Financial Audit - 8 MAXED OUT Credit Cards

Episode Date: July 21, 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 03:50 INSANE spending... 06:38 WHY?! WHY?! WHYYYY 09:51 Maxing out EVERY credit card possible 15:00 SPEND SPEND SPEND 19:36 Oh sure, let's just add some CAR DEBT too! 21:30 This just sucks... 23:22 BURN THEM ALL 26:27 You need to budget! 30:28 time to clean up your mess... 40:06 I'm scared for you... 44:00 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

I'm Johnny. I'm from Gerald, Texas, 27 years old, and this is financial audit. 27 years old. Yeah. Okay. Normally, I just break into this like we normally do normally do, but I want to say, I want to especially thank you for coming on here because I think this is going to be potentially one of, if not the craziest situations we've ever seen. Okay. So I just want to let you know. I appreciate you coming on here because this situation, a lot of Americans can probably relate to it. And so for those who are watching, you are actively helping them by you being here. Awesome. So thank you for that.

What do you do for living? I work in natural gas. Natural gas, okay. What do you do? So we fix gas leaks and replace gas servers and stuff like that. And you are married. Yes. What is the annual household income?

About 120K. Okay. It's always the people with a good income, isn't it? Yeah. Interesting. More money, more problems. Yeah, more money, apparently more. Not having any money.

Yeah. Geez, so what hits your guys' account on a monthly basis? We have the car payment. No, no, no. I mean, like what money comes in? Oh, so we have just minor income. I'm trying to think, like, what's their post-tax? and all that stuff.

What does it come out to? So, I'm guessing it's... A month, I think it's about $7,000. Okay, that makes sense. And like health insurance is sticking out before. Are you guys contributing to your 401Ks? No, she just got offered 401K today, actually. Okay, and you are not?

No. I don't have any benefits. So you think it's about a $7? I'm guessing like $7,500. Do you think it's $7,000? Yeah, yeah. Closer to $7,000? Closer to $7,000?

We'll do $7,000 then, because you would know. So $7,000 hits your account on a monthly basis. Cool. Most people would say, cool, that's great, especially living in a rural town. Cool, 7,000 hours, we can do a lot. Oh, and by the way, just a reminder, click that subscribe button. We're trying to get to 500,000 subscribers, and we're, I mean, pretty close. Thank you to everyone who has subscribed so far.

Okay. I mean, we're just starting with the first account, right? Yep. And I am going to dig into you because I need to make sure you and everyone else out there knows how absolutely dire your situation is. Because if we go to a place, we're like, okay, we know it's good, but it's not bad either. Right, right. It's like, then you're

not going to do what's necessary to actually get out of it. But here, we start with negative $2.22 in your checking account. We start with that. And not only that, 8,449 comes in. That's great. Some of those savings, different stuff. That's a great amount of money. That's fantastic.

We ended with $433. What? is happening off the bat what is up with your financial situation what's going on give us anything i think it's mostly just eating out is where most of our most of our money goes you're not eating out eight thousand dollars a month between we were paying for two apart for two rents for about three months we moved out of one apartment into our house because we were in a studio so we were paying about twelve hundred dollars a month on the studio and then moved into the house and that's about 1750 during the time of these

statements? Yes. Okay. Yeah. And we just, actually, we just paid the last bill on the apartment. Did you buy the house or you renting it?

Rensing. Okay. So you're saying you eat out $5,000 a month? Yeah. Among other things. You must be going crazy. Where are you going to like the nicest steakhouses twice a day? Children?

Yes, one child, six months. Okay. Well, that adds money. That adds money. I wouldn't say $5,000 of eating out. No. But no, it's not just that. And by the way,

$204 was yanked from your existence in fees because you're overdrafting and crap. Yeah. Dude, it makes no sense. Okay. I mean, I have to ask. I have to ask because we need to get into your mindset. If we have Adobe, we have a peacock subscription, some security service that you did. McDonald's, the $200 was taken out for auto safe safety.

And we're going to Hobby Lobby and Waterburger and Starbucks and some tortilla place. and Olive Garden and Dutch Bros. And Wendy's, and going to McDonald's and Major Burger and Netflix and door dashing things. We don't even have money on our door dashing things. And Wingstops and Dutch Bros. In Rozozzi's Cajun Cafe. Amazon Prime. Raised in Cains.

