Divorce Your Debt with guest Katy Almstrom

In this episode of the Brainy Moms parenting podcast, Dr. Amy Moore and Teri Miller, MS Psy talk to financial coach Katy Almstrom. Katy coaches women who are ready to pay off debt through simple strategies that help lower the stress around money.  Is debt keeping you from reaching your dreams? Then maybe it’s time to break up with your credit cards and divorce your debt. It doesn’t have to be as painful as it sounds. In fact, your journey to becoming debt-free can be joyful. Tune in and learn how. 

Read the transcript and show notes for this episode:

Episode 127
Divorce Your Debt
with guest Katy Almstrom

Dr. Amy Moore:

Hi, and welcome to this episode of Brainy Moms. I’m Dr. Amy Moore, here with my co-host, Teri Miller, coming to you today from Colorado Springs, Colorado. Our guest today is Katy Almstrom. Katy is a financial coach, teacher and speaker, who works with driven women, who are ready to pay off their debt and create a sustainable future, that includes simple strategies, so they can reach their goals and live out their dreams. With over a decade of experience in teaching and coaching, combined with her own debt-free journey and simplified life, Katy provides a unique service for her clients to help them slow down, map out their own joyful, debt-free journey, and create a life that has way less stress around money.

Teri Miller:

So, glad to have you here, Katy. Welcome.

Katy Almstrom:

Thank you so much. So glad to be here.

Teri Miller:

Good. Well, I would love to hear, I would love for you to tell our listeners a little bit about your personal story and what brought you into the world of financial coaching?

Katy Almstrom:

Awesome. So, it’s actually, it’s a funny story. I was a high school Latin teacher for almost 15 years. And when I started telling people I was going to be a financial coach, they were all like, “But wait, you’re one Latin teacher that we know, and how are you financial coaching?” So, it was a very difficult transition for a lot of people who know me.

Katy Almstrom:

But the story is when I graduated from college and was getting my feet under me with my first teaching jobs, I really got very stressed out around money. It started with the credit cards that I took out in college, because they handed them out like candy. The student loans that I had. I got LASIK eye surgery probably a few years after I graduated, and that combined with my teacher’s income, my bad habits in general, just with my health, I mean, I was just really not doing a lot of things well. And I hit a rock bottom moment with my boyfriend at the time, who’s now my husband, and really realized I needed to make a change if I wanted to, well, stay with him, number one. And it’s a long story. But he was right.

Katy Almstrom:

And so, I really just decided I have to do this. And so, I did. I paid off nearly $40,000 in debt over the course of a couple of years. And that really was a catalyst for quite a transformation in my life. My experience at work changed. My relationships change. And by change, I mean improved. My health improved. I just, I was building that trust in myself. I was building that faith in myself that life gets better, life gets easier. And it just felt really amazing to have that experience, that transformation.

Katy Almstrom:

And so, that actually stayed top of mind for over a decade as I went through my teaching career. And when my babies were young, I’ve got two kids. They’re almost seven and four and a half. When they were young, I had had it with my teaching job. I was overworked. I loved teaching. I loved coaching, but it was too much. I wasn’t home enough. And so, the transition to coming home, starting a business, it was a natural shift for me. I grew up with entrepreneurs for parents. And the money thing, helping people with money, was always something I’d wanted to do. So, it felt very obvious and natural to me, but it was definitely a shock to the people who knew me in my life like, “What? No more Latin.”

Dr. Amy Moore:

That is a huge difference. It’s a huge difference. So, we were surprised too, to know that you were doing a totally different career. And so, that makes perfect sense though, why you made that transition, because it was so important to you.

Dr. Amy Moore:

It’s interesting, you made a comment that in college, they were handing out credit cards and credit card applications like candy. When I was in grad school, I actually got a group of us together, wrote a letter to the president of our university, asking them to take the credit card applications out of the classrooms, because by having credit card applications in classrooms, it looked like they were supporting the idea that, “Hey, students, you can get pre-approved or you can get a free credit card, even though half of you don’t even have jobs to pay them off.”

Dr. Amy Moore:

And so, I made that mistake. I got a credit card as a freshman in college. I ruined my credit as a freshman in college because I charged up my credit card, but didn’t have a job because I was a full-time student. And so, it wasn’t until I went back to grad school and thought, “You know what? We could stop this.” And so, they did. They published it in the college’s newspaper, the president wrote us back. And although they left the credit card applications in the student union and in the lounges, they did take them out the classrooms.

