Financial Audit - 41-Year-Old Spends EVERYTHING On Fast Food

Episode Date: August 6, 2023

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Hi, my name is Brianna. I'm 41 and I'm here from Seattle today. And this is financial audit. Welcome to Texas, Austin, Texas. Very nice. What do you do for a living in Seattle? I actually have two jobs. My full-time job is a bookkeeper at a small private firm.

And my second job is working on a podcast, two podcasts for a woman who has two health and wellness podcasts. Oh, what do you do for that? I write her show notes. I do the artwork and then I do a little bit of audio editing and then I upload everything. Oh, very cool. So the bookkeeper job, what do you bring in on the yearly basis with that? Right now, I'm making 2575 an hour. So it's about 53,000 land change after. Okay. How many hours a week? Full time. Okay, so perfect. And the podcast, what are you bringing in with that, the different ones? That is a flat 385 a week. Okay, for both, put together.

Mm-hmm. Very cool. So that would be about $1,668 a month on average. When averaged out. Okay. Very cool. Which $53,000 is $4,516 plus that $1,668. So it looks like before taxes, before any withholdings and any stuff like that,

$6,000 a month, yeah? That's about right, yeah. Okay, perfect. And then I'm guessing what? $4,750 hits your account? Something like that? Yeah, it's about 1633 every two weeks. Oh, yeah, that was very close.

We had payroll hit your statement of $4,884 between the different payrolls. So, okay, very nice. Living in Seattle off of basically almost $5,000, close taxes and everything. How's that? It's not too bad. is really expensive, but I'm kind of lucky right now. My rent is still extremely reasonable. I've been living in my apartment for a really long time.

And I don't go out too much, but it's... I mean, I've slowed down. I've slowed down. But yeah, it's not bad. With the two jobs combined, I feel comfortable. So what is your financial situation overall? Well, I have a lot of debt. it's a lot of stuff that I've racked up from a long time ago.

And I've been slowly making progress over it over time. But just this year is when I started making like a really decent income. Also, this is a new, very new income. Yeah, I've increased my income about $6,000 annually this year. So now I feel ready to like make good headway and really buckle down. I was not very strict before, but I was trying to do. the best I could. So why did you get into the debt in the first place?

What did that look like? A lot of irresponsible spending and being young and not really thinking about the impact it would have long term, honestly, and a lot of just going out and having a good time and not worrying about it. Give yourself a score zero out of ten. Where do you stand right now? Less than a one, definitely. Okay, so zero.

Zero out of ten? Okay, interesting. Well, let's see how that stacks up. We're going to start with your debt. We're going to go on to that. Before that, you should hit the subscribe button. I'm trying to get the 500,000 subscribers, thinking to everyone who has subscribed so far. We're so close.

We're going to start with the debts. We're going to lay out the situation and what it looks like. Then we'll hit your checking. Then we'll hit savings retirement. See what any of that looks like. This Apple card. I mean, the previous monthly balance was 1,975. If we're trying to get out of the debt, why is the new balance, $2,300?

Why has the balance gone up? You come in here immediately. Take me off a little. because you just said you got into debt because of bad spending, stupid spending of which this is a big old thick thing of spending, spending, spending that's unnecessary. You're trying to get out of it. The balance was lower than it is right now. Why?

Well, in that statement, there was definitely some income creep or what it, lifestyle creep. Yeah, I got March was the first Was the first month that I started making a little bit more money and I went So what? A few extra hundred bucks hit your account a month and you're like Yeah, yeah, yeah, I was, but you wanted to get out of debt. Why wasn't that money going to debt? What's those you know, what's your mindset around that? Well, I was paying large payments to my debt. I just wasn't being strict about it. I wasn't really restricting my shopping. Do you follow a budget? Let's be real. Do you follow a budget? Then I was is not, but now I do. What's now? When did now start?

Like a week ago? As soon as I found your channel, actually. When was that? So, like, mid-April. Okay, so we haven't had very long. No. When did this end? Well, this ended at the end of it, April.

So let's see. Let's see. I hope it shows my spending slowing down. Oh, I don't remember seeing it slow down. But $46.16 a month, a lot of this is your interest, isn't it? Yeah. I pay that off after the statement comes I paid off before any interest is charged. Oh, you do?

