Believe it or not, financial coaches have debt, too! In today’s episode, I share how a financial coach manages, leverages, and pays off debt. I tell you everything from my early experiences with credit cards to borrowing money to invest in high-value coaching. I give you an indepth look at the complexities of my business and personal debt and my methods for paying off if off. I cover everything from how to identify the root causes of debt to actionable strategies you can implement to create a sustainable, drama-free spending lifestyle.
Are you ready to redefine your relationship with debt? Get inspired by my journey with debt and learn new methods to gain confidence in managing debt and spending money intentionally.
Stay tuned to hear insights on these critical topics during this episode:
[02:10] Starting relationship with debt & credit cards
[05:20] Leveraging & paying off debt in my business
[15:35] Questions to help avoid personal debt
[20:55] Paying down personal debt
Tune into this episode of Money Files to learn how a financial coach pays off debt.
Are you ready to start asking for help with your finances? Apply to work with me, and let’s start working towards your financial goals.
IF YOU LOVED THIS CONVERSATION ON, MASTERING DEBT: COMMENT END HOW A FINANCIAL COACH LEVERAGES, MANAGES, AND PAYS OFF DEBT CHECK OUT MY EPISODE ON SIMPLE STEPS TO PAY DOWN DEBT!
Transcript for “Mastering Debt: Comment end How a Financial Coach Leverages, Manages, and Pays Off Debt”
Intro: Hi and welcome to Money Files. I’m Keina Newell from Wealth Over Now. I work every day with professional women and solopreneurs to help them get out of financial overwhelm and shame so they can experience more flexibility and ease with their finances. Are you ready to gain confidence and learn to manage your finances intentionally? Tune in and grab financial tips that will help you master the way you think about and manage your finances.
Keina: Hello and welcome back to another episode of Money Files. So today I’m going to talk to you guys about how a financial coach pays off debt. Believe it or not guys, I understand debt. And I definitely understand debt when you are making different amounts of money, like I’m making $30,000 a year, I’m making $50,000 a year, I’m making a $100,000 a year, I’m making $200,000 a year. Why isn’t the debt going away? And so I know that if you are listening to this episode, you probably have lots of thoughts about debt. I grew up in a household where I definitely learned that debt was bad. I heard my parents talking about not paying or not holding credit card balances and that you should always pay off your credit card. I actually got a credit card really early on, I can’t remember, I feel like I got a credit card at 16, maybe not at 16, maybe it was 18 because I don’t know.
Basically I signed myself up for a credit card. I did a lot of things just on my own because I think I wanted this level of independence. And when my mother wasn’t willing to give it to me, I decided to create it for myself, like when she didn’t want to buy me a cell phone after I wrote her a really nice letter about how I could pay for it with my babysitting money. So when I turned 18 I went to Sam’s Club and I went to the AT&T kiosk and I signed my own contract. I’ve been paying my cell phone bill ever since. But I got a credit card at a credit union very early on and I want to say the limit was like $500, which when you’re like 18 $500 is a lot of money and I just used it.
I used it to build my credit. I think I used it in a very responsible way early on. And then I think my second credit card that I got that I can like remember was my Southwest credit card. And at the time I think I got my Southwest credit card because I was flying back and forth home. I want to say I got that card out of college because I used, the first credit card that I got I had that one for a really, really long time because I was good at managing my money. They went from like, oh, you have a $500 limit to like a thousand dollars limit. And that limit slowly increased over time. And so I would say that in the very beginning, most oftentimes I was getting into credit card debt for plane tickets or definitely being a teacher and not making as much money as my friends.
I think I was putting things on my credit cards that allowed me to be able to go and hang out with my friends. So I definitely understand the waffling of credit card debt and I’ve had, just I would say like I understand also just that residual mentality is like why is there always just like a thousand dollars just kind of hanging out here? But my relationship with debt over the years has also taught me how to manage my money better. And it’s like what are the things that I actually want to be spending money on when I look at my credit card, what are the things that I’m really excited about that I spent money on? I actually used to get a statement? I feel like I haven’t got one of these in a while, but I used to get a statement at the end of the year and it would break down all your credit card transactions and it would show you by category how much money you spent.
