Debt vs Savings, Savings Buckets, and Investing: Your Money Questions Answered | 599

0:28We are$27 ,000 in debt. want to get debt free, but you don't want to live on beans and rice. Or you don't want to give up those pumpkin spice lattes. If you don't already know how to budget or if you're using credit cards to get through the month. If you want to seem like you have your finances all together or you're not on the same page with your spouse when it comes to finances. We know what you're doing probably isn't working, but guess what? You're in the right place. We're Shana and Vanessa. We're best friends, business partners, and master financial coaches trained by Dave Ramsey. We've been in business since 2019, helping hundreds of amazing people like you create budgets, get out of debt, stop living paycheck to paycheck, and know exactly what to do with their money.

1:07In this podcast, we'll share with you everything we know plus everything we're working on with our clients so that you have the best chance at reaching your financial goals. We want to help you take the guesswork out of your budget, improve your marriages, and even bring your kids in on the conversation. We can help you no matter where you're at, whether you're the single mom who's never had$500 in her savings account, or the millionaire who's paid off four real estate mortgages. And we're not going to shy away from the tough love. We'll tell you what you need to hear and encourage you at the same time.

1:34This is the Financial Coaching for Women podcast. We are back for another Q &A session. So again, we get these from our video ask. If you guys go to budgetbesties.com forward slash ask, you can text your questions, you can voice them in, or you can send a cute little video and we can hopefully answer them for you on the podcast. okay so first question up we are$27 ,000 in debt it's not that bad can I just pause there I know I heard of what we've seen yes listen we see we see it all in one line is$27 ,000 this is doable and then we just keep adding more lines friends hey great job okay hubs and I are both entrepreneurs and have unstable incomes we understand that too our monthly expenses are 8 ,500 that's not that much I'm just commenting on everything I need to just read through but it's fine last year last half year we have not been earning enough per month to cover the expenses therefore why in debt he recently started a new business that is slowly growing debt is credit cards and a motorcycle payment i am wrapping up a launch that will bring me up around 15k after taxes and tithing i love that oh tithing and taxes let's let's reverse that order fun anyway okay so what is the best way to use that money pay off debt or set aside for future months very question this lady i think she's been listening.

2:51Let's go. Okay. Yeah. Okay. So the first thing we would probably tell you to do is make your budget if you haven't already. So it looks like you have with you, you know how much your expenses are. So make your business budget and your personal budget. So you have all three, you said your husband has a business, you have a business and you have your personal budget. So make all three, you need to figure out where you are financially to decide if that money can be used for extra, or it needs to be used to carry you through those low months. Cause what you don't want to do is put it all on debt. And then you're right back to square one in the next month or two to where your income is less than your expenses.

3:24And then you're feeling like you have to use credit to make it through. Yeah, there's a lot to unpack here too. So one thing, if you make$15 ,000 on a launch, what are the deliverables? So sometimes people, they make that, but then they have to work to earn it over the next hour. And so in that case, if we were just doing your business budget, we would say, hey, we're going to pay you that amount as you earn it, quote unquote, and maybe spread it out. We might do that. We might. Depends on what monthly revenue you have coming in. We might want to balance that, whatever. So that's just something to think about in the future for the future.

3:57Now, what we want, as we always say, it's not cookie cutter. So you might, with this$15 ,000, you might say, I need, what did you say? $5 ,000 to get through this month with what my business and then my husband's making 3.5 or whatever it is. Okay. That leaves me with $10 ,000 to think about. Okay. If I pay off this one debt, like there might be a situation where you pay off. If I pay$5 ,000 down, I get$700 back a month that I don't have to. You might choose to do one or two little debt payoffs and you have to get those payments removed. Right. So that you don't cost as much each month. Right.

4:32It depends on what that$27 ,000, like how it stacks up. Otherwise, like Vanessa said, we still want you to only generally we would say pay yourself only what you need and keep the rest for stores, especially if you both know that you have been making less. And then you will still be able to pay your you your business will at least be able to pay whatever the paycheck is that will that will be able to pay yourself in the future. Right. So like you'll be able to pay yourself five thousand dollars three months in a row if you get this launch or whatever that you might look at that. But you might say it's worth it for this one or two debts to not have that hanging over heads anymore if they're small enough to pay off and give you a big payoff in your monthly budget.

5:08Yeah. And as an example, the motorcycle payment. So what if you have$8 ,000 left to pay on your motorcycle payment and your payment a month is like$500 a month? Okay. So if you pay off the motorcycle payment and you get$500 back in your budget a month, that might be worth it to you. I'm not saying it is because I haven't seen all your numbers, but that's what we're talking about. Is there a way that maybe you can pay off one or two small debts and get rid of those payments completely to allow the wiggle room in your budget a month to where you're not going to be as behind or behind at all? Yeah.

