Financial Audit - 25-Year-Old Borrowing Terrible Debt For Her BOYFRIEND!

Episode Date: June 12, 2023

Check out these fun things: Patreon: ⁠https://www.patreon.com/calebhammer⁠  My socials: ⁠https://linktr.ee/calebhammer⁠  Do you want to be in a Financial Audit and you're in the Austin area? Email [e-mail] Sponsorship and business inquiries: [e-mail]  _______________________  Timestamps: 00:00 Job and income 01:08 Drowning in debt from the past 03:38 Checking accounts and where money goes 04:53 He's trying to correct her budget 06:50 Checking accounts continued 08:09 Random savings? 09:23 TERRIBLE CREDIT CARD DEBT 12:42 Retirement... with 1.8% interest... 15:13 $18,923 CRAZY DEBT 17:00 Going to school all of a sudden??? 19:48 Control your money! 21:48 IT'S TIME TO GET REAL 22:55 DEBT ON A CAR FOR HER BOYFRIEND!!!! 26:20 IT'S TIME TO GET REAL p2 32:48 Hammer Financial Score --- Support this podcast: https://podcasters.spotify.com/pod/show/calebhammer/support Learn more about your ad choices. Visit podcastchoices.com/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the show where I take a look at someone's personal financial situation, find ways to overcome their overall financial struggles or meet the financial goals that they're trying to achieve. And make sure to subscribe. I'm really trying to get to 100,000 subscribers and every subscription helps. Thank you all so much for the subscribers so far. With that, my name is Caleb Hammer. And today we are meeting with Cassie Cassie. How old are you based on? I am 25 years old and I am based out of Grand Junction, Colorado. What do you do for living?

I'm in airway transportation system specialist. So I work for the FAA doing maintenance. What do you bring in? So right now I bring in about $75,000 a year. 75 thing. Very nice. Did you have to get a degree certification or what? No.

So I'm actually prior military. So in the military, I worked on avionic systems. in aircrafts and it's pretty much that, but like on the ground. Okay. So when taking a look at your overall financial situation, how would you describe it? What do you think I might be able to help with? So overall, I mean, I'm not in the worst position. I think that I definitely need some guidance.

I have quite a bit of debt, which sucks. I think that I've been pretty financially illiterate up until like the last six months where I've taken the time to learn, but at that point, you know, it's too late. So at this point, I'm just like trying to get down, get down the debt, out of debt pretty much.

And yeah, I mean, I'm trying to increase my income as well. I'm up for, so we actually just got a raise, and then I'm up for another one in the next month, and that'll be an 8% increase. Okay. Well, at least that's keeping up with inflation or right about. But that's good. You just got one, and you're getting one immediately again? What is it, like quarterly?

Well, every year, like, the government gives their employees raise in January. this the one i just got accounted for inflation this one is just because like increasing throughout like my job like well that must be nice that's that's pretty cool so debts why'd you get into so much of debt um i think poor lifestyle choices um what were those choices more lifestyle choices i think that it's really easy especially when you get a credit card like if you don't have it it's like not a big deal in your mind. In your mind, it's not a big deal to just wipe and use it. And that adds up pretty quickly. And then also, me and my partner, we decided to have kids. Kids are very expensive. They're very expensive. How many kids do you have? So I have one and I'm currently 37 weeks pregnant.

So I'm about to have another. But we're going to stop it too. All right. Well, let's take a look at this then. We got a checking account with $764, scary beginning balance, 6,4 in, more out than in, 6,828 left. And then an ending balance of 376. That's scary for a checking account for me. I would at least like to have a couple thousand, you know, buffer in a checking account.

No, I do have two checking accounts. I don't know if you see both of it. Okay, well, I'm looking at this one first, but okay, that's good. So, let's see here. Where is this money going? We got Amazon Prime, insurances and grocery stores, Apple subscriptions, ATM withdraws. We don't know where that $160 went. Transferring some money around.

