194: Break Up With Debt
Michele 00:00
Hello, my name is Michele, and you're listening to Profit is a Choice. Joining me today is Melanie Lockert. Melanie is the author of the book Dear Debt based on her long standing blog. She's also the podcast host of Mental Health and Wealth. Melanie was successful and paying off $81,000 in student loan debt. And she has chronicled her journey on her blog and in her book. Today, our focus in our conversation will be all about debt and how to manage it. Every day, empowered entrepreneurs are taking ownership of their company financial health, and enjoying the rewards of reduced stress and more creativity. With my background as a financial software developer, owner of multiple businesses in the interior design, industry, educator, and speaker, I coach women in the interior design industry to increase their profits, regain ownership of their bottom line, and to have fun again in their business. Welcome to Profit is a Choice. Hi, Melanie, welcome to the podcast.
Melanie Lockert 01:10
Hello, thanks for having me.
Michele 01:12
Oh, it's my pleasure. I am so excited to speak with you today all about money and debt reduction and how as women, we can look at debt maybe differently than before we listen to the podcast today. But in the intro, I told a little bit about you. But I also want to give you a few minutes to kind of share with us just a little bit of your journey and what you do today. And then we're gonna jump in with all the questions.
Melanie Lockert 01:42
Perfect. Well, thank you so much. I'm super excited to be here. And we're talking about my favorite topics, women debt reduction, money, mental health, so many different things that I'm passionate about. So today, I'm currently a personal finance writer and author of the book Dear Debt. I'm a podcaster at the Mental Health and Wealth show. And I also founded a women and money retreat called Lola retreat, which has been on hiatus during the pandemic. But, you know, all of this really started, you know, close to nine years ago, January 2013, I started a blog called Dear Debt because I was severely depressed about my student loan debt. You know, all of 2012, I had been trying to find jobs in the arts, I had all of the student loan debt from my master's degree from NYU. You know, in total, I borrowed $81,000 in student loan debt, $23,000 of that came from my undergrad in theater, and $58,000 of that came from NYU and performance studies. And I had wanted to be a professor originally, and you know, get my PhD and work in academia. And then halfway through my program, I realized that that was not the path for me. And so, you know, I ended up just graduating with a master's and had all of this debt and had to kind of reshift and reshape my life, because suddenly I had all of the student loan debt. And, you know, I think that we are fed this story that if you work hard, you go to a good school, that you'll be able to find a good job and pay back your debt. And that was not the experience that I had. And it's really humbling to, you know, have a certain life and a certain career and think that you're making the right steps and then finding yourself in a worse financial situation. So, you know, by the time I graduated NYU, I had my master's I was 27. And I was more broke than I was when I was 20. And you know, a lot of my friends were getting married and buying houses and having kids and having all these financial milestones. And then suddenly, I just felt basically like a broke college student all over again. And the blog was really me trying to take back control over my life, because I felt out of control in the way that it affected my mental health. Because I was so anxious about oil and so much money, I felt so much shame and guilt for not being able to pay it back. And for going to a fancy private school after people told me, you know, maybe I shouldn't, you know, all the feelings that come along with debt, and who knew that at the time that that blog would literally change my life. I mean, it led to, like I said, a freelance writing career in finance today, my own podcast, a book, my own event. And as my friends always tell me, like Melanie, you turned your pain into your passion. And I'm so excited that I can share my story today because I know you know intimately what it's like to struggle with debt and the feelings of shame and anxiety and depression that come along with it. And I understand that it's a very important topic for women. Because women are in a very particular time in history right now where they're earning more money, they're getting more educated. We have different relational dynamics, we have more choices than ever. And with all of that comes, you know, new territory that we haven't really explored. I remember.
