Savings Buckets, Transfers, and Debt Payoff: Your Questions Answered With Coach Michelle | 523

0:00Coach Michelle:What is that credit card or that loan or that debt that you have that's driving you crazy? And they know. It's just an instant thing. They know whether it's that personal loan that they owe to their parents. They know whether it's a credit card that they've just had a payment lingering forever and they're just this close to being done with it. I said, well, then why would you use that credit card? Why wouldn't you just cut that puppy up, pay it off today, and move on? because if it's keeping them up at night, that's where that stress is coming from and they just need to be done and move on. Do you make good money but have nothing to show for it?

0:41Are you tired of living paycheck to paycheck? Do you have big dreams for your financial future? Do you 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? Hey, it's okay if you don't already know how to budget or if you're using credit cards to get through the month. Hey, it's okay 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.

1:10We'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. In 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.

1:47And 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. This is the Financial Coaching for Women podcast. It's Coach Michelle. She's back on with us to talk about some questions that you guys are having and everything that we're seeing as coaches. We're so excited to have you back, friends. Hey, how's it going, ladies? We are good, girl. We are on our way to our CEO retreat tomorrow. I know this is going to air afterwards, but I need you guys to know that we are getting all the recording in today, getting it done so that way it can air and we can be fully focused on growing our business.

2:22Well, speaking of that, yesterday and today, back to back, every single minute of the day from nine to three, we have been recording. So we had two sessions where we talked about what we were going to record with someone else. But other than that, it's been recording. So we're ready. We're here. We are overtaught. And you, Michelle, you just got done as well. You just got done with office hours with folks, right?

2:42Coach Michelle:Yes, it was so much fun. There's so many people joining in and asking questions because they just got the budget. You know, they went to boot camp, they learned some new things and their heads are exploding, right? With all this new stuff and they want to know how to start, where to start. And they need that confirmation that what they're doing, that they're on the right track and that they're getting things set up and they got that new year feeling, right? Yeah, I think honestly this, you can correct me if I'm wrong. I feel like this new year has the most energy that we've really seen. Yes. Like people are on fire.

3:17They're ready. You know, we were talking yesterday. You know, the boot camp can be, we don't have a team fully in place right now. We have some parts of the team. You're looking at the team. And so the boot camp can be a little stressful for that, only for that reason. But it's so rewarding because people love it. They come and they get all pumped up. And then they come to you and they're working on their budget. They're trying to get the rest of the details figured out. So it's been really fun. By the way, I just want to say real quick, if they go to budgetbesties.com forward slash start, we kind of edited down the bootcamp a little bit so that they can.

3:49It's a bite-sized version of it that people can get anytime. Well, and really quick, it's the whole simplify, separate, automate part that really the big, important chunk of what we teach. And so, like Shana said, it's 20-minute chunks that you can go in there and look at it if you're not sure. you know especially if you're new to our system so yeah yeah so let's dive in michelle you said people have been coming with a lot of questions about savings buckets which we believe because we just had a rock star a testimonial on our podcast and she didn't really understand the savings buckets for a while either so tell us what you're hearing what's going on with that

4:22Coach Michelle:saving buckets everybody wants to know about those right because it's new it's different it's something they haven't heard before or they've heard it in a different manner right And we're having them set up for things that are just not just for fun. We're setting them up for those annual bills, which are huge. And once they start saving for those things, those big things, then they don't freak out when the bill comes due. So they ask a lot about what to set a savings bucket up for. That's the first one is what do I use it for? What's the most important thing? What are those non-negotiables? But what are the things that, you know, once I get my system up and running, what should I be saving for based upon my life?

5:04Coach Michelle:And so we walk through lots of examples. We ask questions of where they are. Right. Do they have a vehicle maintenance fund? Do they have a fund for kids? Right. That sort of thing or travel. Yeah. That whole like, how do I do it? When do I do it? How much do I do? I think that those are all very common questions. And I want to break that down because when people come to us, I think they get really hooked on this, this savings bucket part of it, which we want you to love that part. But sometimes you can't do it necessarily right away. So when we talk about the how, the how really is it's based on your specific situation.

