130: You Don’t Need a Budget with Dana Miranda
Money, money, money—-today’s show is all about money! I’m joined by Dana Miranda, the author of You Don't Need a Budget: Stop Worrying about Debt, Spend without Shame, and Manage Money with Ease. Dana is here to discuss debt from a refreshing perspective, and she shares her best advice about how to proceed after finding your financial footing. Having a budget is NOT the answer to all of your money problems. Join us for expert advice from Dana!
Show Highlights:
Dana’s path to the work she does today
Money decisions are not purely black and white.
What it means to be “Healthy Rich” (Check out Dana’s podcast: Healthy Rich.)
Financial education is more than the demonization of debt.
The fascination with shame as a way to bring behavior change around money (Does it really help to yell at people?)
A healthy (and different) approach to debt
Debt is strategic for the wealthiest 1%?? How?
Understanding how debt products work and impact your credit score
With debt, negotiation is always a possibility. Give it a try.
Dana’s advice about debt products and red flags to look for
Societal attitudes toward “acceptable debt”
Addressing the gaps in financial knowledge for the typical American who finally achieves financial stability
Accessible financial advice is available—where to look and who to trust
Dana’s book: Who is it for and how can it help?
Resources and Links:
Connect with Dana Miranda: Healthy Rich podcast and You Don't Need a Budget book
Connect with KC: Website, TikTok, Instagram, and Facebook
Get KC’s book, How to Keep House While Drowning
We love the sponsors that make this show possible! You can always find all the special deals and codes for all our current sponsors on our website: www.strugglecare.com/promo-codes.
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KC Davis 0:00
Hi friends. Before we get started, I want to let you know that my new book, who deserves your love is now available for pre order. It'll be out on Tuesday, May 6, and the subtitle is how to create boundaries to start strengthen or end any relationship. And yeah, I do mean any. This is for family relationships, platonic relationships, romantic relationships. It's sensible, it's practical. It's going to help you think through why you might be experiencing issues in your relationships. It has a decision tree that helps you make important relationship decisions, and there's a new take on boundaries. It's going to help you make those value based decisions and carry them out. Is love conditional? How do you navigate a relationship where someone's best efforts are hurting you. When should you step away? It's plain spoken. It's powerful. We're going to talk about vulnerability, trauma, disability, personal history, boundaries, and how to conflict well, and how to emotionally regulate, and all of these things packed into a little punch of a book. So check out who deserves your love. You can pre order on bookshop.org, Amazon, or Barnes and Noble. Hello. you sentient ball of stardust Tshirt. Welcome to struggle. Care. I am your host, Casey Davis, and we're going to talk about money, money, money. Today I have Dana Miranda here. She is the author of you don't need a budget. Stop worrying about debt spending without shame and manage money with ease. And we've talked about money before on my podcast, but I really wanted to specifically talk about a couple of things that I didn't get to in that first podcast, which is talking about debt, and also talking about, like, what do you do after you kind of hit a semi stable place. So Dana, thank you for being here so much. Yeah, so tell me a little bit about your background, like, what brought you to writing a book like this? I kind
Dana Miranda 1:50
of stumbled into writing about personal finance. I had been working as a freelance writer, trying to find my way, mostly as kind of a creative writer, trying to figure out how to be a blogger and making very little money, like struggling to make $1,000 a month, and I had an opportunity to apply for a full time writing job, and loved the people that I would be working with and the woman who was doing the hiring, and really wanted the opportunity to work with them, but it was for a personal finance media startup, And so I thought that was kind of a compromise, that I was like, okay, it would be cool to have a full time writing job, so I'll do that, and then I'll commit to it for a year and see how I like it. And I ended up really loving writing about money. I loved everything that I was learning because I growing up in a working class community and a working class family had really not learned about our financial systems and products and how, you know, debt products or investing products or bank accounts or anything work, those things had really not been presented as like for me or for people like me or my community. And so I was able to start learning about them. And they were, they're fascinating how all of these things work, and it was fantastic to also break them down and try to explain them to other people who had had that same lack of financial education and kind of lack of access to that information. So I stuck with it, and it's been almost 10 years now that I've been writing about money. And after I left that job, after about four years, I started freelancing and writing for other personal finance sites. And what I realized in that time was how kind of homogenous the advice was. Everything was very one size fits all, and it was also very prescriptive. We were looking for what was the right way and the wrong way to use money, what were the right decisions and the wrong decisions, and how could we make more of the right decisions and avoid the wrong ones, and it just was very black and white to me, and didn't speak to experiences that I had, experiences I was hearing about from other people. And so I wanted to expand that conversation a little bit, so I started my blog and newsletter, healthy, rich, to start to invite people to share their experiences. I started with, like personal essays of people sharing experiences with more diverse perspectives, women and people of color, people with disabilities and LGBT people and their experiences with work and money, and then started to from what I was learning from their perspectives, and just kind of the ways that I was starting to critique the personal finance industry myself. I started to kind of break down the things that weren't making sense for me, and that's what I started writing about. It healthy rich, this kind of budget free approach and critiquing budget culture. And the book was born from that.
