptions are a great one. I was working with a couple. You love this one, Julie.I was working with a couple of. We were trying to. And they made good money. We were trying to figure out where their money was going.Both husband and wife were both paying for Netflix.

Juliet Chuang00:34:44

Well, they don't need that.

Ralph Estep Jr.00:34:47

And they didn't know that one didn't know what the other one was paying for. And I said, you guys have these duplicates all over the place, but it's because they didn't have clarity.They didn't know where their money was going. So it all starts with clarity.

Juliet Chuang00:34:58

Listen, I understand, like, I think there's an emotional component to that, right. It's, you know, you're looking at your money and if you open that statement, you see, oh, I owe this much on my credit card.Or like, oh my gosh, I only have this much in my checking or my savings. I get that feeling. I'm also still there every time I need to open My banking app.I just, you know, eat a little piece of chocolate to make me feel better.

Ralph Estep Jr.00:35:23

Chocolate always solves all problems.

Juliet Chuang00:35:27

Yes, yes. But I mean, something that Ralph and I, we even talked about this episode is like, you don't know. You can't improve on what you don't measure.And so it's one of those things that we're definitely going to talk about. And I'm going to be there with you, John. I'm going to also take a look at my last. I'll just start with one month instead of three months.

Ralph Estep Jr.00:35:46

You're just going to look at 30 days. But even Juliet, even looking at 30 days, it is going to surprise you because most people underestimate what they're spending by about 30%.

Juliet Chuang00:35:58

I believe it, Ralph. Over the last two weeks, I have canceled so many subscriptions. I'm like, I don't know why I bought you. I don't even use you.And every time that happens, I get a little bit upset at myself, but it makes me a lot more cognizant about what I'm spending my money on towards the future. Because I do want to build my nest egg and all that, too.

Ralph Estep Jr.00:36:19

All right, I'm gonna give a little tidbit here.

Juliet Chuang00:36:21

Okay?

Ralph Estep Jr.00:36:21

Here's one of the things I recommend to everybody watching or listening. Build a simple spreadsheet of your subscriptions. What it is, how much it costs, what's the renewal, and when's the last time you used it.You will find that you buy in and see, here's where they get you. They do these things like, well, buy it for a year and we'll give you two months for free. So you buy it for a year and you don't use it anymore.So, number one, never buy the year subscription.

Juliet Chuang00:36:47

Yeah, never.

Ralph Estep Jr.00:36:49

Because you might find their software sucks and you don't want to use it. So by the one month, if you decide after three months, I can't live without this, you're going to do it then by the year, if they're going.

Juliet Chuang00:36:58

To give you a deal, that's a good tip. That's a good tip.

Ralph Estep Jr.00:37:02

But have that spreadsheet and know when they renewal. Because that's the other thing that people is surprised. I'm like, oh, that renewed. Like, I'll give you a great example.I. I know it's this one called Jib Jab. They make these things like these memes on your phone. Every year, this thing renews Juliet, and I always forget to cancel it.I haven't used it in years. It's not an expensive thing.

Juliet Chuang00:37:20

Is that like a meme?

Ralph Estep Jr.00:37:21

Yeah, yeah. It's some kind of thing where you can take and make funny things you can post on social media. So I said, I'm done with this thing.So I went into my Apple sisters. I did. Destroyed this thing. I thought I had done it before, but now I've got a spreadsheet and every single subscription's on that spreadsheet.

Juliet Chuang00:37:37

That's important. Okay. So we have talked up so much about what John can do right now with the money and the resources already in front of him.But he's talked so much like he's supporting his parents. He has a teenager at home. He's already working extra shifts, I think. Are there any other resources that he should be looking at?Because he did mention he is very involved in his church community.

Ralph Estep Jr.00:37:57

Yeah, absolutely. So first thing, number one is reach out to your church community. I'm a member of a church community as well. We have a benevolence fund.That's what it's for. If you're having a struggle, talk to. There's people that will help you get past that. But number one. So that's number one thing.Make sure your parents are receiving every benefit they're eligible for. Reach out to social workers, Reach out to retirement people. If your parents are entitled to something, they can get it. There's no shame in that.That's what those programs are for.

Juliet Chuang00:38:25

Yeah.

