All right. It’s time again for the lessons from the sessions. And so when we do these episodes, we just want to take the things that we’re working and talking to our clients about and bring it here to you so that it can help you with your monthly budgeting and your behavior when it comes to your finances.

Yeah. And we know that they are getting something out of this. We’re getting something out of this and we’re talking to them. And so we are hoping to bring that to you guys, like Shana said and we know it’s going to help you because we have heard time and time again, people ask us all the time, how do you get so much content for your podcast?

Listen, yeah, we have all these sessions with our clients and we bring that information back to our audience. Yep. So let’s dive right in. 📍  

We have a client that has a rental property and when she first came on, she’s a single mom, she’s a lawyer, she’s very successful. And she was talking about wanting to, wanting help managing her rental property. After we got through her budget and we started talking about how much the rental property costs, what is the is it even worth it? How much is she bringing in? What’s going on with it? Where is it? How just all of the questions she really asked, started asking the question is do I really wanna continue having this rental property and is it worth it? And I think that’s our job, right?

Yeah, exactly. But, and most of, I’m gonna say most of the time, sometimes it’s really, it’s just not, you have a client that like, does it. Full-time, like as her main income. Does she, and there’s a lot going on with her. She’s four or five, I dunno. Seven. How many does she have?

Eight. Eight. I was totally wrong. Yes. There you go. Our job is not just to look at your personal finances and look at your income, your spending accounts, whatever. We look at everything. We are not emotionally attached to your money. We we have a bird’s eye view. We have a completely different set of eyes coming in with different thoughts, different mindset, different way of thinking.

We are looking at your money asking you questions. And it really just makes you think about it in a completely different way. And we love that because we feel like that’s when all the light bulbs go off and really all the gears start turning. So I made her sit down and we looked at what is she bringing in every month with this?

Okay, what are the annual costs that go along with this property? How much did she buy it for? Has she ever thought about selling it? If she did, what would she wanna sell it for? Is how old is it? Like the repairs? Like we just really asked all the questions and she, and then we talked about how much debt she had.

That was a huge factor in all this. And how much is she paying every month? In minimum? Just minimum debt. Payments. Just on her regular life. And we decided. That it made way more sense for her to pay off or sell the property. If she could clear $50,000 and pay a ton of stuff off, walk away 50,000 free and clear.

And that would really help her personal finances. And that is what she decided to do. Nice. And I’m just saying like. When we look at her budget of what it looks like now versus what it’s going to look like when everything is said and done and all that debt is paid off. And all those minimum payments are no longer in her budget and how much more free she’s gonna feel having to fund her son’s travel sports.

And his face fellow stuff. There’s the secret. Yes it is. It’s just. It allows her to do so much more. Yeah. I think that there have been different fads that come, have come and gone in personal finance and certain real, certainly everybody decided they were gonna become a real estate expert, which I’m not.

I’m not mad at you. I understand. Everybody was doing it. Everybody was telling you how much money you can make, how easy it is to be a real estate investor and make your money. No, nothing, no money comes easy, that’s for sure. And this is a very grownup game that most of us don’t even have the time or the wherewithal to run.

However, it was a huge thing. Get it. The idea though, that you wanna take away is if your property is not. It is not making you money, it’s not an asset. And I think that people get caught in this language of it’s an asset, but no. For if, for the time of your life when you wanna be setting aside money to invest for retirement is your rental is costing you money and you’re having to feed it like it’s a. A child a second, a third, fourth child. Yeah. Then that’s not really necessarily the position you wanna put yourself in. Especially when it needs its own savings. Yeah. Like it needs its own emergency fund. A set aside from yours.

Yeah. And you really just have to decide if it’s worth it and do you wanna continue maintaining this? And the answer is no. I’m just gonna help you. For most of us, we have enough going on in our lives. Put your investments in something that you don’t actually have to manage. Yeah. And you don’t actually have to do stuff because the next version of, so first of all it was real estate investing and then it was Airbnb.

