Financially Depressed in Dallas | Millennial Real Life Budget Review Ep.41

When I tell you that my heart absolutely dropped to the floor after reading what this person wrote, I just felt so bad at what kind of financial situation this person is going through. And so, let's get into it. Hey guys, I am back with another Millennial Real Life Budget Review, and this one just jumped out at me because this person I can tell is really going through it. They are super depressed financially, a lot of anxiety around money, and so I wanted to share with you what they said in their application, take a look at their budget, take a look at their debt, and help them just feel good about money again. I love doing this series with you guys. I know I was on hiatus with maternity leave, so let's get into it. So I asked, what do you do for work? And it says he, partner operations manager at a healthcare company. She is a lead researcher at an academic medical center. She graduated with her PhD in June, 2024. By the way, I changed how this application is set up. So I asked, what do you do for work? And I also added a question. If you have a partner or you're in a long-term relationship married, I also asked what they do for work. So that's included going forward. So I asked, what is your annual salary? They said $200,693 combined. Hell yeah. That's an awesome income. They live in Dallas, Texas, and here's where things went South for me, literally. So I asked, what is the biggest thing you struggle with financially? They said deep breath here. I have a deep seated anxiety around money that often detracts from my quality of life. I constantly translate expenses into work hours, making it hard to enjoy spending without guilt. Even though we save a meaningful portion of our income, putting money toward retirement investments and a future home, it still feels like we're behind. When I compare myself to peers or family who seem to have higher salaries, larger homes, frequent vacations, and children, I can't help but feel like we're on a slower track. I recognize that appearances can be deceiving and that they may not be saving as much as we are, but the comparison still weighs on me. I get you. It's hard. It's hard when you see there's always like you buy a boat and then somebody is always going to have a bigger boat and then that person's going to have an even bigger boat. Same with houses. Like you buy a house, somebody's going to have a bigger house and then that person is going to look at somebody else who has a bigger house. It just goes on. This mindset stems from years of lower earnings and a slow financial climb. When I started working in 2015, my salary was just 33K and my income only increased gradually over time. It wasn't until August 23 that I finally crossed the 100K threshold. My wife followed a similar trajectory, earning 42K as a researcher before pursuing a PhD from 2020 to 2024, during which she made only 30 to 40K per year. However, her school did not offer tuition stipends, so we had to pay for tuition with this money. Her income only recently increased to 78K in July 24. Despite these recent jumps, years of stretching every dollar have made it difficult to feel financially secure. Even though we save consistently, our long-term goals feel out of reach. We want to lease out our current home and purchase a larger house in a safer area of our high cost of living city, which would require around $800,000 with a 20% down payment. Yo, Dallas is no joke. But despite setting aside thousands each month, progress feels slow. On top of that, we'll soon need to buy a car and are having a baby, adding two major expenses while I logically know we're in a stable financial position emotionally. It often feels like we're just treading water. I struggle to shift from a scarcity mindset to one of stability and long-term confidence. Beyond the financial stress itself, my fixation on money strains my relationship with my wife. I get so focused on budgeting, saving, and optimizing every dollar that I become overly controlling about financial decisions, something I know isn't healthy. While I logically understand that money should be a tool to enhance our lives rather than a source of stress, I struggle to let go of that control and find a balance. Shifting from scarcity mindset to one of stability and long-term confidence is something I know I need to work on. I got you in this one. I have a couple of exercises that I definitely want you to do after you're done watching this video. I asked the top two to three financial goals they want to accomplish. He said, one, upgrade to a larger home while keeping our current property as a rental. Our goal is to lease out our current home and purchase our next house in the neighborhood near my parents within the public school district we want for our future children in a safer area where we can take walks, play outside. While I would have loved to send them to private school, having attended one myself and enjoying the experience, the tuition costs are difficult to justify. The public school we're considering is highly rated, but I have concerns about the long-term future of education given the current administration. Amen. Okay, number two. We want to retire from traditional nine to five jobs around age 55, allowing us to pursue work. We truly enjoy to build a side hustle. This would give us more time to enjoy life with our kids and family while we're still young and active. A key part of this plan is ensuring we can fully fund our children's college undergraduate education, just as both of our parents did for us. Interesting. Number three, as introverts, we want to build a side hustle that aligns with their skills and interests while minimizing the need for direct customer interaction. We previously launched an Etsy shop for Excel spreadsheets, but it didn't gain much traction. We're exploring other scalable, low maintenance