SPEAKER_00 0:07

Welcome to Money Talk for Real, a podcast where I talk about making money, spending money, and everything in between. I'm Nick, and in this episode, I have another listener-submitted money situation that I want to walk through. And I'm hoping that by you listening to this, you can at least relate a little bit or at least learn something from this. If you want me to walk through your money situation, I'm happy to do so, happy to help. You can submit your information to me at money talkforreal.com and you can click on the debt help link and you can record a voicemail and send that to me directly through the website, or you can type out your information. This situation here may actually be a little bit more frustrating than the last one that I did because this couple is making about $140,000 a year combined. On paper, they should be crushing it. But instead, they've got no savings. They have credit card debt and they feel like they cannot get ahead. So the question is: how do you make that much money and still feel broke? Well, that's what I'm going to break down. Um, we're not talking about whether these are their real names or fake names, but we're going to call them Mark and Lisa. Both are 32 years old. They're married and they have no kids. Their combined income, again, is about $140,000 per year. After taxes and benefits that, of course, come out of their check, they're bringing in around $8,200 per month. Now let's listen to listen how I'm gonna spell this out. Let's see how this plays out. So here's where their money is going every single month. Their mortgage payment, $2,400 a month, which, by the way, not terrible if it's a true mortgage, depending on their area with today's interest rates and house prices. That's not bad. So mortgage, $2,400 a month. Car number one, $620 a month. Car number two, $510 a month. Car insurance, $240 per month. Gas, $300 a month. Groceries, $700 a month. Eating out, $800 per month. Subscriptions, about $180 per month. Gym memberships, about $120 per month. They have this next one labeled as shopping. And the only thing they mention is clothes, Amazon, et cetera, $900 per month. Travel fund, but usually turns into actual trips, $500 per month. And then their credit card minimums that they owe each month. Again, the minimum payment on all their credit cards combined, I'm assuming is what they're talking about here. Uh, $400 per month, which totals about $8,670 per month. So yes, they are overspending by roughly $400 to $500 every single month. So here we go. This is where it gets interesting. Because again, I've said this over and over. Nothing here is completely insane. There's no, you know, $10,000 vacations every month. There's no Lamborghinis that I know of. It's just a very comfortable lifestyle that quietly costs them too much. It's a classic case of what I will call the dual income illusion. Not dual income, no kids. Those are called dinks. That's a finance term, a demographic term for dual income no kids. This is the dual income illusion. This is where you have two people, two working people in the household where two solid incomes trick you into thinking, well, we're fine. We can afford it. It's not a big deal, right? But behind the scenes, there's no margin, there's no system, there's no control, as I've just talked about. They're living on more than what they're making. Um, high income, again, not all this, it's not always about your income. High income does not fix bad habits, it just hides them. These people are not broke, they're just maxed out, which is going to give them the feeling of being broke, right? If Mark or Lisa in this scenario lost their job tomorrow, this whole thing falls apart and it falls apart very fast. So let me call out the biggest issues here. $1,130 in car payments is freaking wild. To put it into perspective, that's over 13% of their take-home pay that's going just to their vehicles. And this is a lesson maybe for everybody. People truly underestimate how much cars kill the wealth building process in your personal finances. Let's talk about the eating out. $800 a month eating out, that's not like a hey, we just grab food sometimes. That's a full-on flipping lifestyle. And convenience spending is the easiest money leak with everybody. We're busy, we're living our lives. It's easy to eat out for the convenience. The shopping, which other people have put in the miscellaneous category, this is the silent killer because it truly does not feel like a problem in the moment. When you're buying a $20 new gadget, it doesn't feel like a big deal. But it obviously adds up. And to be honest with you, and I love Amazon, and I know we all do, but Amazon is the modern day budget destroyer. Okay. It's all the deals and all the $15 here, $20 there. And then you look down and wake up one day and you're like, oh crap. Right? Their travel fund that they're saying is a travel fund, but then they said it usually gets turns into actual trips. It's not really a fund at that point. They're setting aside $500, but then just spending it constantly. That's not saving, that's pre-spending by putting it in this fund that you can then go spend. And this is gonna sound harsh, but they're not living below their means. They're living right at the edge of their means and then stepping over it every single month. Okay, I'm gonna try not to pick on them. Let's talk about what I would do exactly in order to help them. I want to help people. You're just gonna hear some truths. The first goal is simple. Stop losing money. Now let's talk about what that is. Cut out some things, okay? Uh, more specifically, eating out $800 a month. I'm not gonna go die hard on you. I'm not gonna say never eat out. Can you cut it back to $400 a month? If