June 16, 2025 • 24 mins
I often get questions from people who are faced with a challenging situation, and they are unsure of their options and don't know where to start. In this episode, I give some direction and hopefully some encouragement. There is a way out!
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Episode Transcript
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(00:00):
Paul, Welcome to Catholic moneytalk, where we talk about all
things money and finance, and wetry to do it through a lens of
being Catholic, where ourultimate goal is to one day be
in Heaven with the Lord. I amyour host. Paul Scarfone, thank
you for being here today. Sowelcome back. Thank you for
(00:21):
joining me. You know so manytimes I'll get people that will
either give me a call, shoot mea text, Hey, Paul, do you have a
minute? I wanted to talk, andthey tell me about a situation
that they find themselves in,and they're very limited at
seeing what other options mightexist and they might not have
any real strong money behaviorsin place, and that's what's kind
(00:47):
of put them into this situation.
And so a lot of people say,Well, where do we start? So
that's what I want to talk abouttoday. So I'm going to call this
episode kick starting, a planscorched earth and real
emergencies. But before we getinto that, let's say a prayer in
the name of the Father and ofthe Son and of the Holy Spirit.
Amen, Heavenly Father. We thankyou for this day. We thank you
(01:09):
for all the ways that you loveand bless us, Lord. We know that
you have an awesome plan for usand that you love us so much.
Lord, give us peace for whateversituations we might find
ourselves in, let us yield toyou and your Holy Spirit. Lord,
Lord. We find peace when we findourselves in your will. Help us
(01:30):
to understand your will for ourlives and draw us close to you.
We ask this all in Jesus name,amen, in name of the Father and
of the Son and of the HolySpirit, Amen. So everyone deals
with challenges and what we'llmainly focus on financial ones
(01:50):
today, right? But when we don'thave a budget, we don't have a
plan, we don't have an emergencyfund. We don't really have a
plan to handle emergencies. Theycan pile up and they can pile up
quick. I remember this couple,they had felt plagued with home
repairs and car issues andmedical expenses, you name it.
(02:12):
They they had it right now. Theycame to me telling me a few
years prior, they had had aclean financial slate, and that
was due to a small windfall ofmoney that they got from a
relative. Someone had giftedthem some money, and they were
able to kind of create a cleanslate of their financial
(02:33):
situation. Five years earlier,at that point, they had paid off
all their debt, and they thedebt that they had had had been
accumulated medical expenses andsome emergencies, and so when
they received that money, theywere able to wipe it all out,
and they had established a$15,000 emergency fund. They had
hoped never to have debt likethat again. But then here they
(02:58):
were five years later, they hadfound themselves in a tougher
spot than they had been fiveyears before that, and income
had even gone up in the pastfive years. But they had not
changed their behaviors towardsbudgeting and tackling
emergencies, and they were onceagain with a pile of debt
(03:18):
without an emergency fund. Andthe first question they gave to
me was, do they need to increasetheir income? See, see in their
minds, and many of us findourselves there, I, I've been
there. Right in their minds,they thought, if their income
was greater, they would bebetter equipped to handle all
(03:40):
these unexpected expenses. See,and most of us tend to think
that, well, if like, more moneywould fix the problem. But
that's actually not the problem.
The money is not the problem.
Our behaviors with the money isthe problem. So even if we get
more money, if we don't actuallychange our financial behaviors,
the more money is not even goingto help, right? In one sense, it
(04:03):
might cause us to create biggerproblems, and that's what we
actually see. People get moreincome, and they think they can
kind of let go a little bit andkind of expand some of the the
little mental boundaries, or,you know, spending boundaries
that they had thought, that theyhad established that were
keeping them safe, they weren't,but they tend to expand, expand
them, and then they start makingbigger financial decisions. But
(04:27):
without having a good plan andthe good behaviors, they just
tend to get bigger and biggerand snowball. So they were
asking if they need to make moremoney. But see, five years ago,
they had no debt, they had awell funded emergency fund, and
their income slowly had gone upover those five years. So my
question to them was, how willnow be different from five years
(04:52):
ago? They looked at each otherthen they. Asked me, Well, what
do you think we need to tweak inour budget? Tweak? No, I didn't
say that to them, but, but theysaid to me, there isn't much we
can tighten. They said that withall the added debt, right this,
they had built it up onto creditcards, all this debt they had.
(05:15):
They needed more income tohandle the payments, and that
they were afraid all theseproblems, the unforeseen
expenses, they were going tokeep coming. So here was the
solution that they had thoughtof, and they were coming to me
to say, Hey, do you think thisis a good idea? Take a loan for
20 years, pay off the creditcard debt and borrow enough
(05:36):
money on the 20 year loan tofund an emergency fund. Then
they thought, with working morehours, they'd be able to pay off
the loan more quickly than just20 years. But here's the problem
with that plan, right? Thinkback five years prior, they were
in the 16 they were in the sameexact spot, but now with a new
loan, a 20 year loan, and unlessthey seriously change their
(06:03):
money behaviors, namely, twothings, how do we budget and
manage our money well? And howdo we handle emergencies, right?
