151. Ask Tori: Buying a Car, Balance Transfers, and Choosing the Best Credit Cards

Tori Dunlap:

I’m wearing a shirt that says Electable. If you’re listening on YouTube, you already know that. But then yeah, Run For Something, which is this incredible organization that tries to get people, progressive candidates to run for office. We’ll link it down below. Sure. Free marketing. They’re great. They sent me a shirt. Yeah, it’s got a cake on it or a cake, and it says Electable on it like delectable. And then there’s this other shirt that they sent me that’s got little hearts and that says Elect Women. So yeah. Hello Financial Feminists, welcome back to the show.

Really excited to see you. If you’re an oldie but a goodie, welcome back. If you’re new, hi, I’m Tori. I am a money expert. I’m a New York Times bestselling author. I fight the patriarchy by making you rich. You know the housekeeping things. I don’t need to say it. You can like, subscribe, you can share with your friends, you know all of that. We are going to do our probably once a quarter quarterly Ask Tori, which is where I take a lot of your voicemails. You can send your own voicemails in down below.

But we have a ton of questions today and we’re just going to get right into it with our first voicemail, which I believe is a win about salary from Katie.

Katie:

Hi Tori, I found you not too long ago and just wanted to say thank you. I recently got a promotion and my boss, who is a wonderful man, was telling me what he was thinking for my salary, and then he gave me some reasoning behind it and the salary was actually so large my jaw dropped. But as I was listening to his reasoning, I realized that he was working off of some outdated facts and so I corrected him. He said, oh. He said he’d get back to me in a couple of days because I did change things and my salary increase went from about $25,000 to about $40,000 for that pay bump.

And that was very significant and it’s not something I would’ve dreamed of speaking up about had I not listened to you. So thank you very much.

Tori Dunlap:

Just a cool 25K promotion. No, just kidding. It’s actually 40. Katie, congratulations. That’s amazing. I’m really glad that we were able to play a small part in that, but I love that you advocated for yourself and something that I think is so important to highlight from her story is that a lot of people, if it’s more than they expect, they would’ve just been like, oh my god, great. Yeah. Sure. That sounds great. But it wasn’t entirely accurate and you were deserving of more money. So I love that you actually said, no, that’s not the facts. Let’s get this together.

So, that’s a great tip for negotiation is even if the number is way bigger than you expected, but it’s still not reflective of your entire experience or of the whole picture, there’s no reason to accept without asking for more. So I love that. Congratulations, Katie. That’s a massive jump and a pretty life-changing amount of money. Like going from your salary to an additional 25K to an additional almost doubling of that. So you quadrupled your salary, if I’m doing that math right. It might be even more than that, but that’s absolutely incredible.

Buy yourself something nice, celebrate in some way, and then with any money you can, save the rest, build a nice little nest egg. You can hit your 100K in about two seconds with that. So congratulations, I’m really excited for you. And if you are out there and you want a story like Katie’s, we will drop some negotiation episodes in the show description of where you can go next to learn how to negotiate. I would love for us to get 60,000 more voicemails exactly like hers. So congrats to Katie and yeah, cheers to all of us getting paid what we’re worth.

Okay. Let’s take our first question.

Speaker 3:

Hey Tori, thanks so much for all you’ve taught me through your book and podcasts. Curious when you’ve set your leisure priorities, when you pick those three categories, but you still find yourself feeling guilty when you spend money, especially a lot of money on those areas. Do you have any advice for how to move through the guilt or the feelings of I shouldn’t be spending on this even though this shouldn’t is internalized yes? Thanks so much. Bye.

Tori Dunlap:

Okay. This one’s super common, which is I have told myself that I can unabashedly spend in these three areas, which is the value category concept from my book and the show. And then when I actually do try to spend the money, I feel guilty. This is not about spending at all. This is not really an issue about spending. This is emotional financial trauma. Truly that’s what it is. I don’t know you. I don’t know your story. But if I had to guess, you likely grew up either living in an extremely frugal household or in a household that didn’t have a lot of money.

