Bbp Real LiIfe Budget | Single Mom + Savings Goals

Welcome to the Budget Mom YouTube channel. I'm Kumiko Love from thebudgetmom.com and today we are doing something that I haven't done in a really long time. We are starting the real life budgets again. I think the last time we did a real life budget was, geez, probably back in April when my mom passed away. But I have gotten so many messages and comments about how these help you seeing different scenarios, different perspectives, different situations inside of the budget by paycheck method and process. So I am so excited to be starting these back up. Today we're going to be talking about a single mom from Maryland. Her name is Megan and Megan has, like I said, she's a single mom. Her daughter has cystic fibrosis and so she does get social security for that. Now Megan, when she wrote to us, she said she does use payday loans. And every single time I hear payday loans, I'm like, my heart just sinks because I feel like payday loans are so predatory. My heart drops when I hear about people being wrapped up in these payloans because I've seen interest as high as 45%. And once you get into a payday cycle, it's really, really hard to get back out. Now, fortunately, Megan doesn't have any payday loans that are outstanding right now. The only debt that she has is mortgage and then HOA. So apparently she's behind on HOA. And so she owes a little over $2,000 for that. She's trying to get caught back up and be showing you what those numbers look like. So she has no car payment and her parents also pay her car insurance. So there's no expenses for that. So let's jump in and look at the real life budget for Megan. All right. So we're looking at the real life budget for Megan, currently living in Maryland. Her why is she wants to get ahead on all of her bills, be consistent with her sinking funds, and to not always be worried about her finances. Now, like I said, she's a single mom to a teenager. She owns her own condo. She works full-time for a nonprofit and part-time in a gym. I'm in the membership office. She says, I stress about money all day, every day. I can be super strict with spending and then all of a sudden make silly, irrational decisions. I'm relying on payday loans and I hate it so much. Also, child support is very sporadic, so I never rely on it. So we're not going to include child support in her income calculations just because we only include the guaranteed income we know we're going to receive when we're using income for our budgets. And it's funny, she says, I'm super strict with spending and then all of a sudden can make silly, irrational decisions. This could be a side effect from being too strict, too hard on ourselves with unrealistic expectations of what we can receive from our money decisions and the budgets we create in our lives. So let's go ahead and jump in to her income. Now, she did mention she works two jobs. So Megan has also a daughter that has cystic fibrosis. So she gets also income from social security from that on the first for $620 a month. Now she works two jobs, one full-time at Catholic Charities, one part-time at the gym, getting paid for both on the 10th and 24th for a total of $3,702 every month. And it looks like getting paid every bi-weekly with a paycheck on the first, just looking at this, I know we're going to be doing three separate budgets. Now, when we look at Megan's fixed expenses, don't mind some of my writing, me figuring things out, but her expenses total $1,720. First thing off the bat, I noticed a very high cell phone bill. So mortgage, 801, gym, $26 a month for that membership. We have Amazon Music for 11, gas and electric for 118. So not a ton of really, a lot of the fixed expensive and none really, I mean, even her mortgage isn't that, I mean, gosh, in today's world, this is really, really low. So $1,720 in fixed expenses is what we're working with. Variable expenses. All right. So variable expenses equal $1,850. We have takeout and alcohol $400 a month. Again, don't mind me working this all out, my little chicken scratch, but daughter $250, personal 250, groceries 500. So I could say between groceries, takeout and alcohol, her food or her overall food budget is $900 a month. Church 50, allowance 100, gas and car 150, and household 150. So $1,850 for those variable expenses. Now, if you take her variable expenses and her fixed expenses, and you subtract that from her income, the 3,702, she's in the green. She's in the positive. We're not in the negative here. We still have some money to work with. Now, if we look at her debt picture, she doesn't have a lot of debt. The only debt she has, she has an HOA balance because she's behind on her HOA. No interest. She's paying no interest for that, but she's doing $366 a month payments to get caught back up. She does have a mortgage balance of $119,000, interest rate 2.8. And she's paying that 