5:40If you don't have kids, you're not going to have a kid's savings bucket, right? If they're like moved out, you might. If they're older, you may not have one. Maybe that kid's one turns into a grandkid someday, right? Weddings. weddings different things like that maybe you want to help your kids up with their down payment on their house right it can turn into so many things that's the beauty of renaming them because you can constantly change them but i believe that this how do you do it first you want to start with the non-negotiables which are your annual bills it's just as important as a monthly bill so you always want to make sure you have those in there and then really it's anything immediate that you absolutely know that it's coming up that you need to be saving for if you have a disney trip scheduled in three months, that's going to cost you$5 ,000.

6:21How about we divide that by a couple months instead of trying to figure out how to come up with$5 ,000 in one month, right? That's not going to feel as good as knowing that you're spreading it out, being able to save for it. So I would say, Shannon, if you have anything to add as far as the how, you know, again, the annual bills and then anything immediate. Yeah. Well, I would, first of all, I would say, now that we're talking about this, go to budgetbesties.com forward slash savings buckets to grab our little freebie on that. Because what you said struck me. You said people don't talk about this or maybe that's kind of the first time they're hearing it, which I understand because what people hear is save money, done.

6:59And then they stop talking.

7:00Coach Michelle:Like I just throw some money over here and don't write down what it's for. This is just money to save for whatever comes your way. But if you're specific about it, which is what we're teaching them, right? if you're specific about that this is for that vehicle maintenance fund then you know when when you need to get new tires that you got money sitting there yeah right yeah that freebie that that i mentioned will tell you you know vehicle maintenance home maintenance annual bills like a list there that you can wrap your brain around understanding i have a client that has one for sax guy okay sax guys sax guy because the main i thought you meant the store like fifth oh okay Okay.

7:41Yeah. Because understand this man who's so sweet. He teaches her son saxophone lessons for years. He won't take her money, but she's like, someday I'm going to find a way to give him this money. So she just sets it aside in the savings bucket. But my point with that is it's really like Vanessa said, it's unique to your life. It's not these, there's a list that will help you get started, but it's unique to your life. And to your point, we're setting these aside. It's like the cash envelope system, but digital so that you know what that money is allotted for. It's not just one big lump sum that you're like, I might use this sometime.

8:12I'm not really sure. And more importantly, it doesn't derail your budget because you've saved for all of those things that are going to come your way. Yeah.

8:19Coach Michelle:Yeah. And the other question that comes up frequently with savings buckets is, okay, so now that I've saved up for it, how do I get it over to my, to my spending or to my bills account? And what do I do? What, what is the process of that? And so we walk through that. We take an example of, you know, like the tires that we said, you know all right we're gonna go out this this friday and we're gonna get some new tires and so you're gonna go ahead and okay party no i'm kidding right adulting let's go and you know the physical act of transferring the money and and so that's where a lot of people get stuck is all right i've saved up for it now now what do they do when that bill comes due right so i think my brain has a hard time thinking i don't know it's fine it's here's the other thing it's like losing wait, people think it has to be way more complicated than it is.

9:07And so when they look at this and they're like, oh my gosh, I have money in this savings account. What do I do now? I'm like, transfer it to your spending and swipe your card. They're like, really? It's that easy? And I'm like, yes, girl, it's all you have to do. But I think in their mind, they feel like it has to be because finances make us feel like it's so complicated. These tracking budgets, these tracking apps that we've seen in the past make it seem way more complicated than it ever had to have been. And so when they see how simple our system is, they're like, that's all you have to do. And we're like, yes, so freeing.

9:42Coach Michelle:It really is. It really is. And once they do that the first couple times, oh boy, I love the reports back. It was easy. I loved it. It was just, it made it so simple. Well, I have to say like, if they're going to have an aversion, it's that, that, that they have is to get money out of it. I'm good with that. Like, you know, be really good at putting money in it and be like, Oh, harder. I don't know what to do when I take money out. That's a good problem to have, you know, go with that. But yeah, that money is there for a purpose. And you know, I've had to Vanessa's point, I have people that, that complicate it in their own ways.

10:17Like they'll make a general spending account and that's where all these things are going to come out of. And I'm like, okay, if that's what you want to do, fine. You could have just used your spending account, but you do you boo. You do you. And either way, the point of the savings buckets is that the money is there when you need it. You know where the money's coming from when this pop-up thing pops up. Yeah. Specific situation. And we talked about how to set it up. And we said, you know, when, when do you incorporate them as your budget allows? Like sometimes you, we say you can't do it immediately.