They had to do those to break achallenging cycle like this.
They have to push themselves toimplement new behaviors. They
need a big perspective change.
(06:23):
They fundamentally need tocompletely change their process
towards handling money. And thefirst step we all face is to
admit that what we've been doingis not working. That's the first
step, right? We got to face thatperson in the mirror to realize
that there we right the personin the mirror, we're the biggest
(06:46):
culprit in this money stuff notworking, and they absolutely
need to have this reality hitthem, and then to experience
that humility. Yeah, I am aproblem. I have been doing this
wrong, and that will lead themto change. Right? If we think
it's all external stuff, well, Ijust because I don't make
(07:08):
enough, or because all theseemergencies just happened to me,
like we're some type of victim.
No, when we look at the personin the mirror and say, you've
got to change, I've got tochange. I'm the one that's not
doing this right, when we can dothat, then it will lead to
change. If that can happen, thenthey have a chance, and we can
move on to the next step. Soonce they're ready to change,
(07:29):
and that's what I told them,once you're ready to change, you
need to create a budget. Andwhen we do a budget, we start
only with the needs, right? Whatare our top four needs that we
need to spend money on, right?
We can earn money, we can givemoney, we can save money, and we
can spend money. Most of us theproblem is spending. What are
(07:50):
the four? There's only fourneeds that we have that we
actually need to spend money onevery month. The only ones we
need absolutely need. They'recritical to our survival. Those
four needs, and I've talkedabout these in other episodes,
food, shelter, utilities andtransportation, that's it,
(08:11):
right? So, so you earn yourmoney, you list your income, you
set aside your tithe, and then,and when you're listing your
income, just do your take homepay, right? Let the tax
withholdings and your you know,if you've got insurance at your
company, your health insuranceand stuff, let all that stuff
come out. So you look at yourtake home pay, you set aside
your tithe, and then you havethose first four expenses.
(08:32):
That's it. Everything needs togo towards the debt. Until the
debt is gone. There's no roomfor vacations, right? This is,
this is the scorched earth part.
When there's a problem, let'sjust go drastically to change
what we're doing, and then we'llstart to experience it, our
body, our mind, our body, ouremotions. Everything's gonna be
(08:53):
like, Whoa. Something'sdifferent, right? Scorched
Earth. What does that mean?
There's no vacations, there's nodining out, there's no kids
activities, there's no funmoney. And this can seem a bit
harsh it did when Taryn and Ichanged the way we handled
money. We went scorched earthfor a couple years. But this is
what is needed to change thebehavior. You can't just kind of
(09:17):
slowly wander out of debt. Youwill never get out, because
expenses and other things keepcoming, right? And the second
big thing they need to do is totackle. The second big thing
they need to tackle is to createa plan for handling emergencies
right for their whole life,their process for tackling
(09:38):
emergencies. It was the same.
We'll just put it on the creditcard. Credit cards that's for an
emergency. So let's just putthem on the credit card, right?
And they had, they had thatbehavior pretty well
established, right? They hadbeen to it the last five years.
They had done it prior to that,right? When they had gotten in
the mess the first time.
And I think it's a quote, itgets credited to Einstein,
right? Albert, Einstein, you.
Insanity is just doing the samething over and over and
(10:02):
expecting a different outcome,right? And many of us can find
ourselves in that spot. So inorder to handle emergencies, the
top thing just take borrowingoff the table for emergencies,
right? You think back to likewhen you're a kid in school,
just an academic problem. Hey,so and so runs, it's emergency
(10:23):
borrowing doesn't exist. What istheir what are their options?
Right? We'd be able to come upwith some, but it's harder when
we're the person in the story.
And then I might add, are theseexpenses truly emergencies?
Right? Let's take a minute anddefine an emergency. And I've
got a whole episode on this,right? On emergencies, an
(10:44):
emergency needs to be threethings. There's three things for
something to be considered anemergency. First, it needs to be
unexpected. Second, it actuallyneeds to be something necessary,
right? And three, it needs to beurgent,
right? So I, you know, when I'mtalking to the kids in high
school, in their class, I liketo give them the the example of,
(11:09):
what if one of your friendssurprised you and said, Hey, our
favorite artist has concert inEurope, and we can go, but we
have to leave tomorrow. It coststhis much, but we got the
tickets free. We just need topay airfare. It's like, well,
that's unexpected, right? Wegotta leave tomorrow. So it
sounds urgent, right? But is itnecessary? No, no. So that's not
(11:33):
an emergency. You can't use youremergency fund for it, right?
But let's look at some examplesthat a family might face, right?
Is a home repair an emergency,right? These folks, they had had
home repairs, car repairs andmedical expenses. So is a home
repair an emergency? Well, Ithink it depends on what it is,
right? Let's say it's a leakyroof, right? There's, there's
(11:54):
water dripping into the kitchen.
Well, is that unexpected? Yeah,yeah. Most likely. Is it
necessary to fix? I think it is.
