Financial Audit - Taking Out 3 Stupid Car Loans With 25% Interest Rates While Having No Money

Episode Date: September 1, 2023

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Hello, my name is Daniel Rivera. I'm 22 years old. I live currently in Lubbock, Texas. And this is financial audit. You're 22? I'm 22. Thanks for coming over from from Lubbock, but I'm already, okay, so 22. And yeah, you look 22.

I didn't think you were older or anything. Just out of the gate, dude. How do you get yourself into so much random and not good debt by 22? you're too young for this in my opinion what's going on oh you know i'm i'm here to get the help from you yeah but but why'd you go in to the debt um it's it's the long process and how i got my something to it it's just it depends on what do you mean by that well a lot of it student loans which that one's reasonable but then we go through things well i mean i'll just lay it out for everyone We'll go to the debts individually, but I'll lay out where everyone is from a screenshot from your credit karma.

Okay. And we're putting it on screen as well. So credit card, you have a credit card that you're trying to pay off. You have $972 in collections. You have collections of 22 already. Yeah. You probably were able to, what? You were probably able to get you like your first dead only four years ago.

Like less than a half a decade ago and we're already in collections. Sooner loans. Yep. And then personal loans, we're taking out $7,000 of personal loans in Rune 22. And then we're taking out a big auto loan. But it says there's two in there as well. So we're going to have to look at three personal loans. You have two cars at 22.

I'm thinking about getting a third. Why? By getting a Tesla. Why? Why possibly? Oh, you save on gas. You know, it's always nice to have three cars. It's always nice to have three cars.

Well, I have one car. the other one's for my mom. So, wouldn't hurt to get another one. You know, it's always an investment. Investment? What do you mean by investment? You know, if one breaks down, you still have another, you could drive.

So more of a security measure than an investment. Because investment, we're talking about things hopefully going up in value. Typically, that doesn't work. Tesla's, they do hold value better than other cars, but usually cars, especially in a normal car market, which we're getting closer and closer to, still not 100% there yet. Yeah, not an investment

Okay, well, I'm sorry, I'm taking into you Into you right away because I'm just like, I'm just, I'm shocked by this after you hurt your age I was like, okay, this dude's coming out and I was looking on it. He's like 28, 30, something like that. No, I'm barely 22. Barely 22. What would you give yourself as a financial score? Zero out of ten? Where do you think you are?

You know, I didn't travel all the way from Lubbock. I'm here for the help, Caleb. Yeah. I know my financial is not the best right now, and that's why I'm trying to fix that up. But what would you give yourself as a score, a zero out of ten? I would say a six out of ten.

Optimistic, Mr. Three car guy. All right, so 22. Did you go to Texas Tech? I did not. I actually went to a trade school. Oh, cool. Yeah. Very cool.

And what did you study and what did you get? Universal Technical Institute, automotive. Automotive? Oh, that's starting to explain some things. Okay. And you got certified in what? I got certified in Volvo cars, so I'm a Volvo technician. Oh, very cool.

Okay, so that's your job then right now. That's my job. That's where I'm located in Lubbock. Okay, very cool. So what do you bring in? Um, my get paid weekly. Um, it's a thousand a week. Okay.

After taxes. And I'm putting away 50. Wait, wait, wait, a thousand after taxes? Uh, no, before taxes. Okay, so $52,000 a year before taxes. Mm-hmm. Okay, very cool. Uh, and then after tax is probably like, 40?

Yeah, around there. Maybe even a little less depending. There's no state income tax in Texas, but, uh, And that tax park? I mean, with deductions. Well, yeah.

Okay, cool. So $40,000, but you, wait, okay. There's probably $40,000 coming in and hitting your account

on a monthly basis, but you have $30,000 of car debt and you're about to go into more. No. Well, I needed the car. My mom needed a car, so I bought her a car

under my credit. And then I just ended up So you took out debt to get her a car? Yeah. Okay. What, where is she? She lives in Frisco. Okay.

She's in the Dallas area. Oh, gotcha. Okay. Okay. So she lives there. She can't get herself a car? She's in a financial situation as well. So, you know.

As well. I'm glad you said that. I'm just there to help her as much as I can. Yeah, but you know you're hurting yourself, though. To be clear. I do know that, but, you know, I'm still very young, so in the long run, I could always fix that, fix that up, you know? Okay. I'm not going to dig into you too much because your friend nominated you to be on here, so you don't really know the show too much as far as I understand, right?

Yeah. So I'm not going to bully you too hard. But let me just, let me just say off the gate when you say, no, it's okay because I'm young right now, so I can do this because I can get out of it and all that kind of stuff. No, you're young right now. What can happen when you're young is, dude, if you were investing just 15% of your money in the stock market, you're in the best decade of your life for that money to compound and grow to the point where you're easily a millionaire, multi-millionaire by the time you are 60. You are not going to have that because of where you're at. Well, I do have a savings account and I am investing a little bit from my checkings. But this situation saying we can do this instead of doing all that because I mean I've seen I've seen your savings

It's not an emergency fund you know it's not even close well I am working on it and I just started this year I know but you shouldn't be there is all I'm saying Yeah well you shouldn't be here you should be there already you should already have it Oh yeah I know well last year I got myself into a predicament and you know I was the predicament oh I moved up by myself and then I was paying so much in rent. I didn't really think it through. So last year was a year where I really struggled. And this year is just a year where I'm really like trying to step it up.

So overall, I think so far I'm doing pretty well. If you want to step up, step up and hit that subscribe button because we are trying to get the 750,000 subscribers. Thank you to everyone who has subscribed so far. I love you so much. Love you so much. Okay. So let's just go through your situation. you give yourself a six out of ten.

We know you're bringing in $52,000 a year, maybe like $40,000 after taxes, maybe a little less. All right. So this first one's the credit card. There is something I'm happy about. So I would normally yell at you in the situation, but congratulations. You're not spending on a credit card that you're trying to pay off.