Katy Almstrom:

That’s incredible. It is.

Dr. Amy Moore:

Yeah. Yeah. Anyway. Okay. We’re getting back to you now, Katy. You say that we can create a sustainable debt-free journey that is joyful. So, I’m super intrigued by the promise that it can be joyful. So, tell us more.

Katy Almstrom:

Okay. Well, here’s what I believe. If you are stressed about money right now, for whatever reason, going on a path that is going to move you away from that stress should be more joyful than where you are currently. And the reason for that is because that path, those steps forward should include getting really crystal clear about what is actually the most important thing in my life.

Katy Almstrom:

So, the bulk of people I talked to, the majority, the bulk, the majority of people that I talk to, when they’re stressed about debt, they’re number one thing that they say to me, that they think I want to hear is, “Well, I know. I need to pay off my debt.” And I mean, yes, that is a worthy goal. Totally, that is something to work towards.

Katy Almstrom:

But if that is the number one priority, or if you are treating it as if it is the number one priority, what actually matters in your life is not getting taken care of. If we pay off debt, in spite of, well, I guess if we’re paying off debt and we are leaving the actual priority behind, that priority, whether it’s your marriage or maybe one of your kids has something going on, medically, maybe just your house is industrial pair, and that is a stressor. I mean, there’s something that is always more important than paying off debt, is what I believe in our lives.

Katy Almstrom:

And so, if we can stop acting like we have to pay off debt and completely avoid everything else that’s important until that’s done, that’s the non-sustainable, that’s the not joyful path that a lot of people go on, that they think they’re supposed to go on, and stop at nothing until the debt is paid off.

Katy Almstrom:

So, I see the sustainable journey, I see the joyful journey as we’re crystal clear about what’s most important, whether it’s right now, our family, our health, our kids, our marriage, and putting that in the plan, first and foremost. Okay?

Katy Almstrom:

So, now already, you have more confidence in your ability to spend money in alignment with your life. You feel better that the most important thing is being taken care of on a consistent basis. And I believe, and I’ve heard this said recently by a couple of coaches that I’ve worked with, and I think it’s so beautiful, you experience the outcome the same way you experience the journey.

Katy Almstrom:

So, if we become debt free after a hard, really contentious journey, that is exactly how you’re going to experience that freedom. You’re still going to argue about money. You’re still not going to know what’s okay to spend money on. You’re still going to feel those tightnesses, the restrictions around money. Money mindset won’t change. It’s just a ledger difference if you will. But we really have to transform from the inside out, our habits, our behaviors, our beliefs, our faith in ourself, our trust in ourself. And so, that is the sustainable part. That’s the joyful part. And that’s really, truly, what’s going to allow us to then have that joyful debt freedom is, if we experience it on a way, the exact same way we want experience it when we get there.

Teri Miller:

It sounds like, I guess, I’m listening to you, I’m picturing that debt keeps me shackled, chained, so that I am chained to that debt. I’m shackled to that debt. And so, even if I have priorities and things I’m excited about in life, I’m not able to make them priorities because I’m so shackled to that debt. And so, even if I don’t realize it, I think, “Oh, I’m joyful.” That’s still, that’s subduing the joyfulness, the freedom that I could have, because I’m not able to live in a priority way because I’m stuck in it.

Katy Almstrom:

Yeah. And certainly there are extremes. I mean, sometimes people are so burdened by debt that they truly don’t have the resources to do, it feels like anything outside of pay their mortgage, pay their bills. And so, there are certainly extremes. But what I often find is that what is more shackling is this mindset that, “I’m in debt, and I really can’t seem to stop using the credit card. And so, what’s the point of paying off debt, if I don’t actually know how to stop using debt?” And so, it’s the cycle. It’s a story that we tell ourselves, “That it’s always going to be this way. This is just my life. This is just my income.” Right? We just settle into that. And a lot of times that manifests as “Well, I’m going to go make myself feel better about the situation by spending money, getting takeout, shopping.” Right?

