The Rachel Cruze Show - The Right Way to Spend Your Money on Wants AND Needs

Episode Date: May 8, 2023

Boundaries in certain areas create margin in others, so today we’re covering everything from minimalism to paid-for vacations. Learn what to stop doing, start doing, and keep doing when it comes to your spending. What you get in this episode: Is Revenge Spending Wrecking Your Budget? Life-Changing Lessons I’ve Learned From Minimalists How to Cash Flow an Unforgettable Vacation in 90 Days Helpful Resources: Christian Healthcare Ministries Carly Jean Los Angeles with code “Rachel” EveryDollar Enter The Ramsey Cash Giveaway for a chance at $3,000!                                                 Sponsors pay the producer of this show, The Lampo Group, LLC, advertising fees for mentioning their services or products during programming. Advertising fees are not based upon or otherwise tied to any product sale or business transacted between any consumer or sponsor. The following sponsors have paid for the programming you are viewing: Christian Healthcare Ministries and Carly Jean Los Angeles.   Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

spending can be cut down significantly. Okay? Now again, this doesn't have to be forever. When you cut things out, it's only for a season. This is temporary, you guys. And you can easily go without luxuries, like streaming services, takeout, salon appointments for just a few months.

Hey guys, welcome to this episode of the Rachel Cruise Show podcast. I'm so glad that you're here. So in this episode, we're going to talk about the right way to spend money on your wants and your needs. I'll go over how to cash flow a vacation in just 90 days. then I'll go over some life-changing lessons I've learned from some of my favorite minimalists.

But first, let's talk about revenge spending. What is it and how to not let it wreck your budget? Take a listen. Revenge spending. What does it really mean? And most importantly, how is it affecting your money? So some of you might be thinking, okay, can revenge spending really have an effect on my money if I don't even know what it is? Well, you might be surprised because sometimes spending can.

can be connected and usually is connected to our emotional state, even if we don't fully realize it. So I'll be unpacking a few ideas from a recent article about revenge spending. We'll also talk about how to avoid this and build back up your savings if it's taken a hit. So hopefully all of this will help you reevaluate your post-pandemic money habits and get you back on track. All right, so I've heard the term revenge spending quite a bit lately, and then I noticed the New York Times had an article about this. So if you aren't familiar with revenge spending, it refers to the post-pandemic urge to indulge an expensive purchases after being restricted for so long. So some people have gone into debt for big vacations.

Others have been buying every viral home or clothing item they see on TikTok or Instagram. And this writer is reflecting on the different stages of spending over the last three years for herself and others. So first, she says that she actually started. off really strong at the beginning of the lockdown, which actually may have been the case for a lot of people. Because think about it, there were no restaurants, no movies, no concerts, no travel, no shopping, unless you went to the grocery store, which again was even scary back in the early days. And there was definitely no toilet paper to spend money on. So for some of us, that meant that that

extra disposable income probably stayed in our bank accounts for longer than usual, or maybe it actually allowed us to save more frequently. Now, of course, I don't want to overlook. many of the challenges when it came to money during the pandemic because there were lots of layoffs. Essential workers were overworked. There was massive pay cuts, yearly raises and bonuses went on pause or even went away. So to get me wrong, there was a lot of struggle for sure. But we did see that people were saving a lot. But if you were employed and had that stable job and you worked remotely, again, you had the ability to save a lot because there were just not places to spend. So if that sounds like you or even if you've experienced other

times of plenty within your budget, I want to encourage you and remind you how powerful that can be. So remember what that felt like when you had margin, maybe because there were boundaries in your life, intentional or unintentional. So use that knowledge as a tool to know how to recreate that experience again, because having margin is so, so key. So next, this writer explains that her nesting period has started taking over fall of 2020 because she bought candles and comfy loungeware and anything that just made time at home more comfortable. And again, so relatable, right? I mean, you can go to Amazon and get purchases to your door so quickly.

And again, it's so tempting. It's so tempting because things can be inexpensive and you just feel like you need them. So I'll just tell you one way that I cope with that temptation is I will add things to my carts and then not buy them. And I'll wait a day or two and then I'll come back when I hit more in a clear head space. and I'll be like, oh, yeah, I actually don't need those or want those anymore, and then I don't have to buy them. So you kind of get that rush without the money consequences afterwards, so it's great. And speaking of money consequences, that's the next thing that she talks about in this article.

So she eventually gave in to her COVID wish list and actually started dipping into her savings that she had built up months earlier. She even ended up going into credit card debt to maintain this lifestyle. And one quote in the article says, use the credit card because you, you never know when the world might stop again. Now, if you are irregular to the Rachel Cruz show or to Ramsey's solutions, you know, obviously, that is not something I'm going to encourage you to do. So don't get me wrong, picking up some not-so-great money habits during a crisis is very normal. And we talk a lot about being intentional and setting boundaries and having self-control.

