27-Year-Old With More Debt Than Anyone Should Ever Have | Financial Audit

my name is Rachel Justine and I'm 27 I'm based out of Austin Texas and this is financial audit what do you do for a living in Austin Texas uh my main thing is I am a spiritual coach okay interesting yeah how how does that go how does that go um it's like therapy or it's not therapy it's it's a hybrid between um online coaching online courses and yeah and also now that you know things are open back up I'm doing in-person things and it's a hybrid of like yoga meditation uh life coaching upliftment and essentially guiding people into feeling good and fulfillment in their life okay yeah and how successful are you in this um not it's a work in progress yeah it's a work in progress okay yeah uh well so do you feel good in life and all that stuff I do I've had um well I've had a lot of uh shifts in the last few years that really changed my life and made going for this my dream and my passion and um so yeah it's it's a continual journey and of course there's ups and downs ups and downs I'm curious about uh a down right now talking about pastors do you have a passion for credit card debt um this is kind of crazy I I don't think I got my first credit card until like two years ago this was all within the last two years it hasn't even built up go on yeah so I hadn't um I hadn't had the experience with credit cards and at all and because of the nature of my work uh I didn't understand there was like different seasons of the work and there were times of making more and then making less so it became this you didn't do like Market Research into this industry before you decided this is what we're doing full time um not in the sense of like I just saw coaches who were just constantly making you know 40K months and 40 000 a month uh-huh that'd be nice I know right that's what I'm saying yeah so that was like that's where the head was at my head was at and how much you bringing in a month it varies average give me an average let's work with an average here break it down between the low months High months what's the average across just a brief pause to ask you to please consider subscribing look how close we are to a hundred thousand subscribers thank you to everyone who has subscribed so far and back to the video uh I would say a low month could be anywhere from two three thousand okay to um an average is I would say 6 500. okay that's not that at all that's your average that's not your high that's your average that's an average okay six thousand five hundred fantastic what's the complain about that um for how long have you been doing this full time uh I mean in the last few years okay so a couple years bringing uh personal business to pretty much eighty thousand dollars a year people would love that I mean you're five thousand dollars over the median household income in Austin and well above the median in the United States and it's just you yeah why are we in this debt in the first place we haven't even talked about it we'll go into it but why 80 000 a year why yeah why are you in this debt would you get into it why are you not out of it what is happening that's a question I mean it's on my vision board to have all my debts be cleared so okay um I think it that's where yeah I didn't really understand the nature of having like a credit card so I started making more money than I ever had in the last two years from this from this one um making more money than you than I ever have made it started like 20 uh 2020 like okay spring 2020 yeah and credit card debt started 1918 2020 same yeah like I didn't get my credit card until after I started making this yeah okay how much is in your checking account right now I cannot see that on here what's in your checking account uh over four thousand four thousand okay I am happy with that that's awesome four thousand dollars in the checking um everything in here is just mostly paying off well not paying off cards but paying towards cards and you do it in a very interesting way we have like a mobile payment here of sixty dollars and a Spotify subscription then a multiple payment of sixty dollars and then we have we're venmoing out two thousand one hundred dollars like is that what are we doing that's my rent your portion yes I live alone oh so that's your landlord you put your landlord yeah okay yeah because that 6500 is pre-tax which talk about that in a second and then corporate filings LLC I I think I understand that now because with the business and stuff so okay and then we're spending money at Starbucks and we're venuating out the dollar and then again here come the mobile payments again we have a hundred dollars we have sixty dollars so we have sixty dollars we have fifty dollars we have check card Arc my chart hundred dollars okay I don't like that 100 went to something that you can't think of but okay we'll continue with a mobile payment of fifty dollars Mobile payment of fifty dollars and GoDaddy payments website that's starting to make more sense and same with the squarespacing and we have Mobile payment 120 again we're just getting all this in a class pass for 69 dollars class pass yeah that's a workout class oh okay and there's your Squarespace and the Capital One mobile payment of 165 dollars and Mobile payment of a hundred dollars and then it looks like with this there's another one with sixty dollars but it looks like your T-Mobile bill I have the top plan of T-Mobile 70 bucks uh I think that's the top plan but yours is 99.49 that's making me think that phone right there is not owned that is financed it is owned now its own now yeah like you just paid it off officially because this is 99 bucks yeah it's been but it that's just the rate it used to be like 120 a month what plan are you on are you not on the automatic payment because that also brings it down by like five bucks I'd look at that because you do not need to be on that plan I promise you I get coverage everywhere here for 70 bucks a month unlimited okay not a plug for them but and you're