Your Credit Card Isn’t a Budget: The Simple System to Stop Mindless Spending (Without Tracking Every Dollar) | 584

0:00Katrina, look, we're not like going to hang up on you. I always pay it and I like getting the rewards points or whatever. But at the same time, maybe I'm not being smart with that. Unfortunately, a credit card is not a budget. You don't have to track anything like you talked about in January. We're done with that. And when you see the math on paper for the first time, you'll see what's possible. 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?

0:29When 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.

1:03In 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.

1:31This is the Financial Coaching for Women podcast. All right, Katrina, who's going to Mexico after working three jobs for fun. We are so excited to have you on Financial Coaching for Women. We can't wait to see how we can help you. And welcome to the show. Thanks. All right, girls. So let us know what questions you have and how can we help you? i don't know 15 minutes i have a lot to cover so originally i'm in minnesota too by the way so been rough here but i was originally dance major musical theater minor and then switched majors and became a doctor of physical therapy i moved to arizona for seven years moved back went through a bunch of job changes did fellowship went to school full-time while working full-time and I did a business mastermind.

2:18I was going to start my own cash PT practice. Totally burnt out, tanked my hormones, rented out my house. So I bought my house in 2017. I had saved. That's two. So I worked three jobs through my first job to pay off my student loans. I had over a hundred grand like it's a doctorate program. So I paid off my student loans. I'm very fiscally responsible. I've never had credit card debt. Awesome. My only debt was my student loans and then now my mortgage. I'm a big believer of paying off your current debt before starting a new debt. But then, yeah. So then I went to California, rented out my house, drove across countries, threw my car, was going to do travel PT, and then COVID hit.

3:00And I was like begging groceries and Whole Foods. And then went to Colorado and did a pelvic floor residency. And then I finally moved back to Minnesota three years ago. I've been single, animals and childless. I got a dog two and a half years ago, finally. certified in Pilates. So I teach Pilates on the weekends. I coach at the gym to get a free gym membership and all about scrapping this. Plus then I get 50 % off all the supplements. And then I'm a full-time doctor, physical therapy, pelvic floor, but healthcare doesn't make money. So like I've been doing this 18 years and I don't even make, I make$14 more an hour than I did when I started 18 years ago.

3:38So I haven't even gotten a dollar increase and in healthcare we're capped based on one-on-one interactions, which is part of why I did a business mastermind to try to create the money that works for you. I am a big investor. I have 401k. I just started with a financial advisor this past week to consolidate all the 401ks, but with all the moving and multiple job losses and changes, I had to go five or seven years without contributing to savings. And I'm smart. And I have a Honda Pilot. Like for 10 years, I'm going to need a new car in five years with a home I had to replace whatever my tub and stuff so I have a year's worth of cost of living saved and I have a good 401k but I just feel like like with diet like first you give up sugar and then you add vegetables and then you add organic you switch to organic vegetables so I want to look at how I can optimize my finances versus because I'm still I just feel like I can be smarter.

4:41And because I have a good cushion and I'm comfortable, I think I do a lot of like mindless spending. And then I used to track every single thing I spent. And I tried to do that in January. And I was like, this is exhausting. It's like diet, like macro tracking, like you do it initially, but then that's just too much. So you have to, I don't know, I want to create systems and things like that. And I listened to your podcast and I like some of it and other of it doesn't work like the different accounts for like I have my one visa credit card I always pay it and I like getting the rewards points or whatever but at the same time maybe I'm not being smart with that so I don't know what questions I have I just want you guys to tell me what to do so we all yes yes tell me what the I'm single so it's like I have to make all the decisions on my own and it's just like tiring yeah sometimes it's hard when you don't have anyone in your corner or you don't have anyone there to ask questions and all like this.

5:40So we totally get it. But it looks like the bird's eye view, the big picture, what you have going on is going well. You have your investments, you have all that looks good. It sounds like what you need help with is the every day-to-day money management. So that way you can know that you're being smart with your money on a daily basis. That's what I'm hearing. That and just so maybe I could play more, like maybe, cause I'd like to take singing lessons and voice lessons, but I work three jobs. So like, it'd be nice to like, and I love what I do. Like, it's not work to me. It's fun. And it gets me socializing and stuff, but might be nice to more of the creative side.

