Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.

This week’s episode starts with a discussion about summer travel: how to manage costs, stay safe and prepare for the possibility of flight cancellations.

Then we pivot to this week’s money question from Kevin, who left us this voicemail:

“I have a question about inconsistent income and how it relates to credit cards. So I work as a freelance lighting designer. So different venues across the country hire me out, fly me out, and I program lights for different shows and musicals and whatnot. So by the nature of this work, my income is fairly inconsistent.

I recently completed a two week-long gig. It gave me a considerable sum of money, and I was wondering if I should use that to pay down credit card debt or purchase a new computer as my other one died and I’m using a backup one that works fine, but not as well as I would like.

I’ve around $6,500 in credit card debt that has been transferred to a zero-interest credit card for 12 more months. So I guess my question is if I should use most of that money to pay down the credit card debt and buy the computer, or if I should put it away in savings because my emergency fund is maybe 75% funded.”

Check out this episode on any of these platforms:

Our take

Summer travel this year poses unique challenges, as flights are canceled, gas prices remain high and many travelers are getting out after more than two years of the pandemic. But there are deals to be had.

Booking a trip to a less popular destination can mean a less expensive vacation. And for those traveling abroad — particularly to Europe — the dollar is fairly strong at the moment, which can make paying for things like meals and souvenirs at your destination easier to afford.

Earning an inconsistent income adds unique challenges when it comes to sticking to a budget. In the weeks or months that you’re paid less, you may struggle to earn enough to cover your bills; in times of plenty, it can be difficult to decide what to do with a surplus of cash. But understanding your minimum expenses and how to direct your income can help you manage your money with more predictability.

First, add up the cost of your monthly necessities like housing, utilities and food. That total — sometimes called a “bare-bones budget” — represents the absolute minimum you must earn each month to cover your expenses. Knowing this number can help you plan ahead, particularly for months when you’ll make less than that amount.

It’s worth being just as thoughtful when you have extra money. You might add it to an emergency fund or pay down debt, if you have it.

A credit card with a 0% intro APR rate can be another tool to fight debt. Be mindful, though, of when the 0% period expires. Aim to pay off any debt on that credit card before that date. If you don’t, you’ll be charged interest, which can be in the double digits.

Our tips

Know your bare-bones budget: If you make an inconsistent income, understand the minimum amount you need to earn monthly to cover your necessities, like food and housing.

Balance your priorities: Building up an emergency fund is important, but work to make progress on your debt payoff, too.

Plan ahead when using 0% interest credit cards: Pin down how much you need to pay monthly to get debt free before the promotional period ends.

Have a money question? Text or call us at 901-730-6373. Or you can email us at podcast@nerdwallet.com. To hear previous episodes, go to the podcast homepage.

Episode transcript

Liz Weston: Let’s say you just got a big influx of cash. Should you put that money toward paying off debt or a shiny new computer? If you think the answer is obvious, maybe think again.

Sean Pyles: Welcome to the NerdWallet Smart Money podcast, where we answer your personal finance questions and help you feel a little smarter about what you do with your money. I’m Sean Pyles.

Liz Weston: And I’m Liz Weston. To send the Nerds your money questions, leave us a voicemail or text us on the Nerd hotline, at 901-730-6373. That’s 901-730-NERD. You can also send your voice memos to podcast@nerdwallet.com.

Sean Pyles: Follow us wherever you get your podcasts to get new episodes in your feed every Monday. And if you like what you hear, please leave us a review and tell a friend.

Liz Weston: In this episode, Sean and I answer a listener’s question about how to balance competing financial priorities, including when buying yourself a new laptop might be a better decision than wiping out your debt.

Sean Pyles: But to kick off this episode, in our This Week In Your Money segment, Liz and I are talking about summer travel: how to manage costs, how to stay safe and enjoy your vacation without pulling your hair out.

Liz Weston: It’s a good thing you have a lot of hair, Sean.