and constraints that fit our strengths and provide meaningful extra income over time. I'm curious if you, you wanted to sell the spreadsheets on an Etsy shop that you would have to build up some sort of email list. So creating some sort of freebie Excel spreadsheet for people to opt in. And then somehow you'd have to use like either a blog. I feel like a blog would be a really good way for, as an introvert to get your content out there and also to build up a list that you could then sell your Etsy spreadsheets to. Okay. That's a side note. I asked how much debt do they have? Not including the mortgage is $17,533. I asked how much do you have in savings for an emergency fund? They said right now we have 94K, but this is also being saved up for a down payment and a new car. Marcus by Goldman Sachs doesn't allow you to break out funds like Ally, but I would prefer not to switch to Ally Bank. Why not? Ally's awesome. You're still earning interest. Okay. Anything else about their sitch? They said my wife is going on a three month unpaid maternity leave. Once the baby is born at targeting end of month, may our future daycare costs will be approximately 1500 per month, starting in September, 2025. Okay. So it's been a while since this person actually submitted this application to me. I myself was on maternity leave, but I still thought their, their situation justified a budget review because I'm sure now is the time that they're like, Oh ----, we have this extra expense with our baby and they still have their financial goals that they want to crush. So let's hop into their budget and see what's going on. Okay. So first off they have, I'm going through the debt table. They have credit cards with about 29, 28 on them. Student loans, they have about $9,600 left on that. And the car loan, they have about 4,900. The student loan and the car loan have pretty low interest rates. So that's the good news here. It also looks like your credit card. This is just something that you're paying off every single month. Cause he said throughout the month, credit cards, the minimum, the actual payment, the total debt. So right away, I am actually just going to go ahead and delete this for you because my suggestion for you is to make sure that credit card spending is actually accounted for inside of the monthly budget. Don't include it as a debt because anytime that I'm spending money on the credit card in that particular month, I'm counting it as that month's expense. So if I'm putting $55 on the card for groceries, I'm actually going to record it as $55 actually spent under the grocery category right here. So you don't have to label that as like a debt I'm paying off and then I'm spending money here. I just like to treat credit card spending as actual spending that I'm doing within the month because I am. Even if you are paying off your credit card back to a zero balance. The next thing that I want you to tackle, and I know you've got your different goals, which we're going to get to in just a second, but before you actually can get that down payment, get that house fund built up, add in your child care expenses, you need to make sure that some of that $94k is pushed aside for your emergency fund. Now, because you still have debt, you could go either way here. You could do a two month starter emergency fund of about $4,000. Since you have a baby, I'm going to suggest the three month emergency fund. Wait, this is not right. This should be times two. There we go. All right. I had to redo some of the math here because that was wrong. One month of basic living expenses for you guys is around $4,000. So a two month starter emergency fund would be about $8,300. Three months would be equal to $12,500. A fully funded emergency fund for you would be $25,000. So you have a couple of options here. You could go ahead and just subtract $12,500 from the 94k and make sure that's set aside for unexpected expenses. You could keep it in your Marcus account or you could do Ally, whatever floats your boat. Or you could just say, this would be out of order technically, because what I would want you to do is do the three month starter emergency fund, pay off the car and the student loans, and then do the six month emergency fund. That's the order I would do. But because you have so much cash, you actually do have some flexibility here. So you could just take 25k out of the 94. And then you could also take, I wrote two options for your debt. You could take the $14,624 that you owe from your savings and pay off your student loans and your car loan in full. Or you have the option of making extra payments and then redirecting a portion of your discretionary income towards your goals. So order of financial priority here would be, we're still putting the bulk of this discretionary income towards the student loans and the car loan. And then we're putting a smaller portion towards those goals of buying your house, getting a new car. I literally just did this, kind of. I bought a house and a car the same year that we had our second daughter. That was a whirlwind kind of year. That actually just happened last year. So what we did is we ended up purchasing our home first, so that any kind of, we were worried that even though we were paying for the car in full in cash, that somehow, sometimes they pull a soft credit report on these things, even though you're not actually financing the vehicle. And we didn't want the mortgage lender to take that as a negative mark. So I would encourage you to start with buying your house first and then adding in a second car. And you guys should be fine with that. I said second car. I'm assuming this is a second car, but maybe this is just a replacement vehicle for one that you already have. So that's where I see things kind of shaping up for you goal-wise, just off the top. I didn't even get into your expenses just yet. I did see over here that you had $14,149 as