This app will change how you think about budgeting !
October 1, 2020
While I was getting out of debt I started using an app early on that I think was a total game changer. This app not only helped me stay accountable, but it took all the guessing out of “how much do I have left in groceries” or “oops I spent too much, now what?”
Drumroll please - YNAB (You Need A Budget). Yup, that’s the name of the app!
Now, there are a lot of budgeting apps and there is a chance that you might already have one. But let me tell you why this one is different and why you should think about spending the $7 a month for it.
First off, if you spend too much in a category, YNAB will turn the category red and you won’t be able to ignore the problem. It will then ask you where you want to pull money from to make things right again. When you overspend that money has to come from somewhere and YNAB has no problem holding you accountable.
The second reason I love YNAB is that it let’s you use credit cards and it’s easy! I won’t go into the details here but just know that you can still accumulate your miles while you are paying off your debt.
Lastly, it makes saving for larger items a piece of cake. Maybe you want a savings goal for a specific item, like a new coach. Or you are saving for vacation but are going to be spending money along the way. Or maybe it’s a monthly bill and you are sick of looking up how much it is each month. Yup, it’s all there, and more!
The point I want to make is to encourage you to reach out and find tools that will make things like budgeting or paying off debt easier. Don’t try to create fancy spreadsheets or processes for saving receipts that you will never use.
Why make things harder?
Why I don’t think you should have an emergency fund
September 17, 2020
This is a BOLD statement, I get that. But do you know why I say that? I think when we have a large buffer sitting in our bank account we become compliant and lazy with money.
When I only had $2,000 in the bank as my buffer when I was paying off debt that scared me. I was constantly thinking about some possible emergency that could happen and I would be screwed.
But do you know what happened? Nothing, I just worked my tail off to get out of debt so that I could start saving for an emergency and feel safe again.
Saving for an emergency was important to me because I wanted to know that if something happened, I was prepared. If I lost my job (which unfortunately we all know too well right now) I had time to find something I loved doing versus reacting to my new situation.
Don’t get me wrong, you should still have some money saved up while you are paying off debt, but let’s not save 3-6 months just yet
Here’s what you should do:
Save $1,000 for each member of your household before tackling debt
Once you have your minimal emergency fund, stay focused and on plan to pay off your debt
Once you are debt free, save 3-6 months of expenses and set it aside in a high yield savings account for a higher interest rate
5 Things I Did To Get Rid Of Debt
September 11, 2020
Create a budget (see last week’s article on how to do this)
I always thought a budget was for poor people that needed a plan. Which ironically was me but I didn’t think so at the time. By writing down your plan ahead of time you are able to ensure that you aren’t spending more than you make and that every penny is going towards your goals.
Pay extra on current debt
This may seem like an obvious one but you’d be surprised. Use your budget to determine how much you can afford to pay extra each month and make that payment first! When we make debt payments at the end of the month life gets in the way and we don’t pay as much as we had originally planned. By comparing my spending habits with my income I was able to see how much I could afford to pay extra on debt with my current lifestyle. No matter what my income was each month, I would always pay the same amount towards my debt.
Don’t sign up for new debt
I had to call this one out because our society normalizes debt to an extreme, we even have “good debt” and “bad debt”. Debt is debt. Period. Depending on your personal goals you may want to eliminate certain debts before others but to truly build wealth, don’t take on new debt.
Get a side hustle
Everyone should have multiple streams of income coming in, it’s a safety net in case something changes with your job. Increased income doesn’t mean increased lifestyle. Send extra income towards your debt or use it to pay for larger purchases in cash. While I was paying off debt my side hustle was waitressing. It was dependable easy cash and I had been doing it for so long I could do it in my sleep.
Have some real (and sometimes hard) conversations with yourself
Personal finance always involves self reflection. Whether you make a lot of money, or have a smaller income, can you afford the lifestyle you currently live? I am going to guess no if you have debt. Do you need to cut subscription services? Do you really need a new phone every two years? Small lifestyle changes add up and make a large impact towards paying off debt.
3 Easy Steps To Get Started With Your Budget
September 3, 2020
A budget can seem overwhelming, stressful and sometimes, boring! But a budget is the key ingredient to paying off debt and saving for those things in life that matter most helloooo vacation!
