Deep in Debt in New Orleans | Millennial Real Life Budget Review Ep. 37

hey fam welcome back to your favorite series Millennial real life budget review today is really fantastic because I have somebody living in New Orleans who has a lot of debt but the one thing that I got my hands on that I've never gotten my hands on in a video before are the credit card statements stick around okay so when I was reviewing this application really stuck out to me because I saw how much they were making compared to how much debt they had and I got really curious about where this was coming from so I emailed this person they came back to me and said here are some credit card statements I'm so excited to show you this because we've got some work to do okay so first this is a physical therapy assistant making $ 58,209 the biggest thing they struggle with financially is credit card fees and accumulating debt I asked what are your top two to three financial goals you want to accomplish they said number one pay down debt and eliminate credit cards number two build up Savings in my emergency fund and number three live comfortably with current salary now they have $ 64,8 27 in debt they have $0 for an emergency fund I asked is there anything else you want to share about your financial situation and they said I have a side job that I attend one weekend so Saturday and Sunday once a month and they have benefits with retirement in 401K they were out of work for the summer of 2024 unable to pay mortgage bills contributing to an increase in credit card use my savings account and retirement fund have been depleted interesting okay so now I reached back out to this person they said now I've accepted a full-time job um I've been working PRN basically as needed uh in the health care field doing physical therapy June through September sometimes not making 40 hours a week which is the reason for using the credit card and getting in more debt I made some big and recurrent purchases on my Discover card since I celebrated my birthday in August and had a personal trainer over the summer I typically only use my credit cards for flights and purchases over $250 that I can quickly pay off so they use the budget template for their current role since they have City hours now 40 hours a week along with my part-time job got it got it got it my ultimate goal is to be in good standing with my obligations bills and catch it before my credit is heavily impacted how about we go ahead and take a look inside the budget and see what's going on and take a peek at those credit card statements by the way I love New Orleans New Orleans is like one of my favorite places to visit I've only been there twice first time I did Bourbon Street and the second time I was like not do on Bourbon Street but I'm definitely hitting up the food scene did a ghost tour that I was just like Blown Away by so this is my first budget review I think that I am reviewing somebody who lives in New Orleans so this is so fantastic let's take a look here so this is based off of the new gig the more consistent gig it looks like they planned on about $3,600 in income they brought in $44,000 probably due to that side hustle position that they're working on the weekends okay they did say a mortgage payment so I didn't get into the nitty-gritty about what all that was for them but anyway I saw the mortgage payment was about $1,500 out of the $35 $3600 planned income um was close to 43% of their take-home pay going towards mortgage payment alone that is way too high ideally I would on the high end 35 36 37% if you're living in a high cost of living area like LA or New York even Chicago Seattle I think for New Orleans you could do better than than 43 this is one of the areas that's killing your your budget right now also another thing that I saw and these I'm picking on areas where I feel like you could make changes big changes if you really wanted to get on top of your financial situation the car loan you're paying $515 a month in a car payment your interest rate thank God your interest rate is only 2.9% which is incredible these days because most people are getting car loans and hooked up on payments that have 6 7 8% interest so it's happy to see the interest rate so low not happy about the $515 payment as it relates to your current take-home pay and also the car loan you you owe 225 on it in my opinion I just think that's too much car for your salary amount at this point in the game so ideally if you were going to go to the car loan amount and if you've been following the channel for a while you know I'm not a fan of car loans but if you were going to go that way I would have liked to see this at like a you know $115,000 car loan perhaps an older car perhaps a car with mileage but still is safe for you in fact a really cheap and easy way for you to like compare and review cars is heading over to Consumer Reports and taking a look at all of their third party testing that they do I believe it's $29 or $39 for an annual subscription but money well spent in terms of finding a c that you can trust safe reliable and get the reviews on a tangent there but a side note about how to do the car shopping process we're going to get to the credit cards in just a second I see they have student loans of $34,988 oops did we not pay that this month or perhaps the payment isn't due just yet so that could also be part of this and factoring in let me take a look at some of your other budgeted items we've got a cell phone of $106 you've heard me say that I'm like a broken record you've heard me say this is pay you're paying way too much in the in the cell phone plan I would much rather see you do something like a mint mobile where an unlimited data plan is $30 a month that's super easy I'm assuming you might have a device um payment plan on this and you might have device protection which you can absolutely take off the device