Yeah, transferring money around. ATM withdraws. ACH withdraw, ECH withdraw Transferring Transferring So okay Is this like the go-through account

Is money in here And then it gets transferred to places Or what? Yeah, I would say it's That's the account That's the account that my direct deposits go into And I also I've been trying a thing

So it's called cash budgeting I don't know if you've ever heard of it Yeah, yeah No cash budgeting Is good like the envelope system That's what you're talking about Yeah he did not vent that to be very clear. Just like the most things, most things he talks about, everyone thinks

he invented it, but it's existed well before he came along. But yes, and has it been working good for you? Yeah, I think it's been, it's been easier. Like, so in my wallet, I don't, it's like, sometimes I will do groceries, like using my car. Um, because I'm, like, my mom will send me money for groceries. So my sister does live with me. She's going to college full time. And I, I work and so she'll send me money for her groceries and then I'll just use my card. But for the most part, I take all of my, all of my. USAA knows dynamic duos can save the day like superheroes and sidekicks or auto and home insurance. With USAA, you can bundle your auto and home and save up to 10%.

Tap the banner to learn more and get a quote at usa.com slash bundle. Restrictions apply. Like bills that I pay online, I pay like online. I don't take out the cash for that. And then any sinking funds or like grocery money or like anything that goes in my wallet, I take out in cash. And I think it's been better for me to like physically see the money and have to like give it away. Like I think that's a better visual. Sure.

I'm glad that works for you. I wish it worked for me. It doesn't. For some reason when I have cash, this is bonus. Like, because it doesn't impact the number on my screen when I open my account. And that is the money I have is what's there. And anything that's deducted from that. I'm like, but cash, I'm like,

woo, but I'm glad that works for you. That's good. I think that's how it works for the majority of people. I think since I'm so tech-driven, it just works opposite for me, but I'm very glad that works for you. And I can definitely tell because you were drawing more money from ATMs, $80 there, $500 there.

There's not really fun monies being spent on here. This is money getting transferred back and forth and with drawing, right? Right. And then I did send you the, I put my Excel sheets of what I have currently in my, binders, not in my wallet, but, because that's kind of like always rotating, but in my binder specifically, what I have. And then like I said, I have another checking account as well.

Yep, we'll look at all of it. So there are subscriptions on here. We do have subscriptions going and kind of a big debit card purchase, Lovery, Lovevery, or whatever. Love very, geez, it's a subscription kit for my son. Honestly. I'm going to get rid of it because it's pretty expensive. Yeah, so you definitely have subscriptions on here and then Amazon purchases as well. So let's go find that other checking. Here's the other checking. Okay, yep, this one definitely has a buffer.

5,252 starting more money out again, though, 3,416 out where 3,130 came in, ending balance of just under $5,000. So let's see what's up here. So, yeah, here's, well, there's a ring subtraction, and then transatlantic, and then transferring things, transferring things, and good hometown something, and planet home, A-C-H. That's my mortgage.

Your mortgage, okay. So you own a home? I do. Own a home. Okay. Lots of transferring, transfer, transfer, transfer, transfer. Okay, very cool. So your mortgage is $1,500 a month, right?

1550. Right. Well, it's a little under that, but I put the principle, like, I just round it up, Because in the app, it says it'll make me pay it off a year earlier. So I don't know, $26 an extra month will do that. I mean, yeah, and then we have savings as well.

A youth savings account that you must open when you're younger. So only $2,961 in here. So what's up with this? What is this to you? So that is actually my son's saving account. That's what I've saved for him. And obviously, if it hit the fan, then, you know, because it is my account. It's just it's a savings account.

But I don't take anything out of that. What's the purpose of it? Or is it to save for his college and stuff like that? So it's not necessarily for his college. I don't know. I guess I just wanted him to have money. I have a 5 to 9 plan for him for college that I pay into. So I don't know.

I just was saving, I guess. Yeah. Okay. Yeah, that makes sense. So I don't know what the interest that you're gaining on here is, though. Oh, no, 0.01%. This is terrible. Transfer immediately to somewhere that gives you at least 3%.

Because, yeah, I'll let it keep up with normal inflation at the very least. All right. Let's see here. We also have, oh, okay. Yeah. Here we get into the net. previous balance 1,918, new balance 1,865, only made a payment of $100 with $465.65 cents of interest charge. That's, okay, you did pay more than the minimum monthly payment, which is $65, not that much more when it comes to a balance like this.