Track your current spending
Look at your spending from the last couple of months and get an average for money spent in each category. Think of categories as buckets your transactions fall in - restaurants, clothing, hygiene, monthly bills, subscriptions, etc.
Outline a budget with your new and improved spending habits
After you know how much you currently spend in each category, add up all those categories and see if you are spending more or less than your current income. You may need to do some adjusting. If you are spending more than your income, you will need to decrease dollars assigned to categories. If you spend less than your income, where should that remaining money go - saving for a new car, a down payment on a house, your 401K?
Now is the time to follow your new budget with the goal to stay at or below the spending limit for each category. Be sure to track each expense so you know if you are getting close, or going over, the money assigned to each category. A budget is not perfect so continue to track your expenses and adjust your budget with each month.
49% of Americans are concerned, anxious or fearful!
July 6, 2020
According to Marketwatch, 49% of Americans are “concerned, anxious or fearful about their current financial well-being.” The not-so-funny thing is that this study was before 1) the coronavirus, 2) a potential recession and 3) record breaking unemployment rates.
This is almost half! Why do we continue to live life with debt if it is causing us so much pain? Ost of us don’t see a way out. It has become so normal in our society we truly start to believe there is no other way.
One roadblock when trying to get out of debt (which means living on a budget) is that you become an outsider. You start to have doubts that your friends will think of you differently, that people might think you are poor or that you can’t do fun things anymore. And the fact is that all those things can’t be further from the truth.
Aligning your spending with what you value most in life (vacation, a bigger house, fancy restaurants) is the best thing that you can do for yourself. Because you will be truly happy.
Don’t let what others “might” think of you as something that is stopping you. Being in debt shouldn’t be how you live your life, doing what makes you happy should.
Why and how you should be saving with Sinking Funds
June 28, 2020
A sinking fund is when you set small amounts of money aside each month towards the purchase of a larger item. Wouldn't it be easier to save $100 a month for Christmas and have $1200 by December rather than putting Christmas on a credit card and stressing about it in January? YUP! Or how about that 6-month insurance premium? It's much less scary setting aside money each month rather than sacrificing all your fun money the month it's due.
Sinking funds can be used for anything that is not a monthly expense and becomes a line item in your monthly budget. So for example, in your budget, you will have a line item for your rent/mortgage, groceries and Christmas sinking fund (along with a bunch of other stuff). And each month you are setting money for the Christmas sinking fund aside but you aren't actually spending money in that fund until it get's closer to December.
How do you organize money from all these sinking funds? You can transfer the money into a separate account or keep it in a labeled cash envelope. There are also a few apps that help you organize money into separate categories to make your account balance more clear - Qapital and YNAB are a couple that I recommend. Use whatever makes the most sense for you!
This is why you are broke...
May 14, 2020
Are you confused at the end of each month because you know how much money you make, and there should be plenty to cover your bills, but then POOF - it's gone before you even knew what happened? Unfortunately, I think we can all relate to this one! I promise I won't harp on the importance of a budget in this post, even though that would tell you exactly where your money is going.
My guess is on subscriptions! And not only subscriptions themselves, but the mentality that the purchase doesn't effect anything. How many things are you "subscribed" to each month? I'm not talking about magazine subscriptions like the good old days. I'm talking about Netflix, Hulu, Disney Plus, Amazon Prime, Bark Box, Spotify, all the beauty boxes, Dollar Shave Club, Stitch Fix, Hello Fresh and the ever so popular wine club -- the list can go on FOREVER.
This is where your money is going. $5 here, $15 there, you don't even notice each individual transaction but by the end of the month your paycheck is out the window. And it is not each tiny service that is making you broke, it is the mentality that these things don't have any effect on your money.
I'm not saying you can't have these these things, some of them save you time, increase your mental health, allow you something to look forward to during quarantine. I get it! But do me a favor, go through your bank statements for the past month and write down your subscriptions. Do you need them ALL? Are you paying for something you barely use? Can you find a free version? And before you sign up for the next new thing, take a second, see how it is going to fit in your life and determine if there is something else you need to give up to account for this new cost. Small changes like cancelling some of these services can free up money to put towards things you truly love.
Let's create a vacation budget!