Ralph Estep Jr.00:38:26

That way they can contribute something to the household. If it's a. If they don't have any, that's fine. You mentioned that you were looking for a financial advisor. I don't think you need a financial advisor.Check out the show here. Every day we're going to give you those type of tips every day. Before you go pay for an advisor, go find some free resources.Pay attention to who you're listening to. Like for example, I'm a 30 year professional. I have a license. I know what I'm talking about.There's a bunch of clowns on TikTok and on YouTube that are pontificating garbage. Make sure you understand. If you want to go talk to a credit counselor, don't go pay somebody for that. You're going to see all kinds of ads.I'll get you out of debt. I'll see you. No, stop.Nonprofit credit counseling is a good thing as long as they have a plan of how to get you out of debt, not to just prolong the inevitable.Reach out to trusted people in your community, people in your church mostly people who can give you guidance and practical help, that's what you're really looking for is how to stabilize your house, make sure that everybody is contributing.Now this might, this might come off a little harsh, but maybe that 16 year old needs to get a job, you know, part time job or a weekend job to help contribute to a little bit. I'm not saying to go put your kid out, like you got to work every day and they got to drop out of school. I'm not saying that at all.But the truth is that could be a big help. And you're in this crunch where you're.

Juliet Chuang00:39:40

At right now and you mentioned the 16 year old son and I just thought about, you know, this is also not too like pass on any potential financial trauma onto your kid, but this is also a good point to have conversations. So your son, when they grow up, they hopefully are more aware about financial impact of the decisions they make.

Ralph Estep Jr.00:40:03

Yeah, I think that it's. You be really careful about this because you can burden your children with stuff they have no ability to handle.But at the same time, this is a great opportunity to teach them. It's a great opportunity to talk about what you're struggling with. Your kids will learn based on what they're seeing.Yeah, I'm not saying to burden them. You don't go to them and say, hey, kids, I don't know how we're gonna pay the light bill this month. I've seen parents do that.That is not the right answer. But the right answer is talk about scarcity, talk about how do we allocate our resources. Your kids need to learn that because this is where.Ralph, rant for a second.

Juliet Chuang00:40:38

Okay.

Ralph Estep Jr.00:40:39

In this country, we don't do a great job of preparing our kids for a financial future because we give them everything they want.And then when they turn 21 or they turn 18, we send them off into the world and we assume they're going to know what they're going to do and they don't because they've never faced what it's like when you get a paycheck Friday and then by Sunday your money's gone and you got to figure out how to pay food for the next four days.

Juliet Chuang00:41:02

Right.

Ralph Estep Jr.00:41:03

This is where you teach them. Juliet And I've had this conversation about, you know, my own parents. My mom made a big production about this. You know, she would show me.Now she unfortunately burdened me a little bit with it and I felt like I had to own it, which, and I'm not throwing shame about my mom, she passed away A few years ago, she did the best she could.

Juliet Chuang00:41:20

Right.

Ralph Estep Jr.00:41:20

But this is the opportunity to give your kids some financial education, some financial literacy, and I think that we need to do a better job of that.So one of my big takeaways right now, John, is share this with your parents, share this with your 16 year old, have a family meeting, talk about where things are.Because I got the impression, I'm reading between the lines here, John, that you're kind of bearing this all yourself and you've got this, it is hard and you've got this burden on your back and you need help, John. It's okay. I'm happy that you reached out to us. We're doing what we can, but reach out and have those conversations.I think it would be very important for you.

Juliet Chuang00:41:59

Yeah. Okay. So we've given, we talked about practical, immediate steps. We've talked about reaching out to community, having those open conversations.Now let's go into like the big picture. What does rebuilding look like from this point for John?

