Financial Curveballs: How to Take a Hit, Make a Plan, and Come Back Stronger

Lynnette Khalfani-Cox:[00:00:00] If you have sleepless nights or anxiety or depression, and you’re worried about your finances [00:00:05] and your bills, that’s telling you something, right? And for a lot of folks, part of what tends to right the [00:00:10] ship is starting to make choices that are in alignment with their values.[00:00:15][00:00:20]

Jennifer Borget: Welcome back to A Better Way to Money. I’m Jennifer Borget. According to a recent Northwestern [00:00:25] Mutual survey, one in three Americans admit to spending everything they earn each month, [00:00:30] including a lot of people who, on paper, look like they’re doing just fine—a [00:00:35] good salary, a nice house, a life that looks solid from the outside, not [00:00:40] a paycheck-to-paycheck situation.

Today’s guest knows that story better than almost [00:00:45] anyone. Lynette Khalfani-Cox, known as The Money Coach, spent nearly a decade as a Wall [00:00:50] Street Journal reporter for CNBC, covering personal finance for a living, and the whole [00:00:55] time she was quietly carrying over $100,000 in credit card debt. [00:01:00] Eventually, she paid it all off and wrote Bounce Back: The Ultimate Guide to Financial [00:01:05] Resilience, the book she wishes someone had handed to her when things were at their worst.

[00:01:10] Whether a financial curveball comes out of nowhere or you experience a slow [00:01:15] creep into a place you don’t want to be, this conversation is for you. Before we get into [00:01:20] it, if you want to take control of your finances right now, grab Northwestern [00:01:25] Mutual’s free Family Finances workbook at [00:01:30] northwesternmutual.com/podcast.

All right, let’s dig in. Money stress [00:01:35] has a way of quietly taking over even when everything looks fine on the outside, and I know [00:01:40] you know that firsthand. You were a Wall Street Journal reporter for CNBC covering [00:01:45] personal finance for a living while also carrying over $100,000 in [00:01:50] credit card debt.

So, take us through what that chapter of your life was like.

Lynnette Khalfani-Cox: Well, in a lot of [00:01:55] ways, I tell people now that when I was deep in debt, I was very much in [00:02:00] denial. I had this sort of misconception that because I [00:02:05] wasn’t missing any payments, that it was okay somehow, the debt that I was carrying. [00:02:10] I was like, “What’s the problem? Debt collectors aren’t calling me. They’re not banging down my door. [00:02:15] I don’t have any late payments on my credit report.” And so I [00:02:20] felt like I was lulled into a false sense of security. Also, I had a really [00:02:25] good-paying job. I was making a very nice six-figure salary. So I was like, [00:02:30] “Everybody has debt. What’s the problem?”

But obviously, it was [00:02:35] a problem. It did get to the point where I was like, “This is [00:02:40] excessive.” I was maxed out with my credit [00:02:45] cards and all of the things that I was using to kind of float the lifestyle. [00:02:50] And so after a while, I got fed up with that. I was like, “Okay, this is [00:02:55] insane to live this much on the edge financially.”

I knew I had to make a change.

Jennifer Borget: [00:03:00] Debt is so easy to rationalize, right? People will [00:03:05] say, “I’ll deal with it after my next paycheck. I deserve this; it’s [00:03:10] not that bad yet.” A lot of us have been in these types of situations, [00:03:15] so when you were in it, what were you telling yourself, and how did the story you were [00:03:20] telling yourself change as the debt kept growing?

Lynnette Khalfani-Cox: Well, part of what I told [00:03:25] myself was “I’m handling this. This level of debt is sort of [00:03:30] normal. I can deal with it.” And the [00:03:35] rationalization came in because, A, I wasn’t missing payments; B, I had a good [00:03:40] income and a good job; and C, I felt like I could[00:03:45] “afford a lifestyle” that I clearly was not able to [00:03:50] afford.