You know, if you don't fix aleaky roof, it's going to turn
into a much larger problem. Isit urgent? Yeah, probably. I
mean, you can't control when thenext rain storm is coming,
(12:15):
right? But here's the thing, ifyou're going to tackle a leaky
roof, does that mean you need toreplace the entire roof? Right?
That could be 15,000 20,000 thatcould be higher or or, can you
actually just fix the leak?
Right? If you, if you call, likeyour local roofing company,
they're probably most likelygoing to come and try to sell
(12:35):
you a new roof, right? Tell youhow old it is, and everything
you got to be doing with it. Butif you don't have money for
that? Right? Is the whole newroof and emergency. Now let's
say it was due because a treejust fell on the house, right?
And you got half your roof iscaved in. Well, insurance is
going to cover that, and yourcost will be your homeowners
deductible, right? So is ittruly an emergency? Are there
(12:57):
other solutions to solve theimmediate problem that would be
less expensive. What about adishwasher breaking? Is that an
emergency? I would say, No, youcan easily hand wash dishes for
a very long period of time,right? I think for the you know,
history of the world,dishwashers are rather recent
(13:18):
invention, right? You can wantboth. So you can wash dishes for
a long time, while you save themoney to repair or if need be
replaced, the dishwasher, andeven if you replace it. Can you
get a used one? Can you get a,you know, a scratching dent from
your appliance store that's gota significant discount on it,
(13:39):
right? What are the cheaper waysto solve these problems? So our
car repairs emergencies, ourmedical expenses are
emergencies. Well, it's allgoing to depend on what it is.
And I would even argue that ifyou own a home or a car, you can
expect that they're going toneed repairs. I mean, I hate car
(14:02):
repairs, and you can count onthem, they're gonna happen. Some
of them are surprises, right? Adeer jumps out in front of you,
and you hit deer, especially ifyou're in New Jersey. I think
there's more deer than people,right? You hit a deer, yeah. I
mean, that's that's unfortunate.
If you've got comprehensive onyour car insurance, maybe
they'll help you with it, right?
But, but you got your yourbrakes are warning you to
(14:25):
replace tires. I mean, those areall very, very expected, right?
They shouldn't all be completelyunexpected. And then medical
expenses, I mean, they're goingto happen. If you live long
enough, you will get sick, youwill need some medicine or maybe
a procedure at some point. Butthat's why we have medical
insurance right to handle thosebig items. But in the meantime,
(14:46):
we should be somewhat preparedto handle our health insurance
deductible like that. Shouldn'tbe a surprise, so in their need
to cover emergencies, I'm doingmy little air quote. Is how many
of them are truly emergencies.
When I work with couples ontheir finances and they find
(15:07):
themselves in tough situations,it can be very challenging to
admit that they have a problemor to see a new solution that
they hadn't considered before.
And I said this earlier, I oftenlike them to view the situation
kind of like a word problem fromgrade school,
right? So something like this,Joe and Sally, they found
themselves in $20,000 in debt,right? 7000 was from five years
(15:30):
of car repairs, and 13,000 wasfrom five years of medical
expenses, right? So that wasyour 20,000 7000 from car
repairs, 13,000 from medicalexpenses, not always accumulated
over five years. How can theypay off their debt and plan for
future emergencies? They can'tborrow the money. What solutions
do they have? And go right, it'sa word problem. Joe and Sally,
(15:55):
$20,000 in debt they can'tborrow. So how do they pay off
their debt and plan for futureemergencies? Go Well, if we step
back and we do some simple math,it seems like Joe and Sally have
have spent $1,400 a year in carrepairs, right? That's 7000
divided by five years, and wecan break that down even further
(16:16):
to about $120 a month. Thatdoesn't seem very significant,
right? We can also do the mathon the medical expenses, 13,000
for the five years. So we divide13,000 by five. That's 2600 per
year, or about $220a month, right? These, these
numbers don't seem to be crazy,but when Joe and Sally don't
(16:37):
have a plan, oh, man, thesethings can add up so quickly. So
what's the plan for these folks?
Well, we've got to pay 20,000loans and establish, say, a
$15,000 emergency fund. I'd alsoargue that we need to start to
plan to save for some of thesecar and medical expenses on a
(16:59):
monthly basis, to create somesavings to handle these types of
expenses, because we can counton them showing up in our lives.
They shouldn't be completelyunexpected. $120 a month for car
repairs and $220 per month formedical expenses. Well, why
can't those just become budgetline items, right where we have
a sinking fund and we justslowly accumulate that money, so
(17:19):
when those expenses pop up. Wehave the money saved to handle
them, but how do we clear up thedebt and establish an emergency
fund? Right? Joe and Sally, theycan work more hours, they can
earn more money, but they needto have a tight budget, a clean,
intentional spending plan tomake sure that these extra funds
that they're earning, they goright towards these two goals,
(17:41):
right? These two goals of payingoff the debt and establishing an
emergency fund. They earn money,they tithe, they pay those basic
four needs, right? Food,shelter, utilities and
transportation. Food, that'sgroceries, not eating out.