And it had nothing to do with whether or not you held a credit card balance, but it was just kind of giving you an overview of how you used your credit card. I remember when I was getting those, it would be eye opening to look at how many times you went to the grocery store or how many times you went to the gas station. And those are some of my earliest memories of thinking about how do I want to spend my money intentionally. And once again, it wasn’t like there was debt on my credit card from those things, but it just was a reminder of how often I was at certain places and I was buying certain things that I needed or that I wanted or that I told myself that I needed. And so as I was saying like my relationship with debt has changed over the years, but what I have learned from having debt is also how to manage my money better and to really be thinking about what are the things that I want to be able to have money for but also thinking about how can I leverage debt.
So I’m actually going to talk to you, I’m going to talk to you about the business side of things because I spend a lot of time in my personal finances as well. But in my business I’ve leveraged debt, I’ve leveraged debt several times and I’m using the word leveraged debt because I’m telling you that I did not pay for something in a hundred percent cash upfront and that I used a credit card to pay for. And the things that I have leveraged debt for is I’ve paid for coaching. I remember that I built my website leveraging debt. My first actual high ticket coach that I worked with, my first actual high ticket business coach and when I say high ticket, I mean over $5,000. I actually borrowed that money from my mother and I think I’ve probably told you guys this story before, but it was $6,000 and I had known this coach for a while and everything she said and how she connected with me I knew she could help me in my business.
So at the time, I feel like I could have given her the $6,000 but it would’ve been all of my savings. So I was like okay, I’m going to call my mom. And so I called my mom and I asked her to have a loan for $6,000 to pay for this business coach. And my mom, of course is like you’re going to pay somebody $6,000 for what? You’re going to pay them, definitely for what? This is also at the time when they were telling me that I needed to get a job because I don’t have a job because I have my own business. But I remember asking for that and I don’t remember having a lot of fears about borrowing the money from my mother, like not a fear of not being able to pay her back or any of those things also because I knew that I could, I was going to figure it out. I just think I had the belief of figuring it out. And so my mom gave me $6,000. I had to also ask my dad, she was like, ask your dad too, make sure it’s okay. But they gave me $6,000 and then I was able to pay that money back.
And so I have leveraged a parental loan if you will. And I’ve also leveraged debt in the form of credit cards in my business to pay for coaching. Definitely to preserve my cash flow but also even when I didn’t have the cash flow, I had used debt to build my website at the time and I think my website was like another $7,000 or something like that. As you can see, I invest in really expensive things. But my belief about the debt that I had was I would figure it out and pay it off. And this is not the same type of dismissive, I’ll figure it out. But when I’ve leveraged debt in my business, it’s been connected to someone who I felt could help me. And so I want you to know that when I’ve leveraged debt in my business, I’ve been thinking about what is the ROI or what’s the return on investment that I’m going to get from paying this person?
So coaching would be a really good example. My website would be a really good example of where I may have put money out upfront in the form of debt but then I felt like I was going to have an ROI, like my website I felt like was going to communicate how I wanted people to feel when they’re getting ready to talk to me about something that can feel really scary and something that can feel really overwhelming. With coaching I knew that I wanted to work on my mindset and I wanted to be able to have someone else be a mirror for me. And so all of those things I knew that I would be able to like have a ROI if I was okay with leveraging debt.
So when it comes to actually paying off the debt, if I use debt in my business, that’s what I’m going to talk to you about. So one of the things that I do in my business is I’ll build in the minimum payment into my business budget. So if I decide to charge $6,000 on a credit card, generally I will try to use like a 0%. Sometimes I haven’t. But if I’m charging $6,000, I kind of know, let’s say my minimum payment is $200, then I’m going to put that minimum payment into my budget because my business also has a budget. But where I accelerate being able to pay off my debt as a business owner is that I have taken a percentage of everything that I have coming in.
So my gross income if you will. And I might set aside 5 to 10% of that that’s just going to pay down debt. So if I had that $6,000 and I’m paying off that credit card, but if I have a $10,000 month I might be paying an additional thousand dollars towards that credit card or additional $500 towards that credit card and so by doing this, by just putting in a buffer into my business, that’s like 5 to 10% of my gross. It’s created and it has created a consistent plan for me to be able to pay off debt. It also doesn’t allow me to be really anxious about like, oh my goodness, like I shouldn’t have done this. I just don’t have those thoughts. And generally speaking, when I’m investing in something in my business, like I know that there’s going to be a return. So the trade-off might be temporary.
