Interview with The Independence Money Show - Great info on investments & getting out of debt!

Hi, this is Amanda and Penny Kidd.

Well, we are going to do a special edition of the Independence Money Show today. So Penny is someone that we work with very closely. Sometimes she's kind of like the bridge for clients to us, um, as they are in a lot of credit card debt or student debt. So we've had a lot of client meetings with you lovely viewers, asking for some help on how to also use investments and try to get out of this debt scenario. So I wanted to introduce Penny, 'cause I think for a lot of our viewers this is gonna be really helpful.

Good.

So do you wanna explain kind of your business and what you do?

Sure, sure. I have a business called PennyWise Coaching, and I basically help people with the behavior and the systems around money, not the investing. People get confused all the time, and really I'm a financial coach or a financial lifestyle coach. I'm not an investor, advisor, those kind of— I don't have the credentials, I don't have the knowledge you guys have, but what I really specialize in is using my background in social work to help people with the behavior and the activities around money to eliminate the costly debt that they have in their lives and to be more intentional with their money. I think it's really easy to just get swept up in what the world's doing without having a thought, and we know how to make money, and sometimes we We know we should invest money, but the gap in between about what to do with the money we make is, is where people leak a lot of money and they don't even realize it. And there's a lot of people that I now specialize in working with, people that make decent money by our standards in society, but they don't really have anything left to work with.

I think a lot of people, there's a huge gap between having the correct financial knowledge and Now you're in a higher paying salary, but you're not really quite sure how to budget monthly for all these expenses.

Yeah, well, and nobody likes the B word, right? It's like, "Oh, I don't like to budget. It feels restrictive." But truly, when you're doing a good spending plan, sometimes that word resonates a little better. You're just telling your money where to go instead of wondering where it went.

Exactly.

And you're saying, "I choose this." And if you start looking at the whole picture and say, Wow, does it make sense if I'm paying 18 to 29% on this credit card? I'm pretty sure you're not getting that in their investments right now.

Nope.

You know, and so it's like, that's an instant rate of return because you can put your money towards something specific. Now, at the same time, life keeps throwing us things to do and want to do, and as you make more money, your lifestyle can creep if you're not very intentional. And I remember feeling like if we only made X number of dollars, we'll be rich.

Yeah.

And then you just get there and you think, wow, I don't feel any richer than I did 10 years ago.

Yeah, my lifestyle just increased.

Right. And so, which is great, increase your lifestyle, but do it in relationship to everything else. Like, am I planning for the future? Do I have all my safeguards in place? Do I have funds for the things that come up that are irregular? So unfortunately, we're not taught a lot of that as kids in high school, college, whatever.

That's something that public school fails to teach you.

Right, it's really failing. And so I'm really passionate about helping young people like you all the way up to older people like me and beyond to be thoughtful, mindful with their money. Because, you know, as you run illustrations all the time, you're like, if you just do this, look at the compound nature of that, what you can have in a few years. And it's the same way with what I'm doing, but I really help people figure out what belongs in their budget. And if you have a dog or 10 kids, there's a different budget. It's not this one-size-fits-all. And I think one of the other things that's super important to remember is that a budget is a— it's a lifetime activity. It's kind of like brushing your teeth. You do it over and over and over again because—

Even as your salary increases.

Exactly, because then you just, you have more to tell where to go and you get to maybe tell it some more fun things than when you're broke, but you get to be intentional still with whether it's by percentage or by dollars and to remember those things that come up in life that we forget to fund.

Yeah, I think also a lot of people forget, you know, how much you should have as an emergency emergency fund. I think a lot of things going on right now, inflation's running really high.

Yeah, scary.

So your emergency fund that you thought was lasting 3 months is now only lasting about a month.

True.

So, you know, living cost of living prices are a lot higher. So just being able to budget that. Another thing we see is a lot of people putting too much money into investments because they think, oh, my investment is going to make this X amount of dollars and I'll pay that back. Yeah. And you know, you gotta get out of that. We call it bad debt. You know, there's good and there's bad debt. Right.

Well, and if you're, you know, part of being intentional with a spending plan is saying, okay, this is what I need for groceries, this is what I need for gas. And oh, by the way, you know, Christmas is coming or that vacation and, you know, kids' shoes, whatever, right? And so being mindful of those things along the way in addition to your savings is what helps people be like, "Ooh, need to course correct. We're eating out too much. We're traveling beyond what our lifestyle can sustain." And so we have to rein that back in because if you're carrying a balance on a credit card, you're really not out of debt. And you know, it doesn't really matter how much you invest if you've got 29% and growing on these bad debts.

Yeah.

And student loans are another huge burden to our society and really concern me that we're letting people sign on the dotted lines for hundreds of thousands of dollars and with no plan to pay them off.