I do. Okay, I did not see that reflected. Okay, so, okay, so there's no balance on this card right now? There is a balance, but the previous month's balance has been paid. Do you always do that with this card? Yes. Okay. You don't do that with some other cards, but you do that with this card.

Okay. Good, because that would hurt. Which I guess makes sense where this is where all the spending is, but you say you're trying to get out of debt yet we're going Uber. Jimmy Johns, what's Team Mobile Park? Because you go there every two seconds of your life. That was two trips to the ballpark. Ballpark, ballpark, Amazon, Pizza Mart, Orca, Go Fund Me.

You need to go fund yourself out of debt instead of giving to that. Shafah Monthly membership. Apple. Imperfect Foods. Apple, Apple, Uber Eats. Apple, Chipotle, Amazon, Uber, Apple, Uber, Uber. Go to the ballpark. Apple, going to the ballpark, ballpark, ballpark, ballpark, Apple, Zelo, Amazon, Uber Pass.

Like, you need to be giving them more money. Apple, Metropolitan Cafe, Apple, pay range, Apple. Dude, these subscriptions and things you're paying with Apple Pay. It's insane. And Uber eats and imperfect foods. And Apple and Amazon and Amazon, Amazon, Clarnah, are we financing things? Amazon, Uber, Apple, Uber, Metropolitan Cafe. Uber, Uber.

McDonald's, Amazon, Orca, Fresh, Deli, and Mart. That could be groceries. I wasn't 100% sure, but I don't think so because it's $13. It's groceries for $13? Yeah, convenience store. Okay. Uber eats, imperfect foods. That's gross.

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Discover the euphoria elixir collection by Calvin Klein. Amazon, Apple, Metropolitan Cafe, Apple, Microsoft, Apple, Adobe Creative Cloud, which that's for your work, though. That is. Okay, so that's okay now. And then the pay range, mobile. That's laundry. That's laundry? Yeah.

Okay, that's fine. Metropolitan Cafe, that is not laundry. Apple Bill, that is not laundry. Klarna, again, we're financing things and I'm going to pay them off with a credit card. And then Apple and then Metroventon Cafe, Metropolitan Cafe, Amazon, Amazon, Amazon, Amazon, Amazon, HBO Max, Amazon, and an Apple bill. No, you did not slow down your spending.

You did not slow down your spending. You went out or made multiple purchases a day that were unnecessary. These are all circles. You see these circles. Circles right here. Unnecessary. And that's one page out of like four of them. So what's this?

You're coming in here saying you're getting out of debt. You found me mid April and you started to change things you got on our budget since then. Yet we saw at least a couple weeks of that not happening. What is going on? Well, okay. So some of those things are legitimate. Orca is my bus pass. Okay.

And favorite foods is groceries. What is? Imperfect. Okay. Perfect food. I said that like three times out of the hundred. hundred things I just read. No, that's true.

I would say, of all the things you listed, like the Apple purchases, like in-app purchases. Which are like every second of your life. Yeah, I do at least one of those a day. But not. It's crazy. Not anymore. That's crazy.

Not anymore, but we're seeing it reflected there. It's only a couple weeks ago. Not anymore. So even if you stopped for a couple weeks, how are you possibly saying with confidence that it's not anymore? You did it for a couple of weeks because you were coming on the show. Yeah. I mean, it is sort of my guilty pleasure when I'm at home and I'm playing the game that I like.

Gems? Buying gems? What are you doing? What game? It's Angry Birds Dream Blast. You're giving hundreds and hundreds of dollars a month to Angry Birds? No wonder that app is still alive somehow. I love that game.

I'm obsessed. And you finance two Apple purchases. Yeah, there's one revolving purchase on. there that was my Apple Watch, that's 0% APR. And then that Klarna purchase was something that I needed for my cats that I just financed with 0% as well. Why? What's the point, though? I think when I purchased it, I was just low on cash, so I decided to split it up.

If you can't purchase it, you can't purchase it. I could have, but I just didn't. The only reason 0% finance makes sense on those Apple purchases that you're making, Not the car and stuff, but just the Apple purchases. As if, let's say you're going to go purchase a $2,000 computer. Yeah. But instead, you do the $2,000 computer over 12 months, 0% finance, and then you take the $2,000 that you had to give the computer,

and you invest that $2,000 to set in the S&P 500, for an example. That's where it makes sense. Okay. But where people's zero percent finance and then spread it across monthly, and then they take the $2,000 that they had in order to get it, they just go spend it on bullshit. And we know that it was just bullshit. Yeah, that's fair.