Michele 05:09
See, it would have been back in 2003, I think it was. And I was, I've shared the story on my podcast with my origin story and all that. But I was sitting at our kitchen table, and I was finishing the taxes for the prior year to that was like March, it was, you know, right there trying to get all the tax information over to the accountant from the prior year. And I had left my tech career and had come home to start a business and raise my family. And at the bottom of my profit and loss statement, I had a negative number. And the whole reason that I came home to start my business, Well, number one, I left a six figure income to come home, to raise my kids. But number two, I was trying to start a business to bring some money into the house to alleviate some of the pain of trying to take care of everything, you know, off my husband's shoulders. And so not only did I not do that, but as my story goes, I was, you know, not showing up for soccer games, or I was too busy working for other people and doing other things, yet I wasn't getting paid, and I had a negative. And so if you have a negative, it means that i The money came from somewhere, which means My poor husband who worked all day gave money or you know, put money into my business so that I could do things for other people, and not even be able to take care of home family. And that is that is the day mine was in 2003. And I remember sitting at the kitchen table and thinking, it just would have just how miserable I was, I was embarrassed, I was mortified. I was hurt, I felt broken. And at the same time, I remember thinking, I'm just a failure, right. And I called my husband, Melanie and I said, you know, I'm expecting him to be a little bit of a girlfriend, and he wasn't. And I was like, I've lost money. I've got a negative on the piano, so and he was like, You need to get it together. He's secure, smart, smart woman, you have done all these things, you understand money, you've run million dollar budgets, what are you doing, and I realized that I had given up my own control of my money, for the payoff of pleasing other people are doing what was expected. Or the you know, there was a different payoff to what I was doing other than hard cash. And I had to have a very kind of clear conversation with myself. It's funny, one of the things I have mentioned that I like to be I've got like five things that I want to be as a leader, and one of them is active listener. And, you know, I've been learning over the years, Melanie, I also have to listen to myself. And I had stopped listening to me in some of those dealings to make everybody else happy. And I'm not even a pleaser. But I remember it kind of the way you you had that moment that was like, I've got to change this, I don't want to live under this anymore. Like it's too weighty. I remember that exact same moment. I know that moment for me and it. What it did was when I shifted and changed and got it under control the way that you have, you know, written a book and done your thing. So that's exactly what I did is I used mine, and turned around and created signature courses. And I've gone out on, you know, teaching circuits and speaking circuits. And that's the whole reason I have the podcast is the whole reason I'm a business coach, because people don't have to live like that. Like that's not that doesn't have to be the end of our financial story. And so it's just so neat to hear years where our stories aren't exactly the same. But debt is debt, whether it's your personal, you know, life that's in debt, or whether it's your business life that's in debt, both of them bring those same feelings.
Melanie Lockert 08:57
Yeah, it's such an emotional process. And thank you so much for sharing more of your story. I love hearing about these moments that, you know, really catalyze us to make change in our lives that can be lasting and really help others you know,
Michele 09:11
so I, I loved your book, by the way. Dear Debt, it, I want to say a couple of things. Number one, it's very, it's written very succinctly. It's very engaging, it's easy to grasp and understand. It's not preachy, I found it very tactical, in what you delivered and explained. And I've got some questions from it just so that we can unpack it a little bit. But I've already thought of a couple of my kids, friends who are in debt from college, you know, from going, sending it to them and going, this is a really good book and could really help you. But before we jump into that, I do have one question for you. I was thought about it two or three times. Thank you made a comment in the book that being under that amount of debt, you were acutely aware of it like it was in your vision, it wasn't off to the side, it was like in front of you. And it felt like this thing that you just kept running into. Yet you had some peer group and others that you had seen, I'm sure along the way, they were like, oh, US debt, whatever, or it's a student that it doesn't matter. In your research and your study, and you're working and talking about this topic? Do you have any insight into what makes some people feel the pain of debt, and others be able to ignore it? Because I, our family could, I couldn't ignore it, we couldn't ignore it. And I mean, it was, it was constantly like, somebody's beating on us, even our sons are that same way. Now they're like, oh, my gosh, oh, a little bit of money. I need to get that cleaned up. But I got plenty of other friends who were like, whatever. I mean, they're just racking up debt on top of debt. bad habit on top of bad habit.
Melanie Lockert 10:57
Mm hmm. Yeah, totally. And, you know, this is not scientific. This is based on my personal experience, and my kind of chatting with other people. But from what I understand, is that it really comes down to risk tolerance. So you know, we talk a lot about risk tolerance as it relates to investing. But I think it's really important to have this conversation with debt, because I know that I'm extremely risk averse, don't like, you know, make you money. I don't like feeling like people have something over my head. And I think it really has to do with, you know, our risk tolerance, how we were raised kind of our money mindset, what we saw growing up, I kind of was acutely aware that money was finite. And that, you know, I've heard of my parents struggles, in the past with money and knowing how much I made before going to grad school, I mean, the most I had ever earned at that point was $38,000. So to suddenly be Oh, we, you do more than double that. I mean, that was also like a wake up call to to be like, Oh, my gosh, this is, even if I just put all of my income towards debt for two years, I still wouldn't pay this off. And so, and it also kind of related to my mental health issues. And what I mean by that is, you know, I have had clinical depression and anxiety. And I think, you know, when you're paying off debt, you're literally paying for your past, all of those monthly payments are for something that's already happened. And so when you're trying to move forward and be successful, and be happy and reach the next goal, you're literally tethered to the past with this monthly payment. And because interest is ballooning so quickly, it feels like an impossible beast to master. And so for me, it was this acute awareness of how much it was growing, and how difficult it would be to pay back given my current financial circumstances. And also the fact that I would never feel truly free until I paid it off. Because as long as I was making money, a part of that money was owed to someone else. And I think, you know, for people that have a higher risk tolerance, and I'm just like, oh, debt is debt. I mean, maybe they had a different upbringing. Maybe they earn more money. They're not as sensitive as I am. I'm also a very sensitive person. I think there are so many different factors. But it is interesting to me because I still have friends today who, you know, they're not fazed by debt. They just think of it as another bill. But for someone like me, I felt tortured by it. And I know not everyone feels that way. But that's the way I felt. And I felt like no one was talking about it. And so creating my blog, at least created this safe space where I could talk about this and I found a community of people who said, I felt the same way too, which was so powerful.