KC Davis 4:36
So I Love You know, I noticed that when you describe healthy rich on your website, you call it a newsletter about how capitalism impacts the way we think, teach and talk about money. And I feel like when you're describing kind of how you notice that all the financial advice was very homogenous, like that really rang for me as someone who, like, I'm not good with numbers, and I've never. Good with budgets. And I'm a word person. I'm not a number person. And I also feel as though, you know, when I was growing up, or when I was in my early 20s, there was kind of like the one approach was almost like, always the Dave Ramsey approach, that was like the one thing for like, middle to upper middle class, sort of like working people, professionals or whatever. And it was always done through a church around me, like there was a very heavy evangelical tinge to it. And I remember there being a lot of demonization of debt, and like, don't go into debt no matter what, and keeping your cash and envelopes and things like that. And to be fair, like I did have some friends that felt like they were greatly helped by that, but I often wonder, like, Well, that was kind of the only thing there. Like, maybe, kind of anything is better than nothing for some people. But it really did, you know. And I talked on the other podcast episode about finance, about how, like, everything's about budgeting. And I was just never good at that, and it was almost like kind of restriction based so tell me, kind of what are some of the things in your approach that are different? Oh, I know what I was gonna say. The other thing was, like, everything was individualistic. There was never any reflection on systems or capitalism or things like that. So if I'm someone who's going okay, I have unsuccessfully tried to budget for years and years and years, but I know that I need to do something different, because, like, two and two is not equaling four here in terms of trying to survive financially. What about sort of the things that you've learned are going to be different than that, like kind of Dave Ramsey, hyper individualistic. Don't go into debt, no matter what approach. The biggest
Dana Miranda 6:47
difference, I think, is removing the shame and the 100% individual responsibility. I think that's a really important first step. And I can hear that individualism in the way, even that you're talking about it and saying that I'm have just never been good at budgeting, when really I think it's that budgeting just doesn't work for you. You know, budgeting is not a good fit for a lot of people. A lot of data shows that budgeting doesn't work toward the goals that we promise it's going to work toward, and we twist that around to say, like, I'm not good with numbers, so I'm not good with money. You know, in my experience, my personal experience, I was trying to be a creative person, and I thought that I had to choose between enjoying the work I did and making a lot of money. And I chose to enjoy the work that I did so and I made very little money, and I had this attitude that I'm doomed to make very little money, and that means I'm bad with money. I'm going to bury my head in the sand. I'm not going to think about it and try to improve my financial circumstances. So breaking out of that narrative can help you take the those first steps into realizing like you don't have to do it in the one way that you're being told in the one Dave Ramsey kind of restrictive, individualistic way, and you can still find financial circumstances and a life and an experience that is comfortable and happy and luxurious for you.
KC Davis 8:15
So Dave Ramsey, some people might not know that name, or some people do, and he's maybe a little old school, but I feel like that approach still shows up other places. Like, I don't know if you've ever run into Caleb hammer on Tiktok, but he often goes viral. It's this, like, guy that talks about finances, and he goes viral for talking to people about their finances. And he'll sit down and like, look at the People's like transactions, and then he'll like, relate. But like, the ones that I always see are, he like looks, and he's like, okay, so you have this much debt, and you only work this amount, and you spent $300 on, you know, DoorDash last month, and they'll kind of be like, yeah. And he'll just kind of like, flip on them and be like, What are you thinking? This is so stupid. This is so like, I'm gonna play a little clip for the audience that maybe isn't familiar with him. It's so mean, it is
Clip 9:14
McDonald hold on hold on hold on to be very clear. To be incredibly fucking clear. You're not going to McDonald's for yourself either. Girly, it ain't happening. No more sweet treats. No more girl math. It's not you just not getting stuff for him. You're not getting stuff for you. You can't afford it. But I get hungry. Oh my, I'm gonna
KC Davis 9:45
so that's one of his, like, more unhinged moments, but it's often this sort of like, and I been, like, obsessed with watching these, and here's why, I think, from my own background of talking about shame and behavior change, it's Fauci. Fascinating to me, why people love to watch these because all of his guests, at least the ones that go like viral on Tiktok, those moments, so there might be more happening than those viral moments, is usually the same like type of person. It's someone working class who's spending too much money on subscriptions or Netflix or DoorDash or McDonald's or whatever, and he just kind of yells at them for being so irresponsible and so stupid and so this and so that. And I've thought a lot about, like, why do people love to watch this? And I really feel like it has to do with this, like, deep desire for us as a society to like, see other people punished that we view as being irresponsible or lazy or morally wrong. But specifically, I think it's even not about money for a lot of us. I think that sometimes when you see someone sit there and they've been doing something that doesn't, quote, unquote, add up, like spending all this money on DoorDash even though they have debt or they can't pay their rent or whatever, there's kind of this element of like, he's making them be accountable for these decisions, and kind of holding their feet to the fire. And I think a lot of us have so many moments in our life where we've been maybe hurt by someone or affected by someone, and sort of the fantasy is that this person who is doing this unjust thing or just this illogical thing, or this thing that doesn't make sense, because maybe it's not even someone that hurts you, maybe it's you have a good friend that keeps dating the guy that's toxic or whatever. There's like, this fantasy of, I want to see this person's feet held to the flame, and it's so interesting to me, because I don't see any of these people getting helped by being yelled at, but that's how we feel. They'll be helped, like, if somebody would just make them face reality that will lead to behavior change.