So, it was just like a little perfect storm of [00:03:55] mental gymnastics, where you just convince yourself and maybe[00:04:00] gaslight yourself into thinking everything is okay when deep [00:04:05] down, subtly, like emotionally, you know it’s [00:04:10] not. And the red flags, the warning signs that I had too [00:04:15] much debt were absolutely there.

Jennifer Borget: And then you turned [00:04:20] everything around. You managed to pay off your debt in three years. You went [00:04:25] from making minimum payments—“Hey, I’m making my payments”—to not missing [00:04:30] a single payment while also launching a business, raising a family. Walk us through what [00:04:35] that strategy was, as well as your mindset that you had to have.

Lynnette Khalfani-Cox: Sure. [00:04:40] At the time, I wish I could say that there was some magical strategy to it [00:04:45] or some complex formula that I put together or some step [00:04:50] one through five that I knew to take to make it all magically disappear. Not by a long [00:04:55] shot. Some of it was trial and error. For me, one [00:05:00] of the strategies that I started doing was not paying minimum payments. [00:05:05] Again, I now realize that minimum payments in the short run [00:05:10] really mean maximum payments in the long run.

So, it felt comfortable to pay [00:05:15] minimum payments because I was like, “Okay, good, this is good for my cash flow.” But of course, [00:05:20] doing that—minimum payments only—is just like making the banks and the credit card [00:05:25] issuers get rich off of you because your credit comes at a [00:05:30] cost, which is their profit, and I don’t begrudge them their right to make a profit.

But [00:05:35] every time you extend and delay and put off [00:05:40] making more aggressive principal payments on your [00:05:45] debt, it just keeps you stuck in that cycle month after month, year after [00:05:50] year. So I started doubling and tripling the [00:05:55] payments that I was making to allow me to chip away at my obligations [00:06:00] at a much faster clip.

I negotiated some of my [00:06:05] credit card interest rates; as a matter of fact, I just got on the phone and asked [00:06:10] all of my creditors for lower interest rates. Literally nine times out of 10, when [00:06:15] I would ask, they would do it. And so I found out that a lot of [00:06:20] times, getting such deals is yours for the asking.

But a lot of [00:06:25] people don’t want to ask. They feel like, “Oh, it’s me against the big, bad bank,” and they’re [00:06:30] reluctant to do so. I tell people now, “Don’t be afraid to ask. [00:06:35] A closed mouth doesn’t get fed.”

Jennifer Borget: That’s a really good tip, asking for the lower rate. [00:06:40] You know, you’re getting these offers in the mail, and you’re like, “Dang it,” but just ask the bank you’re already [00:06:45] with.

Now, I know not everyone’s story looks the same, but at some point most of [00:06:50] us are going to face some kind of setback, right? So, your book Bounce Back is [00:06:55] built around what you call the Dreaded D’s. Walk us through this list. What are we [00:07:00] actually talking about, and why is it smarter to plan for the hard stuff than to [00:07:05] assume it’s just never going to happen?

Lynnette Khalfani-Cox: Well, even though I personally am not a millennial [00:07:10] (I’m a member of Gen X), when I was in my [00:07:15] 30s and early 40s, that’s when stuff started going south [00:07:20] in a lot of ways, and I started personally encountering a lot of the so-called [00:07:25] Dreaded D’s. It’s things like Downsizing from a job, a Death in the [00:07:30] family of a main breadwinner, Divorce, Disability, [00:07:35] Debt (of course), and Damaged credit. Even things like [00:07:40] Discrimination, which packs a powerful punch, emotionally and financially. [00:07:45]

And so I tell people that, again, none of us is immune [00:07:50] to these life challenges, right? What I share with people now [00:07:55] is that the smarter way to move in your life [00:08:00] and in your personal finances is to anticipate and to plan [00:08:05] around some of these things that are just naturally, cyclically, and [00:08:10] statistically likely to happen to all of us at one point or another.