Luckily, you make good money, so I'm very curious what the overall situation looks like when we're at the end. Good, you are not purchasing things on a card that already has a balance that you are not paying. off because also it is at a rounded up 30% interest. Terrible death. Yeah, that one, that card I definitely regret, but I was traveling a lot for work, well, not for, so I was still in the military and I was having to pay for my own plane ticket. And of course, they were offering 50,000 points and whatever else. And I didn't realize how bad the interest was. This episode is brought to by Redfin. You're listening to a podcast, which means you're probably multitasking, maybe even scrolling home listings on Redfin, saving homes without expecting to get them. But Redfin isn't just

built for endless browsing. It's built to help you find and own a home. With agents who close twice as many deals, when you find the one, you've got a real shot at getting it. Get started at redfin.com. Own the dream. And again, I feel like I just became financially literate. somewhat like six months ago so now I'm just trying to it takes a lot longer to take yourself out of the whole than I thought it would it's very true well I'm just glad you're not putting more money on there since you're not fully paned off and it has 30% so but I get it and then before we look at those monthly things that you put up we also have a prime card new balance 320 with a minimum payment of $35.

Does this always paid off? Yeah, I see no interest with charge. Is this always paid off? I always pay that one off. I'll use it. So anyone in my household, so it's me and my partner and my sister, anyone in the household will use the card because that, they have really good points for the Amazon card.

Interest, not good. But which I, because I had, I paid that. That one had a balance at one point that I paid off. But that one, I do like to get the points for it, but I do pay it off. You have a purchase every two days about every two days. That's a lot. Yeah. That is a lot, which I need to work on.

It's hard to say those are all necessities if they're every two days. You're right. They are, I guarantee you, they're not all necessities. Guarantee it. I live in a smaller community, like pretty small. So it's like harder to just go to the store and get things that, I think most people would be able to get. But again, you're right.

They're not all necessities. What do you mean? Do you have a Walmart? No, we definitely have a Walmart. But like I would say like, so I'm from the East Coast originally. And the things that I could get in Walmart there or not the things I could get in Walmart here. The population here is like 10,000. I'm okay with getting necessities from Amazon.

but I'm less okay with getting a fund purchase, even if half of these, even if half of these are necessities, I'm not good with getting a fund purchase every four days when you have a $2,000 credit card balance that's accruing 30% interest. So let's continue to look at your accounts, but, okay, Thrift Savings Plan, Civilian, rate of return 1.88, which is still crap compared to,

it today, but at least it's much better than the... That is my retirement plan, and I'm supposed to, like, put it in different funds and stuff, but I don't really know much about that, so I haven't done it yet. Well, I don't know Thrift. You might want to contact them, but yes, we definitely want to put these in things. I do not give investing advice. This is not official financial advice, but I'll tell you what I do with $19,830. I put it in, you know, spread it across good returned mutual funds and index funds like the S&P 500,

which gives you an average 10% return when taking account its average, or since the beginning to end on a 10-year basis. It's average yearly return 10%. That's what I do. Believe it or not, 10% is higher than 1.88%. So that's typically what I would do. So that's something you might want to reach out to them. I use fidelity. Fidelity is great. You could probably roll this over or it's not even in something. I actually get them through my job and so I put in 5% of my income and they match it.

This is your current. This isn't from your previous military position or something like that. No. I think in my military one there's like $2,000 because they don't match. If this is your current then, okay. So yes, then we just want to get in contact with Thrift. You might have a representative. Maybe your workplace has a representative. I'm not exactly sure with their service, but see what they offer. And you can get target retirement funds as well, which, you know, aim to get you to a certain retirement place that you want to have. By like, well, in your case, you could get like a 2060, maybe a 2070 retirement fund,

something like that. And it aims to get you to a good place for retirement, essentially, as long as you're consistently putting in enough money. I mean, that kind of comes down to your decision in the end. Yeah, it comes out automatically, and I just put it in at 5% right now. Eventually, when I'm out of debt, I'm hoping to put up more. Yeah, I would definitely take the match because that's always 100% return on your money. So it makes no reason to not pay that off.