6:17Like I want to get into acting, dancing or take singing lessons or something instead of, yeah, just being. I'm just trying to broaden. Look, we're not like going to hang up on you. No, I'm just kidding. I just told her my husband still listens to Dave Ramsey. All right. Do you know Dave Ramsey? You're big about it. Obviously. And he said he hung up on somebody the other day because they about something. And I was like, oh, but I'm not going to hang up on you. But I'm going to say credit cards on a budget. What I think we could recommend to you is try it our way. Try it our way for six months and see if the progress happens that we think is going to happen.

6:50And if it doesn't, you can go back to using the credit card and paying it off every month. Because it's really hard to it's the credit cards are competing with this rewards that they give you. and everybody thinks that's worth it. They're winning the game and it's worth it. And I want to keep playing this game. Unfortunately, a credit card is not a budget. You're not able to, you're not really truly telling your money where to go. You're not 100 % on what you're spending. You're not watching your savings buckets for singing lessons or well, that probably you can, you could afford monthly, but for the next Mexico trip, you're not watching all of that stack up as much as - I want to go to Australia.

7:26Yes, exactly. That's our line. Mexico is like 2 ,000 bucks. Australia is like 10 ,000. Yeah. So I think for the next six months, I think if you would, we'll tell you what we think you should do, try it out. Maybe keep these, these extra jobs for six more months or so, see how much progress you can make in saving to the point of how much you want to save and then see what you want to do. If you want to go back to using credit cards, the thing is that you just really can't, you cannot stop the problem. If you don't stop the way that you're doing it and the things, If it doesn't feel like it's working, then there's a reason for that.

8:01And it's really hard to go to the credit card. A lot of people, we've been conditioned to think that's the way to do it. And they make it real easy. But it's just not the same as being in charge of your own money, which you're obviously really good at. You are a great steward. You made a lot of great decisions. So we're just going to take that to the next level. And we want you to have, if you're single, that's fine. One spending account. If you want to start with one. So you need to have a separate checking account that all of your spending happens out of of. So that's your gas and groceries, go and get lattes or whatever, like all this stuff, the discretionary spending that happens throughout the month.

8:35We want that to be completely separate from your bills. Okay. So you need to have a checking account that all of your bills are being paid out of, and then checking account that you are spending money out of. Oh, I like that. Okay. So that keeps it separate and that's going to allow you to see how much you're spending on bills and knowing that's taken care of. And then the other one is going to, you're going to have a certain amount of money and listen, you may not get it right the first month or two, you know, this is trial and error at first, figure out what the right amount of money is for you to spend each month and start with the one extra account that you're going to spend out of that.

9:12You can just freely buy things throughout the month. Okay. And then when you're talking about, um, doing extra things like travel and all that stuff, that's where your savings buckets come into play. I don't know how long you've been listening to our podcast, laying your budget out. Do you have our budget system? Yep. Okay. So that is going to be a game changer for you being able to see all your numbers in one place, all of your income and how it's serving you throughout the pay. It matches exactly what you do with your hands. So your income comes in, you pay your debts, you pay your bills, you spend money, and then you save money.

9:42Okay. So that's how that's the five simple columns of our budget. And then you separate it, which is the separate checking account for bills, the separate checking account for spending. And then we talk about having a couple of savings accounts, high yield. So you're making about 4 % interest because that's about the going rate right now for high yield savings. My year of cost of living is an open. I don't even look at that. Sure. That's perfect. But that is different. That's an emergency fund. That's like in case something happens with your job. We're talking about budgeting for Christmas and travel and different things that you want to spend money on throughout the month.

10:14And this is probably where you don't know if you can do the lessons, the music lessons or the dance lessons or whatever, because you don't know what your money is doing for you. But being able to separate it and see bills, spending, and then on savings. And you can feel good about spending all the money on the lesson that you want. I sort of do that because I have also my Ally savings. So the open bank is the year. And then my Ally is like the savings for a trip or for whatever. And then I have my regular checking and like savings or whatever. So like the Ally, I have an automatic transfer from my checking to Ally and automatic transfer from Ally to OpenBank.

10:53That's smaller. So then I have that. But then like after Christmas, I feel like I'm constantly dipping into that saving. So it's like I'm having a hard time building it. So that's where I'm at. So I kind of have those in place. You're halfway there. You're not being expected. Yeah. I'm not doing it right. Yeah. It'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.

11:29You 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. If 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.