Jennifer Borget: You’ve been [00:08:15] running a personal finance education company since 2003, and I think it’s great because you’ve [00:08:20] actually lived these things that you’re telling people about. Are you [00:08:25] seeing anything new or different in how people are experiencing these setbacks or how people are [00:08:30] thinking about them these days?

Lynnette Khalfani-Cox: I am seeing some differences. We’ve certainly [00:08:35] seen evolution in the types of debts that people have succumbed [00:08:40] to. I remember when there were peer-to-peer loans—P2P [00:08:45] loans came in vogue and were very popular. Right now it’s BNPL: Buy now, [00:08:50] pay later, and that’s a huge category for a lot of millennials.

[00:08:55] Again, the research around this—and I’ve been sounding the alarm about it, to be honest, but [00:09:00] the research around this that we’re seeing is that the people who get into [00:09:05] debt with things like buy now, pay later, they are more [00:09:10] likely to be millennials or younger people, or they’re more likely to have already faced [00:09:15] a Dreaded D and a setback. They may have been [00:09:20] priced out or not have credit, traditional forms of credit, like credit cards [00:09:25] at their disposal. So now to be able to afford a lifestyle, to keep [00:09:30] up, to buy things, to purchase what they want, et cetera, whether that’s travel, [00:09:35] clothes, electronics, furniture, anything that they can put on a type of installment [00:09:40] plan, the thinking is, “I’ll pay this off in three equal payments.”

[00:09:45] The idea is that this is no interest, so this is going to be good for me. This is a better [00:09:50] form of obligation. It’s not a traditional credit card debt. [00:09:55]

Well, again, we’re seeing some of the numbers come out from this now. A lot of millennials [00:10:00] and others are saying, “Oh my God, I regret this,” because they have so many buy now, pay later [00:10:05] obligations that they can’t even keep up with or they’re not tracking appropriately.

[00:10:10] We’ve seen an evolution in terms of products that are [00:10:15] offered to people. We’ve seen an evolution in terms of people’s abilities to [00:10:20] handle debt. In my estimation, I think the debt problem in America has gotten [00:10:25] worse over the last two decades, unfortunately, not better.

[00:10:30] So much of consumer spending, 70% of the economy, is [00:10:35] built around debt and around consumer spending, but also jobs, right? To the [00:10:40] extent that people feel comfortable and they feel like, “Okay, my job is secure,” then [00:10:45] they’re willing to spend; they’re willing to take on credit and loans of various kinds. [00:10:50] But obviously right now we’re dealing with an uncertain economy at so many levels. [00:10:55] Inflation is still rearing its ugly head, and I think that for a lot of [00:11:00] people, they feel like the walls are closing in a little bit here—that there’s [00:11:05] just too much to handle.

Jennifer Borget: And you talked about buy now, pay later. I think of [00:11:10] my vice: Sometimes I was like, “I’m never paying for a monthly [00:11:15] subscription. I hate monthly subscriptions.” But now there are so many things that I have, [00:11:20] and I have to weigh “Okay, do I do the annual? Do I do the monthly?”

I usually do the annual to save [00:11:25] money, but then sometimes I stop using it and I forget, and then it renews. You forget ... [00:11:30]

Lynnette Khalfani-Cox: We’ve all done that. Yes. We’ve all totally done that. [00:11:35] And listen, we’ve moved to a subscription-based economy. You know, [00:11:40] when you asked about what’s different now, a lot has changed. I was [00:11:45] referencing jobs. I want to complete a thought there ... because AI, obviously that’s something new, right? Right. And to the extent that AI [00:11:50] is now, [00:11:55] in part, responsible for an ongoing trend of job [00:12:00] losses, that’s taking away people’s feeling of comfort and security. [00:12:05] And for some people, it’s forcing them to turn toward debt. If they haven’t [00:12:10] righted the ship before or set a game plan for how you deal if you [00:12:15] have, say, one income in the family now where you previously had two, [00:12:20] then the typical thing that people do is rely on plastic or on credit of some [00:12:25] form.