Dutch Bros. A Hulu subscription. Longhorn steak. Waterburger. Dutch Bros. Two card payments, card payments. Security service fees, again, twice and one month. I don't even know what that is.

Getting our car wash, because that's a necessary expense to survive. Dutch Bros. Panda Express. Waterburger, Firehouse, subs, Dominoes, Domino's, Credit One. The auto security safety bullshit again. Some, you know, going out to eat, going out to eat, pizza, going out to eat, going out to eat. And then Prime Video, we have that. We have, we're venoming out money. $5.75, who knows where that one. Discovery Plus.

More Adobe. because the one or W we had wasn't enough. The $575 is actually rent. So we break it up into three payments. Oh. Oh. Yeah. Sorry.

I was like 575 great. Yeah, you were going off. I didn't interrupt you. But yeah, the $575 is rent. The $200 auto save, that's just something it pulls from our checking into our chase savings. Yeah, when you're like over. Oh. No, no, no.

Yeah. Well, that explains all the money that came that you were depositing from your savings in the year because we don't have money. Yeah. And HBO Max subscriptions all we have in Waterburger and Venmo and Dutch Bros and Spotify and Mojo Coffee. YouTube something. Looks like you rented a video, perhaps. Mexican Grill. McDonald's, subway, Dutch Bros.

Some animation thing I think, I don't know. I can't read it very well. Oh, sorry, that's the security thing. And then the $50 every week is my old truck. Yeah, I totaled it and didn't have insurance. We'll get there. Let's let's just get through the checking account first. Again, a car wash.

We need two car washes in a month to survive, apparently. FormSwift.com, Olive Garden, Starbucks, Dutch Bros. Chick-fil-A, Taco Casa, Starbucks, purchasing things on Steam, overdraft fee, overdraft fee, overdraft fee, overdraft fee, overdraft fee. What are we doing? Buddy, if you know we are overdrafting, If all this crap is going wrong, I need to know any potential logic behind your couple's relationship, this marriage. Why are you guys going to these restaurants?

This isn't where you spend all your money. This is a thick stack. But that's the checking account in every page. It's just green slices of crap. Why? Why are you doing it if you objective, you have to know it's bad because you are negative every single month. Tell me. There's no excuse.

I mean, we don't have an excuse. It's just... No, no, it's not about an excuse. I need to know why. Where's your mindset at? So we can overcome this? Honestly, I don't know. Do you guys not give a...

No, because we always come to like the end of our, you know, whenever we go negative or whatever and we're like, we have to stop, we have to get better. We have to save money and then we get paid again, and then it's just the same thing over and over. Why doesn't it? I couldn't tell you. Is it both of you? Is it one of you more? No, it's both of us.

Okay. It's definitely both of us. Yeah. Total overdraft fees Year to date And we're not We're a quarter of the way through this year $748

That's insane That's insane Just this period $204 The savings that you transfer to Is there anything in there right now? Yes How much? Last time I checked about 4,500

Why? Why are you overdraft If you have $4,500 in a savings. Because she doesn't want to spend the savings money. That doesn't make sense. You've lost $750 this year. Yeah. Wife, if you are watching this, please understand it makes no mathematical sense.

750 bucks you've lost because you're not willing to transfer $4,500? I'm not angry at you. I'm angry at the debt. No, I know. But I want, because immediately, you don't have retirement. No. How old is she? We're same age, 27.

How old are you kids? Six months. Okay. Congratulations. Yeah, thank you. 27. Yeah. No retirement.

Stacked in debt. Stacked in debt. Riddled in debt. No retirement. We congratulate everything else in here is literally just cards and crap, credit cards and debts. Yes. Nothing that's ever paid off, by the way. No.

And then we do get it paid off and then we just go and spend them again. Okay. First off. Before we even get in them, let's say you are not credit card people. You are not. No. That's fine. That's fine.

It's okay not to be a credit card person. Chop them up. It doesn't matter. Whatever benefits someone might get from a credit card, you are not getting. You are losing so much money. So much money, yeah? Yeah. So this situation is scary.

