AAR11 - Monthly Financial Check-Ins

0:00Evan Raidt:Okay, so it's time for some real talk. I have a serious problem with shoes, like legitimate, like my wife has opinions about it type of a problem. So when I find a pair of shoes that I absolutely love and they're$300 or$400, I don't just buy them outright. I always try to find them cheaper first, you know, to keep my wife happy. That's exactly what dupe.com is for. It's an AI-powered shopping tool that finds cheaper alternatives to the expensive stuff that we want to buy. Not knockoffs. They're not counterfeits. They're the same manufacturers, just different branding and way lower prices. Let's be honest.

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2:16Evan Raidt:That's Shopify.com slash beginners.

2:31Dave Ahern:Greetings, everyone. Welcome back to At Any Rate. My name is Evan Ray, and we are here to help you make sustainable financial changes without breaking a sweat. And today, we've got a couple of exciting things. First off, we have a new microphone. We've seen the complaints. We've seen people talking about how muffled and mumbled I am. So hopefully this will help improve things. So feel free to comment below whether you still see any issues or not. And today we're going to be covering monthly financial check-ins to make them both more useful for you financially and for your financial future, but also less intimidating and reduce the friction for you getting started doing them.

3:03Dave Ahern:Today with our resident bank manager turned investing mastermind, Dave Vajorn. Hello. Beautiful. Welcome. So in your experience as a bank manager, because I always love drawing upon that because I feel like you get to see the raw unfiltered ways that people really handle their finances because most of the ways that that all of us see how other people manage their finances is through social media, through blog posts, through podcasts like this as well. And it's going to be more filtered. It's going to be more curated. And so I always love hearing the raw, somebody just walks into a bank and they're trying to figure out their situation or you're kind of uncovering things as you're working with them.

3:43Dave Ahern:How many people out there are really having some kind of regular financial check-in with themselves and or their family?

3:50Evan Raidt:Probably three. Three total. Yeah. I'm mostly joking, but not really. If I talked to 10 people in two days, maybe three or four of those people would do some sort of financial check-in or have some clue where they were with their finances.

4:14Dave Ahern:Yeah, that's incredibly disappointing to hear. And we're going to detail how incredibly important it is, but I think even just off the bat without really diving into what a monthly financial check-in is or regular financial check-in of any kind, you can easily see how disturbing that is because money runs the world in one way or another. And regardless of how you feel about it or how you think it should be run, it runs the world one way or another. And it runs people in one way or another. And it runs your life. It runs your abilities. It runs your opportunity. And for that many people to have essentially no idea where they stand on a regular basis is incredibly disappointing.

4:55Dave Ahern:But just so we're all on the same page, Dave, how would you define what a financial check-in is in general?

5:02Evan Raidt:The way I would define it is sitting down either with yourself or your significant other and going over what you have going on with your finances. So looking at budgeting, looking at where you are with your current bills, and also looking at investments and debts. Just kind of checking out everything that kind of goes into your whole financial makeup and making sure that you're either on track or if you're off track, why? And also kind of communicating with that other person, which is very, very important because money is probably the biggest cause of divorces. And mostly it comes down to just lack of communication.

5:44Evan Raidt:and so if you have a financial check-in that's really where you can really kind of uncover everything that's going on and just be up front with with everybody and it could be very helpful

5:55Dave Ahern:yeah i couldn't agree with the with the communication part more because like you said that that leads to so many relational issues whether you're a couple whether you're even just roommates too you know where where do we stand with with the rent and whether that's going to be due. And it's so against the social taboos of talking about money, which is one of the big focuses here is to break down those taboos so that people feel open and comfortable to be open and transparent about where they stand, where other people stand, people in their life that their situation could affect you and vice versa.

6:29Dave Ahern:And therefore it's important to communicate about these things and often you can feel you can feel embarrassed you could feel like you're bragging you could feel like you're diving into something completely unnecessary like just deeper than you need to go or whatever but in reality it has so many effects on your own life your partner's life your family's life your friends lives like all these people around you not to mention that the the less we talk about it with each other and all the people around you the less understanding you have of sort of how the world works like how do other people actually handle their finances people that are doing well what do they do people that aren't doing very well at this point what are they maybe doing wrong what are they missing and if you don't talk to people about it if you don't hear other people's stories and their experiences then you're never going to be able to get a good whole picture you're always just going to only have your own point of view and only having your own point of view on any subject including finances is never going to get you where you need to go it's never

7:28Evan Raidt:going to give you the whole picture no no it's never going to give you the whole picture and so

7:33Dave Ahern:for all those people those seven out of ten people essentially that come by the bank that don't have regular check-ins what are they really missing out on by not doing that somebody that feels like this is just diving too deep what are they really missing they're missing out on a lot so they

7:49Evan Raidt:really there's really not a lot of opportunity to plan for their future plan for their future of spending, like, and having some sort of idea of what they can spend and what they can spend it on. They can spend a lot of time needlessly worrying about where they are with their money. How many of us all raise our hands, stress out about things, you go to bed, and your brain is still on overdrive thinking about all these things. And money could be very high on that list. And if you don't have a check-in, if you don't know where you are, then that could just, you know, increase the level of stress.