Even the 30% interest, it's not even comparable, you know, when it comes to 100% return. And then, oh, we have something. Oh, we have something. So what in the world is this? What is this $18,923 debt? So that is my biggest debt right now. I did a consolidation because I had a lot of credit card debt. That's what I was guessing.

Yeah. And that one, when I, so I did the math on it as far as the interest rate and the monthly payments that I was making on the cards that. I had and this was smarter. Well, I'm okay with consolidation. At a certain point, it makes more sense to consolidate than do something like the snowball method or avalanche method. So this is, you know, I don't know what it was like. I'll just take your word on it.

It was smart. But what is the interest right now? What is the interest rate on it? Not great. It's, I think, 11%. That was a lot lower than the credit cards that I had. Yeah, that's usually lower than credit cards, but 11% is still deadly. Oh, and especially on 18,923, with 56 monthly payments to go with a minimum monthly payment of $413.

Luckily, you probably bring home about $5,000 post-taxes a month, right? Maybe $4,500. It's not that much, I wish. So. Well, I guess I wasn't taking your contribution to 401K either. So what is it? I don't know. I feel like I have a lot more deduction than like,

the standard person. I pay into a retirement fund as well. So like if like if I retire from here 30 years from now, I'll get like 40% of my income. But I have to pay into the fund for it. Okay. I don't know. That's just yeah, I have a lot of deductions. But I would say my take home each check is like so in the month I would argue that's closer to 4,000. But right now I'm actually currently in school as well. And I'm using my GI bill. And so they pay for my... Why are you in school and you're making 75,000 hours a year

with guaranteed incredible raises? What are you doing? Well, I'm using my GI bill, which they pay for my housing while I'm in school. So I'm trying to take this time to take off my debt. Because they pay for my housing. Yeah, the housing thing, that probably makes it worth it. My concern was all the time studying on school

could be spent on side hustles that would pay this off quicker, but if it's taken care of housing, it might offset. What are you going to school for, where, for what, for how long? So right now I'm in school for massage therapy. I just thought it would be a cool thing to do. Well, you're not actually going to do that, though, correct? I mean, I think it'd be a cool side hustle, but I'm not going to, like, switch careers or anything. Yeah, that'd be a big pay cut, especially at first, big pay cut, average $15. an hour. Yeah, so I'm not going to quit my job board or anything.

And then I'm actually just using the rest of it. So I have another, I think, 16 more months. And I'm going to go. So once this class is over in the next couple months, I'm going to go back for or continue for computer networking. And that'll take the rest of my GI bill. And so I'll have my housing paid for another year. And like I said, I'm hoping that that'll put me in a much better position. All right. One second.

All right. So, and then your workplace it offers, so there's a pension that you're paying into as far as I understood it and they have a 401K on top of it? Right. Okay. And I also have a health savings plan. So for child care, they take out my child care expenses pre-tax. Okay. So, yeah, you deduct a lot.

Okay. And that's okay. You're doing them into good things. So that's fine. Well, the pension. Well, I don't know.

The in and outs of each pension, it depends. But victory capital, capital, we have $1,630 in what? Oh, investing for minors is another investor? Oh, is this his,

uh, that's his 529 plan. Okay. Cool. I'm fine with that. So, do you eat out? I do eat out.

I need to be better about it. Well, where? Because there wasn't like a lot. Right. So if I eat out, again, I budget it and I take out the cash and then I put it in my wallet. But I feel like I probably give myself too much. Yeah, that's where I don't like cash on my side of the table because I don't, I can't see where it goes. But we can look at your thing.

So childcare. Do you owe childcare to someone else? or is this you just put that as a general category so well that's that'll be i think you're looking at my bills yeah i'm looking at your monthly bills yeah so no that's what i pay to my the child care center um every month daycare yeah daycare okay cool so credit card hundred ring alarm 10 hello below this is a diaper service okay is it price effective compared to shopping for diapers? Honestly, I don't know because I've never done it.