I’ve used debt most times in my business when it’s like dang there was something that like yes I’ve budgeted in my business but maybe something was a little bit out of reach based off of how much income I was bringing in. So I can still play with my numbers to make it make sense and I can build the minimum payment into my budget. I can build a plan to be able to pay it off. So maybe I would love to be able to pay it off in one lump sum, but I want to be able to preserve my cash flow and so I could create a plan for me to be able to pay that off in the next eight months and so that’s felt good for me.
But then also in my business, like as I’ve learned about different things that I want to invest in, I have also just started to shift the way that I’m budgeting in my business. And when I say budgeting, especially in my business, it’s like thinking about how I want to invest because there are set things and you guys are going to be like, especially if you do not have a business, you’re like Keina, what are these things that you’re talking about? But there are set subscriptions that I have. If you’ve been one of my clients, you get an email from Dasato. If you booked a consult with me, you do that through Acuity. And so all of those things are like known expenses. But one of the things that I am still figuring out is the level in which I want to invest.
I always pretty much have a coach and that coach is generally more than $10,000 or $15,000. So that to me I know about. But then there can be smaller investments that I might want to make a $6,000 investment here, a $2,000 investment here, a $3,000 investment here. And so when I’m thinking about investing in my business and whether or not to leverage debt or to pay it in cash or any of those things, I am thinking like I have an investment protocol for myself and I really try to pay attention to how I’m feeling before I spend money, especially when it’s kind of like outside of my plan. So one of the things that I like to do is to make a wishlist of some of the things that I want. Maybe there’s a program that I’ve seen, maybe there’s a person that I want to work with or there’s an expense that I want to add in monthly.
I can put this down on the wishlist and just kind of keep a running log of what has sounded intriguing to me. The other thing that I do is I also make sure that I’m using what I have because I find especially as a business owner, sometimes we like really shiny, new bright things and then if I’m looking at it like with my business coach that I’m working with right now, she has a lot of coaching tools and feedback in her program and there are portals where you can get feedback on your mindset. There are portals where you can get feedback on your copywriting. And so I want to make sure that I’m using all of those resources before I’m going out to look for a new resource or trying to tweak something. So asking myself, like am I using what I have is a really great question before I’m actually going in and trying to invest in something else.
So the other thing that I also love to do is actually reflect on what are my hell yeses and my hell nos when it comes to an investment? Because if I know in the last month or not last month but the last 12 months what I’ve invested in and I’ve loved and then in the last 12 months what are the things that I’ve invested in that I haven’t loved? It gives me a guide for what I want to say yes to again. It gives me a guide to ask myself like hey, why do you want to invest in this? How are you feeling? Is this a silver bullet? Which side of this T diagram does this belong on? Is this something that you think is going to have a long-term ROI in your business or once again, is this a shiny bullet?
So I’m kind of mixing some things in there, but I want you to understand that I am not scared of debt as a business owner, but I also like emit. I’m not going to go and deplete everything that I have in my business and be like, hey, I’m at zero. The goal is to have functioning business accounts with savings to be able to pay your operating expenses, to be able to pay for your taxes and all of those things. But as a business owner, I’m also not scared to be like, hey there may be this $10,000 thing that I didn’t plan for and so I’m going to put it on a credit card instead of actually using my cashflow and just build that into the plan moving forward. Because I can manipulate the numbers and if I can manipulate the numbers in a way that I feel comfortable with, then I can say yes to that.
So definitely as a business owner I have been, I would say, I think I’ve been a lot more willing to say like yes to debt in some ways because of the fact that I understand the long-term ROI and some of you your ears may be burning like oh my goodness. But I’ve learned over the years that debt is neutral. It’s the thoughts that we have about debt that create the feelings that we have about debt. And so yeah, that’s where I am in terms of how I think about debt in my business. And then I would go to personal debt. So I definitely am more strict if you will with myself when it comes to personal debt and I just know for myself over the years, like I was telling you, like my credit card went from a $500 limit to $1000 limit.
