For season 2 of the Hope Motivates Action podcast, the transcript of each episode is available for your reading pleasure! This transcripts will also include links to tools, resources and tips I think you’d be interested in, some of these links will be affiliate links where earn a small commission if you click through to purchase. Thank you so much in advance for supporting my small business!
My interview with the wonderful Rebecca Braun is below…enjoy!
Hello. My name is Lindsay Recknell and this is the Hope Motivates Action podcast. Super excited to bring you season two, conversations with inspiring people, reframing the way we’ve traditionally thought about hope and its connection to our lives Today’s episode is a great hot seat interview where Rebecca Braun and I discuss debt and its impact on our hopeful financial futures. We discussed the potential difference between good debt and bad debt and how the choices we make around our finances are so personal and so different for all of us.
If you’re interested in any of the books, resources, and tools I mentioned in this episode, all the links you need can be found in the show notes of your favorite podcast player or head to the blog and pod page of my www.expertinhope.com. You’ll find them all there too. My message and my work is all about using the Science of Hope to motivate action in your life because without action, hope is just a wish.
Hello everyone. Welcome back to the Hope Motivates Action podcast. I am your usual host, Lindsay Recknell, but I have the pleasure of being joined by Rebecca Braun today. Who is going to put me in the hot seat. Hi Rebecca.
So awesome to have you here. I’m really excited about the topic we’re going to speak about today. Hope and its relationship to debt. There’s a heavy topic.
Well we don’t do the easy ones, do we?
I like it this way I like it this way. So Rebecca and I have known each other for a long, long time in her previous career in accounting, finance and corporate governance, but her current areas of expertise and her absolute passion is related to executive coaching and business consulting. Rebecca is result oriented, enthusiastic and most importantly, I think curious. People reach out to Rebecca when they’re stuck and have a burning fire they need to deal with and she helps clients solve their own issues by asking open ended questions and offering fresh perspective.
Well, I’m looking forward to fresh perspectives on debt today. Oh, let me pass it on over to you Rebecca. Take the microphone away.
All right. Thanks Lindsay. And I’m really excited to be on your podcast with you. Thank you for having me. So I came across this study recently by credit cards.com and they analyze how people spend money that just pay, toward their balance and others that pay their balance off in full each month. And it was fascinating to learn that people that make minimum payments or don’t pay off their whole card or their whole balance each month spent very differently. And so people that don’t pay it off, they spend a lot more on non-essentials and they make smaller purchases. So for example, they spend more on dining, clothing, cell phone upgrades, entertainment, fitness, monthly subscriptions, beauty products, so smaller, non essential items.
And if you think of it, those are all kind of self care stuff whereas people that pay their balance off in full spent more on travel and cars and they dug deeper into it and they drive older cars as well. So I found that really interesting and of course I got in the rabbit hole. And so a lot of other things about debt and optimism about the ability to repay it. So M&P did a study in April this year and they said that 64% are worried about their ability to repay debt. And you think about the stress American Psychological Association, says 60% of people have it as a very significant form of stress and that takes a toll on health. We want to talk today about where we can make a difference in our own lives, have control and make great choices. So that’s what Lindsay and I are going to talk about today.
So Lindsay, what was your very first amount of debt and what was it for?
No, that’s a great question. What was my first amount of debt? I think I had a credit card right when I graduated high school and I was going to university, I was working, I believe I was working for you actually going to university for the first time. I had bought a car, but it was a, it was a very inexpensive vehicle so I don’t, I didn’t take on debt there. If I can think back that far. I bought an actual car, like a fancy car. You know, I’m feeling important. I’m, I have a real job. I’m going to real school and I bought a car. I did, I bought a Mazda Precidia right away and ended up, you know, paying monthly payments on that. That was my, yeah, my first debt I would say.
Cool. I teach at the U prep in grade 10 at Masters and we did a calculation. I created a spreadsheet as I’m sure you can imagine, that showed if you’ve got a $500 credit card your first day of university and you bought a pair of $60 jeans and you made minimum payments, it would take you 16 and a half years to repay your jeans. It would have cost you $160.
