Moving on to Blanca's question. It says, "My spouse and I were 33 years old. Each invest 15 and 20 into our 401K with over six figures. We invest another eight percent instead of paying down the mortgage early. Some great stuff sounding like, but we have 15K in credit card debt. Do we go back to the
financial order of operations and tackle this? Do you go back? Did you download the
financial order of operations? Sounds like you need to start, which is great because I need them. Pragmatically, we don't know the interest rate on your credit card, right? So let's assume that it's a zero percent teaser rate that you have this fifteen thousand dollars of debt before it goes to the astronomical rate. Daniel, what's the average credit card rate right now? It's like 18.3. Let's get close to 21. It's almost 21. I was, you know, the Horseshoes, just 21, average credit card interest rate right now. Before it gets there, if you have zero percent, you've got to make sure it pays it off. If, however, you are paying 21% on that credit card, I think you have to kind of, like all things, shut down. Stop right now, pay off that credit card debt, get that noose out from around your neck. So, I would go back to step three. I would satisfy that high-interest debt, and then I would do it as quickly as possible, and I'd get right back on the train to
financial order of operations."
Yeah, my analogy that's in my head right now is "The Price is Right," and you know, in that game where they're like, "YOLO, yo yo!" and he's going up in the price, you know, and then the guy falls off. Well, I don't know how we got to—because I mean, there's a disconnect. Go to moneyguy.com/resources. You've got the
financial order of operations. Let's dissect this.
Step two, employer money. That's part of that twenty percent going into the 401K. I'm very proud of you and your spouse for doing that. But then somehow, okay, we broke it right there, but we'll keep going. Four is emergency reserves. Hopefully, you've got that. Five is Roth. You know, I didn't—you know, you said you had eight percent in additional savings and investment. You didn't tell us what it was in, but I'm hoping it's like in the Roth or a health savings account, something like that. And then we get to step six, max out retirement. I'm back to, how did we get past three? Where, where in the world did we have credit card—I get it, you're saying zero percent, pay off the credit cards. I love that you're saving for the future, but credit cards are a disaster. Remember, you and I don't even like playing the zero percent. I'll do that. It's no different than the "buy now, pay later" because they're counting on you to have something happen in your life that makes it where you can't pay it off in that period of time, that teaser period that they're giving you. They're hoping that you fall into the trap. So instead of thinking because you've ever seen those games like you think about a movie, I can't remember which movie it was, they took the knife and they put their hand out and they're like, you know, when they're beating the knife around their fingers. Yeah, have you seen those? And, yeah, just because you can play that game and keep your fingers once or twice or Russian Roulette and you can do it and you come away doesn't mean you should be playing that game.
So, don't play those crazy games and win those stupid prizes for stupid games with stupid prizes if you don't have to. Avoid credit card use is okay if you're paying them off in full every month. If you have any credit card debt, even with the zero percent interest rate, I say no way. I'd be curious what behavior got you there because that's probably even the bigger question than the strategy. Get out of it. How do I get into this mess? Are you and your spouse? I mean, y'all sound like you're doing great. I love it. That's how that's the secret sauce, is this weirdo brain that I have. But it's, um, yeah, it didn't really connect.
One word of that, you see where my brain go? Watch "America's Got Talent" so you know to get your release on that so you don't feel like you need to juggle chainsaws or throw knives at your spouse. You just go watch somebody else do that, and you stay on the tried and true path. Credit card debt is dangerous, so don't mess with it. That works.