You need to chop those things up. Use like the fizz card that I talk about because it can help. your credit kind of like a credit card, but it's a debit card, and it helps spend within certain categories that you want. It helps you manage your spending a little better. But for example, on this just, this card itself, 625 premium previous balance, we made a payment of 160. Okay, cool.

I mean, we're being in 7,000 hours a month. It should be more than that. But okay, we did that. But then we purchased $130. $130 was purchased. Yeah. If we know, are you guys trying to get out of debt? Is that he you?

Has it We always We had them all paid off For a few months And then Whenever my son was born She was off for like three weeks And then I was off for a week

And I wasn't making that much money To begin with at the time And she's paid hourly She's not like salary? Yeah Yeah, we're both paid hourly Yeah She was getting maternity leave

But she was like only getting 75% Of her pay Oh come on Yeah And then So it only lost 25% Yeah

But I wasn't Again I was only making At the time, I was doing pest control, and I was only doing, like, less than 20 hours a week. So. Why are we possibly putting money on a card that we don't, we're not even, okay, not only that, not only that, but after your payment and after your purchases, plus fees and interest, you have a $620 balance on a card that has a cap of $600. cap of $600. Yeah. So do we just not care?

I need to know something or I just... No, I mean, we definitely care. I just, I don't know, I don't know what it is. We just, we have the money and then we spend it. Like, we just, it's there and then it's gone. Whether it be gas or eating out or going shopping or whatever. Now, these cards that you have are sh-h-h-de-cards. Right.

Right? Yeah. we both have terrible credit, so they were the only ones that we could get approved for. And what are we doing on here? We're Dutch brozine, and we're McDonald'sine and Chick-fil-Ain and Tacos and Dutch Bros and Willie Gay and Really Grill and Ice. I'm not happy about that. That is where I'm a little upset at you.

That's stupid. That is stupid. If we're over our credit card balance, we're not making any progress when we're spending on it, that's objectively stupid. And guess what? Total fees charged in 2023 because you're overspending. These have monthly fees just to be a member of the card. So not even if you have balances, these terrible cards have fees on a monthly basis with no benefits.

So total fees, again, we're only a quarter in of 2023, $78 on one card, one card lost in total interest of $70. Lost. And then we're still with the same company here, but we have a, we have a, we have a, a new, a different card. Previous balance, $789 on an $800 credit limit. Paying $94. Okay, we're making progress, but then we put on it $86.34. With interest charge of $25.65, and congratulations, fees again of $12, meaning that not only one card now,

two cards, two out of year, like a billion cards, we are over the credit limit. Or the credit limit, yeah? Yep. So again, the mentality, whatever it was, like, it's applying to this. It's like we don't have money, but we kind of do. Yeah, yeah. Pretty much all of them. And with this, it was like we went to Walmart and Star Mart.

So, I mean, like, it's either gas or groceries, but, like, we do that from our checking account when we're not credit card people. Right. We're going to talk about all those methods in the end, but this is the painful part where we go through the pain. It already hurts. We'll get through the good part. It should.

And you need to know how much it hurts. And people who are going down the road like you need to know how much it hurts. Right. So that we can just improve people's lives. But again, fees charged in 2020. So far, $61. Interest charge $71. And again, that's two cards out of like the billion you have.

Right. Okay. Credit one now. Oh, my. Oh, that's it. No, it is. Credit limit $300, but your previous balance was $557. No, no, you didn't pay on, you didn't spend money with this card.

Because there was, there was, there was, there was, there was, there was, there was, there was, there was, there was no money to spend. Your balance is completely gone. You made $30 payment, so that's like a minimum monthly payment. Oh. With $8.25 cents of fees, $12.83 cents of interest. New balance. $5. So really no progress is made.

Total fees for 2023, $24, total, total interest, $40. Let's go to another card, shall we? Credit limit, $600. You were under it this time at $5.83. But that gave you an excuse to spend money, which makes no sense. That is not an excuse to spend money, just because we have $18 on there that we can spend $30 of payments. We spent $37. No fees for this one, but interest of $14.26.

And now we're over the credit limit by $3.90. So total balance now, $603. With total interest charge, $203, $41, and you went to Starmark, probably guess, right? Yeah. I assume. Not credit card people. Not credit card people. Say that in your sleep, not credit card people.