Sean Pyles: Yeah, it’s pretty thick, too.

Liz Weston: Because part of what spurred this segment is the fact that you have some summer travel coming up.

Sean Pyles: I have a lot of summer travel coming up. I am going to Las Vegas, and then I’m going to London, and then I’m going to Paris. And then I’m going to southeastern France for a friend’s wedding.

And this is all part of my sabbatical. I actually am taking five weeks off of work. So, listeners, don’t worry. We have plenty of content planned for you, but things are going to look a little bit different in late July going into August.

And that’s in part going to be because I will either be stuck at an airport or having fun wherever I want to go, depending on how the travel gods are looking upon me that day.

Liz Weston: Wow. Some of the coverage lately about how chaotic the airports in Europe have been — it’s a little bit scary.

Sean Pyles: Yeah, even in the U.S. My partner traveled for work a couple weeks back, and his flight to the destination and back home were both delayed by several hours. And it seemed like a pretty regular flight, so I can only imagine what international travel is going to be like — but hopefully not too bad.

You also have some travel coming up, right, Liz?

Liz Weston: Yeah, something similar. We’re going to Europe for the first time in three years. And we are also going to be in Paris for a while — unfortunately, not the same time you are.

Sean Pyles: I know.

Liz Weston: And we’re also coming in through Amsterdam’s airport, which is one of the — I guess vortex? is that the right word? They’ve been having a lot of trouble, let me put it that way.

Sean Pyles: Hell hole, maybe?

Liz Weston: Yeah, a four-hour line for security. I’m not sure if I read that correctly, but anyway, it’s been difficult.

And part of the reason is, obviously, a lot of us are getting out there again and traveling again. And then when the U.S. took away the requirement that you have a negative COVID test to come back in, that really seemed to take the lid off a lot of people’s plans, and people are rushing in.

And airports and airlines and other travel providers really aren’t staffed back up to deal with this kind of demand. So you don’t have enough pilots; you don’t have enough staff.

And I think you found something where Southwest alone had canceled 20,000 flights.

Sean Pyles: Yeah, and other airlines are also canceling flights because, as you mentioned, airlines are short-staffed, and demand is surging. And this is despite the fact that, year over year, airplane tickets are up 25%.

Liz Weston: Yeah, they’re getting out there no matter what.

Sean Pyles: But it’s not all doom and gloom. There is some positive news out there, especially if you are traveling internationally.

The dollar is stronger than it has been in a little while, especially compared to the euro. So that can make buying things when you are at your destination a little bit easier.

And there are also plenty of deals to be had, depending on where you want to go. One tip that we like a lot at NerdWallet is to go where others aren’t. This is a great idea, especially since we’re still in the pandemic. It might be great to avoid people if you can.

One thing to think about is that Mexico in particular has been a very hot destination. The number of travelers to Mexico from the U.S. in early 2022 actually exceeded 2019 levels.

Liz Weston: Wow.

Sean Pyles: Yeah. So folks can think about going somewhere, anywhere else. Places like Greece, Croatia and Italy have been a little bit slower to recover, and demand is a little bit below pre-pandemic levels, too. So that could be an opportunity for a more affordable vacation.

Liz Weston: Yeah, that’s a really good point. And then some of our travel Nerds recommend just picking a date for your vacation and then looking for the destination. Find the place that has the best airfare, and go there.

Sean Pyles: And that’s the exact opposite of how I typically book a flight or a trip with my friends. We say, “OK, we want to go to this one specific place. When are we all off of work? And how can we get there?”

Liz Weston: Yeah, I think that idea of just picking a destination at random works best if you are a solo traveler, have a partner that’s able to travel like that with you. I think for families and friend groups, it’s going to be a little tougher.

Sean Pyles: My challenge with a lot of the travel hacks to save money is that they require you to go with the flow and be flexible, where I like to plan things out many months in advance.