Dana Miranda 12:04
Yeah, I think there's probably a bit of self deprecation in people's interest in watching that kind of thing too, that people walk away from really kind of aggressive personal finance conversations thinking, Oh, that really made me think about how I'm spending money right, like I'm everyone has their version of that, eating at McDonald's, if when they can't pay their rent or something. And anyone who's struggling with money or not being able to kind of make things add up, has something like that. And our culture of money, and our approach to money has that shame so embedded in it that we sort of feel like in order to hold ourselves accountable, that we need to feel that shame, that we need to be, that we need to have our feet held to the fire. And I think people see that happening as well, and for some people, there's probably also the well, at least I'm not as bad as this person. So, you know, you can also kind of justify your choices. I think there's a lot there, but I definitely want to acknowledge the fact that the way that we just think about money as a society just embeds shame in all of us individually, and we just see that kind of as part of our relationship with money.
KC Davis 13:28
Yeah, it's interesting to me how you know, if I'm struggling to quote, unquote curve expenses, and I'm almost asking myself, like, why am I continuing to do this. Why can't I figure this out? And maybe it's a motivation problem. And I think just as a culture, we're so used to reaching for shame as the main motivator, you know, if I could just feel bad enough about this, I'll make myself change. So what is the answer? And I want to kind of specifically talk about debt, because it does seem like, Okay, I've met whether it's credit card debt or medical debt, you know, what is the approach to this that would be different than kind of what we've always known? And that's my first question. And then so I don't forget the second question. I want to not forget to talk about how debt is only bad for the middle class and but if you are like, you know, top 1% all of a sudden, debt is strategic, yes. So can you talk about both of those things?
Dana Miranda 14:31
Yeah. So the kind of tying into what we were talking about with individualism, like the example of someone overspending on things that seem frivolous to us, but not being able to pay rent, and we feel like people need to be held accountable for those choices. That is taking an individualist approach, like we do not hold people's feet to the fire as much when they are the landlord, the management company or the private equity company. Company that owns the buildings that we're renting, that is making housing unaffordable, that makes it so hard to pay our rent, that makes it so we can't eat out at McDonald's, right, and be able to pay rent at the same time, or, you know, or the people who make decisions about food costs at McDonald's, right? We're not the people with actual power to change our financial situations. We don't hold them accountable in the same way that we attempt to hold individuals accountable for all of the challenges that we're struggling with. And I think that same mindset shift can change sort of how you approach debt as well. We talk about carrying debt as an individual failing, and a lot of times we talk about it as a moral failing, like you borrowed money, you have a moral responsibility to pay it back, but really it's just a transaction. The lenders and the credit card companies that are shaping debt products are shaping those and lending to you in a way that's just a financial transaction. It's just numbers to them. They're just trying to come out ahead. And so we should be able to do the same thing without all of the shame that comes attached to it. Why is it not just a financial decision for us, when we allow it to be just a financial decision for the companies? Right? Why do we not shame a bank for taking somebody's house away? That seems like a really serious moral infraction that we should be questioning, but we don't we shame someone for not paying their mortgage because they agreed to pay that debt. So I think that we need to flip that a little bit and understand that it's in the interest of the most powerful and the most wealthy people and entities in our culture to keep that focus on individuals and keep individuals feeling ashamed and feeling like they need to be held accountable so that we don't look up to what they're doing. And
KC Davis 16:55
so where does that leave me as an individual, if I find myself with a bunch of debt. So
Dana Miranda 17:02
it's important to understand how your debt products work, and of course, ideally, this would be before you make that transaction, before you make the agreement, use the credit card or take out the loan, so that you can have a perfect plan in advance on how you're going to deal with that. But you can do that retroactively, once you're carrying debt as well, instead of kind of, which I did for years, which a lot of people do, just feeling like you're buried under this mountain of debt, and kind of burying your head in the sand and not looking at it because you're so ashamed of it, you're so afraid of the consequences. You know, come out into the sunlight and take a look at it, find out how those products work. What kind of interest are you being charged on a credit card? When will you face late fees? What kind of fees have been added to your balance already? What are your options for repaying student loans that might not be such a burden on your monthly budget? Understanding how those products work, and then also how they impact your credit score, because that a lot of times, is the motivation for people to pay off debt, because we're terrified of having a bad credit score, because then we don't have access to that resource in the future. So understanding all of those things can then help you make a decision about how to deal with the debt in your life. And that doesn't have to be the most optimized, fastest way to pay it off, or even the least amount of interest in your payoff plan, anything like that. It can just be the way that gives that creates the least amount of burden on your day to day life, or in your you know, on your monthly resources, so that you can enjoy your life without feeling ashamed of the debt, without feeling stressed out about it, but you don't have to necessarily follow the debt payoff plans that you're seeing from personal finance experts. You can consider like, maybe you're fine with your credit score going down right now because you don't have any goals that that is necessary for in the near future, or maybe you're fine declaring bankruptcy. Maybe you're fine ignoring debt collector calls. Like a lot of us make these decisions out of necessity, and I'm kind of bringing that like personal finance advice tends to come from the middle class, where people are just sort of coming from that place of relative comfort and then trying to strive for a little bit more comfort and stability, but my experience and the voices that I'm trying to bring into this conversation are those of us who have always lived paycheck to paycheck. Have never had easy access to debt products, you know, have so we've always had to make these kinds of trade offs and decisions and just say, like, am I going to pay rent this month or am I going to pay off the credit card bill, right? Well, if I don't pay rent, I get kicked out of my apartment. If I don't pay the credit card bill, I have to deal with calls from a debt collector, and you just decide which one you want to live with in your life. So I want to start to frame dealing with debt more in that as. More of a financial transaction, a financial decision, and less of a moral one, and definitely less of an obligation. It's
KC Davis 20:07