Ralph Estep Jr.00:42:12

Yeah, and I think that's where I always say, you know, what happened yesterday happened yesterday. But today we got to make a change. So we got to start to be in this rebuilding. And that's the number one thing.We got to get current on overdue bills and debt. You got to get tackle that. That's where you call the lenders, try to work out payment plans on the credit cards, on the utilities.But again, go back to that triage. Those are the important things. Housing, transportation, utilities and food. Those are the top four.Before you do anything else, make sure those are covered. So if you've got the utility company threatening to shut that stuff off, that needs to be your attention.If you've got the car loan company saying, we're going to repo your car, that needs to have attention. Once you've done those things, then start to build that emergency fund.Like I said, it doesn't have to be three to six months, $1,000, $500, $250 can save you. When something happens, when you get a flat tire on the way to work and you have a couple hundred dollars, you can handle that.Once you do all of those things, then it's time to start talking about retirement. You mentioned is it too late? No, it's not too late. But John, I have to be honest with you. You're starting off in a deficit position.You have a shorter window to where you can retire when you can put money into retirement. So you've got to be super practical. You've got to be Very intentional.And that's where you, if you've got a 401k at work or your wife has a 401k at work, make sure you understand what your employer matches. Go do that first is a great analogy. And Julie and I've talked about this before.It's kind of like you're walking down the road and you see a hundred dollar bill on the sidewalk. Do you bend over and pick it up?Well, if your company has a retirement plan where they match a certain percentage and you don't do that, you're walking over a hundred dollar bills. Now again, go back to the triage. I'm not worried about retirement if they're going to take your car.I'm not worried about retirement if they're going to shut your power off. I'm not worried about retirement if you can't pay your rent.But once you get those things stabilized, then we start to pivot and look at the employer match. The thing I want you to understand, John, this is a process. This is a journey.You didn't get yourself to this position overnight and you're not going to get yourself out of this position overnight as well. I wish I could tell you that I had a magic wand and I could go poof and everything is going to be great. But here's what I will tell you.You're engaged in this.

Juliet Chuang00:44:35

Yeah.

Ralph Estep Jr.00:44:35

I hear it in your tone of voice. You haven't given up. You haven't said, I'm throwing in the towel, Ralph. There's nothing I can do. This is a journey. The journey starts now.And John, I know something. You can do this. I really do believe you can do this.

Juliet Chuang00:44:51

Yeah. Yeah. Well, hopefully that was super helpful tips not just for John, but anybody else who finds themselves in a similar position as John.And before we transition off, if you have any follow up questions or if anybody else has things that they want to talk about on this show, definitely reach out to us on becomingfinanciallyconfident.com yeah.

Ralph Estep Jr.00:45:12

And since we're live, if you've got a comment you want to make in the chat, we've got our producer Abby is watching the chat for us and as best we can, trying to handle all these moving elements. We're trying to get to that now. Everything we've done so far is about money.

Juliet Chuang00:45:25

Yeah.

Ralph Estep Jr.00:45:25

And John's getting somewhere. But after the break, I want to talk about what he can't see yet because there's more of that than he thinks.But before we do that, I want to get to our second sponsor of the day. And this is a sponsor called Easy Will and Trust. And when I got John's call, it kind of made sense here. And this is the thing that's interesting.I want to talk about something I've watched Go on way too many times. Listen to this statistic. 70% Of people don't have a will. 70%.And in 30 years of doing this kind of work, I've almost never met somebody who sat down, thought it through and decided against having a will. So it's not about they don't want it. That's not what happens. What happens is they mean to do it. Oh, I'll get to that. I'll get to that.And then Tuesday shows up and next thing you know it's 10 years later. But I've sat with the families on the other side of that. It's not a legal problem when it lands on them.It's a daughter trying to keep the lights on of her mother's house while everything sits frozen in probate. It's a brother and sister who can't stop talking to each other because they're so angry with each other.Well, one reason we partner with Easywill and Trust is it helps close that gap. Easywill and Trust provides online guided questions in one sitting. You just basically log onto their website.149 Gets you a will, get you a durable power of attorney and a health care directive. And it's all attorney reviewed and built for your state. Now I'm an accountant, I'm not an attorney, so I'm not giving you legal advice.But I do know this. I know what the absence of this document costs. I've seen it in people's faces.I've seen it in the stress and the emotions of somebody already passed away.So if you want to take advantage of this link, it's becoming financially confident.comEasyWill Again, that's becoming financially confident.comEasywill Again. That's an affiliate link and I earn a commission. But it cost you nothing extra to do it. So go check them out.$149 Get you a will, a power of attorney and an advanced medical directive. And like we said, a lot of people don't have those, so it's super important that you do that.

Juliet Chuang00:47:30

Yeah, yeah. I want to just call back to John's letter. I mean, we had so many to do things that we could do from reading John's letter.Ralph, what is that top thing that you said? Because I think that might be something we Everybody who's listening to the show can do this week.

Ralph Estep Jr.00:47:47

Yeah. Even if you're not in John's situation.

Juliet Chuang00:47:50

Yeah.

