Transcription
After auditing the finances of hundreds of people, what do you find to be the common thing keeping most people broke?
A lot of people don't understand how interest actually works on their credit cards. And even when they do kind of understand it, since a lot of people, they always say, "Oh, but I didn't look at it." You know, I don't want to look at it because it's too scary. It's it's easier to just, you know, let it be and not think about it. They don't know. Like I call their interest rate out and I'm like, "This is 30%." They're like, I thought this was 12%.
Do they even know the difference at that point?
At that point, they do understand. Most of them at least understand that difference. Once they at least understand interest, every once in a while I have to explain interest and that's okay. Uh but that's definitely the common thread I see throughout is a lot of people want to bury their head in the sand because it just gets so scary. So they just bury, but then it gets worse. Then it ends in the situation where there's been a few guests this year where I don't see anything but bankruptcy being the only option. And you know those people specifically where I can't figure out anything on the basic level. I we set them up with a financial adviser that we partner with. That is definitely the common thread is they just put their head in the sand. They're scared and it just ends up getting worse. Then they have no idea how bad the debt even is. And not even that. They they put their head in the sand so much that they will sit here and they'll say, "No, you'll be happy to know that I didn't purchase on that credit card. It's been like six months since I purchased on the credit card. I open it. There's like five subscriptions renewing. They have no idea.
And are those people are any of those people that you audit that are in really bad financial situations also the type of person to skimp out on small purchases? I feel like you can really draw a line between two kinds of people. The people that are very disciplined with like the small things. I'm not going to go get a coffee. I'm going to not get avocado. I'm not going to get bacon cuz it's adding a few dollars. And then the other people that are like, "Ah, it doesn't matter. It doesn't matter." Do you see a common thread there where like you really don't see that archetype of human that saves on those small things to be really in financial strife?
I don't see anyone that doesn't get the small purchases. I feel like our show always has the small purchases and they always think that they're getting they're going out to eat like once twice a week and then I show them that they get a coffee in the morning and then a you know a vending machine during the day and then a dinner at night almost every day. So, it's just the they think they're not making small purchases, but they do.
Well, what are small purchases? Okay. Because I saw some hate that you got maybe about a month or two ago. Spotify.
Was it that? Yeah, I think actually it was. You told someone not to do the Spotify when they said, "Listen, it's like $9 a month or $11 a month. It's like the only thing I enjoy." You're like, "No, you need to cut everything. You You have no room for enjoyment?"
Yeah.
Looking back, do you think that maybe there was some room for enjoyment or no? Like, it's an all or nothing.
I give people uh It's not all or nothing. I give people all the time uh some room. I gave the the episode we recorded today, I gave her 20 bucks a month for subscriptions. There are people that I do give room on when they have room. When people are literally going to potentially get evicted from an apartment because they only have $50 left after I give them the most conservative budget, they have $50 left on a monthly basis. I think they can listen to ads. Now, I mean, do I care if someone gets Spotify specifically? No. It just becomes an example throughout where it's like, hey, we can sacrifice something. It's not about It's not about Spotify. It's about the example of we can sacrifice. If they want to keep Spotify, they can keep Spotify.
I think your point that I actually agreed with was that they could get Spotify with the ads.
Yeah.
Listen to the ads.
YouTube. YouTube has everything that Spotify already has.
I do YouTube. Apparently, the ads are a lot worse on Spotify. The features on premium. Apparently, you can't even like skip a lot of songs anymore. Things apparently free Spotify is pretty shitty. But again, it's never been about Spotify. The reason why we kind of made Spotify kind of like almost a meme to always call out is because people would were good with me telling them to cut back and the moment they heard Spotify, they would always perk up and almost be offended that I seems like the simplest of thing that people should be able to afford. Oh, it's just listening to music. It's it's not even like television. It's just audible. It's auditory. So, I feel like really coming after that's like attacking what people like think as like a basic human necessity. It's also cheap when you think of over the course of a month if like if you're not getting much enjoyment anywhere else in life but Spotify.
But it's more expensive if you're paying interest on that because you're not paying it off and you're putting it on credit card.
Even paying 50% interest on $12 a month like isn't that bad in the big picture if they work an extra hour at their job.