Whoa. That’s unbelievable. That math. That is math we need to teach more in school.
Oh, I know. I love coming up with curriculum and am so, yeah. I am really intentional about teaching the danger of debt to these high school students.
When we are in high school, we don’t have any real concept of of money typically. I mean, absolutely some people would for sure, but the majority I would say I had no idea about absolute scope and scale of that, I didn’t know that minimum payments doesn’t mean that there’s still no interest rate or that having a $500 credit card, you know, and leaving it at $499 balance every month is not the way to go.
Yeah. Well and it’s interesting. Do you recall when we were developing Elbow Valley that when we analyzed how the homes were being paid for, either they were being paid fully in cash or financed to the hilt.
Yeah, no, happy medium.
Yup. Isn’t that interesting?
Fascinating. Speaking of fascinating, one of those stats that you brought up about how people who typically pay off their credit card, what they buy versus those that just make the minimum payment or don’t pay the balance off every time. Did they talk about why that is like why, why people would put big ticket items on their credit card yet still have the ability to pay that off.
Well that’s interesting because it’s a mentality isn’t it?
Yeah, that’s yeah. Mindset that if you have the cash, maybe you’re just putting it on your credit card because you want the points.
Exactly. Scarcity mindset. Yeah. Fascinating. I like that a lot.
So speaking of that, what were you taught about debt when you were growing up?
My parents were really transparent about our financial situation. I’ve always had a good attitude towards money, know we didn’t have a whole bunch growing up, but we were taught that we didn’t have a whole bunch and to prioritize differently. And my parents always taught us to be independent about our money. You know, we had an allowance, I had a bank account from a really early age, but I worked from a really early age as well. I got to make choices for myself. Even my parents didn’t necessarily agree. Every time they let me make those choices and then support me, if I fell. Oh, you know, like if I got into debt, they’d help me to figure out how to pay it off.
They wouldn’t pay it off for me. And I think it has definitely served me well. Now, because I, I use those lessons. I heard them, I’m pretty good at saving. I’m pretty good at paying myself first and paying off debt. But I’ve had a lot of debt in the past and like your weight, you know, it bounces back and forth between a lot of debt and no debt various times. Yeah. But I definitely continued to employ those lessons for sure.
So speaking of your debt, what would you classify as good debt versus bad debt?
So we have our home, we have a mortgage on our house and my accountant would tell you that I should be putting money down on the principal of our home at this time in my life when I’m making this kind of money at this age in my life that I should be putting money on my principal before contributing to my RRSPs.
That’s one philosophy. I have the mortgage on our home, but I also continue to contribute to my RRSP. So I prioritize my RRSPs in my hopeful future. My expectations of a hopeful future to have both of those things and I prioritize them both. So I would say my home is good debt right now. We have loans on our vehicles. That’s not good debt. That’s definitely a want, not a need. We could drive less expensive cars for sure. That is a, that’s a novelty or a luxury that I’m choosing to pay for it for sure. That’s not good debt. I would say on my business side, I have debt related to building business, which at the early stage of building a business, I do believe is good debt. A long time down the road. If I still have that debt and the businesses not growing or I’m not investing in it, my mindset around that would shift to be, that’s probably not good debt.
I mean of course everybody will prioritize and, and feel differently about how to use debt in a good way. Cause I think, I think debt can be used to, well I think debt can be used for growth with expectation of future positive results. Right. Every entrepreneur I know is very hopeful. Their investment to start a business is going to turn out well and there, you know, often go into debt to finance those things for the first two or five years. Okay. There’s definitely debt that’s not good, that is maybe frivolous or you know, not a good use of money. And I think it’s different for everybody.
So I’m curious, what is your goal for breaking even on your investment?
Like do I have a number that’s a return on investment target that I’m, that I go for?
No more of a date.