And you are making more than the minimum month of payment. So there is progress there. So this is credit card, and we have a current balance after a $200 payment of $1,628. And $5. Now you lost $25.36 in interest, which sucks. Why did you go into this debt in the first place, this credit card debt?

Well, I do know my interest rate is 35%. I was able to talk them down to 18%. Still death, but, okay. Why did you go into this in the first place, though? That didn't answer the question. Um, I just, I honestly don't remember how I got so high up in debt. Um, I think I did pay off some student. Um, I think I paid off a class and they really set me behind and then I used, uh, my credit card to get it to get a car.

Okay. Well, you know, what do you mean? Do you mean like the down payment you put on a credit card or something? Yeah, I used my credit card. So you're, you're going into debt for the down payment. So it wasn't even like a down payment. You just fuck yourself. Well, I did put some down payment down, and I also did use my credit card.

Right now, I am at 16 whatever. I know it's probably after this trip. It's probably going to be 1900 that it's going to go up, you know, for this podcast. I come a long way. Your friend didn't offer to pay for it when he nominated you? He's over there in that corner. I'm shaming you right now. Okay.

He nominated you and he's not paying for it. Oh, and we're trying to get you out of debt. Okay. Well, again, I am glad you did not put any more money on this, but we have that. I'm a little nervous. Okay. I'm a little nervous that you're like, I don't remember why I went into bad debt because if we don't know why we went into it, who's going to say we're not going to get into it again? I understand the down payment part for this specifically.

Yeah. But you said, though, you said those words. Well, I have been paying it off and I've been doing better. No, that's fine. That's fine. but you said you don't know why you got into the debts in the first place. Yeah. That scares me.

You're not even able to just like straight up acknowledge what the situation was going into it. How is that going to prevent you in the future from going into it again? Yeah. Well, I did this year, like I said, this year I am doing a lot better financial-wise. And I know I have to pay off that card. And I'm not even using that card right now. I know, I know. I have still September to pay.

it off. Are you hearing what I'm saying, though? Oh, I'm, I'm, okay, because you're just, you're, like, responding to, like, a different question. Like, I'm nervous that you do not know why you went into the debt because that means you might go into it in the future, regardless if you're starting to make progress towards it now in terms of paying it down. Yeah.

Regardless, if you're putting money on the cards, though. Well, I do understand that, but this card is not helping me in any way. I don't get anything back. It's just, it was. my first credit card. So I'm not going to use it after I pay it off. Okay. Okay.

We do have something else. This has to be the car. What is the vehicle? What is the car? There's two cars. Which one are you talking about? Okay. The one that you finance $19,000 for.

Okay. So that one, that's the Scion. I am. It's a 2016. I don't know that car. Is that a nice car? Kind of expensive for 2016. Yeah, I know the prices.

I'm pretty sure it's overpriced. Dude, you're a car, dude. Oh, yeah. You should know that, right? Hold on. All right. What? What?

It was just my mom really needed a car. This was your mom's car? So that's the car, yeah. Dude, you went! 2016, what, Sion? Sion I am. It's the last model they made. That means it was obviously a good car.

Oh, it is a time. Toyota. Fair enough. How much did you put down for this one? I think it was two grand. Yeah, I mean, so you overbought it, but honestly not by that much for what I'm seen online in terms of what it's being sold for. Well, like it depends the source.

It depends the source, obviously. But seeing like some places can have a list. for like 20, but then like 15,000 for private sale and stuff like that. So. Well, I do know that interest rate on that car is 13%. Yeah, it's death. It's absolutely death. I didn't get to that yet.

Okay. So mine needed a car to get from A to B, right? Yeah. Just to get to like a location from her place. Yeah. So she could work, make money and then, you know, take care of herself, hopefully. Right? Yeah, of course.

Why did it have to be a $20,000 car? Oh, that's the cheapest they had on the lot. Okay. Fuck off. Go to a different lot. Car guy? Well, I was in a tight schedule with work. Okay.

Okay. So was that tight schedule with work worth $20,000 with $2,000 down with 13% interest rate? Did you really make that money up by keeping your tight schedule? Well, at the end of it, I'm not really paying for it, Mr. Hammer. My mom is. I've never been called Mr. Hammer. That's very nice. Your mom, so she's paying you for this.

Yeah, she sends me the money for it. Okay. You know that's inherently risky though I'm glad she's paying you for this Why couldn't she get her herself if she's paying for it? Is her credit score just Her credit score is not that bad But she is in the process of trying to get a house

She isn't the process of trying to get herself a house But she wasn't willing to get a car for herself Well if she gets a car It's going to risk the chances of her getting a house So this is why I helped her out Get that house When does she want to get the house This October

or in August. It would have a hard inquiry. It would lower the age of her credit and it would also decrease her debt to income ratio, yes. It would also at the same time show that she is making reliable payments.

But I don't know her credit score. She's not here. She's not the person I'm auditing. But you did take this out. So inherently risky because what if, okay, I'm going to go straight up sad situation. I never wish this for anyone. But, you know,

What if she dies? You still owe this. It's under your name. Or what if something happens? Sower relationship, boom, it doesn't have it. What if all of a sudden she loses her job and she just can't afford it? Then you're paying for it. There's a lot of what ifs that increase the overall risk scenario. You took on the risk. Oh, right now I'm not thinking of what ifs.

You know? Okay. But you're not willing to think about risk for anything? Do you do everything just risk? Well, I do think about it. it, but this is, you know, I'm not paying on it. She's the one making the payment. Well, you are, but she's paying you for it.

But a lot of things could happen. Okay. I'm not even trying to tell you you're a bad person for this or anything. I'm just trying to get you to understand the risk and you're not even understanding the risk behind it. Do you get the risk? I do understand the risk. I just...

And this just happened. And it's 72 months. So you're dealing with this until early 2029. This is something you're dealing with until 2029. Not if she could put more money into it. Yes, not if. Is she going to? Mr.

