Single Mom Spends 48% on Mortgage | Millennial Real Life Budget Review Ep. 29

welcome to this next episode of millennial real life budget review where I anonymously review a real person's budget and give them advice of how to rework them to hit their financial goals today we're taking a look at a single mom and the mortgage is crushing her stick around hey guys it's Justine your host of the debt free Millennials channel here we talk about all ways to help you Achieve Financial confidence Crush debt that leads to more fun and fewer payments and today I'm taking look at a single mom who is an educator living in San Diego one of my favorite cities as you guys know I lived in San Diego for about 8 years and the high cost of living is crushing so I just want to go through her form first and then we'll take a look at her budget so she says the biggest thing that she's struggling with financially is building up my six-month emergency fund and saving enough for a comfortable retirement I want to retire in 2035 guys that is 9 years from now okay their top two to three financial goals one fully funded emergency fund of $30,000 two save for a new vehicle when my current one no longer runs estimated time frame 2031 uh she has a 2017 Toyota Highlander Hybrid Ah that's a car that Kyle wants to test drive I want to pay cash for my new vehicle three get to retire when I want as a net worth millionaire H okay so how much do you have in savings for your emergency fund with was the next question they said $227,000 and then here's where I found out a little bit more I am a single mother of two boys one of them is an adult going to college but still lives at home he has really stepped up to help me financially by paying rent to help me with monthly expenses I currently get no child support this just happened recently and my mortgage is about 48% of my income without additional income oh boy I have been going through a divorce for over 5 years dang and have just just made it my mission to try to become financially stable without a second income this is definitely a work in progress for sure give me all your thoughts and suggestions I've been trying to learn as much Financial education as I can by reading books watching videos and listening to podcasts yay as side not I am 5 years ahead of being a millennial I hope you will still decide to review my budget yes I think so this is what we're going to be doing today and hats off to you for just really taking the time and effort to educate yourself about financial literacy and understanding the way things work budgeting saving debt investing all of those good things and truly I'm so impressed that you have done all of this as a single parent and I'm so sorry that you have had to deal with a divorce for 5 years that's insane let's take a look at your budget and see how we can rework things to get you back on track okay right off the bat I see some things that we definitely need to change so you're bringing in a monthly income of $7,500 which is incredible you have the additional income I'm assuming this is from your son of the 1750 then you've got 9400 in total monthly expenses plus what you're trying to put away for savings we've gone negative and I had to kind of rework the calculations I don't think this was calculated correctly when you submitted it to me so I'm sure things have changed but I see what you mean about that mortgage payment it's $3,000 so if I do three divided by the 7500 it's 40% of your take home which is way too high so I'm curious because you actually did say that it was 48% of your income without the additional source so now I'm curious what this 17750 is if that's from your son or oh I only get paid once a month okay cool so that is you so actually this isn't too too terrible if I could get you down to like 35 38% that would be more ideal and I think what's going to need to happen is either your son continues to pay as part of this additional income because if that's the case let's take a look this plus this 92 so then I want to see what this ooh that is much better yeah so if you can get your son to continue to pay then it's only 33% of your take home in between the two if you can make it around this I I'd say that would be ideal otherwise what I think we we would have to do is aim 4times 38 so 1162 wait divided by there we go okay if we could just increase your income by another $500 then this is going to actually work for you or we could look at35 5 8740 so this would be a little bit of a stretch if you could go from 75 to 8,700 a month it could be doable on your own depending on what kind of side hustle you pick up that could earn you an extra thousand bucks but I think easily we could work on get getting an additional source of income for 500 bucks and then that would help you kind of figure out okay I could actually afford this mortgage on my own with just my income so something to think about let's take a look at the other things that are going on because I see that you have some debts here and then I also saw you're using Capital the Walmart Capital One card for grocery pickup the Chase Amazon is paid off monthly used for gift school supplies and household items okay typically when I'm seeing the actual monthly payment equal to the total debt balance then I know that these are two cards that you're actively using but also paying off every single month but let's take a look at the highlighted one 4% cash back on gas 3% on restaurants travel World okay so she it's kind of explaining what the rewards are for the City Bank Costco card and then what she's using to pay for the following on auto pay lots of different bills here on this card and here's the one where I see oh actual monthly payment was $1.96 total debt $1.96 okay so that one actually looks like you have paid this one off complete so these three things look like you are paying them off every single month in full this one the PayPal and the Care Credit these have balances on them and your actual monthly payment is less than the balance so these are two debts that I definitely want to address let's take a look at your other fixed expenses and for San Diego since I know San Diego like the back back of my hand then I know kind of typically what to look for and terms of your utilities and other fixed expenses like 600 looks good trash water electricity internet cell phone this all looks good gas is a bit high but assume that you commute to your school pool maintenance does your does your house have a pool that's interesting daycare YMC I wonder what that is $139 a month that's super cheap and then dogs monthly vet pets I mean I'm assuming this is vet visit and food $162 and then this is this area is typically the area that people underestimate so I hope this is right $740 on the fun stuff restaurants shopping clothing haircut I mean these things look quite small I also see that you have $25 going to gifts and maybe a sinking fund for Christmas so I would consider reworking that subscriptions it looks like you got a couple of things Amazon Costco Hulu Disney plus Netflix Google one all all the things fun money miscellaneous of $100 buffer and then the emergency fund you're currently putting $1,500 in the car fund of200 I saw that the balance was like 120 I think there's an extra one in here maybe it's a $122,000 balance let me know investing outside investing this looks like perhaps this is for the Roth IRA and then Fidelity so do you have two different investing things that you're doing after you receive