Katy Almstrom:

So, it’s this vicious cycle, where what I find is, and my own personal experience is, when I was really stressed out with four max out credit cards and really just very limited freedom wiggle room, I would go to the outlet mall every weekend. I had a circuit, all the same stores, I’d hit the Starbucks. And that was my routine. And as I found my way out of debt, and as I really changed how I felt about money, and I created more confidence and excitement in myself about my future, that happened less and less, and less. And I didn’t want to go. I mean, it was totally a by-product of that stress. So, I just, anecdotally I thought that was such an interesting shift in me. And I see that in a lot of my clients too, habits that just vanished once they really feel like they’ve got that clarity about what to do next with their money.

Teri Miller:

So great. So good. Tell us about what beliefs and mindsets need to change, or what’s necessary to really get into that and step into that debt-free journey.

Katy Almstrom:

So, I think there’s a couple of things. One for sure is that it’s not going to happen overnight, and there will certainly be bumps or obstacles along the way. So, it is so crucial that we do have that trust or that faith, that doing the right thing enough times is going to give us the result that we want in the future. And so, even if it feels challenging, and certainly I just said, it should be joyful, right? But it will be challenging too. I am not going to sugar coat it. There will be a month when it feels like, “I can’t make any progress at all.”

Katy Almstrom:

But the first thing I like to do with my clients is find a way to get through the month without using new debt. And that’s a win in and of itself. So, even if it feels like, “Well, I’m not moving the needle, I’m not paying off debt this month.” That’s okay, if you’re continuing to operate without new debt. That’s okay, if something big comes up and you’re able to deal with it in the moment and not just push it aside and say, “I’ll put that on payments.” Or, “I’ll take out a new credit card.” Or when we are mature and deal with life as it happens, not only does it reduce our stress because we’re not over-sensationalizing what’s going on, we’re not thinking about it, we’re just dealing with it. And then it’s gone, it’s done.

Katy Almstrom:

That is such a win because then we, again, build up that confidence that when I’m debt free, I’m going to be able to take life in stride. I’m going to be able to use my resources that I have in the moment appropriately. And I’ll know what that priority is. I’ll know what really needs to be paid for first and not feel like I have to do a dozen things at once, which I find is really common. We’re just trying to put out all the fires all the time, because we don’t actually know what’s the most important thing to handle right now and what can wait for later.

Dr. Amy Moore:

So, how do you decide what’s the most important thing?

Katy Almstrom:

Yeah. That’s a good question. Well, if you are married, that’s going to require a conversation, really open communication about what do we feel like is most important right now. After 2020, my blanket response to most people is, if you don’t feel like you can get through a couple of months of your basic expenses, if you don’t have that in savings, that would be the most important thing, is to find a way to save some money.

Katy Almstrom:

And so, what I see a lot of people are doing inadvertently, or they are emotionally responding to a credit card that they feel really badly about a student loan, that’s pissing them off. They will take any extra money that they think they have in their checking account and throw it at the credit card or split the difference, put some towards the student loan, some towards the credit card. And so, there’s no real focus there. And then at the end of the month, they realize, “Well, I didn’t have a plan. And now I’ve overspent by paying off debt. And now we have to use a credit card again.”

Katy Almstrom:

And so, if we can just say for a few months, just pay the minimums on everything and build up some savings, so that I know if a small emergency comes up, I can take care of it. If I lose my income for six weeks, I can take care of it. And you’re not going to create more of a void, add more debt in those kinds of circumstances. So, having a little bit of proper savings is first.

Katy Almstrom:

Another thing I see is a marriage that’s really rocky. And people, they think, “Well, it’s because of the debt. So, we have to pay off the debt. We have to pay off the debt. We have to pay off the debt. And that’s what’s going to help us.” When in fact we need to prioritize our communication first, our time together first, and sometimes just having someone give permission to just leave the debt alone for a little bit. Let’s make sure that we’re not in that circumstance where absolutely every dollar has to go to debt. So, maybe we call the credit card companies. Maybe we find a way to simplify what we’re spending money on, so we have a little bit of a cushion. How do we just break down what we’re doing and make it so that in a period of three months, we know that the basic bills are going to be covered and we make time for us?

Katy Almstrom:

Or again, like a kid dealing with something medically, a pet that’s really been struggling, anything that just seems like a weight in your life that you keep pushing to the side, and every time you think of it, wondering, “How am I going to pay for this?” Let’s make that the priority right now. It’s really hard to answer that question without… This is very nuanced. It’s not cookie cutter. But those are some of the really common things that I see.

