Using Bonuses and Paychecks to Pay Off Debt Without Feeling Broke | 486

0:00Every dollar is a tracking app. Yes, it has you budget, but what are you doing with it? Our system tells you exactly where to put your money, opening up the separate accounts. It's an actual budget and holds you accountable. The EveryDollar app just tells you when you go in the negative. It doesn't stop you from... When we tell you to open up a gas and groceries account, it's because when you're done spending that money, there's no more money to spend. And you don't have to track it. You're just looking at your bank balance and you're like, oh, I have$50 left for groceries. There's nothing to track.

0:29when you put it in the EveryDollar app, it's just going to tell you when you went over. Like, what is that? How is that helping you? Do you make good money but have nothing to show for it? Are 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.

1:01We 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. 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.

1:36We 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. This is the Financial Coaching for Women podcast. Hi, Ashley. Thank you so much for coming on Financial Coaching for Women. Welcome to the show. Hi, thank you so much for having me. Okay, so we're excited. Let's dive in. What is it that brings you to the call? How can we help? So I just started diving through some just financial and budget podcasts and reading through.

2:12I have a long drive on my commute to work. So I came upon your podcast and just was loving some of the perspectives that you take on money and on budgeting. Being that, my husband and I just started our budget journey around two months ago. I thought that maybe I would touch base with you all and see what your take is on our current budgeting situation and how we're doing things. So yeah, that's what initially led me to reach out. Okay, two months in, you're two months in and you guys are on the same page. Is it going well? Yeah, yeah, yeah, it's not going bad. I will say that we're using, I know that you all, I think that I read that you all were trained by Dave Ramsey.

2:54So we're using his approach on some of the things. So I'm curious to see like what your take is this through. I've listened to a lot of your podcasts at this point. And so like some of the things that we are not sure of his approach, it seems like that you all are like, yeah, no, do this. Yeah. I'm excited to learn like what that looks like, but we are using his app, EveryDollar right now. And it's not that it's not working. It's just that we don't really know if like we're making, if like we are making the right decisions with our budget to get to our end goal. We're just flying by the seat of our pants and hoping that it works.

3:32That sounds like a great plan. Let's dive into that. Yeah. Yeah. Okay. So let's start with what is your end goal? Yeah. So our end goal is that we have some debt that we are working on paying off. And so our end goal is that we are living, which we're currently, we're two months into doing this, but that we're living fully on our salary and that my commission checks and Austin's commission checks are fully going into our goals buckets, which are completing our emergency savings fund and slash living expenses fund. And then after that, we are excited about the idea of just contributing to, we already contribute to our retirement, but to take that further and have investments into some stocks and some mutual funds and such.

4:21And then also to have a separate budget set aside for our daughter's schooling and education. We have a almost two-year-old in October and we don't know what we want to do for her school yet. And we want the flexibility to maybe send her to private school if that's what we want to do when the time comes. Okay. Okay. All right. So one thing that I heard that I have a question about, you said that y 'all sell your commission checks go to some of your savings buckets, but then you said living expenses. So is your budget being made on everyday living off of just y 'all's salary or is your commission needed to fund your everyday life with gas and groceries and bills and debt payments and things like that?

5:08No. So yeah, great question. it used to be and it used to be that we weren't looking at any of our spending and as soon as my paycheck came in it just went straight into paying off a credit card and it didn't even pay it off all the way and so it was that we were just in that really ugly cycle we spent a lot of money on our wedding at the beginning of this year or earlier this year this is our like second wedding our second marriage and we were just like should we go wedding yeah let's do it and then it just turned into us paying for being by yourself. Of course, yes. We're excited to celebrate it, but it turned into a lot of money.

5:47And so yeah, no parents helping with the second. Yeah. Take note. Anyway. Yeah. Okay. So exactly. Yeah. So we need to be transparent. We don't do every dollar. We don't really know much about it. We usually have people come to us from every dollar because it's not actually solving the problem. But what I heard is what I would like to know is do we know on one piece of paper how much money you make, how much you spend on debt minimums, because right now we're not focused on that yet, how much we're spending on bills, how much we're setting aside for spending, and then how much we need to be setting aside for these savings buckets.