5:39Yeah. Okay. So hopefully that answers the question. More of those launches. So our business advice is do more of what's working. So you need to launch every month, girl. I don't know. No, we're kidding. But maybe short term, like maybe short term, what do we got to do? Both of you. What do we need to do? Because the example Alex Formosig is, maybe you've heard of him. He's just going to say, go listen to Alex. Is when he was following his mentor's advice and he put 500 flyers out and he told him, he called him and said, only one person called back from those flyers. It's not working. And they were just calling because I messed up their car when I put the flyer on.

6:14And he said, 500. Boy, I usually start, I test with 5 ,000. And he was like, oh. So more of what works, doubling, tripling, quadrupling it to where maybe you're doing a lot more work right now to then when you get, you'll be able to be more steady and less crazy, right, in the future. But maybe right now that's what you need to do or think about. So for sure. All right. So the next question is, how do I manage spending the money in my savings buckets? Do I transfer to my spending checking account from my savings before I spend it? Ding, ding. Yes. Good job. answering your own question. Okay, so this is how this works.

6:53We've said it before, but we can't say it enough because who knows when you started listening, who knows if you heard this part. You got money set aside for your oil change because you're a good girl. You have your vehicle fund. You're doing so good. Go girl. Go girl. And you're at the oil change place. And they're like, that will be$97. And you're like, okay, great. So then you transfer$97 from your vehicle fund to your personal checking account, pay the bill, ta-da, all done. All done. That's Exactly how it works. And that goes with any of your spending or savings buckets. That's how you're going to do it.

7:23It's super simple. Why don't they use their bills checking account? No. No. Because we don't spend out of bills. That's all there is to it. It's not a bill. It's a spending. It's an irregular expense, whatever you want to call it. Yeah. It's not discretionary, right? Meaning bills are non-discretionary. What you get charged for in your bills account is reoccurring. It happens all the time. It's consistent. When you are spending money throughout the month here and there, that is all your spending account and that's where you transfer your money from your savings buckets to there. Now, the only caveat here is if you're saving in your annual bills account, okay, which we've talked about transferring that to a checking account because it just makes it so much better.

7:57You can have everything auto-drafted out of there. But if you're still using a savings account for your annual bills, that is the only one that gets transferred back into your bills account to pay a bill because it's an annual bill, right? Oh, bill. Yes. Another word. Okay. But oil change. Yes, it's a bill that you owe, but it doesn't have a due date, meaning like they didn't bill you for it. It was something that you went to, got a service done, and then you're being charged for it. That is happening out of your spending account. Nothing irregular is happening out of your bills. Your bills account should look the same every single month for the most part.

8:26I do want to reiterate the bills account or the annual bills account. We're like becoming super huge nerd fans over this. We're not against it. If you want to make your annual bills a checking account that you're putting money into and then the annual bills draft out of that, that's even better. Auto draft. Auto draft. Sorry. That way your bills doesn't get any clutter in it. Okay. Now, worst case scenario is you paid for the oil change out of your spending money and then you reimbursed your spending money. That's sometimes that might be what happens because you're too whatever in the moment, but you can always reimburse it if you have the money in your spending account and just pay it and then you go make the transfer when you get home.

9:01Worst case scenario. Yeah. That's how it works. Yeah. And again, remember your savings buckets are for things that happen here and there throughout the year. If it is something that you are spending consistently on, Shana was talking about on a previous podcast, how her client had a ton of animals and they're constantly buying stuff and paying stuff throughout the month for them. In that instance, they turned that savings bucket into a checking bucket. Okay. And so it's a checking account with a debit card so that way she can just buy the thing straight out of there. Just like we're talking about annual bills, it's easier.

9:29Medical is another one that some people move, especially as people get older, they may use that as a checking account just because it makes more sense for them, depending on how many charges happen frequently throughout the month or year. But savings bucket, from savings into your spending account, done, make the purchase. And if your bank has the option, put a little note to tell you like Yukon oil change or Christmas present or whatever. I always like to put the name of the store and then what I bought or what it was for. So that way when I'm in my savings bucket, I know exactly where I spent the money and what I spent it for.

10:00It's so easy. Just a little note. Yes. All right, budget besties, it's time for some real talk. You don't need another budget, you need a budget system. Our simplified budget system is what you've been looking for. It's going to allow you to be bougie on a budget. You'll be able to easily set up a system that runs automatically and shows you exactly where your money is going. And it's going to give you permission to spend. Everybody loves that. It's straightforward, pretty, and packed with walkthrough videos that break down the exact methods we use with our clients to get out of debt, set up a built account, separate spending, build savings buckets, and end the paycheck to paycheck feel.