interesting to me, like calling it a debt product, because I think there's this idea that like a debt is like, either an irresponsibility on your part, or it's this kind of like you said, like this. It's this moral obligation, like, Oh man, I owe this person, and I'm in their debt. And what it hearkens do is this idea that, like, if I borrow money from a friend, like my friend has done, like an altruistic thing to me, and so me not paying it back is me being shitty, and it's me, you know, I owe this person not just in financial but I owe them even some sort of moral debt, you know. And but when you call it a debt product, it really puts into perspective that this isn't a friend that loaned you money out of the goodness of their heart because you needed it, and they had it, and you would kind of be shitty if you didn't make this a priority, or you'd be taking advantage or whatever, like, this is a business. This is a capitalistic business who makes money by, you know, having a credit cards or having bills or being a for profit, you know, medical system or insurance system, or all these things, or doing student loans and, like, it's the thing you bought, this debt product, which really, like you said, kind of changes the way that you're thinking about it. Because I do feel like, growing up, I believed that, like, the only way to deal with debt is to see how you could pay it off the best you can. Or, I mean, I think I knew about bankruptcy, but that was like, if you really failed, and then you just kind of put your hands up. It wasn't until later that I started to learn about, like, other things I should be doing with debt, like calling and asking them to make it smaller, calling and asking for, you know, can I pay off this amount, and can we get rid of the rest? Figuring out whether or not paying this debt with a credit card that had a smaller interest rate was a better way to like, to like, move debt or transfer debt like it was never that stuff was never taught to me or and, you know, I think when we think about the decision between paying my credit card bill and paying my rent, you know, it kind of seems obvious, but when it was okay, I have a credit card bill and a medical bill due like, and I don't know enough about what the difference in those debt products is to decide what to do. That's a really
Dana Miranda 22:35
great point. Is where that understanding makes a huge difference, and knowing that we actually have laws in place that medical debt cannot be reported to credit bureaus, and I know that has just changed recently, because there was a time limit on it, and I think maybe that even doesn't exist anymore, but medical debt has a much lower impact on your credit score and your Credit history than credit card debt does. Student loan debt is similar. I don't know what the regulations are. I just know that looking at credit scores, student loan debt, even though the balance is often enormous, it doesn't have that proportional impact on your credit score, right? And so feel free to take all of your options, to take as long to pay that off as possible, if you're not concerned about optimizing for as little interest as possible, because that can reduce the burden that it puts on your day to day life, and the impact on your financial future is not as scary as that kind of just pay off debt at all cost. Attitude, what have you think?
KC Davis 23:39
Yeah, and I think it was so bizarre to me the first time someone said, like, have you tried calling and just offering a percentage for them to like, say, Never mind. And I was like, but it doesn't work that way, because this is what I owe, and how, why would anybody like? I can't believe that there's not more people talking about that.
Dana Miranda 23:57
Yeah, I would like to see that more. It's and I have to imagine this is like sort of getting into big conspiracy territory, but I have to imagine that narrative continues to be supported by financial companies because it only benefits them to think like, well, you can't offer a percentage to pay off your debt, which is already way more than the amount of money that you borrowed from them. You've already so many people have stories where they have repaid a loan or a credit card balance in you know, two or three times of what they had actually spent. And so the credit card company has already made a ton of money off of you, and you still feel this obligation to repay whatever balance they are showing on your statement every month. So that's where starting to think of that as just a transaction. And how can you make that transaction work for you can sort of flip that switch, and you can start thinking about, how can I negotiate this? How can I get this out of my life? And you can. Always just ask, right what? In negotiations like always just make an offer and see what they'll take. Because often they will, because they also want it off of their balance sheet, and if they've already made money off of you, they're happy to move on.
KC Davis 25:11
So let's talk about some other debt products. We talked a little bit about medical and student loan and how does it affect your credit? What kind of things would you want people to know about debt products, as far as things that are way riskier or things that are predatory, because we're not always taught. You know the difference between, you know, we hear, take out a loan, and it's like, Well, okay, take out a loan. Take out a loan. Take a loan. Well, there's a place on my corner that says that I can take out a loan, right? Like, what's the big deal? And my dad has a loan. My you know that businessman has a loan? Are there debt products that you think people should, in general, be very wary of? I think
Dana Miranda 25:49
the ones that are the most risky, like you mentioned the shop on the corner, so like a payday loan, I think people using those products actually are very aware of how risky they are, and they're using them because they generally don't have another option, because they can't qualify for a credit card or take out a loan. So people do go into that knowing that it's going to be risky and just end up in a tough situation because they don't have a plan for mitigating that risk, because you just might not. You might just be in a situation where you need that resource in this moment, and that's what you're doing. So that one, I don't think, I think the personal finance space likes to warn people a lot about payday loans, but I think people know some things that I think are kind of interesting in just kind of writing about debt products in the personal finance space are personal loans that are dressed up for specific purposes. So most loans that you encounter that aren't like, specifically student loans or mortgage or something like that, are basically some kind of personal loan, which is just a cash loan, is what your parents might have called it. It's just an unsecured loan that a bank is just giving you cash, and they will be presented as like a remodeling loan, or have been out of the space and writing about them for a while. So I can't remember all the kinds of terms, but a vacation loan or a wedding loan, or, you know, like, they'll actually be given that name, as if this, like, you know, financial company specializes in this kind of lending, and what you're really getting and dealing with is a personal loan. But because it's dressed up in that way, it can be kind of difficult to just know the type of product that you're taking out. So it's becomes a little bit more, maybe predatory, but it's more of a marketing tactic to just tell you, like this loan exists for this specific purpose. So in the same way that you take out loans to go to school and you take out a loan to buy a house, it makes sense to you know a wedding loan exists. So this must be a thing that people are borrowing money for. I think kind of is a way of encouraging people to borrow money for that. If you just called it a cash loan or a personal loan, people might be more hesitant to use debt for certain purposes. That's just kind of a guess. As a marketer, that's how I would frame it. I would say, Well, what if you just called it a construction loan and then, but really, anything to do at the house is probably more of like a second mortgage. It's, you know, you're borrowing against your house, but they give it these different names, and it makes you feel more comfortable, kind of taking it out. But what you need to know is, actually, this is a personal loan, and here's how personal loans work, or this is an extension on your mortgage, and here's how that works and and how long you have to pay it off, and the implications that it has for your housing, security, things like that. So is
KC Davis 28:22
the risk that a personal loan functions differently than a mortgage or student loans, or is the risk just that we might be more likely to take a loan, or the risk of a loan if we feel like, well, this is just a normal part of life. Everyone goes and gets some mortgage to get a house. That's how it's done. It's like, oh, well, you know, they're our wedding like, like, it just over normalizes instead of making you kind of consider other options. What's the risk there?
