EPS 25 – Terrible with Money? Start Here: Emergency Funds, Debt, and Building Wealth

Do you ever feel like your money is out of control? Host Jerry Williams dives into what being “terrible with money” really means—and how to fix it with a clear, step-by-step strategy. From setting realistic goals and creating a budget that works, to building an emergency cushion, paying down debt, and planning for retirement, Jerry lays out a roadmap for financial success. With tips on accountability, avoiding risky advice, and making your money work harder for you, this episode gives you the foundation to reach your first $10,000 and beyond.

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Transcript

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Bye.

SPEAKER_00: 0:54

And this is a Pink Money podcast where we talk about all things related to money from a gay perspective. I'm your host, Jerry Williams. And, you know, today the topic that comes to mind is somebody was making a comment to me about, you know, I really need to listen to your podcast because I handle my money. I'm just terrible with it. And I started thinking, you know. I guess it just really depends on each individual's person of how terrible they are with their money. I mean, are you in a lot of debt? You don't have any savings? Are you just falling behind on your bills? Who knows what, right? It could be all kinds of situations. Everybody has their own perspective on where they're at financially. And when you work with a financial advisor, counselor, whatever you want to call that person who takes a look at your finances from an outside perspective, an outsider's perspective, then they can give you their own take. I mean, they're not going to probably say, gee, you know, your finances suck, but you know, they probably say, these are the areas that we can work on. And this is the kind of, you know, things I'd suggest you do. And with that being said, I guess, you know, um, Even though a lot of things I talk about are more in the educational aspect, like, you know, what is an IRA contribution, what kind of IRAs are there, blah, blah, blah, you know, those things are helpful, right? But that doesn't really get down to how it really helps the individual, per se. Meaning, you know, if you are looking at your financial situation and you're not entirely happy about it, you know, then there are ways to improve it, and there's just some basic steps you can take. For example... if let's say you know you're just trying to figure out where you are you know the first thing I would suggest you do is just create some financial goals you know where do you really want to be and when you want to get there like are you trying to work your way to you know a hundred thousand bucks are you trying to work your way to your first thousand ten thousand whatever it is you know then you you can set that goal and you can create a strategy to help get you there. So with that being said, when you set your financial goal, let's just say you're working towards your first$10,000, okay? So if that's your goal and it's realistic for you because you've created your budget and you have an idea of how much money you can allocate towards that goal without stretching yourself completely thin, Let's say that you're going to try to get there in three years. You would need to save around$277 a month. If you get paid, let's just say twice a month, about$138 every time you get paid on a bi-weekly basis. That can probably be fairly achievable as long as you stick to that goal of saving that amount of money. Now, When you're looking at that goal, the first thing you really want to do is not only set that goal, but you need to create a strategy to help get you there, meaning we need a priority of money. So that means the first thing you need to do is just simply start with the basics, and that means... So we need to create at least a safety cushion for ourselves of ready available cash. And that's probably looking like they used to say about six months worth of money, you know, could be even further than that just depends on your situation. Meaning, if you lost your job tomorrow, and you needed to rely on your savings, how far would that take you? Well, of course, you need to strategize and figure out what are the basics right food shelter you know the utilities those things have to get paid so what is that number you know what is that nut that absolute that absolute amount of money that you need to bring into the house to keep your head above water now that doesn't mean you know going out and buying clothing it doesn't even mean paying all your credit card debt it just means can i put food on the table keep a roof over my head without defaulting on anything okay so when i say you know it doesn't even matter about doesn't even take into account your credit cards so the next step then would be to look at where am I in terms of paying off debt that I have? And that could be your car loan, It could be your student loan. It could be your credit cards, of course. And it could be maybe a personal loan. So those kind of debts. Maybe even have a debt obligation to maybe a family member. You know, I don't know. So you just want to take those things into account. So anything that could be kind of pushed out, like let's say your credit card debt, you can probably call the bank and say, hey, you know what, I'm out of work. and I need to skip a payment or two until I get back up on my feet. Now, they probably will. Now, your landlord, if you're paying rent, they may or may not give you that luxury. right? They may be able to, you