Because you are not. Now with a visa, because we just open every credit card that we can possibly apply for, right? That we can possibly get approved for. Slip, swipe, swipe, swipe, swipe, swipe, yeah? Yeah. Okay. $269 previous balance payments of $82. But congratulations for making purchases of $132.

Fees charge of $54.25. $54. Within the last month, $8.83 of interest charged. Now our balance is $383 to the total credit limit of $300. In Fabletics, do we need to be going to? Fabletics? Fabletics, do we need to be going to Fabletics? Again, in $29 of additional card fee, monthly servicing fee of $6.25, annual fee of $48. My goodness, I should go into the credit card, the predatory credit card business, because these people just make money off of you. It's

insane. And that interest on purchases, 883, total fees charged $2023, $96, total interest charged in the year so far, $26. We have another card. We're getting through the pile. Slowly. Previous balance, 521, on a credit limit of $500. You made a $25,

you made a $25 payment, so you had $4 on there, which gave you an excuse to go purchase. You purchased $76 of stuff, giving you interest of $14.70 with the balance of $5,087 on a credit.

limit of $500 and disgusted right now. I mean, that was like optimum, so like some health thing. That's our internet. Oh, okay, yeah, yeah, yeah, yeah. Again, interest, $1470. Total interest charged year-to-date, $26. So the 30% interest fee. We're back to credit run.

We just can't leave them. We love them too much. Credit limit $300, previous balance, $3.23. $30 payment. You didn't purchase anything on here. Probably doesn't have any money. Yes. That's exactly it.

There's a new balance of $309 because fees were charged $8.25, interest charge for $748. Total annual fees, 333. Total interest charge, 29. Last but not least, credit 1. 481 previous balance. But there's a credit limit of 500, so we're below that. But that means we have an excuse to go purchase things. again, $30 of payments, $45 of purchases, $12, $12, $12 cents of interest charge with total interest this year, $35 at a 30% interest rate essentially.

And I went to Dutch Bros. Dude, you guys are screwing yourselves. Yeah. You are fucking up your entire life. Yeah. Okay. I want to make that crystal clear before we put any plan together. Do you understand?

Do you both understand? Are you on the same page that your life right now is? It's just, yeah. We know what our finance situation is. Okay, how long have you been in this financial situation? Since we've been together. How long has that been? About three years.

Okay. So what immediately makes me nervous, if nothing has happened for three years and we've known everything, we've known it's been since we've been together, what's going to change now? I'm hoping having our kid would kind of change around, but. Yeah, absolutely. That's a good reason. If there's a reason, that's a reason.

Yeah, because we don't want to live like this forever, especially having him around. You mentioned a car thing and some other things as well, so what's up? What's that? I don't have the statements for those. So I had a truck back in 2017, 2018. I was making payments on it. It was before I met my wife and everything, and making payments on it. I didn't have insurance on it.

I wasn't paying that, and then I flipped it and totaled it. And so they Yeah So they basically in collections now In collections Yeah and so I'm paying $50 a week So you have a payment plan with them? Yeah

And so that's the Security interest? No, I don't think so Okay And what's the balance remaining? It should be around 3,000-ish now What about your current car?

So that's I think we owe around 30,000 left on that. Jeez. The entrance rate's pretty high. I think it's 10, 11%. Oh. Maybe more.

Could be more. Just right high. Yeah. What's the minimum wealthy payment for that? 680. Oh. Is that just one? Is there another car?

No, no. I drive her old car. That's paid off. Good. Yeah. What is that car? The one we're paying on, a 2020 Chevy Equinox. We might be selling that.

I'm not sure yet. But we might have to. See how far in the hole you are. Any other debts? Not that I can think of, no. Okay, so that's all. You only have that much. Yeah.

We only have one, two, three, four, five, six, seven, eight credit cards that are either maxed out or well over, maxed out. Plus a truck that doesn't even exist that you're paying on. And a ridiculous car with a ridiculously high interest rate. Yeah. So your minimum monthly payments on your debts are over $1,000. And this is for nothing that's even benefiting you, except for one of the cars. Everything else is just money you've spent,

and whatever you've spent it on is gone. Fees and interest, not including either of your cars, by the way. This is just on the credit cards. Fees and interest, first quarter this year, $632.41 has been ripped from your existence. Thoughts? Yeah.

