$188k+ in Student Loans?!? | Millennial Real Life Budget Review Ep. 34

in this next episode of millennial real life budget review we are taking a look at an accountant who has over $193,000 in debt welcome back to the debt free Millennials Channel I'm your host Justine and this series we go through a Millennials budget and anonymously and this one really caught my eye because the debt was just so high so this is an accountant from bethl Connecticut and going through their application here's what they had to say so I asked what is the biggest thing you struggle with financially they said feeling like because individual debts are so high that we aren't making much progress I asked what are your top two to three financial goals you want to accomplish they said paying off debt in order to lower monthly payments would love to see where we could spend less and possibly ideas for different syncing funds or Investments I got you I love syncing funds now they have $75,000 saved for an emergency fund hm that's interesting and then they said we are a husband and wife with one preschooler we have two dogs and one cat we are also in our mid 20s let me know if you have questions I left some notes okay let's check out this family's budget and take a look at why the debt is so high so between the two of them they planned on bringing in $8,400 in the month they actually brought in $8,800 at the time when they submitted me the budget here's where all of the debt is coming from they have mad student loans and your husband holy cow $121,000 in student loans does this include grad school what did he get his degree in that is absolutely insane I know you said you're an accountant so 67,000 I mean that still feels like pretty freaking High where did you guys go to school are these like out of state out of state tuitions I have no idea all I know is $188,000 in student loan debt is absolutely ridiculous and that private loan wow your private loan actually I'm shocked to see that the interest rate is lower than what you were paying for federal and it doesn't look like you actually have this oh here we go still in zero payment due to income driven plan set up prior to co deferrals will likely start up in August okay so yeah you're definitely going to be making payments since your your total outstanding balance isn't super super high I mean 28,000 25,000 I'm assuming that your minimum monthly payment won't be absurd so we'll see right like keep us posted let's go down into your U budgeted items here so we've got a mortgage of $2,500 that looks awesome looks like we've got a couple of different utilities that you're paying for uh $450 you actually spent $532 on groceries that's not bad gas 260 car maintenance oil change registration renewal Night Out parking Easy Pass okay yeah I would consider making this a sinking fun for sure so I'm going to highlight the ones and then you can just pause the video um when you when I'm done here so that you can see which which expenses I recommend setting up a syncing fund definitely car maintenance looks like you've got car insurance paid yearly in June just 160 no way 160 per month for two it's probably for two let me know car property tax 800 is this your registration huh okay these are things I'd also make syncing funds for if you're paying them irregularly like car insurance if you're paying it annually this is something I want you to be saving for monthly same with uh any kind of car registration car property tax is that connetic kit specific I never heard of this okay trash we've got pet insurance V pet food actually was more accidentally bought food twice this month that happens preschool SL activities average varies by when payments are due I get that so $400 not bad restaurants o we bud budgeted $250 but you actually spent close to $700 here so this could be an area that we work on you've got shopping with zero this is something shopping and clothing cuz I mean come on you guys have a toddler and if you're anything like us like you do need to buy clothes from time to time for them or shoes or for yourself I'm thinking of those things those things I would create uh syncing funds for business Adobe and iCloud store if this is something that you are doing for your business this needs to be separated out from your personal expenses so you really need to set up your own business checking account and you're paying for your expenses out of that business checking account so that we keep them separate date night I love that you have that in there subscriptions uh toys and supplies for the kiddo got it health and Doctor dental bill dermo checkup CVS this is something that I think I would keep more consistent inside of your budget as well the emergency fund it says 7,900 I think you said 75 if I'm going back to your financial inventory here huh well okay something happened cuz you said 75 on the application now this is saying 7,900 regardless that's a ton of money in your emergency fund if I'm basing your emergency fund off of your basic living expenses which basically is all of this stuff here we've got $4,700 in the month so $4,700 is what you need to survive for one month of basic living expenses times three is 14,000 multiply that by 6 is 28,000 you have way more money in your savings than you really need at this point so this could be fun what I'm suggesting is dropping this amount