So yeah, we see that people are turning to credit [00:12:30] cards more often, turning to buy now, pay later; turning to personal loans; [00:12:35] or they’re part of that gig economy, right? Another shift that we’ve [00:12:40] seen where it’s like, “Let me have a side hustle. Let me have a freelance contract job. Let me have a [00:12:45] second or third position.” And there’s only so far hustle culture can [00:12:50] take you. Because keep living, as I’ve [00:12:55] done. It gets exhausting, and you’re just like, “What am I working for? I’m just literally working to keep a roof [00:13:00] over my head.”

So yeah, we’re up to our eyeballs in debt in this [00:13:05] country, and it really does behoove us to think about what are the strategies [00:13:10] to mitigate some of this and to make sure that we don’t [00:13:15] wind up in a spiral where it kind of seems hopeless and [00:13:20] helpless. Because that’s where they get stuck, where they feel like, “Ugh, I can’t get out of this.” [00:13:25] Or they kind of throw in the towel mentally. They may not say it, or sometimes they do, [00:13:30] but when you’re deep in debt, and I know this, again, from personal experience, there’s [00:13:35] a part of you that goes, “I already owe $30,000. What’s another thousand or two?” [00:13:40]

When you want to do something or rationalize or justify it or say, “Oh, just this one time” [00:13:45] or whatever, it tends to create this mindset like, [00:13:50] “Jeez, I’m already screwed here. How much worse can it get?” You know, that kind of [00:13:55] thing.

Jennifer Borget: Life events don’t come with a warning. A layoff, a [00:14:00] health scare, a divorce, a new baby. Any one of them can completely reshape [00:14:05] your financial picture overnight. And the people who recover fastest aren’t the ones who [00:14:10] earned more or saved perfectly; they’re the ones who had a real plan in place before [00:14:15] things got complicated. That’s exactly what a Northwestern Mutual advisor is there for.

They’ll work [00:14:20] with you to build a financial plan that’s designed around your actual life, your income, your [00:14:25] goals, what you’re protecting, and what you’re building, so that when life takes you off course, you’re [00:14:30] not starting from scratch.

Coming up, Lynette gets specific: the new reality of [00:14:35] debt, the practical moves, and her best advice for people who feel like their spending is [00:14:40] slowly getting out of hand. Let’s bring her back in.

I’m curious what you [00:14:45] think some of the big warning signs are. I know sometimes when we think of other people [00:14:50] and their debt, we look at it differently. There’s that movie Confessions of a Shopaholic (I don’t [00:14:55] know if you’ve seen that), where she has to freeze her credit cards because she just loves shopping and she’s addicted to [00:15:00] that.

But it’s not necessarily like that experience for everyone. So, from your own personal [00:15:05] experiences as well as maybe your professional knowledge, what are some of the big warning signs that the [00:15:10] debt someone’s accumulating is dangerous for their financial health versus something [00:15:15] that’s maybe normal for this stage of life?

Lynnette Khalfani-Cox: Well, “normal” is a [00:15:20] really weighty, loaded, subjective kind of word. [00:15:25] So I guess part of what I would say is it’s really not the financial [00:15:30] side as much, because honestly, people know the financial side. If you’re like, “I can’t pay my [00:15:35] bills. I don’t have enough money to pay my bills,” you know that’s a problem.

But I think that, [00:15:40] really, where we first get information and get data that’s [00:15:45] relevant is in our own minds and our emotions and our [00:15:50] hearts and in our relationships. The personal stuff shows up [00:15:55] before the actual financial stuff shows up. And here are some examples [00:16:00] of what I mean by that.

If you are stressed to go to the [00:16:05] mailbox or to open up your credit card statement, that’s telling you something, [00:16:10] right? If you’re like, “Oh, I got a bad feeling in the pit of my stomach,” if you have sleepless [00:16:15] nights or anxiety or depression, and you’re worried about your finances and your bills, that’s a [00:16:20] strong signal.