Ralph Estep Jr.00:47:50

The word triage comes to mind. Rank your bills by consequence, your roof, your power, a car and food.All those things need to be at the top when you're writing a budget or where you're writing an intentional spending plan. Start there. Your roof, your power, your car, your food, and then call that lender who could take something from you.That's what I'm really getting at here. If there's a lender or there's somebody that can take something from you that's going to affect you and use the word hardship. Lenders love that word.Because, listen, being a lender, they don't want to repossess your car. They don't want to foreclose on your house. They're going to lose money if that happens.

Juliet Chuang00:48:29

They want some money.

Ralph Estep Jr.00:48:30

Absolutely. Well, they want to work things out because they don't want to lose. Whenever I repossess cars, we lost money on those. Because guess what?If you get to the point where you're not paying your car loan, you're not taking care of your car either, and you're usually upside down, which we're going to talk about tomorrow on this show. We're going to talk about all about being underwater on car loan. So make sure you join us tomorrow. But all of these things take less than 10 minutes.And the companies want to work with you. Now, you might be saying, wait a minute. You know, emotionally rap. I don't want to put myself out there. That's hard. It is hard. I get it.But just think about this. The people answering the phones on the other side of the line are just like you and I. They've been where you are. They understand.I'll give you a great example this Juliette. When I was working in the credit union, I had a collector and he was putting out great numbers, and I couldn't understand why.Then I finally realized it. He was such into this heart. He was paying people's loans for them himself. He was making the money himself.Yes, he was doing it himself because he felt so bad for the situations. So that's the thing you need to understand. People want to help you. You just have to make that first call.

Juliet Chuang00:49:37

Yeah.

Ralph Estep Jr.00:49:38

I want to mention something here. If you want the biggest money conversations delivered to your inbox every day, one of the things you can do is you can join our daily newsletter.It's super simple to do it. Just go to becoming financiallyconfident. Dot com. I'll put a link in the show notes. But again, that's becoming to financially.That's becoming financiallyconfident.com. We'll take that out in the edit, I think. What do you think?

Juliet Chuang00:49:58

Yeah, I think so too. Well, before we wrap up our first show of this new show, is there anything else you want to talk about, Ralph?

Ralph Estep Jr.00:50:11

Yeah, I think we want to talk about the plans for this week. Yeah, it's not about a plan. It's not a budget. It's not some spreadsheet. Now, you probably expect this in accountable. I love spreadsheets.I actually hate spreadsheets, which is a kind of funny. But I want you to do something that you can do today before you even go to bed at night. So based on John's letter, here's what I think you should do.Put those things in and just pick two of these things.

Juliet Chuang00:50:38

Yeah.

Ralph Estep Jr.00:50:38

Put your debts into order. Stop listening for the person that's shouting the loudest. Because usually the person shouting the loudest isn't the most dangerous one to you.You spend 10 minutes, do it for free because they'd rather work with you and do it with your wife, do it with your family. Don't be alone in this anymore. That's really the key thing to this. So just pick one of those things.

Juliet Chuang00:50:59

Yeah. Well, I think that is a wonderful thing that we should all be doing.And I will also take a look at it and we can check back in later this week on that. How does that sound?

Ralph Estep Jr.00:51:08

Yeah. So again, rank your bills by consequence tonight. And then, John, hear me on this. Dude, thank you so much for sending that.You have John, what you don't realize is the things you share with us today are the things that other people need to hear. You're not alone in this. A lot of people are dealing with what's going on. And you've got a lot of stuff going on in your head.You don't have to be alone in that anymore. You can get past this. I truly believe that.

Juliet Chuang00:51:32

Amazing. Well, that is it for today's episode of becoming financially confident.

Ralph Estep Jr.00:51:37

I'm Rafi Stepp Jr. And I'm Juliet. So if you've got a question you'd like us to talk about again, we would love to answer your question. This is why we're doing this show.We want to answer your questions. You can come join us live in the chat. You can send them over. You can even leave us a voicemail.You can do all of that by going to becomingfinanciallyconfident.com and you can explore more of our conversation from today.

Juliet Chuang00:51:59

Yeah. And then if you want to join us live tomorrow, it is that same website becomingfinanciallyconfident.com@a forward slash live.

Ralph Estep Jr.00:52:08

Yep. And this is becoming financially confident. Breaking free from money. Shame. One conversation at a time.So make sure you join us tomorrow again live September 1st. I can't believe it's gonna be September already. Tomorrow, 11:30am Eastern time. So make sure you join us then and we will see you tomorrow.

Juliet Chuang00:52:23

Bye.

Ralph Estep Jr.00:52:31

Sam.