But if you are flexible, it can help you save money, especially when it comes to booking lodging. You’re more likely to find a cheaper price for a hotel within a few weeks or even days before your stay.

But again, that makes me very nervous, because imagine going to a destination not knowing where you’re going to be staying that day. But there’s likely a hotel that has at least one room open. So you can find places, and they’re eager to get someone in that room, so they might cut you a deal.

Liz Weston: Another thing to think about is using your points and miles. This is something that our travel Nerds told me about that I didn’t realize. I always thought you had to plan way, way ahead to get the best deals. And they say, no, that sometimes there’s last-minute availability.

So if you are a frequent flyer member for an airline or a frequent traveler for a hotel, just check to see what deals might be had there.

Sean Pyles: I know you’re also a fan of house swaps, right Liz?

Liz Weston: Yeah. We’ve done this a few times, and it’s turned out super well. We’ve done it with a family in England and then one in France. And you get to know each other with these email exchanges.

We exchanged our house in Los Angeles, which does have a pool in the backyard. That’s always a selling point.

Sean Pyles: Yeah, I bet.

Liz Weston: But if you have a house in a desirable location, it’s amazing what you’re offered. We’ve been offered literal mansions for our little bungalow, because people wanted to come here.

Sean Pyles: How do you vet these people to make sure they’re not going to rob you blind or something?

Liz Weston: Well remember, you’re staying in their place, too. They do have systems now where you can gather points, so you don’t have to have a simultaneous swap. But so far, ours have been simultaneous.

We’ve had a good experience. The girlfriend that turned me onto this has had good experiences. She’s been all over the world doing this.

It’s not for everybody. You do have strangers in your house. If that freaks you out totally, it probably isn’t going to work. But you do get to know each other through email exchanges.

You’re staying in each other’s home, so there’s a built-in incentive to treat their home well and to have them treat your home well.

Sean Pyles: Yeah, treat their house the way you hope they’ll be treating your house, and vice versa.

One thing I always like to throw out when talking about travel is following deals, but within reason. Budget airlines can seem really appealing to some travelers, but it’s important to keep an eye out for potentially exorbitant fees, or just plain old unreliable service that would not make flying that airline worth it.

I’m not going to name these airlines that I’m thinking about, but I’m sure everyone knows and has heard a horror story or two — maybe even had one that they’ve experienced that will make it so they never book with one of these cheap airlines ever again. That’s my case at least.

Liz Weston: And even the good discount airlines have been having trouble with customer service. But if you have a real problem, you want to make sure that you are able to contact somebody to work it out.

Sean Pyles: And another thing that can help make traveling a little bit easier is getting travel insurance. Some credit cards will have trip interruption or cancellation coverage.

And then, also, you might want to think about getting medical and evacuation coverage if you are traveling overseas. Because, as we know, the testing mandate has been lifted in the U.S., but if you get sick, you’re still going to have to quarantine for at least a few days.

Liz Weston: What you need is what’s called trip delay coverage, and you need enough to pay your hotel bills, pay your food for a few days. Maybe even up to 10. It may take a while for you to recover.

I love the fact that my credit cards will cover a lot of this. But medical coverage is not part of your credit card insurance, and you want to check to make sure that your health insurance will cover you overseas. And if it doesn’t, you definitely want to buy some insurance that does, because your credit cards are not going to cover that.

Sean Pyles: Right. We’ve been talking a lot about air travel. I also want to talk a little bit about road trips, because I love a good road trip, but we all know right now gas is still uncomfortably expensive. And it’s making the idea of a road trip a little bit less appealing for a lot of travelers.

Even if you go somewhere and get a rental car, it turns out that rental cars are still super expensive. That’s all to say this might not be the year for a big cross-country road trip.

Liz Weston: Yeah, but there are alternatives if you don’t want to fly, and you want to get out and see the world. Amtrak is one possibility. Again, it can be expensive, so you might want to check out to see if you have a travel rewards partner that you can move points into Amtrak. You could find some pretty good deals there.