Dana Miranda 28:50
I think both. I think because you might be more likely to take on debt, that you might be overextending yourself. But probably the bigger risk is that it makes it harder to understand what the product is, so it's harder to make a plan for how that debt fits into your life if you don't know what you're actually dealing with. That's kind of what I always encourage, rather than discouraging taking the debt, like if you want to borrow or even use credit cards or whatever it is to pay for your wedding, because that's an important thing for you. Go ahead and do it, but know how the products work, so that you know how that's gonna fit in your life. If you're gonna use credit cards to pay for your wedding and then declare bankruptcy, you know, like, I don't discourage that, I don't shame it. I just want people to understand exactly what that means and how that works, and the implication that that has for your finances in the short and long term. So you've
KC Davis 29:37
mentioned like, you know, going in with a plan, and also, like understanding how they work. Do you have any suggestions for one, like, what does that mean? Like, what would be an example of having a plan? And then two, like, Is there somewhere that we could learn about debt products? Because, I think for me, one of the parts that was, it's overwhelming, because. Is it felt like, if I'm learning about a debt product from the person trying to sell me a debt product, they have a vested interest in sort of talking up all the pros and not really being clear about the cons. But if I then go to like, just Google it well, now I have so much information I don't know where to look. And some financial people are, you know, maybe you're looking on social media that talk about things that they don't really know what they're talking about, and others are just trying to sell you a course. So what is the best thing to do if I wanted to learn about a debt product from an objective source here pros and cons and things like that,
Dana Miranda 30:39
that is all very true, and it's kind of unfortunate that I don't think that there is any one source of truth for any of these products. You made a really good point that the person that we would be most likely probably to turn to if we have questions about our mortgage is the mortgage broker or the loan officer at the bank who sold it to us, but they have an interest in selling us that loan, so they kind of want to push it through. A lot of us, I think, have had that experience borrowing to finance a car and getting getting the loan at the dealer. They really just want to push that through, and they're going to make it happen because it's in their interest to make the sale, but that's a sales person that's not an educator, and thankfully, especially with mortgages, and hopefully, we're seeing the need for this in auto lending too, that we can regulate what they're able to do, so that even if they're not able to educate us well on those products, they can be limited in what they're able to sell us without our better understanding. So that's a good question on so where do we go to find out about this? I think it has to be a little bit piecemeal, and you have to go into it with a little bit of skepticism. Understand that a mortgage broker or a loan officer, someone at your bank is a really good person to sit down with to ask whatever questions you have, because a lot of times there's someone who's in your community, you can sit across from them at a desk and ask questions like a human, and that could be a really good way to get some answers and just understand that their goal is to sell You a mortgage and so filter their responses through that reality, and then go Google and read some more and try to keep eyes wide open about whether or not what you're reading is a review site that has affiliate links to mortgage marketplaces online or something like that. So it's more about just kind of being aware of people's motivations, because everyone has like pieces of the information, and that can be really good to absorb. But I also think that especially with something like mortgages, which are so complex, especially once you get into like everything that happened with the housing crisis and the the investments and all of this that I suspect there might not be any single person or type of person or profession that actually understands how these products work from top to bottom. I think some people understand how they impact the bank. I think some people understand how they fit into an investment portfolio. Some people understand how they can fit in with your personal finances, but I have yet to find someone who can really break that down from start to finish, so it's a little bit tricky, and that is all by design, so that we, instead of asking how things work and trying to empower ourselves with information, we are just looking for a set of rules on the right things to do, which is, I have become an adult. It's time for me to buy a house. I'm going to get a loan, and then I pay off my mortgage as quickly as possible, because then that eliminates that scary and confusing thing in my life.