May 11, 2020
Did you know you could create a budget for just about anything? When you sit down and do the basic (yet crucial) steps that involve creating a budget you become aware of how far (or not far) your money can get you, no matter what it is being used for.
Let's take an example that we can all relate to - vacation! Let's say you have $600 in your vacation savings account and a friend asks if you want to go to Chicago for the weekend because flights are only $100 - yep! Your hotel, for three nights, is $200 (splitting with your friend). You head to Target and buy a couple of new shirts and some toiletries, $75 (at least!).
Once you get to Chicago, you buy the 3-day train pass for $20 because your hotel isn't as close as you wanted it to be. You start figuring out that you are spending $80 a day on food, two quick meals and one sit down restaurant. By the end of the weekend you will have -$35 with the new food expenses. You still have a concert you planned on going to and a couple of local museums, so you put the rest on your credit card and will figure it out when you get home.
Well, here we are. Home with more credit card debt. This is an endless cycle that creating a quick budget could have solved. Maybe you don't run to Target the night before. Maybe you get a hotel a little further out since you will have the train pass. Maybe, you can't go?
Let's practice! Create a sample budget of a past vacation - write down all your expenses and what categories they fall in. Once you're done, use this as a template for future trips and rearrange money as needed (maybe you need less restaurant money but more flight money).
How much extra should I be paying on my student loans?
April 23, 2020
This is a fun question because when I start digging deeper into your finances as a coach and I tell you how much you can afford on paper - the jaws drop! We have been trained to think that if we are making our minimum payments we deserve a pat on the back - because we did it! Right? We didn't have an adjusted payment, we aren't in forbearance, we made the payment. Well, sorry, but no.
That minimum payment will cost you tens of THOUSANDS of dollars in interest that frankly, you can't afford. Nobody can! In most situations you should be able to pay double (at least!) on your loan to get rid of it! There are a lot of financial calculators online, I like Unbury.me, that help you play around with various extra payment amounts to find out just how long it will take you to pay off your debt.
Give it a shot, it's really motivating to see if you pay just a little extra each month, the number of years you can knock off the term of your loan!
Why you should keep paying your federal student loans while they suspended.
April 11, 2020
Right now you are not required to may a payment on your federal student loan, sounds great right? Wrong! If you are still employed, or your household can afford to make your monthly loan payment, you should continue to do so. And, this may sound crazy but, pay extra!
Think about it this way, normally you have interest tacked onto your loan each month. So when you make your payment, some goes to the loan and some goes to interest.
Right now, with your payments, 100% of it is going directly to the principle! That means that every penny you are sending to your lender is paying down your debt.
Of course, if you are worried about making rent or buying groceries you should hold off. But, if you are one of the lucky ones, hit it hard!
What expenses are counted towards an emergency fund? Calculate it here!
April 9, 2020
Any good emergency fund consists of expenses that continue on during an emergency. While there are a few different scenarios in determining when we can tap into this savings, there is only one way to calculate it and it is pretty simple.
1. Housing - rent or mortgage, it also includes electricity, trash, water and those sort of bills. Netflix is not here, and if times are tough, neither is WiFi.
2. Food - groceries. Don't put your restaurant spending money or brewery adventures in your emergency fund calculations. This is how much money you need to put food on the table for your family. And if members of the house are still working, this includes packing a lunch (no going out to eat at work either).
3. Transportation - let's be realistic, even in a crisis you will need gas to go buy your groceries or to pick up kids from school. Maybe you take the bus, include your bus passes here instead. You aren't accounting for saving for a car in this fund or a repair that you want to get done in the future.
A proper emergency fund consists of 6 months of savings for the above items. Add up expenses for each month, times it by six and there you go! This money should live in a savings account that you have quick and easy access to. You are not trying to gain interest on this money, you are getting prepared for an unfortunate time in your life.
Reader question: What is the best thing to do with savings? Invest? What kind of account is best to have it in?
April 7, 2020
A: This is a great question and it depends on the type of savings you are referring to! Let's assume you have no debt for this example. Your emergency fund should be in a separate account from your primary checking and it should be accessible. The point of this money is to get it when you need it so make sure it's in an account that doesn't require minimum balances or a specific amount of time that it has to be in the account. The purpose of this money shouldn't be to be making money so don't worry about the interest rate. You may see better rates with online banks, be sure you have a card to access the money.