10:38If you're new to budgeting, this is the perfect way to jump in. And if you're already a budget nerd like us, you're about to meet your new obsession. This is the upgrade to your finances that you need. Now back to today's show.

10:57Okay, next and last question for this episode. Can you talk about investing? A step-by-step tool showing us how to. I feel a lot of people talking about investing, but not necessarily showing us how to do it. Thank you. Okay, so if you have our simplified budget system, we actually have an investing part in there. It's part of your bonuses. So if you didn't know that was there, you can go log into your ThriveCart portal. And if you don't know where that is, go to our website, budgetbesties.com. And you can click on student login. You can log in there. And at one of the bonuses at the bottom, it talks about investing.

11:30Okay, let's talk about investing. We obviously are very much for investing. We are a Budget Besties podcast. We are a Budget Besties business. So we talk mostly about everyday money management, but investing is a part of that. We want you to be lifelong good investors and feel good about it, but you just have to look at your numbers first. You need to make sure that you can put everything on paper and that you can afford investing before you start doing it. Yeah, and I mean, there's, we're not financial advisors. That's the number one thing to say. We're not actually going to tell you how to invest.

12:03We're going to tell you how to budget for your investment. To be able to afford to invest. Everybody does it different. You can definitely seek help. You can definitely do it on your own. There's both ways, there's both opportunities and everybody has their opinion about it. The most important thing for us, we think is to know your numbers. And that's what we put into the budget. And what we put into the bonus video training is what is my retire? What is my point when I need those investments look like? Whether it's quote unquote early retirement or traditional retirement. What do I want my life to look like?

12:32What do I need to work toward? That's where we want to help you figure out that number. The way you get there is going to be up to you. Do you want to do it on your own with a Fidelity or Vanguard account? Do you want to hire a professional to do it for you and maybe make some more, not risky, but like faster return on investments because you're young, whatever. All of that is up to you. How is to make it consistent, like Vanessa said, put it in your budget. And then, but just understand, I think the point here is people make it complicated and they want to sound really smart. It doesn't have to be that complicated.

13:05You can have one really good mutual fund that you've researched that has a return over however many years that is doing the basics that you want. You just are putting in as much as you can every month into that. It's in your budget. And that's as simple as it can be. It doesn't have to be complicated. you can also make it more complicated. You can add real estate and other different things you want to, you might want to invest in or businesses or whatever, but it can be that simple. And it doesn't have to be this, like what you hear all these bros talking about and all of these velocity and all these different things that people are doing doesn't have to be that complicated.

13:37And what you want to remember too, is if you're an employee somewhere, at least do the company match if they have one. So make sure you're investing in that. If you have an HSA, use that. if they're asking you for 401k versus Roth, we always suggest taking the Roth option because it's better long-term. You can research all of this, guys. Roth IRA, 401k, your traditional IRA, like research, like Shayna mentioned, mutual funds, like research all of that. Decide what is best for you. Sometimes you make too much and you can't do it Roth. That's okay. But there are so many other options. I know people talk about 529 college accounts.

14:08I don't love them. I don't like people telling me what limits I have on my money. You can do that differently on your own. You can open up a youth investment account for your kids to use it on whatever you want. There are so many different options. I think the best thing to do is just gain the knowledge and information when you decide what avenue I want to go towards. Like Shana said, Fidelity, Vanguard, all of those have options where you can do it on your own. You can also hire somebody through them. There's obviously places like Edward Jones and different things. But talk to a bunch of financial advisors.

14:37Get good information. But here's the one thing I will tell you. They have a vested interest in your money because your money is going to make them money. And this is why we love when our clients come to us and we tell them straight up how we feel and what we think because we don't have any vested interest in their money. We are not tied to it. Their money is not making us money. So we can say, we say things a little differently than financial advisors do. Okay. So just keep that in mind when you're talking financial advisor, they're probably always going to tell you what's going to make them the most money.

15:04Yeah. Just keep that in mind. Yep. All right. So we hope that this helped you guys. Okay. So So remember, you can go to budgetbesties.com forward slash ask and ask any questions via text, via video, and via voice memo. And we will hopefully answer it on the next podcast. If you make good money but have nothing to show for it, this quiz will help you figure out what's really going on with your money and what your next step should be. You'll get a personalized result and a simple action step to help you feel more organized and less stressed. Go to budgetbesties.com forward slash quiz and take the free quiz today.

15:38That's budgetbesties.com forward slash quiz to find out what's really going on with your money.