And speaking of bullshit, I mean, there were purchases on here. Like, you went to Manor souvenirs on this card. Yeah. That you have a balance and you're losing interest on. That was an accident. That was legitimately I handed them the wrong card. Okay. And then the other purchase on there.

You also have ongoing, right? It's like Emerald City. So utilities some kind? No. No, that was emergency pet services. My cat had a bladder situation. Why on the credit card? Because I didn't have the cash.

That's why we have emergency funds. This is why, instead of that bull-s spending that you were doing in there every second of your life, gems, gems to Angry Birds, you have money set aside. And you have cash to pay for things. And you don't have a stupid $6,718 credit card balance. Yeah. You wouldn't have that. Right. That would probably be cut in half right now if you did not go insane stupid on that Apple card.

Yeah, I realized that the emergency pet services was the wake-up call for the emergency fund. Yeah. And that card was actually twice as much. You'll see on the next credit card. I split it to do 0% APR with a balance transfer. Yeah, I did see that. Is that this card? This card you transferred over?

Yeah, it went from this card to the other card. So this card no longer exists. No, that's what's left on there. I couldn't get enough balance to do the... What was the total balance? Oh, it was like $14,000. How'd you stack up $14,000 in bad credit card debt? Because you were just getting interest stolen every month.

Yeah, that's a good question. I'm not really sure what I spent that money on. Yet, yet you know you have it. Yeah. And you do all that spending. That's the only reason I'm upset at that spending. You can do that spending if you're not. in a good place.

But you are choosing not to have an emergency fund and have to use your credit card in order to pay for a vet thing. You are choosing to have this high credit card balance that has $93.61 and interest sucks from you every single month because you want to have the pool. spending. Do you get what I'm saying? Absolutely. So why?

Why are you still doing that? You say you cut back for like a week now, but. Well, this month was a lot better than last month. why I was doing it. Well, I'm trying to like change all of my habits right now all at once. Around the end of the last year, I was going out a lot. And then I kind of just decided that it wasn't good for me, you know? Yeah.

And so I think. Healthwise, probably, because a lot of that stuff is unhealthy. And then two, financially very unhealthy. Yeah. So I think what ended up happened up. happening instead of spending all that money on restaurants and bars, I ended up spending it on shopping and in-app purchases. And I didn't even realize I was doing it until much later. The interest you've lost on this card this year so far is basically $500. I know.

Of which did not have to be there if you were not doing the bullshit spending. Now we do have 0% finance through city. Yes. And with that way of it. Whether it's a movie night or just midday, Skinny Pop is a salty snack that keeps on giving. Made with just three simple ingredients for an irresistibly delicious taste and a large serving size that lasts. Deliciously popped, perfectly salted. Skinny Pop, popular for a reason.

Shop Skinny Pop now. That's a 6,339 at the time of this statement. Mm-hmm. So overall credit card is like about $13,000. We have minimum monthly payments here of $63. Now, yes, you're saving some interest because it was 0% of finance, but you also had a $215 fee you paid in order to do this. Yeah.

Which is disgusting. Yeah, I calculated what I would end up, what I would have paid an interest on the other card, I calculated it and figured out that I would save a little bit of money by doing the balance transfer. So that was the idea behind that. Yeah, no, overall, probably. But just be, this is, okay, I'm okay with some consolidation 0% and stuff like that when we're trying to get out of a high interest situation.

But what a lot of people do is they get into the situation and then they think they've made progress. And then they just don't go crazy like they should be in order to get out of the really bad debt. Yeah, yeah. I think that's exactly what happened. And I didn't, I really couldn't see it. I mean, but I see it now. What is this? That is my new card.

I got an Amazon card because I was... The fuck. I was buying... If you know you... If you know... Sorry, continue. Because I was buying things on Amazon, I opened an Amazon card for the points or whatever.

But this will also be paid. off without accruing interest. You pay this off every month? Yes. I still don't like the idea of you having two credit cards, one that's zero percent because you had a transfer from the other card, and the other one that's accruing terrible interest, and then opening another credit card?