There are also pretty nice bus lines. That’s another way that you can get around.

Sean Pyles: Yeah. One idea that I’ve been floating for part of my sabbatical once I’m back stateside is to go to San Francisco to see some friends. And the Amtrak train from San Francisco to LA is just gorgeous.

And then I can get down to LA and see some friends and family there. And I won’t have to worry about driving around, because gas is so expensive in California right now.

Liz Weston: Yeah. And actually, I’ve taken that train from LA to Seattle or Portland several times, and it’s intensely beautiful. Get a little roomette, so you have someplace comfortable to sleep. And it is just stunning. It’s a beautiful trip.

Sean Pyles: I was going to ask about that, because with COVID still being a thing, I feel like a sleeper car might be a safe alternative.

That way, you can have a little bit of privacy and get comfortable for what’s going to be a pretty long train ride. But then you can just look out the window the whole time, and it’s gorgeous.

Liz Weston: Yeah, it’s incredibly relaxing, if you like that kind of thing.

Sean Pyles: Yeah. OK, well, I think that about covers it for summer travel. If you guys have any fun travel plans or tips, please hit us up on the Nerd hotline. Or email us at podcast@nerdwallet.com, and let us know what you’re planning.

And before we get into this week’s money question, we have some exciting news for all of our listeners. We are running another Book Club sweepstakes ahead of our next Book Club podcast episode.

This time around, we are talking with Emily Maloney, the author of “Cost of Living,” a series of essays based on her own experiences navigating the health care industry and the impact of medical debt on the U.S.

Liz Weston: To enter for a chance to win our book giveaway, send an email to podcast@nerdwallet.com with the subject “Book Sweepstakes” during the Sweepstakes Period.

Entries must be received by 11:59 p.m. Pacific Time on July 20th. Include the following information: your first and last name, your email address, your ZIP code and your phone number.

For more information, please visit our official Sweepstakes Rules page. Also, if you have suggestions for future authors for us to interview, please send us a note at podcast@nerdwallet.com. We look forward to reading with you.

Sean Pyles: OK, now let’s get on to this episode’s Money Question segment.

Liz Weston: All right.

Sean Pyles: This episode’s money question comes from Kevin, who left us a voicemail. Here it is.

Kevin: Hey there. My name’s Kevin. I’m a new listener, but a happy one. Love your work. Love what you guys do.

I have a question about inconsistent income and how it relates to credit cards. I work as a freelance lighting designer, so different venues across the country hire me out, fly me out, and I program lights for different shows and musicals and whatnot.

By the nature of this work, my income is fairly inconsistent. I recently completed a two-week long gig that gave me a considerable sum of money. And I was wondering if I should use that to pay down credit card debt or purchase a new computer, as my other one died, and I’m using a backup one that works fine, but not as well as I would like.

I have around $6,500 in credit card debt that has been transferred to a 0% interest credit card for 12 more months. I guess my question is if I should use most of that money to pay down the credit card debt and buy the computer, or if I should put it away in savings, because my emergency fund is maybe 75% funded.

Let me know what you think. Thank you. Bye.

Liz Weston: To help us answer Kevin’s question, on this episode of the podcast, we’re talking with Sara Rathner, who’s a credit cards Nerd and occasional co-host of the Smart Money podcast. Welcome back, Sara.

Sara Rathner: Thanks for having me back.

Sean Pyles: Sara, I want to start at a high level and talk about managing an inconsistent income, because that can make budgeting pretty challenging for folks — when they don’t know what they have coming in, but the money is still going out every month.

How do you think folks should begin to get a grip on their finances when they have an inconsistent income?

Sara Rathner: Yeah, this is really common for the many American workers who are freelancers or contractors or gig workers. You’re not getting a paycheck every two weeks that’s roughly the same amount of money.

