📍 If you’re not okay with spending $58,000 for something you don’t own for three years, then don’t do it.

 Honestly, it’s time to get rid of the debt. She did not realize how long she had been paying on it until I made her look at the numbers and she realized how much she had already paid an interest.  We do not necessarily believe that paying off debt is the highest priority in your budget. That is not what we teach. We teach that your priorities are your priorities and we wanna help you figure out the numbers to do them.

 You make too much money to rely on debt. And so that’s really where we focus is more so than anything else.

 It’s your plan and it’s what makes you feel good, you know, what makes you feel confident with your money, like you’re making progress and that you can feel good

 So my, the first concession today on the prices, right? Yes. For coaching. So she is weighing the decision on whether or not to trade in her Tesla for a new lease, like to get a new lease on another vehicle, and um, or purchase a car.

Mm. She lives in a city where having a Tesla specifically is kind of unsafe. I guess. Her boss was telling them, I, if you have one, I wouldn’t drive one into town, so maybe we should think about, you know, uh, driving either a different vehicle. And even her husband, um, was saying because they now purchased a lot, that the Tesla is low to the ground, so they are thinking about, um, upgrading to a, a, a car that sits higher.

Okay. So it’s like a lot of variables in the situation, however. For me, I was explaining to her, um, the difference between purchasing a vehicle and leasing a vehicle and what the numbers look like in her budget. So she came to the call, you know, really not sure what their decision was gonna be, and she spoke to me about like what her and her husband had had discussed, and I laid out the numbers out there.

Mm-hmm. Basically what what it was, is that she was gonna end up paying 58. Thousand dollars to lease a vehicle for three years. And I just told her, I said, look, I’m not gonna make that decision for you. It’s not, this isn’t a yes, you should do this. No you shouldn’t. Or whatever it is. I’m telling you the data, I’m telling you the facts.

Mm-hmm. And you guys need to make a decision if you are okay with spending $58,000 to lease a vehicle for three years for something you don’t own. Then more power to you. If you’re not okay with spending $58,000 for something you don’t own for three years, then don’t do it. So I think it was, um, I think it was an eyeopener for her, like having a coach with an outside perspective who’s not in it, who’s not like, uh, emotionally, emotionally attached.

Yep. Emotionally attached to your money. Um, and bas just basically giving the raw facts and data, uh, I think allowed her to take that information and make an unbiased decision about it. Hmm. Did you like that? I did. And did you guys happen to look at what the vehicle costs outright? I. If you, if you were to buy it or how much it was We did.

Well, we even looked at, yes, we looked at purchasing that one versus another one and what the different options were gonna be. But, um, I think for her, like they didn’t want, uh, do you know how some people just like to lease vehicles? Yes. Do so? I think that’s where they’re at. Um, I don’t understand that, but that’s just me.

It’s fine. No, it’s definitely a thing. Yes. And I have, I’ve had clients that, that do it. My, I remember my uncle always did it too. Um, but I just think, like you said, maybe for the first time, like that’s just what they’ve, they’ve done. That’s what they know. Yeah. That’s whatever. And the first time somebody says, well.

Or you could spend $58,000 and almost own a vehicle. Right. So it’s just, uh, it’s always good to have perspective mm-hmm. For people. Mm-hmm. I think for her too, it was, and I, I actually had another client like this a couple years ago. They did not, they don’t wanna deal with car maintenance, so they don’t wanna deal with the wear and tear of a vehicle.

They don’t wanna deal with, um, the extra costs that, that you incur in purchasing a vehicle. Mm-hmm. So for them. Their mindset was it makes more sense for them to lease something and then, you know, turn it back in and then get something new later. Yeah. And, and, and if, yeah, exactly. And if that, like you said, exactly how you put it to ’em.

If that’s what, if that’s what makes the most sense to them and in their lifestyle, then all, all the power to you. We just want you to know the numbers. Right. And I think that that is the, the lesson here is, is, um, before you make a decision, especially a big decision like that, that’s, it’s gonna cost you almost $60,000 you need to know.

That Right. You need to know all of your numbers. Yeah. How it’s gonna affect you, how it’s gonna affect you now and in the future, and then you can make an educated decision. Yeah. Yep. Okay. So my first, uh, contestant on the prize is right. It, um, I love them because I, I tell him that he prints money, so his job.

