This Project Manager Has $95k Debt, Spent $1,600 on Crafts

I have had a couple of rounds of letting my credit cards run away from me. For this particular month, you had an overdraft. You have multiple buy now, pay later payments. How did we get here? You're going to get me emotional here, Justine. You make pretty good money as a senior director. Yeah. What's your, what's your income? Right now it is, I want to say just under $170,000 a year. Okay. There's also this debt situation on the backend. And when you shared your numbers with me, there was over $95,000 of debt, not including the mortgage and about $500 in savings. How did we get here? Starting in 2020, I have had a couple of... rounds of letting my credit cards run away from me. And it was a lot of emotional spending. And so there's the credit card piece of it that you'll see. There is also a loan that was a consolidation loan for other credit card debt. And so that is, I think the Canvas loan or something like that. I have three pets, two of them are getting older. And there are a couple times a year, some big vet bills that I don't have savings for and haven't planned for. And there's Car stuff. I've had my car for 16 years and it started to have some really big expensive mechanical issues. And so it was time to move on from that. I had hoped to put off. Getting a new car until I had paid off my debt and had saved up for it. And that is just not what happened. Other debts. I own my condo and I got all the windows redone a couple of years ago. Again, didn't have money saved for that and have that on a payment plan. I think there's a handful of the 0% spread out payments over like a year kind of things that I've done. Those are some of those remnants of shopping to like soothe something. It sounded like this happened right Right around the pandemic. Yes. I mean, shoot. So many of us were just like, we couldn't go anywhere. So what do you do? You online shop, you get everything delivered. What were some of the key stressors that really were like prompting you to scroll your phone? You'd start the Amazon links and add to cart. What were some of those key stressors? You're going to get me emotional here, Justine. I, um, my parents got divorced in the early 2020s. Um, that was something I never ever thought that would happen. And I feel like as a grown adult in my thirties that, that, um, That took a big toll, really tough relationship with my dad during that time, still tough. Amazon was such a fun, like click and it's here tomorrow. And wow, does it feel good to have like a random thing that can distract me for a day. Quick, quick dopamine hits, you know, when you can click buy now, it's here on our doorstep the very next day. And Done. And it's, it's so fleeting, right? Like you get that thing. And then a week or two later, you're like onto the next thing. What am I scrolling? What am I getting next? I am not fully out of that. I am. thankfully in a much better place than I had been for the previous five-ish years. I feel like without a better game plan of where my money is going, I am in this constant cycle of like doing well, doing well, doing well. And I think when we get to the spending that I sent you, you will see like that was a wild month for spending on like my hobbies. That's where I am. It's a constant up and down. When you're looking at your financial life right now, where do you feel like You have the most frustration. I have the most frustration about those cycles. And when I have big vet bills coming up, I am never ready for that when it comes up. And it feels so frustrating because I know that I am so fortunate to have the income that I have and not being a good steward, I feel like of the opportunities I have. I feel right now guilt every time I spend money. on something that is not absolutely necessary. Like if it is not groceries, if it is not bills, if it is not like essentials for hygiene or keeping my home clean, I feel it's always like, Oh, I shouldn't have done that no matter the amount. And I think it's hard because I feel that way. If the amount is $30, I feel that way. If the amount is $300 that it is, it is all the same of like, Oh, you shouldn't do that. Oh, okay. Okay. Yeah. Uh, we, we definitely want to get you out of this habit of punishing yourself for spending intentionally on the things that bring you joy, bring you value. You're located in Denver, yeah? Yeah. So I was thinking, okay, Denver, financial summit. You're climbing your own mountain. We've got to start at level one, which is base camp, right? So where you're at in base camp is inside of your budget. So I want to hop over to that and show you what that looks like. All right. So for this particular month that I audited, it looks like you were bringing in around 7,900, just shy of 8K and take home. This particular month I saw it was closer to seven. I don't know if that was just like a paycheck. Do you get paid every other week? I get paid every other week. Yeah. Okay. So maybe this was just a different paycheck month. Going over to your debts, I wanted to clarify, you do pay some of your credit cards in full. You did say earlier, you're like kind of a month behind. Is that on the Chase credit card? That's on Chase. Target is fully... Every single dollar that goes to Target is fully budgeted for. It's generally body