801 for minimum payments on that mortgage. Now, savings goals. She has a lot of savings goals. And I order these in the order I would tackle them. Order of importance. So when she says month ahead, I'm thinking this is her emergency fund, $25,000. She wants to have that by the end of this year. Don't see this. This is a very, very large emergency fund. Could she have a couple thousand saved by the end of the year? Absolutely. So remember, we're talking about setting realistic goals in our lives. We got to start with that first getting that small emergency fund established in our lives. And we can add to it as we go. Daughter's senior year, $4,000. House fund, $2,000. Christmas, back to school, and two vacations. By these dates, she wants to have saved. Looking at her budget and working through this, we're going to have to work on these because I want to start establishing a small emergency fund and then work on some of these. So let me show you what we have. So we look at her paycheck calendar, her budget calendar. I'm saying that we're going to be doing this in three paychecks. One on the 1st, one on the 10th, and one on the 24th. Now I'm assuming that her mortgage of 801 is being paid with previous month's paycheck. I'm going to show you this. So her first paycheck she's going to receive is $620 on the 1st. She's going to cover the gym, the cell, and the music app. I think it was Apple Music. Get that all done. She's going to take care of that. On the 10th, our paycheck for Catholic charities and the gym, she's going to cover the ones in green. And then for the paycheck on the 24th, covering the ones in purple with covering that rent for June. She's using May income to cover an expense, a big larger expense that we know is happening on June 1st. Now if we look at this, if we put our paycheck budgets next to the calendar. So this first paycheck, and I always like to highlight the paycheck with the calendar. $620, she's covering the gym, the cell phone, Amazon Music. That totals $297. She's then left with $323. So it becomes into this, this or that trial and error type of scenario where you could do, like when I do these, I do a mock budget over and over and over again until I figure out the best way to split her variable spending, right? Because she has all these variable spending that she wants to do, but we have to split it among the three paychecks. So I'm giving her $150 for groceries, $50 for gas, $50 for daughter, and $50 per personal. That leaves us with $23 left over. And guess what? Out of her savings, I want to throw that towards starting that emergency fund. So that's our first paycheck. The next paycheck we're going to tackle is in green. Now she has the Catholic Charities in the gym. That gives her a total paycheck amount of $1,541. We're going to take care of the Kindle, the gas and electric, the HOA, the Netflix, the Hulu, the Apple cloud. That totals $524 in expenses, leaving $1,017. So I'm still remember, I'm still working on these variable expenses, giving her money for these throughout the month. $200 for the daughter. So now I'm done with the daughter for variable expenses. Groceries, $350. Gas and car, $100. Allowance, $100. Church, $50. And takeout, $67. There's no money left over after that. So we have the fixed and the variable. Now when we get to our last paycheck, the one in purple, $1,541. We're paying rent that's due on June 1st, Wi-Fi in the prime. That totals $899, leaving us $642. Well, we can take care of the rest of the takeout and alcohol. Like I said, I'll be sharing my recommendations about these category amounts at the end of this video, but leaving us $309. $309 at the end of the month to figure out what to do now. I decided to throw that towards that emergency fund. However though, remember your savings goals is very personal. If I look at this and I look at it and say, okay, looks like by January of 2025, she wants $1,500. She has a vacation coming up. In August of 2024, she needs another $1,500 for another vacation she has saving up. She has to save $428 a month between now, the time I did this, until then to get that amount. We just don't have it. We could get close if we throw all leftover income, but we wouldn't be establishing the emergency fund. In my case, when you're juggling priorities of savings accounts, is it more important to go on that vacation or to make sure you can cover emergencies if they pop up so you're no longer relying on debt? That's a personal decision. If it were me, I'd take care of the emergency fund because my number one why on this journey is living a life with my kids and my family without relying on someone else's money or relying on debt. It's be able to seize those opportunities and experiences with them, but you have to get yourself set up in a way where you can be there. But like I said, personal preferences and decisions, values, and goals. So that is a