So any sort of spending feels extremely ridiculous. Any sort of spending feels like you should be saving the money instead and that you should feel guilt and shame. The other version of this is you might have grown up in a household where actually money just grew on trees. Not literally, but that was the feeling of just we’re spending money all of the time. And so now you have this opposite effect where you’re so scared of making those same financial decisions that you don’t want to spend money at all. So I think you’d said you had read the book, which I so love and appreciate.

I would go back to the first chapter. If you haven’t done those journal prompts around emotional spending and around specifically what is your financial trauma, what are the narratives you’re believing about money, I would delve in and do those. We also have a version of the podcast that has a similar exercise around your first money memory. We’ll link that down below. But really it’s not about … I can’t give you a spending solve at this point because you are spending money, which I love and it sounds like you’re spending money on things that you actually love, which check, check.

But you’re feeling guilty about it anyway, which tells me that it’s an issue of the guilt and the shame that you might feel about money that is deeply harbored before you’ve even spent it. So starting to excavate that is really, really important. It’s really difficult work, but it’s really necessary work. We’ve spoken many times about how all of the actionable stuff is important. Assigning those value categories, great. Learning how to pay off debt, great. Learning what an IRA is and how to open one, opening up the high yield save.

All of these are great, but none of these can really happen unless you start understanding your own financial trauma and your own narratives you’re believing about money. In terms of a very actionable exercise I can give you beyond just doing some emotional digging and doing that journaling, anytime you do have this feeling, especially before you’re about to buy something or after you’ve bought something, rather than taking the shame that you already feel and then feeling more shame that you feel ashamed, just sit with it. Just sit there and ask yourself, huh, why am I feeling this way?

And you notice I said that very neutrally. I’m not saying like, oh, you fucking piece of shit. We’ve done this again or thinking that I need to again feel more shame about my shame. You’re just an anthropologist in your own life. You’re going, oh, interesting. Okay. Well, why do I feel that way? Just ask yourself why. Why am I feeling this way? Or what’s going on in my brain and my body? Where am I feeling tension? Where am I feeling anxiety? Why do I feel like I can’t purchase this thing? That’s the question. Why do I feel like I can’t buy this thing?

And then maybe ask yourself, do I really want this thing? Did I think about it before? Is this an emotional purchase? Is this an impulse purchase or is this something I’ve planned for? And again, we’re not judging ourselves. We’re not asking these questions in order to make a certain decision immediately. We’re just asking ourselves to sit in the discomfort for a bit and start to understand maybe a little bit more about why we feel that guilt or that shame about that purchase or why we feel anxiety before we make the purchase. I’ve said this before, but I think it’s so important.

I will never tell you, you can’t spend money. It’s just not a thing. That’s not sustainable,. That’s not fun. That’s not who I am as a finance expert, nor as a person. And I think spending money is so crucial and really important, and we work hard so that not only can we save, but we can also spend money on things we really love. And if your financial trauma or the narratives you’re believing about money are keeping you from being able to enjoy your hard-earned money, that’s no fun. That’s not helpful. That’s not building a enjoyable life.

So just starting to sit in it and ask yourself, why do I feel guilty when I spend money? What’s going on? And then if you don’t have an answer, keep asking why until you get an answer, or at least until you get a little bit more clarity. And please do this without judgment, without shame, without making yourself feel worse. Just keep it really neutral and sit in that discomfort and start to analyze what’s going on, and that should hopefully be helpful. And if you still have questions after you try those, come back, we’ll talk again.

Okay. Let’s take our next question about someone intimidated with buying a car. Girl, same. Buying a car is, well, I’m sure you’ll talk about it. Here we go.

Speaker 4:

Hi, Tori. First off, thank you so much for your podcast. It has helped me in more than one way and I’m starting to finally feel financially stable. I have a high yield savings account and I’ve paid off all my debt, but the next thing that I’m kind of trying to focus on is buying a car. It’ll be my first car that I bought myself. My last one was a hand me down and I am so intimidated by the process. I feel like I’m just getting into a potential situation of less financial stability. Cars are so expensive and I’d love some advice on whether leasing or buying is a good option.

