Doctors with $314k in DEBT | Millennial Real Life Budget Review Ep. 18

Welcome to another episode of Millennial Real Life Budget Review. Today, do you want to take a look at a couple who has $314,000 in debt, not including the mortgage? Stick around. We're going to be unpacking this budget in this episode. Hey guys, welcome back to the Debt Free Millennials channel. I'm your host Justine, and here we talk about ways to crush your debt, achieve financial confidence that leads to more fun and less payments if you're into that lifestyle. Go ahead and click that red subscribe button below so that you never miss a video from me. And today, we are taking a look at two doctors. This may be the highest amount of debt, non-mortgage debt, that I have seen as I've been doing these reviews. So let's go ahead and take a look at the form and see what's going on. This is a physician who also has a husband who recently graduated from residency and they live in Ocala, Florida. I hope I'm saying that right. They live in Florida and the biggest thing that they struggle with financially is paying off debt and having enough savings. Oh my goodness. Yes. Paying off debt is going to be a big one for you. They have a couple of goals here though that are not really debt related. First, they want to buy a car for their husband of 30K, buy a house between 250 and 350,000, pay off the student loan debt. They have $16,000 in an emergency fund, which is amazing. Some background too, that they wanted us to know is that I'm also trying to conceive, might need fertility treatments. Husband graduated from residency, so his income next year will increase to 220 to up to $250,000 a year. You're like, amazing. They can do this. Let's take a look at the budget and I'll show you if that's possible or not. Okay, let's take a look here. They actually had a plan total monthly income of about $12,000. The month that I'm looking at, they actually brought in 14,000. Assuming this is going to go up drastically next year, they actually have some things working in their favor. The first things that I see here, oh my goodness, over $314,000 in debt. Mainly this is student loans, although they have this care credit, which helps pay for medical expenses. I'm curious exactly what's going on here because that balance is actually really low. There's no interest rate, but the monthly payment is, woof. Yeah. I wonder what type of health insurance plan you're on because something like a health savings account could really help you combat medical bills and paying for that, that keeps you separate from your budget. You would contribute money into that health savings account tax-free if you work for an employer who also contribute to the HSA, then you can use those dollars to pay for qualifying medical expenses without tapping into the budget. That's something that you might want to take a look at. Everything else I see, Nelnet, Sally May, Nelnet, Nelnet, Nelnet mom, mate, perhaps mom, oh, loan under my mom's name, but I am responsible for paying currently on COVID rebearance with minimum of 720 at 7.9% interest. Okay. I'm going to put this in here so that I know this going forward. This is going to be 7.9% minimum of 934 99. So now that the student loan repayments are restarting, they've already done a really good job of taking a look at that ahead of time. And then going ahead and plugging that into the budget, which is what I'm going to do now so that we can get a realistic picture of what this is going to look like 7%. Woo. That is high. Let's take a look at aid vantage restart in November unknown amount, but estimate a thousand a month. Okay. So we don't know what the interest rate is for this yet, but that's really dramatically decreased the amount of net income that we have to mess around with, but I'll go ahead and plug that into the debt reduction calculator. Once we get there, let's take a look at your budgeted items. Let's see rent. Okay. So I think they're still renting because I did not see mortgage. They did not mention a mortgage. So rent of just shy of $2,000 a month, which seems kind of high, but maybe not. I'm not really sure and familiar of your area, electricity, car insurance, internet seems a bit high. So ideally I would like to see that at like $50, $230 for cell phone, parents and brother-in-law lines, total of six lines. Are you paying for all six lines? And then they're Venmoing you back. What's your portion. I just want to see your portion. Ideally your cell phone, an unlimited data plan should be around 30 to $35 per month. I have been using mint mobile for close to two years now, and it has saved me so much money. I love using mint mobile because it saves me so much money. And I actually get access to the T-Mobile cell towers because it's part of the T-Mobile network. Just FYI, these are small potatoes for you, but I'm just letting you know, this is something that you could check out life insurance, disability insurance of $625 per month. I'm curious what this is about. Typically when we're looking at disability insurance, that is rolled into some of the deductions that you take as part of being a W-2 employee. So you're already paying into that. So I wonder if this is outside coverage for perhaps a parent. Let me know, because this is, this is a lot, $625 a month gas and lawn care. So everything here for your fixed expenses is $38.66. Then we've got groceries of $600, which actually looks pretty good. I went ahead and calculated out what I saw from your fix, multiplied it by three, but then I want to add, I want to add $1,800 for your groceries. So really $13,398, it would be equal to three months of living expenses. You already told me that you had $16,000 in your emergency fund. So at this point you can stop contributing money to the emergency fund and then start shifting that over to something else. Now you did mention, I want to go ahead and think about some of the goals that you said. So, uh, you