Discover all of the podcasts in our network, search for specific episodes, get the Optimal Living Daily workbook, and learn more at: OLDPodcast.com.
Episode 3612:
Jeff Rose explains practical steps for gaining control of debt by creating a realistic budget, tracking income and expenses, and identifying true disposable income. He also shows how cutting unnecessary spending and using extra cash to make debt overpayments can help reduce debt faster and lower overall interest costs.
Read along with the original article(s) here: https://www.goodfinancialcents.com/simple-ways-to-improve-your-debt-management-skills/
Quotes to ponder:
"Budgeting is about knowing how your finances work and controlling what you do with your money, in other words, not letting your money control you!"
"Your disposable income is essentially the amount you have left on a monthly basis to pay towards your non-priority debts and, if you have any spare after doing this, to save and to spend on non-essential goods/services."
"Overpaying your debts can be an excellent way to improve your debt management skills."
Wealthfront’s high-yield Cash Account: https://wealthfront.com/OFD
This experience may not be representative of other Wealthfront clients, and there is no guarantee of future performance or success. Experiences will vary. The Optimal Finance Daily Podcast, Diana Merriam (collectively "Media Partner") are not clients of Wealthfront. The Media Partner receives cash compensation from Wealthfront Brokerage for this paid endorsement placed in their video, creating a conflict of interest. More details available via the referral link. The Direct Deposit Plus Investing Program from Wealthfront Advisers LLC and Wealthfront Brokerage LLC provides eligible clients a 0.25% APY increase above the base APY on eligible Cash Account balances (up to an overall boosted rate of 4.30% for a limited time when including the 0.75% APY boost for new clients) when you direct deposit $1,000 a month, plus open, fund, and maintain an investing account. Wealthfront may change or end the program at any time and determine eligibility at its discretion. Terms apply. Full details at wealthfront.com/promo-terms.
The Cash Account, which is not a deposit account, is offered by Wealthfront Brokerage LLC ("Wealthfront Brokerage"), Member FINRA/SIPC. Wealthfront Brokerage is not a bank. The Annual Percentage Yield ("APY") on cash deposits as of January 30, 2026, is representative, requires no minimum, and may change at any time. References to the APY for the Wealthfront Cash Account, including any APY increase, are to the APY paid by insured depository institutions that participate in our cash sweep program (the "Program Banks”).. Wealthfront Brokerage sweeps cash balances to Program Banks, where they earn the variable APY.
Investing involves risk, including the possible loss of principal. Securities investments are not bank deposits, bank-guaranteed or FDIC-insured, and may lose value. Investment advisory services are provided by Wealthfront Advisers LLC, an SEC-registered investment adviser.
Learn more about your ad choices. Visit megaphone.fm/adchoices
[00:00:00] Evening, buyer's remorse. Buy a new car? I'll be moving in. Let's get started. Uh, sorry, I think there's been a mistake. I bought it from Carvana. You what? Yeah, great price. I even have seven days to love it or return it. So there's no... No, no buyer's remorse. More like buyer's rejoice? Ugh, I guess I'll let myself out. Congratulations! I mean it! Buyer's rejoice. Buy your car today on Carvana. Limitations and exclusions may apply. See our seven-day return policy at Carvana.com.
[00:00:29] Heat up your 4th of July at The Home Depot with our wide variety of grills under $300 and make every gathering one to remember. Give your outdoor space a glow up. Whatever your budget is, with savings on seasonal plants starting at $5. With the grill fired up and your backyard set to perfection, you'll be able to invite friends and family over to kick off the party. Start celebrating with low prices guaranteed at The Home Depot. Prices may vary by store. Exclusions apply. See home-depot.com slash price match for details.
[00:01:00] This is Optimal Finance Daily. Simple ways to improve your debt management skills by Jeff Rose of GoodFinancialSense.com. With the economy finally out of recession, it's never been more important to take a look at your financial situation and tweak what you can to improve your debt management skills.
[00:01:21] With so many of us falling into debt and the nation's finances a lot weaker than they were, it's best that you do what you can to keep on top of your debt. Here are a few tips on how you could improve your debt management skills. Number one, create a budget. Budgeting is about knowing how your finances work and controlling what you do with your money. In other words, not letting your money control you.
[00:01:49] When you create a budget, you'll need to A. Keep track of everything you earn. The very first thing you need to understand when budgeting is exactly how much money comes into your house each month. So, you should start by writing down everything your household earns or receives in a month. This includes salaries, benefits, grants, etc. B. Keep track of everything you spend.
[00:02:15] Now that you know exactly how much money comes into your house each month, you need to be aware of how much actually leaves your household too. A good way to do this is to track your spending for one month, writing down everything you spend. This will obviously take one full month, which will delay your attempts to improve your debt management skills. But it's a good way to get a complete picture of your spending.
[00:02:37] So, start by writing down your priority debts, payments to mortgage or rent, utility bills, secured loans, etc. And your everyday living costs, such as food and travel. Don't forget to factor in the things you might pay for on an annual basis, like car insurance, for instance. Note, at this stage, you should not include the money you spend on your non-priority debts, credit cards, store cards, personal loans, etc.
[00:03:05] Or any money you spend on non-essential products and services, like things you can live without. And C. Work out your disposable income. Once you're confident that you've accounted for all of your essential living costs, you can work out your disposable income. Your disposable income is essentially the amount you have left on a monthly basis to pay towards your non-priority debts.