6:22Do you have all of that on one piece of paper? Because when we say flying by the seat of our pants, I'm not sure. We don't want that. We want you to be flying by a very clear plan. And then if we just live with this budget, like you said, all of our commissions can go to these big goals that we have. Yeah. And I guess I said flying by the seat of my pants, but really it kind of like based also on like our learnings from like Dave Ramsey's plan and then also from listening to you. So we are, but we aren't, but I'll tell you like what I flying by the seat of my pants decision was that I made when I had, when we had this debt this year is that I like, don't know if I made the right decision in doing this, but we utilized a really low interest personal loan to consolidate our debt and put it on that.

7:08So we don't actually technically have a debt. We have a loan payment now that we're paying off and there's a minimum, there's not a minimum payment because it just is one flat payment each month. And so now we've done that, which skyrocketed my credit, which was nice. I have 815 credit now, but it did. Now it's just that like we're, we have two of those. So we're paying off two of those plus Austin's car, which is a combined, yes,$53 ,000. And then we know on a piece of paper that our combined income is 265 ,000 and that we are contributing to our, both of our companies match our 401k contributions.

7:52So we're doing that. And how much are we putting? So right now, so we've put that money into that paid-solidated loan. And I guess that is what I mean by flying by the seat of our pants. Like we're trying to make the best decisions. 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.

8:28Everybody loves that. Yeah. 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 bills account, separate spending, build savings buckets, and end the paycheck to paycheck feel. If 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 right now. Yeah. So head on over to budgetbestdc.com forward slash budget and grab yours. Now back to today's show. We now have started this budgeting journey so that we are only living on our salary so that with this now upcoming, I get paid commission quarterly.

9:10So now with this upcoming quarterly commission check in September, our hopes is that it's enough to pay off or almost pay off one of those lump sum loans. And we have two of them. So then our hope is that the one in January would pay off the next one. So we have this, can we live fully off our salary so that we can have plans for our commission checks and like what that looks like. And when living off our salary, could we even do better with that? Could we even make that more, go even further. So that's what we're doing right now. Okay. Have you, I know you use the Every Dollar app. So are you putting your monthly income without commission in there to see what your expenses are and you know exactly how much money you have left over at the end of the month, just with salary?

10:02Yes. Okay. So is there a leftover there? No. Okay. But that's including And that's including the like payments for those loans. But that's, yeah, but you still have to pay those. So those are still debt. For any money you owe anyone for any reason is a debt. Yeah. Okay. So you have debt payments, you have your monthly bills, and you have your everyday spending, which is like gas and groceries and Chick-fil-A runs and gymnastics or whatever, like all the things. And then you have savings buckets and your savings buckets are for things like Christmas, birthdays, lawn maintenance for the house, vehicle maintenance.

10:39Those are all the things that happen randomly throughout the year that are not set monthly expenses. And so what I hear you saying, and correct me if I'm wrong, is that you can pay for your everyday living expenses, which are bills, debt, spending, like groceries, gas, things like that. But we, there's nothing left to fund those savings buckets that happen randomly, that those expenses that happen randomly throughout the year. Is that correct? Yeah. Okay. So then this is how my husband and I run our budget and he gets five bonuses a year. And so all of his bonuses cover our savings buckets. And that includes like your emergency fund.

11:16In this case, you have big debt payments that you're trying to pay off, but you still need to make sure that before, like, I understand wanting to pay off debt. I get that. You're going to go back into debt if you cannot fund your savings buckets, your needed savings buckets for things like birthday presents and Christmas and annual bills, like the main ones. I'm not talking about fun trips to Fiji. I'm talking about things that you know that are coming up that you're going to have to pay for. We don't want to go back into debt to pay those. And so it's funny that you say that because yes, it does.

11:49So it's funny that you say that because I told Austin that like with this upcoming paycheck, this is how we're paying for Christmas. Like with this commission check, this is Christmas. Like we're going to be pulling out, like we have already budgeted how much we're spending on Christmas. So we just assumed like we budgeted out like$2 ,500 for that. So I said, we're like pulling that out of that commission check. And then the rest can go towards that loan. And he was like, okay, cool. So anyways, that is just one of those things though that I'm like, I don't, I didn't, I think that you brought up a great point is that I'm not putting that in my head.