Not dealing with what ifs. You know, I kind of just live my day, day by day. Sure. Think about the future. And think about the future. I do think about the future,

but I live my life is I live it day by day. Yeah, yeah, so I try not to stress as much. This is why I'm on the podcast. It's okay not to stress. It's okay not to, I don't want you to stress,

but I want you to at least think about things. And then, you know make a plan like an adult right so we can do that without like getting like freaked out by it okay yeah so with this i need to know the monthly payments the minimum monthly payment 384 yeah now a good way to think about cars and this is for everyone out there if if that is the way to go into a car though i would prefer there's many things i'd prefer for the average person probably just buying a car in cash because that's just a better overall.

For those that are financially savvy, buying a car. Well, if you're not financially set, you can't pay a car in cash, you know, and that's, that's what the problem was. So I helped their out. I'm going through the different situations. For those who can, and I can help most people get into the place where they can buy in cash, that would be great. For the financially savvy, you know, 3% interest rate if they could or less and then

invest everything else that was going to go to the car, the minimum payment sales paid off for three years. Or we could do the money guys rule that are in other very, there are a popular show who I love. I watch every single episode they put out on YouTube. I forget the name of the rule, but essentially the rule is 20% down on a car for three years, a three year loan, and 8% of your total gross income. If you can't meet those criteria, then you cannot afford a car. And you have to get a car that is worth that by looking at more than one lot. Okay, let's say this then. What about after she gets her house?

Yeah. She could buy that car off of me on her credit. Yeah, sure. That was the plan to begin with. That would be good. Again, there is risk around it. That doesn't negate the risk. But if we get to that situation and she does that, I mean, that's fantastic.

Because it is her car, she should have to deal with it like the adult she is and not her kid. I understand that you wanted to help. I love the big heart. I'm not critical of the big heart. I am here to make sure you're in a good place because you're the person on the other side of the table. So I'm only dealing with your financial situation. Trust me, love the heart, but I want to make sure you are financially safe and taken care of. That's the main thing.

I appreciate that. Do you get that? Yeah. Okay. So moving on to the next debt. This must be the other car. Yeah. $11,704?

Yeah. And what is this car? 2016 Ford Focus. Ford Focus, yeah. How many miles? It's at 103. Would you get it? Same time I bought the Sion.

So this is new as well for you? It was a two-for-one deal pretty much. That's what they told me. What a deal you got. I know, right? I didn't know I got screwed over until the end. You're the cool. car guy.

You know what I was very... I was very pissed off at the situation. I was ready to get out of there. You can't let those emotions, man. Yeah. Now it's going to be beating you down for years. So let me guess you also got like 72 months on this. Well, yeah.

I could probably pay it off way sooner than that. Sure. What is the term, though? Is it that 72 months again? I don't know. What's the interest right? Well, I got the car for 9-5. So I'm pretty sure the interest rate is on there already.

9,500? Yeah. Why is the payoff $11,000? I don't know. Dude. Is this the car? Yeah, that's the car. You don't know the interest rate?

We know the minimum of the payment is $312. Now, I know you have credit card because you sent me a screenshot. Yeah. Can you open credit karma from your book? I should be able to at least see on there. Credit karma? Yeah. Okay.

The 972 collection. That's a medical debt. Okay. We'll talk about that in a second. Which is no reason there's not, that's not paid off at this point, whatever. I haven't seen this in a long time. You win the got-fif the award. 24.39% interest.

That's death. And you didn't even know it. I want to understand kind of just your education in general. around personal finances. Not the best. Were you taught in school personal finances? No. Parents.

No. My parents really aren't that good either. Yeah. Financing. Yeah, because you bought her car and took out 13% interest debt on that. Your friend is even teaching you? Have you been trying to learn things in YouTube? Like, this is a great platform for a lot of things.

Well, I do plan on refinancing later on and lowering the interest rate. Yeah. I think that's a minimum if we're keeping it. And it is 72 months of death. You can't afford either of these cars the way you're doing it. And again, you just started it. So let's take a look at that. Collections.

Okay, good news is, well, except for the collections, you pretty much make everything ounce on time, which I'm happy about that. Okay, that's the credit card. There's the two car loans. There's a couple of things that I did not see, which I'm concerned about. The snap on and the macko. Yes. Yeah.

So collections. It was for medical debt. Yeah. What happened? This is when I was living in Arizona. I was not working at the time. It wasn't feeling well. What was up?

Are you okay? Well, yeah. This was back in last two years ago. Is it something that might flare up again? No. Okay. So you're all good taking care of? Yeah.

Cool. Why have you not paid this sense? Now that you're making $50,000 a year? Because I'm trying to pay off my credit card off first. Okay. Do you care about your credit score, though? So you can refinance your car potentially? Paying off this collections would be a major win for your credit score.

Or like at least dropping it to half of that. Well, you can't. Because the minimum, they can't really report your collection. on credit on medical that if it's less than $500. Okay. You could also probably just negotiate with them and be like, yo, I did try to negotiate with them. Tell me.

They did not want to drop it by a lot. They said $890. No, of course not. But was that it? One phone call. Okay. No, this is how you do it. Once a week, once every two weeks, call them up.

Hey, all I have is $500. Take it or leave it. No, okay. Next week. Oh, all I have is $500. Take it or leave it. No, okay. Next week.

Boom, boom, boom. until they accept it then do it. How long has this been on your credit? I believe since last year. Okay. So we're definitely not going to wait for that to fall off. That would be ridiculous. What were these two other debts?

What were these two other debts that we just saw? What was that? The Snap On, those are tools I use for work. It's paid off. It's paid off? It's paid off. Why did I see a balance on your credit? Because it's not fully updated yet.

Okay. And what about the other debt? Oh, the MACO. Oh, that's horrible. You don't want to know about that one. I'm going to need to know about that one. one? That one is an 18% interest rate. The toolbox itself was 6,500. Right now, with the interest rate accumulated and everything, the box came up to $9,500. You own $9,500? Oh yeah, I'm getting $1,000. Yeah, you are.