10:47When do you fund them? Like, you know, it's just one of those things where you fund them on your payday. It's very simple. It doesn't run any differently than the rest of your budget. I do want to say, I really want you to start it with, we both do. I want you to start, well, first of all, let me caveat this. And I'm sure this is what you tell them too, Michelle. Like month one, we're working on getting a budget and we're really excited. You're opening some accounts. Like maybe you're just, that's all you're doing. Even maybe month two, you're getting the spending transfer set up, right? Like give yourself a minute, but then when you do get to the savings.

11:21Like if you can't do a lot, we would love to see you be able to do 10 bucks. Just do something, get yourself a habit, get yourself proud of the kind of potion that saves money, even if it's not a lot yet.

11:32Coach Michelle:Building those habits, right? Yes. I think that that's really important is that you're building the habits. And like Shana said, we have a hard time. People, our clients, we see they have a hard time being the type of person that has money. They're not used to having money. They're used to money coming in and money going out. They have no idea where it went. Again, that's why the opening of our podcast is you You make good money, but you feel like you have nothing to show for it. So this is a different concept of saving money for a specific purpose in the future and you being okay with it sitting in your bank account until you go to need it.

12:01It's time to enter your coaching era because making good money should feel like making good money. Yeah, imagine six months of private coaching where we'll tell you exactly what to do. No guesswork, no confusion, and absolutely no judgment. It's a done-for-you system that actually works. You don't know what you don't know, and that's not your fault. And that's why we're here. Financial coaching with us looks like two coaching sessions a month, personalized recaps, and after-hour support, you can text and email. So you're never stuck wondering what to do next. Together, we're going to build your budget, set up your system, and tackle any challenges that come up along the way, which, by the way, they always do.

12:40If what you're doing isn't working and you're tired of trying to figure it out on your own, Sign up for financial coaching at budgetbesties.com forward slash coaching before all of our spots fill up, and we will help you go further faster. Six months from now, you'll wish you started today. Okay, so another thing, Michelle, you were saying before we started recording was that people are asking questions about paying off debt. How do they pay off debt? When do they pay it off? So do you have a specific question? Do you remember of during office hours that somebody had?

13:11Coach Michelle:Yeah, yeah. Yeah, I was working with one gal and she was just really wanting to pay off debt, but she also wanted to set up savings buckets, right? And so she isn't the only one that's asked this, is, you know, how do I make progress on paying off these little credit cards that I have and whatnot? But I also want to set up these savings buckets. How do I do this? And what do I do to get started? It was a little bit of analysis paralysis, right? Because it's like, what is the best thing? And really doing something is better than nothing. So we talk about, well, what do you have that you're working on?

13:50Coach Michelle:How many credit cards do you have? And is there something that you can knock out right now? Or is it something that we can get taken care of in the next few months? But really, you've got to get some of those savings buckets set up first. And I know you guys have talked about that in your podcast before. you got to get that annual bills one set up for sure. And you got to have some wiggle room before you start knocking out debt. Otherwise you're going to end up continuing to use debt. And so we do walk through that and, and talk about, you know, it's going to be specific to each household and what they have and how much wiggle room they have to, to make progress on those things.

14:29Yeah. I think a lot of times, you know, it's like, you want this one answer. It's like, Like, okay, if we're using diet analogies, you're like, it's paleo. That's going to solve all your problems. Or it's keto. That's going to solve all the problems. Well, no, it's not that. It's nuanced. And it's different for every person. And, you know, sometimes, well, I'll give you an example. This morning, I graduated some clients. I'm so sad because I love them. I love them so much, but they had to go. And they're going to get their$800 back in their budget. So they're excited about that. But he had a huge bonus.

14:59Congratulations to him. And they had to decide. they were either they were thinking about paying off this one credit card or two smaller like one was a medical and one was a appliance line of credit or whatever and they were too smaller and we were talking he was weighing it and i'm really happy and proud that he was figuring this out on his own like the one option he was going to get more money back in his budget every month which was like 290 or two like 400 total maybe but the other one he was going to be able to pay off this bigger credit card all at once which was a lower payment but it was 22 percent interest a month versus the other two were 0%.

15:31And so he had to weigh the options with that. And we talked about it and, you know, they came to a decision, but that's what I mean by it's nuanced. It's not, there's not one size fits all. It's really what makes the most sense for you. I also say like, what is going to make you feel good? Like that matters. What's going to make you feel like I made progress. I, this, I feel I sleep a little better at night. It matters.