I agree. But but I think you would also probably agree with the sentiment that it's not necessarily about the $9.99 and the 50% of that, but it's the string of actions that follow the whole mentality of the $9.99. Oh, it's not a big deal. Oh, the $3 Starbucks is not a big deal. Oh, this isn't a big deal, but it adds up.
And that that's why I push back on that.
And that's why I find it really interesting that you rarely ever see people struggling that are the type to skip out on those small little purchases. That's very interesting.
No, we don't get those people cuz we only have people on that are struggling and we never have the people who are trying to be frugal on small purchases.
What have you noticed about human nature? Not only auditing the finances of hundreds of people, but also just talking to 500 people that open up to you.
Yeah, definitely some sense of entitlement. And I hate saying that word cuz a lot of it gets politically charged. You know, when you hear the word entitlement in our culture, it's, you know, politically charged. But a lot of people think that they had a hard day at work. They're entitled to pick up the meal. And sure, they can do it. And what I always try to tell people when they're not willing to change on the show, I'm just like, "Okay, go do it. I don't care. Go do it." But I'm having the conversation of, "Oh, here's what you should do to actually get your finances in order." But a lot of people, they really, they had a tire of work. Oh, you know, maybe make it even more complicated with a little extra school. make it even more complicated by having some kids and it's just they deserve the sweet treat. All that stuff and I want them to get the sweet treat. I want them to spend 30% of their money on their sweet treat once they're out of debt and have a fully funed emergency fund. But I there's I've picked up on a lot of that entitlement thinking that it's more of a deserve than a let's just put in a little bit of sacrifice and then let's get all the sweet treats you want. So lot yeah lots of
Where does that come from?
total guess but just based on how I grew up and based on the culture and probably the consumerism culture, you know, we our median household income in the United States is or our GDP per capita is double the United Kingdom. So, it's like we have that extra money more typically than those other countries to just go blow it on things. We see the commercials, we got everything. It's in our culture. No, you get the McDonald's cuz you want the ice cream, you know. You get it. It's a nice day out. This is the extra little things should have that yearly trip somewhere. Life insurance is one of those things that makes sense for a lot of people out there, but most people just put it off because it feels complicated, expensive, or timeconuming. But it doesn't have to be. Thanks to our sponsor, Fabric. Fabric by Gerber Life is term life insurance that you can get done today. It's made for busy parents like you. It's all online. It's on your schedule right from your couch. You could be covered in under 10 minutes with no health exam required. If you have kids, and especially if you're young and healthy, the time to lock in a low rate is now. And even if you have life insurance through your employer, it may not offer you enough protection for your family. And it usually does not follow you if you leave your job. Fabric offers flexible, high-quality policies that fit your family and your budget, including options like a million dollars in coverage for less than a dollar a day. Fabric is partnered with Gerber Life, trusted by millions of families for over 50 years. There's no risk, and they even have a 30-day money back guarantee, so you can cancel at any time. Fabric also has free digital wills, tools to invest in your kid's future, and more. All right from your phone. Join the thousands of parents who trust Fabric to protect their family. Apply today in just minutes at meetfabric.com/icclip. Again, that's meetfabric.com/icclip. Mfabric.com/icclip. The link is also down below in the description. Enjoy.
I feel really bad saying this. I genuinely do, but it's just my honest it's my honest thoughts. So, obviously, you know, when we have a guest on the show, we research them a lot. So, I was watching a ton of your videos. I'd seen a lot in the past, but I'm just like I I would say re re-watching a lot of stuff. Um, and I noticed I kept getting very
honestly kind of upset, like a little bit angry because a lot of the guests like I would not,
it would be rare for me to feel sympathy for them. And I know this sounds awful to say because these are people in bad situations. They're struggling financially. They're not coming from a good spot. But it seems like similar to what you said, it's like, "Oh, because this, oh, because this, because this, because this." And I'm thinking like, is there no sense of personal responsibility for
How far did you make it in the episodes? I'm curious.
I mean, your episodes are long now, like an hour and a half. So, I probably watched six episodes all the way through.
All the way through. Did you see towards the end though? I feel this doesn't happen for all of them, but a lot of them that I see these days, they really start with that cuz again, they've never been pushed back on. Also, they've never been on camera. They're literally random people off, you know, they're in the audience typically.