If you’re arguing with your partner or your spouse over money issues [00:16:25] or who spent what and whatnot, again, those are all tells [00:16:30] that your finances need more attention, more love and attention, more time [00:16:35] spent, and perhaps a reorienting of things. [00:16:40] And for a lot of folks, part of what tends to right the ship is starting [00:16:45] to make choices, spending choices, investment choices, [00:16:50] debt payoff choices, et cetera, that are in alignment with their values and what they [00:16:55] really want and what they say they want.

Sometimes there’s a disconnect. People might say, [00:17:00] “I totally value education. This is so important to me.” And then you’re like, “Oh, okay, are you [00:17:05] saving for your kid’s college education?” They’re like, “Uh, not yet.” You know? And it’s like, [00:17:10] “Okay, well, how important is that education really for you? Because you know you had student loan [00:17:15] debt; and you know when your kid, who’s now three years old, 15 years from now, [00:17:20] college is going to be a lot more expensive.”

Sometimes we try as money [00:17:25] coaches and as financial experts to help people to close the gap between what [00:17:30] they actually do and what they say they want or what they say they want [00:17:35] to do. And it’s not for us to judge. It’s not for us to point a finger or to wag [00:17:40] our ... and say, “Oh, you’re doing something bad or wrong” because all the shame and the blame and all that, honestly, [00:17:45] it doesn’t work. It’s counterproductive. It’s easy for us to say, “Well, jeez, you [00:17:50] make $60,000 a year. You can’t spend $70,000.”

On math, on paper, of course, [00:17:55] we know that. Yeah, of course you don’t spend more than you earn. Duh, we get it. But [00:18:00] have we taken the time to kind of do a deep dive with somebody and to talk through [00:18:05] what it is that they’re spending on? If they’re saying, “I go [00:18:10] out to eat three times a week,” or, “Every Friday night, my friends and I do this,” and you ask [00:18:15] them, “So, what do you get out of that? And do you feel like what you’re doing is about [00:18:20] right, a healthy amount, a little less than you’d like, or more than you’d like?” Let them come [00:18:25] to the answer on their own. Sometimes when they kind of talk it out and look [00:18:30] at it, they’re like, “Honestly, I don’t really need to go out three times a week. I could probably do like once a [00:18:35] week and maybe cut back here or ...” You kind of explore things with them, [00:18:40] again, without judgment.

I mentioned to you before that I didn’t have a [00:18:45] plan at first, right? I knew the advice; people were like, “Pay off your high interest rate credit card [00:18:50] debt first.” That absolutely didn’t work for me, not at all. Now, [00:18:55] again, two decades into this, I don’t teach people that method. I tell people, “Attack your [00:19:00] own area of pain. Whatever it is that’s bothering you, [00:19:05] go after that most aggressively first.” Because that’s what somebody’s going to stick [00:19:10] with over time. They’re going to see the results of their actions, and they’re going to feel good about it. [00:19:15]

Some people, yes, they’re really upset, especially in this current interest rate environment. [00:19:20] They’re like, “Oh my God, my credit cards are like 20-something percent. I can’t stand to see all this. I’m paying [00:19:25] these payments, but my balances aren’t really shrinking.” That frustrates them, so maybe they [00:19:30] do want to focus on high interest rate debt. But other people have a [00:19:35] lot of credit cards outstanding, and they’re like, “I can’t even keep up with it all. I’m juggling. I [00:19:40] forgot. I missed payments. I got dinged with a late payment.” And for those [00:19:45] people, the better strategy is actually to pay off the cards with [00:19:50] the lowest dollar balance first so little by little, they can [00:19:55] chip away and eliminate some of the cards. They might have a card that has just [00:20:00] a $400 balance on it. Maybe they pay $200, $200, that one is gone. And then they [00:20:05] take the next $200 that they were applying, and they go to the next card. So [00:20:10] that’s another strategy to address that person’s pain point.