And I think a lot of people are realizing maybe this is not what what I really wanted to do. Yeah. And I do have that client at least for her, she’s at least transitioning them all to short term or long term rentals instead of short term this year, which is going to save her a lot of time and energy, but.

Again, I think, invest in something that you can understand and that doesn’t I think about her, not only was her money probably all being drained, but your time. Like you’re feeling like you’re anxious about it. And I think too, the terminology that’s going around is make money with other people’s money.

And we’re talking about take money with your own money. That could work. But there’s so much talk out there. You hear it on TikTok and all these shorts and everything. It’s use your bank’s, the bank’s money, which is, so they’re saying use other people’s money to make money. And it’s yeah.

But you don’t understand how much more of your time, energy, and of your money that you need to be able to maintain that thing that you just bought with somebody else’s money. Yeah. So it is just a lot more to it. Yeah. So I wanted to bring this up because I think that, I know you guys live this way and and my clients live this way, and I’m sure other people do, is they get paid less monthly than maybe they would want, but they get these big bonuses, right? And it’s like, how do we budget that?

What we have done with my latest clients is, he makes a good, he makes good money monthly, but it’s just barely not enough really for him to live the li them to live the lifestyle that they want to live, which is very, still very frugal, I think. Given the amount of income, but it’s still not enough.

So we have, we figured out. So the first step is, and we always say this is figure out what you cost a month. What does your life need a month? Okay. So we figured that out. And for them it was like $16,000 is what they need. They have two kids between everything that they got going on. 16 is a good number for all the spending, all of the, bills and stuff. Okay, so then, hold on. That’s not including any savings buckets, right? No, it’s not. That’s just their Okay. It’s not, so then we can figure out, so he, maybe he makes 10,000 a month. I think he makes more than that, but we know that we have that $6,000 monthly shortfall that we need to figure out, right?

So then when he gets these big bonuses, we’re putting enough for, it’s literally guys as simple as this, 6,000 times 12. If that was the shortfall into the, in a income holding account. And for him, fortunately, one bonus covers that. So he can completely fund his income in one quarter.

It goes in the income co the income holding account. As does his monthly paychecks. And then once a month, $16,000 gets transfers to his bills account and everything happens just like we teach regular budget. That’s, so that’s how that would work is you, but you do have to figure out like, what do I cost monthly?

And then you gotta figure out what that difference is short, if you’re not making short, making enough monthly for that shortfall, and then that’s you, that’s what we have the income holding account. And then we just still can do one transfer to make it simple. Okay. This is not the same thing, but I had a client who gambled for a living.

Oh yeah. I, it’s that’s hard. Yeah. And he, like we were figuring out this exact thing is like you need that, your income holding account and how much do you cost to survive? What is that shortfall and how much you need to bring in every single month to make, he was like a professional gambler, but like how much you needed to bring in every month to be able to make and fund all of that to make it work.

But yeah, having the, if you have this type of situation where you get paid little during the month, but you get paid big bonuses or it’s. Super, super inconsistent. If you’re in lawn care and your business makes, whatever, a million dollars in the summertime, but then you’re dead broke in the winter.

Having that income saving, income holding account is really important to be able to just use it as like you’re just a placeholder. Yeah. A placeholder to just fund your bills account as every month or twice a month. However, you’re gonna do that. So you can have a consistent income. And people come to us all the time I can’t budget, I have inconsistent income.

Let me show you how to make it consistent. And this income holding account is gonna do that. Yeah. So you just, you pull all of your income in that account, but you still only pay yourself monthly. What you need monthly. And you let it just stay there and that way. It, this would work for teachers or coaches or like Vanessa said, stuff for, it’s seasonal.

That way you can al there’s always gonna be money there for when you do need to pay yourself. And if you have a lower month the bigger months that you’ve had that have been `pooling there will help. So yeah, the income holding account and then like we said, then you just transfer your paycheck.

You’re paying yourself something regular from the income holding to your bills account each month. Based on the budget that you set up. Yeah. I think that’s just gonna help them make everything just way more consistent.