total monthly income. But here you said, I took out federal social security medical taxes here. Does not include takeout of HSA contributions, retirement contributions, medical dental vision premiums either. And it should. You should actually just put in your total monthly income, your total take-home pay after all of those pre-tax deductions are taken out. After all those deductions are taken out. And I was guesstimating around $11,000 in total monthly take-home pay for you. And you'd have to make some adjustments here because right now it's showing the $14,000 in planned income minus the $7,300 in total monthly expenses and the $4,600 in monthly savings with a net of $2,000. And I just don't think that's accurate given this little note here. And then you said the retirement does not include employer funding for the HSA contributions. Yes. Does not include employer match of 4% or 8% for their pension and 401k and Roth 401k. So that all looks really good. You guys are doing a stellar job in putting money towards your investments. Let me take a look at some of your fixed expenses here. We've got a mortgage of $1,400 cell phone of $80. Not bad. Internet 65. They did an average of their electricity and their water groceries. Wow. Looks amazing. Especially for Dallas, which can be, you know, high cost of living gas 55, but they actually, Oh, that's right. They made a note here. So they travel back to Ohio a lot for family. So that's why their gas bill was a little bit higher for this particular month. Car maintenance insurance. $80 looks good. Doctor's appointments, dog stuff, counseling. There's the childcare expense that they already put in. Very good to plan that ahead of time. About $500 average on restaurant spending. Very good. Shopping inclusive of clothes. Legos. Love that fun purchases and gifts. Haircut entertainment travel. This was an average. So they spent an average of $1,200 per month on travel. They said that they had a lot of like a high expense travel related things, but I have a feeling that's going to go significantly down now that the baby's here. Also, I can see why they have the chase Sapphire reserve because they've been traveling so often. I would definitely think about moving down to the preferred card because that's only a $95, $99 annual fee. This is an annual fee of $550. And guess what? It just increased to over $800 a year. I just don't think that's worth it. You already have the American Express card with $325 in annual fees. That's just a lot in card fees. That's like over $1,000 with the increased rate on the reserve. We've got all these other little subscriptions. I can tell we're gamers. Nintendo Switch. Xbox. Very good. Prime. And then here's where things got a little hairy for me because I don't think this is accurate. You put $4,000 towards an emergency fund and house fund, and I really don't think you have actually that amount left over to fund. I'm just going to put this at zero. And then if I'm understanding this note correctly, I really truly think you guys only have $11,000. I mean, let's say I'm off and it's $12,000. Shoot. Yeah, you really do have $4,000 here. Is this right? Yeah. You have a lot of money left over, which is amazing. So let's go over to... I don't see any changes that you need to make in your budget right now because things are so... I mean, gosh, your mortgage is just so good right now. $1,400. If you're moving that and going into a bigger house, I have a feeling this number is going to jump way up for you. So what I would suggest is to make a duplicate of this budget and do a mock budget scenario of your new mortgage, inclusive of your insurance and your property taxes, because I have a feeling that's going to double at least. Let's take a look at the debt reduction calculator. I picked up this free template from vertex42.com. I love this one. Input your numbers. Good to go. So in total, you're paying about $500 per month on your student loans and car loan. If I just took $2,000 of the leftover budget and put it towards the debt, you are completely paid off with your student loans and your car loan in eight months if you were to start today, which you very well could because you have the extra cash left over. So I'm suggesting here that if you did $2,000... Let's go back to your budget. $2,000 here. So extra payment, extra payment. Okay, great. $2,000 for the next eight months. You'd have that paid off. You still have an extra $1,000 left over to put towards your house fund. So see how the debt is still getting priority over the next six to eight months and then you could put $1,000 towards your house. I don't know. At the time that you watch this, you very well could have already made that housing decision, but you still have a lot of money to work with for the down payment. You may not be able to do 20% on the down payment. You also mentioned you wanted to lease your current property and make it a rental property. You could. I think doing a rental property can be really good passive income for you. And I say passive loosely because being a landlord is really not that passive, okay? You have your tenants calling you for any kind of maintenance or repairs that you're responsible for. And also think about what that actual profit, monthly profit might look like for you. I highly encourage you to run some scenarios and some calculations based off of like, all right, here's how much I'm charging in rent. My mortgage on this house is $1,400. So right off the bat, you're going to have to charge more than that. Plus the cost of maintenance and repairs. Are you covering any additional things like mowing the lawn or trash services, whatever that might be, you got to factor that in. And also factor in any lapse in actually having some occupancy in that rental property. I don't think that would happen in Dallas, but you just have to plan for worst case scenario. Those are the things that