8:25And you see that all the time.

8:28Evan Raidt:And they can also miss important changes. Let's say you have a new bill that you took on, a new car payment, and you have a recurring payment for that car payment, but you kind of forgot. I mean, maybe you won't forget the first month because it's, you know, the excitement of buying the new car and everything. But let's say you have, let's say you buy a new couch and you have a six month free grace period before you start making the payments kind of thing. Well, a lot of people, including myself, would probably forget about that if I didn't have some sort of plan or organization to keep all those things, you know, in line and understand where it goes.

9:05Evan Raidt:And I've been there myself personally, missed a payment or had a payment come out that I was not expecting. And maybe it's a bigger bill and you can pay it, but it also is a little bit of a surprise. Oh, well, I guess, I guess, you know, going out to dinner tonight is off the table kind of thing. So, you know, it's that kind of stuff. It can also lead to lack of motivation. You know, it can interrupt any sort of positive momentum. So you get a raise and you're starting to turn a corner on paying your debts, but you really aren't sure when those debts end. Let's say you have a loan and it's a five-year loan.

9:40Evan Raidt:You don't know exactly when it ends. Then that can lead to your problems and you're not really motivated because I just got to keep paying, I got to keep paying, but you never know when it's going to end. And I guess the last thing, and this is our friend, Chris Granger has talked about this many times on our show, investing for beginners, is poor debt management, car loans in particular for his, that was his drug of choice. And that can be very, very tough. And if you don't have a plan, you don't have a check-in, it's really, really hard to manage some of those, some of those debts. And it's not something to avoid, but it definitely needs to be addressed.

10:14Evan Raidt:And if you don't have a a check-in or a plan and know where you are with those things, it can make it a lot harder to stay on track with those.

10:21Dave Ahern:Yeah, and I've definitely heard Chris talk about and talked with Chris personally as well about all of the difficulties he's had in the past with car loans, and I know how hard he's had to sort of claw his way back out of the other side of it, because debt is something that if you don't conceptualize it the right way, it compounds just like returns. that interest that you're you're gaining on a monthly basis or whatever depending on what the debt is how it accrues as it's accruing it's compounding just the same as if you were investing in the stock market and watching your wealth go up it's going to be decreasing just the same way with debt so when you when you take that wrong step that misstep it's not just a like a dent oh crap you know i missed out on that x amount of money it's now that i missed out on x amount of money and if I can't fix that dent immediately then that dent is just going to get worse and worse faster and faster and that can be that can be life-ruining for many many people and thankfully it hasn't been for Chris but many people out there fall into this spiral of of debt the spiral of personal bankruptcy this this spiral of just being stuck in this debt that they can't find a way out of and if you have that check-in beforehand even if you don't necessarily love what the check-in is showing you and it's maybe not the direction that you want to be heading at this point if you're aware of it you can do everything in your power and take all the actions possible to prevent it or or lessen the the burden whatever it is that's going to come you can just be prepared for these kinds of things and and for me personally i know i've mentioned buying a house we don't close till the end of this week so i'm still not going to dive into it too hard to jinx anything however planning for future spending going into buying a house would be 100 impossible for me if I didn't have those check-ins prior if I didn't take the time usually on a monthly basis sometimes maybe three weeks or something but about on a monthly basis to sit down and see okay where am I at where where is this amount of money going where this amount of money that's set aside for the home or something how's it doing this money that I used to pay the bills is it still doing okay and we'll discuss you know what exactly we do at our check-ins a little bit later.

12:34Dave Ahern:But if I didn't have those kinds of things, I never could have planned. I wouldn't have known what money was exactly where, what rate I'm expecting it to grow at, what rate it's grown at historically. I just wouldn't have any clue of those kinds of things. And I'd be flying blind. And even though I am in a thankfully privileged position to be able to save and invest and set money aside, saving and setting money aside and investing, even investing money is only so powerful when you don't know what the heck is happening with it. If you're just throwing it into a black hole and hoping it's going to grow and get better, then you're definitely better off than somebody that doesn't have money, but you're nowhere near as well off as somebody who has the exact same amount of money, but knows where it's all going, knows where it's growing and knows what they plan for it in the future and where they need it to reach.

13:21Dave Ahern:They're going to be so much better off and have a much better picture of everything. So speaking of that, what do your financial check-ins actually look like, Dave?

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15:39Dave Ahern:Join at functionhealth.com slash beginners and use gift code beginners 25. What's the best way to get started in the market?