Michele 13:57
Yeah, I have had, I think the same experiences with you. Like you said, they're not scientific, but it is what I've run into as well. I've loved the line in your book. It was one of the first lines in there where I think you said to yourself, it's time to break up with debt. And Mike Michalowicz in the book Profit First, one of the things that he says when he's we're talking about debt is you've got to love saving more than spending, like we have to twist our mind to say, our whole life can't just be spend, spend, spend. And even when I work with companies, the first thing I do is go look at their balance sheet and I look at their profit loss. And so some people tend to think Well, Michele, and worse and finances, and my my answer to them is always kind of what alluded to what you were saying, Melanie, I'm going to that because that's what shows me where they're spending their money and what they owe. All it is is showing me all the decisions they've already made. And if we don't like the numbers that we see or The places that those numbers show up, right? If we wish they had shown up in profit instead of expenses, we have to change the story. We have to change the actions, we have to change the choices. And you you had to do a lot, of course correction, right to be able to pay off $81,000 of debt, when that's not what you were making on a yearly salary to share with everybody how quickly you said you wanted to pay it off, because you gave yourself a pretty aggressive goal.
Melanie Lockert 15:29
Yeah, so I just want to, you know, be transparent about this. So the unsexy version is that I paid it off in nine and a half years. And that's because, you know, I went to undergrad and grad school two different times, you know, the first five years, I just pay the minimum on my undergrad debt. And then I went to grad school. And then when I graduated from grad school, after making, you know, minimum payments for five years, I had $60,000 left still, and I paid that off in four and a half years. So that's kind of like the sexier version. So there's been a lot of, you know, articles written about my story. And you know, depending on, you know, who writes it and how they want to frame it, like, there's the sexy version unsexy version, and I just want to share both because, you know, I want to be transparent that it wasn't overnight. But yes, I do want to also say that, you know, paying off $68,000, in four and a half years was a lot. And it was interesting, because when I started my blog, you can read the very cringy and awful first post on Dear Debt about how I gave myself a timeline of paying off my debt. In four years, when I started the blog, I had $57,000 left, and I was making $12 an hour at a temp job. And so I had no idea how in the heck, I was going to pay off $57,000 in four years, but I was like, I just need a crazy audacious goal to put out there in the universe. Because this is driving me, you know, miserable. And I'm so deeply unhappy, and I need to make a change. And it's so interesting what happens when you put a crazy goal like that online, because then I had these supporters cheering me on, then I realized six months to a year later that, oh, I can turn my blogging skills into freelance opportunities as a writer for other blogs and for other finance companies. And that's the career I have to this day. I mean, that is really what helped me become self employed. And what's interesting is, it took me two years after graduation to finally find a nonprofit job as a communications and Events Coordinator making $31,000. And, you know, when I was really broke, I was making between 16 and $20,000. And for context, I was living in Portland, Oregon, at the time, I was paying $400 in rent, because I was living with my then partner in a studio apartment, I did not have a car, I did not have health insurance. And so like my expenses were super minimal. But even then, it's like, you realize that frugality hits a plateau very quickly. And I realized with how much debt I owe, and how little income I'm making, my only choice really, is to earn more money. And so you know, I finally got that nonprofit job making $31,000. And then, at that same time, I realized people were side hustling as a blogger and a writer. And I thought, well, I have a master's degree, I've written papers, maybe I could do this. And I got my first $25 blog post. And I started, you know, pitching and connecting with other writers. And interestingly enough, a year after getting that nonprofit job, I quit, and my parents were like, What are you doing like you waited two years to get this full time job with benefits so you're gonna quit now. And I said, I promise you I'm going to make more money being self employed. And that first year, I doubled my income from 30,000 to 60,000. And self employment for me single handedly got me out of the low nonprofit pay trap and you know, I know a lot of people quit six figure you know, very well paying jobs to go self employment route. And that's a little more risky. But for me, it was the opposite. It completely opened up a whole new world making more money, when in the nonprofit world it's so easy to be capped at you know, 40,000 50,000 and never have any chance of earning more. And so for me, it just opened up my financial life. I was able to pay off my debt December 10 2015. And you know, grow my income and grow my business from there so, like I said, creating the blog changed my life which then turned into writing for others, which then created a self employment writing career. And you know, people think, oh, there's no money in writing. Believe you me there's money in finance, writing, especially If you write for some other fintechs, and financial institutions out there, and so that really helped me pay off my debt and completely changed my life. So when people are like, how would you pay off your debt, I always say, two things, I lived in a very low cost of living location and had like, almost no expenses, like cut back to the bone. And number two, I doubled my income through self employment. And that was the biggest key for me to make progress with my debt.