Shelter, let's that's theirhome, right? Their mortgage,
(18:03):
their home insurance and theirproperty taxes, right? Or maybe
it's your rent and renter'sinsurance if you don't own a
home, if you're rentingutilities, well, that's heat,
water, electric, right, gas,oil, whatever you have to to
heat your home. And I might alsoadd into utilities, especially
now, like if someone's workingfrom home or something, you
(18:26):
know, phone and internet, thosecan be included in utilities,
but, but you don't need videosubscriptions and new cell
phones and all that. Andtransportation, that's basic
transportation to get to andfrom work, right or to and from
the grocery store or gettingyour kids to school, right? So
(18:46):
transportation, what's that looklike? That looks like gas,
parking, maybe tolls, carinsurance, right? Because you
got to be able to get to work,right? That's the place where
you go to earn Buttransportation is not an excuse
to lease a new car, right? Soafter those four items, food,
shelter, utilities andtransportation, then you need to
(19:07):
put the money towards thesegoals, paying off the debt,
establishing an emergency fund.
You know, Joe and Sally, theyshould save a quick 1000 or or,
you know, maybe $2,000 as asmall emergency fund while they
tackle the debt that way, thisthey have something, this little
emergency fund to help cover aroof patch or a new tire if that
type of expense came up. Butsee, the quicker they go after
(19:28):
the debt, the quicker they canthen build up to their fully
funded emergency fund. But theyneed to be intentional. Need to
be focused. If they'reunmotivated or just kind of
lackadaisical, like whatever,like they're going to get buried
with life's challenges again,but if they get after it now,
(19:48):
they can leave their old waysand the poor money behaviors and
all that in the dust, and theycan begin to experience a new
sense of peace. Experience andhope with their finances
like this is so, so important,right? So, so what was that
(20:09):
first step? Just admitthat you've been the problem,
right? So, kick starting a plan,scorched earth and real
emergencies. That's what we'retalking about today. Kick
starting a plan. Hey, just admitthat I've been the problem, and
I need to change what I've beendoing. A drastic. Way to do that
is to go scorched earth, likeI'm just paying my four needs,
(20:30):
right? So I'm earning, I'mgiving my tithe, then my before.
I'm saving and other expenses.
I'm I'm just doing my fourexpenses, my four basic needs,
food, shelter, clothing andtransportation, right? So that's
scorched earth and realemergencies, right? Instead of
(20:51):
getting caught up all, it's anemergency, it's an emergency.
And we, you know, it's what aone word excuse for everything.
Oh, it was emergency. Was itreally? Was it really, and we
talked about that emergencies.
They're only emergencies ifthey're unexpected, right?
They're only emergencies ifthey're absolutely necessary,
and they're only emergencies ifthey're urgent, right? Urgent,
(21:15):
like it's got to be handledright now, and then we have to
use an emergency fund to come upwith a solution. Don't borrow,
don't dig a hole, don't usecredit cards for emergencies,
because then we're just gonnahave to clean that up again
later. Do you know, put up, puton your your thinking cap, and
(21:37):
say, Hey, we've got a newemergency. We've got something
that's truly unexpected. It'sabsolutely necessary, and it's
urgent. We're not borrowingmoney. What's the solution?
Maybe you're selling something,right? Maybe you're going in the
attic and going, Hey, we haven'ttouched these things in years,
and you're just selling them.
Maybe you're picking up extrahours somewhere. Maybe you're
(21:59):
cutting a few other expenses outof your life, right? I don't
need to go the office every day.
I'll try to work from home andjust save two days of gas money
every week, right? Whatever itmight be, but be intentional.
Push yourself to do thingsdifferent so that you have the
opportunity to get differentresults. So I don't know if you
needed to hear this today. Imeet people all the time that
(22:27):
they just need to be reminded ofthis. So hopefully, if you're
listening this and you're like,Oh man, I need, I need to do
this, then I encourage you doit. Kick Start your plan. Go
scorched earth, determine whatreal emergencies are, and create
a plan to handle them. You know,not just to clean up whatever
mess is there, but to handlethings when they come, because
(22:50):
they will come. There's newchallenges all the time, but
when we when we have a plan tohandle these things, when we're
working a budget or managing ourmoney correctly, when we're
developing those good behaviors,those emergencies just turn into
like mild inconveniences,because we have a plan to handle
them right. If you're married,work with your spouse if you're
(23:13):
not, have someone that canencourage you and someone that
you can be accountable to. So Ihope this has been helpful for
you today, if you if you needmore help, if you're Paul, I
don't think I can do this on myown. Hey, I've got a link in the
podcast episode description. Youcan connect with me. I'm happy
(23:35):
to chat through something withyou. Or you can even there's a
way to send me a note. Shoot mea question. I'll email your
response. I'm here to help.
So hopefully, hopefully I'vebeen helpful today.
Thank you for joining me. Godbless.