care, household. Yeah. Okay. So Chase is the one that is kind of lagging right now? Yes. Okay. Do you know what the balance is on that? Chase is about 5,000 right now. Okay. So we've got 5K on Chase. Your car is paid out, right? Right. So this is the new car. I ended up doing a lease because it was Less expensive right now. Also knowing it is not the best financial decision long-term. So it is a car lease at that amount monthly right now. Okay. And the lease is 36 months or how long? Yes, 36 months. Okay. And you just started it? Yep. What'd you end up getting? A Subaru Forester. Oh, that's what I drive. I love it so much. Very Coloradan of you. Very, right? Get your plaid on and head to Whole Foods and you are set. Okay. So we've got the car lease. We've got your Windows loan that you mentioned at 10.99% interest. Aside from the Chase credit card, that is your highest interest rate and your highest balance aside from the federal student loans. So we've got that going. The Bank of America It's not, it's actually not a credit card. It's a, oh yes, it is. It's a zero percent balance transfer. Yeah. And that ends in November. That ends next month. Yeah. Okay. And we've got $17,405 on the zero percent interest card. Yeah. Okay. So that's something we will address next. And then it looks like you bought a couple of things using some of these buy now, pay later. programs. I think there was like a mattress, a camera on Apple. It was a new MacBook. My MacBook had died and I got another one and was not financially prepared for it. Everything that you are describing, these are normal purchases, right? Like a new computer, a new mattress. These are all normal purchases that every person goes through. It's the timing of it. And then it's also planning around some of those purchases that we can start to bake in for you so that you don't have to get into these buy now, pay later programs. A lot of these buy now, pay later programs, they all want to pull out of your account at once. Hold on, Sarah. Um, excuse me, are you hacking the Pentagon? I'm in the middle of a budget review. Oh, I couldn't listen anymore. Sarah evaluates programs for a living and she's letting high interest credit cards run unsupervised while she's had a stressful week at work. Okay. First of all, lower your voice. And second of all, what are you even doing? Oh, I'm setting up her guardrails in Wealth Architect. So a budget gives you a plan, but when you're a compulsive spender coming off a no buy binge, you need an AI co-pilot monitoring your spending in real time so that add to cart doesn't turn into add to my insanity. Instead of forcing you to manually categorize every coffee or airline ticket, Wealth Architect uses AI to monitor your spending. Okay, wait, wait, wait, wait, wait. So when somebody comes off a 30-day no-buy challenge and starts impulse swiping on Amazon, the AI catches the pattern shift. You can even text it to prevent the next impulse crash out. Okay, that actually changes the psychology a little bit. You stop staring at past guilt and actually start watching your net worth grow in real time. Try Wealth Architect for free now and then use code DFM at checkout to get 50% off your first three months. Okay, now please put the coffee down and mute your keyboard so I can show Sarah how to get past level three of the financial summit. Yes, proceed. I think I saw for this particular month, you had an overdraft occurrence. Is that right? I didn't realize that. And I feel icky that I didn't realize that. I know fairly regularly the savings account has to jump in for the debit card overdrafting. I don't hold my savings account sacred in a way I probably should. I love that word sacred with your savings account. Absolutely. And anytime that I'm looking at a checking account balance, I want to make sure that I have at least one month of expenses as a cushion, as a buffer inside of your checking account so that when this stuff happens, your checking account can now absorb some of those fluctuations when the bills are being paid. in between when you're receiving those paychecks. That's a goal that I want you to work towards. And I think when you had sent over your account statements, I think your checking account balance kind of hovers between like this. $1,500 to $2,500. And then we had that moment where it actually dipped below zero. So to me, that tells me the checking account balance really needs to be above the $2,000 threshold. When I budget for the month ahead, or when I look at my budget, I lump all of that together as the money that I have. I'm likely getting into a situation where I am saying, well, I have the money, just not in the checking account where it's getting pulled from. Let's go down and take a look at just some of your fixed expenses that you have here. You have about $1,350 for the mortgage. Yep. Your utilities looked pretty good. I think the $130 a month is actually a bundle of your... Car and condo insurance. Yes. Yep. Yep. That's right. So actually all of these look pretty low. So, um, Groceries from the raw budget that you sent over to me, you had budgeted around $375. This particular month, I saw $415. A $40 difference really is not that big of a deal to me. It's like, okay, yeah, you're pretty much within range. Health and therapy is about $360. I did notice that you have. an HSA