Yeah. How have you proved to yourself in any way that you're able to manage this long term? Because... For a month, maybe okay. Well, okay, so my spending has been completely out of control. I own that. But with my Apple card, I've had it for almost a year or not,

and I've not paid a single dime of interest on that. You spent on some travel 555, more travel, 361. That was to come here. So, sorry. And Amazon 44 and Amazon 37. Yeah, it's gross. You don't need to be doing those Amazon purchases. We don't need to be going to Whole Foods of all places.

I usually don't. It's the closest grocery store to where I live. So if I need like one or two things, I'll pop in. there and I just try not to buy the marked up stuff. But yeah. And then the Amazon stuff on that card is like basic home goods stuff. Oh, I had to buy a pair of shoes because fitness for fitness. I'm doing a lot more walking now and I needed something that worked better for me.

Now we have some checking accounts. Yes, that's my main checking account. First of all, I'm confused. The saving started at $100. bucks and you put in $200 and we took it all out and out zero. Yeah, I see, every time I try to put money in savings, I'm like, no, wait, I should spend that on paying my debt down. Well, it's good to have at least a one month emergency fund.

Yeah. So I always go back and forth about what I should do. Do I save money for the emergency fund or should I pay down the debt or should I pay my student loans or what? I did not get a statement for student loans I sent it in a separate email I thought What's your student loans? It's 18,000

All federal? I don't know I don't think so I don't know they're really old Who'd you get it through? Originally I don't remember In a separate email? I thought so

It should be American Education Services is the lender right now. Are you paying out right now? Yeah. It's not deferred? No. It's been deferment for a very long time when I was younger. But I can show it on two on my phone. Federal Family Education Loan programs, which I know there's confusion around those with the forgiveness.

Didn't the FFELPs like get taken out of those? Yeah, whenever the federal, whenever the government said that they would pause student loans, I opted not to pause. You opted not to, so they're federal. Well, I honestly don't know if I had the option. It's on here? Yeah. I have one subsidized, one unsubsidized. Two thousand six.

Oh, okay, subsidized and subsidized. Okay. So these are federal. They are federal. $2.62. Why don't you pause it? At least you wouldn't be getting interest. You're getting interest added of $2.62 a day.

Why don't you just pause it? It didn't make any sense. Because those loans are very, very old, and I want to pay them off. You could pay them off while it's paused. What? Oh, I didn't realize. Not all at 5, just over 5% interest. What's your minimum monthly payment on these things?

3.04. All right, so add that to the debt. Okay. Vehicles? No. What is your car? I don't drive. Oh, city?

Okay. Yeah. So it's like a good walkable city? Yeah. I'm jealous. Okay. Yeah, it's not walkable here. It's too hot.

Well, it's also just not walkable. It's very car-centric, but either way. No other debts. No. Okay. Scared me for a second. Okay. So in here, we can have ongoing bills like,

Verizon and then paying off debts and transferring to Robin Hood and paying off credit cards and well paying two credit cards I should say and setting things around Zelen at 225 Yeah What that was Oh my God you're going to yell at me That was for like a psychic reading

Why Because it was interesting Sure 225 $5. Interesting when we're losing $500 so far this year in interest? Yeah. It was just, I couldn't, I really wanted to do it because it was. Cool.

Congratulations. What? Yeah. Are you going to put your wants over everything forever? No. Not any more. Mind you. Whatever.

Doesn't even matter. And then there's Puget Sound and you paid $22 for and then you PayPaled out. 95 as well. Yeah, that account just gets a few bills and credit card payments, and then I do all of my spending through Apple card. And stash. Because you have a chicken account and stash, of which has a zero dollar balance. What do we do?

We had Netflix and we had Amazon. We had Amazon. We had Amazon. We had Amazon. We had Amazon. We had Amazon. We had Amazon. What the fuck?

Those are household things, like subscription things, cat food, cat litter. They better be better. And then what you can get in the grocery store, I can't see. I don't know. Who knows? They are. They are. Financially better?

Yeah. Yeah. It's a better price. The cap food that I was buying, I couldn't even get in the... So Stash, really, you just have two accounts with basically $1,200 in them. Yeah. Each one has about $1,200. And you put them in, like, kind of like U.S. large stock.