Yeah. And your total debt owed is $35,07. $0.20.15. Which actually does not sound insane. This is insane the way you've done it. Right. Your minimum payments on your debts are $1,000. The amount that you spent on food going out to eat was $1,578.50 in a month.

Is that not insane? Oh, yeah. It's insane. It's ridiculous. aggressively insane. And all your bills and fees are $1,751. Overdraft fees, $204, subscriptions, $175. Walmart, whatever.

Is that only grocery store shopping? Yeah, usually it's baby formula. $571 in a month of baby formula? Yeah. Not just baby formula, but yeah, diapers, wipes, clothes, all that stuff. He grew out of all the clothes that we had for him in the first month, so. Yeah, babies do that.

Yeah. And then he has to have expensive for him. He's a sensitive stomach. So it's like $35 a can. He goes through that like every two days. You're killing yourself. You guys are killing yourself. So what is very clear from my situation, this is a disaster.

Credit cards seem to be gone today. Like it's not even an option. When you guys are home, are you guys on the same page relatively? If you guys are, then burn them. Have a ceremony. Burn them. No. All of them?

Every single credit card. All of them? You can ask all of them after this? All of them? Yeah. Well, we'll fuck you all of them. Yeah. Right.

Okay. What? Well, we're trying to build our credit back up too. Fuck your credit. I don't give a shit. Credit is awesome for those who can utilize it. You are being taken advantage of that system. Okay.

Someday we can talk about it. Again, I've mentioned it millions of times. I think I may have said it in this episode already. I don't know. You can use the Fizz card. Yeah. That I recommend. And that builds credit and it's a debit card.

Dude, insanity is what this is. Build credit. You guys are over maxed out on the build credit. Fuck you, build credit. No, build credit's not in the conversation. Maybe we can talk about that eventually, but no. Build credit.

Build credit. So, every person is situation to situation. Your situation is Dave Ramsey is perfect for you. know him? Yeah. Okay. We listen to Dave Ramsey. He is perfect for you. Your debt is laid out on such a perfect way to follow his whole baby steps model. And he does the snowball method when it comes to paying off debt, which of course was invented, like when money was invented. So he didn't invent that, but it's a part of his baby steps and it would work for you. I would probably

modify his first one to meet your situation and we will get your budget here in a bit, especially since you have a kid. It's a little more risky. Yeah. But I'm I want, if this wasn't already clear enough about how dire this situation is, I want to talk to you about the child aspect of this thing. You guys have zero retirement, barely anything in savings. Yes, you guys are below 30, but with where you guys are headed, with nothing in retirement and always in debt for the rest of your lives, that is irresponsible of a parent because you are forcing your child to have to deal with you, right, as a required experience.

later instead of you sacrificing now saying okay let's not live this extreme lifestyle we're living now is take care of ourselves and we will actually have money to set ourselves up in the rest of our lives eventually you know when we're in our 60s and they won't have to worry about it what is happening now is irresponsible parenting yeah do you agree yes I agree good so if none if none of that else mattered that should That is critical. And show them this video at some point. Do it.

Be like, this is why you shouldn't go into death. Mom and dad made that mistake. Yeah. Learn from our mistakes. So we need to build a budget, and then we need to attack this thing. Because it's as easy as that. I mean, that's what it's going to come down to for you. Rent.

What is it? A 1725 a month. You're rural. Why is it so expensive? It's... That was the cheapest place we could find. I guess it's small, so not a lot of options, right? Yeah.

Everything in Cedar Park was like 2,000 over, so... Cedar Park? Yeah. We're from Liberty Hill originally, so Cedar Park is like kind of halfway between both of our jobs. Oh, okay. Utilities, internet, renters, insurance, all of that combined, best guess? Probably about 300. Gas between the both of you for cars?

I probably spend close to $100 in gas a week. Okay, and her? She spends a little bit less. Her car gets better gas mileage, but it's probably about 50 to 60. It's about an hour drive for me to work and about 30 to 45 for her. It's on average of, oh my gosh, dude, that's something, that's something bad. That's $693 a month on average. That's insane.

Car insurances? Yeah. It's on, it's for both of them I think it's about 600. No, it's a lot less than that. I'm sorry. A lot less? Yeah, because I think for her new car it's only about 200.