Yeah, you know what my boss told me? What'd your boss tell you? He said, might as well put a d-do on it because you're getting in that. And what's the minimum? monthly payment on that thing? 18. Minimum monthly payment is 180. Okay. So we've gotten through the debts, right?

That's all the debts or is there? No, there's the student loans. The student loans. Are they federal or private? What are they? I think they're private. Are you paying on them right now? No, I don't have to start paying off until October.

Okay. Because they are federal or are they deferred to private. Who are they with? Pull it up again. I'm guessing they are federal, but we're about to see. Yeah, Department of Ed with AVM. Okay, very good. So this is federal.

So we have with the student loans, you can have that back. Thank you. $12,000. And it's likely, hmm, guessing about $100, $150 minimum monthly payments, $125. You're usually been pretty good at guessing those. Guessing more towards the range of $150. starting in October because, yeah, not the date the recording of this video, but it just got struck down today.

Did you see? I did not see. Okay, yeah, the suit alone for gift is officially not going to happen. And it's likely ranging from 4% to 6% interest on us. Okay. Checking account. Checking account, we have $540 in. Okay.

It's a okay enough buffer. Usually I like to see a least closer to 1 to 2,000, but that's okay. And this is something that pops up a lot through here. You clearly have an acorns and you paid the $3 subscription for it. Yeah. By the way, free $5. If you sign it for acorns, using my link in the description below. Let's go.

That, though, you're withdrawing constantly from your acorns later, which means you're also putting in that their later account is usually an IRA. You're paying a 10% penalty when you withdraw that. What are you doing? But I don't plan on withdrawing anytime soon. But you, no, no, no. Oh, congratulations. Guess what?

We all just learned that I am the idiot right now. Because that whole time, I was viewing negative $5,000, $0.5. I was like, why are you withdrawing from acorns and put it into your account? No, that's okay. I'm happy to see that. No, you did well on that. I had a complete brain collapse during that. So, no, those are good.

I'm happy to see those. Red Robin, not throwed the seat, because we have 18% debt, 25% debt, 18% debt, 13% debt, and then 6% debt with student loans. And yet we're deciding we're going to go to Red Robin because those burgers and unlimited fries and halfway decent root beer floats. Bottomless fries, you can't beat that, you know? I'll tell you I can beat it, 25% death interest rate. So tell me right now, I need to know before I go through those, is Red Robin and their bottomless fries that aren't that good fries, by the way, and the burgers are kind of trash. better than the in and out that you had in here because that's like kill me now when it comes to food.

But is that more important? Is that possibly more important than your financial future? I need to know. No. Okay. So why in your logic now I know we're not the most financially educated here. And that's why I'm, you know, I'm making sure you understand the gravity of the situation. That's why I do the things that I do here.

So you truly know because it is absolutely. Well, I only eat out once in a while just to treat myself. Okay, Red Robin and New Creation Priso and Zell and money out $20. She knows where that went. And the rich one, Benjamin, an in-and-out burger, death. You may as well at least eat food when you're trying to put something in your body. Cash half and out $5 a water burger. And what is the, oh, the Snap on Credit was the thing you were paying off.

Okay, got you. That's paid off. And the Bolton Services. And Raising Cains and Headhuners and Snap and Johnny Estes. And that's the Maco I'm paying off on. Oh, okay. And Chick-fil-A and Wendy's and McDonald's and McDonald's. And you got some more tools and Apple Cash sent out $30.

She knows where that and when. New Creation, Raising Canes, Dutch Bros. Waterburger, South Plains, Lanes, and Waterburger. So, yes, you do not go absolutely crazy, but you eat down twice a week. I stopped doing that. And if I do, it's, it's, I'm making sure I still have enough at the end of the month. Well, no, no, no, you have enough that thing in the month because you have $550. But why are we eating out at all when that money should be going to 25% death debt?

Right? Yeah. So I want to know the logic from the mind of not knowing much of the problem for some finances, which is totally okay, by the way. And, you know, good job being here. And, you know, your friend convinced you to come on. Like, you're taking the first step. Like, it's absolutely fantastic. Like, you know, I definitely want to praise you for that.

But what was your logic at the point of, okay, I have terrible debt. Let me go to Waterburger. The only way I could explain it is that I was hungry. Okay. And you don't know how to make a sandwich? I do, but it's just I don't think I had any groceries for that month. And I just decided to eat out. For that month?

Have you ever thought about that crazy idea of going? on to the grocery store? Yes. If I do eat out, it's not a crazy amount that I'm spending on eating out. The fact that you went out to eat it all, though, the logic behind it while you have the 25% death death, that you could be paying off quicker if we prioritize where the money was going. Do you get that?

Is this coming through? Oh, yeah. Okay. Because you just try to justify it by. saying you didn't eat out much and you didn't it's only a couple hundred bucks but imagine if that couple hundred bucks was going towards that's almost doubling doubling your minimum monthly payment on your 25% interest car you're paying it off twice as quick and then you have subscriptions looks like uh some annual subscriptions that came through we don't really want to have

subscriptions unless they're benefiting us necessarily right now at this point going to have to eat that kind of stuff yeah so yeah now you do have a high high yield savings account with American Express. I am happy to see we have $8666 in here. It's not much. But it's... I did add a little more.

Good. What's it at? It's right now it's at a thousand... 66. Again, not much for a savings. Certainly not an emergency fund. But that is you making the step towards the least trying to have something, which is great. So, you know, definitely like, high five for that.

I will say this doesn't make the biggest difference. in the end, but I just got to give it a call out because I personally use them and everyone always asks what I use. You're getting 4%. You can get 4.3% with SOFi. I use SOFi. Link in the description below. Give bonuses up to $250 when you sign up.

