Work hard and save your money.

Andres Paniagua
4 min readAug 6, 2017

Hello everybody and welcome to The CTE Podcast. Thanks for tuning in. I’m your host, Andres Paniagua. This podcast is brought to you by Cafe Tres Estrellas. CTE is a small batch, craft-coffee roaster that specializes in fair trade organic coffee. If you need a good cup of coffee, visit them at Now that that’s out of the way, let’s get on with the show.

We have another listener question submitted on facebook. You can find us on Facebook @thectepodcast. Like and share us, we would appreciate that.

The question was about debt and how not to get into it and how to get out of it.

So first off, wealth is about how much money you have, not about how much money you make. So that means that the number one tip for not getting into debt is to live within your means. In our house we have a budget and we allocate money for all our expenses. From food to movies to savings, all money is accounted for. There is no extra money of disposal income. Important things like food and mortgage get taken care of first. All other expenses are accounted for after that. Going out to eat and going to the movies are the least important expenses so they’re first on the chopping block.

Before we started doing this my wife and I had some student loan and credit card debt. We used Dave Ramsey’s baby steps to get out of it. Making a budget is step 0 of the baby steps. I would suggest making a 0 balance budget. You can look that up online. The basic concept is that there is not “extra” money. All money is used for something. Once you get your budget on paper (you do this every paycheck) you’re ready for the baby steps.

Baby step 1 is save $1000 by any means necessary. Sell stuff if you have to. This is your emergency fund. Put it away and do not touch it. The only reason to touch it is for emergencies. If money is used, pay it back.

Baby step 2 is to pay off all your debt using the debt snowball system. List all your debt balances and minimum payments. Any money you can save from cutting frivolous items goes towards your smallest balance every month. Once that is paid off you take money you freed up plus the minimum payment amount from your newly paid off account and apply it to the next balance on your list. You keep snowballing your money until you pay off all your debt. It might take a few years but this system will cut the time it would have taken drastically compared to paying the minimum payments.

Baby step 3 starts you down the path of financial independence. Now that all your balances are paid, you take that big snowball and start to put it in the bank. Your goal is to save 6–9 months of living expenses. You know exactly what this number is because you’re still using a budget. Because of your budget and the snowball, this shouldn’t be that hard or take a long time.

For most people staying on steps 1–3 is the hardest part of the 7 baby steps. When my wife and I did this the first time, we completed step 2 and stopped. Taking on step three requires a different mindset because you’re saving, not paying off debt. When we started up again, we went straight in to the saving mindset and completed step three without too much heartburn. The most important thing is that we didn’t have to do steps 1 and 2 again and it had been a few years between steps 2 and 3.

You can search online for steps 4–7. They are save 15% of household income for retirement annually, college funding for children, pay off home early and build wealth and give.

Depending on what your income is will determine how long each step will take. If a step doesn’t apply to you (this is only for 5 and/or 6) you can skip it.

The big takeaway from this episode is to not get in debt to begin with. Reigning in bad habits is harder than not picking them up in the first place.

So that’s the show for this week. Thanks for listening. If you have any comments or questions on the things I spoke about today, please leave them in the comments below. You can email me at if you want more information about the show or its sponsor.