If you’re trying not to spend as much every month, is it worth it? Yeah, I would just love some direction in what your thoughts are on the car buying process. Thanks again.

Tori Dunlap:

I will always say as a finance expert when I have to look things up too, buying versus leasing a car is one of those things that I have been told by my family and about society there’s a one right decision and one wrong decision, and I wanted to make sure that I actually believe that too. So I literally Googled buying versus leasing a car to make sure that I had my facts straight before I take this to you. Okay. So one, car buying, you’re exactly right, is kind of an intimidating process, especially if you’ve never done it before.

It’s very easy to just believe, oh my gosh, everybody’s trying to get me and this incredibly big purchase I’m about to make. I just don’t know how to go about it. And I felt that way when I bought my first car when I was 22. I was lucky to have my parents with me who had done this many, many times before. If you have somebody in your life, this is the time where I’m like, ask for help. Great. If you have somebody in your life, and I will say, and I hate that I have to say this, but the world is sexist. If you as a woman have somebody in your life, especially a man who has purchased a car before and feels comfortable negotiating, bring him with you.

Whether that’s your brother or your partner or your dad, if you do have somebody in your life, they will probably be able to get you a better deal. Not because you can’t negotiate, but because this is a sexist world and people are more likely to give men a better deal than they are women. And we’re going to use it to our advantage to make sure we don’t overpay for this car, so the first thing. If you do have somebody in your life who’s done this before and who you feel comfortable doing this process with, ask for help, bring them with you.

If you don’t or if you want to tackle this alone, great. Here’s a couple of things you should know. Any car that you’re going to buy, the sticker price is not the real price. It’s kind of like going to a garage sale and that $10 limited edition, a 1975 record, but what is that doing at a garage sale? I don’t know. The Beatles record, the $10 is not the real price. It is OBO, or best offer. You never, ever, ever should pay the sticker price on a car, especially like a certified pre-owned used car. Now, whether we should buy or lease a car?

I’m just going to give it to you. What is the best version? We don’t want to lease that car because you don’t actually own the car when you lease it. You basically pay, it’s almost like you pay rent, which is you know that I love paying rent and that’s okay, but a car is much different than a house. And in the end, leasing the car, it almost costs you more than the equivalent loan to buy the car outright because you’re paying for this car at the same time while it’s rapidly depreciating.

So, that’s one thing to keep in mind is you might actually pay more money if you’re leasing the car and the payments are going to go on forever. If you can find a car that is a good quality model with not a lot of miles on it that you can pay for. Again, I’m a big fan of certified pre-owned cars, which means that they’re not brand new cars, but they are maybe a couple years old and they don’t have a lot of miles on them and they’ve been checked and they’re like new cars. That’s a great way to go.

My parents always told me the magic three are things you want to look for. These are three kinds of really dependable cars, Toyotas, Hondas, Subarus. Those are the three cars you look for. I bought a Toyota RAV4 in 2016. It was a 2014 certified pre-owned. I think the total cost of the car was about $22,000. I think they wanted 25. We negotiated them down to 22 and then I took out a loan on that car and I paid off that loan, which helped me boost my credit. And yes, it was more expensive than leasing the car. But after four years, I ended up owning that car outright and it’s a really good car.

We’re at 10 years now, actually. It’s 2024. That car has been alive for 10 years and it’s still serving me really well. It’s a dependable car. I love it. I don’t plan on getting rid of it anytime soon and now I outrightly own it. So leasing a car might be better if you’re buying a car very temporarily, but for the vast majority of people, leasing ends up costing you more money. It doesn’t really make financial sense in the long run. And again, you don’t own it at the end of the day. And especially if this is a car that you think you’re going to have for a very long time, it’s advantageous probably to buy the car, not lease it.