No, I don’t actually, I think you know, for our house for example, I, I have it in my mind, but I’d like to pay it off before the mortgage maturity date. That’d be cool. And I definitely put extra money onto the balance every month so that I can get it quicker. But it’s not a priority for sure. Much more of a priority is to pay off the higher interest things or the debt that I’ve invested in my business as opposed to my home, which all my things are crossed, but my home, which should retain the value that we’re putting into it. So yeah, I don’t have around time goals around specific debt repayment of the big ticket items. I don’t have the dates in mind, but I’m definitely progressing towards repayment of.
So as someone who’s so goals oriented and results oriented, I’m surprised that you don’t have a date.
I don’t have a date, but that’s not to say I don’t have a goal. So I really believe in setting smart goals but don’t necessarily believe that they have to be super time-bound.
For me it’s about progress. It’s about the closer you get to the goal, the sharper the goal gets and by not putting a specific time around it, that gives me the flexibility to change the path towards the goal to get me where I want. So, you know, as an example, if I set a goal that I’m going to pay my mortgage off in 15 years and then all of a sudden I decide that instead of continuing on the career path that I’m on making X amount of dollars, I’m going to change my mind and build a brand new startup where my income is going to go down for the next five years. That’s going to affect the timeline of that goal, right? Because I won’t be able to contribute as much to that for that goal. So what’s more important to me to pay off that debt and make progress towards paying off that debt than it is the idea of I have to pay off that debt by a particular day.
It’s about the progress not being the time-bound of it.
There’s a bit of forgiveness in there. So I really believe that we can only control what we can control and and sort of let the rest take care of itself. And I think that I’m bound to be disappointed if I set a time-bound goal and I don’t reach it. The journey, what I learned, as long as I’m progressing and feeling good about the progress, there’s value in that and, and I believe we should celebrate the value that and the learning that comes along with that. Not just be disappointed because I didn’t pay off this big debt by this particular day.
Interesting. Okay. If you had to do it all over again, what would you do differently?
And so over the last nine years, my husband and I have bought and sold a lot of homes. There are definitely decisions I would’ve made differently on those big ticket purchases.
So for example, six years ago we moved to BC from Calgary and we bought a big beautiful acreage and it was awesome and we loved it. But we shouldn’t have bought an acreage at that time. We should have gone to the Nanaimo, rented something or you know, spent some time figuring it out, figuring out the city and the town and what we wanted and getting jobs and you know, figuring out the lifestyle before we made a big commitment to a big purchase like that. I would have been more cautious in, in that because we stayed a year and a half and came back to Calgary. You know, we spent a lot of money on the move. We spent a lot of money on the land title transfer tax in BC, which is outrageous. You spend a bunch of money, we probably didn’t have to spend indirectly on that purchase.
So I definitely made a different choice there for sure. On the vehicle side we could absolutely keep our vehicles much longer than we do. We typically buy our vehicles from my husband’s dad, which you know, helps with the, uh, not paying the bank rates and we know are getting a good vehicle, which is sort of how we justify it in our mind. But for sure those are vehicle purchases over the last 10 years have been not the best financial choices for sure. They are definitely lifestyle choices that we’re making there. So we can definitely make some, uh, we needed to save some money. There’s a lot of opportunity in the vehicle side of things.
So I’m curious about small purchases, how you finance them.
So I am one of those people that pays the credit card bill every month. That’s just a lesson I’ve learned. I, it drives me bonkers to pay high interest rates on my credit cards, but I also really like the points. I really liked the perks. Um, I also like the tracking of it. I do, I put as many purchases as I possibly can on the credit card and then I pay it off with the cash every month. Yeah. For the extra bonus. Yeah. Yeah. I definitely put all the money on the credit card and then I track it as I, you know, as a good accountant. I like the tracking ability of the credit cards, but I, yeah, I pay it off every month.
Nice. I remember hearing years ago when I first got my credit card that people spend more if they’re paying with credit than they do if they’re paying with cash.
Yeah. I can absolutely believe that. Anecdotally, definitely. I feel like I pay closer attention to my bank account balance than I do my credit card balance. Yeah. Psychologically. I don’t know why that is, but.
Right, if you’re paying with a card and you see, you know, an impulse item, it’s easy to throw in an extra six bucks, but if you have to break a 50 instead of a 20 to pay for something, right. You spend less.