(23:59):
Thank you for listening toCatholic money talk. I hope you
join us again next time, pleaseclick Subscribe in your podcast
app to get notified of newepisodes. God bless you and have
a great day. You.
Paul, Welcome to Catholic moneytalk, where we talk about all
things money and finance, and wetry to do it through a lens of
being Catholic, where ourultimate goal is to one day be
in Heaven with the Lord. I amyour host. Paul Scarfone, thank
you for being here today. Sowelcome back. Thank you for
(00:21):
joining me. You know so manytimes I'll get people that will
either give me a call, shoot mea text, Hey, Paul, do you have a
minute? I wanted to talk, andthey tell me about a situation
that they find themselves in,and they're very limited at
seeing what other options mightexist and they might not have
any real strong money behaviorsin place, and that's what's kind
(00:47):
of put them into this situation.
And so a lot of people say,Well, where do we start? So
that's what I want to talk abouttoday. So I'm going to call this
episode kick starting, a planscorched earth and real
emergencies. But before we getinto that, let's say a prayer in
the name of the Father and ofthe Son and of the Holy Spirit.
Amen, Heavenly Father. We thankyou for this day. We thank you
(01:09):
for all the ways that you loveand bless us, Lord. We know that
you have an awesome plan for usand that you love us so much.
Lord, give us peace for whateversituations we might find
ourselves in, let us yield toyou and your Holy Spirit. Lord,
Lord. We find peace when we findourselves in your will. Help us
(01:30):
to understand your will for ourlives and draw us close to you.
We ask this all in Jesus name,amen, in name of the Father and
of the Son and of the HolySpirit, Amen. So everyone deals
with challenges and what we'llmainly focus on financial ones
(01:50):
today, right? But when we don'thave a budget, we don't have a
plan, we don't have an emergencyfund. We don't really have a
plan to handle emergencies. Theycan pile up and they can pile up
quick. I remember this couple,they had felt plagued with home
repairs and car issues andmedical expenses, you name it.
(02:12):
They they had it right now. Theycame to me telling me a few
years prior, they had had aclean financial slate, and that
was due to a small windfall ofmoney that they got from a
relative. Someone had giftedthem some money, and they were
able to kind of create a cleanslate of their financial
(02:33):
situation. Five years earlier,at that point, they had paid off
all their debt, and they thedebt that they had had had been
accumulated medical expenses andsome emergencies, and so when
they received that money, theywere able to wipe it all out,
and they had established a$15,000 emergency fund. They had
hoped never to have debt likethat again. But then here they
(02:58):
were five years later, they hadfound themselves in a tougher
spot than they had been fiveyears before that, and income
had even gone up in the pastfive years. But they had not
changed their behaviors towardsbudgeting and tackling
emergencies, and they were onceagain with a pile of debt
(03:18):
without an emergency fund. Andthe first question they gave to
me was, do they need to increasetheir income? See, see in their
minds, and many of us findourselves there, I, I've been
there. Right in their minds,they thought, if their income
was greater, they would bebetter equipped to handle all
(03:40):
these unexpected expenses. See,and most of us tend to think
that, well, if like, more moneywould fix the problem. But
that's actually not the problem.
The money is not the problem.
Our behaviors with the money isthe problem. So even if we get
more money, if we don't actuallychange our financial behaviors,
the more money is not even goingto help, right? In one sense, it
(04:03):
might cause us to create biggerproblems, and that's what we
actually see. People get moreincome, and they think they can
kind of let go a little bit andkind of expand some of the the
little mental boundaries, or,you know, spending boundaries
that they had thought, that theyhad established that were
keeping them safe, they weren't,but they tend to expand, expand
them, and then they start makingbigger financial decisions. But
(04:27):
without having a good plan andthe good behaviors, they just
tend to get bigger and biggerand snowball. So they were
asking if they need to make moremoney. But see, five years ago,
they had no debt, they had awell funded emergency fund, and
their income slowly had gone upover those five years. So my
question to them was, how willnow be different from five years
(04:52):
ago? They looked at each otherthen they. Asked me, Well, what
do you think we need to tweak inour budget? Tweak? No, I didn't
say that to them, but, but theysaid to me, there isn't much we
can tighten. They said that withall the added debt, right this,
they had built it up onto creditcards, all this debt they had.
(05:15):
They needed more income tohandle the payments, and that
they were afraid all theseproblems, the unforeseen
expenses, they were going tokeep coming. So here was the
solution that they had thoughtof, and they were coming to me
to say, Hey, do you think thisis a good idea? Take a loan for
20 years, pay off the creditcard debt and borrow enough
(05:36):
money on the 20 year loan tofund an emergency fund. Then
they thought, with working morehours, they'd be able to pay off
the loan more quickly than just20 years. But here's the problem
with that plan, right? Thinkback five years prior, they were
in the 16 they were in the sameexact spot, but now with a new
loan, a 20 year loan, and unlessthey seriously change their
(06:03):
money behaviors, namely, twothings, how do we budget and
manage our money well? And howdo we handle emergencies, right?
They had to do those to break achallenging cycle like this.