I will say too, again, we just mentioned this, but do not pay sticker price for the car and make sure you walk in knowing not only your budget but what the type of car you’re looking at should cost. You can look Kelley Blue Book, you can do some online research. Again, if I was walking in to buy a Toyota and specifically I was looking for some sort of like smaller SUV, like a RAV4, I knew about how much I should be paying for that car. And I saw that car, liked it, went home and did research and came back to buy the car.

That’s something that I really would recommend is you can take a little bit of time to check out the car. Definitely test drive it. Oh my God, definitely test drive it. Make sure you like it. Make sure you are understanding the total cost. Then maybe go home, sleep on it, get some research. If it still looks good, then let’s go back and negotiate. Also, the negotiation process might take you a couple hours. I remember this. I was probably 12 or 13. My parents spent probably four hours negotiating a car. Now you don’t have to do that, but they did.

That’s classic Dunlap behavior and they negotiated a lot of things on top. They actually negotiated to get a certain number of free oil changes at the dealership. They negotiated for a couple other things. So even if the price of the car won’t come down, you might be able to negotiate some other things. When you do take out a loan on this car, if you do choose to buy it, there’s a couple places you can take out this loan. The most obvious is a bank or a credit union. I had actually gotten pre-approved for a certain loan amount at my credit union.

But then when I went to the dealership and was actually seriously talking about purchasing the car, the Toyota dealership had actually a lower interest rate on the total cost of the car. So as opposed to I think it was a three or 4% interest rate. And again, I know things are different. This was 2016. It was a three or 4% interest rate at the credit union. I think it was less than 2% at the Toyota dealership. So I went with the Toyota dealership. So that’s the other thing is you can not only shop the price of the car, but you can also shop interest rates.

I will be honest too, I haven’t bought a car in a long time. Car buying after the pandemic, it’s fucking crazy. It feels like used cars are almost more valuable and more expensive sometimes than new cars. The reason I do advise if you can define one of those certified pre-owned cars is because the moment you drive, this is the infamous thing. But the moment you drive a new car off a lot, it’s depreciated. And if you’re financially able to buy a new car and you want to, and great. I think for you, especially if you’re having this buy versus lease conversation, if it was me, I would be purchasing the car.

I would be taking out a loan to purchase the car and I would be finding one of those certified pre-owned models and I would definitely negotiate it and bring somebody along with me if I felt like I had somebody in my life who could help advocate for me or even just sit there and look intimidating. That’s the other great thing. And ultimately just like with everything, I’m getting a 45-second voicemail. I don’t know you. I don’t know your life. Personal finance is personal. I can give you the best advice I can based on the info I have, but also what would I do.

So hopefully that’s helpful. Have fun buying your new car.

Okay. Let’s talk about balance transfers.

Meg:

Hi, Tori, Meg here from Chicago. Question, when you have a credit card and it’s a 0% interest, but the 0% time is about to end, instead of the APR going up to 25%, is it better to do a balance transfer so you can start over at another 0%? Because I feel like the fee for that would be less than paying 25% on the balance of the other card. Wondering, because I’ve done this several times and just want to know if I’m making a mistake. Thank you. Bye-bye.

Tori Dunlap:

Okay. Hello, Meg from Chicago. I love how you started this voicemail. You’re like, Meg, I’m from Chicago. Here we go. I appreciate the direct, we’re going direct into our question. Okay. Again, I’ve talked to you or listened to you talk for 50 seconds, but if I have to psychoanalyze you, you’ve said you’ve done this a couple times, which makes me nervous. This tells me that either if I’m assuming most positive intent that you’re just having a financially rough time and that’s not your own fault, that’s not anything that you’re doing.

Maybe you don’t make enough money to afford your bills and that’s again where policy change needs to come in to better support you. The fact that this keeps happening just makes me really nervous. So if that is what’s going on in your life, I’m really sorry. I hope that we’re here to help with the things you can control. If this is happening because you are not in control of your own spending, we need to get to the root of the problem, which is not do I do a balance transfer, but is why does this keep happening over and over and over again?

