[00:55:24] Ramit: All right, let’s look at the debt payoff. What’s your interest rate?
[00:55:29] DJ: Adam, did we write this down the other night?
[00:55:31] Adam: I didn’t save it.
[00:55:36] Ramit: We’ll just say 26%, because I bet it is. And how much currently pay every month?
[00:55:42] DJ: It varies. It really does vary. I pay–
[00:55:48] Ramit: Why?
[00:55:49] DJ: I try to put as much as I can when I can.
[00:55:52] Ramit: Okay. How much?
[00:55:54] DJ: I usually put at least 2,000 a month towards it, but then I charge it back up. That’s the problem. I will pay and then I’ll use my credit card so that I get points.
[00:56:07] Ramit: What the fuck? Why? What the fuck? What are you talking about? Why are you using it for points?
[00:56:14] DJ: I don’t use– because I don’t want to use my checking account. Because you don’t get any rewards to use your checking account when you pay.
[00:56:18] Ramit: Are you kidding me right now?
[00:56:20] DJ: What? You’re supposed to do that, right?
[00:56:23] Ramit: Who told you that? Who told you? Who told you that you’re supposed to go into more debt to earn one cent in rewards?
[00:56:34] DJ: Well, you just don’t get any rewards when you spend money out of your checking account.
[00:56:38] Ramit: Who cares? You are in debt. You know why you actually care? Do you know why I’m getting so mad and you’re not? Do you have any idea why this is happening right now?
[00:56:48] DJ: Because the math doesn’t equal out.
[00:56:51] Ramit: No. I’m getting mad because you don’t even see the consequences of what you’re doing. Because you have no consequences. You are staying in debt, not just because of the interest, which is already crazy high, but because you keep spending on it.
And when I ask you why, you go, so I can get points. It makes no sense. These points are worthless for somebody like you in credit card debt. The last thing you should be thinking about is points.
[00:57:27] DJ: I needed to hear that.
[00:57:31] Ramit: Has anyone ever told you that?
[00:57:34] DJ: No. I thought that if you were good with money, that you used credit cards to your advantage to earn points so that your money was making you money.
[00:57:51] Ramit: Your money is not making you money. All that money you’re putting in your credit card on the backend is just costing you more than those points. You’re basically spending a dollar to pay a 1.50 and then you get one cent back. It makes no sense.
[00:58:14] DJ: Yeah. When you put it like that, it doesn’t make sense at all.
[00:58:17] Ramit: Okay, so we got to stop that. This is why people who are in credit card debt, they use their debit card. It’s a huge behavioral peculiarity. But it actually makes sense because those people go, shit, I do not want to put more on this credit. I’m paying it off. I don’t want to add more to it, so I’m going to pay for my dinner with a debit card.