had a goal of buying a car for $30,000, which I don't know, that seems kind of high knowing the other stuff that you got going on in your budget and your debt situation. And then you also talked about fertility treatments. Obviously we don't know what, to what extent you'll be going through that process, but I definitely want you to cashflow that. And if you had that health savings account that I can actually pay for fertility treatments for you. So I would kind of get an estimate and think, I'm thinking back to my sister-in-law who went through this. And I think she said it was about $20,000 for her to do that all in everybody's situation is different. So you just don't know exactly how long that phase of life is going to be. But I would definitely look inside of Facebook support groups or asking friends and family, people in your circle who you know, who've gone through IVF and ask them kind of what the ballpark range was for fertility treatments, because that one is definitely coming up for me. And then you said you wanted to buy a house between two 50 and three 50. So if I was going to do, if I was going to aim for 20% down, that would be 60 K for a $300,000, $300,000 house. So let's put $60,000 for that. My question to you is when we are thinking about some of these goals, as it relates to the debt is how quickly you want to achieve these goals. Do you truly need the car within the next year? Or can you wait three years? What about the down payment? Does it need to happen now? Can you truly maybe get by with the rental that you're in and have a baby in it? I would say, yes, babies don't take up a whole lot of space and you certainly don't need an extra bedroom for them when they're that little. I can attest to this because I was in an apartment when I had my first child. And for the first three months, she ended up sleeping in our room and we had a second bedroom, but honestly really not needed right away when they're so tiny. So that could be something that we take a look into as well. Or perhaps you just move into a bigger rental unit that does have an extra bedroom that could accommodate a baby. So that would be my first ask is when are you planning on hitting these two goals? Because right now, what I can do is for, let's take a look at the next month. And now what you guys are seeing on the tabs, July, August, disregard that because whatever month you end up watching this, just know that what I'm going to be talking about is for the next month. Actually, I'm just going to go ahead and duplicate this and just do brand new. Let's call it next month. Next month. Next month, we are going to take a look at this. And so what I'm going to do is I'm going to zero out the emergency fund. Well, you do have the car fund here, but you only have $40 going towards it. We need baby fund and Christmas fund got way more money than the car fund, but car fund was one of your biggest financial goals. So we definitely need to put more money here. So these are some things that I would start reworking here. Groceries, households. I mean, you've got $3,000 going towards fun money right now. And I would be really like beauty of $300 per month. That's a lot right. Medical again, you, I see a lot of like medical related expenses, and I'm sure that just requires a quick explanation from you. I really think a health savings account or even a flexible savings account would really help offset some of these costs. So gifts and holidays of $600. I like that you're planning ahead for gifts and holidays. I do see another Chris separate Christmas fund here. So maybe there's a way that you can combine and rework that. This just seems really high. I'm already looking at just like personal beauty gifts, holidays. Those seem really high household. What are we buying for $200 per month for household? Is this truly toilet, toilet trees and stuff? Or is this home decor? It would be interesting if you were spending $200 a month on home decor, because that's that stuff. I feel like you buy once and then it's, it lasts you at least a couple of years. So this is an area that you could definitely address to really start putting more money towards the debt. Cause right now I've freed up about $2,600 from a planned income of $12,000. Once your husband starts his new job and gets that new paycheck, then we're going to continue to add and keep your lifestyle relatively the same. Although I could see you really using that extra income to both fuel the car fund and the down payment, potentially IVF, but you really have to prioritize these things. That's why I was asking about when would you like for this to happen? Ideally, which goal gets you the most excited to make sure that we're cash flowing. Perhaps it is the IVF stuff, the fertility treatment stuff. Then I would say that would get the bulk of that extra income. And so does the debt. I feel like you guys could do this simultaneously because your income is so high. I wanted to show you the debt reduction calculator. If you guys have been following this series, then you know, I love the debt reduction calculator by vertex 42.com. It's a really great, great tool. And so I went ahead and put in your debts except for, I want to put in your minimums for the Nelnet and the advantage. Let's go ahead and do that. Here we go. So at minimum, we're going to be putting around four grand towards all of your debts right now. And so you can kind of see exactly how long this is going to take you using either the highest interest rate or the snowball. Ooh, I think I like snowball for you mainly because it gets us paying off some debts really, really fast, such as the care credit and Nelnet H and GM financial, which I am assuming is a car loan of 50. Oh my God. $628 per month. Guys. I just like, Ooh, it's like nails on a chalkboard. Whenever I see car loans and car payments that high, when I know this is something that you can absolutely cashflow. Now she wasn't sure