Librarian with over $56,000 in DEBT | Millennial Real Life Budget Review Ep. 39

welcome to another episode of millennial real life budget review today we are taking a look at a real Millennials budget anonymously we are taking a look at a librarian who lives in Long Island New York and has racked up $56,000 in debt let's pick apart this budget and see how we can help them get it turned around welcome back to the channel I'm your host Justine here we talk about all ways to Achieve Financial confidence and Crush thatb that leads to more fun and fewer payments thank you to Rocket money for sponsoring today's video rocket money is an app that can help you cancel subscriptions lower your bills and manage your money but more on that in just a bit I saw this application and it really caught my eye because they are in kind of a sticky situation so I asked what do you do for work they're a librarian their annual salary is $100,000 combined full-time and part-time job plus $700 a month from their boyfriend I asked what is the biggest thing you struggle with financially they said trying to do everything at once I want to contribute to everything and it feels like I don't make a dent on any goals aha yes that whole Gundrum of trying to do all the things at the same time and getting absolutely nowhere in any direction I asked what are your top two to three financial goals you want to accomplish they said number one pay down debt two save three months emergency fund and three increase income they have $ 53,3 38 in debt I asked how much do you have in savings for an emergency fund they said $3,000 thank you I like that we we have a starting point and it's not zero which is awesome I asked anything else you'd like us to know about your financial situation they said I am 32 years old and before purchasing a home in 2021 I paid down $50,000 of student loan debt I had savings for a down payment and left some left in my emergency fund but over time I racked up credit card debt in Furnishing and making repairs on the house my mortgage is definitely the largest expense in my budget but I don't regret taking on this expense on my own considering the price of Housing and rent in my area yes Long Island is definitely a high cost of living area my plan when buying was to rent out part of the house to contribute to the mortgage cost currently my boyfriend pays $700 a month in addition to buying most groceries and household items so that's how they're splitting up expenses this year was a wakeup call that I don't want to keep working two jobs just to have it go towards debt payments I get that I started working on paying down my debt and trying to get rid of the larger payments I paid off my car of $2,000 man you you must have either had a really old car or you just didn't maybe you had already been making payments for a couple years and working the snowball method snowball method is meaning they are paying off the debt according to the lowest outstanding balance and kind of working that their way out of that I struggle with wanting to do everything at once some months I'll focus on paying down debt others I focus on contributing to retirement savings currently have $105,000 in retirement I also struggle with relying on the credit cards when a big expense comes up and not wanting to deplete savings the savings account oh my gosh I have so so many comments so many things for you to consider and honestly just redirecting your energy and focus to one task before I get into those recommendations let's hop over into their budget and see what we're working with okay here's what we got working with Okay so we've got a $6,000 total monthly income we've got a lot of debts holy cow nine nine debts many many many many credit cards and your student loans which are almost completely paid off I mean well done I got to give you Kudos on the student loans because you have done an exceptional job on paying that off you know 50 I think you said 50 $50,000 in student loan debt however I'm wondering how you did that with the snowball because you at snowball you pay off the lowest outstanding balance unless you were just focused on individual student loans but let's see what your interest rate is on a lot of these credit cards we've got anywhere between 165 to 29% although this one these two credit union and Wells Fargo are completely paid off so we're not going to count those paid off in 2024 okay great let's just take them off the list then we don't need to worry about them the other ones you've got oh Capital One $114,000 I know when you move into a house we're dealing with this too it's like you want to tackle the repairs you want to tackle the Furnishings you need different Furnishings because this is a different space I totally get that and also we have to move as fast as cash you also said you have a $3,000 emergency fund when I'm taking a look at some of these fixed expenses here like you have the mortgage cell phone internet all of this stuff where is your we're going to include this there's your your groceries you did say boyfriend is taking care of that gas I'm going to call this kind of the necessary stuff so that's 30 let's call it $3,400 in basic living expenses the mortgage cell phone internet electricity all your utilities uh some of your insurances and then groceries and then car gas so if 1 month is$ 3,400 and they want to build it up to 3 months that's 10,200 let's call it a $10,000 emergency fund is the goal so you need $7,000 left to fund that and we need to be putting more than $100 into the emergency fund that is where I would start also you have a net of $ 250ish I'm sure we could cut some things like 1885 for your car insurance I know you live in New York I feel like there's something we could do with your car insurance premium to get that amount lower yeah the 2400 I just want to see this as a percentage oh boy so your mortgage is nearly 40% of your take-home that is high high very very high I know you said you don't have regrets you're also working two jobs just to make ends meet with the mortgage plus the minimum payments plus I don't even see anything else here about Like Home Improvement home repairs oh $200 here okay well if you ask me it's probably more than $200 that you're paying on on Home Maintenance at any given point right this is where I'd be having some conversations with your boyfriend like he's getting a steal of a deal if he's only paying $700 a month which is not even what is that not even a third of your mortgage payment I get that he's covering groceries but I feel like if you guys are serious I guess this is a sidebar conversation but if you guys are serious about doing life together you're thinking about moving the relationship to the next step this is where we really need to be combining forces financially because on your own I can see where you are starting to burn out also I have a hunch that you're spending just your regular spending is probably more than what you've got listed here restaurants clothing only as needed this is an average of What I've spent this year just $27 per month gifts was only $50 per month what about restaurants I have a feeling this spending is May needs some working and you might need to take a look at and if you want to take a look at your spinning habits very quickly luckily there's an app for that rocket money is a great app to help you with your spending patterns and it can also capture that very very quickly so you can get a sense of what are the biggest things biggest areas that you tend to spend your money on for example I could see exactly how often I went to Costco and then they could actually give me an average amount of all of my Costco trips with no calculator needed from me plus racket money can help you negotiate your bills all you have to do is upload a photo of your