So, I mean, that's pretty good. But 4% I'm also happy to see that. So you're nothing to stress about with that. Is that it? Is there anything else? That's it. You said you also have an investment account. I'm guessing this is a 401.

Okay, Roth IRA? It's all part of the acorns. It's a Roth IRA. How much is there? Can you open up your acorns so quick? It's not that much. That's okay. You know, we just want to get everything down on the paper and see where you're standing.

And I'm glad that, you know, it was just like five bucks here, five bucks here wasn't crazy. You're starting to do something. So yes, in your IRA basically $200. and then in your traditional investment account, $300. So we are going to stop doing that for now because you're not getting any kind of match through a company. So even if you're getting like the S&P 500 historical returns with dividends reinvested of just over 10%. That's still getting absolutely obliterated by your 25% interest rate debt. So if we pay off that 25 interest rate debt, you know, we immediately get that 25% return on the investment of the cash.

putting tortoise it. Yeah. Which beats 10% any and every day. So we're going to pause this. And there's really no point of you having that traditional one open. I would just put everything in your IRA, especially if it's a Roth IRA, because that's at least growing to the point where you can pull for a

without having to pay taxes on it when you retire. But we can't do that with the traditional. But of course, the traditional you can pull from penalty free, but you will have to pay taxes on it at some point. Okay. going into this man how much do you care to get out of the situation like where are you on the scale of just

ready to get your shit together and live a better life I'm ready yeah I'm this is a year where I'm trying to just step it up it's going to be more than a year yeah fair warning and well I have a plan for next year and let's hear your plan before I do my plan

move back home really yeah very interesting And, I mean, obviously, there's automotive opportunities in the Dallas area. Yeah. So no issue there. Specifically just to save money or just want to be close to family as well? It's both. Good.

I wins your lease up. So listen to this. I'm actually under a contract at my job. So I'm technically not allowed to leave until that contract is over. Which is? Which is in September. February of next year. That's not bad.

I mean, that's fine. If it was for a couple years, I was like, okay, what does it take to buy out? Well, yeah, I completed a whole year there already. And, you know, the first year I moved, I moved to Lubbock. I was like, oh, my God, I've got a big boy job. Let me go ahead and just start spending. And that's what happened. So I'm trying to get myself out of that hole.

Well, yeah, yeah. We'll get you out of it. So you're going to be here until February then, or there until February. Yeah, pretty good. What's your rent right now? Let's build your budget. My rent right now is $6.50 a month, not including utilities. Then utilities, what do you pay?

Roughly estimate a month I'm paying $750 a month on utilities and rent altogether. Oh, okay. So an additional $100 for utilities. Wow, rent's cheap over there. That's nice. Oh, I got a roommate now. Even still. So that's good.

Let's add up your minimum monthly debt payments. This one's about to hurt with. The only good thing about the long-term links with these is the minimum monthly payments aren't going to stack up. And it will help us at tax certain things quicker. But that's not what we want to do in general typically. Yeah, this one's hard for your situation. Minimony monthly payments for debt, dude, is $1,072. Now, I know your mom gives you some money, so we're going to put that into your income situation.

But this is included in your budget. Technically, she only gives me half of what the car, monthly car is, because I'm pretty much paying for insurance as well. And then my phone bill. So it's not, she's not giving me the full amount on the car payment. She's only cutting it in half. And then I pay the other half because she's pretty much paying for my insurance. So that's what she takes.

She's paying the car insurance? Yeah. Okay. And my phone bill. So you do not pay for car insurance at all? No. No car insurance. Okay.

Do you have health insurance? Is it through work? It's through work. Good. Just taken out before you get your net to pay. So that is good. Congratulations. No more Waterburger.

I am putting, let me say this, I am putting $50 into a Christmas fund every week. No. Absolutely not. I'm sorry. Christmas is canceled. Well, I do get that money back at the end of the month or I could request it whenever I want. What do you mean? Where's it going?

It's going into the Christmas fund that my job has set up. Cancel that. That's stupid. We're using every single cent right now to get you out a 25% interest rate death. So, again, congratulations. No more water burger. No more endless fries. Doesn't exist.

It's been canceled. You are spending three. $300 a month on groceries. Not a cent more. For toilet paper, toothpaste, all the good stuff needed to run your household and life, $100. Gas, you spent about $150. Does that seem normal for you? Yeah.

Obviously, that changes with price and you adjust your budget accordingly for where the price of gas is. But we're just trying to get an idea for where money is left over. renter's insurance probably 10 bucks i don't pay that that's illegal pay that well i think it's included in i think it's included already no it's not download lemonade or something that's what i used download the lemonade app get yourself some apartment insurance it's against the law always in the state of Texas my roommate takes care of that the apartment's under his name you need your own renter's insurance I think he did set me down for it.

You're not on the lease at all? I'm not on the lease. They didn't approve me. Right. Okay. All right. Well, when I first moved, they did approve me. When I first moved to Lubbock, I was living on my own.

They did approve me at that time. But I guess this time, they didn't want to. They said because of the collections. Do you have any medical issues? No. Any mental health issues? No. Okay.

So we don't have to take those in account on a multi-basis. I encourage everyone to do therapy, but that's... Well, you know, I get depressed here and there, but that's why I hit the gym. Okay. Yeah. I'm definitely... I'm sure you want to swap financial places. I want to swap physical spaces over here.

I would love to get rid of that dad-bought life. Okay. Any other minimum expenses that you can think of in your life? No subscriptions do not count. You are canceling them all. Okay. What subscriptions were you talking about? I don't know any subscriptions. Do you have Netflix or Hulu or anything like that? Okay. Okay. Yeah. Done. Done. Jim. You pay monthly for a gym. How much is that?

$15 a month. Not bad. And obviously we're certainly keeping that up. That's something we would never cut. Cool. So I think this is your budget then. $650 for rent, $100 for utilities, debt, $1,072, $1,000, food, $300. total paper spending and everything else needed to survive the household. $100, gas $150, gym, $15. Anything else you can think of. Last call. Are you including everything I'm paying off as well? Nope, we're about to do that separately.

