This Mom Wants to Pay Off $60k Debt (And Wants Baby #3)

Between Wells Fargo and Bank of America, we're at $35,000 of debt. How did this happen? It's just been rotating debt that I haven't been able to figure out because I've made so many steps to tightening our budget except with one area that I'm sure you're going to pick on me about. What's that vision when baby number three arrives? Like is this 100% happening? It is. We decided that we wanted one more. I found a $5,000 leak in your checking account Hi, my name is Megan. I'm 40 years old and I'm from South Jersey, and this is Millennial Budget Review. I am so excited to have you on. Let us know, what do you do for work? I work for an insurance company. And your husband works as well, right? Yeah, so he's in IT. And how much is your household income? I believe about $120,000. $120,000? Yeah. Okay. I'm just going to get straight to the point. How much debt do you guys have? It depends on what you look at in total. But so the credit card debt specifically that is always weighing on me, I'd say is probably close to $35,000 just for me. I'd say if you include him, I think we're looking at close to $40,000. Then you have stuff like HVAC loan, we got a new HVAC system. So that's like another, I don't remember where that's at, I think like $16,000 in total. Okay. If I'm doing some mental math, it sounds like we're approaching $60K of debt all in, not including the mortgage, right? You guys have a mortgage? Yeah, we have a mortgage when we lease our car. We will talk about the lease. And what we're going to do today is we are going to build a roadmap to help you get out of this $60,000 of debt. We're also going to talk about some of the family planning that you had mentioned on your application, how that factors in. And then I found a $5,000 leak in your checking account that we are absolutely going to address. Let's talk about the debt. Specifically, I want to talk about the credit card debt. Between Wells Fargo and Bank of America, we're at $35,000 of debt. How did this happen? Honestly, it started with the Wells Fargo, probably when I was 18, 19, 20 years old. So I always tell younger people, do not open cards, do not use them, use them for small things. And then there's certain things, we don't use a ton of them now, but we would only use credit cards now, mainly for travel, because seeing my family who is farther away is very important to us. And sometimes we just don't have the money in our budget and we're not willing to close or to touch our emergency funds for that. It sounds like for the last 20 years, the debt has accumulated because you said you've got the Wells Fargo card when you were 18. So has it just always had a balance? Probably shortly after it was open. Yeah. It's just been rotating debt that I haven't been able to figure out until this year when I finally said, hey, I'm going to tackle this. We're going to fix this. And that's where we're at. What about this year was the moment that you were like, I'm pivoting, I'm going to address this? Oh, we had a baby this past October in 2025. And I said, thank you. And I was like, I'm done. We're done having children. But he took a lot longer to get than our last. And then even though my husband after day one was like, so we're going to have a third, right? So after a while, something happened and I realized that we still wanted one more. So then I did a whole bunch of soul searching and I thought I was like, okay, my age and I was fixated on that for a long time. And I was fixating on finances, and then just like mental load of it all. So I've been slowly tackling everything to the point to make sure that I would be okay and that we would be okay. And that's kind of where this came into play. What does life look like for you? What's that vision when baby number three arrives? Is this 100% happening? It is. So my second was conceived using IVF. And so because we have extra embryos, we decided that we wanted to use one more. And I'll be starting probably within next month. So keep your fingers and toes crossed for us. But we've cut a lot of things, I've negotiated things, I've done so many tactics. But now I'm at the point where I need to figure out how do I actually move the needle and get it down and get this out of the way. When you think about bringing a new baby into this financial environment, how does that feel? I mean, it's a little scary because knowing how long it takes to have a baby and just their stuff and the timeline to get stuff kind of cleaned up, it does get a little scary. But if people always said, hey, I'm not ready, I'm not financially sound enough, or if they just like waited and thought everything was perfect, nobody would ever have children. And does the budget need to accommodate IVF treatments? I mean, where are you at in that process? I'm very lucky. My employer has really good benefits for fertility. The amount that I have to pay for IVF is very minimal. Whether you're done having kids or you want to expand, you need to understand what each option actually means for your finances. Now, if this conversation is hitting close to home, here are three signs that your family needs a money reset. And honestly, no judgment. This stage of life is expensive and exhausting. One, checking your credit card balance makes you nervous. Two, you couldn't tell me what your family spent last month or where it all went. And three, you keep saying that you'll start saving once life calms down. You're busy. I get it. But you can't afford to completely ignore what's happening with your money. Monarch brings your accounts spending and goals all in one place so you can see the full picture. You can set spending limits, savings targets, and check your progress without turning budgeting into another full-time job. Now, the goal