The Spending Audit And A Practical Plan To Cut Costs And Save

Your spending habits already reveal your priorities, even when your goals say something else. We sit down and get brutally practical about how to audit your lifestyle, cut the right costs, and turn “I should save more” into a plan you can actually follow.

Julie Schwenzer asks the questions we all have, and Jason Taylor, CFP, breaks down what he recommends to real clients: why spring is a smart time to review your money, how far back to look (three months), and how to separate normal spending from one time outliers like holidays or special trips. We also talk about why the 50/30/20 budgeting rule can feel impossible with today’s rent, inflation, and housing affordability and what to do instead when the math does not cooperate.

From there, we move into the clean up phase: cancelling unused subscriptions, finding bigger “quiet” expenses like car payments and overpriced phone plans, and tackling debt in the right order. Jason explains why high interest credit card balances are a financial emergency, why an emergency fund beats a credit card as a safety net, and what to consider before using tools like a HELOC or refinancing when interest rates are not in your favor. We also touch on using AI to speed up a spending audit (with privacy in mind), plus how retirement planning and retirement age expectations are changing.

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Transcript

Welcome And Big Money Question

SPEAKER_01 0:03

Welcome to My Pocket FP, the podcast where your wallet finally meets its financial planner and they actually get along. Join your host Jason Taylor, certified financial planner, money sensei, and your guide to financial freedom. Whether you're planning for retirement or just trying to figure out where all your money went last weekend, we've got you covered. Get ready to take control of your financial life with smart tips, surprising insights, and yes, an app that fits right in your pocket. This is My Pocket FP, because your future deserves more than guesswork.

SPEAKER_00 0:52

What are my financial goals and do my spending habits align with my plans, particularly if they are to save money in a productive way? I'm Julie Schwenzer, co-host and producer with Jason Taylor, certified financial planning expert and the creator of My Pocket FP. Jason, it's great to be back with you.

SPEAKER_02 1:11

Thanks,

Why Spring Is Audit Season

SPEAKER_02 1:12

Julie.

SPEAKER_00 1:12

So how do you suggest we audit our lifestyles to reduce spending?

SPEAKER_02 1:19

Uh yes. Well, you know, step one is to figure out where you are now. And April is a you know a great time of year. May is a good time of year because it's post-holidays, don't have any extravagant spending usually in the months of January, February, and March. Uh so it's a good time to uh look back and reflect on what your actual average spending is without any outliers like Christmas.

SPEAKER_00 1:41

Absolutely.

Rethinking The 50 30 20 Rule

SPEAKER_00 1:42

And you know, we've heard about something called the 50, 30, 20 budgeting system. Is this something that you look at for clients where a portion goes to needs or essentials and the rest to discretionary and savings, or do you have a different equation for that?

SPEAKER_02 1:57

Yeah, we do a lot of uh cash uh basis spending type planning. We don't do set percentages. I mean, we you know, you also figure out the 10% for tithing that is usually added onto that as well. It all depends on what part of life they're in as well. Uh first starting out, the 20% savings is very difficult to do, you know, especially with the cost of living nowadays. Uh and the 50% isn't that realistic with the price of rents in a lot of towns.

SPEAKER_00 2:26

And what have you seen change over the years since when you started as

Inflation And The New Housing Reality

SPEAKER_00 2:30

a financial planner? Have you seen a lot of impact by inflation, like what you're saying now, just how much it costs to buy a house, to rent everything?

SPEAKER_02 2:40

Yeah, buying a house is not an option for a lot of young people nowadays without having an open mind. I've talked to a lot of young people who, you know, when I first bought my first house, it was difficult too because I wasn't making a lot of money at the time. But I I bought a house and I rented out to my friends. So I myself didn't have to make the full payment. And a lot of young people today aren't really willing to still take that chance.

SPEAKER_00 3:07

Yeah, yeah, and I hear that. And so what about cleaning up some of the expenses?

Subscriptions And Lifestyle Cost Cleanup

SPEAKER_00 3:12

Do you also look at things just like a simply like, hey, you're not using these subscriptions, or there's other services you may not need, or what are those wants that you have that really aren't essential? Do you ever go through that, like kind of almost like a cleansing of somebody's budget?

SPEAKER_02 3:29

Subscriptions are a great place to start because there are a lot that you don't use enough to really make it worthwhile. The other place we look is you know, some people have loans for like recreational vehicles like boats and ATVs that they rarely use. So yeah, we do look at subscriptions as a very easy, but it's usually a small amount. You know, $10, $15 here and there, uh, which does add up. But we look for larger amounts to, you know, they're paying on two cars, or if they have you know more cell phone than they need, uh, things like that as well, if they're really trying to limit their budget.

Debt Paydown And Credit Card Strategy

SPEAKER_00 4:10

And what about paying down debt and these really big expenditures like the mortgage? I mean, I know you said in the past episodes too, some debt is good debt in a way. How do you go about that depending on where the person is in their stage of life versus like a younger adult versus somebody who, you know, maybe is middle-aged?