Uh, gosh, I don’t, I don’t know exactly. This is bad. What his job, because he’s a jack of all trades. I don’t know what his actual job is, but I know basically he fixes stuff with his hands. I don’t know if it’s like plumber, AC mix or whatever. Mm-hmm. Sorry. Love you client. You know who you are. Um, because he fixes everything all the time.

So his job, he can work overtime and he make, he has a very in demand trade skill and he does really well. Okay. Then he can fix things. He can sell things, he can, uh, like he’ll get a broken fridge and re and re and fix it and sell it or whatever. Like, it’s amazing. So half the time we show up, he’s like, well, I got money from this and that and the other.

And I’m like, okay, let’s just add it all into the budget. And so I just tell him he, while, while we’re between sessions, he prints money. Okay. So they did do that. They also got a tax return and so they fi, they paid off. They’ve been working really hard to pay off debt and get everything systemized, get, you know, stop the overspending and all that kinda stuff.

 Hey guys. In case we haven’t met yet, I’m Shana.

And I’m Vanessa. We’re the budget besties. We’re best friends and master financial coaches and we love talking about the B word. We help women who make good money but have nothing to show for it. Finally, set up a budget system that fits their bougie lifestyle. If you’re liking this so far, hit the subscribe button and stick around.

Your budget is about to get a major glow up.  

So they finally really are there and we finally made what we had been focused on paying off debt and getting. Just kind of getting through the months and now we can look at what the new normal is. Right? What is your normal budget? Because we hadn’t really been doing, we’ve been sort of frantically funding things that were coming up for, coming up rather than being able to do savings buckets.

But now we were at a point where we could do it all at once. Okay? So once they paid off the credit card, what we did is we made a. Regular month’s budget, our new normal, right? Mm-hmm. That’s why I like to, uh, what’s your new normal? Um, and new normals can happen with all kind, like you got a different job or a kid moved out, like, what is the new normal and let’s look at what that’s gonna look like.

And so we actually finally, they finally figured out how, what savings book they needed, what they wanted, all that kind of stuff. And so we went. Back and forth between our savings bucket tracker and their budget. And we put in all of their savings buckets, um, according to for the rest of the year. Right?

Because we teach you obviously. That, you know, your general savings bucket, math formula is, what do I cost in a year? Divide it by 12 and start. Start that. Put that number in your budget and start finding it monthly for them. They don’t have, they only had seven months for most of them. Mm-hmm. And some of them even shorter.

So we plugged it all in for the month of May and then the, and then once they, and then we also got a regular budget going once some of the bigger ones were caught up. Anyway, it was just nice to see. What their normal budget was gonna look like. That because they had done the hard work of, of making this extra money, of, of paying off debt that they could now actually fund pretty much everything they want.

Everything they want. Mm-hmm. Um, with their normal budget. And that’s pretty exciting. I think it’s an eyeopener for people when we first talk about savings buckets and they really wanna do it and they’re not really sure if they can. But then when we put the numbers down on paper, and, and like you said, they had to beef up the first couple of, uh, months because you said they were like working off seven months or something.

Um, but then when you put it in and divide it by 12, it’s like, oh. I can actually support my Christmas savings. Mm-hmm. My travel savings, the kids’ gifts, like all of it, my, my pets instead of this roller coaster situation that you were dealing with before of, you know, paying $800 in one month because you’re all your pets needed to go to the vet and get their shots and flee and ticket medicine or whatever.

Like, no, I’ve been saving for that for 12 months and I can actually make this worth work. And I think it’s important for people to put in their budget what they actually truly cost. And that right there. By taking their annual cost, dividing it by 12 and putting it in their budget, they now know mm-hmm.

Like you said, that they can cover everything off of their regular paychecks. Yeah. That’s huge. Yeah, it is huge. And I, I think especially now, you know, when, when you make really good money, it’s you, you don’t wanna feel like you’re still struggling or you’re trying to get through the month. And that, that’s kind of where they were, um, just really a lot of disorganization and, and some, some, maybe some choices that they wish they wouldn’t, but they’ve cleaned all of that up now, so it’s really a pleasure.

And now when he prints money, now we know exactly because they. So the, the savings buckets are funded. Okay. Their debt is almost all paid off. So now when you print money in between sessions, where would you like it to go, sir? Like, what kind of things do we wanna do? You know? So, um, so that’s a very exciting point.