They have to push themselves toimplement new behaviors. They
need a big perspective change.
(06:23):
They fundamentally need tocompletely change their process
towards handling money. And thefirst step we all face is to
admit that what we've been doingis not working. That's the first
step, right? We got to face thatperson in the mirror to realize
that there we right the personin the mirror, we're the biggest
(06:46):
culprit in this money stuff notworking, and they absolutely
need to have this reality hitthem, and then to experience
that humility. Yeah, I am aproblem. I have been doing this
wrong, and that will lead themto change. Right? If we think
it's all external stuff, well, Ijust because I don't make
(07:08):
enough, or because all theseemergencies just happened to me,
like we're some type of victim.
No, when we look at the personin the mirror and say, you've
got to change, I've got tochange. I'm the one that's not
doing this right, when we can dothat, then it will lead to
change. If that can happen, thenthey have a chance, and we can
move on to the next step. Soonce they're ready to change,
(07:29):
and that's what I told them,once you're ready to change, you
need to create a budget. Andwhen we do a budget, we start
only with the needs, right? Whatare our top four needs that we
need to spend money on, right?
We can earn money, we can givemoney, we can save money, and we
can spend money. Most of us theproblem is spending. What are
(07:50):
the four? There's only fourneeds that we have that we
actually need to spend money onevery month. The only ones we
need absolutely need. They'recritical to our survival. Those
four needs, and I've talkedabout these in other episodes,
food, shelter, utilities andtransportation, that's it,
(08:11):
right? So, so you earn yourmoney, you list your income, you
set aside your tithe, and then,and when you're listing your
income, just do your take homepay, right? Let the tax
withholdings and your you know,if you've got insurance at your
company, your health insuranceand stuff, let all that stuff
come out. So you look at yourtake home pay, you set aside
your tithe, and then you havethose first four expenses.
(08:32):
That's it. Everything needs togo towards the debt. Until the
debt is gone. There's no roomfor vacations, right? This is,
this is the scorched earth part.
When there's a problem, let'sjust go drastically to change
what we're doing, and then we'llstart to experience it, our
body, our mind, our body, ouremotions. Everything's gonna be
(08:53):
like, Whoa. Something'sdifferent, right? Scorched
Earth. What does that mean?
There's no vacations, there's nodining out, there's no kids
activities, there's no funmoney. And this can seem a bit
harsh it did when Taryn and Ichanged the way we handled
money. We went scorched earthfor a couple years. But this is
what is needed to change thebehavior. You can't just kind of
(09:17):
slowly wander out of debt. Youwill never get out, because
expenses and other things keepcoming, right? And the second
big thing they need to do is totackle. The second big thing
they need to tackle is to createa plan for handling emergencies
right for their whole life,their process for tackling
(09:38):
emergencies. It was the same.
We'll just put it on the creditcard. Credit cards that's for an
emergency. So let's just putthem on the credit card, right?
And they had, they had thatbehavior pretty well
established, right? They hadbeen to it the last five years.
They had done it prior to that,right? When they had gotten in
the mess the first time.
And I think it's a quote, itgets credited to Einstein,
right? Albert, Einstein, you.
Insanity is just doing the samething over and over and
(10:02):
expecting a different outcome,right? And many of us can find
ourselves in that spot. So inorder to handle emergencies, the
top thing just take borrowingoff the table for emergencies,
right? You think back to likewhen you're a kid in school,
just an academic problem. Hey,so and so runs, it's emergency
(10:23):
borrowing doesn't exist. What istheir what are their options?
Right? We'd be able to come upwith some, but it's harder when
we're the person in the story.
And then I might add, are theseexpenses truly emergencies?
Right? Let's take a minute anddefine an emergency. And I've
got a whole episode on this,right? On emergencies, an
(10:44):
emergency needs to be threethings. There's three things for
something to be considered anemergency. First, it needs to be
unexpected. Second, it actuallyneeds to be something necessary,
right? And three, it needs to beurgent,
right? So I, you know, when I'mtalking to the kids in high
school, in their class, I liketo give them the the example of,
(11:09):
what if one of your friendssurprised you and said, Hey, our
favorite artist has concert inEurope, and we can go, but we
have to leave tomorrow. It coststhis much, but we got the
tickets free. We just need topay airfare. It's like, well,
that's unexpected, right? Wegotta leave tomorrow. So it
sounds urgent, right? But is itnecessary? No, no. So that's not
(11:33):
an emergency. You can't use youremergency fund for it, right?
But let's look at some examplesthat a family might face, right?
Is a home repair an emergency,right? These folks, they had had
home repairs, car repairs andmedical expenses. So is a home
repair an emergency? Well, Ithink it depends on what it is,
right? Let's say it's a leakyroof, right? There's, there's
(11:54):
water dripping into the kitchen.
Well, is that unexpected? Yeah,yeah. Most likely. Is it
necessary to fix? I think it is.