I probably should look into doing that. Yeah, you love Amazon. Take a look at diapers on Amazon because we need to squeeze as much money out of you as we can. As much as I love YouTube premium, I don't think you should necessarily have it right now. Whatever we can cut back on. Apple One, I don't think you should have right now. Yeah, maybe continue doing the 529. Hulu I would cut

Gerber life. I don't know what that is. You could probably cut it. It's a life insurance policy. Oh. Well, it's not making or breaking. Amazon credit card, 100. You spent more than that, didn't you? Oh, yeah. That's

in total 75. So, it's time if you want to get real and take care of this deadly 30% credit card debt, Then we get real because even with $4,000 after all deductions, I see no, well, okay, I see no reason why that's not paid off in two months. Do you have car debt? Do you have vehicle debt?

I do. That was not included in all this. So what is that car? So, like what kind of car is it? It's a 2012 award explorer. Okay. How many miles? Is that not a good car? It has 100,000 miles on it. What's the loan? Right now, I think the loan's at like 17,000.

I'm pretty sure. 17,000? How? Why? I did get the warranty. I don't know. I just got nervous, I think. Did you not include this because you know it was going to kill me?

Oh, what's the monthly bill? So the monthly payment is 365. But I don't pay that. I don't pay that. I have another car. What? So I have a Honda Civic that's paid off, but we needed another vehicle. It's kind of like, so there's three of us, and my boyfriend told it his car, and it just made more sense for me to get it because my credit's better.

Wait, when did you get this? 2012 um like four months ago i thought you said you became fine well yeah i didn't well i didn't know that card debt was a problem until like last month so again not completely financially literate that's usually step number one okay so six months ago okay what's the interest rate on that what's the loan repayment. 5.7%, something like that. And I know, I thought that was kind of hot, because when I got my Civic, obviously, like five years ago,

it was a lot lower, but that seemed like the standard going rate. So, um. The repayment term? Oh, um, not the longest, I think four years, I think, maybe. Car market turns on the way down. I highly do.

you could sell that car for that amount of money. Yeah, I realize that now, too, that... First of all, it doesn't make sense that you have two cars because you're not married and you have car debt for a car that your boyfriend use. That's bad. That makes no sense. That makes no sense. If you guys are married, then okay, fine, you know,

but you are having debt on a car for someone you're not married to. Well, I think that, uh, I get what you're saying. I think for me, marriage is kind of like, it's important. I mean, if it matters to you, but I think it's more of like, I don't know, just a piece of paper. No, it's when a marriage, it can be, okay, I'm trying to find a proper way to say this. It can kind of be defined as a business agreement as well when we're talking about personal finances. You agree upon certain things. and when a divorce or separation were to happen,

there are legal things that get settled, whereas if it's just a boyfriend, you have this debt on this car, and he's like, oh, I'm going to go just not be here anymore. There's nothing that happens. There's nothing legally that happens there. Right. Well, if I wanted to get a contract put in place,

I could specifically for the car than I could, and it was helpful at that same way, right or no i don't know that contract i mean i guess you can make a legal contract for almost anything right but i'm not a legal expert either way it gives protections in certain cases like this and the financial space i'm not even talking from a religious perspective or anything like that but that's why i talk about marriage when it comes to finances so no this was dumb and i totally get that i think you know in the worst case scenario um i would sell my car because my car works fine plus you have the warranty on it as well. So it's as, I think you're underwater on this thing. I'm not

100% sure, but I would not be surprised at all. You're probably right. You're probably right. So no, I don't think you could just sell your car in that situation. So it's a risky maneuver that you're going on about. Either way, now we're on all these bad debts. We have all these minimum monthly payments. This $4,000 is not going as far. Is you like, let me guess you probably took advantage of like a VA loan. Right. What's the worth of this home? What was the purchase price of this home. Say that again? What was the purchase price of this home? $2.95, I think. Well, your money's not getting stretched very far. It's pretty expensive in Colorado right now, so. Well, I mean, this becomes pretty clear in my mind in terms of what I would do, not official financial

advice, if I were in your shoes. There's the $1,550 mortgage payment. There's the car payment. And then There's the credit card minimum monthly payment and the account consolidation payment. After all that, you probably have what, like $1,500 left? Does that sound about right? I would say it's probably closer to the $1,000 right now. Okay. Then from there, for, again, your partner better be contributing to grocery money and baby money, yeah? So, yeah, so I pay for our son as far as childcare and stuff like that goes.