SPEAKER_02 4:31

So when we work with people, we definitely look at interest rates. A lot of credit cards are, you know, 20, 30 percent that they charge people. And we want to get rid of those credit card balances because that's just gonna eat all their savings up and more usually and put them further into debt. So the credit card is a main focus on how to get rid of those, not just pay them down, but completely get rid of them. You don't want too many credit cards, like I would say, you know, two at the most.

SPEAKER_00 4:59

Is that one of the areas that you look at first when you're um trying to help somebody again, like kind of budget their lifestyle so they can save more?

SPEAKER_02 5:10

So we look at the low-hanging fruit first, which is like the subscriptions and things that people aren't as attached to. Um people are very defensive when it comes to credit cards, um, as far as being like a safety net, which we also try to promote getting an actual emergency account as your safety net rather than a credit card. Because that gets a lot of people in a lot of trouble.

Refinancing Risks And HELOC Rates

SPEAKER_00 5:34

Oh, yeah, sure. I I was wondering too, when you spoke about like looking at interest rates, what about other plans like reevaluating your insurance plans and also possibly refinancing on your home? That one is like a big question because then you you lose equity, right? You lose what you possibly put into that home and now you're starting a new loan.

SPEAKER_02 5:57

Right. We try to avoid cash out refinance is what it basically is. We will have people do a line of credit when interest rates are good. Right now, line of uh home equity line of credit does not have a great rate. Um, so we're not doing as much as we were when the rates you could get a you know, home equity line of credit for four or five percent and use that to pay off credit cards was good at that point. Right now is not a great time to take on any debt.

Using AI To Review Spending

SPEAKER_00 6:24

And then when you meet clients, I know you see them at all different parts of their their life, right? Like as an adult. Yes. Um, do you have a lot of cases where you they do ask you for help? Like, can you look at what I'm spending and I almost need you to intervene to stop me from uh spending on something that might be like too discretionary?

SPEAKER_02 6:46

Yeah, generally I like people to try it on their own because it is a lot of work to look at you know, three months credit cards, three months bank statements. Um, fortunately, with AI nowadays, um, you can black out your personal information and upload your spending, and it will actually do that for you. It will, you know, sum up all your spending and you know, um, if you plug in what is discretionary and what you need to live off of, it will create a nice little report for you.

Why Three Months Tells The Truth

SPEAKER_00 7:16

I had a another question too. Is what do you recommend for someone? Like how long in their financial history should they look backwards? Should they look like the past three months to kind of evaluate how they're spending and their habits, or do you recommend a longer length of time?

SPEAKER_02 7:36

Uh yes, the three months is what I I recommend, and that's why this time of year is really good for that.

SPEAKER_00 7:40

Yeah, yeah, that's what you were saying. So this is the key be after the holidays, before the trips for families, yeah, before the summer trips, all that.

SPEAKER_02 7:49

And if there are outliers, I ask people to take those out um and plan for those separately as a goal versus normal expenditures.

SPEAKER_00 7:58

Okay. And then is there like any other tips that you have that um you recommend to people that like just they just want to save more and um you know they need to maybe hone down a little bit more on what they're doing and take a more realistic approach to their spending because it can be shocking to a lot of people on you know, things that they're spending and that they could actually save on that, and maybe they just don't want to deal with it.

Goals That Make Change Stick

SPEAKER_02 8:25

Right, and that's you know what you you hit right on the nail right there. The not wanting to deal with it is where people get in trouble. The best first step is to figure out where you are now and figure out where you want to be. So look at your current spending and see where you are now, and then uh write down all your goals because your goals are the one thing that are gonna motivate you to make change. Because if you realize you can't reach your goals without making a change, you're gonna want to, you know, make change in your current spending more often than not. If you actually have it written down and visual, um you're gonna move forward a lot faster.

Retirement Timing And Market Tailwinds

SPEAKER_00 9:06

I wanted to throw in one more the retirement, the goal of retiring at a particular age. How has that changed with your clients? Because now it just seems like it keeps getting pushed back.

SPEAKER_02 9:17

It's it's getting pushed back for different reasons. A lot of people, you know, love what they do and don't want to quit just because they hit a certain age. Um, others it's because they're realizing they need more income in retirement than they had first thought. Overall, right now, you know, the stock market's done so well that people are in a better place than they planned. So more people are thinking about retirement than you know earlier because the investments in their 401ks have gone up so much.

SPEAKER_00 9:51

Well, yeah, that's a lot of great tips and advice that you gave us, Jason. I you know, we I think we all could work on this. So we appreciate another informative episode with you. Thank you.

SPEAKER_01 10:02

Thank you.

Pocket Sized Planner And Closing

SPEAKER_01 10:07

Thanks for tuning in to My Pocket FP, where we believe small monthly changes can make big positive changes in your financial end game. If you're ready to level up your money game, head over to mypocketfp.com and download the app today. Your financial planner is now officially pocket sized and doesn't charge by the hour. Until next time, keep your goals high, your debt low, and your pockets smart.