Welcome back to another budget strategy session on the Money Mindset podcast. I'm your financial coach Ashley with budgets made easy. And during these sessions I like to focus on one thing that you are struggling with and some small action steps that you can take in the next 24 hours to quickly get into action and start seeing results. If you feel like you just can't seem to figure it out and you feel stuck,

come join me for your own budget strategy session. You can save your seat, pick your time@budgetsweeteasy.com slash strategy. Now in today's budget strategy session with Christina, we discuss what to do with the money that is left over after paying bills and how to best allocate those funds toward debt and which options you have for paying off debt. So we deep dive into paying off debt strategies and how to manage her finances with her husband.

They just celebrated their one year anniversary in just combining the things together and working together toward their financial goals. So let's head on over to Christina's episode. Hi Christina. Thank you so much for being here for a budget strategy session. How you doing tonight? Doing good. How you doing? I am great. Thank you so much for being willing to do this for us because our listeners get so much out of hearing other people's situations because everything,

you know, everybody's situation is a little bit different even if like kind of the main themes are the same, right? So it's always good to hear other situations and get other ideas from other people's situations. So before we dive into what your biggest struggle is right now, can you just give us a little bit of background information, whatever you're willing to share.

Of course, don't share anything that you're not comfortable with sharing, but that'll kind of help us give you a little bit better advice. Okay. Well I am married, just celebrated our one year anniversary. Yay. We haven't started a family yet, but we are in the process of trying to do that. Got three fur babies and my mother lives with us so it's a full house.

Yes. So I feel you there definitely get that. Just trying to figure out how to combine budgets and monetary stuff and then trying to pay off debts cuz I do have student loans that I have unfortunately accrued a good bit of and some other outside stuff as well. And yeah, I'm not sure. I'm sorry. No, you're fine. So are you both working?

Yes. Okay. We both do have a job. We work for the same company but we don't have the same position. Okay. And are you guys working together with the finances or is everything separate? Not just separate bank accounts but like are you guys working toward the same financial goals? Are you on the same page with that? Yes. Awesome.

Yes. Okay. Well my husband and I are. Yeah, that's what I meant. Yeah. Yeah. You and your husband, She's kinda got her own thing going but yeah. Yeah. Is your mom gonna be staying with you short-term or long-term? Long-term Permanently. Okay. Okay. And so does she contribute financially to the household, whether it's like buying her own food or does she pay you any kind of rent or you know,

pay for maybe tv? Like does she contribute at this time? Yes she does. Okay, Awesome. Yes, she pays well. She only does the rent bill. Everything else is me and my husband and then she pays food. Awesome. Okay, so with combining your finances, what do you feel like you're stuck on? What do you need some advice with?

I just, I know we have money left over, I just don't know what to do with it and it usually ends up going to like the most useless stuff. Yeah. That's What Happens. That's what I want. So yeah, just kind of I guess curbing the impulse purchases more so and figuring out what to do with that money instead of letting it bleed out because we just got our W two s back and ooh it hurts.

Yes, yes it does. I think we talked about that during the bootcamp last night actually, so yeah. Yeah, I think you were on there now that I say that. Yeah, so this is time of year that people are like, oh we've made all this money, where did it go? And I've been there many, many times. So are you doing a combined budget then?

Are you like doing a paycheck budget for each of you? We are putting our paychecks together in the budget. Okay. So it's one budget but we're both adding our stuff. We're complete transparent. Okay. What comes in, well I guess you guys probably get paid the same day if you work for the same company? Yes. Yes. Yeah, okay.

So that makes sense. Yeah, that makes total sense. Okay, awesome. So really you're just trying to figure out how to manage what is left over on your paydays cuz it's same payday, it's both of your money. And so are you planning, so you've got your guys' paychecks then like the regular bills that you take care of. Are you doing any planning after that or is that kind of where you stop?

That's mostly where it goes right now cause we had a lot of stuff we've cut back on some. We did just recently pay off a credit card which was super nice. Yay. But so that money's getting funneled back in somewhere else but so we are getting some of the smaller stuff knocked out and then trying to figure out what to do with it from there.