isn't to manage your money perfectly. It's to build a simple weekly check-in so you can make major family decisions with real numbers instead of guesswork. This is really good. You can check out Monarch using the link below or scanning the QR code you see on screen. Make sure you use code DFM50 at checkout to get 50% off your first year. Thank you, Monarch, for your partnership and for helping us parents keep our finances straight. Because between paying down debt, snack requests, and shoes they outgrew five minutes ago, somebody has to. I want to show exactly what this budget and breakdown looks like. If baby number three is 100% happening and we still have this debt, we want to make sure that we are set up so that you are welcoming baby without the additional financial stress that additional children can also bring on. It only adds to the chaos, so we want to set you up with a realistic plan. We've got four different loans here, and then we have a car lease for $550. But you had mentioned on your application that two of your credit card debts are in financial hardship. How did you do that? How did you make that decision, and what are the terms? So I will say when it sounds like they're called financial hardship, that's what the companies call it, but it's not anything super negative. I just called them probably after seeing one of your videos. I reached out and I just said, hey, I'm really trying to pay off my debt. I'm really uncomfortable financially. What can we do? And this is what they both offered me with Bank of America. Their option was to close it and pay it off over for a fixed period. I think it's a 4% interest rate fixed payment amount, and so it was a lower payment than what it was when it was open. And then Wells Fargo offered me something that I like, I guess a little bit better, because that is a 1% interest rate freeze for a where I can't use the card for a year. The idea is to try to pay off whatever I can and kind of take advantage of that. And then at the end of one year, then it goes back into my previous interest rate, which I think was around 8% or 9%. And then I could use the card again if I wanted to, but I won't. I mean, even 8% or 9% on a credit card is actually really amazing. Most people are upwards of 20%, 25%, 29%. Yeah, I've had it for a very long time, and I don't know how it gets to be that good, but it's been like that forever. Okay. And then Bank of America is closed. And then is there a set, did you say there's a set number of months that you have to pay it off? It's five years, so it'd be 60 payments. So it breaks down, I think, I believe it's 291 a month. So the idea is just to have it paid off within five years. Obviously, I can pay it off sooner, just whatever, but that's just kind of like the terms. All right. And then Citibank is your highest interest rate card. It's sitting at 16.5%, but it actually has the lowest balance. And it looks like this particular month, you paid a little bit extra. Is this the one that you're trying to attack first? Yeah, we'd like to get rid of that one first, just with the snowball method in mind. And of course, it kind of works out with the interest rates as well. We did already pay off one of our very small accounts that had, I think about $1,000 on it. And we did get that emotional win. So that felt really good. Amazing. Tell me about the HVAC loan. It seems like maybe your HVAC system went out and had to buy a replacement. We had it checked for annual inspection. And they said that it was completely rusted through. And if it continued, it was also leaking. If it continues to leak, then we'd be looking at a carbon monoxide situation. And me having babies, I'm like, absolutely no way. So we got that replaced. And we're like, we'll deal with it later. HVAC systems are one of those things, as a homeowner, you have to factor in as part of your home ownership maintenance and costs that come with it. The car lease, how long is your lease for? Three years. Okay. So did you just start this? Yeah, we got it past November. What prompted the car lease instead of just buying a car outright? We had previously leased another vehicle. And we were kind of like, I don't know, cars are really awkward these days. They're just really expensive. So we did a lot of back and forth and we decided to just purchase the car that we had. Probably about six months later, we were getting that car. We were dropping it off for maintenance. And then we sold the newer model and we got prices on those. And I was like, okay, well, this is what we're paying to own it. And at the end of our loan to own it, we'll have an eight-year-old vehicle and we wouldn't have paid this much off. Or we could lease for this amount and then three years later, figure something else out. We just felt like it wasn't really worth it. So we just decided to lease so we weren't stuck with anything and then just kind of figure it out in a couple of years. Okay. We'll definitely talk about that because I know this was something that you had talked about in your application because every parent knows when you are adding a third baby specifically, that a car purchase is absolutely factored into the equation because most standard sedans and SUVs comfortably fit a family of four. When you bump it to a family of five, all of a sudden we're looking at cars with third row seats or vans that can accommodate more children. That's just the name of it. So we'll absolutely address that. And I want to take a look at how your budget is rolling out because on top of we've got, I included the car lease up here as a debt because you have to pay that back. We've got minimum of $1,400 total in a monthly payment and you actually paid just about a hundred bucks extra on Citibank. The total take-home pay for you guys actually was for this