And so you can get this increased spending power on your personal side. And the best question that I’ve asked myself especially over the years is what is the cause of your debt, what’s been the cause of your debt in the past? And as I was sharing earlier, it may have been flights, especially during the years when your friends are getting married and all of those things are happening and you are like, but my paycheck and my salary, they don’t seem like they want to support five weddings and two baby showers this year. So you can end up being in a place where you’re using your credit card to show up for your friends. I think that’s very, very, very common. But what has really beneficial is to understand like I said, like what is the cause of my debt.
And I think that there can be several different causes of your debt. Like I just said, you want to show up for your friends or you’re kind of failing to plan. I think that’s also true. And so the next question we want to ask ourselves is how do I correct this? And so when I’m talking about correcting what I might believe to be my root cause issue with the debt is like I go back to the numbers and I’m going back, especially if we’re looking at this through the lens of creating a drama free spending lifestyle. I want to be able to create space for the things that I want to spend money on and the things that I also just need to spend money on as an adult. One of the things I was thinking about today I was like dang, oh my goodness, I’ve been in my house for 10 years, which is crazy to me because I don’t feel like I’ve been in my house for 10 years.
I am totally old because as I’m thinking about the fact that I’ve been in my house for 10 years, I’m like, oh you know Keina, you probably need to save like more for home repairs because your house is 10 years old and you don’t know what might happen. So I was having this conversation with myself and especially like last year I had some unexpected home repairs because my dishwasher malfunctioned, which then created a leak in my garage and I had to call my insurance and that meant automatically I had a thousand dollars deductible and I ended up needing a new dishwasher as well. So I was out of at least like $1,600. But that was “unexpected.” And I do have like a home repair fund. But I was just thinking about other things that can be happening over time, especially as you own a home, like people that own homes, like my roof can start to need work or like I said I’ve been here for 10 years and there are things that I’m thinking about.
I’m like, ooh, I probably need to start doing some painting. I probably need to do some patchwork. Just things that keep up the maintenance of your home. The reason I’m sharing all this is because those are things that can cause you to go into debt. But if I’m asking myself like in the past if home repays, like calling a plumber would’ve caused me to go into debt, how would I correct that? I’m going to correct it by putting a home repair line in my budget. And so it’s being able to prepare for what we would call an unexpected expense. I also remember I had a little Honda Civic years ago and that would’ve been something too that I maybe wasn’t fully prepared if I needed work done on it. I maybe had $300 saved but then they told me I needed $600. And so the feedback that I’m getting is that I need to increase how much I’m putting into auto maintenance because that’s something that was causing me to swipe my credit card.
So when you think about the unexpected expenses that you’ve had in the last year, like how do you go back and correct that and like put that in your budget. Even if you can’t save the full, like let’s say you spent $6,000 on home repairs last year and maybe you can’t save the full $6,000 this year. You’re like, Keina, I don’t see the space for that but can you save $100 a month? It doesn’t have to be all or nothing, but how do we create some space for it? And I actually recently did that with a client where we were creating space for home repairs and then we’ll shift that number as time goes on.
But I think the other thing that I’ve adjusted my budget for in terms of debt is lifestyle creep. That’s not really an unexpected expense. It’s just more so a reflection of your lifestyle. I’ve had to have conversations with myself about like am I willing to go into debt to go out to eat three times every weekend and then four times a month? Like is that okay with me to be like I want to spend $500 eating out? And so looking at how does lifestyle creep show up on your credit card and how can you make sure that you are leaving space in your budget to make sure that those things aren’t living with interest on your credit card. And these are just conversations that I’ve had with myself. I’m now translating them into lessons for you. But really thinking about what does that look like.
When it comes to paying down personal debt, I’ve had a similar system as I have in my business except for the fact it looks a tad bit different. So I have adjusted my savings goals. So first I build the minimum payment into my budget. Like that’s a non-negotiable. I build the minimum payment into my budget. Listen guys, this is after we’ve actually corrected and we’ve understood the root cause because if we don’t understand the root cause then you’re just going to end up in more debt. I’m also not telling you that if you’ve ended up in more debt to judge yourself because that’s not the thing. There’s been times I’ve paid off debt and then it’s like oh there’s like $500, like this is a cycle that you can get better at. And so this is not about judgment, this is a cycle you’ll get better at. But we do want to always go back to identifying the root cause because if we’re not getting to the root then we’re never going to address the whole problem, we’re just going to give ourself excuses.