Gotcha. But yeah, we kind of stopped with the bills cuz there was overwhelmingly a lot of them. Okay, gotcha. Is there, okay, so but you do still have money left over? Yes. Okay. Yes. All right. So let's think about what to do with what is left over and talk about that. So usually what I do with what's left over,

I start with food and a reasonable amount. So if you're just paying for the two of you or if sometimes you're paying for three of you, you know, that's still probably not a lot on like a reasonable amount would probably be like 600 or so dollars depending on where you live and taxes and that kinda thing. Yeah, usually we're probably around four ish cause we,

I Was giving you a little extra, I was giving you some extra credit there. Okay, good. Yeah We're, we're here in North Carolina so it's not too terrible where we are. Yeah. And only 2% food tax, which is Nice. Yes. Tax On food. Yeah. So we keep it still relatively calm but yeah. Okay, good.

So 400 for food and do you have a good handle on, you know, gas keeps changing of course and now it's going back up but do you have an idea of kind of what your gas budget is as well? We only have one vehicle for me and my husband and then mom does her own separate. Okay. And thankfully I have a newer vehicle so our,

we only fill out the tank once a pay period. Nice, nice. So yeah. Okay, so you've got an idea of generally what that costs. Okay. Yeah. So after food and gas and bills are paid, what other things do you want to focus on with your money? So once everything that needs to come out is out, we want to create a savings,

kind of get savings back up cuz we have unfortunately no savings right now. So where we work, I do get a bonus, a yearly bonus and it's about to drop soon. Oh nice. And it's, yeah, it's gonna be nice. So we're gonna put that into all in, into savings. Okay. And then tax tax stuff for bills probably.

Okay. All right. So some of the suggestions if you haven't already, and you may have heard me say this before, but for like your emergency savings that you just wanna have money aside, I would recommend having that at a bank that is not easy to transfer back and forth so that it stays outta sight out of mind. And once you reach that goal,

which if you focus only on that, well you're gonna have a bonus. So you're gonna, that'll be kind of squared away. So do you have any other expenses coming up that you wanna save for birthdays, anniversary, Valentine's day's coming up, spring break, then Summer memorial day, 4th of July, you know, holidays and things in there. Is there anything that you kind of wanna set money aside for stuff like that?

Yeah, we've kind of been, well we've saved stuff but like emergency savings is what I'm talking about. Okay. More so, but yeah we do have our Valentine's stuff already squared away cuz we start Christmas shopping the day after Christmas. Yeah. Awesome. All the time. Christmas comes around, it's done. That's great. So really what you're doing and it sounds like you are on the right track and so once you kind of have an idea on your budget,

your paycheck budget, you just wanna kind of plan in there and have, you can definitely have like a buffer amount, a miscellaneous amount. I don't know how much you have leftover and you don't have to share that but you know it could be a hundred dollars, it could be $200 like just so that you have some wiggle room but then the rest of it,

I want you to be really intentional with it because when you have that buffer and you have that emergency fund, you can like if you wanna send it to your debt you can without worrying about it. Right. And so sometimes we get caught up in like Friday on payday, it's like okay I wanna send this money to debt but what if something comes up this weekend,

I'll just wait till Monday and then by Monday rolls around, the money is gone and you're like that's not what I wanted to happen. So what I try and encourage people to do is to go ahead like when you have it planned out on paper, like you know you can send that money and then that helps you stick to your budget and your plan and if you give yourself that buffer if something spontaneous comes up or something that you just didn't think about or didn't have the money for yet,

you know, a smaller emergency, something like that. But if once you have your emergency, like you don't even have to worry about that. Right. Except if something major happens and that's a whole other conversation. Oh yeah. Yeah. So I would encourage you to decide on what your biggest financial goal is, whether after you save with your bonus and your tax return,

what bill you wanna pay off first and just kinda work your way that way and you know, send, send the money and it's a weird feeling at first when you start to do that. It's like I just don't know if I wanna send it yet. What if something comes up? But when you have the money in other savings it's like you just gotta remind yourself that it's okay and you can let it go.

Cuz there's kind of that security feeling as well with not wanting to send it. Yeah. But you really just wanna focus on one goal at a time. So it sounds like you're good on your syncing funds like the holidays and birthdays, like that kind of stuff. So then once you have your savings it really is about paying off your debt in saving for retirement if you aren't already,

the sooner the better on that. I always encourage people to save for retirement early, even if you have debt because you have no idea how much it can cost you to wait with investing. And so I'm never gonna tell somebody not to invest in their retirement account just cuz they have debt. So you know, if you have money left over then you should be able to put some money into retirement too.