particular month was around $8,800. I was guesstimating about $8,750 for take-home pay. Does that sound right? Yep. So your debt payment representation is about 16% of your take-home pay and ideally that debt to income ratio should be 30% or less. So that's the good news is the payments you guys can actually manage. But here's where things get interesting for me. It's not so much your fixed expenses because that actually looks really good. Your mortgage payment is quite low compared to what you are bringing in. So it represents about 21% of your take-home pay. Amazing. Your utilities looked fine. Groceries was fine. Then we got to the fun. We spent $1,000 in restaurants, $900 in shopping, and then I found about $400 per month in Dunkin Donuts transactions. How jacked up on caffeine are you? I mean, I have a 10-month-old baby. I love caffeine. We go there like once a day. This was $400 a month and this is the $5,000 leak that I was talking about. This adds up to $4,800 in the year. That's nearly $5,000. That's literally your baby fund. Yep. My caffeine baby. Your caffeine baby. Okay. Let's figure out what is going to be the shift and the adjustment that we can make so that this is not taking over the baby fund, right? I mean, I'm picking on coffee and Dunkin, but honestly, restaurants too. If I scroll down here, $1,000 on restaurants and no wonder your grocery budget is so low is because you're doing DoorDash, you're picking up quick casual food and bringing it home. Walk me through that. Is it because you've got a baby and you're just feeling like, I can't put dinner on the table, I'm just going to grab something? Honestly, I don't know because I know a lot of the times I do cook at home, I do go through phases where I will be, if I haven't gone grocery shopping, I do rely on purchasing food out. We do go to restaurants on certain nights of the week, but yeah, we're not like a eat out very infrequently. We will go out at least once a week as a family. I mean, your checking account statement says otherwise. We're going twice a day, sometimes three times a day. This is just eating up your budget. I know you had done some shopping. I included Venmo payments as part of shopping because I didn't know what that was. Target, you did a lot of Target purchases. I think these were kind of back to school things or things for the kids. Yeah, I do grocery shop at Target and then I also get clothes for the kids. I do most of my grocery shopping at Target, Walmart, and then intermittently like Acme and Sam's Club. Okay, so here's what I want you to do. It's going to be like your homework assignment. I'm going to check in with you in the next two days. I want you to go through specifically restaurants and Dunkin' Donuts. Just off to the side here, I'm going to share this spreadsheet with you. Just off to the side here, let me know if this is either positive, negative, or neutral. How do you feel about this purchase? When we're looking at this Knopf Grill, did we feel really good about that purchase? Did we feel good about McDonald's or was that neutral because that's just part of our habit and what we do? Or are you like, God, dang it. I did McDonald's again. Now I'm going to feel negative about that. That's all I want you to do just so that we can see where you're feeling really excited, happy about those purchases and those experiences and where you're feeling like, I just fell into the habit again. I want to replace that negative habit with something that's actually going to propel me further because what we're trying to do here is find the spending leaks so that we can take care of the 60K of credit card debt. Now we know that there's a time pressure in place for some of these debts because that Wells Fargo with 1% interest, that's going to go away. And we want to be intentional about how we're paying off these debts and do it in a matter of speed. And if I can get you to dial in on some of the spending, let's say we're just going to reduce restaurants by half. I'm still going to let you have restaurants, but now we're freeing up some money. I'm going to reduce shopping by half. I'm going to reduce coffee to a hundred dollars because now I'm going to invest in a nice Nespresso machine. You get at home, gourmet coffee. It just takes intentionality. Go to Marshall's, pick up the Tehrani syrups, get your favorite creamer. Boom. You can still have coffee. We're just not going to let it derail what we can do to prepare ourselves for the expansion of our family. When I do that, I freed up $1,700 in your budget to put towards what actually matters. So here's kind of the step-by-step plan in your order of priority, because your emergency savings has about $3,000 in it. And then you had an everyday savings account of a thousand bucks. You had 4K all in. And what I found from your budget is that one month of expenses is $3,500. And a starter emergency fund would be equal to two to three months of basic living expenses. I factored in about a 10K goal for you. And so right now you need about seven or $6,000 if we're adding in that 1000 from the everyday savings. If you could set aside $2,000 a month, and I know you can do it because we've already freed up $1,700 from your budget. I just need to go find $300 more. Summer camp is going to go away, right? Yes. Thankfully. Thankfully. So I've got $2,000 going to the emergency fund. I also have a padding of about $250 that you could still add to the fun stuff. But again, I'm allowing some spending here because you still have to live your life. And you're going to hit that goal in three months. I want you sprinting to your starter emergency fund because that's really going to just protect your house in case an unexpected emergency were to arise. And then we can pivot into this discussion about saving for baby number