 Okay. So I have a client who she is a very high up in, in a company and she gets a quarterly bonuses and a huge yearly bonus.

And then they all, she also gets a yearly like dividend check from the stocks that they give her. And she has right now in the bank account about $200,000. And she is trying to figure out hey, do I save that for this down payment on this house that I wanna buy maybe in a year? Or do I use some of that towards debt?

Do I save it? Like she, there’s just, there’s a lot of questions and she’s afraid to like, let go of it because she knows she has it. But then she goes, but I get another a hundred thousand dollars in dividends next year. And I’m like, hold on, you have $200,000 in the bank right now and you know that you’re getting another a hundred thousand.

I know this is cooking. I know what’s happening. And she’s yeah. And I’m like, okay, we need to think about this. So we really, we went like over 15 minutes of our session last week, and I can’t wait to finish that conversation with her this week. But really it’s okay, you need to find out how much money you have in the bank and what is the interest that you’re making in that money.

Okay. That’s question number one. Number two is how much debt do you have and how much are you paying in interest every single month with all that money? That, that’s going out okay. And then it’s oh, of this $200,000 of money that I have in the bank, do I actually own any of it? If most of it needs to go towards debt, and especially if I already know that another a hundred thousand is coming next year and I’m not planning to build for another year.

What is the best option and what do I do with that money? I don’t wanna give it away, but we are gonna talk about putting some of that on debt. Absolutely. Especially so you’re thinking about saving that money, but you’re gonna pay a whole year of interest on I think she’s got seven or eight different debts and interest rates aren’t.

Low, like we’re talking about like regular interest rates, right? Only our, the money we get is every, yeah. Not the money we pay. Do you really wanna be sitting there paying thousands of dollars in this next year in interest? Or you could be paying all of that off and saving thousands of dollars of money every month.

Putting that towards the payment of your, like your down payment of your house when you do go to build. And with all of these bonuses and then being outta debt, what if you just wait another extra like year and buy the house fully in cash? ’cause you’re getting a hundred thousand here, a hundred thousand there.

Just buy a whole house. Buy the whole house, it’s fine. And that was the other question. I was like how big of a house do you want? And she’s I don’t know how, and I think she’s in between that how bougie do I wanna be and where I, it’s comfortable to maintain, whereas I’m not drowning and and I’m not house poor.

So I think that’s, and I, I told her, I was like, you have to have, you have to go back to your husband. Nobody can answer that. I can’t help you. That I can tell you my experience and what happened to us and what I think I could have done differently, a little bit along the way.

I said, but you have to figure out, and she’s got two kids. How big of a house is gonna be comfortable for you? And really how much in payment? Like, how long do you wanna be paying on this house? You could, like Shayna said, she could literally buy a house outright in cash and not have to pay not to ha not to have a mortgage on it.

If she chose. Yeah. To wait just a little longer. That’s our budget. Best official opinion. You do what you want, girl, but. We we are still dreaming about people taking a briefcase of cash to buy a car. Yeah. If you could just do that for, to buy a house. We wanna be there.

Can you video? Yeah. First of all, we’ll come see you. If we can’t, then can you videotape this experience? We wanna walk and see the finance or the people’s face when you say, here’s my briefcase of 400, 5,000 thousand dollars. Anyway. Yeah, it’s fine. Okay. We’re gonna go into vacation mode because vacation time is coming.

So I. Wanted to talk about the illusion of a cheap vacation. So I love my clients. They’re they were so excited. They’re going on this cheap `vacation to stay with their family. They live. Gosh, where do they live? Up in the north. I can’t remember exactly where. It’s very cold. Where they are. It’s still frozen.

Oh. So he can’t fix his mailbox. Somebody ran into his mailbox, so the ground’s frozen, so he has to, we actually set aside money in their home savings bucket for a new mailbox until it’s like spring and it thaws out and he can actually install it Anyway. It’s really funny. That’s where they live. I’m sorry.