Okay. And for the camera that I drive, it's like 110. It's like 1.10? So, 310? Yeah. Sorry. No, it's okay. Good. Good, good, good, good. Okay, so with the baby stuff, and yes, babies are expensive, but you don't have to go crazy. And a lot of people, I've looked at the baby,

budget breakdown. I know what can be spent on food and babies and stuff for a household. I think, think you can do about 500 bucks for the household, maybe 600. We'll say 600 in hope to cut it to 500. We'll do that for food for the household, okay? Yeah. Where are your thoughts on that specifically? It sounds about right, probably. You don't have to eat fancy stuff. Right. Healthy, sure, but we don't have to be going crazy. And then stuff. And then stuff. for the household to keep it in order. $100 a month is fine.

Yeah. Don't have to go crazy. And then the debts, what are we at? $1,000 a month. Oh. Any other minimum payment? No. Not that I can think of.

Health insurance is all taken out of before income. Yeah, it's on hers. It's just her and the baby. It's about $800 a month. Why don't you want it? You need to be on it. You're a dad now. Yeah.

Get on it. But it's already $800 a month for just her. You've got to get on it. Okay. You need to make sure you're getting your yearlies. Get blood work, get everything. You're a dad. Take care of yourself so you're there for your kids' future.

Yeah. Okay. And no, car washes are no longer in the budget. Restaurants are no longer in the budget. Steam purchases are no longer in the budget. And all that other crap that was relentless and McDonald's and Chick-fil-A and all the other crap you guys are doing. Subscriptions, they're out of the budget.

Internet. Yes. Watch YouTube videos. It's fantastic here. It's a good time. Everything else is out. No more Netflix, no more, nothing. You cannot afford it.

You have minimum monthly expenses to survive of $4,738. Okay? If you guys are actually going to do this, if you guys are going to be adults, responsible parents, you will follow that budget and go crazy. Because congratulations, and I don't mean that in a sarcastic way for once, I don't think this is going to take forever. You've been incredibly insane and stupid and just like terrible with credit cards, but all of it added together is creating a balance with an income that you have that you can just beat down.

Yeah? So, 2,000, strictly falling the butt in, 2,262 is left. And with $5,720, take 15 months. For the situation you're in, that's not crazy. The kid will be a year and a half old. And then your entire future is ahead of you. You guys will be 28, 29. A year and a half.

That's crazy. And what do you do? I mean, with this $2,262, with that, you kill your smallest four credit cards. Actually, what I would owe, no, no. How much was in your savings? $4,500? Perfect.

We're keeping it there. That's like your minimum monthly expense. That's perfect. Keep it there. Don't use it. Now, for now. 2,262. Kill your bottom three credit cards, bottom four,

and then kill your next three, two and a half to three. You just keep going until the smallest credit card to the largest credit card is paid off. And then you kill the truck. And then you kill the car. I don't think you need to sell the car in this situation. What you can do, if you want to sell it, what's your credit score? Last I checked it was like a 560, 570. Hers is about the same.

I was going to say, get it up. With the income you have, okay, let's just pay this car off. And then keep these two cars for as long as you can. We'll build up a car fund. What's the car you're driving now? It's a 2011 Camry. Okay. I'll need a car fund at some point.

Yeah. But seriously, a year, a year and a half. What is that in the grand scheme of things? Yeah. dropping the bucket yeah it's nothing your kid won't even have any memory

nothing's even like being like imprinted on him yeah he's he yeah he's a couple years away you don't know you guys are not having fun and going out to eat yeah and work extra hard

do some ubering in the new car or something like that some uber eats and if you want in the end cut this down to a year instead of a year and a have. Right. I mean, as hard as you want to work, as quick as you will get out of this situation, yeah?

Right. So from there, what is critical, now you'll have $3,000, because the debt minimum of the payments are gone, $3,272 a month. We probably want you to have about $21,000, in an emergency fund. You already have $4,500.

Divide that by the $3,272. You'll have extra. So, boom, two years. Two years you have a fully funded emergency fund and you have no credit card debt, no card debt. You don't open up another credit card because you'll go back in this situation.