there's four weeks in a month, that gives you $100 a week to eat out for two people, $50 a week. That's a nice meal if you go once a week. Or if you want to divide that up to five days, you each get $10 a day. Whatever it is. $400 a month from $800. They're at $800 right now. Bring it down to $400. The next thing is the quote shopping. $900 a month. That's an entire paycheck for some people. $900 a month. Can we get that down to $400? You're still got $400 a month, people. That's a lot of money to go shopping. And if you're saying, well, the stuff I buy costs more than that, then maybe you need to reconsider the stuff you buy. Maybe you need to look at cheaper stores, cheaper websites, more generic brand stuff instead of name brand stuff. I've talked about that in previous episodes. So from eating out $800 to $400, shopping from $900 to $400. The next thing is this travel. Everybody needs to travel. Again, I'm not going diehard on you. Can we cut it from $500 down to $250? Cut it in half. $250 a month for a travel fund is still pretty good. Okay. If you save that up and do that for 10 months, that's $2,500. Um, so from all right, so to add tally this up, we saved $400 a month on eating out. We're cutting back $500 a month on shopping, and we're cutting back $250 a month on the travel. Those three frees up $1,150 per month. Over $1,000 a month. And you see that I did not go die hard. You could cut that back from eating out. Maybe instead of cutting it back to $400, you cut it back to $100, one meal a month, one eat out and joint nice meal a month, whatever. But my point is you don't need to cut everything. You just need enough room to breathe. We're trying to create margin here. The next thing, let's talk about these freaking cars. If they can eliminate even one car payment, it's a game changer. Whether that's refinancing or downsizing, I'm sorry, but can you do it? Do you really need whatever vehicles you have? That could free up $300 to $600 a month right there. The other thing that I would consider a potentially a big deal for couples and more specifically married couples, because typically married couples are going to have combined finances. Whereas if you're not married, I would not recommend combining finances. If you are married and have combined finances, I would recommend that one person essentially define some roles. One person needs to own the money system, not control it necessarily. You're a partnership, you're in this together, you're married, but manage it. Right? And it's not that you're going against each other, you're not contradicting each other or you know, again, you're not hindering each other. It's just that one person should manage it. It doesn't have to be the man, it can be the woman, it can be it doesn't matter. Just one person. And then I would set a clear goal. They need to target, Mark and Lisa need to target, in my opinion, a $10,000 emergency fund. And the emergencies fund is in the name, it's for emergencies. That's not a travel fund. That's in a we're talking about an emergency fund. $10,000 that sits in an account. You never touch it unless you are having an old crap moment, meaning you're getting ready to get evicted right now. You need money fast. The next thing, pay off the stupid credit cards. Credit card interest rates are through the roof. SoFi and MasterCard and American Express and all of them do not have giant skyscrapers and prime real estate locations in the biggest cities in America off of losing money. They are making money hand over fist, and they're doing it from you paying interest rates that are sky high. Pay off the credit cards. The next thing, maybe just start investing a little bit. And I'm not an investment investment expert. I do a ton of investing, but I'm not going to give my advice out here because everyone's opinion of that is different. But just start investing even a little bit. Just get into the habit. And the first habit may be a step backwards and just say saving. Get into saving a little bit. That can build some habit, build some momentum, and then invest it. But again, I put investing on the list because we've already talked about the emergency fund. And that $10,000 emergency fund is a form of saving. Right now, they're kind of just floating. And I think by doing those three things: the emergency fund, pay off the credit cards, and then invest, it will have a clear goal for them. And with these changes, Mark and Lisa will go from being in the negative about $400 a month to a positive $800 to $1,200 per month. That is a massive shift. And I understand it's easier. Talk is cheap. It's easy for me to just say this while I'm making this episode. But based on what they've told me, with the limited details I have, I think this is very doable. Look, I guarantee there's people right now listening thinking that's literally us. We have a good income, we have a nice life, but we have no real progress. You may be one paycheck away from losing it all. What happens if you get laid off? Are you comfortable or does that make you nervous? If it makes you nervous, it may be a money situation. So if you're listening and that's you, and you would like for me to break down your situation like this, please send it in. You can absolutely stay anonymous. Just give me your income, your expenses, and what you feel stuck on, and I will walk through it on an episode exactly like this. You can send your stuff to me at money talkforreal.com slash debt help. That's money talkforreal.com slash D E B T H E L P. Most people, again, they don't have a problem. They uh money problem, they just have a clarity problem. You fix that and everything starts to change. So thanks for listening. I will catch you on the next one. This is Money Talk For Real.