If you are spending money that you do not have on a credit card and this is beyond your basic necessities and you not being able to afford those basic necessities, we need to ask ourselves why is this happening over and over and over again and what can we do about it? When it comes to balance transfers, you are right in the math. Paying nothing is way better than paying 25% interest. You’re right. But because you’ve told me you’ve done this before and it sounds like multiple times, you’re like, I’ve done this before, it keeps happening, it just makes me nervous.

It tells me that something else emotional is going on where either we’re not looking at our spending, we’re not working to manage this, and this is actually the number one thing I see with balance transfers is … Let me define it simply very quick. A balance transfer is exactly what it sounds like where let’s say I have $5,000 on a credit card that I have not paid off. It is carried month over month and rather than paying the interest from that credit card on that $5,000, I’m going to transfer it to another credit card that has 0% interest for a certain period of time.

So I might take that $5,000 from a credit card that has 25% interest and move it to a credit card that has 0% interest for let’s say six months. But this is what happens with most people. And if I had to diagnose you just based on that, it sounds like this is what’s happened with you is that people do that balance transfer as almost like a get out of jail free card. They’re just like, well, I don’t want to pay the interest, which you’re right, I don’t want to pay that interest either, that’s financially smart, and they move the money to that 0% card for six months.

But then five and a half months later, nothing has changed in their life. They did not create a plan when they were making that balance transfer. They did not set expectations with themselves. They did not work to pay that balance off. So suddenly they’re going, well, I just bought myself six months more of time, but I didn’t chip away at my debt at all. Or I didn’t create a plan to be able to manage this money better in order for this to not happen again. And you just get in this cycle, which is just you transfer it again and maybe it’s 12 months now and okay, that bought me a year.

But nothing is changing about your financial habits in that year and there was no plan. That was just the quick fix. It was the staples that was easy button and just trying to move on from there. I have a section in my book that talks about how dangerous this is because if you’re making any sort of financial decision, especially one out of desperation or out of panic and you have no plan to back it up and you’re not actually being real with yourself about how your habits or your life needs to change during that period of time, this cycle will continue.

So you’re asking, is this the right thing to do? The math says yes, but there’s something else going on here. There’s something else going on here. And again, I don’t know you. I don’t know your life. I’m not trying to shame you if this is a I don’t make enough money and I’m really trying. I get that. That’s not on you. That’s systemic oppression. That’s all of the other stuff. But if this a honest, if this is the other version, I need you to take an honest look at how are my spending habits sabotaging my life?

How is my lack of planning and my lack of honestly getting my shit together causing this to continue to happen? These tools are at our disposal because credit card companies know that most people who do a balance transfer have not created a plan together to actually pay that debt off or to actually change their spending habits in the meantime. So they know they can make money off of them later because usually the cards that do have the balance transfer have an even higher interest rate when that’s 0% is over. So it’s not 25% interest, now it’s 30% interest or 28%.

So I just say with all love in the world, if this is an issue where you’re just trying to figure your financial shit out because you don’t make enough money and because you’re actually financially struggling, I’m really sorry. It fucking sucks. And on the flip side, if this is a I’m spending money pretty mindlessly or at least there’s some things that I can control about this to work to get myself out of the situation, great. I am with you every step of the way. I really encourage you to do some thinking and some actual planning before you make another decision that is, well, I’m just going to put this off until six months later.

I just never want to sound, especially on these phone calls. You can keep this in. I never want to sound like Dave Ramsey. I just had a fun little aside with Kristin of like, does this sound shitty? Does this sound like I’m being mean? But at the end of the day, that’s the financial advice is if it’s not a literal paycheck to paycheck thing and it is just a I don’t want to think about it, I don’t know what I’m doing, and you just put it off till later. No, we got to get honest with ourselves and we got to make a change.

So yeah, here to guide you and hopefully give you some resources to be able to make that change. We’ll drop some. I mean there’s tons of episodes on the show about how to mind spendfully, how to spend mindfully, how to make sure that you are creating a plan, creating goals that you can actually achieve. And yeah, I appreciate your question. All right. Let’s take our last voicemail about credit cards.