Michele 20:28
So one of the things that you said in the book and I marked it as key was you said, having money means having choices. And, and to your point, you can only cut back so much at some point, you do still have to breathe, you do still have to eat, you do still have to have shelter, good, old Maslow's hierarchy of needs, we still need to hit some of those. And so we do need to bring in more money. But you know, the trap that I see and have also experienced is that we bring in more money, so we go spend more money, yet what you did was you focused primarily not to say, and we'll talk about this in a minute and not so you didn't treat yourself, but you chose that when you made more money, you spent more money, but you spent it on paying down that debt, not in increasing your lifestyle at the very beginning, in a way that you know, let's say kept up with the money that you were making, you had a plan. You know, I am a firm believer in we tell our money, where to go instead of seeing where it's already gone. And I think that's exactly what you did, you were very intentional with telling your money where to go. It kind of goes back to my tagline what you own, you can change and you own the position you were and you own the spending that you had done. And then you chose to own the income you were making, and how you spent that income. And you spend it differently than you spent it the you know, the money that you had before. Right. So very intentionally, to get out. But you know, something I also noticed in your book that I don't know that I had thought about, I totally get it, I understand it. But you you you call it the stages of debt. And the minute I looked at it, I'm like, That's the freakin stages of grief. She did the stages of grief and showed how working through that debt and it's so true. Melanie, we go through this, you know, the denial like, it's not that bad. I'm not good. Not gonna worry about that to Oh, my gosh, what have I done? Why does she use this? Why didn't I listen, or I'm so mad or angry, or you're mad at the institutions because of you know, terrible lending practices or whatever it is. And then again, the bargaining and then the depression, which feeds right into the mental health, like all of this does, and then accepting it and making a plan. You know, sometimes I think, too, it's easy as business to not see the debt as personally as if it were personal debt. But it does the same thing that personal debt does. And that's it ties our hands from making other choices, because we are still tethered to prior choices.
Melanie Lockert 23:08
Totally. Yeah. And, you know, in the book, I definitely talk about how paying off debt is like the five stages of grief. And I experienced that very closely. You know, in my own personal story, like I was in denial at first with how much I owed, I signed up for a mint.com account and saw how much I owed and I deleted my account, because it was easier for me to pretend like it didn't exist, you know,
Michele 23:31
Tthat's what happens with a lot of people that call me when they finally call me to talk about you know, wanting to grow and scale their business but either not understanding their financials or having you know, different financial challenges. Sometimes it's because they just they looked at it and it was so overwhelming for whatever reason, right? Either the understanding of it, the amount of it, the weight of it, that they took a step back Is this the ostrich and then they hit this point or hit this wall where they're like, I can't go on like this anymore. Something's gotta give something's got to change. What What was the one it was there one thing other than it just that's a high number. I don't want to live under Dad, I don't have a lot of risk tolerance. Do you even remember, like a moment where you're you thought, Alright, I've gone through five stages. I met the acceptance get get through, get this off of me.
Melanie Lockert 24:26
Yeah, I mean, I think there were several different moments that were kind of critical to the story. So the first moment that got me out of denial. So as I mentioned earlier, you know, probably, I graduated may 2011. Like that first month or two, I created that mint.com account to see how much I owed and to try to get my finances together, completely panicked and freaked out and I deleted it. And I tried to you know, bury my head in the sand and it wasn't until about November December 2011 where my grace period was coming to an end i You still hadn't found a full time job in New York, I had gone 30 different interviews, I had many second, third and fourth interviews, so close to getting hired, and they would go with someone else. And I was just like, oh my gosh, I can't afford to live in New York anymore while living and paying off student loan debt. And you know, my partner at the time, you know, was living in Portland, we were doing long distance. And so I kind of realized that maybe now's a good time to go move across the country and have a lower cost of living and to be together. And, you know, while I had romantic influences at the time, I did not want to leave New York yet, I was still very much invested in trying to make my New York Life work. And so I felt like I was kind of pushed out of New York without my consent or without wanting to leave. And when you feel like your debt is making your life choices for you, instead of you making your life choices for you, that's also a very humbling experience, I would say, that was one of the big, kind of rip the band aid off moments, I was like, Ah, I'm not in denial anymore. Like this is affecting my life. And then, you know, I have like a mini hopeful phase, like, okay, Portland's gonna be cheaper, I'll be a big fish in a small pond, everything will be great. No, the economy is much smaller in Portland, this was still a few years after the Great Recession. So, you know, jobs weren't, you know, abundant. And then in Portland, I only found 10 to $12 an hour temp jobs, and I ended up on food stamps briefly. And so then I just kind of spiraled even further. Because I was like, This is not what I imagined my life to be after getting my master's degree from NYU. And so, you know, between feeling like they got kicked out of New York, ending up on food stamps, making 10 to $12 an hour, I was just extremely depressed and anxious and felt I can't continue on this way. It's just it's not sustainable. I'm so stressed out. And, you know, I feel like I've just made so many mistakes. And I want to course, correct.