15:51Coach Michelle:I usually do ask them, well, what is that credit card or that, that loan or that debt that you have that's driving you crazy. And they know it's just, it's an instant thing. They know whether it's that personal loan that they owe to their, their parents, they know whether it's a credit card that they've just had a payment lingering for forever. And they're just this close to being done with it. I said, well, then why would you use that credit card? Why would, why wouldn't you just cut that puppy up, pay it off today and move on? Because if it's keeping them up at night, Right. That's that's that that's that where that stress is coming from.

16:29Coach Michelle:And they just need to be done and move on. Yeah, it's that's the intangible. Yeah. Right. It's not just numbers or data or facts. Yeah. Okay. So what else is, do you show them how to like plan for that little bit of extra each month in the budget? Yeah, we do. We do work with that. And we want to make sure that they have a buffer, right? Especially the first starting, make sure they have a buffer in that bills account. When we make sure that they have emergency fund and annual bills set up before they start, if they're going down the path of their goals are to pay off those debts, then we make sure we have those things first.

17:06Coach Michelle:And then we start working on those debts. And then we try to concentrate on how much they can put towards it, but also how much they're going to be able to have in their budget when it's gone. You know, when that$400 a month payment for whatever is gone, then what are you going to do with it now? And then usually we talk about what are you going to do with that extra$400? And generally it's to put towards a different savings bucket. Sure. Yeah. Well, and you know, it's interesting. I had a session with a client that she had a, I think a wedding in two years or there was something really big a trip in two years oh it's her anniversary trip for their husband and then we're gonna go to europe it was gonna be a big hole bang but it was in 2027 and she's like i want to start saving for it now but they have debt and they have to pay for it and i was like okay or we could take care of the immediate thing that you have knowing that when this is gone you're gonna have that extra four hundred dollars to double down and put that on top of what you want to put extra on their home.

18:05And so I think that was eye-opening for her to realize, oh, yes, once this is gone, then I will have twice as much to put towards that trip, which means I will fund it twice as fast. But sometimes it's hard to see that. So there is a way to do both. We're not saying no. But if you have something big like that that's way in the future, making sure that you're always paying for your annual bills and things that you have immediately coming up in your savings buckets and then also paying off debt are the most important.

18:32Coach Michelle:Absolutely. And we do walk through questions of, you know, is it better to use the snowball method, the avalanche method, the minimum method? And, and, you know, we, we will sometimes look and see if, if there's, if there's something that's better than others, but I usually have them start with that, that debt that's driving them crazy and then reevaluate and go back and see what, what makes better sense to them because it could be something that has a really high interest rate where if they work on getting that out of their life, then they have more wiggle room to do other things. Yeah. Right.

19:06Well, I think this has been super helpful. I really believe that there's going to be someone who's going to be like, oh, I had questions about savings buckets and oh, I don't have to go to office hours because I got an answer. It's fine. But they may have more questions. And so I hope they do join you. But yeah, I think, you know, these questions that are coming up in office hours are relevant. They're not just happening with the people on the call. They are, our listeners also have these questions. And so guys, if you were listening to this, hopefully you got some of those with those questions answered, but also come on over and visit Michelle and office hours because she is able to help you and walk you through when you have the budget system to, you know, it's just able to personalize it to your specific situation.

19:42Yeah. And you can just go to budgetbesties.com forward slash office hours. You'll be able to find out more information there. and you know she's got a whole party going on over there like it's a whole thing there's a

19:52Coach Michelle:little like yeah oh we have fun we celebrate wins that's one of our favorite things to do is we celebrate wins i mean we talk about and sometimes it's it's a big old wind like paying off fifty thousand dollars of debt and sometimes it's the little stuff that just gets you started of hey i got my budget set up and i've got all of my bank's account set up and my account separated and I'm on my way. I'm going to set up those transfers. So we celebrate them all. And it's a great group. Yeah. That's awesome. Well, thank you so much again for heading that up for us. You're an amazing coach. I know they love you.

20:28And thank you for being in our Facebook community group as well and helping them answer questions there. If you're tired of feeling like your finances are all over the place and you're ready for a simple set it and forget it way to budget, we have something special for you. Watch our automate your budget masterclass at budgetbesties.com forward slash automate. We'll show you step-by-step how to finally organize your money, how to set up your accounts and put your budget on autopilot. So your bills, saving and spending run like clockwork. Imagine less stress, more savings and the freedom to spend money without having to track every dollar or babysit your bank account.

21:03Go to budgetbesties.com forward slash automate to start today.