This is clearly your, y'all's instinct. So if we recognize that, then we say, okay, we're just not going to do it because our lives actually matter. And you can take advantage. If you get out of these credit cards, get out of the car, and get into what I would allow, if credit is super important at that time, what I would allow, is like a, get you a $100 gas card that you put one fill up on a month on there and pay it off every month and nothing more. Just paid off as soon as we get it. But that still scares me.

but if credit card is that important, if credit is that important to you, then do that in this later situation in two years. But burn these cards now so you never spend on them, remove them from all your virtual wallets, anything, destroy them, burn them, kill them. They do not exist because they're killing you

and making it so that your finances do not exist. Then you have so much money to work with. I'd say your income stays the same. $3,500, which is about what your needs will be. That's rent, utilities, your gas, your car insurance, $600 a month for groceries, $100 to hold paper, stuff like that. That'll be your needs category. That's perfect. You don't need to go extra grocery shopping from there unless you increase your income or minimize your rent, you know, cut back on something.

Your car insurance will be a little cheaper as well on the car that has debt right now. But from there, what I'm going to recommend. for you guys is of the $7,000, $1,400 a month is invested, whether that be in the 401K or Roth IRA or brokerage

or a hybrid of all, $1,400. That's 20%. Right. Okay? You can spend that exact same amount on going out to restaurants again. Budgeted. In a category. Budgeted. You don't spend over that

in fun. If you're going to go on a vacation that costs twice that much, you don't have fun for one month, then you can spend double the next month. Does that make sense? Yes, yeah. You never touch your emergency fund for anything either.

Never. And then that additional 10% that's missing from the pie. It's going to go into a car fund. You're going to take that to like, if you want a $20,000 car, you take that right into $20, then trading your car,

sell your car, get as much as you can, buy your car and cash. Just don't go into debt again because you guys cannot do debt. Right. There are smart ways to do, debt, it is for the vast minority of people.

You cannot do it. And that's okay. It doesn't matter. Who gives a... Yeah. And once you get that car, I'd keep that 10% going. What you can do is use that $700 a month. Continue going, ramp it up a little if you want to.

Cut from your needs where you can. Or cut from your wants, especially don't cut from retirement, though. And what that can be is a down payment fund on a house. Because eventually you want a primary residence. Right. That's our goal in the next couple years. That is not going to happen in the next couple years. Two years, you're out of debt and have an emergency fund.

And only then you're starting to save up to get a car, and you're starting to contribute to retirement. House doesn't happen for probably about six to ten. But that's okay. Who cares? You'll be in your mid-30s. Most people can't buy their homes until then anyway. That's fine.

That just makes you someone who's doing well. Right. Okay. So don't be ashamed of that. Don't get rushed into it. Once you get into the personal finance space, I get the lure of like, I don't want to pay rent.

I want to have my mortgage going into my overall equity of my home and while my home value goes up, it's a piece of property, it's great. You can pass it to your kids eventually. I get it. Right. You do not have the rush into it. Put the overall,

boring, grand scheme of your financial life. Take that into account over rushing into something. Because if you just save up a little, do an FHA in this area, the minimum monthly payment on that would be beyond an affordable fairing. Right, right. Even in the, like, edge of suburbia will still be beyond unaffordable, even if interest rates are good.

So that's what I do. We do need, like that, like I said, in two years, when you guys are 29, 20% is going to retirement. We'll just base it off the average stock market return instead of the average S&P 500 return. I'm a slut for the S&P 500, and it does 10%, a little over 10% on average. Historically, stock market, it's like 8%. So we'll just do that. And we'll do, what was it again?

So 70%, 20% of 7,100, 1,400. Doing that for 31 years. So that's great. If that follows the average return of the stock market historically for 31 years, so when you guys are 60, $1,400 a month, which, by the way, will go up because your income will go up over those 31 years. But let's just saying that for an example, $2.27 million, which is great. Or we can take an account the average inflation. Take an account the average inflation, that'll be $857,000. Which is pretty good.

So pretty good in today's money. In today's money. That's what it would feel like if you had it right now. Oh, wait. No, no, no, no, no. I did that wrong. It would be $1.24 million. I was going to say, that did not seem right.

I typed them the wrong number. And if you use the 4% rule, you can withdraw $50,000 a year in today's money for the rest of your lives. And you'll have the paid off house at that point. You'll have no debts. $50,000 in today's money would stretch a lot if you didn't have any debts.