three. We got to determine what's needed. Do you need a refresh of baby supplies? Do you need to replace your income while you're on maternity leave? No. I think also New Jersey is a really good state too. My husband will get paid parental through the state, and then I can get paid parental through the state at my job. Since we have a 10-month-old, we don't need anything. And with my current baby who's still on formula, I actually got most of his formula from doctor's offices, from buy-nothing groups, everybody taking advantage of those free. And we have a ton of clothes. So we're pretty much all set. The only real expense is just coming into the world and diapers. Diapers. Yep. So we can add that. So treatments, medications, you said your employer plan is really robust. So you have a small out-of-pocket, it sounds like. Yeah. So this really, to me, what would you say as an estimate? A thousand bucks? If it's similar to what I did the first time around, I would say probably about $2,000 in total. And again, it's hard because my first time around, I also did egg retrievals. So it might be less because this would just be a transfer. So I don't know exactly. So I'd say worst case scenario, $2,000. Best case, $1,000. Well, that's amazing news because you'll have your emergency fund of about 10K. And then the very next month, set aside an additional 2K and you'll hit that goal. So four months of really working this plan and you've already got two big things knocked out. The next portion of your step-by-step plan is to actually work the debt payoff plan. But before we do that, I want to make sure, because I had this as step 2C of saving for a new car. So the options I came up with for you was one, you keep leasing and you kind of keep doing the three-year pattern of upgrading your car. I don't like car leases because they lock you into that term. And then at the end of the term, you don't get to keep it. You have to send it back. Some people like that, but I feel that this is kind of a luxury for people who have a lot of discretionary income to kind of test out luxury vehicles and then move on to the next. For you, because you have, well, you're going to have three kids, finding a used vehicle with a monthly payment that's less than $550 would be ideal. But I'm going to leave it up to you. And I said current savings for that new car is zero. Is that right? Yes. What have you guys talked about in terms of options? So we currently drive an Explorer, which is a third row vehicle. We talked about the third row. Yeah. We've had an Explorer since our first was born. And we do know that either something like that or a minivan would be the only feasible option for us. But we also know that the current car that we're leasing would not be something that we would buy out because it does not have captain's chairs. And that makes accessing a third row very difficult. Yes. Yes. What we could do instead of pivoting to aggressively paying off the debt, we could just after baby fund is set aside, the starter emergency fund is set aside, you could just start stockpiling thousands of dollars until you have a hefty down payment on a minivan. I think something like nine, 10K would be amazing. You could hit that in a couple of months and then look at how that would factor in that monthly payment because minivans are expensive. I would want you to look into those options and be proactive about it and not wait until the last three, four months of your car lease and say, all right, what are we going to do? Because you won't have enough time to build up the savings. Remind me again, your lease is up in three years? Yes. So it should be 2028. Okay. Access to that third row seat would be difficult by the time baby three would come around. So you're really trying to do this before baby arrives? No, definitely not. So we would keep the lease. It's fine. Our oldest is in a booster currently and we can get around to the third row. It's just not as easy. Okay. So then I think we're going to stick with what I've got outlined here, but I want to show you exactly how you're going to be able to pay off this debt in a very short amount of time. I'm going to pull up your debt payoff plan here. I've added in all of your debts and then I totaled up exactly how much that was. That's 846 total. So obviously took out the car lease of the $550. And because I found so much extra money in your budget, if we were to temporarily reduce some of those spending factors, you could actually put an extra $1,500 towards your debt, still have money left over to do the fun things. And here's where I got really excited for you, because if we're attacking the credit card that has the highest interest, which is Citibank, you've got that paid off in three months. One year later, HVAC is completely paid for. And then all of that cool air, that bought air is completely yours. It is really cool in here. And it'd be nice to actually own the equipment. So that's done in a year. Bank of America is done in a year and a half and the Wells Fargo card would be done in two years. However, because I now know that the 1% interest rate actually kicks back up to 9% after 12 months, we may want to prioritize putting the Wells Fargo card ahead of Citibank because it's got the higher balance. And when we've got the interest rate on a higher balance, that interest charge likely is going to be more than what you're currently being charged on $4,700 with Citi. We can pivot to that in 12 months when it kicks back in and then say, all right, or we can go ahead and pivot to that now. So let me do a custom order here. We did one, two. Okay. Wells Fargo would take a year to pay off if we do it first, which is actually ideal because then you would avoid the 8% or 9% interest that comes back into play in a year, it'd be done. And