If you spend cash over spending out of your bank account on your debit card, I think you’d probably spend more on your debit card even than you would if you had cash in your wallet.
For sure. Yeah. Yeah. Back then there were no debit cards.
Also like the idea of, so when you spend cash, you know you’ve got a bunch of change leftover. You’re throwing that change in your drawer. You know, like I think probably saving more, even you’re spending less and saving more.
Yeah. Good point. Yeah, that’s a really good, you’re doing both at the same time. I like that.
For people that are, that are wondering how to pay back debt or how not to spend as much or you know, really want to plan for that hopeful future. Maybe that’s a tip to, you know, take your allocation of money out of the bank every week or whatever and just spend cash and leave your credit cards at home.
Yes. The other thing I remember learning when I was very young is don’t take your credit card with you to the mall.
Yeah. Good point.
Because then you have to go back home and decide, do I really want that right? And then go buy it. Right? If you have to do something that’s inconvenient, you may not want that pair of jeans as badly.
Yeah. That makes a ton of sense.
Yeah. You know, and going back to that survey by credit cards, people that don’t pay off their card and full spend, the smaller amounts on non-essentials, right. So if you go out for lunch, you could spend, you know, 20 bucks on a bowl of pasta, or you could make with $20 worth of groceries, you could feed four people. Right. And so I think there’s lots of examples where convenience, rewarding yourself. I know after I retired I spent so much less money rewarding myself because I work so hard. The fancy purses and clothing where especially where I love to spend money. So I think if we can not look at self care in terms of stuff but rather looking at self care as taking care of your mental health, getting enough sleep, right, treating your body well and your mind well, you don’t need to go buy stuff to reward yourself, which you know, creates that cycle of feeling guilty and then you know, then you start chastising yourself and that does no good for your self care, your mental health.
I really liked that and the whole how you buy or why you buy, the motivation behind why you buy and what you’re buying and and things like that. We’re actually talking about that. Last night I hosted an event called Hope Chat and it’s just a informal get together where we talk about all things hope related and the impact on our lives of these kinds of various things. And one of the things you talked about was self care and how we spend our money to make ourselves feel good and everyone is absolutely different. I told a story about we adopted a family at Christmas time and we had delivered clothes and food and Christmas gifts and all this to a home of a family that, you know, that needed it.
And I remember walking in there and seeing a big screen TV and I thought, well what’s what, you know these people can afford a big screen TV. What are the, what do they need us for, right? First off, who am I to judge? Well, I don’t know what the situation is, but what if that TV and that allow them who spend time together as a family having movie night because mom and dad didn’t work on Friday nights and you know that’s what they did together as a family to take care of themselves. Right? If they had to go into debt to buy that TV, but the value they were getting out of it in terms of quality time and self care of their family. Awesome. You know, like the point of my story is how we choose to spend our money and how we choose to go into debt. There’s good debt and bad debt and we’re making choices for ourselves, but if the payoff, if the value, we’re getting it out of it is high enough for our mental health for our financial future, whatever that looks like, there’s an argument to be said to go into debt for a short period of time for that big future payoff.
Right. As long as it doesn’t become a pattern. Right. And I think, you know, it’s interesting what was going through my mind right at the end when you were, finished is that, we have stopped saving for those treats, right?
Yeah, definitely. We are a, um, instant gratification culture. Right? Right. We don’t necessarily set those goals to start saving towards those things. We buy them now and pay for them at the time we should be saving for them maybe.
Yeah. Shifting your mindset right to that cash mindset.
Yeah. Instant gratification for sure.
You’re counting your loonies and toonies and change and all of a sudden you have 600 bucks to go buy a TV. Like how excited would that be?
Oh yeah, that’d be awesome. That’d be really good. We used to do that. Actually. My husband would keep up every year he started a new bucket of money and every, you know, New Years we counted and split the winnings and go and spend it on whatever we wanted to spend it on. It was a, yeah, it was a great way to save for sure.
That’s awesome. So what was the best thing you got?
I don’t know. We haven’t done it for a number of years. I don’t know that I actually remember.
It’s almost time to start again.