But again, we're human. And we have slip-ups, but that's what grace is for. But I want your mentality to go from not feeling shame, but from feeling like, oh, I don't want to get stuck here again. I can do something different. So remember, to get on a budget, to take back that control and make wise decisions now. So next time, the world stops, you don't have to go into debt. You can live with security and comfort because you have lived within your means.

So that's the key. And finally, she talks about the urge to spend on travel now that it is available to us again. and this is where I've heard revenge spending mentioned the most. And lots of people are now talking about traveling because they were so limited for so long. And she mentions about being invited on group birthday party trips, streaming up amazing vacations. And listen, I get it.

I totally get it. These last few years, they've been really hard and people want a break, and that makes sense. But she also goes on to write about how helpful budgeting has been in her life. She even mentions that doctors who have studied the effects of credit card spending and Apple Pay have found some really interesting research. And spoiler alerts, this is what we've been saying at Ramsey for decades.

And now science is backing it up that you will spend more money when you use a credit card or an app on your phone because you will feel less attached to that cash. So as much as the pandemic made us feel like the world was going to end, statistically, you probably will still have another 20, 30, 40 years. And it's your job to shift your mind. mindset back to the reality that you're currently living in. So let's turn revenge spending into revenge saving, comfort and security and stability and all these things that can motivate you

to have a more peaceful life. But remember, you can't spend all of your money today and expect to have cushion in your savings account just appear out of nowhere or when you want to retire. You have to be the creator of that cushion by being wise with your money right now. And we're whether you're starting out for the first time or maybe you're getting back on track with the baby steps, listen, everyone can start with a clean slate. Now, if you want to know more about the baby steps, go to ramsysolutions.com. There are tons of videos and articles and other resources available to create an amazing way to walk with your money and have a plan and have security. All right, you guys, I hope this video gave you some helpful reframe and kind of squash that

revenge spending that we've all probably been a victim to at one point or another. And remember, you're not alone, but it is time to start making smart decisions when it comes to your money. And trust me, your future self will thank you. Today, we're talking about the top most life-changing lessons that I've learned from minimalists. So if you've been watching for a while, you know, I've had quite a bit of minimalist experts on the show. I've learned so many tips and tricks and hacks from them, and they've helped me clear out the clutter in my life, have more peace and simplicity, and it's great. So today, I want to revisit some of my favorite moments on the show with these guests. All right, the first clip comes from an episode we filmed

last year with Joshua and Ryan, known as The Minimalists. And in this video, Joshua's explaining two rules that can give you a quick mindset check when you're trying to clean out reduce the number of items in your home. The first one is called seasonality, or the 90-day rule. And the second one is the spontaneous combustion rule. So I love these two exercises because they work. So check it out. On our website, we have a free e-book.

It's called 16 Rules for Living with Less. And in that e-book, what we do is what we try to do is create rules that aren't really strict. They allow for some wiggle room if you want to adjust them. They're rules that work for me and Ryan, and you can adjust them for your own taste. So I give you a few examples. One's the seasonality rule. Pick up any item in your house. It could be your couch.

It could be that old sweater in the back of your closet. It could be an old toaster that you haven't used in years. Ask yourself, have I used in the last 90 days? If not, am I going to use it the next 90 days? Be honest with yourself. And if not, give yourself permission to let go. It's okay. We call it the 90-90 rule.

Another rule is the spontaneous combustion rule. So if you pick up some sort of items, say it's a sentimental item, your grandma left it behind this giant quilt, and you just can't par with it. it, but it feels like a burden. How would you feel if that spontaneously combust it right now? I'm not telling you to set it on fire, but how would you feel? And if you realize like, oh, I'd feel really upset, well, then maybe, maybe it has some sort of meaning to you. But if you feel a relief like most people would, maybe it's a sign that's time to let go.

Oh, amazing. I mean, just so helpful. And honestly, you guys, that video in its entirety, and the full content of everything they talk about, they are so practical. They give such great advice. And even towards the beginning of this episode, I remember raving to them that I had successfully done their monthly challenge called the Minimalism Game. So it's like when you take, you know, on the calendar, the first, and you just take away one item or donate it or throw it away. The second, you find two items, three items. And you go down the calendar and whatever number day you're on is the number of items that you get rid of. And it was so great. And I did it. And it was so helpful. I loved it. So you should definitely check out the full video and let

