I watched dozens of finance guru Caleb Hammer's videos — here are his 6 go-to tips for people with massive debts (2024)

• Anyone who spends time on finance TikTok has heard of Caleb Hammer.
• He's become known for his blunt advice to help people budget their way out of financial ruin.
• Here are the tips and principles he always comes back to when giving guidance.

If you've spent any time at all on finance TikTok, you will know Caleb Hammer.

28-year-old Hammer, who started making videos for YouTube a year ago, has become a staple of the online personal finance genre, as a kind of modern Dave Ramsey.

His blunt, tough-love approach had amassed 664,000 subscribers at the time of writing, with some clips viewed millions of times.

Hammer's YouTube show "Financial Audit" generally shows a guest opening up to Hammer, letting him analyze their bank statements, debts, mortgage, medical bills, and other outgoings in excruciating detail.

Snappy clips of these interviews also regularly go viral on TikTok, often featuring Hammer scolding guests for their "bullsh*t" spending.

Hammer uses his own journey from his past getting into massive debt at a young age, then getting out again, to help the people on his show. He is open about the fact he isn't a qualified financial advisor, but his no-nonsense approach keeps viewers and interviewees coming back.

Here's a list of some of the solid foundational money advice Hammer gives out time and time again to people who don't know where to start with their huge debts.

The 50-30-20 rule

Hammer touts Dave Ramsey as one of the reasons he was able to get free from his own debts years ago.

Hammer told Insider he has "a lot of respect" for Ramsey and his method, but said that his phone-in format only gives a limited picture of a guest's situation. Hammer said his interviews are meant to give a more rounded version of someone's life and debts, which last about an hour each.

One staple piece of advice Hammer often tells his interviewees to take on board is Ramsey's 50-30-20 rule.

The saving plan breaks down post-tax income into needs, wants, and savings + debt — 50% goes on needs such as rent, mortgage, bills, and groceries; 30% goes to wants, like eating out or vacations, and the remaining 20% goes towards paying debts. If there are no debts, then it goes towards savings.

Hammer emphasizes there is no "one size fits all" method for saving, but the rule should be pretty effective for a lot of people.

Are you a credit card person? Probably not

Hammer's guests almost always have credit-card debt, and very often, their cards are maxed out, and on high interest rates.

One of Hammer's catchphrases has become him shouting at people: "You are not a credit card person."

A credit card person, he says, is someone who has no recurring debt, and so is never charged interest because their pay off their balance every month. He argues that anyone who doesn't do this shouldn't get a credit card.

He also says it's not wise to spend on a credit card you are still paying off. In some shows, he's had guests cut up their cards as a way to drum into them that the spending has to stop.

Avoid pay-later apps and financing

Hammer says he sometimes agrees with financing a big purchase, but only when someone is doing that to invest the cost of the initial purchase to turn a profit once it has been paid off.

Anyone who is just stretching out the payments because they think it's more affordable is making a mistake, he argues.

Unless they offer a 0% rate, buying on finance costs more overall, and can also lead people to sign up for things they probably can't afford.

It's a similar story with buy-now-pay-later apps like Klarna and AfterPay. Guests on "Financial Audit" sometimes pay off their pay-later purchases with credit cards, which Hammer considers a slippery slope.

Snowballs and avalanches

A debt "snowball" method is a technique used by many financial gurus. It involves paying off the smallest debt first, even if it isn't at the highest interest, to create a sense of momentum as each debt disappears.

Hammer sometimes recommends this method if the guests debts spread out across multiple small credit cards and loans.

For interviewees who had debts at very high interest rates, Hammer sometimes advocates the avalanche method instead. This technique calls for debts to be paid off from highest to lowest interest rate, and is the most cost-effective approach.

Get a side hustle

Hammer often recommends people work more to get on top of their debts. If they already have a job, he tells them they should sign up to be an Uber Eats or Doordash delivery driver (if they have a car).

For those who are unemployed, Hammer tells them to get any job they can, whether it's stacking shelves at Walmart, or flipping burgers at In-N-Out.

In one interview, Hammer spoke to a man named Lael who owed around $28,000, and whose needs were $300 over his budget. This was despite him working multiple jobs including DoorDash and being a sperm donor. Hammer said Lael had to bring in more money however he could.

"Because right now this situation is bad," he said. "I don't even know how to budget out your repayment because right now you can't repay. It's as simple as that."

Sell the car, buy a banger

The number ofcar loans in the US has risen sharply over the last decade, according to data from Finder, as has the number of people behind on their payments. In 2022, 84% of new cars driven out of dealerships had financing, per data from Statista.

Nearly every guest Hammer has had onto "Financial Audit" is struggling with some kind of car debt.

One couple had two car loans at 4.24% and 11.51% interest, totaling nearly $85,000.

A 22-year-old man told Hammer he was considering getting a third car loan for a Tesla. One guest was spending half his income chipping away at a $64,000 car loan for an electric Mustang.

Culturally, there's "a complete lack of understanding" of what people can really afford, Hammer told Insider. He blamed that partly on schools not teaching finances, partly on parents, and partly on the normalization in the US of debts taken out because people feel like "we deserve everything."

Hammer aims to try and shift people's perspectives, often telling them to sell their car if they live in a city with good public transport, and buy a "banger" if they truly need their own vehicle.

The funds from selling the car then either go towards paying off the car's debt. If there is a big balance, Hammer recommends getting a loan with a better interest rate to cover the shortfall.