you could consider in terms of like renting out your property, or had you guys consider just selling it and using the profits as going towards the down payment to your new larger house. That's an idea. I think there are a couple of things that you guys need to figure out in terms of what is the right next step for you in terms of the house and the car, because you have choices. Because you have such a large amount of cash on hand, but absolutely you need to separate the money for the emergency fund into a separate high yield savings account. Just keep it clean at least $12,500, or you could go all in and do 25 K. I think you also have enough money to just go ahead and get rid of the student loans and the car loan completely and pay them off. If you're like, no, I really do need more money, more cash to get into the house that I want. Make sure you're still paying off the debt and making that their priority by putting the bulk of your discretionary income towards those pieces and then utilizing a smaller portion towards a down payment. We want to make sure that, I mean, imagine if we could really accelerate without this extra $500 monthly payment. I know the interest rate is low. The total debt balances, but I would just rather simplify your finances. Why hang on to them, simplify it, get rid of it. That absolutely needs to happen inside of your, your budget and your financial life. Also two things that I want to share with you in terms of getting your financial anxiety in order. Let's address that next. Let's talk about the financial anxiety, because it is very clear to me. This is a real problem for you. And I want to give you this exercise called debunking your money beliefs. This is an exercise from my one-on-one coaching program. And if you're interested in coaching, you can definitely check that out in the link below. But what I want you to do is take out a notebook or a sheet of paper, hell, even your notes app on your phone and write down three to five main ideas that you tell yourself about money. Like, what are those things? And if it's something that you haven't told yourself, but maybe you've learned from a parent or your parents, what have your parents told you about money growing up when you were a kid list and write down three to five ideas there. It could be credit card debt is bad. I have to work really hard for money. I'll never make a significant income, whatever it may be, write it down. Then what I want you to do is reframe those negative ideas by writing out why this isn't a hundred percent true all the time. Like the example I gave about the negative idea that I gave you about, um, I have to work really hard for money. So even though on the surface, it looks like a positive thing. We could say, well, not everybody has to work 40 hours a week to make a really good income. Um, I've seen other people accelerate their wealth by working very efficiently with not a lot of effort. Then you can baby step that new belief by using transition words, such as beginning, allowing, or becoming. So you can say, I am allowing myself to see that I can work efficiently with less time to make more income. I'm beginning to see that there are really simple, easy ways for me to work less and make more money. So that's just one example. Use the ideas that you have and take those negative ideas and start reframing them into a positive money belief. That's the first thing I want you to do. The second thing that I want you to do is to write a letter to money. This sounds ridiculous. I know, but hear me out on this. You need to heal your relationship with money. I think there is some anxiety that stemmed from when you were a child and when you were growing up. So I want you to pause and think back to some of the very first times and moments when you were a child where you learned about money. Then I literally, I think this is very important that you write this down on a sheet of paper and do this by hand because when you actually put pen to paper, I think it gives you the opportunity to kind of pause and think about those moments and right at the top of your sheet, dear money. I had a couple that I'm coaching currently and I had one of them do this exercise and she was like, dear money, it's nice to meet you. I have not formally introduced myself and I thought that was just so funny because a lot of us are just like confused by our introductions to money. So whether you're 13 and learning about it or maybe 16 and in your, in your first job and making an income for the first time, or maybe it's when you're 25 and you're just getting started out in the real world, whatever comes to mind to you, write a letter to money and figure out exactly what that interaction was. Then you can ask yourself some questions such as what can you learn from this experience after reading your letter out loud? How has your childhood shaped how you interact with money today? And then how can you powerfully reframe what you didn't know back then? This is a constant involvement and I think very few people actually take the time to think about what their relationship was like with money when they were a kid and how that's impacted them later on as a college student, as a young adult, or now as a functioning middle-aged adult with kids. I think these two exercises are really going to help you out and please email me when you've done them and let me know how you go. If you are interested in getting your budget reviewed anonymously on the channel, fill out the Google form below. The more details you give me, the better advice that I can give you. And if you want to take it a step further and you're like, I think I want to talk to Justine and talk about my financial situation with a real honest person who is not going to pass any judgment, check out my coaching program. Check that out so that we can get you back to a feeling of financial confidence and I'll you in the next one.