KC Davis 33:55
Yeah, well, and you talked about going and having a plan, and you know, I want you to maybe give a couple of examples of what that might look like, but it strikes me as it's not just specifically that, you know, okay, it's a great plan. I mean, hopefully we have a good plan. But also, just like the view of walking into debt, like, there's this, I feel like, for the middle class, there's this, like, we've been talking about, like, this shame aspect of, like, Okay, I'm here out of desperation, and so, you know, I need to do this, and I'll have to deal with it, versus, like, what the way that debt is like, sold to upper class echelons where it's like, oh, it's strategic. And, I mean, obviously there's, there's a difference, if you're financially stable and want to take your money, make more money, versus, you know, I'm sort of in a desperate spot, and I've got to do something. But that viewpoint of, I'm being strategic, pat myself on the back, because I'm, you know, going to take on some debt because that's going to alleviate but it's not different. And function, right? It's. So let me take on this debt here, because that will alleviate this need here and maybe free up these funds here to use these funds more wisely towards this, because that'll be a better long term like it's the same type of strategizing for coming out with the best financial you know, whether you're going from, you know, a deficit to stability, or whether you're going from stability to surplus, it's not different going in and going, this is a product that I can use to my advantage in this moment and feeling as though you're being responsible by strategizing as wisely as you can within your limits, versus the way it kind of gets sold to us when we're going, Okay, well, I guess I've really screwed some things up, and now I need to look at, you know, how I deal with this debt, or how I go into debt? Yeah,
Dana Miranda 35:46
absolutely. We seem to be allowed to treat certain instances of using debt and certain types of debt products as a financial transaction and a reasonable money move, and others. We have to treat with shame and avoid them at all costs. And a lot of times, that's like you said, it's when wealthy people are using debt to move money around and make financial decisions to be come more wealthy. But it's also, you know, I live in a working class town, a lot of people are small business owners, and they're not wealthy by any means, but it's a lot easier to get a business loan a lot of times than it is to get a personal loan, even when it's the same person and it's the same finances, the idea that you are using this somehow to make money seems to make taking on debt. Okay, a lot of small business owners are just constantly in some amount of debt, and we just accept that that is part of doing business. Almost every homeowner in the United States uses a mortgage to take out that uses a mortgage to purchase a home, and we don't question that. It's an enormous amount of debt. It's probably the biggest amount of debt that most of us will take in our lifetime. And we have just decided that home ownership is a cultural value, and so we allow people to borrow enormous amounts of money in order to make that happen, and that's just a financial decision. That's just saying I do not have a few $100,000 right now to buy a home, so I'm going to borrow to be able to buy a home, knowing that I'm probably going to pay the bank back twice what it cost me to buy this home over the lifetime, and it's going to be 30 years or more. You know, if I extend that mortgage further in the future, I will just be paying for this for the rest of my life. And we don't shame people for that decision. It's a huge debt decision, and we just don't really include that. It just is a normal part of how people live in homes and own homes and property. So I think extending that idea to other types of financial decisions and products could help to kind of make that shift. And there are things to consider, because other like a personal loan or a credit card has a much higher interest rate than a mortgage does. They also have a lot less regulation on them. But if you're thinking about, you know, I'm going to spend $2,000 this month on my credit card, it does seem a little bit silly that we treat that as a less responsible decision than digging out a $300,000 mortgage that you're that's going to take you 30 years to pay off to buy a home.
KC Davis 38:30
It's interesting to me how when the housing market crashed, when you know when the bubble popped, I feel like that was a time when there was a lot of focus on blaming systems. Like, okay, we've sort of done all of these things. And, I mean, I don't, I barely understand what happened, so I'm not gonna embarrass myself by trying to do it. But there was this sort of top, I mean, if you saw, like, The Big Short the movie,
Dana Miranda 38:54
right? I was gonna say that was, like, if you want to know a little bit, yeah, you feel like you kind of understand. That's a great place to start. But there
KC Davis 39:00
was some attention brought to, okay, this was sort of like business greed that created the scenario where all these people could no longer pay their mortgages. And it's not to say that. I mean, sure, maybe some people did, do make a decision in that, in hindsight, maybe wasn't wise for what they but there was a lot more at play than just personal decisions. There was people overselling things. There were people giving out mortgages that should not have been giving them out to people and and so it's interesting to me how those same things, where it's like buying a house with a huge amount of debt is so normal that it's not seen as a bad decision. And then when we had all these people that then couldn't pay their mortgages. There was a lot of focus on this being the fault of the systems and the mortgage companies. But when it comes to student debt, I feel like it doesn't go down quite like that, like I still see so many people sort of sneering at individuals for not paying back their student. Loans, or you just made a stupid decision by taking out that much in loans, when, in reality, like going to college is just as much of a cultural expectation as owning a house when it comes to sort of like the American dream, and college even more so you're told like you can't succeed unless you go to college. And yet, going into massive debt to go to college that you might be paying off forever and ever and ever is kind of looked at like, Well, that was a dumb decision that you made, by the way, at 18 years old, with zero information about it would mean, yeah, it's interesting, like, those things are comparable in terms of kind of what we're told and but it's interesting to me that the house is normalized, as you know, worth going into big debt, and college isn't, and we kind of still see people sneering at people that haven't been able to pay off their student loans. So I just think that's interesting. Okay, so what I want to ask about next is, you know, I feel like there's a lot of financial advice out there for maybe somebody that is struggling, or someone who's making hard decisions, someone who's trying to get, like, it's like, there's this lot of advice for going from unstable to stable. And then I see a lot of advice out there by like, podcast bros, where it's like, what you're gonna do is you're gonna buy 14 apartment complexes, and we're gonna turn all into Airbnbs, and then we're gonna do this kind of, it's like, this sort of, like, let's get rich kind of thing. But I don't, at least run into a lot of sound advice about like, so what do I do if I do get to a stable place, and I'm maybe I don't have debt that is consuming me or making me have to make sort of, you know, survival cuts. But I was never, there was never any place where anyone ever taught me like, Okay, I have a checking account and I have a savings account, and at some point I think I'm supposed to have a 401, K for retirement, but there's not a lot of education out there for, you know, how do I sort of use money to make money when I start to get stable? And so I'm curious if you have any, like, even just like, quick rundowns about, like, what are things to look into if we get to a plug and I've got a little bit of money and savings, I'm not worried about not being able to afford a vet bill. What do I start looking at then? So
Dana Miranda 42:28
the first question that I would encourage people to ask is, what are you trying to achieve, which is probably what any financial planner would, you know, what are the goals that you're trying to reach, you know, I'm hearing you say, like, so I'm financially stable. I'm not struggling. But what do I do next? And there's a lot that can be done, and I will talk about that, but first I do want to say, like, ask that question. Why are you asking what to do next? What is unsatisfactory in
KC Davis 42:58
your financial situation?