And I think one of the things that we’ve really been focused on this year and even like at at Christmas time is I’ve asked for an experience where he and I can spend our time together. I feel like for me, I would much rather spend our quality time together and spend our money in that way to continue to build that relationship and that connection between each other and you know, maybe there’s other people involved or family or friends or something. I would much rather spend our money on on that kind of thing and go on a trip where I will remember the time we spent as opposed to what he gave me as a gift in 2019. I think we can go into debt for those inconsequential things, like you mentioned, that don’t really matter in the grand scheme of things but maybe if we were more intentional about it, the value of those moments, those experiences would definitely go up.
Another strategy that I was taught years ago, and it applies to everything in life, but will it matter five years? Right? So if I don’t buy something to treat myself, will it matter in five years? I won’t own it. So no. Right. Yeah. So looking at buying things with value as opposed to just like short term fun.
Yeah. And I think it’s a balance. I think you definitely should reward yourself for short term fun as well. I don’t believe in the scarcity effect where I have to prevent myself from enjoying something really great just for the longterm payoff because then I don’t get to enjoy the journey to that longterm payoff.
However, that’s, that’s my choice to make, right? I get to choose and if the future is much, much, much more important than the money I would spend today and its impact on my future, then I’m not going to buy it. There is something to be said, treating myself to a, to a pedicure instead of putting that 60 bucks on the mortgage on my home.
So I’m curious what your stress level is about your debt.
Ah, depends on the day. Okay. Yeah, it depends on the day. So most of the time I’m quite hopeful about my future and my financial stability. My pattern, my history, my capability has, has shown me that over the years I have been able to pay off any debt that I’ve had eventually. You know, and I maybe in not the best financial way, but I’m confident that it will be okay and I will continue making the steps to pay off the debt. There’s peaks and valleys. You know, when my husband lost his job, that stressed me the hell out. Like the pressure that I felt to, to be the sole income earner in our family. That is hard and it’s hard to maintain. When we made those big home purchases, that freaked me the hell out because you go to all the places in your mind that says, now what happens?
What happens if this happens or you know, it’s scary, it’s risky, it’s, it’s panic driven until you know, I’m go to the high end, don’t lose your job and the value of your home continues to increase and you continue to work hard to pay down the mortgage and whatever. But it is stressful and depending on the level of risk involved in, in the investment or the accumulation of debt, it is stressful. But what I found is it all comes down to progress and progressing towards paying it off, progressing towards earning the value that you went into the debt for in the first place. No, continuing to make those choices, setting those goals and then employing hope theory.
Right. And I love talking about progress and it’s being proud of the progress you make. Right. You know, like the do one thing different every day or the 1% you know, there’s lots of different theories or strategies and the one that I like with regard to finances is to make one good money decision each day. Right.
Good one. I like that.
Yeah. You know, it’s making good choices. You know, whether it doesn’t matter how old or how young you are, how much money you have, how much you don’t, right. It’s like make one good choice a day, whether that’s to invest in something or not to spend or to reconcile your bank accounts, what have you. Right. It’s like do a smart money thing every day. We were at friends brunch on Sunday and they are big into reduce, reuse, recycle and they’ve gotten into furniture reupholstery and they’ve got gorgeous furniture and they have spent virtually nothing on it. They buy it on Kijiji and recover everything. It’s gorgeous.
I think that brings up a really great point, like ways to not go into debt and still have beautiful things because often we talk about, you know, the pressure and stress of keeping up with the Joneses or wanting to have nice things, but you shouldn’t have to go into debt to get those nice things.
You know, you have to put in some sweat equity. You have. You very likely I can put in the effort and the the work required to get it if you’re not just going to pay someone to do it for you, but you can have nice things.
Right. I love your word about scarcity, right? I’m not into scarcity, but I’m into making smart decisions.
Yeah. Yeah. And smart decisions for you cause you get to choose.
Exactly. What are some other thoughts you have about debt and finances and cash and all the good things we’re talking about?