Ava:

Hi Tori. I’m currently a student in college and I’m looking to build my credit. I currently have a credit card that I’ve had for a year. It’s the Discover Student It card and I want to get another credit card so that I don’t have to use over 30% of my credit line. And right now my credit score is about around 700, little more than 700 and I am looking into other cards and I don’t really know which ones to go for. And I am not pre-approved for anything because technically I’m still not verified as a good borrower yet because the longevity of my account isn’t that great.

So I’m curious what you would recommend or if there’s any, I don’t want to say credit cards that are shoo-in because I know that’s not really a thing. But I’m curious if there’s any that you would recommend like that. Okay. Thanks.

Tori Dunlap:

Ava, you are me 10 years ago, literally almost to a T. You’re like, I’m in college and I’m like, check. And you’re like, my first card is the Discover It card and I’m like, check. And you’re like, I want another card, but I need to know which one I can apply for, check. My credit score is 700, check. Literally, I just got a call from the past. Hello past Tori, how are you doing? Break up with him. Okay. I love that you’re asking this question. If I was you and I was you, I would just get a cash back card that is good for everyday purchases.

One that gives you something like one and a half percent cash back on everything. This is a good secondary card. It’s a good everyday card. And anybody listening, even if you’re not a student, if you’re in your early 20s and you just need a new credit card that just has good points for everything and there’s no annual fee, there’s no craziness, this is the kind of card you want. We have linked down in the show notes are list of recommended credit cards including a card like this. So I would check that out.

But that’s a good second card past your starter kind of, I’m saying this as least condescendingly as possible because this was me and this was everybody, past the training Wheels card. This is the first big girl bike. A good everyday cash back card, especially with somebody with 700 credit score is a great card as your secondary card. I love that you’re even thinking about how do I boost my credit score? How do I not use 100% of my credit line? This was me as well. And yeah, I think that is typically a card that will accept you.

If it doesn’t, if you apply for it and you don’t get accepted, your credit score isn’t high enough, just keep using your Discover card for a while, maybe for three more months after you receive that notice that you didn’t qualify. And then maybe start looking at other cards that are a similar card to your Discover card. If you do get a increase in your credit score in the next three to six months, could be a perfect time to apply for that card if you feel like you have better credit, you’re proving that you can be responsible with your credit card.

So yeah, in terms of your next card to get, good cash back everyday card is perfect. That’s exactly what I did. It’s still a card I have. It’s a card that I don’t use a lot anymore, but it’s one of my backup credit cards should something happen. And yeah, it’s a good general card because there’s no annual fee and it’s just going to give you cash back on anything you put on that card. Okay. Team, thank you so much for all of your questions. I love hearing from you. It’s my favorite thing to hear your wins and hear your qualms and hopefully help you in some way.

If you got any value from this, please feel free to subscribe to the show. Make sure you don’t miss future episodes and share with a friend. And if you were one of the people who submitted a voicemail and I answered your question, tell us. We would love to hear from you and hopefully that was helpful. As always, Financial Feminists, thanks for being here. We appreciate you. We hope you have a kickass week and we’ll talk to you soon.

Thank you for listening to Financial Feminist, a Her First 100K podcast. Financial Feminist is hosted by me, Tori Dunlap, produced by Kristin Fields, associate producer Tamisha Grant, Research by Ariel Johnson, audio and video engineering by Alyssa Medcalf, marketing and operations by Karina Patel, Amanda Leffew, Elizabeth McCumber, Masha Bakhmetyeva, Taylor Chou, Kailyn Sprinkle, Sasha Bonnar, Claire Kurronen, Daryl Ann Engman, and Janelle Reisner. Promotional Graphics by Mary Stratton, photography by Sarah Wolf, and theme music by Jonah Cohen Sound.

A huge thanks to the entire Her First 100K team and community for supporting this show. For more information about Financial Feminist, Her First 100K, our guests and episode show notes, visit financialfeministpodcast.com.