bill and then they start the negotiation process you can do this with your cell phone bill your car insurance premium your internet bill and this saves you a lot of time and headache out of your busy day especially if you work at two jobs and it can locate and cancel unwanted subscriptions they can even cancel it on your behalf if you take advantage of the app's premium features Now Rocket money has helped its customers save $500 million that's $740 in the year on cancelled subscriptions I think this is a great supplement to anybody who is looking to just figure out their SP patterns or cutting down and cutting off things that they no longer use if you want to try rocket money head over to Rocket money.com deeptree Millennials to get started thank you so so much to Rocket money for sponsoring this video now let's get back into it all right so the first thing to work on with your with your goals with your financial goals is definitely working your emergency fund building it up to the 3-month emergency fund of $10,000 we need $7,000 more at a at a pace of just $100 per month I mean that's that's not going to do us any good right that'll take way too long 6 years no way we've got to work much much faster on that emergency fund that means pausing any extra debt payments that you might be making at this point in time and moving everything over to the emergency fund now I don't typically give this advice however you are kind of in a unique situation I mean the first thing is is maybe having a conversation with your boyfriend or just getting real with yourself about the relationship to see if there's any wiggle room in having him contribute more than $700 a month to the rent if this could be a true 50/50 split and maybe that means doing a 50/50 split on the groceries that's kind of my first action item for you once we kind of figure out what the game plan is there between the two of you I normally don't give this advice however you do have 26 27% you've got this little guy might be okay um you've got a couple of debts that I feel like potentially we could consolidate and do either a personal loan that has a lower interest rate for you and do some debt consolidation there or we look at doing a balance transfer um maybe you've already done that with Wells Fargo I'm not sure Wells Fargo I hate to see them on the list trust me do not like them at all very predatory Banks you guys got to watch the Netflix episode on Wills Fargo Dirty Money classic make you rethink about working with Wells Fargo but I would consider doing a debt consolidation or a balance transfer on some of these cuz the interest rate is killing you and so are the minimum payments I actually went ahead and filled out your debt reduction calculator just to see where we're at with everything and you've got you know the $56,000 in in in debt your minimums are1 15572 at this minimum monthly payment amount it actually it actually doesn't look too too bad to be honest my goal for everybody is to get them debt free in 5 years or less 3 years would be awesome anything less than that would be like cherry on top so you can actually get everything paid off in about 4 years at the monthly minimum payment amount which is kind of wild I get though that this 0% interest rate is just an intro so it's probably going to take you a little bit longer than the 4 years once this interest rate kicks in also same with city was it there not an interest rate for City Intro rate so when those interest rates kick in it'll probably bump you out of this four-year payoff plan and get you into maybe like five or 6 years so I agree that you do need to increase your income with your third Financial goal and that may mean that we are looking for jobs outside of what I'm calling like the public sector because you're a librarian you work for your for your city maybe or maybe it's look for a promotion within within the library so I'm not sure what that is but I definitely agree with you that income needs to go up somehow um but your debt payoff plan actually isn't that bad if you want to pay off Home Depot in two almost three years which I'm I'm assuming you probably don't want to do you want to be able to free up more money so let's say if your if your guy was really like going to pay 50 on this instead of 700 what if he gave you I don't know 1,400 what if he doubled his his payment here that gives you an extra there's $946 here so if we added if we did $1,000 towards your emergency fund that's 7 months of really buckling down and building up your savings over the next 7 months then we can transfer that $1,000 into your debt payoff plan and so then I'm going to do$ 2572 here so an extra $1,000 and if we're talking about 7 months from now you know let's take a look at this boop boop boop boop what if you started this in January and then you got it done in July here's where things start shaping up in a really really great way so maybe this extra $700 isn't coming from your boyfriend but maybe it's a pay raise that you experien Yourself by changing jobs this is where I feel like things look really optimistic because then you get debt free and 2 years 4 months and I didn't do any debt consolidation for you you have options that's the biggest thing for you you kept saying like you're trying to do all the things at once stop refocus and start with the emergency fund continue to track your income and expenses using your budget spreadsheet we're going to find ways to cut from our budget if we can although it looks pretty pretty trim other than the mortgage payment that's that's the biggie making sure that we find ways to increase our job networking filling out resumés you're actually doing this at a really great time of year because the New Year sets new budgets hopefully there's more positions open for you and we're only talking about maybe potentially adding an extra $700 in take home so I think that could work well for you you also have the option of taking a look at the debt consolidation you also said that you have been relying on the credit cards when something big pops up and I want you to really focus on building that emergency fund up specifically for that reason okay minimum payments on the debt really focus your intent on your emergency fund savings we're talking about $7,000 that you need to grab fast in order to make that happen any unexpected expenses that pop up between now and then and Beyond you're pulling from the emergency fund and then you continue to restock it until it hits 10K and then you move on to your debt payoff plan and start working that if I were you while you're working on building up your emergency fund take a look at different debt consolidation options to see how you can get those interest rates lower and see how that that affects the minimum monthly payment because the minimum monthly payments are also killing you and then the conversation with the boyfriend that's my advice henceforth go proceed and make sure that you're having open conversations with your partner about this I have no doubts that you can buckle down and get this done it's just refocusing your energy a little bit thank you to Rocket money for sponsoring this video if you are interested in having your bills lowered and negotiated cancelled subscriptions on your behalf plus much more in just managing your money and getting better check out rocket money head over to Rocket money.com debt free Millennials to get started I will link that in the description box below if you continue to enjoy these budget review videos and you're vibing on them give me a thumbs up that really helps out the channel and it helps me out to say okay I'm going to create a little bit more content around the budget reviews I love them you love them let's continue to get better with our money we'll catch you in the next one [Music]