It's a bunch of random stocks. It is, but it's just, yeah, it looks like you did, like a large cap. Okay. other than that, it's really nothing else. It's like a billion pages of this because it just shows every individual stock that you have, like, a cent in. Yeah, for a while I was using the stash checking account, and they would give you, like, stock back on certain purchases that'll just match it to your purchase. And you have $200 in Robin Hood, which I don't really get the point of this anyway.

Yeah, there was just... Some woman's health thing and treasury bonds and QQQQ, okay, that's okay. And then Vanguard U.S. okay. I don't understand the first two. I actually cashed that out and just spent it on credit card bill. Good, which is what I would have told you to do anyway. That's your retirement, you have nothing else? No, nothing else.

Except for my job just started to offer a 401K, so I've made one contribution. So you have $3,000 in retirement. Your net worth is negative. Yes. You have a net in your early 40s. That scares me. I know, it terrifies me. You've lost the two best decades of your life for income and investment compound growth.

Yeah. From here. It has been scaring me for a very long time. If it's been scared. Again, I need to understand your mindset. If it's been scaring you for a very long time, yeah, we saw all that bullshit. It's the first statement we've looked at. I don't care if you're scared because you don't react to it.

You don't possibly change things. Yeah. How are we going to do anything here going forward if that is what it's looked like? I've been scared for a long time and then I just spent all my money. Yeah, to be completely honest, it's like so scary that I've, the only way to deal with it is to push it out of my mind. And then. Well, what does that accomplish? What in any world does that accomplish?

Do you seek therapy? No, not right now, but I am doing some like self-help stuff. All right. Therapy. Yeah. Therapy. Do therapy. It's better.

We basically have 32,000 dollars of debt. Yeah. Okay. So let's put together a plan. But again, with what you've done, historically, when you've realized things are bad, if we put together a plan, is this even going to help? I'm honestly very skeptical. No, I am so tired of paying these same credit cards and student loans.

I'm so tired of it. If I had $32,000 in cash right now, I'd pay it immediately. What's your rent? It is 12.25 at the moment. In a few months, it'll be going up to $1,300. Okay, that's what we'll put it up. Okay. 1,300 utilities and Internet?

So gas electric internet, trash, gas is 20, internet, 60, Um, water and trash is included. Electric, on average? Um, uh, end of the mic. $90 a month. It's every other month and it's about $180 every other month.

Okay. $170. Utilities. Your phone, your Verizon thing, I think I saw $120. Yeah. Car insurance. Oh, you don't need car insurance. Health insurance that comes out through work?

Yes. Before? Yes. Cool. I'm giving you an additional $200 to therapy. You're going to start doing that immediately. Okay. Once every other week is fine.

My bus pass is 100. Anything else you can think of? Giving you groceries to 300. Yeah. Let me, oh, I need pet. Pet supplies is really expensive right now because of... I'm giving you 100. I can't do 100.

I have at least 200. Why? Because my cat is on special food and I have to feed them all it because they won't feed separately. Put them in a room. Will they eat? No.

Are they grazers? Yeah. Big time. And then fine. I'm cutting your groceries to 250. It's a sacrifice for making. I can do that. I'm cutting your household items to 75.

Okay. To keep it going. Yeah. Toothpaste and tote paper and hand soap and shampoo, all that stuff. We're not going crazy. Not going crazy on makeups, haircuts, anything like that. until we go out of debt. Any other ongoing expenses you can think of in your life?

Let me check my spreadsheet. Just so we don't miss anything. And by the way, no, $731 of going out to eat and stuff. What you did in that statement we saw? Yeah. No, that it's not a part of it. Yes, it is. Oh, God.

Note that it should be everything. Yep, that's it. We saw $176 to subscriptions. you're canceling all of them. Netflix, Netflix, HBO, other subscriptions, they're gone. I can't have Netflix. You cannot have Netflix. All right.

If you have time to watch Netflix, you have time to work. And get out of this debt. I have two jobs. Congratulations. If you have time to watch Netflix, you have more time to work. Okay. Do not understand how bad credit card debt is and how it's holding you behind. Do you not understand how bad it is that have a negative net worth at 41?

Do you understand how bad it is that you have $3,000 saved for retirement at 41? Yeah. I have a contingency plan for retirement. What? It's my best friend. She has a pension and VA disability, and she said we could get married. Okay. In the real world, no.