your paycheck let me know you pretty much already have your fully funded emergency fund but I actually want you to pull money away from the emergency fund and again we're going to have to kind of cancel out that so that this goes back to either a positive or zero net balance because we can't have you going negative and spending more money than what's actually being brought in so once I cleared that out then I actually have $438 to play with this is pretty much done in my opinion and also if I'm taking a look at your fixed expenses you've got 5,200 in fixed expenses so if I was doing 5200 time 6 months yeah so about a $30,000 uh fully funded emergency fund is right for you and you're pretty much over almost there but what I want you to do is make sure that all of these debts are paid off in full completely before you go heavy on that emergency fund so what I did is I went over to the debt reduction calculator by vertex42.com this is a free tool that anybody can use and then I plug pled in your stuff so I did the Costco card which I think you're paying off in full based off of what I'm seeing here you put an actual payment of $1.96 the total debt so let me just go ahead and zero this out I'm going to move this guy up all right so depending on these 0% terms whenever they're completed I think you did say ends May 1st 2024 that's coming up like now so we need to get you paying off the PayPal card immediately after this if you put $477 already to it then you're pretty much done with it for the next month so that's what is that 1154 minus the 477 so 677 for the next month needs to go so if I may I'm going to duplicate your your budget here and then this is we're basically going to delete these this is going to be 677 cool that works then I want you focus on putting extra money towards that care credit card so you've got a balance of 1635 on Care Credit and also I'm curious CU you said on Care Credit that this was an emergency vet visit dental and Med you didn't need to do Care Credit you could have just pulled that from your emergency fund that's what your emergency fund is for I know you're really maybe interested in just stockpiling the cash especially as a single parent you're like I just want to make sure that I'm set up and I have this almost like safety mountain of money kind of built up that you're standing on but this is exactly what that emergency fund is for $1,600 that's something you could easily have pulled from your emergency fund be done with it and then go back to funding and building up that emergency fund so you're going to put instead of 157 you're going to be putting more like $600 towards that Care Credit so pay off PayPal and then we're going to pay off Care Credit next and then you're going to be done with it by next month then you're going to be de free then you're going to go back to the emergency fund and start building up the rest of the money that you need so you just need about $2,000 more by the way what we could do is we could temporarily put a pause on invest infidelity right now just to free up a little bit more money and you would basically have both debts paid off and then we have $1,500 oh my gosh you could have both debts paid off then by June you could have your emergency fund completely funded then stop and then you don't have to worry about the emergency fund after that because it's fully funded then you can go back to saving for your new car you have plenty of time to save up for the new car so you've got estimated time frame is 2031 you want to save for a new car you have a Toyota Highlander Hybrid let's see let's see if you did Toyota Highlander Hybrid this was a car that I have been interested in buying so MSRP is about $40,000 for 2024 so let's say that you want to come up with a car goal of about $40,000 minus the $112,000 that you already have saved so you need $28,000 more by the year 2031 7 years 28,000 ided 7 years so $44,000 / 12 you just need to increase your car fund just a little bit to $325 $350 that's what I would do and then you would have4 ,000 saved by that time oh that's amazing okay so 350 I would let that ride and then what was the next thing get to retire um for your net so that you are a millionaire did I tell you about projection lab projection lab is a financial planning simulator tool that helps you track your net worth over time you get to keep the data inside of that platform it does not sync automatically to various financial and investing accounts so you truly get to to have that peace of mind and privacy of the numbers that you're putting in it's a bit of a manual process but once you add in your numbers which honestly I think is really fun because then I get to log in and see all my numbers then you get to create a financial plan based off of your goals if you want to retire when you hit millionaire net worth you get to see at what age that happens then you get to make other goals of such as well I'm going to have to buy another car after I buy that one in 2031 or maybe I want to take a vacation to Japan in 2035 what does that look like add those add in those scenarios into projection lab and that's really going to help you get a sense of what retirement is going to look like for you I think you can absolutely make this work living in San Diego with the stuff that you have your fund money spending is actually quite low and you see I didn't actually change anything on fund or fixed expenses here I'm really just working with whatever you have left over which is honestly quite a lot of money so very well done despite having a high mortgage payment but even as I was thinking about this out loud and thinking oh well she could just sell the house and get a newer one I'm like nope because the 7% interest rate and the San Diego housing market the way that it is right now that mortgage payment is going to be well above that $3,000 so honestly I think you're you're doing well if you can figure out how to maybe increase your income slightly by taking on a side hustle or having your son continuing to help pay for the uh for the rent or for the mortgage I'm sorry this is 75 plus the 1750 I mean 9281 Allin that's a 33% um budget for the mortgage which I think is fabulous I know it's not forever but it works for now and if I can get you to add $500 to $1,000 in income per month I think you're going to be just fine especially knowing that you've got some other things also by the way I didn't say this but you still have $1,200 left over after these things are paid off actually you've got quite more you got $24.90 and let's say what let's say your son is like I'm done with this I moved out I don't want to help you with the mortgage payment anymore you have $740 left over and this is where you could go back to investing um your money into to that Roth if you've got a Roth or I think Fidelity is this a TA taxable brokerage account could be a little bit of both so you could divvy up your money in between those two things and still have money for your car fund and if you're like I want to invest even more that's where you start increasing the income or reducing some of these other fixed and fun expenses here but honestly I think very well done with the opportunity that you presented to me if you want your budget review anonymously on the channel fill out the Google form below the more details the better this budget was filled out so completely that I was able to jump right in so take note of that and let me know 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