This Nurse Has $90k of Debt, Spent $400 on Dunkin Coffee

I think the two hard areas for me are coffee and food. Yeah, tell me about your relationship with Dunkin' Donuts. I have a love-hate relationship with Dunkin' Donuts. $373 in just Dunkin' Donuts. That is outrageous. Coffee spending was close to $600 for the month. Daria is a nurse from Chicago who earns about $90,000 per year. She also has about $90,000 in debt and spends close to $400 a month on Dunkin' Donuts. Today, we're breaking down her entire financial life to figure out one thing. How does somebody who's on the path to earning a lot of money not blow things on coffee so she can actually achieve a life she can be proud of? Because the reality is, this isn't just about coffee. She has student loans ranging from 2.7% to close to 8%. She has a car loan with 10% interest. And she's trying to decide if she should pay off all that debt or save for a house. On top of that, she's about to transition into a nurse practitioner role, which may take two years to stabilize financially. In this conversation, we're going to be breaking down her spending, her debt strategy, and the habits that might be holding her back. And by the end, we'll build a plan to help her become debt-free and financially secure. This is Millennial Budget Review. I have a lot of student loans, naturally. I'm getting a master's in nursing. I think I have close to $88,000, somewhere in there. I can't remember the exact number off the top of my head. And then I have $11,000-ish that I owe on my car. I don't have any credit card debt or consumer debt other than my car. Nice, nice. What kind of car do you drive? It is a 2018 Hyundai Kona, and I plan on driving her until her wheels fall off. Yes, I love that. What's the biggest thing that you struggle with right now? I do more spending than I'd like. I'm better than I was. I think the two hard areas for me are coffee and food. Other than that, I don't really spend a lot of money on clothing or anything like that. It's coffee and food. And then the other thing is prioritizing, okay, now that I have a more substantial income that's going to come in, do I prioritize saving for a house? Because that is a goal. But should I pay off my debt first? Should I pay the car off first? Should I hold the student loans that are below the 7% and just long pay those? Or it's just really hard to figure out where do I go from here? What steps do I take to get myself where I want to be? Yeah, yeah. Because it sounds like you are thinking long-term, thinking about planting roots. Since you have this new job, you want to buy a house, but also the student loan debt, the payments are happening when? Are they happening now? June. June will be my first payment. So June is when you start making those payments. And then how does that impact everything else? What kind of money are you taking home with the new position? So there's a lot of question marks, it sounds like. Right, right. Got it. Let's hop into your budget and see what's going on. And hopefully I can guide you in the right direction. All right, let's take a look at your budget. I dumped everything into the super budget template so we can kind of see what's happening in one month view. So we've got the federal student loans at 88K. We put the interest rate at 2.75. I'm assuming there are multiple loans, multiple interest rates. I have over $35,000 that is sitting above a 7.8. I have one that's sitting at 8.8 and one which is about $11,000 or $12,000. And then I have another hefty chunk of like $22,000 sitting at like 7.8. Okay, got it. I didn't factor in the student loan payments yet, but they are coming. Then we've got your car loan. The monthly payment is 470. Yes. At 9.95%. I feel like that's a high interest rate for a car loan. It is very high and I have tried to refinance it and I'm approved for refinancing through several options, but it only took the monthly payment down by like $15 a month. So I wasn't sure if that's worth it or not. Maybe it is. I have good enough credit that that is an option. I have really good credit, but I do feel like I needed a car immediately and I kind of got taken advantage of because I needed it right then. Yeah. Okay. All right. So we planned on a $4,000 income month. You do part-time work with SHIPT, correct? Okay. So we were planning on just under 5K for your monthly take-home, but you actually brought in a little bit more than that because the month that we looked at was a three paycheck month for you. Right. Plus you had actually some other deposits come in for this month and the SHIPT income. So you actually brought in over $8,500 in one month. And then I saw an ATM deposit, but I wasn't quite sure where that came from. I do the cash envelope system. So I will deposit cash back and forth in between my accounts. So it's technically money that is already spent on my credit card. So I deposit it back into the account to then pay my credit card right away. Okay. So would