So you want to first start with your bare-bones budget: just the minimum amount that you need to cover necessary bills — food, rent, medicine, health insurance premiums, utilities, transportation, the basics.

And then from there, you can build on that and think about other bills and other expenses you have that are billed in a monthly cadence usually. And you almost want to think about, “What do I earn annually,” and then divide that by 12, because you don’t necessarily make the same amount every month.

Sean Pyles: It can also be helpful for folks to revisit their bare-bones budget quarterly — or monthly if they’re feeling really ambitious — because chances are the minimum amount they have to spend to cover things like food and rent has gotten more expensive lately.

Liz Weston: Yep. Thank you, inflation.

Sara Rathner: And gas, if you drive for your work.

Sean Pyles: Right.

Liz Weston: Well, I think all of us have been freelancers at one point. And one of the things to think about when you’re talking about budgeting is your income and trying to create at least one stream of income that’s on the reliable side.

Having either a side gig or — my IT guy charges a retainer to his customers. So we get, I think, two hours worth of work every month essentially for $80. And we might use that and we might not, but that helps him keep a steady income going.

Sara Rathner: Yeah. When I freelanced, I had one main client that accounted for about 20 hours a week of work. And then I would supplement that with one-off projects or clients that needed me for less substantial projects or lower amounts of time.

But at least I always knew I had that steady, part-time job, essentially. It wasn’t enough to survive on, so I’m not a freelancer anymore.

Liz Weston: Another thing that can help people is having access to cheap credit of some kind. I got a business line of credit that was super cheap, and that was super helpful.

It helps you get through the lean times when necessary and make sure that you have the cash flow that you need. Some people use a home equity line of credit. It sounds like Kevin uses credit cards.

Sara Rathner: So when we talk about, “Should I pay off debt or should I do other things,” I feel like a lot of times the pervasive advice is, “You got to pay off the debt, you got to pay off the debt. The debt is bad. It’s dragging you down.”

I’m going to argue in favor of buying the computer.

Liz Weston: OK.

Sean Pyles: Well, it does allow Kevin to do their work, right?

Sara Rathner: Yeah. It’s not like, “Should I go to Coachella, or should I pay off my debt?” Then the answer to me would be very clear: “Don’t go to Coachella, dude. It’s overrated.”

But this is equipment that you need to do your job, and you’re working with a backup machine. You’re a lighting designer. Your technology has to work. And if it doesn’t, I imagine it’s a pretty small industry — word’s going to get around that you don’t do a reliable job.

Sean Pyles: Yeah. And I have a feeling that Kevin is probably pretty decent at managing finances, anyway. Kevin was able to qualify for a 0% interest credit card, which not a lot of folks can do. You have to have a pretty great credit score to do that.

So I’m assuming that he’s able to make payments on time — hopefully, they could keep his utilization low — and make a plan to pay off all of this debt before the 0% APR period runs out.

Sara Rathner: Right. Kevin, if you still have that $6,500 balance, and you still have that 12 months to go, we’re talking $540 a month to get that debt paid off before the interest rate rises — again, because the promotional period for the interest rate has ended.

So if you can cash flow it out and afford that $540-a-month payment — or maybe you have a month where you’re more flushed with money because you’ve just finished working, bump the payment up if you can. So in the months where your money is a little bit more lean, you don’t have to make as large of a payment, but you can still hit that 12-month goal.

That’s a great way to — I hate to use this businessy word, but — to leverage the debt, which is essentially a fancy way of saying: Take advantage of the time you have where your debt doesn’t cost you anything extra.

Liz Weston: I would just add that you need to be careful about overdoing it on deductible expenses. I got into this habit. Because it was tax deductible, it was like, “OK, I can spend anything I want.” It’s still real money. You do get a tax deduction for it, but it’s really easy to go overboard.

Obviously, you got to have your equipment running; it has to be good. But maybe not buy the absolute top of the line. You don’t need that.