us know what you think. Now, the next helpful hack that I learned comes from a conversation I had with Dawn, aka the minimal mom. She is wonderful, and I've had Dawn on the show several times, and we've had so many great conversations, and she is just full of practical tips. And she's a great resource when it comes to living simply when you have a family and kids. Now, I know I'm not alone on this, but those of you who have kids know how hard it can be to live without the excess when you factor in the little ones. It seems like someone is always outgrowing their shoes or they need a new school lunchbox,

or they need something here or there, and then you go and clean out the playroom, and it's like there's stuff in there that is just broken crap from McDonald's or Sonic from three years ago and all of a sudden they want to keep it because it's their favorite thing in the entire world. So Don walks us through all of that,

and it is such a great clip, so check it out. All right, so let's talk about number one, kitchen, gadgets, and appliances. Yes. These things are designed to make our life easier, but most often the cleanup is worse than the time it saves you, like the choppers and the blenders and the puriers

and the whatever. I hear this all the time. It's like the cleanup is too much, so I never use it, right? So feel free to declutter it, and also don't buy it again. Like next time you're watching it, infomercial, and it's like, look at all that it does.

Just say like, no, no, no. I don't need that. I don't need that. You fooled me before. I know better now. Don't buy it. Number two is miracle cleaners. I love influencers, Instagrammers, all this.

But darn it, don't they make everything look like a miracle product? Yes. Cleaners, face creams, hair products, whatever. Amen, amen, and amen. Yes, absolutely. I have a friend, she says, the magic's in the motion, not the potion. She was like, just use the stuff you have. Use the face creams you have.

Use the cleaners you have. It's in the motion. It's actually using it, doing it day in and day out. not the potion or the miracle products that we're always going to be. Yes, but you see it and you're like, oh, I need that, I need that. And then it comes with this two things

and I need the brush to be able to... Well, you might as buy the whole set. Yeah, and it's, yeah. Oh, it's like a black hole. That's good. That's good. That's convicting, Dawn. Yeah. That's convicting. That's good.

Oh, isn't this so true, you guys? I mean, the kitchen gadgets, they always get me. And she's right. You know, cleaning the fancy new shiny kitchen tool is enough to make me never want to use it. So it's crazy. And I love the

catchphrase that she uses, the magic is in the emotion, not the potion. And I 100% agree. It is way more about the habits and the habits you have in your life than the product that you're going to buy. But that was just the first two tips out of 10. So make sure to watch the rest of the video to get the full list. And as I mentioned, we've had Dawn on the Rachel Crew show several times, so there is more where that came from. And just one of my favorite philosophies that she has is new toy in, old toy out rule. and that trick can be applied to anything from your closet to your pantry to your garage. It's wonderful. So, Dawn is amazing. All right, the last clip is a conversation I had with Sandra, also known as the clutter bug.

And this was her number five tip in a list of decluttering tips that she gave. And you guys, they were all useful. But the timer trick has been life-changing for me and my family. I love this trick. I actually kind of used it in my own way before she mentioned it. But it worked. And it's just, it's a amazing what you can get done in two minutes and five minutes and 30 minutes. And having the end in mind is what keeps you so motivated and productive while you're in the middle of those not so fun cleaning tasks. So Sandra has so many great stuff, but I loved this one. And the last thing and the most important thing that you can have is a timer. Because we always, we almost have like time blindness when it comes to declutter. We overestimate how long something is going to take.

you can declutter your purse in under two minutes. Set a timer, see if you can do it. And then as soon as you have that information and you know like this is going to take five minutes or this is only going to take two minutes, we're way more likely to actually do it. I love that. And I actually, my husband, he laughs at me sometimes

because I used to do a timer on our microwave when I would clean the kitchen, like a night when he was taking kids up and I was like, okay, here's the kitchen. I'm going to set a timer for nine minutes and I can get a lot done in nine minutes. And now that we have Alexa, I'm always like, Alexa, set timer for 11 minutes, and I'll do this obscure number.

But you're so right, though. I'm like, it's crazy. And then when I have time left over, I feel like I've, like, accomplished so much. I'm like, I had four minutes left. I did it all in this amount of time. But it does something to you because it gives you an end time. That's my problem, I think, is like, it just feels like it's this endless thing. I don't have time doing this.

But I have eight minutes or whatever it is to do it. And so I love that. Okay, so check out the rest of that video. when you have a chance, and I guarantee you, it will motivate you and equip you to do some decluttering. One thing Don, the minimal mom and I have talked about for quite some time, is that paying off debt and living on a budget goes hand in hand with minimal living. So even if your end goal isn't full on minimalism, which I get, there is so much you can learn from that mindset and just the habits that they teach. So if you're interested in cleaning up your monthly spending, make sure to check out

every dollar. It is our budgeting app, and it is incredible. It makes budgeting simpler. and less intimidating. Today I'm going to be talking about how to save enough money to cash flow a vacation in just 90 days. And by cash flow, I mean no loans, no credit cards, just your hard-earned cash. So whether you're someone who's been budgeting for a while or maybe you're brand new to the idea of living on a monthly budget and paying for things in cash, I hope this episode gives you some practical steps and tools to reach your goals.