know, let's say give you 10, 15 days grace period, but they're probably not going to go beyond that. I mean, we're not in the pandemic anymore. So they're a lot more apt to kick you out versus, you know, help you stay in. And if it's your mortgage company, you have a house and you have a mortgage that you got to pay. Now they be more, they may be more willing as well to help you out and maybe be more willing to help you go a month, you know, probably two at the most you know without going into complete default and reporting that negatively on your credit report. So all I'm saying is that your emergency fund should take that into account and that's the amount of money that you need to set aside just to give yourself that little cash cushion to fall back on if and when it's needed. So the first thing we want to do is take care of our emergency fund the second thing we want to do is pay down our debt and the third thing we want to do is start saving for retirement and after that save for everything else and the reason that retirement goes in really the third place is because it requires so much money and Really, they used to say about a million dollars is where you should shoot for. I guess it really just depends on your personal situation and what you're trying to achieve. What kind of retirement are you really actively looking at? And really whether or not you're planning for... Social Security to be a part of your world or not. So ideally, we wouldn't count on Social Security in the grand scheme of things. But hopefully, the government keeps that thing going and keeps it fully funded. And it doesn't have to be something that we have to really worry about. But nevertheless, you want to go ahead and use that simple priority money so that you have an idea of where you're going and what you're trying to do to get there. And so saving for retirement is even before saving for things like your children's education. Now, oftentimes people will say, well, that's more important than me retiring. Well, is it really? Because if it gets down to, you know, the fact that you've got all this money sitting in your child's, you know, college saving fund and you're out of money, you might have a tendency to raid that college savings plan, right? That's not what you want to do, but that can happen. Especially again, if you've put, you know, sort of the cart before the horse, so to speak. Now, It is a good idea to start saving for college early, no doubt. But you really have to have your act together in terms of, again, your budget so you know where you're at and where you're going and what it's going to take to get you there. Now, oftentimes people hear the word budget and they're like, I don't even know what that means. I don't even want to think about it. You know, I don't know how to budget my money, blah, blah, blah. So there's all kinds of software out there and there's lots of different ways to help you create a budget. But really, All the budget really does is help you track where you're at and what you plan on spending based on how much money is coming in. So you know how much money you get paid annually, monthly, weekly, biweekly, whatever it is. So you can start there. And then you sort of just work yourself backward. Because again, you have your fixed expenses, the things that don't change, and then you have your variable expenses, things that are all over the board, let's say food, entertainment, clothing, you know, those things can change, you know, very rapidly. And those are controllable, right? Because you know how much money you can allocate towards food to keep yourself alive it doesn't mean maybe you're buying steaks every week but you know the basics right if you spend I don't know let's just say$150 a week on food and sometimes you go way over you know if you're having a party or again you're writing friends over or it's a special occasion you might over buy right but maybe you can play catch up the next week and cut back a little bit because you over spent in that week and maybe you know you start having spaghetti for two three nights You know, something easy like that. And it doesn't require you really going to the grocery store again. That is all really under your control. So budgeting really is a way for you to just create a strategy to get you where you want to go and track your money in a broad sense. Some people are very diligent about their money. They know where every dollar goes. And some people are very loose about it. And, you know, they just kind of guesstimate, ballpark, you know, their way through it. Whatever works for you, but the closer you are with your money, then the more accurate you're going to be and the further you're going to get. Because again, if you're saving$138 every two weeks, then you know what that's going to take to get you there, right? And that's not going to change. So if you only have X dollars coming in, you've got to adjust everything so that you can achieve that goal if it's, again, achievable. If it's not, adjust the goal. Push it out. You know, It has to be achievable for you. That's all I'm saying. So you could work with somebody or do it yourself. If you really feel that you can't control your money, get yourself on some kind of automatic bill payment so it pays it automatically. And set yourself X number of dollars in your checking account or what have you. Put it on a spending card so that when you go to the grocery store, you don't overspend. You only have X dollars. And once you reach that level, then it's done, right? You're going to be a lot more cautious about what you buy and the