Michele 27:04
I can imagine the weight of all of that, you know, like you said, it does happen happen in small stages in bits and pieces. But I'm just amazed that you were able to, to even still think clearly, because the spiral is real. I mean, it's real for all of us, no matter where we are in it. Right?
Melanie Lockert 27:25
Yeah. I mean, it's hard, you have to really kind of re channel that energy into something productive. And for me that was through blogging, because if you don't, it just sits in your nervous system and makes you spiral.
Michele 27:37
Well, and you mentioned too, that you did did some counseling, didn't you? Yes. And
Melanie Lockert 27:42
you're so important. I was in Portland in 2012, I found affordable counseling at the local grad school. So there were graduate counseling programs offering $15 sessions for people and they were like, counselors, like one semester away from graduating and getting their certifications, they still needed clinic hours. And because I was on food stamps, I was able to negotiate it down to $5 per session. So that was a great hack for me to get someone to talk to. And while that was helpful, and it definitely helped a little bit, I still kind of was running in circles. And you know, at the end of my time with that, I kind of realized, okay, this is the main point that's causing me stress is the debt, the only way for me to be free is to pay off the debt. So even though it was helpful, it was limited in its usefulness, because I realized, I'm still going to feel this way, as long as I feel trapped under this debt. And the only way to feel untrapped is to get out of this debt. And so, like I said, I hit my kind of breaking point at the end of 2012. That's when I discovered personal finance blogs, and thought, what if I start my own blog, and then they share my own story, because as much as I love all these other blogs that I'm reading, I feel like they're not sharing my story, which is, I thought I did everything right by going to a good school getting the quote, good debt for student loan debt, you know, I don't have any, you know, thing to sell, I've never had a spending issue, I have no assets to my name. So I can't just like sell my items and pay off my debt in six months. And also this is severely impacting my mental health. And so I thought, you know, maybe I can kind of fill that gap in the personal finance blogging world, because I'm not seeing that and that, you know, showed to be that it was a niche that was required and needed for other people and people were clamoring to say, I feel the same way too.
Michele 29:34
Okay, so let's go a bit more tactical with it then because you mentioned two main philosophies, if you will, of the say debt reduction, paying down your debt. In the book, the Debt Snowball, which we all talk about, I mean, that one people are probably most aware of, but also the Debt Avalanche. I'm gonna give you a minute explain what the Debt Snowball is. And then let's talk about the Debt Avalanche just in case these are new terms to anyone.
Melanie Lockert 30:05
Yeah, so the Debt Snowball Method is, if you have various types of debt, you kind of line them up by the smallest balance, and you focus on paying off the smallest balance first. So this is assuming that you're making minimum payments on all of them. But then any extra money is going towards the smallest balance, you can pay that off first. And this is something that's usually, you know, recommended by Dave Ramsey and other people because it can be very motivating to see the numbers go down quickly, when you focus on the smallest balance. The Debt Avalanche is about focusing on high interest debt first. So if you have, you know, student loans, or car loan and credit card debt, it's likely the credit card debt has the highest interest. And you want to focus on paying that off first, regardless of the balance, because interest is what makes debt so costly. And so for me, I had Graduate PLUS loans at 6.8, and 7.9%, like 50,000 of that. And then I had my undergrad loans at 2.3%. And so when I did the math, my loans were costing me $11 per day. And when I did that math, I got so angry. I was like, that's a flight from New York to LA once a month. Oh, my gosh, I could do so much for $300 a month. And I channel that anger into paying off my debt because I just realized how much I was paying towards interest. And so for me the Debt Avalanche method worked, because the math is what motivated me. I think there are no right or wrong answers. You know, I'm a personal finance writer, and people love to say, what's the right answer? What I always tell people is the right answer is the one that you're most consistent with. If motivation feels you do the Debt Snowball, if math motivates you do the Debt Avalanche. Also, in the book, I recommend to other debt payoff options. So number one, pay off the debt that makes you the most angry. So if you have debt from an ex boyfriend or ex spouse, or some other traumatic experience, and it just makes you angry, pay that off, because you will get your peace back faster. And another one that I mentioned the book is pay the debt off that will give you the most peace at night, what will help you sleep better at night. So you know, if you owe your parents money, or owe friend money or whatever it is causing strain in your life and keeping you up. pay that off too, because your peace is priceless. So I offer those two other repayment strategies as well, because I think they're important and acknowledging the way that debt affects our emotions, our life and our peace.
