Owes Family $15,000 | Millennial Real Life Budget Review Ep. 31

welcome to this next episode of millennial real life budget review today we are taking a look at a couple who owes their family $155,000 and daycare is just crushing their budget let's get into how we can rework things to help them level up in their [Music] finances hey guys welcome back to the channel I'm your host Justine here we talk about all ways to help you Achieve Financial confidence Crush debt that least to more fun of fewer payments thank you so much to today's sponsor save save is a financial platform that helps you earn more money and returns than you would in interest in a traditional or high yield savings account and they do so by investing your money in the market but more on that later I want to tell you about this review because when it came across my desk I was like oh my goodness let's get into kind of the background of who this couple is first they are a speech language pathology assistant and customer success manager they live in Louisville Kentucky when I asked what is the biggest thing you struggle with financially they said we are in our 30s and want to start investing but have two small children our daycare is expensive and it can be difficult to make big Financial progress towards debt savings and investing we would like to be able to fund more trips too also it's difficult to see a clear path towards our goals savings investing trips maybe a house one day I asked what are their top two to three financial goals they want to accomplish they said one pay off debt two catch up our invest vesting for a more Secure Retirement three bigger savings emergency fund and saving for trips and vacations they have just $3,000 in their emergency fund and then they told me that they currently pay around $900 a month for daycare for their toddler in the fall they'll start paying closer to $1,800 a month for both the baby and the toddler honestly for two kids that's that's not bad I currently work for a school system and for extra income and looking to take individual speech therapy clients one day a week and work extended summer school to make more money if I do this it would average around $400 per month in extra income also my husband started a new job in August that doubled his income but we were pregnant at the time we've had a lot of medical and baby expenses we just had our second baby in March yay and we want to make some Financial progress I get it so you're like okay we've had our kids now it's like there's kind of two different phases like having the baby phase and then raising the kids phase and I'm not sure if you're in the raising kids phase or if you're like looking to continue to expand your family however we know that this is what it is and so I want to see exactly what your budget looks like by popping it open so let's go over to their budget by the way you're probably wondering like what is this kitchen background situation that's going on well if you haven't caught our we're finally leaving California video we actually did leave California and so my sister is letting me use her place to temporarily film until we find her house and get get set up there will be a whole video on the updates of where we're at kind of in this in between phase between California and Kansas City and yes I'm like floating somewhere in between the two however I did want to make sure that we get into this budget because it did catch my eye first of all the total monthly income between the two of them is $65.99 so $6,600 in monthly income and then they have two different debts here they have student loans and then they have a family loan of $155,000 and I did check with this person and they said you know that that loan was given to them a while back they weren't being charged any interest and it's kind of like oh you know we give $20 here and there when we can and so we're going to talk about addressing that because I never like to be in a situation where I'm owing family members money because it does change the dynamic of the relationship going down to their fixed expenses so they have $760 for their rent mortgage which is like peanuts nowadays the daycare I can see is like definitely a big big cost $950 in groceries and toiletries which is really high and I know you have a toddler and a baby does this also include things like formula baby food diapers I'm assuming yes which would probably be the reason why it's so high gas of $175 $21 per month towards car insurance I'm hoping that's for two vehicles I think it is Insurance of $110 I don't know if this is your homeowner insurance or something else and then your fund money stuff I can't even believe this $50 per month for clothing and $25 for shopping I have a hunch that your fund money spending is probably a little bit maybe a lot more than what you've written down here cuz this is totaling about $500 you still have a net of $11,000 left over I have a feeling that this is much higher so what I would love for you guys to do is track your spending in all categories for one month I want you writing down every single transaction as they pop up have this spreadsheet open as a tab in your computer at all times and just start inputting those numbers into your budget because I really want to see this um the emergency fund only gets $50 I know you said you had 3,000 and then the vacation fund has 25 investing has 90 I wonder where this $90 is really truly going because you had talked about really bolstering up your Investments and trying to figure out how you're going to catch up for retirement not to mention some other big financial goals that you might have along the way getting a replacement car starting um 529 plan or building up for potentially a down payment to upgrade your home this is where I think you might be interested in Market savings by save so the market Savings Program by save is a way for you to invest into the market with no downside and you're like M what hold up here's how it works so save Blends saving and 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this is