protection so long as you have your emergency fund in place which is one of the big starting points for you is getting that geared up let's see everything else 200 for groceries gas $100 car insurance $12 seems a little high so I wonder I know you've probably got comprehensive since you have that car loan that seems high I would take a look at my um car insurance video and how much you need I will link to that up here in the cards it's an oldie but it's a goodie and it'll tell you kind of the breakdown of the different types of things that you're going to see on your policy and how to understand that looks like you have an HOA of $100 $83 for homeowners insurance good good you're hardly spending anything on the fun $200 I think I think there's probably more to this because when I saw those credit card statements I think there were some shopping things happening um co-pay for therapy trying to put money aside for an emergency fund so for you the emergency is based off of your basic living expenses which is all of your fixed stuff up here so that comes out to 2464 and we're going to multiply that by two and then I'm going to multiply it by three so we're looking at about a 5,000 to $7,000 starter emergency fund for you I'd really love for you to have $5,000 in your emergency fund because you depleted that it sounds like and I'm not sure how much money you had in savings to start with when you were out of work this summer it sounds like you had savings you had cash you you went through it and then you went through it down to a zero balance and then you started using the credit card as your emergency fund and so we really need to get you out of the credit card land and back into building up your emergency fund also as it stands it looks like you're already netive $333 based off of your plan so something's got to give you've got to reduce something inside of your planed spending by $333 cuz this is this is not working and I think a lot of it has to do with this guy I would be taking a hard look at at this and if you're living by yourself I think a roommate is definitely the way to go with this if you're not willing to sell your house we need to get a roommate because $1,500 on your own is just killing plus plus the credit card debt plus all the Deb debt you have going on now if you were doing this actual like if you're bringing in an extra $400 a month which I think at this point is necessary then we would have some extra funds to start putting towards that emergency fund I actually want to skip over to your credit card statements to figure out what was happening all right so they gave me their apple card statement and their Discover card statement so this is apple as of August they had a balance of $511 let's see let's see what they did so looks like they bought some gas they are on a payment plan with something they bought from Etsy now I know Etsy is you know built by these small shops online shops they're normally selling like HomeGoods Home Furnishings Decor so to me this situation means you bought something shopping wise during the summer also the watermark is a hotel in Baton Rouge so they did spend some money at a hotel while they were not really making a whole lot of money so I'm like oh we probably shouldn't have done that and it definitely should not have put it on a credit card because you were charged $886,000 the previous month you had put I think $125 in payments and now it looks like you put the 20 just the minimum payment on this which is fine because right now we really need to be focusing on that emergency fund and really being proactive with tracking your expenses inside of your budget so again that Etsy payment plan came through twice in September so that was twice in August twice in so already $200 is is something you spent $200 on something in Etsy and then about $10 on the Tik Tok shop so again this telling me that you're shopping and not really using this card for the Necessities um so perhaps you're cash flowing the Necessities at this point and then the shopping bug is kind of getting you and you're adding it to the Apple card so now we've got total interest charge $26.80 and then I don't know why this is all funky but balance subject to interest rate is now going to be over that $500 amount amount because you've carried it over now we're going to take a look at the Discover card because this actually has a very high balance so you've got a balance of $532 okay so the previous balance was $2,877 okay looks like you paid $97 you added $34 in purchases so you were still using this card even though it had a balance you did a cash advance of $2500 $125 fee charged and then interest charged of $113 oh my this is our problem area let's see what we did okay so they did tell me they spent money on their birthday they spent money on a personal trainer it looks like in August is when we did the cash advance so kind of using this to me this is like okay now we're using using this as a way to pay our bills and using it as an ATM so already my body's like no I don't like seeing that the personal trainer it looks like okay $54 $29 maybe they had a promotion in the beginning and then they got you for every single time that you come in $110 with that personal trainer oh oh no also they charged you $125 for the cash advance fee so that's where that fee is coming from you've got a 28.24 per interest rate on this Discover card I'm not vibing with this at all because I'm just curious like the cash advance was that used to pay for the basic necessities or was that used for something else it sounds like you're kind of doing a little bit of both you're trying to pay for the basic stuffs stuff and also you're you're doing some things that I would not do an emergency situation because I feel like that's where you were at you were kind of in this unemployed scenario and still spending money while money wasn't really coming in