Dr. Amy Moore:

So, I know in a lot of marriages, one person takes care of the finances. And it’s typically the person who doesn’t have an emotional attachment to the finances, where as the other person is too emotionally attached, can’t handle the stress of the monthly finances, and just says, “Okay, you do it.” So, what I’m hearing you say is communication is so important. How do you start that conversation when only one of you is in charge of finances, but you need to be on the same page?

Teri Miller:

Well, that’s a big question. Help her, please.

Katy Almstrom:

That is a big question. So, I’ll start by saying that opposites attract. And so, that kind of a relationship where maybe one likes to do the budget, one doesn’t, one likes to spend, one likes to save. That’s super common. And so, first and foremost, let’s understand that about each other. That’s where this communication piece comes in. Let’s talk about money in a way that isn’t so charged. Whatever you feel about money, however you behave with money, let’s not make that wrong, but let’s be very open with each other about what our tendencies are. And so therefore…

Teri Miller:

Have we lost her?

Dr. Amy Moore:

Yeah, she froze.

Teri Miller:

I didn’t know if it was just on my end. Okay. What are [inaudible 00:19:15] marriage?

Katy Almstrom:

I still hear you guys. Can you hear me?

Dr. Amy Moore:

Yeah. Can you start your whole sentence.

Katy Almstrom:

Can you hear me?

Dr. Amy Moore:

Can you hear us?

Katy Almstrom:

Yep. Can you hear me again?

Dr. Amy Moore:

Yeah. Can you start your full sentence over, and then I’ll just cut out that awkwardness in the middle.

Teri Miller:

We don’t see you, but we see your picture. So, that’s okay.

Katy Almstrom:

Yeah. I turned off the video because I thought that might be a… Sorry. I’m trying to remember what I was saying.

Dr. Amy Moore:

So, you said that just know that no matter what you believe about money, which partner believes which, that that’s okay. And try to understand each other.

Katy Almstrom:

Yes. So, I think a really important thing for couples to do is have that conversation about money, where we talk about what were some of our early experiences, what are our beliefs about money? How do we think about money? How do we feel about money? And that’s what’s going to inform, what are our roles here in this marriage?

Katy Almstrom:

So, I strongly believe that when you’re married, it’s our money. Income all goes into one pot. And we as a couple, have a plan for how we’re moving forward as a household, as a family. That said, you do not each have to put the budget together every month. You do not have to track every single expense equally.

Katy Almstrom:

So, the “burden” of the finances and keeping track of things, that’s usually going to fall to the person who wants to do it. And certainly, there are some circumstances where neither person wants to do it. And that’s where we work together to find a solution that it’s a work around, it’s something that you can reliably do on a regular basis to stay on track.

Katy Almstrom:

But a lot of times I talk to women and they really feel, they feel like they don’t know how to take that first step with their spouse, if money hasn’t always been an easy topic of conversation. And so, what I recommend is, think about something and really, truly turn inward here, be vulnerable. Think about something that you can do differently, a way that you can maybe change a behavior or a habit, something small, but something meaningful, and go to your spouse and simply say, “Look, I’ve been thinking, and this is something that I want to do differently because I feel like it would really help us, moving forward financially, I think this would be really good for me, for us, for our household. And so, for the next 30 days, I really want to commit to this new thing. Will you support me? Will you encourage me?” And that’s it.

Katy Almstrom:

And there’s no expectation of reciprocation. You are just simply going into this vulnerably and sharing how you want to be the role model, how you want to pave the way for your family. And that is a lot easier said than done, I realize this, but it is a hard first step, that is a really important for, I think for a lot of people trying to get this communication piece rolling.

Dr. Amy Moore:

So, let me ask the part B to that question. It’s really hard to disappoint your children by saying, “No, you can’t have that because we can’t afford that.” Or if you’re making changes in your finances, it’s just a difficult conversation to have with your kids. So, what advice do you have for how to get those conversations going?

Katy Almstrom:

So, I tell my kids no all the time, even if we can’t afford something. And here’s the thing, saying, “No, we can’t afford it.” That is language that you should remove all together as parents, instead, let’s say, “We’re not going to spend our money on that. We’re choosing instead to spend it on this.”

Katy Almstrom:

So, as a family, you always, always, always want to have something special that you are choosing to spend money on. It might be your Friday night pizza and movie. It might be a weekend trip at grandma’s. Whatever the case is, there does need to be something that they can wrap their heads around that, “Yes, we are choosing to spend money on me, on the family, all together, but we’re not going to spend it on this toy at the grocery store or this extravagant something else over here.”