Emerald City, what's that again? That was my pet emergency services. Oh, right, right, right. Okay. So let's see what your budget adds up to. again, let's go through it again. $3,200 for rent, $170 for utilities and rent, $120 for phone, $200 for therapy, $100 for bus pass,

$250 for groceries, $200 for pets, $75 for total paper or other supplies. This brings your minimum required to, ooh, we got to do debt, plus $408 for debt, of course. Add that in there. 2,800. $123 what you need to survive. You bring in $6,000. The fact that you have debt is inexcusable at this point.

The fact that you haven't been making more progress on this debt is inexcusable and actively upsetting for me. The fact that I saw all that bull spending and you've barely put anything towards debt is disgusting. That can no longer be a thing. No longer be a thing. You have at least $3,000 extra dollars. Your needs category is under 50% of your income. That's rarely seen here. You're in a position where there's no excuse for this to exist.

Well, I mean, that is new. It is new, but you should have been making more progress than we've seen. Yeah. I definitely dropped the ball. I've been dropping the ball. There's no excuse to not see the progress we've seen. So, we're going to say you have $3,000 extra, give you a wiggle room of like $150 there.

$3,000 is what you have extra on a monthly basis. Woo, woo, woo, woo. Let's go. $3,000, what do we do? Well, next month, you set that $3,000 aside. In a high-yield savings account, don't even let it be in that account that's connected to the same bank as you're checking because I don't want you to see it. That set aside, that's what you need to survive just in case you lose your job for a month while you go find something else in your just scrape, scrap, everything. Then $3,000, and you're, of course, making minimum monthly payments on debt.

So this is happened. That's cooked into the budget. $3,000 goes the next month, month number two, to the verity. Verity. Verity. Verde? Yeah, Verde. Whatever.

Payment thing, $3,000, boom. Month number three, $3,000 goes to it, boom. Month number four, about $1,000 goes to it. It's paid off. No more interest is accruing. It's incredible. Now, because that city will be interest-free for a while, and the student loans are at 5%.

What we're going to do is $3,000. What are we in? In month number four, $1,000, $1,000, $1,000, $1,000, $2,000. Yeah, month number four, almost $2,000,000. goes to city. Next month, month number five, $3,000 goes to city. And then $1,500 goes to it in month number six. Cities paid off.

Okay. Now, this is what I'm going to do because you're in a bad situation in a bad situation-in-wise, and the student loans are 5%. We're minimum monthly paying the student loans until they're gone. And everything else that you would put towards them, we're investing because we need to start catching up. Okay. And the average market at 8% or average S&P 500 of 10%

And I'm not going to give investing advice or even say when I'm invested in for the legal reasons That beats 5% any and every day And those percentages aren't like, okay, you're gonna make this this year No, that's what it takes all the down years and up years combined So if your dollar cost averaging as in investing on a consistent basis, you should No promises blah blah blah blah blah blah That's what the stock market averages 8%. So yeah

The economy doesn't collapse. No, trust me, that 8% takes into account many economic collapses. That took in economic collapse. After the Rour and Tourneys, that took the economic collapse of the housing crisis. And yet, on average, we have seen an 8% gain in the overall stock market. Okay. For the S&P 500, we saw the housing crisis. And we still see 10.

10.something percent with dividends reinvested. So pay off both the credit cards and then start. are investing. I have a couple of things that I would like to do within the next one to two years. Okay, what? Well, the first thing is that I'd like to get out of my apartment and get into a different one. I would like to move. I've lived in my apartment for 12 years. It's not a good place to live for me anymore. Why? It's kind of a... I don't want to say it's a... But the neighborhood is going south and... it's just, well, here's the thing.

I can have you, if you follow, if the utility stay relatively similar, the phone stays similar, the therapy stays similar, bus pass stays similar, grocery stays similar, pet stay similar,

toilet paper stays similar. And once we get rid of the debt, well, we're going to have an extra $100 because student loans are still going to be there. I can have you put an extra $300 towards rent and you'll be fine. $300.

$600. Like $1,600 then? Mm-hmm. You go to $1,600. I'd be okay with that unless you increase your income. But again, need stay at 50% or less. Sure. The apartment that I'm looking at is $1900, but...