Sean Pyles: Right. I have a very dear friend who loves to travel and is a freelancer. And she recently took a vacation and wrote all of it off, because she said it was deductible because she did a couple hours of work each day.

But that didn’t maybe mean that she should have purchased a room at the most beautiful hotel in the town that she visited. But to her, in her mind, it justifies it because, oh, she can just make it a deduction when it comes time to file taxes.

Liz Weston: Ooh, you got to be careful about that, because the IRS is looking for exactly that kind of thing. And if she went overseas, there’s different rules that apply overseas. You have to work a heck of a lot more to make things actually a business expense than you do if it’s local.

So as long as she’s getting really good tax advice, if she’s doing that, cool. But we were talking offline about: You don’t want to follow the TikTok influencers who say, “Write off everything.”

Sean Pyles: Right.

Liz Weston: Because that’s going to come back and bite you in the butt.

Sara Rathner: I’m just going to say this to Kevin and anyone else who’s listening who’s self-employed: Don’t commit tax fraud because some himbo on TikTok told you that it was a good idea.

Seriously, pay for a tax professional — a CPA, or an enrolled agent, somebody who is credentialed, who understands the law, and who also is liable if there is a mistake on your tax return. That’s a nice bonus. You’re paying for that security.

And they’re available to you to answer your questions as your needs evolve over time. You might have questions about, “Oh, should I stay a sole proprietor? Should I become an LLC? Is this expense deductible? Is that expense deductible?”

You basically have somebody in your life on retainer who can help you make these decisions. Because if you’re asking some buddy what to do — I mean, you’re not going to get reliable advice unless that buddy is an accountant.

Sean Pyles: Well, you mentioned a sole proprietorship. Can you describe what that is and why it might be beneficial to someone like Kevin or anyone else who’s freelancing or self-employed?

Sara Rathner: I mean, if you’re one person who walks dogs in your neighborhood and gets paid for it, congratulations. You are a sole proprietor, and you, as such, need to do your taxes in a way that is in line with having a small business.

I’m not a tax professional — this is not tax advice, guys. But there are different ways to structure your business that typically has to do with liability if something were to go wrong with your business. So a sole proprietor is liable, and so your personal assets could be at risk.

And then an LLC is a little bit different. It’s limited liability, and so it limits how much of your personal assets would be at risk if something were to happen, instead of just your business would be at risk.

And then from there, you go into larger corporations. Again, if you are self-employed in any way, and you have questions about how to structure your business, may I once again recommend that you talk to a tax professional. And they can tell you if the cost of setting up an LLC or something more official is worth it.

Liz Weston: When you’re a business owner, you really do need to have tax advice.

Speaking of liability, we should make clear that the taxpayer is always responsible for what’s said on the tax return. If you do get advice that turns out to be not correct, a tax professional should have errors and omissions or other insurance that will cover things like your penalties or your interest, and they can help you fix it.

But you’re going to be on the hook for those taxes. So even if you do have some sort of scam artist accountant who’s telling you to write off everything, that’s still your name on the tax return, and you are on the hook for that.

So you want to make sure that you’ve done the research, gotten a really good professional, licensed person to give you advice.

Sean Pyles: Right. Well, now I want to talk to another part of Kevin’s question, which was using the money to pay off debt or put it in savings. And Sara, you alluded to how sometimes people think, “Oh, you have to put everything toward paying off debt. Do that first and foremost.”

But at NerdWallet, we like to say that you can multitask. You can both build up your savings and pay off debt. And it’s actually very important that you do that, because having a decent cushion in your emergency fund can prevent you from getting into debt in the future if and when an emergency does pop up.

So let’s talk about this aspect a little bit and maybe when you actually might want to funnel more money toward debt instead of savings. That’s what I’m thinking with Kevin, because they said that their emergency fund is about 75% funded.