Okay. That's just your minimum monthly debt payments that we had in there at 1,072. So minimum in order for you to survive, survive would be $2,387. What is your second account? I want to get a more accurate. accurate number on what came in? $3,060. $3,060.

Your needs, which is $2,387, is rounded up 80% of your income, your needs. So because you've probably never heard of these things, 50, 30, 20 rule. It's a relatively easy, basic rule, you know, if you want to start thinking about taking personal finances seriously. of the money that comes in, 50% is the cap of your needs. Everything that you need to survive, living, food, all that stuff, is cap. 50%. You should aim then for 20% going to savings, investing.

Mostly investing, but you can also save for, you know, do that as an emergency fund, getting that towards your emergency fund, and getting that towards a house as well. Then once, when out of debt, could be 30% of your income. And that's your unlimited front. that you love and adore. You're not in that situation yet. But again, your needs, 80% of your income.

Okay, so of the $3,060 that comes in at the $2,387, you have $673 left on a monthly basis. That is what's left. With the $1,066 sitting in there for two months, we're saving as close as we can to $2,387 in your high-yield account. So what you're doing? Because you're following this budget and no money spent out. outside of the budget. If you want to have fun, your friend can take you. If you want to have fun, go on dates. They can pay for it. There is no fun money that you are spending. You can go have fun for free, but you are not spending money. I'm not going to give you any wiggle room.

I've started to give some people wiggle room. You get no wiggle room because there's not a lot of money. Not a lot of money left over as your needs are 80%. So you get to that $2,387 in your high-yield savings account. And boom, you have a one-month emergency fund in case anything happens. So that is two months. after that I think we're going to let the collection sit for a bit what we should do I think we attack this in-

Okay the car situation with your mom you are not going to like this you are not going to like this but this is what you should do and we'll do if you want to better your life she takes out a car loan to buy it from you because your future matters

and she's a big girl. She can take care of herself. And if it, this will not be what makes a break her getting a house. It will not be. Well, she's the only one working right now. And then we have, I have brothers and sisters.

Okay. But my sister, you know, she's 19, but then I have two younger brothers. She's still paying for it through you so she can afford to do it. And then take on your own car insurance. Well, car. Dude, it's time to be a big boy. Okay? Time to do the hard things because your future matters. It matters. If I'm not able to convince you that your future matters in a way where you deal with this most basic thing, then there's no, there's no hope. There's no hope flat out. Like what's the point? There's always hope.

Okay. All right. I mean, come on. Are we not willing to do this? The most basic thing necessary to improve your overall security and get that debt out of your name, that 13.6. 06%. That's the plan, but, you know, she's trying to get a house, like I said. I think that comes first. This should not make or break that. What's her income? It'll change your debt to income ratio, but what's our income? Into the mic, please.

About $4,000 a month? And you said she's the only one making money. Is your father with her or does she have a husband? Oh, my dad is disabled. Okay. Does he get disability? Yeah, but it's it's not that much. No, it's not that much, but

She's trying to get a house in the Dallas area. That's going to be hard in general. But in the outskirts of the Alice. Yeah. Okay, I'm trying to be a little flexible. We just don't pay attention to that right now pretend it's invisible other than making the minimum monthly payments. And then the moment she gets that house,

moment she gets that house, she takes a loan out and buys the car. car from you and that is not an option. Okay? Yep. From your situation? Okay. The credit card of $45 a month, well, that's at 18% anyway.

I'm trying to think of the avalanche method makes more sense for you or the snowball method. I think psychologically the snowball method will help you. Avalanche method is we're paying off the highest interest rate debt and mathematically speaking that lowers the amount you pay in the long term versus doing the snowball method, but snowmwell method does have psychological benefits of seeing that you're making progress. I think with the $675,

the credit card starting a month three, at this point, two and a half months, the credit cards paid off. Credit cards done. No more credit card. That's exciting. And cut it out because you're probably not a credit card person either. Nope.

What do you, I don't think you added up the macro box on there of what I owe left And I did send you a screenshot of it. Is there another one? There's another debt? I said, is there anything else? Yeah. No.

Well, I thought you meant utility-wise or basic needs. So there's more tools besides the 9,500. The tools is paid off. I did send you the Maco. You said you owe $9,500 for something. Is that this one? Yeah, I believe so. Okay.

So we do have that included then. Okay. Confirmed? Confirmed. Oh, second. Okay. Very good. I just wanted to show you.

This is a different number and different minimum payment, man. Is this something different? It's the same thing. It's just on my credit report. It shows differently. But this is, I don't know why, but this is what, this is what I owe right here. Okay. So you owe $7,683 on this.

Minimum, monthly payment, not 180. 72.45. So your budget gets slightly adjusted for that. Well, the monthly payment is like 40 bucks a week. It says minimum due, 72.45. That's because I'd missed the payment. Earlier you told me it's 150. No, the thing is, it doesn't show till the end of the month that I have to pay it off.

So I... So roughly, it's around... 160 bucks a month that I have to pay off for the box, for the toolbox. It doesn't change the situation that we're talking about now, but. Okay, so $6.93 is left over. Either way, the credit card is what you pay off after two months. Two months, you get yourself to a one month emergency fund, then you pay off the credit card by putting $693 towards on a monthly basis for two and a half months.

Okay? So we're four and a half months in. Yes? Are we on the same page? Yeah. Okay, cool. So from there, you get an extra $45 now. in your budget because a $45 minimum monthly payment on your credit card does not exist.