I mean, I saw the other day that between 2020 and this year, the consumer just debt price had raised 17%, meaning consumers had added 17% more debt than they had in 2020. I think it's a huge thing. You know, a lot of people are out there investing all their money, but, you know, on the side they still have this student debt, these credit card debts eating away. So let's kind of talk about how you work with us, how we come into play with—

Yeah, we've had, we've had some fun shared clients together where I remember one several years ago that got referred to me and they had $130,000 worth of debt, including a HELOC and cars and credit cards. And I don't even remember what all. And there was a lot of conflict in the marriage.

Right.

And that's the other thing that I really focus on is about— it's not just always the bottom line. It's about can you sleep better at night? Do you fight less with your spouse? You know, we always hear that money is the number one cause of divorce. And I don't know that that's science, but that's really high up there. That causes a lot of stress, you know. Yeah, and even in a good marriage, when you're not on the same page and you're fighting about, you know, do we spend 50 or 500, that's a huge, you know, or one spending and one saving. So trying to get people on the same page is a huge part of what I do, and having those conversations together. So just being intentional with how much is that, and sometimes one party is not in tune with let's say he works and she stays home with the kids, he doesn't have a clue what it costs to buy groceries right now. And so we have to get to kind of the same page. Okay, you can handle that part, but we both need to be looking— it's kind of like looking at the roadmap together, even if you're going one way and I'm doing this, but we're heading the same direction. So that particular couple, in one year, because of what we did together with I worked for the first probably 6 months with them on the behavior and the systems, and they had a lot of complicated, like, processes or whatever. So it was like, ooh, streamline, because that's part of what was causing the conflict, is that he had really complicated, trying really hard, and she was checked out raising kids. And then she was stressed and angry because when she woke up and found out that all this was going on, you know, it was like, well, part of it was she wasn't involved. Yeah, so, and she acknowledged that.

No, we see that a lot too. A lot of it is the male is in charge of the finances and the females have no idea what's going on.

And I see it backwards, you know, it's just, it really, it's not even gender, it's just easy to have one or the other who that's their strength. Yeah, but it's not fair to the one who's doing it all and it's not fair to the one who's clueless. You know, it really needs, they need to at least both be aware of how to do it And of course, my other fear is that people will— somebody's going to die first, more than likely. And so what happens when that one person is gone and it leaves the other one, or they split, they go through a divorce? That's the other, you know, big population is people going through a divorce, and now they're in a whole new reality and they never handled the money.

Yeah.

So this particular couple had like a— they eliminated, I want to say, $50,000 of debt and they saved another $37,000 in a year. Yeah, because they got intentional with their money.

And you would be surprised, I mean, a lot of these people are high-income earners, they're doing very well, but they are just— money gets so mismanaged.

Yeah, well, there's a lot of shame and embarrassment around money, you know, and I think the more money you make, the less easy it is to say, I don't really have a clue what I'm doing. Yeah, and I've been just winging it for a really long time. And so I really honor and respect those people that will come to me and let their guard down because it's It's a very intimate relationship I have with my clients because, and like you do, you know behind the curtains what's going on. And if you're not honest with people like us, we can't help them. Yeah.

So then what Penny did is she got them kind of where a place where they were comfortable to get out of that debt. And then we are able to step in and kind of say, okay, well now that you are saving this much a month, let's put your money to work for you.

For you. Yes. And they've done—

Find investments that are outpacing this inflation, right? Have some liquidity in them.

And you helped give them a target to say, okay, to have this lifestyle that you want to have in 20 more years, you need to be saving X. And so then what we did was like, all right, we'll build that into the budget. If we need that many thousands of dollars a year to build out the retirement plan, and, and they're hitting their goals every year, you know, and they don't carry debt, and they've bought a new car here and there or something like they have some debt, but it's within their ability to pay. And if they wanted to, they could have pulled it out and taken it, paid it off, right?

So getting out of that student loan debt and the credit card debt is always number one. Yes.

And so, yeah, it's really— and I don't know if they see this, but when I still— I still meet with them about once a year, just kind of as a tune-up and kind of get them ready for the next year. Their relationship is much better.

Yes.

It's really interesting. Yeah, yeah. So yeah, it's, it's a stressful time if you're in the mix of it, but I, I go into it without judgment. I'm not here to, you know, people come to me with kind of a hot mess sometimes. I'm like, all right, let's just roll up our sleeves and start on it, right? It's not my place to judge, but it's— I'm very passionate about we have to start something now because we want the time for these to Yeah, to put an investment plan together to get you to that goal of retirement.

No one wants to work forever.

That's right.

All right, well, if you guys want to utilize Penny's services, I'm going to put her website link in the description. We're also going to put a form in there that if you want to fill out with your phone number and email, we can forward that on to her so that you can get in contact with her.

That'd be great.

All right, until next time.

Thanks.

Be wise.