12:26I'm just like, get this debt out as fast as possible. But I don't want to set myself up to have a surprise. Like we just had a surprise cost that's happening on Friday. I was excited because we were going to have a fifth paycheck for the month to do something with. It's been a long, it's a long August. There's five Fridays rather than four. So anyways, like we have a fifth paycheck and an extra paycheck that we forgot to include in budgeting this month. So we were like, oh my gosh. And I've heard you guys talk about using your last paycheck to jump forward. And so I was like, cool, I get to do that.

13:00And then I got an email saying that, wait, your national and state tax is coming out for your nanny because we use a nanny and we have a payroll service for her. So anyways, that just slapped me in the face because that's using all of that. All yeah. There's things like that I'm not prepared for. Yeah. And so give yourself grace. You've been doing it for two months. So once you get through a whole year, which is why, you know, again, I don't, I need to investigate every dollar, but with our budget system, you would put what you just paid, you would put that in the annual bills. You would put it so that next, so that you can start saving for an annual bill savings bucket, right?

13:35Because there's other stuff. There's car insurance, there's car registration, there's any number, HOA fees, there's all kinds of stuff that have big, big expenses like that. And if we can just start setting aside every month, they don't surprise us. but in the meantime, they're going to come up because you're just starting and it's great. And you should be really proud that you had, you did it. You paid it for it in cash. You know, you're going to have the money. That's good. But then in general, what I would say is what we want to do is you do want to get a paycheck ahead. That's where you would want to, you want to do, you're going to want to flush out your savings buckets.

14:08So where you're at now, Ashley is where we have a lot of clients. It's like, we need to figure out which savings buckets have to happen before we go all in on debt payoff, right? So I know I have to have Christmas. Maybe there is certain annual bills that I have to pay. Maybe there is a certain household. Like maybe I have to get the thing repaired or the thing, whatever, the sprinkler, I don't know, whatever. What is coming up? When you look at the savings buckets, what do I know that I need to set money aside for? And then I will put the rest on debt, right? And then once you get those two debt payments, the two ones that are like eating you alive, then you maybe retake a look at all the savings buckets and start funding all of them.

14:47That's the kids tuition. That's if you have pets, that's annual expenses. That's travel. That's Christmas. Glam up. You look beautiful. I don't know if it's all by yourself or if you have help. Maybe you need to fund that account too a little bit. So all of those things you want to fund a regular amount monthly, but that's usually after you get going with your other goals, get the main savings buckets, get the debt paid off. I wouldn't necessarily wait to pay the car off. I would probably start all of those savings buckets as soon as I could for your regular life. And then once we get the car paid off, maybe we get a little bougier with stuff.

15:17And as your debt payments go down, as you reduce those debts that you have, then you'll be able to put more money in your savings buckets. So the amount of money will be there over time. And you're basically swapping the debt payment. And then you're taking that amount and spreading it out in between those savings buckets to be able to fund those. If you don't have, I know you're using every dollar. one of the things that we'll say is every dollar is a tracking app. Yes, it has you budget, but what are you doing with it? Our system tells you exactly where to put your money, opening up the separate accounts.

15:47Like it's an actual budget and holds you accountable. The every dollar app just tells you when you go in the negative, it doesn't like stop you from like when we tell you to open up a gas and groceries account, it's because when you're done spending that money, there's no more money to spend. And you don't have to track it. You're just looking at your bank balance and And you're like, oh, I have$50 left for groceries. There's nothing to track. When you put it in the EveryDollar app, it's just going to tell you when you went over. Like, what is that? How is that helping you? So I would urge you to get our system so you can print out the savings bucket tracker.

16:18Look at that. Plan out your year. Find out exactly how much money you need to put aside monthly to be able to fund all these annual fun things that you guys have going on. And then you'll be able to know, yes, I can fund tuition. And hey, I can actually put aside money every single month for tuition and have that payment up front and probably get an annual discount because I paid in lump sum versus paying it monthly. There's a lot of discounts that come in paying things in full and setting up that savings bucket tracker is going to help you get there. Yeah. And so as you mentioned, we have a little bit of differences with Dave.