Michele 32:45
I'm glad you mentioned them, I had written them down in my notes to to talk about, because I think they actually in some ways, will guide the individual to whether they do a snowball or an Avalanche method. And the other thing is that's kind of interesting is you don't have to just do one and stay late, you can switch in the middle if you think okay, now the endorphins are kicking off enough, I'm gonna switch, because now I'm going to be motivated by math. So it's not always, just one way it's really about staying focus to pay it off. Exactly. But you know that, like, I've also worked with quite a few companies where they've had multiple owners, and then maybe they've sold the company or an owner had sold their portion or whatever. And that's a debt that most people want to go ahead and pay off as quickly as they can. Because otherwise it always feels like that other partner is still somewhat involved. And, you know, so if you were to just even move it back into business from personal is the same thing. It's what is it that either it makes you feel like you said angry or not even peace it even if you're not angry about it, it just doesn't feel peaceful. Or it feels like I wanted the kind of pictures in my mind, Melanie when I think of debt sometimes as I think of being in a hot air balloon and you're in it and you are so excited about going up up in a way and looking over the rooftops and going on this beautiful excursion and you know, all of the things that weather is gorgeous. But the people holding the the rugs on the ground won't let go like nobody will let go. And you're like, Please let go. So can somebody cut those roads. And if you really just could create even a mental image that every time like you could almost draw this right and have a different like tether line and name it as a debt. And every time you do it, you're cutting it and you're you're gonna see in your mental image. When you cut that last rope, that balloon is just going to go and that that's what I think of when I think of being so tied down by debt and not being able to have the freedom to make the choices in your life that you want to make at a time having to make different choices and doesn't mean they're all bad choices. But it's just more limited. It's just not the freedom to holistically choose whatever you want to do and that timeframe. Yeah, totally.
Melanie Lockert 35:16
I love that imagery.
Michele 35:18
One of the things that I have shared with my students and coachees, and people that I've worked with for years is, you know, and even all the way back to my kids, when I would tell them, You're not your mistakes, or you're not, you know, the worst thing that you've ever done, that's not who you are, it's what you did is separate, just the same as you're not your business. Even if I'm self employed, you're self employed. I'm not my business. Because if my business ceases to exist, I will still be here. Like we're not, we're not the same. And I love that because you also said in the book, and I, if I could just like highlight it and put 14 exclamations behind it. You said in chapter five, you are not your debt? And I think, for anybody who has experienced debt, or who is currently maybe under that weight of shame, or irritation or frustration, or what, anywhere in the five stages of debt right now, I think that's freeing to know, we are not our debt. How did you? How did you work it out to finally get to that place? And when it had probably been a bit more consuming at the very beginning of your journey?
Melanie Lockert 36:37
Yeah, I realized, you know, so much of the suffering related to debt was this idea that, because I was so much in the negative, that my self worth was in the negative, you know, I had conflated my debt with my self worth. And I think this happens a lot in our culture, you know, we conflate our self worth with our net worth. And because I owed so much money and had no assets to my name, I felt little and small and worthless. And, you know, as I was doing some of the money mindset work required to pay off that amount of debt, I realized, this thought is not serving me, this thought is not helping me pay back debt. And honestly, just because I'm not working a full time job, or making a great income, or able to pay off the debt, like I want to, doesn't mean that I'm useless, doesn't mean that I'm worthless doesn't mean that I suddenly don't have value. I mean, think of all the unemployed people that we've seen, you know, since the pandemic, or people that suddenly have to go on disability that suddenly worthless or, you know, not valuable to society, that's not true at all. But those are the kinds of messages that we take in from this productivity, hustle culture, that's always demanding that we produce more and more and more. And so I had to really separate my self worth from my financial life, and say, I am not my debt. Even if I don't produce anything, even if I don't pay off my debt. Even if I don't have a job, I am still worth something because I'm a human beings. Exactly, though, that's, that's the plain and simple of it. And I know that's overly simplistic, but I think it's an important revelation for people to have that simply by being alive, you are worth it. And you know, you don't have to translate how much value you provide the world with your work or your jet or your financial life. And so, you know, I had seen so many other people also feel low self esteem because of their debt. And so I just said, you know, you are not your debt, you are not alone, you are not a loan. And kind of those are my two signature phrases that I've been saying for years and years now. And I still think they're super important, even today.
Michele 38:55
I would totally agree with that. And I do think there's a huge amount of power within you, that you actually took back right? By by realizing that that you were separate from those you do have value and worth simply by being born and by being human. And the rest of it is something that's happened. It's something that can be worked on, worked around, work through, but it is certainly not to be equated with with personal worth or any worth like that. So let's talk about for a minute, you have a couple of really great ideas towards the end of the book. Not that the first part didn't have great ideas, but in a different way. Right. But you mentioned something called debt fatigue, and I have seen that as well. It's where you're doing the same thing doing the same thing. You're getting exhausted, you're getting tired and you feel like every dime is going towards debt fatigue. I know even in profit first. In the that methodology that we use, we talk about that Fatigue and how to reward yourself so that you don't get exhausted. Or you start having stress and anxiety, because you're constantly telling yourself what you cannot do or cannot have, or you know, or where you cannot go, or all those things. So share a little bit about what you did to overcome debt fatigue, because I thought some of the things that you offered and suggested in the book are just really great.