it be fair to just remove that since it's all kind of in a wash? Yes. All right. So I looked at $8,500 all in for this particular month. Your expenses, I think, are actually pretty good. Your rent only represented 17% of your income, which is fantastic. You have really low rent. Where do you live? What major city? I am about 40 minutes outside of Chicago, Illinois. Okay. So yeah, this is really, really good. The biggest thing that I saw in your budget, and you kind of already talked about it, was the food and the coffee. I showed $788 in restaurant spending. Does that sound right to you? It would not shock me. I mean, to hear it compiled like that is like, oh my Lord. But it's not shocking. If I really think about it and go back and like, I mean, a coffee here now is almost $9. So it wouldn't be shocking to see that number. Yeah. Tell me about your relationship with Dunkin' Donuts. I have a love-hate relationship with Dunkin' Donuts. I love this drink that they have there. I've been drinking it. It started as just like a fun treat in high school. And then it just kind of became something that was like my ritual, that I start my day with my Dunkin' coffee. But unfortunately, it's like a $9 drink. And I go through periods where I've done really well of not having it or only, okay, I can have three this week. That'll be my treat, but only three of them this week. That'll be my spending money. But then sometimes I backslide a little bit. But it is definitely something that is on my radar that I need to work on and reduce that. Yeah, I would agree with that. Because if we go down to the daily expense tracker and I clocked everything, check out all of these transactions. This is a whole page. Yeah, that's embarrassing. This is a whole page. And most of your transactions hover around like the $14, $15 mark. So I was thinking maybe it was like coffee and a breakfast item that you were getting. But I mean, we've got $373 in just Dunkin' Donuts spending for the month. All right, we need to pause here for a second. Because $400 a month on Dunkin' Donuts is a lot. She actually spent close to $600 in the month on Starbucks, Dunkin' Donuts, and other coffee outings combined. I know I've spent close to $9 on a single coffee outing. Haven't you? Be honest in the comments. $600 per month is $7,200 per year. And if that habit stays the same for five years, that's $36,000. That's nearly 40% of her student loan debt balance. And this is exactly how everyday spending quietly delays financial progress. It's not that coffee is bad. I drink coffee too. The problem is when small daily purchases go unnoticed and unintentional. Because when you start asking yourself, what else could this money be doing for me? That's when behavior starts to change. Now let's keep digging into the rest of her spending. That is an eye-opener that I guess I'm aware of, right? But also just to see it, that real number, it's like, what could I do with $600? A lot of things. Yeah, that's the question that you should be asking yourself. So you mentioned you do your budget by paper. And you sent really diligent notes on that, that you had everything written down. The reality is though, I think what you're doing is you're transacting digitally with the credit card, and then you are planning manually on paper. And they're actually not matching up so that you are making intentional spending decisions. Enjoying the interview so far? If so, I've got plenty more episodes for you. So hit the thumbs up button and subscribe for more. Really helps out my channel. Plus it's free. Okay, there's something really important happening here that most people miss. She told me that she budgets on paper and uses cash envelopes, but she's actually doing most of her spending on a credit card. This creates a system mismatch. She's planning her spending in one place, but the money is actually moving somewhere else. And when those two systems aren't connected, your budget turns into a guessing game instead of reality. This is incredibly common for people who use credit cards for points. So this strategy can work, but only if you're tracking spending in real time. Otherwise it becomes really easy for spending to drift past the plan without you noticing. And we start to see that in other areas of her budget. I'm curious if you can go back to some of these problem areas, which is absolutely the coffee and the restaurant spending, and figure out what were the positive purchases? And then what were the things that you were doing on autopilot? Like I truly believe there are moments where you're like, yay, I love this coffee. I feel good. It's like I'm starting out my day right. And then I think there are other days where you're just doing it on autopilot because that's part of your routine. And so how can we get you to dial back to see the bigger picture of like, is this truly where I want to be dumping over $1,000 into, or would I rather be dumping over $1,000 into buying my very first