Can't do that yet. Well, I know. I know that. Can't even do that when the two credit cards are gone. Unless my income increases. Unless your income increases, which should. Yeah. Over, you know, a year, two years, you know,

we should get those annual increases, like cost of living at least. Yeah. So, I'm actually have... But the rent will also go up. Yeah. I have a few projects on deck for the podcast that are going to bring in some extra money as well. Good. So as long as all your needs together are budgeted at a 50% or less of your take home,

the rent is included in that needs category. That's fine. That's fine. Do not cut things like therapy in order to do that? No. I will not accept that. Neither should you. Either way.

Okay. So at the end of six months, we have $3,000 saved up on the side. We have the two credit cards paid off. At that point, then $3,000. We're saving up to $18,000. You already have $3,000 saved up. So divide that by $3,000. That'll be another five months.

So a year from now, we're going to say you'll have two credit cards paid off a fully funded emergency fund, which I'm guessing is something you've never had in your life. Correct. Which is going to be incredible. I didn't know they existed for a long time. Well, you're going to see that when these emergencies pop up, you don't open credit. credit cards to do them. You don't use credit cards to do them. You take it from the emergency fund and then you put it back in there as soon as you can. Okay. It's awesome. It's like the greatest thing ever. Emergencies are not scary anymore. Right. It would be nice to have that in case

my cats decide to explode again. And also I'm at some point in the future I'm going to need to buy a new laptop. The one that I have now is very old and it's starting to become obsolete. I can't even update the programs I'm using right now. Okay. So again, here's what we're doing in a year from now. A year from now, we have the fully funded emergency fund and you need your laptop for work, correct? Yeah.

If during that time, the laptop breaks, only if it strictly breaks, we can pull from the emergency fund to take care of it because that is important for your livelihood. We can do that at that time. Because, again, every single cent of our money that is not in our needs category, which is a strip down needs, is going to. to paint off the two credit cards and then saving up the fully funded emergency fund. Okay. So we can pull from what we have for the emergency fund there to get that only if it breaks.

Right. It's currently breaking, but I'm being very gentle. Be very gentle. Think of a repair shop as well. Yeah. It's a possible option. We don't want to do that forever. But we can pull that right now $3,000.

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you'll actually look forward to drinking. Shop Ultima on Amazon or in store at Target and Whole Foods Market. Cut aside is most important, and then paying off the two credit cards is most important. And then the money that we're saving out for the emergency fund at that point. So within at least, you know, starting in six months, you know, you're saving up for the fully funded emergency. fun and then we can take something that if it breaks fully to get a new laptop if it doesn't

and we do like a minor repair or something like that in a year what we can do from now is again 50% of your income $3,000 goes to your needs then because you have to play rapid catch-up rapid catch up we are putting a minimum 35% of your post tax third two thousand one hundred dollars month to retirement. I'm good with that. A month. Now, you're also going to be contributing up to the max, up to the match of your 401K. There's currently no match, but that is in the pipeline.

Okay. Then you're maxing out your Roth IRA at $6,500 a year, whatever it goes up to you on the yearly basis. Then everything else in order to get us to a minimum $2,100 a month is going in to your 401k. Okay. I have some questions about that as well. So the 401K program just started, there is a Roth 401k option as well. Do that one? Should I do both?

No. So there's really no reason for, because Washington State doesn't have a state income tax anyway. I don't see any reasons for you to try to minimize your taxable income in retirement form when the growth that you're going to receive on the other end of a Roth IRA would be much better to get tax free. Okay. So, max out the Roth IRA $6,500 a year and then put as much in your 401k as you can order to get this. But I am still going to give you 15%, 15%, or more if you cut down your needs.

Because most important incomes investing. Yeah. And then you can cut down your needs, but max out of 50%. But if you cut it down, 15% will go in this 50, 35, 15 rule to fund. Okay. So you can have fun again. Yeah. It's exciting.

Now, a part of that can be getting a laptop. Cool. In a year. Yeah. So you can put 15% aside for a couple months, get a laptop. But 15% goes to needs, cut 5% from your, or 15% goes to wants, cut 5% from your needs somehow. And. I don't know how I'd do that.

It's pretty bare bones right now. Again, increase in income. That's true. Then you can have 20% go to fun. Okay. Does that make sense? Do you understand how that's laid out? Yeah.