You know, if you don't fix aleaky roof, it's going to turn
into a much larger problem. Isit urgent? Yeah, probably. I
mean, you can't control when thenext rain storm is coming,
(12:15):
right? But here's the thing, ifyou're going to tackle a leaky
roof, does that mean you need toreplace the entire roof? Right?
That could be 15,000 20,000 thatcould be higher or or, can you
actually just fix the leak?
Right? If you, if you call, likeyour local roofing company,
they're probably most likelygoing to come and try to sell
(12:35):
you a new roof, right? Tell youhow old it is, and everything
you got to be doing with it. Butif you don't have money for
that? Right? Is the whole newroof and emergency. Now let's
say it was due because a treejust fell on the house, right?
And you got half your roof iscaved in. Well, insurance is
going to cover that, and yourcost will be your homeowners
deductible, right? So is ittruly an emergency? Are there
(12:57):
other solutions to solve theimmediate problem that would be
less expensive. What about adishwasher breaking? Is that an
emergency? I would say, No, youcan easily hand wash dishes for
a very long period of time,right? I think for the you know,
history of the world,dishwashers are rather recent
(13:18):
invention, right? You can wantboth. So you can wash dishes for
a long time, while you save themoney to repair or if need be
replaced, the dishwasher, andeven if you replace it. Can you
get a used one? Can you get a,you know, a scratching dent from
your appliance store that's gota significant discount on it,
(13:39):
right? What are the cheaper waysto solve these problems? So our
car repairs emergencies, ourmedical expenses are
emergencies. Well, it's allgoing to depend on what it is.
And I would even argue that ifyou own a home or a car, you can
expect that they're going toneed repairs. I mean, I hate car
(14:02):
repairs, and you can count onthem, they're gonna happen. Some
of them are surprises, right? Adeer jumps out in front of you,
and you hit deer, especially ifyou're in New Jersey. I think
there's more deer than people,right? You hit a deer, yeah. I
mean, that's that's unfortunate.
If you've got comprehensive onyour car insurance, maybe
they'll help you with it, right?
But, but you got your yourbrakes are warning you to
(14:25):
replace tires. I mean, those areall very, very expected, right?
They shouldn't all be completelyunexpected. And then medical
expenses, I mean, they're goingto happen. If you live long
enough, you will get sick, youwill need some medicine or maybe
a procedure at some point. Butthat's why we have medical
insurance right to handle thosebig items. But in the meantime,
(14:46):
we should be somewhat preparedto handle our health insurance
deductible like that. Shouldn'tbe a surprise, so in their need
to cover emergencies, I'm doingmy little air quote. Is how many
of them are truly emergencies.
When I work with couples ontheir finances and they find
(15:07):
themselves in tough situations,it can be very challenging to
admit that they have a problemor to see a new solution that
they hadn't considered before.
And I said this earlier, I oftenlike them to view the situation
kind of like a word problem fromgrade school,
right? So something like this,Joe and Sally, they found
themselves in $20,000 in debt,right? 7000 was from five years
(15:30):
of car repairs, and 13,000 wasfrom five years of medical
expenses, right? So that wasyour 20,000 7000 from car
repairs, 13,000 from medicalexpenses, not always accumulated
over five years. How can theypay off their debt and plan for
future emergencies? They can'tborrow the money. What solutions
do they have? And go right, it'sa word problem. Joe and Sally,
(15:55):
$20,000 in debt they can'tborrow. So how do they pay off
their debt and plan for futureemergencies? Go Well, if we step
back and we do some simple math,it seems like Joe and Sally have
have spent $1,400 a year in carrepairs, right? That's 7000
divided by five years, and wecan break that down even further
(16:16):
to about $120 a month. Thatdoesn't seem very significant,
right? We can also do the mathon the medical expenses, 13,000
for the five years. So we divide13,000 by five. That's 2600 per
year, or about $220a month, right? These, these
numbers don't seem to be crazy,but when Joe and Sally don't
(16:37):
have a plan, oh, man, thesethings can add up so quickly. So
what's the plan for these folks?
Well, we've got to pay 20,000loans and establish, say, a
$15,000 emergency fund. I'd alsoargue that we need to start to
plan to save for some of thesecar and medical expenses on a
(16:59):
monthly basis, to create somesavings to handle these types of
expenses, because we can counton them showing up in our lives.
They shouldn't be completelyunexpected. $120 a month for car
repairs and $220 per month formedical expenses. Well, why
can't those just become budgetline items, right where we have
a sinking fund and we justslowly accumulate that money, so
(17:19):
when those expenses pop up. Wehave the money saved to handle
them, but how do we clear up thedebt and establish an emergency
fund? Right? Joe and Sally, theycan work more hours, they can
earn more money, but they needto have a tight budget, a clean,
intentional spending plan tomake sure that these extra funds
that they're earning, they goright towards these two goals,
(17:41):
right? These two goals of payingoff the debt and establishing an
emergency fund. They earn money,they tithe, they pay those basic
four needs, right? Food,shelter, utilities and
transportation. Food, that'sgroceries, not eating out.