then Citi is done just two months later after that. Next year would be insane for you. If I knew I was getting rid of two big cards within two months of each other, that's money. And then we pivot into the HVAC loan and your Bank of America card. And you're done in two years' time. That's crazy. That's why I think- It feels very overwhelming. What about that feels overwhelming? Like what's coming up for you? I don't know. I know that we spend money obviously on my Duncan habit, but I don't know. I always feel so financially uncomfortable. We can't afford certain things and not always having money as it flows as you get taxes, bonuses, et cetera. Certain times of the year, daycare just feels so overwhelming and just all the bills and all the items that aren't fixed. Our utilities, different times of the year, it's just crazy. I would never believe that in two years I could be debt free. And I think what I'm hearing too is you're kind of looking at it as a black and white, all or nothing. It's going to be this way. We're always just going to struggle because something else is going to pop up. I really encourage you to try to live in the gray because everything that we're doing right now is temporary. The way that we're spending money is temporary. The debt journey, temporary. I'm talking about 24 months of intentionality so that you can get back to why you're doing this. This is all so that you can bring in this new baby into the world. And I think you also had mentioned a dream vacation. Where do you want to go? I promised my five-year-old that I would take her to Disney. That's kind of what our goal is. I want you to hold on to that. That's why we are doing what we're doing and taking a hard look at our spending habits right now so that we can get back to the deeper purpose. How does the plan feel now, now seeing that you can actually pull this thing off in two years' time? I'm very optimistic and I honestly can't wait to show my husband. He's always won. He never criticizes my coffee habit because he loves it too. But I think we just got to find something that we like that's cheaper that we can do at home. We're even talking about only taking a fraction of your coffee budget and buying a ready-made Nespresso machine or a Keurig machine that has that really good concentrated coffee or even doing concentrated coffee brews that you can buy from the grocery store and just doing some experiments. Dude, I would absolutely be putting money into that because then you can experiment with it and see what you guys like. Look up some TikToks and some Reels and take a look at different recipes. Kyle and I love doing that because we love being able to have those treats, still feel like we are enjoying those little luxuries without throwing so much money out the window on convenience. If you added that $1,500 per month towards the debt, you become debt-free in two years and you can take your daughter to Disney literally the next month. That's crazy. That would be amazing. And then we talked about the dream vacation, so Disney for sure. How are you feeling about this? Does this feel like I'm in? Yeah. I mean, I'm excited to get going and figure out. Honestly, the biggest thing is figure out my coffee. Everything else I can give up, but my coffee, it's just a love affair. I love coffee so much. So I just figure that out, but everything else feels extremely doable, especially after seeing what can be because financial stress is a real thing. Now you have a step-by-step plan that's going to help you get out of stress mode and into action mode. So I'm going to check in with you in a couple of days and see how you did on the restaurant spending audit and the coffee spending audit. Again, just doing a little positive, negative, or neutral sign next to each transaction. You're going to have to take yourself back to that day in time and say, okay, what was I doing? And then I would love to hear from the community in the comments, what they're doing to perfect their at-home espresso. If you could give us some recipes or some machines that you really, really love, we want to know because we want to help Megan just combat her addiction to Dunkin' and maybe supplement it with something that's actually going to work in her favor financially. Good morning, all my almost debt-free millennial friends. My name is Megan and I did my budget review with Justine earlier this week. And I went back and I did a review of all my coffee habits and my restaurants. I still don't feel bad about my coffee habit and all my Dunkin' spending. Can it be a little excessive? Sure, absolutely. But is this coffee delicious? Absolutely. But I still love Dunkin'. But my restaurant habits, like I don't really have so many negative feelings that I do about the whole spending of certain things. I did put negative on some items just because some of them can be a little more expensive. Some of them I wish that were like the quick grab and go for my children that I wish didn't have to be. But yeah, overall, I am going to cut back tremendously, save money in my Dunkin' but still allow myself to have it. And same thing with restaurants. Honestly, I enjoy cooking at home more, but sometimes I'm just out and I'm starving. So I'm just going to try to carry more snacks with me. That's going to be my thing. But I do feel negative about some of those items, like mainly the quick grab and gos. And then the really expensive items where I know that we've spent it paying for other people too. But other than that, yeah, we'll see how this goes. It's going to be great. Megan is finally taking control of her $400 Dunkin' habit. But if you thought $400 was crazy, I did a budget review with somebody who spent $600 a month on coffee. It was literally eating her budget alive. Click right here to see the spreadsheet.