Caleb Hammer has become a prominent figure in the world of finance TikTok, known for his direct advice on budgeting and financial recovery. While he may not hold qualifications as a financial advisor, his no-nonsense approach and personal experiences with debt have garnered him a loyal following. Hammer’s YouTube show, “Financial Audit,” delves into intimate details of guests’ financial situations, such as bank statements, debts, and expenses. Clips from these interviews often go viral on TikTok, with Hammer not shying away from criticizing guests for unnecessary spending. Here are the key principles and tips he consistently shares for those overwhelmed by debt.
One principle that Hammer often promotes is Dave Ramsey’s 50-30-20 rule, which he credits for helping him overcome his own debts. This saving plan advises allocating post-tax income as follows: 50% towards needs like rent, mortgage, bills, and groceries, 30% towards wants such as dining out or vacations, and 20% towards paying off debts. If no debts exist, the 20% can be directed towards savings. Hammer acknowledges that this rule may not work for everyone, but finds it effective for many individuals.
In Hammer’s interviews, it is almost a given that guests carry credit card debt, often reaching their maximum limits at high interest rates. He frequently asserts that guests should not consider themselves “credit card people” unless they pay off their balances in full each month. In fact, he discourages those with recurring debt from using credit cards and advises against making new purchases while still paying off existing credit card debts.
Hammer also advises against relying on pay-later apps and financing options. While he acknowledges situations where financing a large purchase may be acceptable, such as when it can generate future profit, he warns against using financing simply to make things appear more affordable. According to Hammer, financing ultimately costs more and may lead individuals to commit to purchases beyond their means. The same caution applies to pay-later apps like Klarna and AfterPay, which he considers a slippery slope, especially when users resort to paying off those purchases with credit cards.
When it comes to managing multiple debts, Hammer offers two approaches. The first is the “snowball” method, where guests prioritize paying off the smallest debt first, regardless of interest rates, to build momentum. This method works well for guests with multiple small credit card debts and loans. For those burdened by high-interest debts, Hammer suggests the “avalanche” method, which entails tackling debts from highest to lowest interest rates, providing the most cost-effective approach.
To increase income and tackle debts more effectively, Hammer frequently encourages guests to explore side hustles. For individuals who already have jobs, he suggests becoming a delivery driver for services like Uber Eats or Doordash (as long as they own a car). Unemployed individuals are urged to accept any available job, whether it’s shelf-stacking at Walmart or flipping burgers at In-N-Out. Hammer believes that additional income is crucial, as seen in an interview with Lael, who had multiple jobs including DoorDash and sperm donation but still struggled with his budget. In this situation, Hammer emphasizes the need to increase income to address the repayment challenges effectively.
In Hammer’s interviews, car loans are a recurring issue for guests. He attributes this problem to a widespread lack of understanding regarding affordability, which he partially blames on the education system and cultural norms. As a solution, Hammer encourages guests living in cities with good public transportation to sell their cars and purchase more affordable vehicles if necessary. Proceeds from the car sale can then be directed towards paying off the existing car loan. If there is a substantial balance remaining, Hammer recommends seeking a loan with a lower interest rate to cover the shortfall.
Caleb Hammer’s straightforward and insightful advice has attracted a large following on platforms like TikTok and YouTube. Through his no-frills approach and personal experiences, Hammer aims to help individuals struggling with debt regain control of their finances.
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