Mm-hmm. So, um, but the point being, when you get a new normal or when you pay stuff off, you wanna make sure you put that back into your budget on purpose. Um. You know, line by, or numbers by numbers. Mm-hmm. Like, don’t just let it sit or, oh, I, I paid this off. Let it sit there willy-nilly. Like, let’s, let’s reallocate it to the right thing.

Yeah. I was just say like, realign your budget, realign your goals. Um, so that way you can make sure that that extra quote unquote extra is now working for you. Uh, all right, so my next client has been paying on student loan debt for over a decade, and she really wasn’t sure if paying off her student loan debt was important to her.

And she said, I probably paid these off more than once by now. It’s ridiculous. Like, that was literally her line. And I had asked her last session, I said, is your goal to pay off debt? Or not, like, I think she needed to answer that question for herself because we had gotten rid of all of her petty, like, um, credit card debt.

Mm-hmm. She had just Belk and whatever, all the different Nordstrom, like all the store cards. She had all, she had all of them, and not that she really needed to, she makes really good money. But was the, the perks that they had that enticed her, right? It was the, yeah, so the perks, the points. Um, and honestly they just kind of spent money every month and they didn’t, I had no idea where all their money was going, so it was kind of a mess.

Um, and she said, and so she said, when you asked me that question, I thought to myself, honestly, it’s time to get rid of the debt. She did not realize how long she had been paying on it until I made her look at the numbers and she realized how much she had already paid an interest. And, you know, she can pay off all of her debt.

Quickly if she wanted to. Um, but she just wasn’t tracking it. She had no idea what she was capable of doing until we really looked at all her, all her numbers. Um, and then when she saw that she was on track to pay off $97,000 in interest just by, just by like really focusing on on her, her student, her, like strictly her student loans, um, I think that was really motivating.

So, you know, a lot of times you look at those minimum debt payments and you’re like, okay, I think I’m fine just paying those. I don’t wanna pay anymore. But when you look at the cost of delay, like the cost of, what is it costing you mentally, emotionally, financially to not pay that off? Like I think that that is motivating to wanna pay it off as quick as possible when you know you can get all that money back in your pocket.

Yeah. I think a lot of times it’s like any other thing in our budget that people are just not. They don’t know the numbers. Yeah. Like they, and it’s, it’s kind of just a, I I was already doing this situation and I’m, I’m, you know, but once you look at it and actually study it, then if you probably are gonna come to a different decision with actual information, right?

Mm-hmm. Versus just coasting along and doing, um, what the credit card company wants you to do. Because they obviously are not doing it for any, they are not, like, they don’t have a plan at all. So, yeah. So just again, taking ownership and looking at your numbers, I think it’s important. Yep. Okay.

 So we actually just recently spoke to a client about this, and so I think it’s actually a good, it’s a good, um, point to keep bringing up.

We do not necessarily believe that paying off debt is the highest priority in your budget. That is not what we teach. We teach that your priorities are your priorities and we wanna help you figure out the numbers to do them. But for us, what’s more important, what’s most important is that you stop relying on debt.

Mm-hmm. You make too much money to rely on debt. And so that’s really where we focus is more so than anything else. We want you to get a budget system where you feel like, you know, you have the money for all the things that you want to save and spend money. On. Right. We want you to feel like you have it so you don’t have to rely on debt, because most of the time you don’t need debt.

Mm-hmm. Well, maybe never, but certainly we’re talking about like credit cards, bank loans, like, well, I’m saying yeah, but we understand you may need a house loan, but No, I don’t even mean that. Like you don’t even need credit cards. Yeah. Like you don’t need to be using, um, you probably make good money. You don’t need to use them.

You’re just using them typically out of convenience. And so that’s where this client comes in. She got a $8,000 escrow refund. Right. Um, which is huge. But you know what? She’s in California, so maybe that’s probably normal. Right. Um, and you know what? What would be the number one thing possibly to do is pay off a big credit card.

Right. Pay off as much of a credit card with that as you can. Um, but she did not wanna do that. She resisted it. And we’ve had clients do this before, you know, they feel better having the money, quote unquote, in the bank than to putting it, putting it all on a credit card. Right. And so what we, what she decided to do, and this is what, this is exactly what we mean.