15:47Evan Raidt:Download my ebook for free at stockmarketpdf.com. Well, I do two things. The first one is my wife and I get together at the beginning of the month every month. And we go over, we have like a little checklist, literally. We have a little Excel spreadsheet. You'd be so proud. And we have some things that we go over. So I go over my situation and then she goes over her situation. And then we talk about where we're going and where we want to be. And so, for example, if we wanted to plan a trip to Brazil, my wife is Brazilian. If we wanted to plan to go see her family, then we'll talk about, okay, what's the timeline?

16:28Evan Raidt:When are we going to do that? And how are we going to start setting money aside for the trip or the plane ticket and any other expenses that we're going to have to pay for so that we don't have to, as much as we can, don't have to put it on a credit card to finance it. And so we try to organize those things. And then for me personally, I basically do a check-in every week. So I look at where I am in my checking account, where I am with my bills, what's owed for this week, how much have I put on my credit card, and paying that off. So I have a routine of every Friday, I log into my Apple Card, and I pay off the amount that whatever I've used that for, then I pay it off every Friday.

17:11Evan Raidt:And that's just kind of a routine I got into a while ago. And so I try to do those two levels of, I guess, checking in. So it's budgeting, it's planning, and it's looking at any sort of investments or paying on any debt that we might have. And then also a weekly checkup for my own personal situation.

17:33Dave Ahern:Yeah, that's pretty dang similar to mine in that I also have the weekly check-in where I'm really just focused on credit cards myself. I'm going to go into credit cards, making sure everything looks legit, everything makes sense. You know, I compare that to the balance of the checking that's going to be paid from and make sure it's all lining up okay and everything seems kosher. And then I'll go ahead and pay off the cards, same as you do. I've seen so much proof over time that it significantly helps your credit score to pay it off often and keep a nice little balance. I know there are also people out there that argue to carry a balance over every single month.

18:07Dave Ahern:And frankly, the credit scores are such a black box. nobody necessarily knows, but I think Dave with bank experience does know. So how do you feel about that?

18:15Evan Raidt:That is a urban myth. One of the criteria for evaluating your credit is how much capacity do you have and how much of the capacity are you using? And the bigger the gap there is, the better your credit score is going to be. So i.e., let's say you have$10 ,000 in credit card availability and you leave a hundred dollars on there well you have less capacity right so technically they're going to ding your credit score if you have no balance then you have the full capacity and that's awesome and that's what they want to see and so that's why i think it and the other thing is carrying a balance even if it's 50 bucks you're paying interest on that money You're giving the bank free money because you didn't want to pay off$50 or whatever the amount is.

19:10Evan Raidt:Yeah, don't do that. I used to work for a bank. I've invested in plenty of banks. They love the credit card interest, but don't give it to them. If you don't have to, don't. There's no reason for them to collect that from you. And I wouldn't say it kills your credit score, but it doesn't optimize it to the max.

19:30Dave Ahern:okay so let's 100 kill that myth going forwards struck struck the record for my brain that is not a possibility so yeah keeping your balance as low as possible pay it on a weekly basis could sometimes i even pay more often if i make a rather large purchase on there i'll pay it like as soon as it goes from pending to solidified on the balance pay it off right away so it's just not gonna not even gonna really show up on there for the banks but anyways yeah i do that weekly check in where I'm paying off credit cards and then I'll do a monthly check-in both Jen and I to to do a few things the first thing I do is usually I check like the approximate level of the balance in my checking account and and that's to gauge under versus overspending my checking account is kind of the bucket that everything lands in that's where all spare money would land in so if bills were already paid and money was already moved to investments into a savings account and blah blah blah, blah.

20:22Dave Ahern:And there was still, and there's still money somewhere. It's going to be left over in that checking account. So that checking account is a good gauge for me to see how much money is left over at the end of the month. If, if, if I, I usually keep my balance around$3 ,000 or so, that's where I like to keep it. So I know I can easily have padding to like pay, you know, spare rent or a medical emergency, whatever. I have that money available right there. And I want to see that level on average on a monthly basis hover around that number and that means that i'm not i'm not spending so much money or pushing so much money aside in the savings accounts or something that i'm draining that slowly but it also i don't want to see it building up because then i know i have spare money that reached the bucket that could have gone into investments or savings and so if i see that to start to to trend up over a few months or something then i'll usually go into something like my high yield savings account and and up that contribution a little bit not too much I don't want to overcorrect, but I'll up that a little bit and track that over the next few months and see how it goes.

21:24Dave Ahern:If I see that trending downwards at all, then I do a little bit more of a deep dive to see what's happening with my spending. Did I maybe spend more that month that I forgot about? Have my monthly recurring costs gone up for something that, again, I didn't realize? And do I need to adjust for that? Or do I maybe need to decrease my savings a little bit because a need went up and I just don't have a choice? and so I need to cut into something. But that's kind of my way, my time to adjust. And I use a very similar spreadsheet, pretty much the exact same spreadsheet to what we have available for free at einvestingforbeginners.com slash budget.