so I would have halted that in fact I would halt a lot of this stuff until you get that emergency fund built back up okay let's go to the next one here this is the October um October statement for the same card so 50 5159 let me see did we make a dent in this no it went up it went up slightly your payments was only $34 however you did keep all of your purchases off which is amazing you had a $41 fee charge and $120 in interest uh let's see what happened a late fee oh no okay we had a late and looks like they redeemed the $3 the 5% cash back bonus of amazon.com and Target is that the only thing for this quarter H mm I'm not loving this card for you unless it's cash back on everything cuz this it says a cash back bonus you're earning 5% on amazon.com and Target plus maybe the 1% on everything else um cash back bonus Redemption the late Fe looks like you were charged uh $34 so the late fee was even more than your actual payment so that that just that's awful let me go back to your budget here so we've got the Discover Card the Apple card looks like your minimums now has really jumped up $282 uh you are paying minimums on City and Home Depot so that looks good I mean just slightly over right $30 $30 but whoopsies undc discover you only made a $100 payment we definitely have to figure that out so something's going to give something and if you want to make big changes here's where I would be focused on that car loan or the mortgage we've got to get these two things down these are two things we can control and these are two things that we can make changes on that would drastically change your financial situation I I don't want to waste my time telling you like reduce the fund money spending that you're barely spending any money on this but I know you're actually spending money on the fun cuz you have a personal trainer um there was the Etsy payment plan there was the Tik Tok shop that sort of thing I'm not going to tell you to reduce your groceries amount cuz I mean honestly $200 is pretty damn good so what I am going to tell you is those are the two priorities to focus on and making sure you increase your side hustle income I know you're working one weekend a month can you do two weekends a month we really need that money in order to build up a robust emergency fund I don't want you use in fact like rule number one stop using the credit cards rule number two is consistently filling in your budget spreadsheet and tracking your payments your what you're spending rule number three is putting every single dollar amount you can towards the emergency fund I want you actively working towards your first $1,000 in the emergency fund continue to build that up make minimum payments on everything while you're building up this emergency fund I don't want you to get into a situation where you are out of work again and we repeat the cycle only this time it's worse because you have the debt already in place and it's just going to balloon I went ahead and put together the debt reduction calculator for you to show you where things stand as is you've got total minimum payments adding up to $992 you've got if you did $1,000 right so an additional $7 towards your payment this is where things are shaping up honestly it's not too bad whenever I'm filling out these debt payoff plans for people I really aim to get you debt free in 5 years or less my goal is like a a good better best scenario is good as 5 years better would be like 3 years best is like anything less than 3 years so a lot of these debts you can absolutely pay off in less than 3 years minus the student loan based on the current payment plan in your current situation but I think if we were able to really move some money let's say you even did like 15 an extra $500 towards your debt once you get to this point remember the emergency fund is going to be priority for you we get you basically done in about 4 years including that car I really don't want to include that car I want you to get a cheaper car but yeah everything is done in a year except for the student loans which would be incredible for you so in order to be in good standing with your obligations and your bills you need to be making ontime payments with all of your credit cards all all of your debt and make sure that you are doing the minimum payment until we get that emergency fund really built up and created I know you talked about how you were worried how the debt is going to impact your credit really the only thing I would be concerned about creditwise is if you were to go back and let's say trade in your vehicle for something cheaper which I really would I really would you want to make sure that your credit score is reflective in a way so that you are in a cheaper payment plan for your car loan cuz I think that's what I would do in your situation is I would get a cheaper car with a lower car payment I don't know what that's going to do interest ratewise I would just go ahead and shop around see what's available out there see what you can get for financing that would be comparable at least interest ratewise comparable to what you paying because if you can get another 2.9% interest rate but your monthly payment goes from $515 to like $200 all day all day I think that's really really going to help you out also if you're just unsure of like what next money move to make and you're like I just need to know the steps the steps you need to check out my new Mini course Millennial money moves which is going to help you with your financial priorities and your life priorities to help you make the right next financial step for your life super easy I've included a decision making quiz that's just going to help you through exactly what next step you need to take you can check out that course by using the link below if you continue to jam on this series and you are into it hit that like button and I'll catch you in the next episode [Music]