[00:20:15] I know that was a long-winded way of what I’m trying to say, but really the strategy is [00:20:20] tackle the pain point. Whatever’s bothering you, [00:20:25] go after that first, and marshal more resources toward that.

Jennifer Borget: [00:20:30] I know you’ve mentioned this, and you talk about this in your work, how shame [00:20:35] surrounds the financial struggle. Why does that silence [00:20:40] about it make the problem so much worse, and then how can people start to [00:20:45] break it?

Lynnette Khalfani-Cox: I think the reason that shame really prevents [00:20:50] people from moving ahead with their finances in general, and certainly with debt, is that it [00:20:55] prevents them from reaching out to get help. And so many [00:21:00] times it’s one phone call could turn the tide.

[00:21:05] Unfortunately, most of us who’ve been in debt, we suffer in silence. And [00:21:10] for those of us who are college educated, it’s almost worse. [00:21:15] We’ll say things—for me, I’ll say, “I have a master’s degree. I should have been [00:21:20] smarter than this. How could I have gotten myself into this hole?” Or we’ll say things like “I made my [00:21:25] bed; I have to lie in it. I got myself into this, I have to get myself out.” No, you don’t. [00:21:30] You don’t have to do this alone by any stretch of the imagination.

[00:21:35] One of the things that I share in Bounce Back, the first couple of chapters, is not personal finance [00:21:40] advice. It’s not like prescriptions on how to financially recover immediately. No, the [00:21:45] first part is about getting your mind right. It’s about establishing [00:21:50] community and connections and doing a lot of self-care to be able to [00:21:55] move forward in the best possible manner. [00:22:00] So, one of the things that I talk about in Bounce Back is getting help, [00:22:05] not being afraid to reach out.

We also think [00:22:10] mistakenly that we’re the only ones. We’re like, “Okay, everybody else is out there”—you’re seeing your friends on social, [00:22:15] traveling, living their best lives (ostensibly living their best lives), you know? [00:22:20] They’re giving you the curated social media version. You don’t see the stress when [00:22:25] the bills come.

But the idea is if you [00:22:30] have connections of various kinds, the people who recover from setbacks [00:22:35] like the Dreaded D’s more quickly and in a more robust [00:22:40] and full manner are those who prioritize community and people [00:22:45] and relationships. It’s not really like the personal finance advice that people are like, “What? [00:22:50] This sounds kind of woo-woo here. What are you talking about?”

Having the right people helps in [00:22:55] so many ways. Lost your job? Okay, you might take some time, [00:23:00] take a beat to regroup because it’s a devastating emotional blow to get a pink [00:23:05] slip, right? But then when you get back in the saddle and start searching for another [00:23:10] job if you’ve been downsized, and that’s the Dreaded D you’re facing, who’s going to [00:23:15] help you to get that next one? Probably a friend, a colleague, a former [00:23:20] co-worker, somebody you know. Having those relationships can help you to [00:23:25] get reoriented in the job front. Again, people who’ve gone through a divorce, I’m not telling you to jump [00:23:30] back in the saddle there immediately and try to go, “Let me find another [00:23:35] spouse.”

Jennifer Borget: Yeah, that’s one way to do it!

Lynnette Khalfani-Cox: It could be, you know? But [00:23:40] later, after you’ve processed, you’ve done your own work, and you’re [00:23:45] ready, it might be your social circles or connections. It could be [00:23:50] through your church, your synagogue, your mosque. It could be through your [00:23:55] place where you volunteer or do any kind of civic engagement, [00:24:00] social activities that you do.

It's going to be the relationships and the people around you, and you’re like, “Oh, wow, I just happened [00:24:05] to meet somebody. I wasn’t even looking” kind of thing, you know? So, it’s better to get [00:24:10] yourself together first before you go on to the next phase whenever you’re trying to recover [00:24:15] from one of the Dreaded D’s.