Shelter, let's that's theirhome, right? Their mortgage,
(18:03):
their home insurance and theirproperty taxes, right? Or maybe
it's your rent and renter'sinsurance if you don't own a
home, if you're rentingutilities, well, that's heat,
water, electric, right, gas,oil, whatever you have to to
heat your home. And I might alsoadd into utilities, especially
now, like if someone's workingfrom home or something, you
(18:26):
know, phone and internet, thosecan be included in utilities,
but, but you don't need videosubscriptions and new cell
phones and all that. Andtransportation, that's basic
transportation to get to andfrom work, right or to and from
the grocery store or gettingyour kids to school, right? So
(18:46):
transportation, what's that looklike? That looks like gas,
parking, maybe tolls, carinsurance, right? Because you
got to be able to get to work,right? That's the place where
you go to earn Buttransportation is not an excuse
to lease a new car, right? Soafter those four items, food,
shelter, utilities andtransportation, then you need to
(19:07):
put the money towards thesegoals, paying off the debt,
establishing an emergency fund.
You know, Joe and Sally, theyshould save a quick 1000 or or,
you know, maybe $2,000 as asmall emergency fund while they
tackle the debt that way, thisthey have something, this little
emergency fund to help cover aroof patch or a new tire if that
type of expense came up. Butsee, the quicker they go after
(19:28):
the debt, the quicker they canthen build up to their fully
funded emergency fund. But theyneed to be intentional. Need to
be focused. If they'reunmotivated or just kind of
lackadaisical, like whatever,like they're going to get buried
with life's challenges again,but if they get after it now,
(19:48):
they can leave their old waysand the poor money behaviors and
all that in the dust, and theycan begin to experience a new
sense of peace. Experience andhope with their finances
like this is so, so important,right? So, so what was that
(20:09):
first step? Just admitthat you've been the problem,
right? So, kick starting a plan,scorched earth and real
emergencies. That's what we'retalking about today. Kick
starting a plan. Hey, just admitthat I've been the problem, and
I need to change what I've beendoing. A drastic. Way to do that
is to go scorched earth, likeI'm just paying my four needs,
(20:30):
right? So I'm earning, I'mgiving my tithe, then my before.
I'm saving and other expenses.
I'm I'm just doing my fourexpenses, my four basic needs,
food, shelter, clothing andtransportation, right? So that's
scorched earth and realemergencies, right? Instead of
(20:51):
getting caught up all, it's anemergency, it's an emergency.
And we, you know, it's what aone word excuse for everything.
Oh, it was emergency. Was itreally? Was it really, and we
talked about that emergencies.
They're only emergencies ifthey're unexpected, right?
They're only emergencies ifthey're absolutely necessary,
and they're only emergencies ifthey're urgent, right? Urgent,
(21:15):
like it's got to be handledright now, and then we have to
use an emergency fund to come upwith a solution. Don't borrow,
don't dig a hole, don't usecredit cards for emergencies,
because then we're just gonnahave to clean that up again
later. Do you know, put up, puton your your thinking cap, and
(21:37):
say, Hey, we've got a newemergency. We've got something
that's truly unexpected. It'sabsolutely necessary, and it's
urgent. We're not borrowingmoney. What's the solution?
Maybe you're selling something,right? Maybe you're going in the
attic and going, Hey, we haven'ttouched these things in years,
and you're just selling them.
Maybe you're picking up extrahours somewhere. Maybe you're
(21:59):
cutting a few other expenses outof your life, right? I don't
need to go the office every day.
I'll try to work from home andjust save two days of gas money
every week, right? Whatever itmight be, but be intentional.
Push yourself to do thingsdifferent so that you have the
opportunity to get differentresults. So I don't know if you
needed to hear this today. Imeet people all the time that
(22:27):
they just need to be reminded ofthis. So hopefully, if you're
listening this and you're like,Oh man, I need, I need to do
this, then I encourage you doit. Kick Start your plan. Go
scorched earth, determine whatreal emergencies are, and create
a plan to handle them. You know,not just to clean up whatever
mess is there, but to handlethings when they come, because
(22:50):
they will come. There's newchallenges all the time, but
when we when we have a plan tohandle these things, when we're
working a budget or managing ourmoney correctly, when we're
developing those good behaviors,those emergencies just turn into
like mild inconveniences,because we have a plan to handle
them right. If you're married,work with your spouse if you're
(23:13):
not, have someone that canencourage you and someone that
you can be accountable to. So Ihope this has been helpful for
you today, if you if you needmore help, if you're Paul, I
don't think I can do this on myown. Hey, I've got a link in the
podcast episode description. Youcan connect with me. I'm happy
(23:35):
to chat through something withyou. Or you can even there's a
way to send me a note. Shoot mea question. I'll email your
response. I'm here to help.
So hopefully, hopefully I'vebeen helpful today.
Thank you for joining me. Godbless.
(23:59):
Thank you for listening toCatholic money talk. I hope you
join us again next time, pleaseclick Subscribe in your podcast
app to get notified of newepisodes. God bless you and have
a great day. You.
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