Because after all, we're talking about a trip here, a vacation. It's fun. All right, step one. When saving for anything, so whether that's a vacation, a new car, a new home, is to calculate the amount of money that you need to save by a certain date. So then you're going to create what's called a sinking fund for whatever that total is. A sinking fund is just a temporary savings account or a pool of money to be spent on a specific need in the near future. Then you're going to calculate how much money you need to contribute to that fund each month in order to reach your total by the deadline. And this amount of money will depend on the destination. And this amount of money will depend on the

destination, your transportation, and the duration of the trip. So where are you going to go? Is it domestic international? How are you going to get there? Are you going to drive? Are you going to fly? How long are you staying? Just two nights or an entire week? And then you also want to think about food. So are you going to want or need to eat out every day? Are you staying at a place that has a kitchen so maybe you can cook some meals? So you figure out all of that and then you calculate. So the average cost of a one week beach vacation for a family of four is around $4,000. The average two-bedroom condo rental for one week is $1,700, and you want to make sure to factor in parking costs, taxes, and cleaning fees. The average cost of gas driving to and from the beach in a mid-sized SUV is around $170.

So you're going to divide the number of miles that you drive to and from, and while you're at the beach to get the number of miles your car gets per gallon. So this will tell you how many gallons you need, and then you can multiply that number by current gas prices to find out your total. Then you're going to look at food costs. So the average food cost for a family of four on vacation is around $130 per day, which adds up to $910. This could be based on your kids' ages. Again, whether you eat breakfast or you don't, maybe you eat light lunches or big lunches. So that all depends. Now, when you add together those three categories, which is kind of like your four walls on vacation, that total is $2,780.

Then we're going to add a couple $100 to it just to be safe because there will be miscellaneous things on the trip from sunscreen and snacks and car maintenance, all the things. So then you get your grand total to $3,180. Now, step two is to calculate how much you'll need to save per month. In this case, it will be about $1,060 per month to save, which is $265 a week. Now, if you need to save,

need to pay for a deposit on your accommodations on the front end. You need to remember that because you'll probably pull from first month savings to pay for that. All right, step three is budgeting time. So if you're not already using every dollar in the budgeting app, I highly recommend it. Or of course, you can use Excel or a piece of paper, whatever it is, but make sure you have your numbers visual. So for this example, I'm going to use every dollar because not only does the app allow you to create custom line items and adjust your spending categories, but it also does the math for you, which is wonderful. I love that part.

And then after your four walls, which is food, shelter, utilities, and transportation, the rest of your monthly spending can be cut down significantly. Okay? So that's really my first tip is to remind you that this is temporary,

you guys. When you cut things out, it's only for a season. And you can easily go without luxuries, like streaming services, takeout, salon appointments for just a few months. And finally, step four

is to earn extra income. Now again, this doesn't have to be forever, but most part-time jobs and just food service or retail industries are at least $10 an hour, usually higher some places. So if you worked an extra 10 hours a week, you know, that's two extra hours a day, you'll be a little under halfway to your weekly goal of $265. You can also consider yard work or ride sharing driving, host or hostessing at a restaurant, selling consignment clothing, doing freelance creative work, any way to bring in some extra money that can help you when it comes to saving for this trip.

All right, you guys, I hope this video showed you how to break down what can seem like a really big goal into smaller step-by-step-step-pieces. So whether you're in the trenches and you're paying off debts or maybe you're on Baby Step 7, overall, it's just empowering to know that you can spend, you can save, and you can steward your money well. And sometimes it looks like investing into yourself and your family and taking a trip and enjoying yourself.

But listen, you don't want to lose momentum, them regardless of where you are. So all of you on baby step two, keep at it. Keep pushing through until you are debt free. That's going to be your number one goal. And then beyond that, you guys, you could just start to dream, hey, what do I want my life to look like? What are the things me and my family want to do? So if you want to learn more about sinking funds or short-term savings hacks, make sure to check out ramsysolutions.com. Oh, vacation sounds so nice, you guys. And listen, you can do it. You can save up money and cash flow a great vacation. you guys, thank you so much for listening to this episode. If you have not hit that follow

button to subscribe, please make sure to do that. And leaving a review is so helpful. Please, we love hearing from you guys. I read these reviews. I want to know what you love about the podcast and it helps others find the podcast easier. All right, you guys, as always, make sure to take control of your money and create a life you love.