Well, I feel like this time of year, particularly around the holidays, there’s a lot of pressure and a lot of expectations and you know, I can think about people who are planning weddings or attending weddings. There’s a lot of expectation to spend a bunch of money and those situations or you know, you go on vacation with another family or something and they have different income levels than you knew or their money priorities are different.
And again, it’s very, very stressful and those expectations can put a lot of pressure on people and they can turn into not very hopeful times in our lives. You don’t have to go into debt to make other people happy, right? Again, you get to choose, what is right for you and where you spend your money and this time of year you choose to put more in your credit card than you normally would and you take the rest of the year to pay it off. Cool. You get to choose, you know, you get to do that, but whatever that strategy is for you, I think it’s important to think about the intention and the motivation and not just do things unconsciously when it comes to money, but you know, actually yeah, maybe do a budget or set a spending limit for each purchase or things like that where it makes it conscious that you can recognize where your money is going.
I love the budget thing. Of course I do. Right. Very few people actually have longterm budgets.
Yeah, I absolutely believe that to be true. Yep.
Probably the same cashflow forecast spreadsheet I created a million years ago that you used. I set my son up with it six years, seven years ago. It’s a five year cash budget. He still uses it and he’s getting married next year and he’s got everything planned out for the wedding costs and how they’re paying for it, how many hours he has to work. And, and you know, I, I love that he is at a young age, super conscious about how much he’s spending, where the money is coming from and where it’s going.
Well. And I like also that, you know, you’ve set him up to learn that stuff, right? You, you taught him to set those goals and then to employ his agency thinking in his pathway, thinking to get to achieve those things. He’s got the tools and the resources to manage. Yeah. What that map looks like, what that calculation looks like. Those are the resources to employers, the expectation of a hopeful future.
Absolutely. And he doesn’t worry about money because he knows what the plan is. Right. And nothing goes according to plan, but least you know, he’s got a good sense of timing and you know, when there’s going to be less money and more money and when tuition is due and the like, right. So I think it’s, it’s important that we have hope based on facts and a plan, something concrete and the action of it as opposed to just wishing, but by doing something concrete you can have optimism about the future.
Hope without action is just a wish.
Can’t win the lotto if you don’t buy a ticket.
Is that good debt?
There’s a cool motto I have from a mentor of mine who tells me that hope is cheap. If he spends $5 a week on playing the lotto, the value that he gets out of that, albeit low probability that he’s going to win the lotto that $5 dollars he spends every week, it’s absolutely worth it to him and like he says, hope is cheap.
That’s awesome. I love it.
I have so enjoyed this conversation and I think we touched on some pretty heavy topics but a lot of really cool ideas on how people can, can manage that. Their debt, their stress, you know, some identification of good debt versus bad debt. And I think people will really sort of sit back and think about their own scenarios and their own situations and where good debt could be good debt and where maybe there’s some bad debt that they could take care of.
Also talking about the self care, the pressure that we put on ourselves to spend money.
Yeah. To, to suit someone else’s opinion or someone else’s judgment of us. I think it’s, yeah, it’s important to be aware of, of our motivations. Yeah. Our motivations for why we want to spend that money.
Yeah. Motivation is perfect word.
Motivation and mindset. Well, I so appreciate the discussion around motivation and mindset. Thank you so much for joining me today and uh, I will talk to you again very soon.
Sounds great. Thanks you Lindsay for the opportunity.
Thanks so much for listening to another episode of the Hope Motivates Action podcast. These conversations have been so inspiring and motivating to so many people, and it’s my absolute pleasure to produce them for you.
This show thrives on your feedback, so if you find value in this podcast, it goes a really long way. If you’ll give me a five star rating on Apple podcasts, the next step in your journey to action your hope is to check out my virtual mastermind program, the flagship series, which is called Hope for Caregivers. These are 12-week group accountability programs designed to support those of us who are caregiving for others, likely at the expense of ourselves and our own personal goals.
As with all the tools and resources we discussed on the show, you can find links to this program in the show notes on your favorite podcast player or on my Expert in Hope. Also, when you’re visiting the website, check out the Shop page where you can take Hope home. This show is all about making hope tangible and practical because without action, hope is just a wish.