Melanie Lockert 40:24
Yeah, I think, you know, overcoming that fatigue requires you to set milestones for yourself that, you know, can keep you inspired, during the process. So for me, I would say, you know, after making $1,000 payment, I would, you know, be able to go to a coffee shop and have a nice drink after $5,000, I might go to the massage school and get a $30 massage, after $10,000 payoff, I might go for a day trip. So having these reward systems in place, so that I'm honoring the journey, and still having some fun, because they think that fatigue can happen, because you're just so focused on paying off the debt that it feels really not fun, do you have to incorporate some more fun throughout the journey to stay motivated as well. And I think that's just part of the process, you know, I would agree
Michele 41:13
In Profit First, some people always get twisted up by the title thinking that is that we're robbing the company of profit. But really what it's doing is it's creating a rhythm of creating and managing profit within the company, so that the company can be sustainable. And when we have debt and accompany one of the things that we do is we, we go through that same process of like, here's our profit distribution, but instead of distributing it to people, we distribute it to pay off debt, so that we understand number one, that we already have good habits in place of saving. But then we recognize acutely that until we pay off that debt, that additional savings doesn't get to come home with us. But we do make an allowance for some amount of that money to be able to be used to celebrate whether it's to have a pizza party with the team, or whether it's, you know, to do something small, just in recognition. So it's about getting in those good habits, finding ways to reduce waste and expense. But then at the same time, being able to treat yourself. It's so easy. I think, Melanie, I don't know if you've run into this in your work as well. But I I've seen some people that have a higher tolerance for debt in business than they do at home. But they don't always realize that it's tying them down the same way until it ties them down. And so just understanding that the principles that I share over on, you know, purely the business side, I don't really get into a lot of people's personal finances, we do look at it and go, Okay, if we can put these things in practice here, there, it certainly translates to personnel, and vice versa. All of the things that you've talked about from a personal budget personal debt standpoint, translates into the business. And that's why these are so intertwined. I remember watching or reading, I don't know what it was, I was looking at something a couple of months ago, and it was talking about one of the number one leading causes of divorce was actually I would have thought before I read it infidelity. But the number one cause was financial issues. And I was like, Oh my gosh, marriages break up more over finances than over an infidelity. And that one caught my attention. So it is seriously a big deal if you think about because it influences so much of what we do the day to day, how we think how we cope, what we do our mental health, our energy, all of it is tied to how we use money as a resource, whether we are making it work for us, or whether we're working for it. Debt kind of feels like we're working for it.
Melanie Lockert 44:05
Mm hmm. Exactly. Yeah. I think you know, finances is a huge pain point for couples, especially if they're on different pages. And in a to your point, I definitely think people can kind of, quote justify debt a little bit more in a business because it's a quote, investment. And while I understand that logic, to an extent, I think it can be easy to get carried away when, you know, we don't have a plan to get that return on investment.
Michele 44:34
I would agree with that. You know, something else that I thought about when you were talking a minute ago about treating yourself and you know, finding ways to to not get burned out on it. It's what we do when we do weight loss journey. Right? Like oh, when I lose X amount of weight or you know, I'm going to go on this vacation. I'm going to buy these cute jeans or whatever like we set goals is the same thing here. And you mentioned something about recognizing your spending triggers, which is the same thing when we're going through a struggle with eating that, that we're told, think about your triggers, what are your stress triggers that cause you to eat when you're not hungry? So it's interesting how are there are triggers that make us feel this urge or this need and desire to act a certain way or to do a certain thing, and they're not always for our health and our benefit? What were some of your spending triggers,
Melanie Lockert 45:34
two of my top spending triggers with two of my top spending triggers, which still persists today are hunger and exhaustion. So if I'm hungry, or extremely tired, I will just throw money at the problem. And suddenly, I'm spending, you know, 20, to $40, on a venti coffee, and a lunch, or some sugary tree, or whatever, and I just realized, you know, if I'm not getting adequate sleep, or if I'm not properly nourished, and I just spend money without care, because I'm trying to fix the problem, but then I overcompensate by, you know, buying all these things, and, you know, trying to solve the problem, where it's much easier to say, you know, what, let's try to get a good night's of sleep, let's make sure to have snacks on hand, you know, now, whenever I travel, or if I know I'm gonna have a long day, I bring bananas and granola bars and protein shakes, and things that I know that can help me stay nourished, and also not fall into that trap. But it took a while to be aware of that. And I think awareness really is the first stage and so realize, when are you spending more money than usual, when it seems like something's kind of guiding you there without like you wanting to do that, per se. And I think that's a good kind of indicator of what that trigger might be. And then try to reverse engineer at, you know, how can you prevent that from happening. And for me, that's why it's super important for me to try to get adequate sleep, and then also just have snacks on hand, because I know I don't make the best financial choices, you know, when I'm extremely hungry and tired. And I talked to this therapist on my podcast and mental health and wealth show. And she said something that has really stuck with me, and she said, you know, adults are not so different from toddlers, we're really just advanced chemistry sets. And when things are off, I mean, we're just going back to kind of our base urges and needs. And so really just think of yourself as these advanced chemistry sets and what your needs are. And once you have those basic needs, then you can make better, more optimal decisions.