home? Right. So that's the question there. You mentioned you had savings in your emergency fund. How much do you have currently? I think it's just over $1,500 right now. I had to use it recently. So it's sitting just a little bit over $1,000 right now. Okay. This is kind of step number one for, or well, it's step number two. Step number one is putting together the budget, which you've done kind of. It's there, like the legs are there, but I think it's just the execution of actually following up with yourself to see what the spending is like week to week. That would be my recommendation, is that you're doing weekly budget check-ins so that you're not getting to this, we've completely blown past $115 restaurant budget and a $65 coffee budget. It's not realistic for you right now. So setting more realistic numbers here. I don't know if you can go from $600 spending to $65 spending per month on coffee. How can we baby step you down and then add in some other strategies to help you with that? So my suggestion was like an espresso machine. That's fun. It's something that you can make at home and still get that fix and feel like you're getting a treat without having to go through like, oh, here I am with the Folgers coffee and my regular coffee pot, like boring. Yes. But you're getting something better. Maybe it's a Keurig machine. Your emergency fund definitely has to be higher because when I'm factoring in, you had this parking tolls and I pass for 225, but I only saw you spent around $43 for this month. I was anticipating, sorry, I was anticipating my new position was going to require $18 of parking per day. However, that is not the position I ended up accepting. So the director of nursing position is not, it doesn't have any parking costs. So that was factoring in that. I'd say maybe I'll spend about 20 bucks a month in tolls, but that's like on a month where I'm driving a lot. But so that will be off of there. Okay. Let's take that off. Okay. For your basic living expenses, I've got about $2,600 per month going towards that. So realistically, I would love for you to at least get that $1,500 emergency fund up to $2,600 would be goal number one. Goal number two would be two months of basic living expenses, and then three months of basic living expenses built up. That's your first step before you tackle the debt, before you go hard on a down payment. And that's where I think the bulk of your money should be going is into a high yield savings account that's addressing your emergency fund. The good news is you already have money there. So if I'm, let me open up my calculator. We're looking at a goal of about $7,000. If you had $7,000 in an emergency fund, how would you feel about that? I feel good about that. I think as like life trajectory increases, if I had like kids in the future, or if I had a house, I would think that number would be uncomfy for me. I'd want it to be higher. But at this stage in my life with no children, no dependents, and no house, that feels comfy. Yeah, and you're already there. So if I just even number 7K minus the $1,500, you've got $5,500 to go. And I think that's totally doable with you with this new position. So your paycheck's gonna be a little bit higher. Are you still interested in doing some like side hustling gig work? That is still the plan. I want to keep doing a shift or some gig work until I find a 1099 nurse practitioner position. That will obviously pay me at a higher rate of pay for per hour technically. So eventually when I can find something to do that, or if I have to kind of pivot and maybe start my own thing with like my psych NP, but that would again be an LLC and a lot of money involved and stuff. So I would need money to start that up. But that is still the plan is to do one of those two things to kind of bring in some extra income as well. Cool, cool. I think you could totally do it because if you stuck to your planned budget, you still had 800 bucks left over. I think you could pull money from that. I think you could definitely decrease some spending here. And then in about five months, five, six months, you'd have that fully funded starter emergency fund in place. And then you're done with that step. And then you would stop saving for the emergency fund and then move on to things like debt and the down payment. And for you, I'd say you could work on those two steps simultaneously, paying down the debt and putting money towards the down payment. And how I would prioritize that is I would make sure like you're, well, you're kind of in an interesting position because the student loans is a long, long play. Your car loan, I think is just gonna pay for itself because here's what I saw. If you did a $500 student loan monthly payment, which is the average of what U.S. households are paying on their student loans right now, plus a 470, even if you added like 100, $130 extra towards that debt, you are car debt free in less than two years. The student loans is going to take a longer