We, she’s in month one, maybe, I guess now month two, she is. Um, getting her budget still finalized, like she’s still getting the set, the spending and the bills and everything figured out and situated. Right. So that’s step one to not using credit cards, right? Um, step two is to figure out the savings buckets and then really step three is to feel good about those things and then see what you can do on extra on debt if you want.

Mm-hmm. And so what she chose to do with her. Big refund was to fund her annual bills account and know, like, okay, we were talking about California. Well, you know, she got some property taxes coming, baby. Yeah. So she wanted to know that, that for the rest of the year, that those were taken care of and we compromised.

And she paid off a couple small ones because this is a client that had, that she’s, you know, that her and her husband are working together and we want to honor his commitment to this by paying off some cards. ’cause that was why he’s in, on, in, on, in for it. So she, she basically did both. She’s. Paying off a little bit of her credit cards or her smaller credit cards, and she’s putting a bunch in savings so that she feels good about having that there for the future.

Mm-hmm. I think that that is so good to go ahead and fund your annual bills account, especially when you have. A bunch. Mm-hmm. Um, and it looks like she, did she decide to not do property taxes and stuff in her escrow? Is that why she got a refund, I’m assuming? No, it’s just no, I it’s not, it’s, it’s just whatever.

Okay. We’ll just edit that out. We’ll just edit that out because it’s, it’s very complicated. Okay. No, that’s fine. So, you know, when you get a refund like that from any, any whatever, whether it’s tax or a tax refund, or you get a bonus or commission or anything, when you get that amount of money, when you look at how it’s gonna best serve you in that moment.

The, those annual bills, especially if you have a lot. So, like for me, I don’t have a mortgage. ’cause when we paid it off, um, that, you know, discontinues. Mm-hmm. But now you have to pay your property taxes and your homeowner’s insurance that no longer comes out of your escrow. You have to pay that upfront.

So basically making your, you have like a new quote unquote bill to your annual bills savings that is gonna, um, save that every month so that way you can pay it in full. That when you start stacking up, like your homeowner’s insurance, your property taxes, prime, any other, like auto insurance, all of that stuff, if you really pay all that annually, that’s a big chunk of money that you’re looking at paying.

Um, so when you can take a, like a chunk of money that she took, I. And put it in there and know that it’s already taken care of and you don’t have to worry about it. Like that’s, that’s really, it’s a big, like, it’s just a, um, a big weight off of your shoulders, I think. Yeah. And I mean, for them, this is stuff that they have to pay every year.

Yeah. Regardless of it’s, it’s completely separate from their mortgage. It’s just, um, some states just have more taxes. It’s all, all, and you. And so by next year, I, I’m, I’m. Confident, we’ll be able to fund it a little bit each month, but now she can feel good. And that’s, and that’s what’s important to her and that’s what makes her feel good.

And she compromised by security paying a little bit. So that’s fine. And that’s what we, we just want you to know like it’s your plan and it’s what makes you feel good, you know, what makes you feel confident with your money, like you’re making progress and that you can feel good and you’re, and you’re at the same time.

Like I said, the most important thing is she got the budget set up. Mm-hmm. So she’s not using credit cards anymore. You don’t have to need, feel the need to use credit cards. Mm-hmm. That’s the first thing. And then. You know, whatever order the next priorities come in let’s you know it’s, it’s custom to you.

So. Well, and I love how you, you hit on that because some people can look at our system and, and what we say and like, oh, I cannot believe they’re not for paying off debt. Well, sure. In some situations it absolutely makes sense that you need to work on paying off debt. In other situations, that is not their first priority.

We are here for our clients. Mm-hmm. This is something that they wanna work on. We will tell them our 2 cents, they will tell us theirs and we will come together and find the right plan for their specific situation and in and for them, this is what worked. And we’ve had many clients. Where listen, they, that’s just not what they wanted to do.

And that’s okay because we are trying to honor their goals. Um, but there are other situations where Shane and I will come in and go, you actually do need to pay off the debt and here’s why. Mm-hmm. And, and, and those are kind of hard conversations, but also necessary. Yep. All right. Well we hope you enjoy these lessons.

Um, hopefully you can take something from, um, one of these stories and it helps you and apply. You can apply it to your budget and we’ll see you next time.