pulling from the emergency fund here cuz you really even 6 months is only is just less than 30 grand if you could pull even half of this amount $35,000 we are paying off one of these student loans completely in one go that would be fantastic in fact I wanted to go over to your debt reduction calculator I put this into vertex42.com and by the way they had this Bank of America uh loan for $4,300 but that's already been paid off so I'm going to take that off so their minimum monthly payment on the federal student loans is $1,400 if they added an extra ,000 towards their debt and keep in mind I saw the extra th000 here so I'm going to pull $11,000 towards the debt that still leaves them with wiggle room of about between $500 to $900 for them to start adding in some of these sinking funds and really increasing those for the green areas that I've marked and making sure that our restaurant budget is actually realistic $700 seems really high maybe this was a crazy off month but I really want you tracking that diligently using like a daily expense tracker I just created one on Amazon it's super simple it's just a little notebook that you can put in your purse but I think right wrting this down for you or even printing off from my spend more debtless workbook which is way more robust and gives you more activities and exercises for you to figure out the spending behaviors the that's linked below the Amazon daily expense tracker is linked below um the workbook is a digital download The Daily expense tracker is shipped and printed to you from Amazon so great you can pick up either one of those I think this is an area that you could really take a look at to make make sure that you are focused on the right things because right now what what we could do is going back to your debt payoff is we could knock this out easy like the $25,000 loan is gone if we were to pull from that emergency fund savings would you have more than enough to to work from so I said pull 35 that was 25 so then 10 what if we reduce this to 185 and here we go alternative you could and I'm going after the federal student loans because they had slightly higher interest and then you had the $1,000 so let's say all in you're putting 2500 per month towards those federal student loans let's go to snowball for this so that federal student loan is not going to take you that long a year and 7 months to pay it off completely let me put this to uh today's date oh 7 2 2024 yeah so we're looking at this is insane so every 2 years you're going to be paying something off so you've got one year and 7 months then after that 3 years 9 months so we got February 26 April 28 and April 30 to pay off all of these student loans I have a hunch that you could actually go even faster cuz I did this based on on an extra $11,000 payment but there was actually more money that you had from your budget so even if I could increase this by let's see what happens if we change this to like 2750 and put an extra $250 yeah I mean we could get you debt free I bet you in less than 5 years on all of your student loans that's and and according to the standard repayment plan for your federal student loans which is a 10-year repayment plan we're cutting that in half and I think you can absolutely get this paid off in 5 years okay so your marching orders are to clean up the budget by adding in some sinking funds and also pulling from your emergency fund and start moving some of that money towards paying off your student loans the way that I'm looking at this if you're terrified of like reducing the safety net from your emergency fund the way that I look at this is the more that I can get this released now the faster I can get back to living the life that I truly want for my family I know you don't want to be making $1,400 you know $2,000 it's going to be close to two grand once those federal student loan uh minimum payments kick in I know you don't want to be doing that for the next 10 years you're just heading towards the inevitable so why not Sprint towards that debt free goal make it in 5 years or less versus 10 15 20 years that's why pulling from that emergency fund and think about this this because this is this happened to me when I was trying to pay off Sally May I had the money in my savings account I had like a $5,000 uh balance on Sally May I had the money in savings and it was just like release it because you're going to get it all back and then some and I did I like 10 xed the amount of savings more than that since I paid off Sally May so that's that's absolutely what I want for you guys and then tracking that restaurant spending and any other spending categories where you find are starting to creep up by actually physically writing this down continue to use the monthly budget I think that's going to go a long ways for you if you would like your budget anonymously reviewed and get some advice from me go ahead and submit your budget by using the Google forms link below I prioritize those who actually use this budget template because it's very easy for me to figure out and tell you where to go and what to do next and the more details that you give me the better I hope you are still enjoying this series if you are it would mean the world to me if you give this a big thumbs up and if you aren't subscribed yet why not join the family and I'll catch you on my next one [Music]