I do notice a small resolve at the end after being berated, you know, for like an hour finances.
Abely Well, it's cuz again, they've never had it. They also just we do story times and stuff and, you know, to get more context on their life, but once you start getting halfway through the document pile, it really starts to set on them how bad it is, worse than they thought it was. And you can see it after the show. And then we filmed the post show and that's an extra 20 minutes and you can just see they're just like, "Oh, I can't believe how bad that was. I had no idea." So, would you find yourself being sympathetic towards the guests that you have sometimes on your show or what's the general how do you feel about it?
Yeah. Well, definitely more sympathy towards the uh the uncontrollables that we talked about. Absolutely.
Lots of definitely sympathy towards them and then you know they usually we give them an extra helping hand. Um, but sympathy of I can't get Chick-fil-A after work. Um, a little less. Usually when someone has when people have kids and they have to cut back on on on, you know, special things for the kids just temporarily,
that's definitely where I feel, you know, more of a heart on that. But when it's just a single person just trying to really grind it out for like a year, that's hard for me to actually I have less sympathy when um we get to the end, we make a budget and they have thousands left over. I'm like
this is just the dumb there's no reason to be in this kind of debt. You could literally fix this in a few months and we recorded like four of those in a row a few weeks ago and I was just like I had no sympathy at the end. It's like dude just [ __ ] do this. This is the dumbest thing in the world that you're not doing.
How long does it take to break through to people and what do you have to do to get to that point?
I start to see it at about 45 minutes 45 minutes into the episode.
Is there anything you're doing in particular or it's just like you got to like keep like chipping away chipping away and then 45 minutes and they break down.
That that's that seems to be the philosophy we you know you find the things to relate to them. I I learn more things about their family, more things about their personal life and you can start relating things to it and the consequences of their actions and who they might be affecting. if they learn they have a kid, you know, I demonstrate that older kids going to feel morally obligated to take care of them at some point if they don't actually get their [ __ ] together now cuz I don't think any of us would let our parents literally become homeless, you know, if they don't have retirement, but we didn't choose to come to the world either. So, it's like why put that on your kids? So, I find something to relate it to. And then, yeah, chipping away and usually about 45 minutes in, we're most of the way through the documents and that's where the numbers really start to stack. So that it's just I think it's just all that becomes a little overwhelming good overwhelming hopefully and you start to see some emotion and they even get quieter in that moment usually and um yeah that's when they start to be more receptive to things.
So what are the items that are keeping people poor the most that you notice?
Definitely car loans big car loans on the show. Uh some of our, you know, biggest moments are big trucks, big American manly trucks where someone, you know, they have their Ford F150.
Yeah. Uh at a, you know, 7-year, 8year loan, 25% so they can pick up groceries.
I saw a video, and this is real. This guy got a Lamborghini Gallardo, and he went through his expenses on like here's how much it costs to buy a Lamborghini Gallardo. Great car, by the way. Like fantastic for resale value. Uh, I believe he put almost no money down, but he got a 140 month car loan on this.
12 years.
It was about 12 years. And I was thinking like the average auto loan rate for a used car that's that old because these cars were built from like 2004 to like I think it was like 2012, something like that, give or take. Uh, but for used cars over four years old, the interest rates have to be minimum 7%. like at the lowest and I was doing like some backwards calculations to figure out like how much he's paying in interest over this 12 like it makes no sense but
I want to get that guy on the show
but he has the car and the thing is it's he seemed like a really bright smart guy
okay
that was the one thing that
maybe he got a super rate somehow though
there's no way you're getting a better than 6% on a 12 month it's impossible
yeah that's crazy should get him on that would be interesting I always wondered it would be kind of cool rather than people that apply to go on the show like you just go on the street and just like go up to someone working a McDonald's job or something like that and just approach them.
That's so hard
cuz that's a little bit more true I feel like.
Yeah. Well, I mean that would be
I mean it is all true but it's just I don't know because people get on such a big this is it's the there is a bit of a moral dilemma. Uh we want to make sure that the people coming on the amount of onboarding they come on before coming on the show. But we couldn't do that with someone on the street, you know.