Even if it's a small amount because it really does add up fast. Yeah. I think I only put in 1% to my 401K right now but we're you know, wanting to pay off some stuff where we add more. Yeah. Okay. So at least you've got something though. Okay good. Yeah. Awesome. I mean something is better than nothing so I love it.

Our, we work retail and they offer stock buying. Oh nice. So they take out money from our paychecks for stocks as well. So we have Okay so you have both cuz you wanna be diversified cuz you just never know. Okay good. Yes we do have both. Awesome. Okay. So do you have in mind, do you, do you already have your debts listed out?

I did. Okay. The first thing I'm probably gonna do is my medical bills cuz it just having that kind of scares me. I had a kind of emergency situation pop up I wasn't expecting last year, didn't expect insurance not to cover what they didn't cover. But yeah, no I was a surprise. That's terrible. Okay, so have you decided on kind of the order that you wanna pay paid off?

We're debating it because I have two different student loans. I have a really big one that is the terrifying part of my debt. Everything else outside of that is less than 20,000 including my car payments. That one like triples it. Okay. So yeah, it it's makes it a lot, it makes a lot more scary. Very daunting doesn't it? Yes,

it feels very daunting. So what you could do if you have it already is of course just focus on the smaller ones and run some debt calculators. So when you create your zero based budget, so you've got your paychecks, your bills and then whatever you need to save for those miscellaneous things that you're saving in your sinking funds, then your miscellaneous just in case something pops up,

then that money that is left over, literally all of it could go toward whatever debt you wanna focus on. And there are tons of different debt calculators online that you can run the numbers and maybe just leave that big one out and just focus on the smaller ones to kind of decide what order you wanna go in and how long it'll take you. And so you'll find that as you get going and as you get momentum you'll wanna do it faster and faster and then you know when you have tax returns and your bonus yearly,

you know you can make a bigger dent in it. So that's kinda what I would do mentally cuz you know when you start to get those smaller ones paid off, it definitely helps. And then once you get to that big one you'll have a lot more to work with and it maybe it won't feel as daunting but there's some things that we can work on to get through that feeling as well.

Inside money's success club which you're into. So like visual trackers and things like that once you get there. So mentally for now I would just kinda ignore it and focus on the smaller ones. Yeah, well thankfully it's a federal student loan so that one payments have been paused for a little bit now I did pay a little bit enough to get it down to where I would just be paying on principle no more,

more interest on it. Yes. So the interest has stopped and everything right now so it's just paying on principle. So we're just putting a little bit into that. But everything else we've been funneling more towards cuz it's actually accruing interest right now. Right, right. So that's where we started focusing. We did push that one way to the back burner right now that's like furthest thing from my mind.

Yeah, Well it sounds like you're doing all the right things. So why have I answered your question or is there something that we need to dive into deeper why you're feeling stuck with merging the finances? Cause I feel like I'm retracting to you like you're on the right track. I don't know, maybe it's just in my head but I'm like okay I,

I feel very panicky when I think about all of like overwhelmed and panicky when I look at it. Gotcha. It's like I see it on paper or I've got it on paper, I've got it on electronics, it's everywhere and it's like oh this is a lot. Yeah And it just kind of feels like it's right here in my face. Gotcha. Gotcha.

I totally understand that. So kind of what I would encourage you to do is to focus on just one. Yeah. So when you're laying out your, you said you had a lot of bills but you have money left over. So once you kind of write that out, just focus on one debt that you guys wanna focus on and focus on paying off.

Especially since you'll have your savings taken care of. You know, if it's, I would really have you run the numbers so the debt calculators online yet. Okay. No I would do that and just start with one debt. Like you can put all your debts in there but maybe just start with one, look at how much you have to send per paycheck.

Let's say it's 300, $400 per paycheck so let's say 800 a month, which may not be, I'm just making up numbers and then then put it in there and see like when you look at it it'll tell you if you put that extra $800 toward that debt when you'll have it paid off. And that might help you not feel so overwhelmed and just do one at a time.