So let's see. We had 4,000 or sorry, 6,000, 35. Okay, so 2,100. In a year from now, when you're 41, going to retirement. Now, I want to lay out what this looks like. We're going to use the average stock market return of 8%. And we are doing $2,100 a month, starting with 3,000.

So that's all that's going to be in there. For, you're going to go to 65, let's say. And I'm willing to... 23 years. Work longer if it... Rather you're not. This is just for an example. If you go to 65.

And Social Security, who even knows? We can't rely on that. $2,100, 8%, starting with $3,000, 23 years. Gets you to $65, $1.675 million. Oh, that sounds fantastic. Sounds very nice. But after you account for inflation,

it will be about $1.1 million in today's money. Okay. That's doable. Now what you can do with that is... They get to go crazy on the shopping, right? Because I'm old and I'm... The end is near. What you can do is stretch that over to like give yourself like a hundred.

So it's a million bucks divided by that many years. You can live off of that. So it's drained by a hundred. Or what you can do, and this is if you want to pass money on, is you can withdraw 4% from it a year and live off of that money because it will least maintain. And that would be about $40,000 a year. Yeah.

In today's money. Yeah. So does that make sense? Yeah, absolutely. And that's where we want to get you to at a minimum. Now, of course, as income increases, the dollar amount that you're investing increases, which helps that snowball all the way up.

Yeah, so keep it at 35% then. I wouldn't go less than 35% for where you're at in your life because we need to start doing emergency mode. Because this is why it's important to start investing when you're younger. When you get to the point where 41's not old by any means, but when you get to the point where you're in your 40s and you've lost those two best earning years of compound growth or earning decades, you have to play catch up.

Yeah. When you start at mid-20s for investing, you can do 20%, maybe even 15%. But, I mean, I'd rather 20, but you have to do minimum 35%. Yeah. Honestly, this is the first time in my life where I even thought saving for retirement would be possible. Yes, here's the exciting thing. We've done the negatives. Six months, you're out of the stupid credit card debt.

A year, you have a wholly fun and an emergency fund. You only have some student loans that are at a relatively low interest and we're starting to save for retirement. Okay. 65? You're able to retire. That's something you've never thought was possible. You never thought an emergency fund was possible. You probably never even thought getting an audit.

debt was possible. No, I just thought that's how people lived. Yes. Oh, it is how people live. But it's not how you're going to live anymore. But that only works if the bull we saw does not exist anymore.

You follow the tight budget. And then you live off to that 50% on needs, 35% on investing, 15% on fund after you have the fully funded emergency fund. This only works if you follow those principles, those rules or else you are. I will. I mean, the thought process now is that. I might not have fun for the next year until my emergency fund is funded, but I've had two decades of fun spending to those memories will just keep me warm as I'm hanging out in my house by myself. And again, you can have free fun.

There's nothing free in Seattle. Well, I mean, you could just like walk the market. Yeah. I mean, I do that. You just walk it and just enjoy the city and just. Like, I love going to parks and stuff like that. That's my free fun. I take my dog on walks and stuff.

And then, gism people to take you on dates? Gives and people to take you on dates? I think I'd rather stay home. Okay, well, that's fine. But that's a good way to go out to eat without paying for it. Yeah. Get people to take you on dates. Yeah.

Okay, so that's the plan. I hope you follow it. We'll do a checkup, but any final thoughts? Just, just that if anyone out of, out there is watching this and they are kicking the can down the road like I did, this is going to end up being negative $30,000 net worth at 41. So don't do that.

It's not worth it. She definitely has a way to get out of this. It's just buckling down for only a year. What's a year for the rest of your life? I mean, we'll see. We will do a follow-up episode in a year. We already talked about it. So you better do it.

For now, her hammer financial score. She was pretty spot on. Spending, within the statements that we saw, that should all be going to death, she was overspending and going crazy every single day on gems and crap. Zero out of ten. Debt, it's not the craziest debt by far. Three out of ten still not good, but three out of ten.

Retirement, way behind for her age and just getting started, one out of ten emergency fund, there's nothing zero out of ten. Real estate, not even in the conversation, not yet. Could be in like five years. Zero out of ten for now, though. That aggregates down to a point five out of ten. If you want a free $5, sign up for Acorns using the link in the description below. If you use my link that gives you a free $5 and it gives me a free $5 and we all win.

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