12:02Six months from now, you'll wish you started today. You're almost there. And like we said, you're obviously really smart and savvy with all of this. So we're just trying to, we're just going to give you a couple extra tools to implement and then it'll all make sense. It'll all work. Because one of the things that I love about our budget is, is when you put the income in there, you're working three jobs. We want you to know like this extra work I'm doing, this is where it's going. So you're making good money, but, and it's, and I have a feeling you're not like spending frivolously, but we want to know specifically when I work those extra hours, this is where it's going.

12:35It's literally paying for me to go to Mexico or it's literally paying my mortgage or whatever it is going to be. So when you make that budget, that's the first step is to make the five column budget, because you need to know your income. You need to, you don't have any debt. You just have a mortgage. We need to know that. And then your bills. But then we want to have the rest of it to know specifically how much do I want to spend a month? How much do I want to save a month? And that's where you can really see the whole thing. Yeah. On one page, see what your money's doing. and from there every part of that budget can be automated right so the first step is to do the five columns and it does the math for you or if you do the free version you have to do the math yourself rude but it takes the income and you subtract the bills then you set your amounts for your spending which Vanessa said you can have one account which is fine but you're still going to budget this is how much I spend on gas and groceries a month this is how much personal spending money I want this is how much I spend on dining out or whatever what are the different categories monthly total.

13:32You don't have to track anything like you talked about in January. We're done with that, right? You don't have to track it because it's in a separate account. Yeah. You're just saying, okay, my spending budget is$1 ,500 a month between all of those things. That goes into a separate account. Each time you get paid a little, you do that automatically, like your other transfers doing, it'll do the same thing. And then your savings ally, as you can have as many savings or not as many, you can have 10 savings accounts in ally, all high yield. And you can set those up too, depending on what you decide, which ones you decide you want to set up.

13:59What we, what I'm hearing you say, I think is that you're using ally and then maybe you're using their bucket system, which we don't love because it's like they almost got it right, but you can't deposit money directly into the bucket system. And then you also have to track that after that, then you have to have a spreadsheet to track how much is going where and when. So if you open up separate savings accounts and ally that allows you to see, this is for travel. This is for Christmas. This is for gifts. This is for medical co-pays just in case, right? Just other, like whatever those savings buckets are, that is completely separate than your emergency fund, which is your one year of savings.

14:35That is still your budget. You need to figure out what you cost in a year, break it down, put it in your monthly budget. Like Shana said, you're automatically. That's okay. We love it. I like nice things. I am very frugal. I cook all my food. I don't have to copy, but I will pay for quality that lasts. I like things that last. I don't need a lot of stuff. I just want nice stuff. That's why you listen to our podcast. We're the same way. Quality over quantity. Yeah. And that's how most of you, most of our listeners are. We're not out here buying like Bohemia. What Bohemia? I have a Honda Pilot that's 10 years old.

15:09And we're not buying Prada bags. We're like trying to get, we were just talking to a lady. We're trying to get good shampoo for our hair so we can stop falling out. I know. I'm 23. Thank you. I'm all the work. I have to pay for all my hormones. I'm on testosterone, on all of it. So that would be a health bucket potentially, depending on how often you go a year. And that's what we want the budget. So like the basic budget, when people think about it, it's a monthly thing, right? What do I spend? What are my bills each month? Maybe I think about my groceries, right? Monthly. But what we also want to put in that budget is all the things that don't necessarily happen monthly, whether I go get hormone treatments every so often or prescriptions or I travel or Christmas, like that doesn't matter.

15:49But I need to have little bits saved up for those things so that it doesn't attack me in mass in one month. And in your case, sometimes you have to pull from that emergency fund, which does not feel good. You don't want to do that. That should stay there. It's amazing that you have a whole year saved up. Leave it there, making money. That's fantastic. We want the other buckets to start filling up so that when those things come along, that's where you pull the money from. And that's really what our budget system is about is like always knowing where the money's coming from for everything. That's every expense that comes, comes at you saying, I need money, I need money.

16:20You'll know you have the money and you'll know where it's coming from. Yeah. Those unexpected expenses that pop up that you have to pull from that emergency fund for now we're on purpose saying, no, this is an actual thing that I know I need to say for, like you just said, car insurance. We had a lady one time say that she has like an$800 HOA due our HOA fee due every January. And she was stressed out because it's a terrible month. Yeah. And it happened right after Christmas. She was super stressed. And I I said, just divide$800 by 12 and save for it monthly. And so you always have the money. And it was like mind blowing for her.