Right. Now, of course, again, as incomes go up, your contribution amount will go up. So it's going to be like $75,000 in today's money, $100,000 in today's money. There's like 20% of what you're bringing home that month. Mm-hmm. I would do that. At least 20% are post-tax.

So, yes, there's a certain percentage that you're doing pre-tax when, you know, well, depending on 401K you have. Either way, as long as it just comes out to a minimum 20% post-tax, because that's what we need to do. I'm, I am not to go back to negativity. this situation in general deeply scares me. The track record being on the same page and knowing that this is for three years, yet nothing has been done in which you bring me are overbalances and negative balances on your checking account? I'm terrified.

I'm scared. I'm scared that you're going to be 60. There's going to not be a single cent in retirement. I'm scared that you're going to be 60. You'll have like 20 credit cards with overbalance. And we're still negative on our checking account and we've never owned a piece of real estate. I'm scared of that based on the history. Prove me wrong.

Do you know how much of an incredible success? Let's just pretend I'm the most selfish person in the world and I only care about me for a second. Let's just pretend like that. Because sometimes when people see people being YouTubers, they forget their actual people. They just assume they're like an entity. Let's assume that. Even if you do all that, do you know how good that looks for my channel that you have succeeded? in the most selfish way possible.

So please prove me wrong. I actually really want you to prove me wrong so that you guys can have an incredible life so your kid can have an incredible life. And then we can put the situation on display for everyone so they can have incredible lives. That only does it if you change what's been happening. If you follow the budget that we laid out and put on screen.

If you follow that, two years fully funded emergency fund, no more debt. 60 years old, we're retiring comfortably. And setting up our kid for success along the way. And maybe having more, if that's what you all are into. Depends on who you ask, but yeah. Tell me realistically knowing your history, you two, together, what is actually going to happen when you leave here?

I think we'll follow it for sure. I've been talking to her about cutting up the cards for a while, now. What has been the pushback on that? She wants some news to build credit and then just having them as like a backup for like gas and stuff whenever our checking account is negative. We can talk about building credit again after you're out of this whole

situation. It doesn't matter. You guys are doing this now when your credits are in the what? What was that? Four hundreds? $500? 560. It doesn't even matter at that point. So who cares? Sorry, continue. But yeah, I think it doesn't seem too hard to follow. It's just about sitting down and putting our heads together and actually doing it

and actually sticking to it for longer than Because we've done good for, we'll do good for like one or two months. And then, you know, something will come up or whatever. We went on vacation last year and pretty much just blew all those things that we had. Sorry, vacations don't exist for the next two years. Yeah. It needs to be known. Yeah.

Do you guys have close friends here, close family here? Everybody, yeah. Friends family. Good. Yeah. So good groups? Yeah. Let them know your situation.

So there's on this episode and use them as a tool to keep you accountable. Yeah. Because I get that. That happens to a lot of people. Even me with my diet, I'll do great for two months. I'll do great for six months and then I'll have like terrible. If you have people holding you accountable and you're actively trying to have them hold you accountable, you know, like you're encouraging it, it's going to help so much. This fire will be lit under your ass right now, yes, and you'll burn the cards, yes, probably.

But where are we going to be in three months? So please take advantage of the amazing group around you. Make sure you're being held accountable. And we will definitely hold you accountable when you come and do a check-up. We'll do a checkup in like six months because in six months, what, the car should be gone. Yeah. The cars, the truck or the vehicle is what's going to take forever, but the credit card should be gone. Yeah.

Yeah. Any final thoughts? Not really. Hope to stick to it. Hope to get her on board to stick to it. Hope to be out of debt. For Johnny. Okay, that's a scary mess.

I really hope they get it together. They can have a great life, but they have to get it together starting now. Hammer Financial Score Let's break down those categories Spending within a budget Obviously zero out of ten That's not even a question Debt, one out of ten

Only because it's not like there's any crazy High Interestude Loans or anything in collections Or like IRS debt But it's still really bad Retirement? There's nothing Zero out of ten Merchant's fund There actually is money there saved up Three out of ten which helps them get this process started by the way

Real estate Well they're not even close in that game yet Zero out of ten That comes to an aggregate get hammer financial score one out of ten don't forget to check out the resources in the description below and don't forget to follow my instagram and twitter thanks