account. I do. Yeah. Are you using your HSA to pay for therapy? It does not have a high enough balance to pay for therapy. And so I use it for most of my health expenses, but not therapy. The account statement that you sent me was showing a balance of over $5,000 in your HSA. Is that not right? A big chunk of that money is in an investment. And so I, several years ago, my HSA balance I was maintaining it at a much higher level. And so I think it was when I was above 3,000 or above 2,500, it would automatically transfer the excess into this investing account. I haven't contributed additional to that account in several years. So it's available. I could transfer it back into the HSA, but the 360 a month, I believe, is a little bit more than what is being contributed to my HSA every month. Ideally, I would want your HSA. balance the working cash that you can use to cover your deductible, your annual deductible. Anything additional outside of that can get invested. There is absolutely no shame. This is a thing like finance bros on YouTube are going to be like, don't pay anything with your HSA, pay for it out of a pocket and invest the money into the S&P 500, which is great and a perfectly Great advantage to you. using an HSA. However, real life actually happens and we get sick. We need to see our providers and we get to utilize this account as it was intended. And so I would love for you to pay for your therapy with your pre-tax HSA money. And then you can invest the rest after you've grown that account balance to your deductible because then you're covered. Then at least you know you're Is there a consideration with that, that my therapy is not And so it would be outside of the deductible because it's not in network. It would count against your out of network deductible, which is much, much higher. But it would still count. You can still use your HSA funds to pay for therapy providers that don't accept insurance. Just verifies like, hey, do you accept HSAs? They should. It's a debit card, right? Like it's a bank account. So they should. So you could just verify that with them. And I think that would be a way just to kind of alleviate what's happening in the budget. Yeah. Something to take a look at. Just that makes me so excited. I'm literally, I brought out a notebook and I'm writing it down. Amazing. Your pet spending is on the higher end. And it makes sense now knowing that you have. Three pets and two of them are senior. And I think a lot of people, when they get dogs or cats, they're like, yeah, it's only going to be maybe like a hundred bucks for food and maybe a toy here and there. Not realizing as your pets age, yeah, it just ends up, there ends up being a lot of health problems. So we want to make sure that you have a pet sinking fund set aside for. Any kind of vet bills, upcoming surgeries? Trees. scans, that sort of thing. So I would love for you to take an audit of the last three months of pet spending and really figure out what was just fun, cute stuff that you bought, what was maintenance stuff like food, their annual vaccinations, whatever. And then what was kind of the extra stuff where it's like, my dog has a heart murmur. That's extra. Now we're going We're going to need to get on medication for that. Okay. Let me figure out how much that is and start kind of building up this pet emergency fund, so to speak. We won't know that amount until we've taken an audit. And then once we know kind of an average of what you're spending there, then we can start putting that away into a high-yield savings account. I really like that approach. And that is the category of the kind of those necessary funds, the funds, the necessary spending that always seems to balloon. out of control without being ready for it. So I really like the audit idea. Listen, our pets are our families. And I can tell for you, this is part of your values. You are willing to spend money in this area because they mean so much to you. And I love that. That's totally normal and totally okay. Now let's just make sure that they are baked into this because we need to provide for them. HOA is a... 800 bucks a month high, but not shocking for a condo in Denver. So that's your fixed expenses here. And we're looking at close to $4,000 all in on your basic living expenses. You had mentioned the savings account is only 500 bucks. One month of basic living expenses for you is about 4K. And ideally, what I would love to see is a starter emergency fund that's equal to two to three months of basic living expenses. So for you, that's between $8,000 and $12,000. So you could really just call it a solid $10,000 would be amazing for you to have in your emergency fund so that. We can plan for if something happens to the pets, something happens to you. We've got our bases covered. We can still take care of all the fixed expenses. That sounds great. I've struggled to know what the amount should be. And 10K feels great to me. That would feel really good to have that. And this is what I would consider level two of you getting up this financial summit is like, if we can really get you using the HSA for your health related things, now I've freed up $360 that we can put towards that. So that's gone. Yeah, I love that. But you know, I wasn't going to not talk about the fun spending because that is something that you've been