amount, how much things really cost. Maybe you're going to be more cost conscious about using coupons and what have you. All that's fine. All that's fine. But again, it just really starts with you creating a strategy to get you where you want to go. So beyond that, I think that when people say that, again, they're really terrible with their money, it's most likely because, again, they don't really track it very easily or very readily. And then when they want to buy something, they probably either have to um you know just kind of again guess it or they put it on their credit card or whatever it is so you those are the kind of things you really don't want to do so if you put let's say things on your credit card then let's say you're taking the kids to disneyland and you've ballparked that you're gonna spend i don't know i'm just gonna say four thousand i don't know three thousand whatever it is so you know, throughout the year, then you can put enough money aside so that you can have that vacation, right? So if, let's say, you can't reach that in a year, then maybe the Disneyland vacation is going to be, it's going to have to be pushed out to maybe the two-year mark, right? Because that's an expensive vacation. And that's just how it goes, right? So you know what you can afford and what you have to do to get you there. So I don't want to belabor the point. Hopefully that makes a lot of sense. And You can just use that simple priority of money of paying yourself first. They always say that, but that's what you have to do because if you don't pay yourself, who is, right? Nobody. So you got to start with saving at least 10% of, I say at least 10% of what comes in the house has to go automatically to savings. And you create your little emergency fund and then you pay down your debt next and you save for retirement third. And then you can do whatever you want to after that. But that should just give you a basic strategy of where to go. And again, use budgeting software, use a pen and paper, whatever it takes to help you eyeball where you're at. I always say a good thing, too, is to involve others in the family. So if you have kids, you have your husband, you have your wife, you have your boyfriend, girlfriend, whatever, you can involve them as well. So let's say that, again, you're trying to reach that$10,000 mark. Well, you can put that goal on the fridge, and then every time you achieve that first step, second step, you know, we've made the... I put that money aside this week and I wasn't able to do it the next time so I put a little bit less but you know you can just keep tracking it tracking it tracking it so it becomes everybody's goal and everybody's on board and everybody works towards it and helps everybody achieve it because when you have others holding you accountable not just yourself you know you can cheat easily you know all on your own right it's like if you're trying to diet and you have that extra brownie who's going to stop you right nobody so if sometimes your will power is a little weak you know having somebody else who looks at you crossways and says you know what I mean come on if you're going to try to lose that extra 10 pounds then that is certainly not going to help or again you're going to have to make some trade-offs but it's just a matter of just keeping you on track right and it's it's also a good idea to help you know when you have these little wins of course you know then you can do a little celebration but you know all I'm saying is It's a good way to post your goals and have everybody on board with helping you achieve that same goal. Because really, if we're all trying to go to Disneyland, then everybody has to all row in the same way. And I think that's the best way to help get you there. So if there's something in particular about your financial situation that's really tricky... Maybe you do need to speak with an expert. Maybe you do need to seek out a financial guide or counselor or what have you. Don't hesitate to do that. There's lots of anonymous ways if that's going to make you feel better about it. Again, somebody who knows your situation can be very helpful. One thing I'll caution you about is sometimes you get people who will be very free to give you all kinds of advice and it can be very suspect. Also, be cautious about who's giving you advice. You know, I've encountered plenty of people, you know, who want to give you investment advice, you should buy this stock, you should, you know, buy these options, you should do this, you should do that, you know, this, whatever, I would say stick to the basics. And again, if you're not a real astute investor, then don't do it. Right? Because it's a good way to lose your money. You know, if you're a gambler, I mean, a good poker player and you're comfortable doing that, well, you know, good for you. But if you're a novice, then you certainly don't want to go to the card room and start playing poker and you don't even have, you know, your savings account built up. Not a good strategy. So not trying to tell you what to do. I'm just giving you some helpful hints and tips and things that I've seen that are good and useful ways to help get you where you want to go. And one thing I will say about investing, since I brought it up, is, you know, I would say again, and I've talked a lot about this, but again, if you're going to do any investing, you would not do that with your savings account, right? You want to keep that money completely liquid. Now, let's say you've got your first$3,000 set aside, and you're worried that you might go spend it. Well, you could just