Katy Almstrom:

So, and a lot of that too comes with just as parents, the confidence that everything is a choice, and that a simpler lifestyle is better. I guess I’m a hard one to ask about this because I have no qualms telling my kids no. Gosh, I tell them no all the time. And I really just think the more you can frame it in a way that’s of course, “I understand you want this toy. Of course, I understand you want to do this, but we’re not choosing to spend our money that way. You are more than capable when you’re older to earn your own money, make your own choices.” But modeling that early on, that we don’t just get whatever we want, especially if we can’t afford it.

Katy Almstrom:

And I have no idea what the example here is, but let’s say you do take your kids to the water park. And the entire $1,800 goes on the credit card. The amount of stress and anxiety that your kids will feed off of you or feel emanating from you on the way during the trip, on the way home, the weeks after the trip, and compound that with all the other times that you said yes, when you should have said no, it’s way better that we’re saying no in the first place. It’s like the extra desserts or the junk food, the stuff that they shouldn’t be eating, every time we say, no, you’re just reinforcing, “Let’s eat healthy food.” Or you’re reinforcing, “Let’s do something that’s better for our bodies that is going to make us feel good, that’s going to set you up for things down the road.”

Katy Almstrom:

And I’m not saying never have the dessert. Oh my gosh, no. We stayed up way too late getting ice cream last night with my kids. But I think it’s just that same mindset of, we don’t need to feel badly because we’re saying no, because the kids don’t need to know we can’t afford it. It’s we’re choosing differently because this is healthier for our family. Oh, it was long-winded.

Dr. Amy Moore:

I loved it. I loved every word. That was the best piece of advice, I think we’ve heard on the show.

Katy Almstrom:

Yes. Oh, I love that.

Dr. Amy Moore:

Fantastic.

Katy Almstrom:

It’s that idea of, again, prioritizing. I don’t have to be shackled to the idea that, “No, we can’t afford it.” It’s just a different priority. And so, there’s a freedom and a lightness. It doesn’t have to be this sorrowful, “No, buddy, I’m sorry, we just can’t afford that.” It can be this lighthearted, “Oh gosh, that toilet is really cool, but we’re going to spend our money on something else because remember, we have this trip coming up, and I bet we’re going to be able to go out to eat when we go on that trip. And so, we’re going to use our money that way.” And so yeah, this forward thinking, positive. I’m like, wow, mind blown. This is so great.

Katy Almstrom:

Oh, sorry to interrupt. But that’s the thing too. When you start to plan ahead, here’s how we’re going to spend our money in October or November, whatever month is coming up, when you do that planning, now you actually have a figure. You have a number for family entertainment or eating out. And so, you can even give your kids the choice. If they say, “Hey, we really want to go do this thing this weekend.” Say, “Great. We can do that, but we’re going to have to skip pizza next weekend. How’s that sound?” I mean, it’s just a choice.

Teri Miller:

It empowers our kids to make wise choices, to be aware. I think we so often keep our kids in the dark about money. And so, they’re just not aware. But this empowers them to be aware and understand that in the adult world, that’s what we’re doing constantly, is balancing those choices. It’s so good.

Katy Almstrom:

That’s right. And with any aspects of parenting, done with intention, done with love, done in a way that is truly trying to show your kids a way that is not going to overwhelm them in the future, is not going to destroy their health or their finances, no kid is going to look back and say, “Oh man, I wish my mom had bought me every single toy, I ever asked for.” I mean, it’s just, it’s one of those things where, when I talk to clients, a lot of times it’ll be couples, one will say, “My parents really talked about money and taught me about money growing up. But my spouse, it wasn’t that way. And they have a spending problem, or they’re afraid to invest in this.” All the stories.

Katy Almstrom:

And so, that kind of structure, those boundaries that we can set as parents, and that framework, that mindset, that we always have a choice, and we as a family get to set what the priority is, what’s important to us, and live in alignment with that, that is so important. So if you, as a family, make traveling or camping, or doing certain things together, the priority, and you spend money on it, and you do that thing, your kids will pick up on that. So, really defining that priority. I can’t stress that enough.

Teri Miller:

So good. So again, about choices, about priorities. That’s the freedom. That’s beautiful. So, you have a free for our listeners. It’s called Nine Ways to Break up With Your Credit Cards. I love that concept. “I’m breaking up with you. Okay. I’m done.” And so, before we talk about some of those specific things you mentioned, why would we consider it? Why should I consider saying, I’m done with you. I’m going to break up with you.”