When it comes to paying off debt, I really focus on like okay, how do I build the minimum into my budget? And for paying off debt, I might have adjusted my savings goal to accelerate those payments. So really being able to, if I was saving $500 a month, maybe I’m going to save $300 a month because I’m going to put the extra $200 towards my debt. I also earned more. You guys I love earning more. So when I was working a nine to five, I think I told you guys in the last episode, one of the things I did was tutor. And so when I was tutoring that was extra money and if I had credit card debt I could pay that off. So that money accelerated me being able to pay off my debt without also impacting my day-to-day budget.
So the other thing that, if you are a business owner, you could also take a percentage of the bonus or the draw that you give yourself quarterly or however often that looks and you could put that towards your credit card payoff. So I think that what I’ve learned about debt is being able to build this healthy relationship with my credit cards. I don’t want to be in a space where I’m like, oh my goodness, like I can’t ever have debt because I think that can be really detrimental and not allow you to use debt when it actually may help you in a situation, especially when you can get access to something that you need. My clients have actually access debt to work with me and the money that they have paid to work with me, they have literally made back because they have identified the leaks in their spending.
I had a couple that I worked with that borrowed the money from their sister who had previously worked with me and she wouldn’t have had the money to lend them before working with me, which is so cool. But they took a loan kind of like I took a loan out for coaching, they took a loan from the sister and I helped them make monthly payments for the five months we worked together and they paid their sister back. But I literally found them money that they didn’t know that they had. And so then after they finished working with me, that money became money that they just saved. But they wouldn’t have been able to do that if they weren’t able to have a healthy mindset about like, you know what, I can leverage debt to actually get help. And so I don’t want anybody to think that. I think there’s such a negative narrative around debt, but I think there are positive ways in which you can use debt to help you get to the next level for what you need, like you may hire a career coach or I’ve had to talk to a client about like, let’s actually look at financing options because your husband needs a root canal and right now you don’t have all the cash flow, but we can build in the payment for you to do that.
It could be health related. And so it’s really, for me, when I think about debt, it’s also like looking at, am I in a space to make a plan if I want to leverage the debt? Because I think where debt becomes “dangerous” is if we’re not willing to look at the numbers. If we’re not willing to look at the numbers, then we’re going to use debt in a way that isn’t advantageous and that can look like us, like digging a hole that we feel like we can’t get out of. But that’s only because we don’t have a plan and we don’t understand the root cause. And so that’s one of the things I love to be able to help people see is that they don’t have to have this adversarial relationship with debt. And once again, this doesn’t mean you don’t get to pay off your debt, you don’t get to do any of those things. But for me, my number one thing as a coach is to be able to help people get out of that cycle of shame about being in debt because if I can get you out of the cycle of shame about being in debt, then guess what? We’re going to actually be able to pay off some debt and stay out of debt and have a healthier relationship with how we manage our finances.
So that’s all I have for this week. I wrote some notes guys, and y’all got a lot more than what was on my notes. But thank you once again for tuning in. If you want to focus on being in a space where you’re like, Keina, this is my year where I want to be able to spend money drama free, apply to work with me, I’m going to teach you a simple five part framework that allows you to be able to create this drama free spending account and you’re going to be able to build in 25% more drama free spending into your budget. You don’t need to make more money, you don’t need to cut off all your credit cards and you don’t need to eat rice and beans unless you love rice and beans. So if working on your money is something that you said like that’s what I want to do in 2024, apply to work with me.
So this episode is going to air in February, so if you click apply right now, like we can get you on the calendar so we can start working together by early March and we’ll be together from March all the way through August. So we’ll be able to plan the summer, we’ll be able to think about how you want to use your tax return if you have a bonus, but like you are going to get in some critical skills for how you want to manage your money month in and month out, day in and day out. So go to the link in my bio, apply to work with me in my five month coaching partnership, or you can go to Wealthovernow.com/appointments. Until next time guys, have a great one.
Outro: Thank you so much for listening to Money Files. If you’re ready to take the next step to reach your financial goals, head to www.wealthovernow.com/appointment and let’s get started.