Sara Rathner: Not sure what they mean by 75%; 75% percent toward a specific goal, it sounds like. And I don’t know, based on the information that we have, if that goal is three months of expenses, six months or more — or even some other goal, like one year’s salary or something like that.

Sean Pyles: For some people, it’s just one month, right?

Sara Rathner: Right. And sometimes career freelancers or contractors will have even more emergency savings than the recommended amount, because their income is so variable.

If it helps you sleep at night to have a year saved in your emergency fund, then do what helps you sleep at night. That’s OK. You don’t have to listen to the rule of thumb if it’s keeping you up.

So I don’t know what 75% means, but it does mean that they’re in a pretty good position, because they’re not starting from zero.

So if they wanted to perhaps allocate a certain amount of money per month toward the credit card debt that’s currently 0% interest, and then another perhaps smaller amount of money into continuing to replenish that emergency fund, then that’s something — if they’re able to do at the same time, that’s great.

Liz Weston: Well, we’ve been talking about emergencies, things that can come up, but people can put protections into place to make it less likely they’re going to have some sort of catastrophic expense. Can you talk a little bit about that, Sara?

Sara Rathner: When you’re an employee of a company that offers benefits, they are either free to you or they’re heavily subsidized so they’re not as expensive. So you’re paying them out of your paycheck, and you might not even realize everything you’re getting.

Health insurance is obviously the big one, but you might also get access to disability insurance and life insurance, among other perks. And these things are really important to have for every worker, especially people who have dependents who rely on them financially.

And so when you work for yourself, you have to cobble together your own benefits package and pay for it yourself.

So I would say, Kevin, if you haven’t looked into this, if you haven’t budgeted for this yet, look into how you can access these benefits. You work as a lighting designer in theater — maybe there is a workers union you have access to that will offer health, disability insurance at a discounted price.

You basically need to plan for having a source of money available if you’re temporarily unable to work because you get sick or injured.

Liz Weston: Yeah. If you’re young and healthy, you think, “Oh, I’ll be fine. I can skip the health insurance.” But it’s just one accident, one illness will show you the folly of your ways. So make sure you’ve got that.

Sara Rathner: Yes, especially if you’re working in any sort of industry that involves lifting heavy things.

Liz Weston: Having heavy things fall on you …

Sara Rathner: Right, driving many miles to a job … There are lots of things that can happen on the job that can temporarily or even for the long term put you out. And so you need to plan for those sorts of things. And, unfortunately, that protection does cost money.

Sean Pyles: It might also be worth talking about how Kevin got into debt in the first place. I think that they might want to examine their spending and see if there’s a way where they can hopefully limit their debt in the future.

See if maybe it was one big unexpected expense like a medical bill, or maybe a series of smaller purchases that just added up because spending can pile up like that.

Sara Rathner: So much of debt is associated with negative emotions, like guilt and shame. But feeling those feelings can be worth it, because it can help you find ways to avoid getting back there in the future.

Emergencies do happen. So, in that case, why did I get into debt? Did I not have adequate emergency savings at the time? And then when I was faced with this bill, I didn’t have the cash on hand so I had to put it on a credit card?

Or did you just not make enough money at the time to afford your spending, and so you slowly got into debt, and it ballooned over time?

And by examining that, you can find ways to avoid it, find ways to budget differently that will hopefully help you later on.

Sean Pyles: But that moment where you dig into what you owe, figure out why it happened, and then make a plan to get out is so empowering.

I’ve seen this happen with a couple of friends who have gone different paths with this. One, who had almost $20,000 in credit card debt, didn’t really know how to get out. I talked with her about a nonprofit credit counseling agency. She’s going to be on a debt management plan, which she found out will save her $50,000 in interest over the life of her debt, which is incredible.

Liz Weston: Wow.

Sara Rathner: Oh, my God.

Sean Pyles: So I’m very proud of this friend for taking that step, because it was scary for them in the beginning.