With all of that, additional savings should be going into a Roth IRA. Personal finance coaches don't give investing advice so I would recommend you speak with a financial adviser on other account types. I would avoid single stock options if it was me.
If you don't have an emergency fund or you have debt, this should be your priority. Set aside $1,000 for each person in your household first. After that, work to pay off all your debt. Once your debt is paid, save six months worth of living expenses for your emergency fund. And that brings us back to the top!
Hope that helps!
What should you do with your COVID Economic Impact check?
April 4, 2020
So, this stimulus check. What about it?
First off, check out this link to see the details on how much you may be receiving. Amounts vary but are up to $1,200 for individuals and $2,400 for those filing jointly (with $500 per child also in the mix). If you are behind on child support you won't be seeing a check. You will receive this money via direct deposit or a check in the mail, depending on your last filing method.
What should you be doing with this money? I can tell most of you that the answer here won't be to spend it. There are a few easy scenarios to cover but if you think your situation is a little more unique you can always reach out.
If your job is stable, you are not worried about lay-offs or reduced hours, this money should go towards any debt you may have. Let's say you don't have debt, then it should go towards your savings. If you have a five month emergency fund you can always invest or, my personal favorite, make a donation to an organization that is doing some good right now.
If you are at all questioning your employment then it should go towards your necessities and any leftover funds should go straight to savings. What are necessities? Rent/mortgage, gas for your car, food and utilities. Netflix? Nope. It's only $8.99/mo - nope. Getting food to go because you can't stand to cook anymore? Nope. Birthday gifts for friends because you feel bad they are stuck at home? Nope. Nope. Nope. You lost all or some of your income, it's time to save every penny you can.
Be safe and be smart out there!
This is what you should pay off first!
April 3, 2020
Debt, a lot of people have it but no debt is good debt. Hear me now, I will say it again. YOU DON'T WANT DEBT.
Ok, now that we got that out of the way, if you do have debt and you are trying to get rid of what, where do you start? Reminder, no judgement, I was there too with a scary amount of student loans, but I am here to help.
Ok first, we want to list all debts from largest to smallest. I also like to put the interest rates next to them because it might effect things.
After we list all our debts, we are most likely going to pay the smallest debts first. This is snowball method, you can also use the avalanche method which is where you pay off the highest interest rates first. Back to paying off the smallest, this helps with creating easy wins as you pay them off. If it takes you a year to pay off one debt (let's say it's your largest), a year is a long time before you get a win in your journey. Too long and it's hard to keep up momentum.
With that, if you have a $300 credit card bill that is at 25%, we gonna get rid of that.
Back to the plan, once you pay off your first debt, that money then rolls into your payment for your next debt, and so on. And that's it! Easy right? Stay on track, remember your why and life will be grand on the other side.
What is debt?
April 2, 2020
This is a fun topic because I am about to blow some of your minds. What exactly counts as debt is something that can go one of two ways in conversations. You have the deniers that think a car payment is the American way and student loans are "good debt". Then you have the people that don't want it but haven't taken the steps to get rid of it for one reason or another.
So what is debt? Debt is anything you owe to anyone for anything. Anything.
Car loans (or boat loans, rv loans, you name it!)
Home mortgage (this debt is more acceptable by the debt free community but a 15-year mortgage is a must)
Outstanding medical bill
The list can go on but we will stop there. If someone can take it away because you don't make a payment, it's not yours. That is why I am here, preaching what I preach, to get YOU to own your stuff and to stop owing people for things.
What is a budget and how do I get one?
April 1, 2020
A budget is key to being successful with your money. While you may think of a budget as something restrictive, it is actually something that allows you to spend. If you have money in a category in your budget, you are free to spend every penny and not feel bad about it.
There are a few ways to create a budget, I always recommend the zero-based budget. Zero-based budgeting is where your income minus your expenses equals zero. That doesn’t mean your bank account is empty, it means that every dollar you have handles something very specific. The types of things that this money is assigned to ranges from monthly bills, living expenses, savings, travel funds, 401k contributions, etc.
The best part about budgeting is that it can change every month. Take 5 minutes a day to look at your budget and categorize your spending, it saves you time in the end.
That's it, now go make a budget!