Katy Almstrom:

So, some people get along just fine with credit cards. This message is not for you. This is for the person who, and I think I talked a little bit earlier about, what’s the point of paying off your debt if you can’t get through the month without using new debt? And I also really truly believe in simplicity.

Katy Almstrom:

So, a lot of times I’ll talk to a woman who has a few different credit cards taken out, and on one, her Amazon Prime auto, payments are coming out, and on the other, her Netflix and Hulu. And so, there’s these memberships and subscriptions, and payments, that just get added over time to the different cards. And we just don’t even know what we’re spending money on anymore. We don’t feel like we can close any of the cards because, well, we might lose this subscription. It feels like, dare I say, we get a little bit lazy and just let it go.

Katy Almstrom:

But instead, what we actually need to be doing is getting super simplified and say, “I know exactly what’s happening next month. I am planning my dollars in this way.” Instead of saying, “Well, so much money was spent last month on the credit cards. And I have this much, this month, to pay that off.” But you have no idea what the dollars are going to. It’s just paying off a chunk, probably not all, but a chunk of what you’ve already spent.

Katy Almstrom:

And so, when you break up with your credit cards, when you simplify by putting all of your automated expenses on your debit card, then we can actually plan for the month ahead before the money even leaves our checking account. And we don’t get into this cycle of playing catch up every single month, paying off what we did last month, and not actually really knowing what it was for.

Dr. Amy Moore:

It makes sense. So, we need to take a quick break. And Teri is going to read a word from our sponsor, LearningRx. And when we come back, I want to talk more about some of the ways that our listeners can begin to break up with their credit cards, if they do have a contentious relationship with them.

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Dr. Amy Moore:

And we’re back talking to Katy Almstrom about creating a sustainable and joyful debt-free journey. And so, let’s talk a little bit about what listeners can do today, if they want to start that process of breaking up with their credit cards.

Katy Almstrom:

All right. Yeah. And credit cards, of course, are just one part of the debt free journey, but I find very often they’re the most stressful, because they’re often the highest interest, and that really can raise the anxiety level for people. So, the first thing that I like to do is think about why we’re using credit cards.

Katy Almstrom:

And so, an activity that I’ll do with my clients, with people in my community is to think about the last time you used your credit card. And a lot of people immediately say, “I don’t know. It was probably automated.” But think about the last time you actually took it out and used it, or entered the number in your computer to purchase something online. And once you’ve identified what the thing is, now answer the question, why, “Why did I use a credit card to purchase this item?”

Katy Almstrom:

And so, the responses vary, but usually what it boils down to, especially as I peel back the layers are, “We are using it out of necessity, because there’s not enough money in our checking account. And the reason we’re using it out of necessity is a lack of planning, right? So, are we’re out of money in our checking account because we’ve spent it on other things. And now we feel like we must use our credit card, because of a lack of planning.”

Katy Almstrom:

Another time that people use a credit card is out of convenience, because it is the first thing they see when they open their wallet. It’s very convenient. It is something that they can just quickly have entered into their computer or in their phone. And so, when they order food online, or do anything with their phone, it automatically recognizes your device, and you stick your fingerprint on the back of your phone, and boom, it’s paid for. Right? And so, it’s very convenient because we have that card loaded. It’s sticking there right in our wallet, it’s easy to grab.

Katy Almstrom:

And so, convenience is expensive. Convenience might be when we went through drive-through, you’re right, “What did we buy?” We went through drive through, we bought something on Amazon really quick. It was convenient. It was right there. It was easy. All of it is very easy and convenient. And so, that is one thing to identify, “Am I doing this out of necessity because I feel I don’t actually have the money, or am I doing this out of convenience, because it is what is easy and in the moment available to me right now?” So, once you’ve sort of identified that, then we need to say, “Okay. So, if nothing changed next month, what would you spend on your credit card? What kinds of purchases would you make with your credit card, if you made no changes? And actually going through that process of thinking it through.

Katy Almstrom:

You might go back and look at a month or two of statements and see, “What did I use the credit card for?” You might actually create a budget, which is one of the ways, one of the nine ways to break up with your credit cards. Actually make a plan for next month. How do you intend to spend every dollar of your income? And how is that similar or different to what you’ve done the last couple of months? But I think that awareness and just thinking through, “Why do I use it in the first place?” Is a really important question to work through.