Dana Miranda 43:02
Are you asking that question? Because we have this culture of money that tells you you should always be trying to optimize more. You should always be trying to do more. You should always be trying to accumulate more. I see that message coming a lot from the personal finance space that says, you know, if once you're stable, here's how you should be investing to make more money, then, like you said, make your money. Make more money. If you feel like you're stable, why are you doing that? I think that's a really important question to ask to break this mindset that we have in our culture of thinking that we just always need to be optimizing and accumulating more. I don't think that that's necessary, but I also understand that sort of the condition of, like middle class kind of financial stability is constantly working to maintain that you're not at that position where you can just make bets on investments and buy, you know, like you said, buy a bunch of apartment buildings and just start accumulating more wealth. You are always needing to make decisions to maintain that stability, because you could lose it at any moment. When, you know, we saw that again with the recession, with the housing crisis.
KC Davis 44:18
Yeah, it's like, well, I might be stable, but I'm one broken leg away from not being able to work. You know, my job that requires me to be able to physically walk around or whatever. I think for me, when I think about, you know, what makes me want to talk about those kind of things? I think part of it is this understanding that it's almost as if, for the Uber wealthy, there's like, a whole different world. Yeah, of like, making your money make more money that is purposefully kept opaque from the working class. So for me, I think it's like, well, I feel like more people should know about those things, because it doesn't. You don't have to be at the level of, let me just take out a three. Million dollar loan and buy an apartment building. You know what I mean? Like, there's, there's other things we can be doing, but not like, you know, you're scrolling through Tiktok, and you hear people be like, Well, what you should do is get a high yield savings account. Well, what you should do is put it in a CD. Well, what you should do is not just have your 401 K, but, you know, what if you also open up a Roth IRA or, well, what if you, you know, started buying up real estate. And it's like, I think as you get to a place where, okay, I might actually have enough money to try and invest some of this, or you're like, oh, put it in the stock market, it's like, well, I don't know what that means. Thank you. You know, like, it's so confusing and overwhelming and opaque that that even if you maybe have enough of a nest egg to invest part of it. It's like, well, I don't know where to start. Like, even, what? Where do I even start looking to learn about things if I've just never really heard of anything, and you
Dana Miranda 45:53
could really fall into a trap of the kind of advice that's like, here are the secrets that the wealthy don't want you to know that are really trying to just take advice that works for someone who has just an extra $3 million to throw around. That is not really realistic, if that's not your situation, but you're not gonna hack your way into it, absolutely. Yeah, and things like stock picks, and things like, every once in a while, some like meme stock gets a couple of people lucky, but that's really rare. It's unlikely. So actually, you know, following specific stocks and stuff and feeling like that is being smart with your money is actually pretty detrimental. It's a lot of like, basically casting bets with your money, and that's something that much wealthier people can do because they have the money to lose, so they can kind of make those bets and hopefully win more than they lose. But when you don't have that money to lose, you should be looking at more stable options, so you pretty much mention them, a high yield savings account, a certificate of deposit, a CD retirement investment accounts, and then when you're thinking about investing, most experts recommend an index fund because they're low cost. The fees are very low, so they're not eating away at a lot of your savings. And the money is basically spread out across a bunch of industries and a bunch of companies and sectors, so that you're not making one big bet on any any individual company or sector, that if something goes wrong there, you could lose a bunch. It's really spread out and just kind of follows the growth of the market. So you can kind of benefit from that kind of stability. So a lot of the things that you can do are, like, pretty boring. They're not exciting. Like finding individual stocks, or, you know, meme stocks, or becoming a landlord, things like that. They're very small things that you can do. So a high yield savings account is just a savings account that has a higher interest rate than what's typical, because a typical savings account at a bank yields like point zero 1% interest, which, at the end of the year, kind of regardless of how much money you have in there is very little. But high yield savings accounts, depending on what's going on with the market rate can yield four or 5% or even when that rate is low, it's, you know, more like one to two or 3% so it's a lot more. If you have that money in savings anyway, you can make a little bit of money off of it every month. You know, let it grow a few $100 so that's a small way to optimize with something that you're already doing, and banks are really competitive with that stuff right now, so it's pretty easy to find a high yield savings account. It's not like a really rare product anymore, so you should be able to find it kind of at any bank. If your money is just sitting in like a point zero 1% account, you could move that money somewhere pretty easily. Certificates of Deposit are something that people kind of follow a little bit more closely, because their benefits depend on what's going on with the interest rate, the market interest rate. So that's something where, like, if you're following personal finance advice, like I want to say, we I write for CNET, and we talk about this, sometimes that C NET with rates, Motley Fool talks about rates, sometimes investing, and things where they're getting into a little bit detail, they'll sort of tell you, like, here's what's happening with the Fed rate, and here's what that means for whether or not you should