While many of the financial advisors who’ve reached household name status are Baby Boomers, Gen Xers, or even older Millennials, Gen Z has seemingly yet to find its resident money expert. Sure, some financial challenges, like paying down credit card debt or saving to buy a home, are universal — regardless of whether your birth year starts with 19 or 20. However, the solutions aren’t always one-size-fits-all across generations.
Most people never consider these 4 financial moves — and they’re leaving thousands on the table.
Middle-income Americans are quietly becoming millionaires. Copy their strategies and start building wealth.
Fortunately, a new expert has arrived on the scene. Caleb Hammer has become a social media sensation for offering tough, practical, and compassionate advice to people facing financial struggles.
In one video from his Financial Audit series, which garnered roughly five million views, Hammer confronted 27-year-old Rachel, a self-proclaimed “spiritual coach” with $80,000 in debt. While you might not be in her exact situation, there’s a lot to learn from her experience.
Trending Now: Suze Orman’s Secret to a Wealthy Retirement–Have You Made This Money Move?
Take an Honest Inventory of How You Ended Up in Debt
After getting Rachel to open up about her work — which, “woo woo” aside, is rooted in her passion for helping people — Hammer asked her directly: “Do you have a passion for credit card debt?” This blunt question made Rachel reflect on her relationship with credit, revealing that she hadn’t even gotten her first credit card until about two years ago.
So how did she rack up so much debt in such a short period of time? She hadn’t realized that the nature of “spiritual coaching” meant experiencing both busy and not-so-busy seasons. During the off-seasons, she’d essentially lived off her credit cards.
While the slings and arrows of any business can be tough to navigate, Hammer asked Rachel another difficult question: Had she seriously not done any market research about the industry, or any planning for what to do during the off season? Apparently, she hadn’t.
Rachel’s lack of research and planning led her to become, as Gen Zers say, “delulu” (meaning delusional) about her ability to support herself. This mindset allowed her to get a little too careless with her credit card use.
Have a Realistic Budget
During her conversation with Hammer, it also became clear that Rachel didn’t have a firm grasp of what her income actually looked like. She was too lost in visions of other coaches bringing home $40k a month. Hammer gently pointed out that this sure did sound nice, but then he zeroed in on how much she actually did take home. Which was, shall we say, decidedly less than $40k a month — though still not bad at all.
On a low month, she told Hammer, she could make about $2,000-$3,000, while an average month could bring in $6,500. Not bad at all. In fact, it was higher than the national average for income.
So why, Hammer wanted to know, was she in so much debt? Since Rachel wasn’t accustomed to making that kind of money initially, she ended up blowing through it — between necessary expenses like rent and her business LLC filings, and a slew of transactions for Starbucks, random Venmo payments, and poorly organized payments on her credit cards and other bills.
Indeed, Rachel couldn’t even remember spending $100 on something for Arc My Chart, compelling Hammer to quip that he didn’t like her spending that much on “something you can’t even think of.”
All snark aside, Rachel wasn’t living within her means, and she certainly didn’t have an organized, realistic budget. To get out of debt and avoid falling into the same trap again, she needed to start reigning in her spending, getting clear about where her money was going, and creating a more streamlined budget.
Learn How to Save Money
Hammer was characteristically blunt about the root of Rachel’s problem: “You don’t know how to save money.” While getting out of debt was on her vision board, she hadn’t taken any real steps to make it a reality.
Rachel had small accounts on Acorns, the investing app, which she regularly raided — essentially robbing Peter to pay Paul when it came to her debts. Hammer quickly pointed out that someone in her level of debt shouldn’t have these kinds of accounts and should instead focus completely on paying off their debt. He also noted that Rachel was treating these investment accounts like a piggybank, not allowing them to grow interest or work for her.
Have you seen these 4 TikTok-viral money hacks? (They can save you thousands.)
At the end of the day, her biggest issue was that she didn’t know how to save from the months when she earned $6,500, ensuring she could cover her bills during leaner times. Rachel was going to have to set aside the vision boards, smash the rose-colored glasses, and get focused.
Learning to save more efficiently and strategically was the crux of Rachel’s issue — and it’s something many people — including those who’d roll their eyes at the idea of a “spiritual coach” — could benefit from.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Caleb Hammer Has Some Hard Truths For a 27-Year-Old With $80K in Debt