Dr. Amy Moore:

Absolutely. What do you say about people who use credit cards because they earn free airline miles or free dollars back for their kid college? Do you support that? Do you think there’s a benefit to doing that? What is your stance on that?

Katy Almstrom:

I don’t support that. Number one, because those systems, those games are set up for the credit card companies to win. They’re like Vegas. There is no way that the credit card companies are creating these programs so that you end up winning the game, so to speak. Now, that being said, there are people who argue that and say, “No, I really do win.” Okay, fine. Again, this is not for you, this message. But that is just as another way to simplify is to just eliminate the games, think about when you go shopping and it says, “Spend another 16.53, and you’ll get free shipping.”

Dr. Amy Moore:

I do it all the time.

Katy Almstrom:

Yeah. So, but the shipping was only 8.99. An now you’ve bought something quickly because you only had 15 seconds to buy something or whatever. So again, it’s not wrong, but if that is why you’re still using credit cards, then we need to start from the beginning, what’s important here?

Katy Almstrom:

The other thing with that too, is that there’s been a lot of research that shows that we will spend on average 16% to 18% more when we’re using a credit card than cash or debit card, and up to 100% more when we’re using a credit card. And you probably know this. I mean, the pain center in the brain does not even light up a bit when you use a credit card. It does with a debit card, and it really does with cash, right? It physically hurts us to hand over cash. But you have to say goodbye to the cash. They don’t give it back to you when you’re done paying. The credit, you get to keep. And so, the debit card is an in between because it’s connected to actual cash. But it does activate the pain center in the brain somewhat. Credit cards, not at all, is what we’ve seen.

Katy Almstrom:

So, that right there shows me that you’re probably going to spend way money anyway. And so, those points are just that you’re making back really nothing. I would challenge you instead to make a budget, right? Make a plan, simplify, forget about the credit cards for a few months, and just see if you can save up the money for those airline tickets without going through all the hoops of spending enough money to get points back.

Teri Miller:

That’s great wisdom. Yeah. I think like you said, let’s be realistic people. I mean, I think there are rare people, rare situations, where people have the discipline to do that, but obviously the credit card companies are making money on this. So, for most people, it’s not going to work out in our favor. So, that’s so good. Totally.

Katy Almstrom:

And I was just going to say one more thing. There’s a financial guru, Dave Ramsey, and something he says is that credit cards are like the cigarettes of the financial industry. Sure. Some people will smoke their whole lives and be fine. But are you really going to suggest that some someone pick up smoking.

Dr. Amy Moore:

Teri, actually used to work for Dave Ramsey.

Katy Almstrom:

Did she really?

Dr. Amy Moore:

Years and years, and years ago when he first was publishing his very first book. Yeah.

Katy Almstrom:

Cool. I was a Ramsey preferred coach for quite a long time too. So yeah, a lot of good wisdom there.

Teri Miller:

So much. Yeah. A lot of good wisdom I had in my head and I wasn’t following it as a young newly wed. So yeah, definitely got wiser as the years went on. I want to ask a real specific question, two parts, but I’ve got a lot of student debt, student loans. I went back to school as an adult, got a master’s degree. And so, I’ve got student loans. I thought it was 80,000. It’s not that bad. 65,000. That’s still, I mean, that is a ridiculously high number. And they vary, I’ve got one of them that is at like 7%, and then like three or four more at 5%. It’s because they were taken out at different semesters. I don’t know about consolidating that.

Teri Miller:

I get offers like once a week. I’ll get something in the mail. And I’m so scared to follow up on it, because I’m worried it’s a scam. Because right now I have my student loans through this federal program, Nelnet. And I just keep wondering, is that something I should do, consolidate, refinance, to put them all into something with a lower rate? What’s your perspective on dealing with debt in that way? Even like with a credit card, you’ve got at a couple of credit cards that are at like 20%, what about refinancing them, consolidating them with one of these offers that says you get 0% interest for the first 12 months? Give me some advice in those areas.

