Blows $700 on Fun and $86k in Debt | Millennial Real Life Budget Review Ep 33

today we are taking a look at a pargal who has $86,000 in debt she's blowing $700 a month on the fun stuff she has multiple credit cards personal loans student loan debt everything we're going to get into it in this episode hey fam welcome back to the debt free Millennials Channel I'm your host Justine we have a series here on the channel called Millennial real life budget review where real Millennials anonymously submit their budgets to me in hopes of gaining some outside perspective on their budgets their financial struggles and goals and so when I saw this application come through for this pargal I thought I have to do a video on this one this pargal lives and works in Atlanta Georgia the biggest thing they struggle with financially is debt their top two to three goals they want to accomplish is to become debt-free one-year emergency fund and a hefty vacation fund I'm curi ious about Hefty vacation fund because Hefty vacation fund could mean an annual trip to the Bahamas or it could be a trip to Europe or maybe it's something fun where you're going on a weekend trip to Chicago so the more specific you can get with your goals the more likely you're going to achieve them because you're envisioning yourself in the Bahamas with a p colada on the beach in the sand with blue Blue Waters but maybe that's just me going into to the rest of their application how much do you have in savings for an emergency fund they said zero just wiped it out for a car emergency uh anything else they'd like to add about their financial situation they said I'm 34 single mom of a 4-year-old boy and guardian to my 17-year-old nephew okay so let's hop into their budget and see what's going on so this pargal single mom with and a guardian to her nephew amazing has planned on a 4,600 in $25 budget this says salary only and then let's see what's over here salary plus extra income average last 3 months cool so they're making extra income somewhere either I don't know if it's overtime or a side Hustle but she's bringing in about $5,000 cash per month which is awesome I want to go over to the debt table here because the thing that caught my eye is there are a lot of debts and a lot of high interest debt this is in so USAA she owes $11,000 2915 interest City Bank owes $1,400 29.99% interest then you got the student loans of nearly $60,000 we've got credit one $29.24 per with $453 on it capital 1 Platinum oh my gosh 3224 per interest that is insane on $1,900 another one that you you have two upstart loans one for 30% and one for almost 26% and we've got about $6,000 split between the two of them Capital 1 Auto so this must be your car loan of about $115,000 and then you have the Aima I think I think this is a buy now pay later program of about $94 so the amounts themselves the total balances themselves except for the student loan debt aren't High balances the problem is you have such high interest rates that it's absolutely crushing you in all different areas and I'm curious what your credit limit is because you have so many different credit cards u kind of spread out with balances on them so if you're hitting those credit limits of just like you know $500 or $11,000 this is a big issue because it's going to impact your credit score I think a better method for you if you're really interested in building your credit score in a healthy way that's not going to ding you would be eliminating all of these stop using them completely and jumping into a card like fizz fizz is a debit card and you can actually build up your credit using Fizz now it's geared towards college students but anybody can use it so you can use that as a way and they actually set your credit limit for the card based off of what is actually in your bank account because the seem to your bank account and then it's automatically paid off every single day could be a smart move for you to clean up all of this stuff and speaking of cleaning up cuz we still have to pay it off right we're going to get into your debt payoff plan in just a second I also want to hop down to your budget because what I was noticing was a lot of money was spent on the fun and discretionary stuff so you have a rent mortgage payment we're not sure so you don't have a mortgage listed up here so maybe this is your rent of $1,236 I want to know what percentage that is of your takehome all right so 25% not bad not bad we've got your Utilities in there your car insurance oh you do rent so $25.50 for your renters insurance car insurance of $400 holy cow per month that's insan that's so expensive I really hope that that's for two cars at least even then $200 a month is ridiculous please go and check out my car insurance video I'm going to link to it up here in the cards for you to check out uh it's an older video but the rules still apply be sure to take a look at how much you are maxing out in your liability Collision comprehensive coverages because there are some numbers that you can play with um that could help get you that number down unless you were charged with a speeding ticket or a DUI or something like that that has that car insurance way up there holy cow daycare of only 380 oh split with my son's father this my portion cool amaz $380 a month that's amazing groceries looks great average from last 3 months $ 342 that's amazing gas average of $171 per month okay and then an average of about $58 on car maintenance stuff so yeah I would just use these averages as a way to budget for the next month let's go down to fun because I was noticing a lot of stuff on your fund spending namely personal spending okay $350 which just personal spending and I'm not sure if that's clothes hair nails massages fun bars entertainment whatever it may be this is money that we could absolutely actually the whole entire thing this is how I knew it was over $700 cuz I added it all up between your subscriptions and the fund money spending like fast food alone you've got $130 you got $225 on eating out which wouldn't be so bad if we didn't have over ,000 or over $1,200 in debt payments that we're making every single month so this has to be cleaned up I suggest and I don't want you to cut out all of the fun money spending I want you to live your life I suggest really tracking for the next 2 weeks what personal spending means to you and to take this a step further I would love for you to think about some of your contentment activities contentment activities are the things that you love to do that feed your values that also don't cost anything so I'll give you an example of some of my contentment activities one of my favorite things to do is take long baths so I typically like get a bath have my meditation music going on light a candle do some bath salts all this stuff I already have okay I'm not going out and buying this but this is something I already have another thing that I like to do I love to journal I love to uh doodle in my Sketchbook I watch Mera berer she's here on YouTube she's amazing if you love to Doodle Draw or you're not good at it but you just want to do something to just get your hand moving and just release it from your brain this excellent activity that actually feeds my creative side of myself going outside going for walks hiking Beach Lake