working hard on. And this is, I think, the part of your budget that you've been yo-yoing on. Yes. This particular month, I saw about $1,600 in shopping and then almost $500 in subscriptions. Yeah. So I went down and I categorized everything that I saw from your, your accounts. I see, I think you love books. I think you love knitting or sewing. Um, there were some Amazon things in here. So talk to me about like, what was going on back then where you were kind of just spending? Because it was happening pretty much every other day. Yeah. It was. I love creative crafty things. I think I probably went six months before this of no spending in crafts and creative stuff. And it was seeing like new, new interesting designs for knitting stuff and wanting to buy patterns and to buy the wool to make the pattern after kind of going cold I pulled turkey on that. It was multiple things. It sounds like. What happened was you starved yourself for six months of something of a hobby, of an activity that you really, really enjoy. And then you were just like. I'm done and I'm, I'm, I'm going for it. And I want to get all these things that I've been thinking about. And it's like another way that we could approach this is if a creative outlet is really part of who you are, why not just allow ourselves to spend on that every single month, but give ourselves a realistic boundary around it so that when you do see something, You can give yourself permission to say yes to that item without feeling guilty about it because we've already added it into the budget. Let's do a knitting line item here and we can add 50 bucks a month. And let's say you don't even spend $50 on knitting for the next month. It just rolls over. And now we've got a hundred dollars to work with the next month. And then you buy something for $25 and now you have $75 remaining. And then that rolls over for next month. Another thing that I think would be helpful for you to try as an experiment is creating a want wait list. So on your notes app, on your phone, you're just going to create a want wait list. When you see something in the moment, you're like, ooh, I love that pattern or I love that type of wool. We're going to put it on the want wait list and then it goes into the want wait list for at least 48 hours. And then you can come back to that want wait list and then see, okay, oh. Yeah, that was cool, but I'm not feeling like 100% on it. So I'll think about it later. I'll keep it on the want wait list, maybe to give people Christmas ideas, but I'm not going to buy it. This has saved me so many times. I had followed an influencer who was giving all these recommendations for fancy face masks and moisturizers. I'm like, ooh, yes, yes, yes. Put it on the want waitlist because it was really pricey. It has been on the want waitlist for like five months. I went back to it and I was like, I actually really don't want this. I don't even know what it is. So delete. I really like that. And as we're talking about this balance of buying versus contentment, this would be a really good place to kind of look at how you felt about each of these experiences. So. Literally go through and don't think too much about this, but put a little positive, negative, or neutral sign next to each one of these things. I just want to get a sense of, ooh, I remember I bought that book and I started reading it and I got all these insights, really loved it, positive. Or like, I haven't even cracked that one open. That is still just sitting there, feeling kind of neutral about it. That way, Whatever negative and neutral ones that make the list, they get cut. So that's not the type of shopping that we're going to focus on. Any of the positive ones on here, maybe some really cool stationary things that you got and you've been getting a lot of use out of it. That is the type of purchases I do want you focused on. That's reflective of your values. That's reflective of cultivating who you are and not cluttering your budget or your life with things that you just bought because you were stressed or lonely or just feeling like you needed a thing in the moment. That's the next action item for you is to do a positive, negative, neutral contentment exercise with the shopping category specifically, because that one definitely got the bulk of your paycheck for this particular month. I want to touch really quickly on your subscriptions because that was so high, $465. I clocked, I think maybe there was some one-time fees here. Yes. Looks like there was like a boost Kroger, maybe like a grocery delivery service. Yep. That is a once a year thing. Yep. A lot of fitness stuff, which you had kind of told us about. Yep. Are you still going to Genesis? Yes. Yep. Okay. And finding value in it? I am. Yeah. That is my gym. Evolve Stronger is essentially the training plan that I subscribe to every month with my trainer. I am not certain what the Apple line is. There's so many things that happen within your accounts. It flies fast. So if you're unsure of where $115 is... We need to go hunt it down and find it. So that would just be one that I would take a look at and take a look at on your phone what all subscriptions are on auto renewals right now and make sure we are keeping the ones we actually use and canceling the ones that we're not really using on a regular basis. So subscriptions, that's