Katy Almstrom:

Yeah. So, I think with something like that, they are very appealing. A lot of times there is that time limit. And in the act of making that decision, doing that kind of consolidation, it feels like you’re really taking action. It feels like you’re really doing something about this, when in reality, you’re not, you’re not doing anything really. You’re not paying them off. You’re not changing your behaviors. You’re not putting a budget together. You’re not really making a plan. And so, I think that, first and foremost is a danger in it, is just saying, “We’re going to do this thing. And then we’re going to check the box of dealt with student loans.” When in reality, if you choose to go that route, and in some instances it might be a really good option, have it be a small piece of the bigger plan. And so commit to, “Okay. If we do this, we’re also going to make sure that we can pay them off by the time the 12 month time limit runs out on the 0%.” Or whatever it is.

Katy Almstrom:

Same thing with credit cards. I mean, if you look at the credit cards and you can make a plan to pay something off in a year or two, the interest probably won’t be that big of a deal. If you consolidate and ignore it for the 12 months that it says 0%, and continue your behaviors and continue to add more debt, now you wind up with a higher interest rate when the 12 months goes up, more debt that you added because you felt like you dealt with the credit cards. And so, you just wind up in a worse position anyway. So, the answer would be possibly, but make it part of the big picture plan. Have it just be one aspect of what you plan to do moving forward to take care of them.

Teri Miller:

Okay. That’s good. Yeah. You got to deal with the root cause before…

Katy Almstrom:

That’s right.

Teri Miller:

… thinking everything is going to be solved by solving a symptom. Yeah.

Katy Almstrom:

Or not even the root cause, but how do we really take action on this? And not telling ourselves that doing a rollover or doing a consolidation is the action. Right? It is just part of the process, potentially.

Teri Miller:

Okay.

Dr. Amy Moore:

And that makes a difference psychologically, for sure. Yeah.

Katy Almstrom:

Right. Yes.

Teri Miller:

Well, what next Amy, did you have one? Do you have a question?

Dr. Amy Moore:

No. We are running out of time. Katy, I do want you to tell our listeners about your coaching program. Yes.

Katy Almstrom:

Awesome. So, right now what I’m offering is a two hour intensive coaching session. And the reason I’m doing that is because I think a lot of people feel like, once I have a really deep coaching conversation with someone, they feel like, “I want to go do this work.” They’re really fired up. They feel like they’ve got this plan. They know what to take action on for the next 60 to 90 days. And they just want to go and do it.

Katy Almstrom:

Sometimes what is the hardest part here, and Teri, you might relate to this with the student loan situation is, you just haven’t created the time or space to actually look at the numbers, do some research, talk it through, see what makes sense. And so, to put this plan together, that really feels aligned and good and makes sense, now it’s like, “Okay, I want to run. I want to do this. I want to try this.” And then of course, we can do ongoing coaching. You can do another intensive a few months later. But I really think that I do my best work with new clients when we dig deep for a couple of hours, and you walk away with an amazing plan that is totally unique to your circumstances. So, that’s what I’m offering right now. And it’s really fun.

Dr. Amy Moore:

Okay. Awesome.

Katy Almstrom:

I’m biased.

Dr. Amy Moore:

Of course. People find out about that on your website?

Katy Almstrom:

People find out about that in my Facebook group. So, I spend the most time in my Facebook group, which is The Simplified Budget. And of course, I realize not everyone is on Facebook. But you can easily get in touch with me by downloading the freebie, that’s available, Nine Ways to [inaudible 00:46:55]. You jump into that. You will have my email and the Facebook group also. And I can be found on Instagram, Facebook, YouTube. There’s a lot of ways to connect with me.

Teri Miller:

Okay. We had a teeny little technical glitch in there, but I think we still were able to follow what you were talking about. So yeah.

Katy Almstrom:

Absolutely.

Dr. Amy Moore:

Okay. So, this has been super enlightening and full of some really great advice today. And so, we want to thank our guest, Katy Almstrom, for sharing her insights and tips for moms. If you would like to connect with Katy or learn more about her coaching program, you can visit her on Facebook at The Simplified Budget. We’ll also put her social media handles and link to her Facebook group, and a link to download her free resource, Nine Ways to Break up With Your Credit Cards in the show notes.

Dr. Amy Moore:

So, thank you so much for listening today. If you liked our show, we would love it, if you would leave us a five star rating and review on Apple Podcasts. If you would rather watch us, you can subscribe to our YouTube channel. And follow us on social media at the Brainy Moms. So look, until next time, we know you’re busy moms and we’re busy moms. So, we’re out.

Teri Miller:

See ya.

 

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