And then I have another friend who just keeps putting it off, and putting it off, and putting it off. And it’s been years, and they just kind of bury their head in the sand.

And I’m like, “Well, I’ve done all I can do short of just berating you every day, which probably wouldn’t be good for our friendship.”

But that’s all to say: There are different routes you can take when it comes to managing your debt. And the one of knowledge and ownership and proactive planning is, I think, the best one.

Liz Weston: Yes.

Sara Rathner: Yeah. And, Kevin, you’ve already taken a step toward paying down your debt by transferring that debt onto a card with a 0% APR promotion.

That’s not zero effort there. You have to shop around for the card, apply, get approved, actually execute the transaction to move the money. So you’ve already done the hard work — some of the hard work. Paying it off is not exactly a walk in the park.

So continue the work that you’ve already done. If you’ve given yourself a year at no interest to pay it off, you can spread the pain a little bit. That’s the benefit of these types of promotions, but you don’t want to lose momentum.

Sean Pyles: Right.

Sara Rathner: Now is the time to capitalize on the hard work that you’ve already done, so you can get yourself into a better situation.

And the next time you work a gig that earns a lot of money, you don’t have to ask yourself, “Should I put this money into debt?” Your debt’s gone. You could put that money into something else, and it’ll be awesome.

Sean Pyles: But, like you said, the benefit of this kind of card can also be the risk, where you kind of forget about paying it off one month. And then it just piles up, and then suddenly you’re a year later, and you still have that debt.

So it really is important to make sure you know exactly how much to pay, and then make a plan to get out of it before that promotional period ends.

Sara Rathner: Yeah. Even set up autopay, if that’s something that’s possible for you. If you know you have the money in your checking account that will cover that bill amount every month, automate it.

Ideally, make it so that you pay it off a month early so you have a buffer, just in case you have to lower the payment one month because it’s just not in your budget. Give yourself a little bit of breathing room, but also automate what you can so you know that bill is getting paid.

Sean Pyles: Well Sara, thank you so much for talking with us today. Do you have any final words of wisdom for Kevin or anyone else that’s in a similar situation?

Sara Rathner: I think 100% of people are trying to prioritize multiple financial goals at the same time, so you’re not the only one. Everyone else is in the same boat.

And your unique situation might make it so that certain best practices or rules of thumb don’t necessarily apply, and that’s OK. It’s OK to buck the traditional advice if it’s something that will get you closer to where you want to be.

But do that with caution, and just be aware of your situation. Be honest with yourself, so you don’t accidentally put yourself at risk of getting further into debt or anything like that.

Sean Pyles: All right. Well, thanks again for talking with us, Sara.

Sara Rathner: Thank you.

Sean Pyles: And with that, let’s get on to our takeaway tips, and I will start us off. First up, know your bare-bones budget. If you make an inconsistent income, understand the minimum amount you need to earn monthly to cover your necessities, like food and housing.

Liz Weston: Next, balance your priorities. Building up an emergency fund is important, but work to make progress on your debt payoff, too.

Sean Pyles: And finally, be smart with 0% interest cards. Pin down how much you need to pay monthly to get debt-free before the promotional period ends.

Liz Weston: And that’s all we have for this episode. Do you have a money question of your own? Turn to the Nerds, and call or text your questions at 901-730-6373. That’s 901-730-NERD. You can also email us at podcast@nerdwallet.com.

Visit nerdwallet.com/podcast for more information on this episode. And remember to follow, rate and review us wherever you’re getting these podcasts.

Sean Pyles: This week’s episode was produced by Liz Weston and myself. Our audio was edited by Kayleigh Monahan.

And here is our brief disclaimer, thoughtfully crafted by NerdWallet’s legal team. Your questions are answered by knowledgeable and talented finance writers, but we are not financial or investment advisors. This Nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

Liz Weston: And with that said, until next time, turn to the Nerds.