where I want you really focused because your debts I mean the $115,000 is concerning the student loans is actually I I think you guys are going to be able to knock that out really fast but I really want you sprinting towards a hefty emergency fund I mean you could split the difference between 8500 and 12,800 and let's call it 10 if you could have $110,000 in an emergency fund in a high yield savings account that's earning over 4% 5% interest I want that liquid cash available to you I think you would feel really confident so that's goal number one is a $10,000 this is your starter emergency fund eventually we're going to build this up to 6 months and 6 months is 25,000 and that would be the big Pie in the Sky emergency fund basically so that's what I want you to do I also want you tracking diligently especially the fun money stuff especially the groceries I want you tracking all of that inside of your budget number one this emergency fund should get way more than $50 in fact according to this plan you have over $1,000 left over I I don't think you do it could be more like 500 and so I want to see how fast we can get this going so that you can get up to$ 10,000 so we need $7,000 divided by 500 so 14 months just over a year if you were going at a pace of $1,000 you could cut that in half we could probably do it in like 7 months if you could truly put $11,000 per month towards the emergency fund then I want to go back up to the student loans and the the family loan that you're paying on so if we could truly put maybe $11,000 all in cuz you're already putting $200 towards the student loans and the loan that you owe to your family we could be debt free in 2 years easily easily you could be debt free in 2 years I know that the daycare is crushing you because it is the biggest line item in your budget and knowing that this is $1,800 for two kids and what I've been seeing from California and now researching in Kansas City how much full-time daycare costs I honestly I think that's that's really good given you guys are pulling in you know $6,600 in income I think we can make this work and remember the whole daycare situation is just temporary once those Littles get into public school then it's going to be like a big fat pay raise for you guys but I think you can still manage the daycare manage the emergency fund and the debt and make it out in one piece and do it very very fast okay you also mentioned that you just wanted to build up the emergency fund um the bigger savings I agree that we definitely need to have a vacation fund that's putting more than $25 cuz let's be honest a vacation for a family of four is going to run well over $1,000 and we would never be able to take a vacation in the short term at $25 saved per month so I definitely want to see more money going there $400 for miscellaneous feels very high so I feel like we could even borrow from that and start putting more money towards uh Vacations so see how I'm doing this I'm prioritizing the emergency fund still because it's getting the bulk of the discretionary income the money after bills and and our actual needs are met and then I'm putting a little bit more towards vacation so emergency funds still gets priority but I'm actually adding a lot more towards vacation and then you guys could take a really fun family trip somewhere together this summer or even at the end of summer early fall I think that would be wonderful for you guys and lastly I just want to rework the priorities of your financial goals because you told me first you wanted to crush debt then do the investing then build up the savings we're going to actually reorder that by putting the savings up at the top so the emergency fund savings should be number one number two is crushing that debt number three really bolstering and building up your Investments if you're really focused on retirement specific Investments then we're going to focus on any employer sponsored retirement plan such as a 401k or 403b we are contributing up to the match first up to the match whatever your employer has and then we're going to move into opening up a Roth IRA for you I think Roth IRAs are so great because they have such great tax advantage is because they are taxed opposite of a 401k or traditional IRA when you go to withdraw from the Roth IRA during retirement those withdrawals are taxfree it's so amazing I've done a whole explainer video on Roth IRAs if you want to check that out I will link to that up here in the cards for you and I think we're just going to slowly start working up to building up and maxing out those accounts cuz you're going to do the employer sponsored plan you're going to do the Roth we're going to go back to really maxing out your for 1K which that in itself I think that's at $23,000 let's see yeah so it's $223,000 for the max contribution limit into a 401k and often times that does take people several years sometimes if they're really just kind of waiting on salary bumps over the course of a year or two to really start maxing that out and move and you can move at baby steps if you're contributing 4 and 1/2% let's try to do 5 1/2% the next year move at a pace that works best for you and once you Max it out just let it ride it's so easy so wonderful I hope that was helpful for you thank you so much to Market savings by save for sponsoring this video If you want to get a blend of savings and investing and have access to the market I think this is a really great product that you could look into to help fuel your bigger financial goals I will link to the market Savings Program down below for you to check out thank you so much for save for sponsoring this video and if you want to have your budget anonymously reviewed on the channel the Google form is linked below the more information and details that you can give me the more accurate my advice that I can give it to you and be sure you're subscribed to the channel and be part of the family we are committed to building this channel to over 100,000 subscribers are we there yet are we there yet and I will catch you in the next one