one. And then the shopping, if you can dial in, those two things with the action items that we put together today. I think you're going to see a huge improvement in having a net positive amount at the end of the month. It looked like you were putting money, transferring money into your savings, but then it would get pulled back out and we kind of did this back forth, back forth. I'm like, what is it? Are we keeping the savings Yeah. It was a little whiplash looking at all of those transfers back and forth. We need to make sure that your emergency fund is truly for the emergencies. So again, I think if you can work on, before you really go headstrong on building up your emergency fund, if you can focus on just keeping cash inside of your checking account as a buffer, I think that's really going to be helpful for you. The thing is though, is you can't look at that balance and say, oh, I have extra money to spend on a new book this month or going camping, whatever. You have to look at that $2,000 checking account balance as zero. If we're going beneath the 2K, fire alarms should be sounding off. Rename your checking account balance like never less than 2K. Yeah. Instead of the account number, I would love for you to do it for your checking account so that you have that gentle reminder every single time you're logging on, like never less than 2K. Okay. That's really helpful. All that said, we had a negative, we had a negative balance here for this month. And again, I may be missing one of your paychecks here, but you were under a couple hundred bucks if it truly is a $7,900 income month. But what I would love to see is some of this stuff like... The one month ahead, you had a savings transfer for irregular expenses. Is this actually happening? I am not certain what that is, to be totally honest. Let's just remove. I just want to see where we're at now. We're at a positive of $400. If this subscription number can be reduced, because I know, like, let's say we get rid of this stuff, this stuff. This stuff. Okay. So we have your gym membership is taking up the bulk of this. Yep. Actually, these two pieces, that's like 200 bucks. And then everything else is kind of like small. Yeah. And some of those have been canceled. Even though they're small, I wasn't getting a lot of value from them. And so. Perfect. Perfect. Okay. So if I called it $200 on your subscription services, now I've got more money to play with here. And this number may change based on how much we need to be putting here. I'm specifically looking at the shopping because there's no way we can go from $1,600 to $150. That would be a huge Jump for you. What I don't want you to do is go through this like, I'm not going to shop for six months, and then we start the cycle all over again. I want to include money here. I don't know what it is. If we can baby step this down from like $1,600 to $1,000, and then the next month, try to just baby step yourself down. We're still giving you permission to spend. But what I want to do is I want to free up as much money as I can out of your budget. So that I can put more money towards your $2,000 checking account balance. That's the first step. Second step then would be putting money towards your emergency fund. Once we've hit 8K minimum would be a number I'd be okay with if you wanted to switch over to your debt payoff plan. And the debt payoff plan is really where we're almost at the summit. To me, Financial Summit for where you're at is like we are paying off all debt. And now we've really not only have a freedom of time, we'll have freedom of money. And I think this is really going to just open things up for you. So I created a debt payoff plan for you. I've got your total minimum payments right now at $1,578. This includes all of these debts. And then I, this is where you can play. I'm going to send this to you after. the interview. And for those of you who are watching, if you are interested in this, I will leave a link below for you to check this out. I put your debt monthly payment at $2,250, which is a starting snowball amount of $672. Do I think we can pull that out of the budget? Yes, if we are really freaking strategic. Because right now, the way that I have your budget after clearing out some of those items. I have $780 freed up. You have the money, Sarah. You are a high income earner. Yeah. There's no doubt about that. It's now how can we be strategic with doing the next step? I have you on the debt avalanche method, which is paying off the highest interest rate first, only because you had the stream at 10.99. But actually, it's probably going to be this Bank of America card. Yeah. Which is 16.49. Would it make sense to turn that into a loan that would have a lower interest rate or would you recommend sticking with this and powering through? That's a great question. I think it would be wise to at least check your options. Okay. So if I could look at A debt consolidation loan where I am grouping a bunch of debts that have... A high interest rate, and I can get a lower interest rate on that amount. Now, the only thing that I would take a look at for your debt consolidation loans is, is there an origination fee? So is there a fee to actually move that money over into the loan? Take a look at that, and then how is that fee paid? Is it just rolled into the loan? Do