I'll pay for all his expenses. since we're having another one and he'll take care of hers is how it'll work. And then of course groceries, yeah, he pays for most of the groceries anyway. It's time to cash budget that grocery builds pretty much nothing. Home repair renovations, we're not even thinking about renovations, and we're doing the most minimal repairs possible to not make a death trap in the inside. Christmas, no, that already passed. That's gone.

Birthday, we're cutting birthday. Doesn't matter. Travel doesn't exist. $190.00. Absolutely not. Not even close. Your car maintenance a 264 seems ridiculously high. Clothing, nope, we're cutting it.

Gifts. Nope, we're cutting it. Pet care, take care of your pet. Of course, this doesn't make sense right now. Of the $1,000 left, you need to have all other expenses needed to survive, essentially be $300. Then the extra $700 has to go to this credit card, and that credit card needs to be paid off in about three to four months.

It'll be like three and a half months. it would be paid off because you're just, you don't go out to eat once, you don't get anything on Amazon's. That's not a complete necessity. That's a better value than you going to Walmart there. And then from there, that minimum monthly payment barely even does anything at that point. It's the interest rate that's so terrible. But you have, again, $5,500, and over the $19,000, it's going to take 27 months,

27 months, 27 months of additional payments, probably like 25 months, 24 months. to pay off that really bad debt. So really. Well, all of it? How much of it? The, sorry, I was thinking, the $19,000 of that consolidation, 27 months of you putting extra $700. So I do get $400 a month from my sister,

but I hadn't, I kind of been saving it, just, yeah, I've been saving it, but I guess I should probably put that. Well, with where are you having your savings right now, We're going to stop it there until all this death debt is taken care of. Once the death debt is gone, then we can focus back up on that again because you have about $3,000 there and I'm okay. And you have a good buffer and you're checking as well. So throw that towards this stuff as well.

It's still going to take forever. So that's where I'm a little, I would rather instead of you spending time at school, you were spending time, well, crap, small town, who knows, but anything you can do, anything online, any little small jobs you can pick up all the extra money you can is miserable as a couple years is going to be it's going to be a couple years I'm sorry but this is

I think your mortgage is too expensive for your life right now for your debt situation it doesn't make sense actually you know your mortgage is too much for your post tax just barely but still things need to be figured out you need to there just can't be

I'm sorry a single cent of fun money for probably a couple years which is so hard to tell someone and very almost unrealistic for most people to do. But if you realize how bad this debt really is, then hopefully that is something you actually do because this is, it's time to cut back on everything and put any penny you can squeeze out of your life

and to paying off the bad credit card first, then the consolidated debt, and then that car. And then you're in an incredible place because you do have a good income. Right. So I know right now I'm in massage, like bomb in massage. therapy school, I do have to physically go, like, so I do go at night. But once I switch over to the to the networking, that'll be online. So I will have more time to potentially either use the

massage therapy as like a side hustle or figure out some other kind of side hustle as far as that goes. I don't know what it would be. I guess I need to start looking into that. But I definitely hearing what you're saying. I know I have. So, I still qualify for financial aid. And so I know at the end of this course, I will be getting like $2,500 back. And I know my tax refund will be, because up until this year,

I was filing on my W-4, I was filing single, no dependents. And so when I file my taxes, I do get back like $6,500. And I kind of wanted to just, I know every year, like, you get that and you, you know, want to spend it on fun. But I was going to take the time

and actually put it towards debt this year. Yes. Nope, not a single penny that goes to anything but debt. Right. But I was, I'm hoping that'll like push me more on the right direction, that like a little faster. It's a hard financial situation for Cassie. She has a lot of bad debt.

And, you know, even though she's not actually spending that much money on fun, it's more money than she can afford because the mortgage is taking up so much of her money. These minimum monthly payments are so bad. She's left with practically $1,000 before, food and everything necessary to survive. So it's a really big struggle and it's going to take years and years of sacrifice to get out of the mess. But she can do it and she can do it by the time she is 30 and have a fantastic rest of the

decades of her life if she sacrifices now. Hammer financial score with all those debts and everything, three out of ten. Check out all the fun things in the description, including my Twitter and Instagram. And don't forget to subscribe. Thanks.