invest in a CD and how long it should be. So it's just a way. It's essentially a really short term investment with a fixed interest rate. So you put money in, it stays in for a year, or two years, five years, something like that, and you have a guaranteed interest rate for that entire time, as long as you don't take the money out, and you will have to pay a fee if you pull the money out early. So there's an incentive to just keep the money in there, and it's guaranteed to grow with that rate. So savings accounts and CDs are good in that way, because you can't lose money the way that you can with investments, even in a retirement account, because that money is invested in the market, that can lose money, so there's a little bit of risk there. But people recommend like a 401, K or an IRA, because those also come with tax advantages, so you can sort of maximize the. Amount of money that you can save in that way, and then it's just a matter of determining which vehicles are right for you. And if you want to get into something more than just your like, company's 401, K and you have that money to work with, I would recommend working with a financial planner, because then they can explain, like, what a Roth IRA is to you and what the benefit of using it would be. And you can look for a fee only financial planner, so it doesn't have to be a super expensive thing. Look for a fiduciary, because they are bound to only give you advice that's in your best financial interest, unlike some investment advisors, who can recommend investments to you because they make a commission off it or something that it benefits them. There are people who are allowed to do that. So look for a fee only fiduciary financial planner to guide your any investment advice that's sort of more complex than just your company retirement account. That's great
KC Davis 50:57
advice. Yeah. When I first learned what financial advisors were. I was like, Oh, great. Someone for advice. And then I realized that, oh, they make money because they're gonna take, like, a cut of everything that they invest for me. And you know, that makes sense if I had a ton of money to invest, but you know, when you're just have a little bit, it was like, Oh, this isn't really a lot of money, and I don't want a percentage taken away, because it's already not a lot of money. And of money. And also it's not like a big benefit for someone to want to give me a bunch of advice about this, because it's, you know, they had probably bigger fish to fry. So I think when I learned about, like, how to look for a fee only financial advisor, was a huge turn of like, Oh, someone can just sit down and explain some of this stuff to me, and I can just pay them for the hours of that I'm meeting with them for their advice and go from there. So I think that's helpful. Yeah,
Dana Miranda 51:48
I'm really happy to see that cropping up. But it's kind of this more accessible level of financial advice that used to be, you know, we used to have just these big like investment or wealth management firms, and you had to really have a lot of money to work with. And now we're seeing that like, you know, when you're in your 30s and you're kind of just starting your career, it can make sense to talk with a fee only financial planner that's almost like a higher level financial coach that can do a little bit more for you on the investment side.
KC Davis 52:16
So as we sort of land the plane here, tell us a little bit more about your book and like, who is your book for and what are, kind of, like, the big things that they can take away from it, so
Dana Miranda 52:27
through you don't need a budget, I set out to investigate our cultural relationship with money that I call budget culture. And it's kind of that some of the things that I've mentioned that kind of focus on wealth accumulation, restriction and shame, and what that means for our personal relationships with money. And then I get into sort of more specifically. Then, given that understanding, how do you survive under this system? How do you manage your money in a way that makes sense for you, if you're not necessarily going to follow all of the rules that budget culture sets arbitrarily. And I wrote it for the people like me and the people that I've had sort of writing for healthy rich who have experiences that are not well represented in the personal finance space, we're seeing a lot of middle class white men a lot of times giving advice in the space, not exclusively. I know that there is growing diversity, for sure, but a lot of it either is directly coming from that demographic, or it's influenced by their experience of what we decide is right or wrong with money. And there are so many of us who have been seeing that advice and knowing that it just is not going to fit into our lives. That kind of restriction, the focus on wealth accumulation, the caring about paying off debt, caring about your credit score, that kind of stuff for some people, that just doesn't make sense with the kind of experience that we want to have in life. And so I wrote the book to let you know that if that's how you've been feeling when you hear personal finance advice, that that's okay and you can do it differently. And I don't offer just an alternative method to say, like, don't do. You need a budget. Don't do. Dave Ramsey, you know, don't do. Don't listen to these other gurus Listen to me, but instead to start asking some questions, to prompt you out of the mindset that budget culture puts us in and that approach to money that is just sort of ingrained in us, and to understand that doing it differently is okay, and there's some education in there too. I talk about some specific debt products and how those work, how they impact your credit score, how some investment products work, and why people recommend some over others, and things like that. To help you start to get that understanding and break away from just a set of rules for here's what to do at this point in your life. Here's what to do next. Here's what to do next instead, to understand. And what are your options, and how will they impact your life, and what kind of choices will you make with that broader understanding?
KC Davis 55:09
Awesome. Well, thank you so much. Dana. And again, it is called, you don't need a budget, and you can get it at Amazon. You can get at Barnes and Noble. You can go to bookshop.org and support independent bookstores, and I hope you guys go out and get it. Thanks again. Thank you, Casey, you.