what the interest rate is going to be with a advantage, but for shits and grants, let's say it is 7%. Okay. It really doesn't change. It really doesn't change the outcome. If you were to do the snowball method, which is paying off by focusing all of that extra income towards the smallest outstanding balance, we would have basically three of these debts knocked out in about a year's time, a year and two months to knock out the car Nelnet H and care credit. I love that for you. And then we can really work on Nelnet. The, the one that your mom had taken out and then Sally May and then Nelnet and advantage by the seven year, eight year mark. This is not a fast sprint for you. However, things will change once your husband's income gets into play. I'm also looking at this as a $4,500 total monthly payment. So if we did $4,500 minus the three, eight, seven, four, that's an extra $626. We can actually do a lot better than that. I also want to see you saving for some of these goals, depending on what time I'm hesitant to put a plan together for you, just because I don't know when you want to hit the down payment and the car fund, but at minimum, I don't even see down payment down here, wedding, Christmas, baby pet car, vacation, emergency. We now got to put the home fund down here guys. So this is where I want to see money going towards the home fund. Ideally, we're going to prioritize the debt. We're going to do a little bit towards home fund. We're going to do a little bit towards baby fund, which could be, you know, IVF and then car fund. So right now I'm prioritizing all three, just because I don't know. Ideally I would like give one fund more money than the other, but we're still putting the bulk of our money towards the debt. So if I had an extra, let's call it $1,700 that I could throw here, 1,700 plus the minimum 3874. You guys are watching like that's their minimum 3874. Yes, but they can do it. So 5,500, almost 5,600 all in, Ooh, this is looking real good. Basically one month to pay off care credit, four months to pay off H's Nelnet loans, nine months to pay off the car. And then just two years to take care of mom's Nelnet loans. And then the rest of them are just kind of hanging out for a couple of years. Basically 2027 is all just trying to pay off the student loans. This is not factoring in anything else. I've not made any other changes here because you guys have such high income. It's just starting to be intentional with it. So I actually really liked this plan for you. What do you think? I think knocking out literally three loans in less than a year sounds amazing. If you can take a look at that and just kind of step away from the smaller things of the interest rate and the balances. If you could just step away and think to myself, would I be okay with paying off three debts in full in less than 12 months? If the answer is yes, then I think this is your plan. This is what you got to go for knowing that you're also stocking and putting mad money aside for car IVF and home. And we didn't touch any of this stuff. We could really make a lot of changes if we were to take a look at the spending of the fund money and cut this by a third would be incredible. If you could free up an extra 800 to a thousand dollars from your fund money and start putting it towards either the future stuff or the debt, we would make a lot of progress. I really like that for you. So that was $300,000 plus worth of debt that we were looking at. One thing that I didn't mention that I wanted to share with the couple that submitted their budget to me is maybe they're considering working on PSLF. That's the public service loan forgiveness program so that they can get that high amount of student loan debt forgiven. This could be an option for them. However, the way that I broke down their debt free plan is it actually has them paying off their debts within five years. And I know that they could do it even quicker than that because we haven't even factored in that extra income that's happening by next summer. So I don't know. It could be something that they take a look at if they're really focused on bigger priorities such as, you know, the IVF, the down payment and all that. But a lot of their debt, almost every single one of their debts, except for two are related for to the student loans. So if you can pay it off within five years or less, all your student loans, then I don't think PSLF is the right plan for you because PSLF requires 120 qualifying payments, which is a 10 year, at least a minimum 10 year plan, unless you are on the wrong income driven repayment plan that would not qualify for PSLF. I've done a whole video on this. So you'll definitely want to check out public service loan forgiveness, uh, up here in the cards. I will link that for you. If that's something that you're interested in, it's something that I wanted to mention, because it could be a question in the back of this couple's minds, because they have so much student loans, but honestly, the way that this plan is coming together and shaping up, I don't think they need to do it. I think they could just stick to the standard repayment plan, or maybe they do an income driven repayment plan, but knowing that their income is so high, I don't know how much savings they're really going to get. Maybe a little bit. I want them to just go as quickly as possible. And for them, a five year plan, plus hitting those other goals is going to be the right move. Let me know if you're still enjoying this series by clicking the thumbs up button and letting me know if I should be creating more content like this. Do you want your budget reviewed anonymously on the channel? I'd love to share my guidance recommendations and feedback with you by filling out the Google form below the more information and details that you can give me about your financial situation, the better recommendations that I can give to you, and I'll catch you in the next video.