[00:03:29] And if you have any spare after doing this, to save and spend on non-essential goods and services. To work out your disposable income, simply subtract your monthly expenditure from your monthly income. Once you know how much your disposable income is, you'll need to work out how much the monthly repayments to all your non-priority debts cost you. Now compare this with your disposable income. If it's big enough to cover your debt repayments, you should be fine.
[00:03:58] However, if it isn't big enough, it's important that you rectify this problem as soon as possible. You can start by letting your creditors know you're experiencing problems and seeking professional debt advice to find the most appropriate solution to your problem. Number two, cut back on non-essential spending. Once you've worked out your budget and can see whether or not your disposable income is enough to cover the cost of your unsecured debts,
[00:04:25] you could focus on cutting back on non-essential spending to free up a little bit of extra money each month. Here are a few tips on how to do this. A. Create a list of everything you spend and highlight the items you don't actually need. Make a list of everything you spend in a month, including spending on non-essentials, such as chocolate, magazines, CDs, etc. Once you've done this, go through the list and highlight the items you don't actually need.
[00:04:54] Once you've highlighted those items, you should add up how much you spend on them. This is money you didn't actually need to spend and could have been used for other purposes, which brings us on to the next point. B. Remove these items from your budget. Try and remove as many of these non-essential items from your monthly budget as you can. The money you free up by doing this can be used for other purposes, which again brings us on to our next and final point.
[00:05:23] Three. Use any spare money to overpay your debts. The extra money that you're not spending on non-essential goods and services can be used to overpay your debts each month, to pay more than you need to. Overpaying your debts can be an excellent way to improve your debt management skills. By overpaying your debts, you'll reduce the amount of money you owe at a faster rate, and it should reduce the amount of time you're in debt, as well as the total amount you'll pay in interest,
[00:05:53] providing you don't take on any more debt. You just listened to the post titled, Simple Ways to Improve Your Debt Management Skills. By Jeff Rose of GoodFinancialCents.com My philosophy with money? It's a tool for freedom, not a source of anxiety. Wealthfront helps you tune out the noise and earn more on every dollar with a high-yield cash account and sophisticated, easy-to-use investing products.
[00:06:20] The Wealthfront cash account offers an industry-leading APY, no monthly fees, and easy transfers to Wealthfront's expert-built investing products. Right now, you can earn up to 4.3% variable APY on your uninvested cash in the Wealthfront cash account. You start with a 3.3% base APY from program banks. New cash account clients can get an OFD-exclusive 0.75% APY boost
[00:06:47] for your first three months on up to a $150,000 balance. Then you can add another 0.25% APY increase above the base APY, no expiration date or balance limit, just by enabling direct deposit of $1,000 a month, plus open, fund, and maintain an investing account. Join the million-plus people trusting Wealthfront. Visit wealthfront.com slash OFD. Terms and conditions apply. This is a paid endorsement of Wealthfront. Client experiences will vary.
[00:07:17] Wealthfront brokerage is not a bank. The base APY is as of January 30th, 2026 and subject to change. For more information, please see the episode description. Most of us have a clear picture of how work should get done and almost no visibility into how it's actually happening. We've all sat in meetings where decisions about what to fix or automate can come down to gut feel because nobody had real numbers. And the traditional fix, interviews and months of process mapping, is outdated before it's finished.
[00:07:45] That's exactly what today's sponsor, Scribe, was built to solve. Scribe Optimize passively captures how your team works across approved business apps, following workflows even when they jump between tools, and turns it into a live dashboard. Not last quarter's report, but what's happening right now. It automatically surfaces your biggest inefficiencies and gives AI-powered recommendations with estimated time savings built in. And user-level data is anonymized by default,
[00:08:14] with sensitive info redacted and never leaving your firewall. That kind of visibility used to take months. Now it's just always on. To see Optimize in action, visit scribe.how slash OFD and mention OFD for a 30-day risk-free trial. That's S-C-R-I-B-E dot how slash OFD. In order to pay off your debt, it's extremely important to throw as much money as you can at it,
[00:08:42] especially if it's high interest debt. If you just make the minimum payment, the interest that compounds over time will cause that debt to balloon into a much bigger problem. But this can be difficult if you don't have an intimate understanding of your income and other expenses. And that's where budgeting and tracking expenses comes in. Remember, a budget is just the simple act of telling your money where to go versus wondering where it went. It's an exercise in awareness.
[00:09:11] I believe it was Peter Drucker who said, what gets measured gets improved. The simple act of paying attention to your spending and engaging with a budget does wonders for changing behavior. I remember when I was paying off debt. Because I would enter every expense into a tracking app at the time I was making the purchase, it made me hyper aware of how that spending related to my overall budget.
[00:09:39] Making that behavior of tracking expenses a habit helped me curb spending because I forced myself to look at the reality of my choices with eyes wide open. A budget only really helps you if you continually engage with it. This means you're regularly assessing your actual spending against what you've budgeted. By continually engaging with your budget, you'll be able to see where you need to make adjustments
[00:10:04] or where you are being unrealistic about desired spending versus actual spending. And that's a wrap for another Monday show. Have a great start to your week and I'll be back tomorrow where your optimal life awaits. Have a great start.