So $693 plus 45, you now have, whoo, $738 that you can put towards debt. And you're not using that to go get unlimited fries. So at four and a half months in, let's call just for the sake of wiggle room, saving up that two-month emergency fund and just getting into the habit of things. We're five months in. On the sixth month, where do we go towards next? We're leaving the collections for now. student loans with where they are I think we go when we hit the tools

$7,683 it'll be a little less of the time but just for simplicity divide that by $738 I think we know where this is going it's going to be about 10 and a half months 10 and a half months of that okay that makes sense so far

yeah so we're 15 months in 15 and a half months in we'll give us in a room say 16 months in and you have the credit card done a one month of emergency fund and you've paid off the death tools. Cool with that so far? That's probably taking longer than you expected, right? Yeah.

Yeah, because you do not have money. So what I also recommend through this process, work some side jobs. Dude, anytime you're not working, go work and make money. Bring it in because that cuts this process in half, if not more. What? What? What possibly? Go on.

You know, I'm honestly, I already worked 50-hour, uh, weeks so I'm trying to get congratulations you're working 70 now what matters more your debt or that no I'm just trying to get that pay bump and then I I enjoy my weekends off you know congratulations do you enjoy 25% interest rate the thing is it's very hard to find side jobs on the weekends it's not shop uber eats around campus man I'm not going to put miles on my car I've tried DoorDash I don't I like it. What don't you like about it? I don't like putting miles on my car.

I don't. So you don't have... I'm not going to do that. Uh, coffee shop, Jimmy Johns, Subway, something, McDonald's, I don't give a shit, bringing more money. Dude, you simply double the $738 that you have left on a monthly basis, and the situation gets cut in half. You realize that?

Yeah. That's chill, dude. Work a couple shifts on the weekends. It's simple. Okay. 15 and a half months, 16 months again, just for the sake, and you now have an extra $160 left on a monthly basis. And hopefully you will have gotten a raise during this time or anything.

Well, 15 months. Okay. So this is where it gets complicated. Because in 15 months, you're maybe home now with a different job, with a different income. What's the job situation going to look like there? Are you going to do the same thing? Oh, yeah. Okay.

So income will probably be pretty similar. No, it'll be higher. In that situation, hopefully we start, we can really start moving things because the rent of 650s gone, utilities are down. You're living with mom and dad, right? Very cool. From there, anything and everything you have, man, just gets thrown at your car. Anything and everything gets thrown at your car. And you pay that off as soon as you can.

If you have an extra $1,000 a month, maybe $1,500 a month at this point, you know, maybe it takes seven to 10 months. So, you know, we're like, what, two and a half years now, something like that? And that's going to be a big help without those extra expenses and potentially more income. So that's going to be good. It's going to be good. Oh, yeah, it's hard. And I'm not very optimistic from this conversation, I'll be honest.

But that's okay. Hopefully you, hopefully, the way, the reason I do. dig in and go so hard is because I want to make you understand the severity of the situation because so many people come in they're like yeah this is bad or yeah this isn't good but it's not that bad either no it's bad so that's why if you fully realize how bad it is that you're willing to actually go sacrifice and do turn your life around from there you probably have the $6,000 to your student loan debt is probably higher than 4% I would pay that off as quick as possible and then I would do minimum monthly payments under 4% or less interest.

just rate debt until it's done. But if you want to keep the momentum going, you can just pay that off too. I think it's going to be about three and a half, four years, depending, this whole thing, depending. And that's with you moving home and having slightly more income and not having the rent. So I'll try to get that to like, what did I said, what did I just say four to five years? You did say four to five years. I'll try to get that to like four years.

Yeah. Well, let's try to get that to like two to three then by going and working, making more money, man, somewhere else. You don't need weakens right now. You don't. It's Lubbock. What are you going to do? Roll around in the sand.

Get stung by a cactus. Come on. It doesn't matter. Go work. A good one. I know. I'm hilarious. Go just to work your ass off, man.

Because if you can get this thing care by the time you're 26, you still have the times on your side for investing 20% and becoming a millionaire, multi-millionaire by the time you retire. hire that's great you stretch this and remember everything i just gave you is the sacrifice version you don't sacrifice you stretch this to 10 15 years man then your retirement's in serious doubt because you only have a thousand dollars in there at this time or whatever it was no it was less than that was like 500 so you know at that point you're dying on the walmart floor because you never had compound growth on your side you never had time on your side so that's why i say give up your weekends now so

you can have a better life. Yeah. It's as easy as, well, it's easier said than done every day. But the overall grand scope of it is as easy as that. Now it's just you and, you know, you determining whether or not you're actually going to do that. It's your future. It's your choice. No, that was my plan to get a weekend job.

And I'm still, I'm still kind of in the search, but I kind of laid it back. So I'm going to get back into it. Yeah. And just take anything. Doesn't matter. It doesn't have to be a dream job. Get the $1.1 at first, and then while you're in the fucking, look for the one that's better and then take it when you can. Well, you just need to get more income right now because just the extra, you know, a few hundred bucks we have to put out.

It's going to take too long to make progress. Yeah. And this is with you cutting back on everything. Now, on the optimistic side, if you do this three, four, five years, whatever it is, because your living situation is going to change. We don't know what things are looking like there. It would be much more concrete if I knew you're staying there or where things were going to be. Either way, at that point, then you fall to 50, 30, 20.

When you go get your own place and everything at that point, all your needs combined, never more than 50% of your income, you're always investing 20% of your income, whether that be maxed out of Roth IRA, someone in a 401k or Roth IRA, and then into like any individual brokerage, depending what the workplace offers. So how much would I put into savings? Well, savings for what? Oh, actually, I will say that. Sorry, hopefully this isn't confusing.

You can watch this back and see it. I did forget after you pay off the debt, you need to figure out, what it takes for you to live for six months and save that up. Remember, we had a one-month emergency fund. Yeah. You're bringing that to six after all the bad debts are paid off. Or if it's below $10,000 because you're living at home, you're doing a bottom of $10,000 just in case anything medical or car-related happens

because those tend to stack up. Does that make sense? And then savings for other things like houses and stuff? Just saving in general. Yeah, so just savings in general? Well, what is it for? You already have a fully funded emergency in front of that point. What are you saving for?