real life budget for Megan. Now there are some things on, for example, in her variable expenses, she wrote down allowance, daughter, and personal. Now in my mind, I don't know what the allowance is for. Maybe the allowance and the daughter categories can be combined and we can decrease that by $50. Here's what I'm thinking. After all is said and done at the end, when we run the red light, green light test, she is in positive. She is in the green. We have that green light to go, but we don't have a lot to work with, especially with all the different savings goals that she has. So if we can decrease the spending a little bit, and also I always highly recommend on the other side of the equation, looking at ways we can increase our income. And I've said this in the past, you can only decrease your spending so far. There's a limitation there, but there's no limitation with how high your income can be. So the first thing I always say, start with your spending though, because that is something that you can quickly control. You can quickly decrease in some areas. So when I look at her variable expenses here, one, the takeout and the alcohol, $400 a month. And I hear you, takeout, it's the easy route. It's what we gravitate towards that convenience. But my recommendation, can we decrease that takeout and the alcohol down to $200 a month instead of 400? That's a drastic jump, but can we decrease it that much? Also, can we decrease, if we combine the allowance and daughter categories, can we decrease that by $50 a month? Another thing that I want to look at decreasing, so that's variable spending. So right there, we decreased by $250. Now the next change I would recommend is looking, there's two of them. When it comes to her fixed expenses, one, the cell phone bill. The cell phone bill seems extremely high, and I don't know what that entails. She didn't give us any additional information or even what carrier it is for her cell phone. I've had the same cell phone provider for a very long time. It's been a while since I've kind of went and did investigative work on what I could find as far as cell phone plans. I did look at Mint Mobile, and I remember seeing that you could get two lines, two phones for $85 a month. I think that's what I saw. Don't quote me on that. And if you are with Mint Mobile, let me know in the comments if that sounds accurate. But I do know there are cell phone plans out there for less than $260 a month. Like I said, I don't know the circumstances of her cell phone bill, but that's an area I would definitely recommend. Now, I was sitting in the living room working on this, and Christopher saw $26 for the gym. Now, Megan, like I mentioned, she works part-time at a gym. She makes $300, it looks like, twice a month on the 10th and the 24th. Now, my husband was in the gym space for a really long time. In fact, fun fact, that's how we met. He was my personal trainer. He worked at the gym that I was running at all the time. But he said, that doesn't sound right. He said she should really think about negotiating getting that free gym membership if she is an employee there. My husband has worked at many gyms. Never once has he ever had to pay a gym membership for the gym that he worked at. Now, I don't know the situation and circumstance, but if it were me and I was an employee at that gym, fighting for a free membership to the gym that I worked at would be something that I would be doing. Just the thought, something to nibble on. I know the gym expense is only $26 a month, but it's $26 a month, 26 times 12. It adds up. So that's one of the things that I would recommend looking into as far as decreasing. Now, when I look at her savings goals, obviously, we want to get caught up on that HOA. That's our first debt priority, and then the mortgage. If we can decrease those things I just said and have an extra $300 a month to throw towards this HOA debt, we can get it paid off in around four to five, six months. Get that out of the way. Then we can have more money to throw towards all these savings goals that she has. Obviously, first priority is establishing that emergency fund and getting that in place in her life. Then we can start looking at paying for her daughter's senior year, getting something started for the house fund, and then our smaller sinking funds for things that we know are coming up, the Christmas, the back to school, the vacation. That's what I'm recommending to Megan. Stay away from those payday loans. You have the income. It's a matter of just tweaking and looking at her spending. I do realize also increasing the income might be difficult for Megan as a single mom because she already works two jobs. I get that. I hear that. I was once there. Let's look at that spending. Let's look at decreasing where we can and making headway where we can. If you found this video helpful, please like it and don't forget to subscribe.