period of time unless you add more money to it. So let's see, if I added $1,000 extra payment, then you would be done in less than five years. I think that could totally be doable for you because you are in a career path where the money's there, the salary is gonna increase over time. So I have no doubts that your salary is going to increase in four years, in two years, I know it's gonna increase. Right. My question for you is how badly do you wanna get into a house? I want it pretty badly, but I'm also willing to wait. Ideally, my goal was to have a house before thinking about having a child. However, you know, life doesn't always go how we plan, but that was the intention. So I was hoping to be in a position about a house within the next five years. Yeah, I think that's totally doable for you. I would be thinking about putting that down payment into a high-yield savings account with liquidity and then remembering that your mortgage payment is the floor of what you're going to be paying into a house. There's going to be additional costs that renters just don't have. So if you're thinking about which comes first, baby or a house, like I wouldn't let the house dictate when you wanna have a baby. I certainly didn't. I was a renter when I had my daughter and it was great. I didn't have to worry about any other home repairs or maintenance costs or any kind of adjustments to the budget other than what does it look like bringing home baby and having the additional costs of just having another human being in my life. Right. And that made it actually much, much easier for me to pivot into home ownership because I already had that in place. I was already building my family. Right. Food for thought. I think you could totally do your debt payoff plan and build on the down payment so long as you are kind of prioritizing that debt and then you're also adding a little bit to the down payment. I think because the student loans, depending on how many you have, you could always plug in on like a student loan tracker here and figure out exactly what are those percentages and then figure out which student loan debt am I paying off first. So you could actually use this debt reduction calculator and instead of lumping them all together, we know there's a 7.8% loan. We know there's an 8% one. I'm curious if you added all of those in and then if we chunked away at it and then you always have the option to pause or slow down your extra payments on student loans while you work on maybe building up savings or a sinking fund for a baby or building up savings for a really robust maternity leave. How is all of that sounding? It sounds good. I guess I'm curious your thoughts on would you prioritize the highest interest student loans first and then would you long pay the ones that sit under like the market return? It depends. What's the smallest outstanding balance do you have? It's like a thousand bucks. I have one that's about 1,800 and then I think the chunkiest one is sitting at like 44. And what's the interest rate on that? That one's sitting around five and then I've got about 30,000 between two different loans sitting above a 7.5%. Yeah, I'm motivated by quick wins. So if I could knock out that $1,800 fast and let's say there's like a $3,000 one, I'd be knocking those out right and left because I think that's really gonna motivate you to see like the number of individual student loans that are, like I had 10 of them and that list was very daunting. And so when I was paying them off one by one by allocating my extra payment towards that specific loan, wow, it drastically changed how quickly I paid off the student loans. So that's my recommendation for you is plugging in the rest of those student loans into this debt reduction calculator and then seeing how that changes the total interest paid and then the total years to pay off. Because I think you could pay off a bulk of the student loans so that 88 doesn't feel so scary and overwhelming. But if I've got like 40K, 30K left to go, it feels much more manageable. The good news is you've got 100K salary, you owe altogether 99. When I see a debt almost equal to income level, doable, it's always doable to pay it off DIY. So I think you're on the right path. The big question is like, can we get that spending in order on some of this stuff? And that's where intentionality comes into play. I still want you to have your treats. I still want you to live your life. I also don't want it to derail you from the bigger picture, which is family in a home. Right, yes, absolutely. Cool, how do you feel? I feel good. I feel motivated. I feel ready to make some changes and tackle the things that need to be done. Yeah, yeah. And then get serious about how we can like curb some of the coffee and the restaurant spending. One thing that I love, if you're like I'm pressed for time, I've got a busy work schedule, a Chipotle meal deal, 10 out of 10. It's 50 bucks, you buy it once, all of the food is prepped