Jennifer Borget: Now, Lynnette, I want to ask you a little bit about savings too, like [00:24:20] emergency funds, savings. That’s for long-term goals. That’s kind [00:24:25] of Personal Finance 101. But contributing to those things while you’re already [00:24:30] in debt can feel really impossible. So how should we be [00:24:35] reframing this problem? How can we have a financial plan, [00:24:40] and how can that help achieve this balance while we’re in debt and we’re also trying to [00:24:45] save?

Lynnette Khalfani-Cox: Well, Jen, you said the key word, “balance,” and I’m often [00:24:50] asked, “What should I do first? Save more money or pay off debt?” And sometimes people [00:24:55] don’t like the answer because you have to do both simultaneously. [00:25:00] I know it’s hard; I know it’s a challenge, but there’s a method to this [00:25:05] madness, and there’s a reason why doing one or the other [00:25:10] exclusively actually hurts you financially in the long run.

If you, say, [00:25:15] just want to focus on debt payoff—if you’re taking your income, for [00:25:20] example, and you’re like, “I can’t take it with these student loans or this credit card debt or these buy now, [00:25:25] pay later obligations, and all I want to do is just focus on getting rid of the debt, that’s it, that’s it, that’s it,” [00:25:30] and you don’t have any savings whatsoever, let me tell you what’s going to happen.[00:25:35] Something is going to go wrong in your life. It might not be one of the big Dreaded D’s. [00:25:40] It could be a smaller thing. You might get a flat tire. Your toilet could [00:25:45] leak in the house or an apartment, and you absolutely have to call a plumber. Now, all of a [00:25:50] sudden, your $200 tire or your [00:25:55] $500 plumbing visit, the bill is due, and you have no [00:26:00] savings whatsoever.

So, what are you forced to do? Whip out the credit card, [00:26:05] relying on plastic, and then you go deeper into the cycle of [00:26:10] debt. Without that emergency savings on hand, you [00:26:15] put yourself back in that debt cycle time and time again. [00:26:20]

Ditto for the opposite end of things. If you’re like, I just want to keep [00:26:25] saving because I’m trying to reach a goal, or I want to do this, and I’ll worry about the debts later,” [00:26:30] if you only focus on saving, saving, saving so much that you’re not aggressively paying [00:26:35] down that credit card debt (you could still be making your payments), your debt balances [00:26:40] actually grow, especially given double-digit interest rates. So, [00:26:45] again, you have to do both.

Jennifer Borget: And a lot of people think that they want to do this later. [00:26:50] They are like, “I’m going to wait. I’m going to [00:26:55] worry about paying off all that until after my kids are through school. Things are going to settle down a little bit.” [00:27:00] What would you say to someone who keeps waiting for the right time to start [00:27:05] this, and what are the moves they should be making right now no matter what position they’re in?

Lynnette Khalfani-Cox:[00:27:10] There is no ideal time to start. I don’t know if it was Warren Buffett or [00:27:15] somebody else who said the best time to plant a tree was yesterday, you know? [00:27:20] And the next best time is now, today. You have to get it going [00:27:25] to be able to plant those seeds that later you can profit [00:27:30] from.

It’s always better to ... if you think something is of value to you right now and [00:27:35] aligns with your values and what you think is important, better to start now, whether that’s [00:27:40] saving, paying off debt, investing, being prudent with your [00:27:45] finances overall, looking for ways to connect with professionals.

If you think [00:27:50] it’s a good strategy—and I absolutely know that it is—to have advisors, [00:27:55] then why wouldn’t you start assembling your team now? You can look for a [00:28:00] financial advisor. You can look for a CPA. You can look for a money [00:28:05] coach or just an educator of any kind that you feel aligns and can teach you something. [00:28:10] You don’t have to wait for some magical point in the future to [00:28:15] get started.