Cuz if you do have a lot of debts, even if they're small debts, it can be overwhelming to like look at all of it and put all the numbers in. So maybe start with one, maybe two if you feel like start you know, just in the calculator to see how fast you can pay it off with that extra money. Cuz you,

I mean if you do have credit, you know a couple hundred, several hundred dollars a month, you're gonna be able to pay things off really fast and seeing the numbers visually will really help kind of motivate you to do it. At least it does for me cuz I see the number and I was like, oh like that's really possible. Like I could do it that fast.

Like cuz you don't, until you run the numbers, you really don't understand or comprehend like it doesn't click how fast you could pay it off with that extra money. You're like woo. Okay. Cause if you paid the minimums it could be years and you put in $800 and you could have it paid off in a couple months or you know, depending on the balance of course.

But yeah it is really surprising when you start running the numbers. So how would you feel about having your 24 hour like action step to be to run at least one debt through an online debt calculator and see what the payoff date would be with your extra whatever extra money you have a month. Okay. Does that feel less overwhelming than thinking about all of it?

Yes. Okay. Good Question. Your advice, should I focus more on a credit card versus a one that's already got a set payment plan, like it's got a set amount of time on it or should I focus on how would you you choose that? Well You really have like three options and you know, it really truly doesn't matter which one you pay off first.

As long as you pay off the debt you're gonna get there in roughly the same amount of time. So there's three different ways you can do this. So the impact method, which is my method, and this may be something you consider depending on what your debts are and how you feel about 'em. It could be the debt that makes the biggest impact in your budget but that you can still relatively pay off quickly.

So maybe, you know, if you have a car payment that's $400 a month and you can still pay off, pay it off relatively quickly, maybe you wanna free up that money in your monthly budget or it could be a debt that you just hate. Like you said the medical bills. Yeah. Like you just wanna get them outta your life, then I would focus on those.

So that's the impact. And you can always switch. So don't feel like if you start with when you have to stick with it, you can always switch. Okay. What matters is that you pay off the debt, it doesn't matter how you do it. So the other option is debt snowball. So it's the smallest balance regardless of interest rate. And I like that one as well because you can get that momentum going and you can free up,

you know, if you can knock out five, six bills in you know, two, three months that like just frees up a lot of mental space. Right. And you like have less to worry about. So I do like that method as well. And then the debt avalanche method focuses on the highest interest rate, which makes the most logical sense but it doesn't,

it doesn't always help you mentally. And as we know, finances is mainly mental. If, if your highest interest rate is your highest balance, that's gonna be really hard to stick with it and keep paying it off, right? So, oh yeah, yeah. So you know that one makes the most sense mathematically, but if you are really focused on paying off debt,

you're going to get there at roughly the same time anyway. It only matters if you just make the minimum minimum payments forever, then maybe then you know, then the interest straits will play into it. But when you really focus on debt, you're gonna get there the same time. It doesn't matter which way you go, it's just a matter of mentally which one's gonna give you the most motivation and momentum to not give up and keep,

keep going. So that's why generally speaking, the de avalanche doesn't really come into effect in my decision making. But it does depend on you. Like, you know, Cindy in the group she's talked about a lot, she has a couple 0% cards or accounts and you know, she doesn't worry about those. She focuses on some of the higher interest rates.

So if you have something that's 0% and you're not really worried about it, you know you can put that on the back burner so it's truly your decision. But those are kind of the three main like options to kind of categorize them and that makes it more manageable too when you decide, okay, I'm gonna focus on this debt and then this debt and just kind of list it out in priority so that you know which one you're gonna focus on next.

Okay, that makes sense. Any, any other questions? One more actually, sorry. No, You're fine. Do you think a fifth or a sixth of your overall, like what you make in a year could be used for to pay safely, pay off debts if it, as long as you cover like the minimum bills and everything else. Cuz I make,

we've calculated it out and I think if I'm paid like 10,000 a year, it would pay it off in six years. Okay. I don't really base it on percentages. Okay. So I'm trying to do the math in my head. Yeah. Sorry, I don't even think I can that math in my head. So let's just do some easy math here.