Michele 47:40
It's funny that I think we used to always hear don't ever go to the grocery store when you're hungry. And it's true, because you pick up, you know, trash food and throw it all in my husband say, oops, look, those four things of Oreos fell into our basket. I wonder how that happened? You know, same kind of thing. Why is my grocery bills? That's right. He would be like the kids have left home, why are we paying more. But I also know one of the things like you had said kind of the reverse engineering it when we did some analysis of our own home spending, we realized that a large portion of our personal income was spent on eating out. And I think a lot of busy families and homes do that. And when we started having conversations about the body's digestion of food, where does it all go? Right? At the end of the day, we were like, look how much we just literally flushed down the toilet. sounds gross, but it's true. So then what we started doing was, at the end of the day, if we had not planned a meal, we had not thought in advance and kind of done some menu prep and that kind of thing. Instead of just jumping up to go out and grab something, we would start we start this conversation, not the whole Where do you want to go? I don't know, where do you want to go? That not that one that that happens too. But this one is are you craving anything? Is there anything that you think that you want so badly that you're willing to pay for it? And when we ask it that way, Melanie both of us have been like, you know, I'm not really craving anything. So then when we don't really want anything, there's nothing that we're just dying to have like there's not this, this urgent need, it's just more sustenance that we're looking for. It changes the way we look at paying for their sustenance because now going out to get you know a $50 steak is not what we really want because we're not even that hungry and don't even know what we want. And that's what we end up back in the kitchen either making a sandwich scrambling eggs grabbing some soup or like you say granola or something. Because it just we're not. There's nothing that is that important. And so it just kind of puts it in perspective. Are you willing to spend x amount of dollars to go eat Eat that when you're not even hungry and not sure what you want. And when we just kind of turn the question around, we both are like, Yeah, I'm not not really want to spend my money that way, I don't really want to spend my money that way. But if we're just looking at solving the urgent need of eating, and not thinking about the money, and what it cost and what else we're not going to be able to do later, we will just jump out and run out and go grab something.
Melanie Lockert 50:24
I love that reframe. Isn't that so useful?
Michele 50:27
It has been for us and so now, but what it also does is when we are craving something, it's like we've given ourselves permission to go enjoy it, because we don't mind spending the money because now it's what we want. We're looking forward to it. We're not just at the end of the day, going somewhere just to eat so that we can go home and watch a Netflix show and go to bed. Do you know what I mean? It's now it becomes an experience, it becomes something that we are planning for an excited about. And it sounds crazy, but the food tastes better when we go looking like that than what we were just solving an urge that we had in the moment. So that's just that's kind of one of our mind trick, magic tricks that have helped us not spend money when we don't need to. And you know, it sounds cliche, and I talk about all the time, but creating a budget has been huge, too. And so we've given ourselves permission to spend within certain allotments, because it also keeps us on the path for how we want to spend our personal money and our personal life with other things that we're saving for or that we want to do the same way that we would do in a business.
Melanie Lockert 51:35
I love that.
Michele 51:36
So as we wrap up today, Melanie, is there anything else that you can think that you would love to leave our listeners with about their mental health, about getting out of debt, changing their mindset, anything that we haven't covered that you think could be instrumental in helping them move that needle forward? Just a little bit?
Melanie Lockert 51:55
Yeah, I think you know, focus on the things that you can control and the things that bring you joy. I think right now, we're seeing so much change in the world, there's high inflation is high gas prices, wages have been stagnant for many years, there are a lot of things that are kind of hurting our finances that are not in our control. And, you know, I want people to use that in the way of like, don't think of this as just your problem if you're not making all of the numbers work perfectly. But there are many different systemic issues that are making it difficult. But what can you focus on? And where can you grow your income? Where can you lower your expenses? And what can you do to bring more joy and passion in your life, and earn more money? Because if you can tie some of your passion to making money, it'll be easier to make money as well.
Michele 52:43
Oh, I love that. So where are you hanging out online? Melanie? Where can people find you?
Melanie Lockert 52:49
People can find me at MelanieLockhart on Twitter and Instagram and also check out my podcast, the Mental Health and Wealth show. And as you mentioned, you can read my book to your debt and get that on Amazon.
Michele 53:00
That sounds awesome. I highly recommend the book. Quick, easy read, but just full of actionable information. And Melanie, thank you so much for taking the time to join us today. Thank you so much for having me. Thank you Melanie for sharing today. I love the honest approach to money management and debt reduction that you shared. If you're a successful business owner and you want to kick that debt to the curb, apply for a discovery call and let's make a plan to tackle your debt head on. Choose to be profitable by paying off debt because profit doesn't happen by accident. Profit is a choice is proud to be part of the designnetwork.org where you can discover more design media reaching creative listeners. Thanks for listening, and stay creative and business minded.