Jennifer Borget: Lynette, for people listening right now, there’s a lot of millennials who [00:28:20] are experiencing their first ever real financial curveball, maybe a [00:28:25] Dreaded D, a layoff, a medical bill, a divorce. What’s the first [00:28:30] move when everything feels like it’s falling apart? What should they do?

Lynnette Khalfani-Cox:[00:28:35] I think the first step after you’ve had a setback is to take a step back [00:28:40] and to assess. This is a hard thing for people to do [00:28:45] because the inclination, the instinct, is, “Let me fix it. Let me jump right back in. [00:28:50] I lost a job; let me go back out there and go get another job,” or “I had a [00:28:55] credit problem; let me just try to double down on that and do something to fix the credit problem.” [00:29:00]

But without any sort of thought or analysis or expertise or [00:29:05] guidance, and you could have just restarted the clock. It’s not always a good idea to [00:29:10] just be like, “Let me just fix the problem. Let me just jump right back in there.” The first step is [00:29:15] actually pause, do nothing, sit still [00:29:20] because the emotion that is tied to whatever event [00:29:25] that’s gone on means that you’re just not in your right perfect or more [00:29:30] ideal frame of mind to make good financial choices.[00:29:35]

I know it’s counterintuitive, but the pause [00:29:40] is actually part of the process. The pause is actually part of what [00:29:45] will help you to move forward.

Jennifer Borget: That’s Lynette Khalfani-Cox, [00:29:50] the money coach, New York Times bestselling author, and someone who’s lived every [00:29:55] part of this conversation. Here’s what her story makes clear: It never feels like the right time to [00:30:00] get your finances together. Life doesn’t wait. A layoff, a medical bill, a [00:30:05] relationship ending, any of life’s curveballs can hit before you feel ready, but the earlier you have your [00:30:10] plan, the less it knocks you off course.

That’s where a Northwestern Mutual advisor comes [00:30:15] in. They’ve seen it all, the debt, the avoidance, the pivots, the fresh starts.[00:30:20] They’re not there to judge where you’ve been. They’re there to help you build a flexible [00:30:25] plan that can keep up with whatever life throws at you next. Start with Northwestern Mutual’s free [00:30:30] Family Finances workbook at northwesternmutual.com/podcast. And when you’re [00:30:35] ready to talk to someone, an advisor is right there.[00:30:40]

Next time on A Better Way to Money ...

Jonathon Gais: There’s always something that [00:30:45] feels like I’m just not ready yet. There’s some hurdle in the way, and being able to just start the plan [00:30:50] matters more than if the plan is perfect.

Jennifer Borget: We’ve spent this season talking about the big [00:30:55] life moments that reshape your finances, but what about the blind spots hiding in plain [00:31:00] sight?

Jonathan Gais from Northwestern Mutual joins us to talk about what most people get [00:31:05] wrong about money, why intention matters more than income, and how to finally close the gap [00:31:10] between what you know and what you do. Tap “follow” in your podcast app so you don’t miss it.[00:31:15]

Northwestern Mutual is the marketing name for Northwestern Mutual Life Insurance Company (NM) [00:31:20] and its subsidiaries, including Northwestern Mutual Wealth Management Company (NMWMC), [00:31:25] investment advisory services and federal savings bank.

[00:31:30] NM and its subsidiaries are in Milwaukee, Wisconsin. Not all Northwestern Mutual representatives [00:31:35] are advisors. Only those representatives with “advisor” in the title or who otherwise [00:31:40] disclose their status as an advisor of Northwestern Mutual Wealth Management Company [00:31:45] (NMWMC) are credentialed as NMWMC representatives to [00:31:50] provide advisory services.

Lynette Khalfani-Cox and themoneycoach.net are [00:31:55] not affiliated with Northwestern Mutual, and the views expressed by Lynette Khalfani-Cox do not [00:32:00] necessarily represent those of Northwestern Mutual or its subsidiaries.