16:48And what we are going to say is you guys are going to continue to live life in the meantime of paying off debt. We know paying off debt is like a big goal, but we want to balance that with being able to afford the things as they come. and if you have to wait till what April to get it to get that done like worst case scenario you're out of debt or the big stuff that you consolidated in less than a year and that's wonderful and you have you're so young you have so much time ahead of you but I would also add to what Vanessa said which she implied which is we really think do you have a bills account and spending separate do you have your spending separate from yours okay okay good because as you can tell that helps you that's probably helped you guys live within your means like you have been doing yes and I had a question about that too because in one of your podcasts you're talking about it too you're talking about like different accounts and i've heard you talk about different checking accounts and stuff and i'm like are the one of the main bank that we use is sofi because of its high savings yield perfect and and then they have different vaults like there are vaults that you can create within it for savings goals so i was going to we were going to make a christmas vault but we just had a surgery dog surgery vault that got used up and spent and it like worked well is the first time we'd used that portion of that banking app and we were like wow that's kind of cool is are you well you're encouraging us to have a ton of different checking accounts or we can talk about that later but no i was trying to understand it's an easy answer yeah it's an easy answer so we you're gonna have vaults are different than savings accounts and that you're still gonna make the high yield on the savings account we want you to have one for your pets whatever just happened one for travel or Christmas and then one for annual bills and then whatever ones you guys decide as a couple that you need, you're going to have separate savings accounts and you're going to fund those differently.

18:31You don't need a separate checking account. You just, you, what will happen is you go to the vet. You're so excited. You get to pay this$500 bill that you didn't see coming. Yay. Everybody's excited. And you, so you transfer the money from the savings to the checking and pay the bill there, but you don't need a separate checking account for that. But yes, what you want to think of is those savings accounts like Dave talks about. They're like different. They're like the cash envelopes that we used to use, they're digital. So you have a different savings account. And then once eventually you'll be able to fund them automatically, according to your budget, like you'll be putting a hundred dollars in each every month or whatever you guys figure out.

19:02Yeah. So really, as far as checking accounts, we really need like a gas and groceries. You and your husband will each need your own spending account. We love a family fun account and a kid's account just because it allows you to go to Chick-fil-A, date nights, goofy golf, movies, whatever. And it's not mixed in with your Starbucks money, his hunting money or whatever his vices. And it's not mixed in with all the bills. Yeah. And you always know you have groceries and money, money for groceries and gas. So yes, we do recommend a gift card. Yes. Yes, girl. Look at you. So yeah, you'll have more savings accounts than you will have checking accounts, but we love the idea of the vaults, but they don't work the same.

19:40You still have to go in there and transfer individually into the vaults. So we do recommend separate savings accounts. okay okay no and here's did you have something else okay here's what i what we want to say ashley is you guys are newly married you're about to pay off all of your debt like at probably worse a year and a half for the car too right but a year for all of this stuff that you're doing it together you're living on less than you make right now all of this is really good like you're doing really good and we're really excited that we were maybe a little bit to help with that so be encouraged.

20:12You're doing wonderful. The little bits that you want to do is just set up those savings buckets more specifically and just understand at the moment, you're going to fund those with your bonuses. And then once you get that debt paid off, you'll be able to automate that just like you do automate your checking, like your spending where that just, you get a certain amount every time you'll be able to do the same with your savings buckets. Once you get through paying off some of this debt and then your budget, and then you guys will be able to invest more. You can set aside a nest egg for your daughter and decide later what to do with it.

20:39totally fine and just I we just want to congratulate you because you're on the right track you're young you've got so much time ahead of you yay hooray yeah yes yeah thank you okay yeah and then if you come back in January like you're like okay I did this and this what's next we will be happy to have you back yeah come back on a free call let us know what you've accomplished since then what new situations new problems you got and we'll be happy to help so thank you all right thank you Ashley so much for coming on. Yeah. 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.

21:18Watch our automate your budget masterclass at budgetbesties.com forward slash autonomy. 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. Go to budgetbesties.com forward slash automate to start today.