Wait, is their mailbox box currently like duct taped to a tire? I don’t know. But remember that one that we saw around here and it was so redneck? Yeah. I don’t know what they’re doing for Mill. I don’t know their mail situation. But anyway, long story short, they live somewhere really cold, but they’re his in-laws.

They’re in-laws whatever her parents live in Florida or have a condo in Florida. Have you ever heard this? All you have to do is get here and we’ll, oh yes. And it’s gonna be so cheap and, okay. Thank goodness they’re on a budget. They’re doing things so we can plan for it. But the illusion, I just wanted to talk about the illusion of a cheap vacation because you’re staying with family.

Okay, so first of all, let’s just remember we still have to get there, which is never cheap. Yeah. Especially just add kids, add chaching, chaing. As you’re trying to get there, whether you’re driving or flying, it’s still a budgeted item. You need a way to get around. If you don’t drive, you need a way to get around when you’re there.

And. Relying on other people’s vehicles is not the most adult feeling in the world. So that’s usually not gonna be an option. Yeah. So if you’re not driving, you’re gonna need a rental. And that’s just the beginning. ’cause then we know, oh, let’s take you to this favorite local restaurant and oh, oh.

And then my favorite is when they’re like, oh, we’re just gonna go to the beach and we’re not gonna spend any money. I’m like, okay. So make sure you get your sunscreen. Your kids are gonna want shovels. Let’s just be really honest about how it’s still gonna, yes, it is a blessing to be able to have.

Free board. A room not board, I don’t know, which was different room and board. Yeah. But you’re still gonna have to pay for food. You’re still gonna go out to the special places in the local area. You’re probably still gonna want souvenirs and you have to get there and you have to afford while you’re there.

And then also sunscreens, like gut needs its own savings bucket. Let’s be real honest. That was just this one in particular. But anyway, just to understand as we’re planning for these quote unquote cheap vacations, not to forget that part. Mom’s bed and breakfast is always the best, obviously, right?

Yeah. So it’s yes. Being able to stay with family and not having to pay for a hotel or Airbnb. That’s awesome. But like Shana said, sometimes we take that for granted and we’re like, oh, it’s super cheap. And then we don’t realize how much money we spend in lieu of paying for this hotel or Airbnb.

So the excursions or trips or, maybe there is like a Six Flags next, close by or whatever, like some zoo or. And so it, they just add up very quickly. We were out of town this past weekend for three days, and I’m pretty sure these three days cost me $2,000. I’m not even kidding.

After with the hotel stay and everything. It can just go by very fast and you just want to make sure that you are accounting for it. And like Shana said, don’t underestimate, we would rather you overestimate the cost of the vacation and then have some of that money to put towards your next vacation.

Instead of underestimating it and one trying to rely on credit or two, pulling from a savings bucket to be able to fund it. And then you just feel like crap because you weren’t able to pay cash for it. Yeah. And the other thing that comes along with this is setting a budget. You can set a budget.

Yeah. So just because we’re going doesn’t mean we’re spending money. It’s no, we’re gonna plan one outing. Pick the best one. Let’s go all out. Let’s do a great job. We’re gonna go out once to eat a day, not three times, not twice. One time, like whatever you need to do, let’s make, you can create a budget and stick to it, and you don’t have to play this.

Like it’s Disneyland and we’re just spending money we, like somebody’s printing it anyway. That’s not correct. Not a free for all. Okay. But but you can still, you can set a budget and stick to it. But the key is Vanessa, get set a budget so you’re not going back to use credit or stealing money from your future self for other things.

That’s important. And just don’t estimate. These quote unquote cheap vacations. Yes. So we’ve loved bringing you, there are lessons from the sessions here. And listen, if you’re interested in coaching, we would love to the opportunity to chat with you if you go to budget besties.com/free call.

Sign up for a discovery call and let’s see if it’s a good fit. Because listen, we for the first time, like we have a couple of spots open and we’d love to meet you and see if you wanna come join us.