Parks pool anything that is free for you to do and accessible that is something you need to start incorporating on a weekly basis take your son I think it would be so fun this is an area we absolutely have to clean up $700 per month on the fun stuff when we have $86,000 in debt we've got to reshift the priority plus you don't have anything in your emergency fund and that's the first step you said you wanted a one-year emergency fund that is going to take some time and I know you can get there but we have to really start with a 2 to 3 month emergency fund that's equal to 2 to 3 months of basic living expenses which would be this stuff up here so you've got about $3,000 for for basic living expenses right now I would love for you to have between $6 and $9,000 set aside in your emergency fund to get you started then we're going to move on to the next step and start paying down your debt so let me take a look up at your budget cuz you've allocated every everything let me go back here we need more than $100 going towards the emergency fund debt payoff is on hold until we have uh the emergency fund put together same with investing and I am going to you have all this zeroed out this is weird cuz you're spending well you have your actual $55,000 here you're just overspending in some of these areas so I want to get you in a place where I think this could go down to$ 175 so now I got $225 to play with yeah 325 is what I can do from your planned budget obviously you're pulling in more than the 4600 so if you're truly experiencing a month where you're bringing in more than $4,600 I want you to take that additional surplus of income and add it to your emergency fund cuz at this rate it's just going to take you too long to get that starter emergency fund 18 months I mean I think we could actually get this done a lot faster if I know that you're bringing in more than the 4625 and we're watching some of these other spending areas that's the first key to your financial plan here and honestly the first the first key is doing the budget which you've already put together very very nicely so I love that you did this I'm going to hop over to the debt reduction calculator because I want to show you what this could look like for your specific situation I'm going to go off of today's date these are all the debts that you had listed the balances the rates the payments all that stuff so if you are still wanting to work on this debt payoff plan and you wanted to to work it from paying off the highest interest rate first then we would be going after this Capital 1 Platinum the 32% you'd have it paid off in 10 months with just the minimum monthly payment of the 12250 once your emergency fund is funded to that starter amount of 2 to 3 months you can pick between $6,000 to $9,000 I want you to have enough money in savings that covers most unexpected expenses including the thing like you said with the car emergency car emergencies and car repairs sometimes can be thousands of dollars so we want to make sure we have that money set aside in your uh high yield savings account ideally so once we get that funded then you would have an additional $325 to add to the $ 12250 is what I rounded to so what is that that's $575 so that's the additional 325 and wow even just the additional 32 $25 that you could put towards your debt makes everything so manageable the first year alone is really really fun for you because you're paying off a ton of those High interest cards so you'd have Capital One paid off in 5 months upstart 8 months uh in the same period in the same month you'd pay off City bank and credit one the next month USAA I'm telling you once you get that emergency fund that should be like the the inspo for this because this debt payoff plan is really amazing the student loans are going to take a little bit longer however as you're working this plan over the next year to two as a pargal your job is stable you're not going anywhere unless that firm was to go under and then you'd have to find a replacement job I assuming that you'll be able to increase your salary over the next 2 to 3 years which will make this debt payoff plan go by even faster I just looked at Avalanche but oh my gosh if you do snowball I kind of like snowball better for you even though snowball so snowball you're going to be paying off the lowest outstanding balance first and then go to the highest outstanding balance what I love about snowball I personally did snowball is that it gives you that quick win that quick win that motivation to be like oh my gosh it really only took me 2 months to pay pay off credit one that was easy oh my gosh the next month I it only took me 3 months to pay off this buy now pay later program and the next you know it just goes and goes so we're talking about months 2 3 4 6 9 11 wow you have wiped out the majority of your debt working this strategy honestly I like both of them for you both are great obviously with Avalanche it's going to take you a little bit longer to hit that first one but I mean gosh paying off a 32% interest credit card feels kind of nice in doing that first so I think you've got options here you can do snowball you can do Avalanche I really want you to go back and work this budget and track it closely because the $700 spent on fun is you didn't even plan on that that's the that's the crazy thing you didn't even plan on spending that amount and and you did you actually did spend it so we need to go back and be intentional with a budget intentional with the activities and the things the way that we're spending our time so that it's reflective of your core values which is why I mentioned the contentment activities and then getting smart with how you are dealing with your debts um and by cleaning that up building the credit in a healthy way by using something like fizz if you're interested in using Fizz you can use my link below and use the code debt free to get a $10 sign up bonus so I feel like this would be an easy one for you just to start turning things around both on the credit side and then also on the debt side and the budget side all the sides if you are interested in getting your budget reviewed anonymously on the Channel with no hate and no judgment I think this person is doing the best they can with what with what they're doing and they just needed some outside perspective to really shift things in a positive way fill out the Google form below the more details that you can give me the better and I prioritize applications who use my budget template I've had people upload different templates and it's very hard for me to figure out because it's like you created something in your own world and it's hard for me to understand wait where's the expenses where's the debt so I prioritize the ones that use my template because this template is easy to use by the way you can get this template for for free using the toolkit link below or heading to Deb free Millennials toolkit if you like this series you want to see more give it a big thumbs up and don't forget to subscribe to the channel if you want to build Financial confidence you want to pay off debt you want to get better with money you want to hit your financial roles with other Millennials come on come join hit the red subscribe button and I'll catch you in the next video [Music]