buy... certificate of deposit and you could put that money into that CD for let's say six months or maybe it's a year and it could earn maybe a higher interest rate than you could just letting it sit in your savings account now you could do that right And again, that requires a little bit of discipline because that money is sort of moved off the books, so to speak, and it's in this certificate of deposit. And if you run into a situation where you absolutely have to crack that CD open, then you're going to pay a penalty. So should you do it? You know, you have to really weigh that. Is it really wise? You might want to take, you know, instead$2,000 instead of all$3,000, put that into a CD. If again, you're kind of living on the edge and you say, hey, you know what, I don't think it's a real concern for me right now to lose my job. I'm too high in demand. Well, good for you. Then maybe. But it's just something you have to weigh. But it's certainly an option when you start building up your savings. You want to really... put it to good use in terms of making it work hard for you. But should you be putting that into the stock market would be another story because there's certainly no guarantees there where like most certificate of deposits, you buy it, you know, chase JP Morgan, what have you, you know, those are all going to be FDIC insured. Can you buy uninsured CDs in the open market? Yes. Should you, I would say probably no. And again, unless you're really a student investor, you've got, you know, plenty of cash and you're very on top of your investments. Um, Should you be buying individual stocks at this point if you're just getting started? No, right? No. Again, there's way too risky. You don't have the money set aside yet to be buying stocks. Should you be buying maybe a little bit of mutual fund? Yeah, you could do that. You could buy a stock-based mutual fund or a stock bond mutual fund. You know, put your$50,$75,$100 a month or what have you into that thing because that's a long-term investment and you can really just... You know, put that money aside. And if you do need it, you could easily redeem that place of redemption and just get your cash back and make a sale. Now, again, does not guarantee it's going to go up. You could lose money, you know, but it's certainly an option. Again, that's not where your emergency money is going to be. Plenty of people have always told me, you know, I don't really have an emergency fund. You know, all my money is in the market. And I'm like, okay, my emergency fund is my credit card. Okay. Okay. Again, to each their own. I wouldn't suggest that, but it depends on what your liquidity is. So if you have a high degree of liquidity and you're not really worried about it, I know we certainly saw a lot of credit lines cut back in 2008 where people had$10,000,$15,000, whatever,$20,000 of credit available. Next thing you know, it was halved. So you can't rely on that 100%. It just depends on your situation. But since those are things that I've seen anyway. So the other thing I would caution you about is if you see sort of a deal you can't pass up. Right. So oftentimes people will try to get you to buy a certain stock or you'll see an IPO coming out and you think, oh, my gosh, I really need to buy into this because that is just a golden opportunity. Is it? You know, I don't know. Because IPOs can go sideways. They may be a really good deal. Most average people are not going to be able to buy into an IPO, an initial public offering, meaning a company who's decided to go public with their stock will issue an IPO. Most often IPOs are bought up by institutional investors. So you can sometimes get involved in an IPO if you're an accredited investor, meaning you have like over a million dollars or so and you make about$200,000 or$250,000 a year, then really what they're saying is you have the means in case this thing goes sideways. But again, if you're just starting out and you're not anywhere near being an accredited investor, it's not something you really want to do. There are different ways that you can buy. into ipos through you know other avenues like etfs etc mutual funds etc and you know that's possible but you know again speculative investing is not where you're at unless again you're a really astute investor and you know where you're at or you're really seasoned and you're probably not even listening to this podcast anyway if you're a seasoned or real astute investor you're already off doing your thing and this is too basic for you but for everybody else who's not quite there you're working your way to get there we want to start with the basics you know, create your goals, your financial goals, whatever you're trying to achieve, then set your budget so that you can have a means to get you where you want to go, track it, make sure you're diligent and, you know, kind of marking where your progress is and hold yourself accountable by using other people and having support so that people can cheer you on and help get you there as soon as, you know, as soon as you can, as soon as you can get there, you know, as soon as possible, because that's really what you want to do. And once you achieve that goal of having 10,000, then move on to your next goal. So anyway, that's pretty much it for me. Have any questions, reach out to me. I'll be happy to give you a hand to the best of my ability. You have a great day, and we will talk at you later.

SPEAKER_02: 22:49

A man can love a liar, and a woman can love a thief. There's a few things, baby, you should know about me. I've always looked for power in all the lovers I knew.