you have to pay it up front? And then are there any penalties for paying off the consolidation loan? If I know those two pieces of information, then we can take a look at whether or not that is your next best step in terms of debt payoff. But as it's standing for doing the highest interest rate first and paying that off, you've got everything pretty much knocked out in four years. Anytime I'm working one-on-one with clients in my mentorship program, I'm always looking at debt-free plans. plans that have you debt-free in five years or less. Do I think you could pay it off faster? Yeah. If you are really freaking committed to this, I think you can knock it out. Not to mention if you continue to excel in your career, if you can continue to bump that up and keep your basic living expenses the same. Don't give yourself a raise during that time. We could knock this out Even faster, if you Tab over to the payment schedule. It's going to tell you the exact dollar amount to the penny of what you need to be paying on every single loan for each month. And then you can just update your debt plan with the new balances. And I think having that visual. is going to help you stay the path. But remember, this is a summit. This is what we're reaching for. We still got to do some of the work with the spending and the savings in order to prep you to really do this. Because if you try to do this now, it's going to backfire because we don't have the safety net in place and we don't have the tools, the spending tools to help us get to this point. Yeah. If you do all of that, It's all leading towards the inevitable, as my husband says. We're just heading towards the inevitable. So I wanted to show you the complete picture so you know where you could go. And I think you can get here. It feels like an unclenching in my chest a little bit going through this. And I think I have felt really hard on myself for not paying off the debt faster. And it's really helpful. To like get permission to focus on an emergency fund first and that I am not doing a bad thing. By setting that foundation and taking the right steps to get there. And you're still paying on your debts. You're making the minimum payments. So it's not like you are going backwards. Part of your minimum payment will go towards the principal. But no, like, hey, I'm doing my due diligence. I'm doing my responsibility here. I'm making my payments. And I'm taking care of my house first. There's an intention that... That I tell myself whenever I'm kind of like, ah, I'm getting a little terrified here. Place your hand on your heart and you say, I'm no longer making decisions out of fear. I am committed to following this through. I'm no longer making decisions out of fear. I'm committed to following this through. And if you really want to like physically own that, you can stand up and then take a step forward and that step forward. Should be your reminder of the baby step that you're taking with your checking account, with your savings account, creating values around that, creating healthy boundaries where, yes, we are still going to spend on the fun stuff that brings you a lot of joy. And also when we see something that we're like, ah, I wasn't planning on that, but I want that. It goes on the want wait list for 48 hours because I'm not going to forget about that. I literally do this with my five-year-old daughter. She wants everything when we go to Target. So we have talked about like, I love that for you. Let's take a picture of that so we don't forget. I have it on my phone so that if she's still thinking about it, we can pull it up. Nine times out of 10, she has forgotten about it. If it works for them, if it works for kids, it works for us. There is a certain amount of... parenting myself that I need to do with money. How are you feeling? Really good. It's a really humbling thing to go through and to, I think, really take a serious look at the decisions that I have made that I can often just make in private and not have accountability for. I feel equipped. But, um... And I feel clearer. I feel like there is action that I have that I can take. And I can also, it's that balance of discipline with myself and accountability and also care. And that is the most important thing to me. And I feel good. I appreciate you a lot. Thank you. Of course. Of course. We're all cheering for you. And for those who are watching, if you found this helpful and you're like, oh, I need to talk to Justine as well, you can fill out the application below to see if you're a right fit to get on the show. I went through the activity of saying how I felt about my shopping purchases, looking at my expenses in August, and the vast majority of things I feel kind of neutral to me about. It's a lot of things that align to how I like to spend my time, align to my hobbies and my values, but I just didn't need to buy them when I did. I have a lot of projects at home that I can can work on and I didn't need to buy as many new ones. And so I think The idea of having a waiting list for buying things or time to think on it, just putting it on a list so I don't forget, but I know I have it a few months down the line if it's a better time. And so I think this is something I'm going to really think about as I move forward and keep doing this kind of activity for spending in future months.