Yeah. We might between 50 and 60, somewhere around in there a year, both of us Together and then you get taxed and you know, anything pre-tax coming out. And so, you know what I would say is not to worry about percentages. Okay. Just look at what you have left, prioritize anything you wanna save for, you know, like we talked about Christmas holidays,

if you wanna go on vacation or whatever, like I'm not against vacation just cuz you have dead. Like especially if you don't have kids yet, live it up, enjoy it while you can travel. So Yeah. You Know, family in Michigan enjoy So. Yeah, exactly. So we're constantly going up there. So That's not really vacation though. Like you need to take a real vacation.

I wish somebody would've told me that when I was younger, like take a real vacation. Like, cuz you know, I'm in North Carolina too and our family's in Kansas, so it's like every time we had free time we'd go to Kansas. That's not a vacation, It's not discount. So like if you wanna take a real vacation, you know, you,

you'll need to kind of plan for that too. But when you focus on just sending that extra money and you've got everything else taken care of and you've got your buffer, you will do it faster than six years. Like okay. It just happens. So I'd really love to see you run the numbers and you may decide to add in a couple extra things too.

So you know, we've al you already said you've got Christmas taken care of, the holidays. I'm trying to think of what else. You know, maybe some clothes or do you guys have any hobbies? Vehicle maintenance? Oh yeah. You've only got one car. You're doing pretty good. You really are. Yeah, we, we try to keep our hobbies calm.

I'm a crafter and he's a gamer so It can add up. They Get Expenses. Yes, it does. I've learned that lately as well as, You know. Yeah, that adds up. So, okay. So I'm trying to think if there's anything else that you might wanna put money aside for. And it can also go month to month. Like I don't,

for me, I would rather focus on saving for like one thing that I want or one category let's say, and then move on. Like I don't wanna have like $20 in my budget for it forever, you know, type of thing. And it sounds like you're probably like that too, where you just wanna fill the bucket and move on. So if something like that comes up that you haven't planned for in your budget,

you're like, oh crap, I forgot about that. You can always cash flow it as well. And then just not that month, just not that much will go to the debt. Yeah. So I would run some calculators and really see, well, especially without the big student loan, you know? Yeah. Cause if the big student loan isn't gonna end up taking you a couple years,

you know, just focus on the smaller, the smaller ones and focus on that. Yeah. And we're, like I said, we're hoping for the best, but praying or hoping for the best and praying or planning for the worst. So, you know, we did apply for that student loan forgiveness, so if that goes through, that'll help out on that one.

Heck. But we are planning for just in case. Yes. Making sure it goes away. Now would that be for the total amount or just like the 10,000 that they're talking about? I qualify for the 20,000. Okay. Awesome. So would that cover most of it? It'll half it. Okay. Awesome. That, that would be a lot more manageable.

Yes. So No, that'd be good. And North Carolina still taxes it, but we're like $2,000 versus 20,000. Yeah, Exactly. Outta thoses pros and cons. Exactly. We just won't get a tax refund that year. I will be perfectly happy with that And maybe set some aside in case it ends up being more just in case, but Yeah. But it's still better than 40.

Yeah. So Yeah, totally get you there. Okay. So any other questions before we wrap up? You're, you are really in a good position. I think maybe just looking at the numbers, running the numbers will kind of give you that confidence to be able to Okay. Start making faster progress. Okay. That's probably where I'm at. It's probably just my all in my head right now.

Well, it's overwhelming. And then you're like, I don't know what to do because I'm overwhelmed. And so when you just take it one step at a time, so just focus on the one debt you wanna pay off first, then look at the, I find running the numbers motivating, especially if you have a good chunk each month that you could send to it and you see that number,

you're like, oh, I can do that. It'll help get you going. It'll give you that momentum to get started. Okay. All right. Well I appreciate you for being here. I, and you've got your 24 hour action step, so I'll be following up with you to see if you've done it. Just run at least one, at least one dad that you wanna focus on first.

And I'll find out if you followed through with that or not. And thank you for being here and sharing your journey with us. Thank you for having me. Absolutely. Thank you to Christina for being willing to share. If you would like to come and have your own budget strategy session with me, me and you one-on-one, let's start making progress and take some action.

If you are ready to get started, come join me for your own session@budgetsmadeeasy.com slash strategy. Now you have a good week.