16:49And now that's what we want you to do is figure out what just bird's eye view. What do you cost in a year? You're not going to get it right. Just ballpark. Okay. And then I miss mint. Like I used to use mint and it helps me a lot. And now mint doesn't exist anymore. I love that app. The mint app. It did all that. You don't, but I get, but that's the thing is you don't, once you know how much you cost, you put it in the budget, it's automatic and there's no tracking required. Like you just have to put it in once. Yeah. So your accounts will do the tracking for you. It's, have you ever heard of the cash envelope system?

17:19Like people like Dave talks about that. This is the digital version. So instead of you going to the bank and getting cash out for groceries every month or every two weeks, whenever you get paid, you just put it in a different account. It's still separate. It's still organized. It's still very clear. This is how much I have for groceries. And if I just stick to this budget, my bills are fine. everything's good the same the same thing for my hormones or whatever saving buckets I have I'm sending a little bit over there and you can start where you're at like you'll look at your budget you'll see how much you have but even if I'm sending 50 bucks a month to it like I still know I can do that and then I my bills are covered and I have money for groceries like everything that's the point of seeing it all on one page and then you're not pulling from emergency and then separating it we don't have to track anything because if I need to track I can go into my supplement account and say, Hey, every six months I've spent$300 to go get my supplements or whatever.

18:07If you want to, you can go, but it's already there. It's our logs for you. It's all tracked. The data will be there in each account of when you deposited money, when you spent money. And so you don't have to track anything. It's doing it for you. That's what I love about my savings buckets. If like, for instance, we have, I need new tires on my car apparently. And like brand new car timing belt, like last. Yeah. But in the fall, it's like hard about this bucks. Yeah. Yeah. It's expensive. They're not cheap. But the easy part about this is once you fill those buckets, I just go in my vehicle account and I can just look at all the transfers out into my spending that I like the transfers from my vehicle out that I have spent.

18:44And it's like a year's worth of transactions in like 10 lines or so, because you don't pull from it very often, right? You maybe get your oil changed once a quarter and you may have a couple of timing belts and different things here and there that you spend. But other than that, you can clearly see how much you spend in a year on that category. And that's it. Like, like Shana said, the tracking is there for you. Nice. Probably makes taxes easier to do too when it's all. Yes. Especially if you have your own business, if you're getting paid, you need to have that separate, but yeah, that's a whole different conversation, but yes, it does.

19:15Yeah. Yeah. So the first step would be get all of your numbers on one page a month and then remember that month. So your budget will be, can be 90 % the same every month, which may be what the appeal of the credit card situation is. I just pay that off and I'm done. Like it's the same. Your budget can be the same every month, but what, because we're going to start saving for those one-off things or those unexpected or those random things in your savings bucket so that it stays the same. It's nice and easy. So the first step is to set those up, open the separate spend your bills and your spending needs separate.

19:46That's the second step. We can get more complicated than that, but if you want to just start there, that will really help you. And then the third step is to start those savings buckets, get the system running, have it to be automatic. Just like you already have it on automatic everything else can be done automatic. And then your budget is running automatically. And when you see the math on paper for the first time, you'll see what's possible. You'll see, oh, if I just, if I actually only spend a thousand dollars on groceries a month and 500 on eating out, I could not work this other job and I could do singing lessons, but you won't know until you really see it.

20:16And that's why we don't particularly love the credit card. It keeps it mysterious. We want you to be in charge of your money. You know, exactly. Because my bill was$2 ,000 this month, but it was$4 ,000 last month, which is very inconsistent. Which is why doing a budget is going to make it consistent because you're doing it on purpose. And you'll be able to see, like Shannon said, everything all at once. And with you working three jobs, you get to pick one of those pay cycles to transfer your money, right? So if you get paid every other week or if you get paid on certain days of the month, you get to decide how often you want to fund your spending account and your savings buckets.

20:48And if you want to just make it easy, first and 15th every single month, it's all done for you. So that way you don't have to think about it. And, and Shanna said, having it automatic, knowing you always have money coming is really going to be a game changer. And also again, knowing that everything is being funded in your savings accounts too. Right. Okay. Great. Yeah. We hope that this took long. No, that was easy. No worries. That was a great question. Yeah, it was good. And I think it's going to help a lot of people to hear it too. So we hope you have fun in Mexico and we hope you set up your system and we're excited to see like, you're already, you're like, so already there and you're so savvy.

21:22So this is just going to take it to the next level, we think, for you. Awesome. Okay. All right. Thank you. You're welcome. Thank you, Katrina. Bye. Bye. 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. That's budgetbesties.com forward slash quiz to find out what's really going on with your money.