I just like to save. Okay, save, but in an account that's giving you returns like the stock market. That's fine. 20% putting it in there. You can save up on the side as well. You could take 5% of that, start putting it towards a house fund. I don't want any less than 15% going into. So on my American Express account, how much should I be saving into that account?

How much should I be putting? When you're out of debt or now? now now remember we're only getting to one month emergency phone which is 2,387. Once you aggressively save for two months by having everything go to that, then you're done. You're paying off the high interest rate debt in the order that I talked about. And then once all the high interest rate debt is gone, then you save up a six-month emergency fund and then you leave it there. You never touch it unless an emergency occurs. Okay.

Okay. And then everything else, stock market house fund, that kind of stuff. We definitely want to at least max out the Roth IRA on a yearly basis at a minimum. That should be just like basic requirement, which right now, $6,500 a year, which is easy, relatively easy on your income if you manage your expense as well. And we just paused because people are doing loud things outside. Yeah. You said you have another car that you consider and selling.

What do you think you can get for that car? Right now I got an offer. Well, I was hoping to sell it for $2,500. Okay. Yeah, dude. If you get that, I mean, that immediately gets you to the one-month emergency fund, plus an extra $1,000 that you can put towards the card, and then you only have $600 left on the credit card.

That's awesome. Do that immediately. I would just take that offer and just say, it's done. Honestly, just so you can start making progress, man. Because just with the other people who've been on the show who have been sending me updates via email and everything, the moment you start paying off something this,

that man, you're going to get a, when you see that, When you see that credit card is done, you're going to get a fire under you. And you're like, all right, now it's time to go kill that next one. Then you're making progress on that. And you're like, let's go, let's go, let's go. It's going to be like when you get hype at the gym and you're just making progress, man. Yeah. You're going to be seeing that towards your debt and you're going to get hype about it.

And you're just going to want to kill it in a good way. So yeah, do it. Take the deal. Unless you think you can get substantially more for it. No, I definitely cannot. Okay. Then, yeah, take it. Take that offer.

You're like, just take it. So, yeah, I mean, some of it's a little three, four, five, depends on the moving situation. Where do things look like? But at that point, 50, 30, 20, once you have all the bad debts paid off and you have a fully funded emergency fund, 50% needs, 30% on wants, 20% on saving and investing. Do you think you could write that down just so I don't forget it? Yeah, absolutely. Yeah. We'll do some notes on like your notepad or something.

And then, of course, you can always watch this video as well. So I'm happy to answer any questions. And then you can stay in touch. And we can talk via email and text or anything like that as well. No, absolutely. Because I want to see you make progress, man. I want to do a follow with you at some point. Maybe when you move to Lubbock.

Move from Lubbock to civilization again. And, you know, that'll be excited. Yeah, the only thing that's out there is Texas Tech. Yeah, yeah. Yeah. So. And I actually think it's very fun when, because I didn't go. to you too, but a lot of people around here love UT, and I think it's pretty fun when Texas

tech beats them, and then they all freak out and get sad. And I'm like, he-he-he-he. But either way, we'll do an update. That card should be gone. You should be making progress towards the toolbox, if not the car. You should have a one-month emergency fund. And in October of this year, you're going to text me when your mom closes on her house. You'd be like, all right, she applied to take out to borrow to get the car. And honestly, You know, to be completely honest, if she's watching this, you shouldn't be getting a mortgage anyway right now if you have a 13% interest rate debt on a car, even if it's through him.

You shouldn't. That's stupid. That makes no sense. You're not going to beat that with the housing market and, like, averages across the board of decades. So pay that off first and then get the house. She should sell this and get a $10,000 cars what she should do, actually. But that's a conversation with her. Whatever.

Yeah, that's something I don't really want to bring up because that's her car. Except, guess what? It's not legally. It's yours. You have the debt. You have the title. So I don't have the title yet because it's not paid off. Oh, right.

It's different per state. When I'm from in Michigan, you get the title, even though you have the debt. But, yeah, here in Texas, the bank holds it. Either way, whatever, whatever, whatever. That's what she should do. You should have the adult conversation with her. I can't force that. The relationship is what it is.

Knowing yourself, man, knowing yourself be as. honest to us, the audience, me as possible. What are you actually going to do? What is it going to look like going forward from here? Get a second job, work my stuff off. That's the plan. Okay. I'm really trying to pay off that credit card off first.

That's like my first step. And then from there, you know. Yep. One month emergency fund. I'll say it again. One month emergency fund. Credit card, toolbox, your car, the high interest rate, student loans. Then the collections, then a fully funded emergency fund, then 5030, 20.

Let's go. Okay. For Dan, it's going to be a hard situation to get out of, and he really needs to sacrifice and it's going to take a lot. I'm not overly optimistic from the conversation, especially the first half of it. Now, he gave himself a 6 out of 10. I know he hasn't watched the video, so he probably doesn't know how my score works, but it's not going to be a 6 out of 10.

For his spending within a budget, you know, his spending wasn't insane, but he shouldn't be going out to eat while he has that death. 25% interest rate debt. So it can't be better than a 1 out of 10. The debt itself, it's almost as bad as it can get. You can have IRS debt, which is, you know, terrible as well. But, I mean, this is absolutely death, death, death. So 0 out of 10 retirement.

Glad he only started within Acorn switch, again, link in the description below for a free $5. But it's, you know, obviously drastically behind one out of 10 emergency fund. He has started, but it is obviously not all the way where it needs to be. Two out of 10 real estate, not even a part of the conversation, probably not even part of the conversation in the next decade, but zero out of ten for now. Hammer financial score for Mr. Dan, one out of ten.

For the resources that I use or would use in specific situations, I've linked those at the top of the description below. You can get things like free $5 for signing up for a coin or a really high-yield savings account through SOFI and many others like educational resources as well. And don't forget to follow my Instagram and Twitter. Thanks.