for you in little containers and then you can just make your own tacos or burrito bowls and it's fantastic. It'll feed you lunch and dinner for the majority of the week. A lot of like fast takeout places like that are now offering these family meal deals and I think that would be a really good test or experiment for you to try. I don't know, how does that sound? Well, it sounds delicious and anything that, you know, allows me to still have a little fun and keep it more mindful, you know. Keep it more mindful, exactly. We didn't address the shopping because the shopping was at $1,600 but we did say that a bulk of your Target spending is on groceries, is that right? Yes, I do pick up a lot of grocery items from Target. Occasionally, I'll do some additional spending on other stuff like toiletries, household stuff but it's usually groceries. I haven't shopped there for clothing or anything like that as of recent. Okay, and then lastly, the Amazon purchases, is that groceries or is that just kind of whatever? A little, I'd say maybe like a third of it is probably whatever or like random things that I see but most of it is my dog's supplements, my supplements and like his food and treats. Okay, so mostly dog-related expenses on Amazon stuff, a few supplements because I saw over $800 in Amazon spending for the month. So that's another area that I'm like, we need to- Yes, I've actually suspended my Amazon so I no longer, my Amazon is on pause because I took it away from myself. Okay. I said, no more. There we go. Anything that we see on Amazon goes on the wait list. It's just like, we got to wait and pause and then really ask ourselves, do I need this right now? And making sure that we're also intentional there because it can run away from us. From what I saw, there were 18 different transactions on Amazon, which meant you were spending like almost every other day is what it averages out to be and I don't want that for you. So Daria admitted to spending over $800 in one month on Amazon purchases but the interesting part wasn't just the total. It was the frequency. She had 18 separate Amazon transactions in her budget. That's basically buying something every other day on Amazon. And this is how convenient spending quietly drains a budget. It's not just one purchase that feels painful. It's all these little purchases that add up quietly over time. I mean, I get it. I'm an Amazon user myself. It's designed to remove the friction, which is great for convenience but not so great for your budget. The good news is she actually recognized this and paused her Amazon account. And honestly, that's a great example of putting a boundary in place when spending gets out of control. That's a lot. So there's some work to be done on the spending and I think if you can rein in on that and really track it diligently every single week, you're going to think twice about the next purchase. Yes. All right, so let's step back and look at the big picture here because Daria actually has a lot of good things going for her financially. She's got a great career. She's approaching a six-figure income and she's thinking about long-term financial goals right now. So the biggest challenge isn't income, it's direction. When you have multiple goals like paying off debt, saving for a house, building up an emergency fund, it can feel like everything needs to be prioritized at the same time. So here's the order that I'd focus on. Step one is building an emergency fund. Right now she has $1,500 saved but her basic living expenses adds up to $2,600 per month. That means the first goal should be hitting at least one month of basic living expenses then building that up to three months of basic living expenses. Once that safety net is in place, I'd focus on paying off the debt. Now her car loan is sitting at 10% interest which is pretty expensive. That's the kind of debt I'd wanna prioritize and knock out quickly. Now the student loans are a little bit more nuanced because she has interest rates hovering between 2.7% and 8%. So what I tell my students is to put all of your individual student loans into a debt reduction calculator. I wanna see outstanding balances, minimum payments and interest rates for each student loan that you have. Then you can make decisions on what to prioritize in terms of which next debt you're going to pay off. At the same time, Daria can be putting money aside for that future house and a down payment. Because Daria's income is strong and likely to grow over time, she actually has the ability to work on multiple financial goals at once so long as her spending stays under control. And that's really the key here. When the spending leaks get cleaned up, that money can actually move and flow towards the financial goals she truly wants. Budget behavior is what really builds financial freedom. And clicking the like button and subscribing if you haven't done so already. Thanks for watching and I'll catch you in the next millennial budget review.