spending thirty dollars more there when you have a lot of bad debt and again we just have mobile payments and mobile payments Apple subscriptions mobile payments mobile payments mobile payments for years and years is pages of mobile payments it's just brutal how often this is going on now one thing I do not like what we have here if we have money going into acorns right now and subscriptions for acorns and acorns is great if you don't have really bad debt you can sign up for acorns in the description below and get a free five bucks when you put five bucks in which is great bug it doesn't make any sense for you to do this right now because you have so much debt thoughts comments investing in acorns when you have all this crapped up so actually that so that one I still have that account open um but it was like that was one of the accounts that I had is like the reserve you know like Sol I I hit a rough month or something I need money like I had that because acorns you can have a savings account option no I just was using it as like an investment safe slash saving well speaking of that you took 800 out of it then you took another 300 yeah I needed all of that to come out why I had it why six thousand five hundred dollars a month do you need that I hit one of the Slowdown periods um so you're not good at saving money then if because if we're looking at the average that's great but the high months you need to have that money set aside for the slow months you don't do that right now um I like to think that I do but I feel like I end up spending it or yeah so that is a bit of a yikes there on the acorns front we also have twelve dollars fifty cents going to Visa great rates here alone what is that what is it here oh that's um dental insurance insurance yeah I'm okay if it's insurance it says loan I don't know all right and something that I did not get a statement for but all of a sudden like the pup is a little had out for 534 dollars is Ally Ally car loan car loan yeah 500 30 we'll get to that so all of a sudden this money really starts to go away and yeah and then you took an additional 508 out of regular savings now again if we have some slow months and we have in the savings like a specified savings meant for the slow month I'm okay with that where you're taking it out but what makes me nervous is I don't know if that's how it looks we'll figure that out we'll get to that in a second so okay let's just take an account you have a few thousand dollars sitting in there yeah okay if you have a few thousand dollars sitting in there you clearly didn't at that point when you had to withdraw like a thousand five hundred right from different sources correct how much is in your acorns right now I think I withdrew it all there might be a hundred or so in there still how much is in that savings account in the acorns no in the savings account that you took oh I took that that was the 508 dollars from the savings well that's all that was in there um okay so where do we have money do we have any money anywhere um I mean I have some cash and I'm watching cash uh 600. okay and then um and then I have investments in other places Investments and other places okay well I want to hear about that before we do that guess what eighty thousand dollars a year is actually a significant amount of money fun fact about money that you make have you saved any money for taxes because we are entering tax season as we speak what do you do when have you paid taxes these last few years um yeah I have uh-huh yeah so you claimed all the money that you made I claimed I claimed the money I made okay um I think I got help from a friend one year who did it who gave me money gave you money to save my taxes A friend gave you money but it was a gift right you don't owe it back I don't know it back no how much was that I mean I don't I think it was like a few hundred maybe like is this like a third party platform that you're using that you're getting payments through this this online thing is it your website or is it like a there's kind of there's different platforms like sometimes I'll use um like cash app like and I'll just have people for the coaching like go one on you know through that I'd highly doubt you're claiming that money I don't think I don't I don't do my attack I have someone else do I do have someone else do it a CPA yeah you pay someone to do your taxes no I dream I we like trade trade trade what like you know I coach and then they oh yeah well that's okay but are they like good at it yeah it would be worth someone in your position bringing home 80 000 a year sitting down with the CPA this tax season I just don't want you to get in trouble within the future if you get audited which is actually quite rare but it could happen yeah look at that shark's face absolutely that could happen you could get audited again probably not but I just I it would be really bad it would be really irresponsible on the side of the table to say you will not get audited if it does and things have just been a little funky these last few years then guess what bad news and they could be like you owe this now oh I can't pay this okay you might go on a payment plan oh I'm not doing those garnish wages stuff like that and you don't even have like official wages so I don't even know how it works in the Contracting world and then in the worst of the worst of the worst of the worst uh jail but you know that's worse of the worst so there's there's a lot of ways you just don't want to mess around with the IRS and guess what you have absolutely zero dollars right now saves up to pay these taxes on 80 000 a year coming soon you'd probably want like at least I don't know just to be safe twenty thousand dollars saved up on the side just to be safe for like just potential taxes for taxes yes and that's why I don't think you are claiming everything you get girl I think you're the cash app and stuff we're not doing that whatever platform I think the only platform you might be claiming is square because they'll send you the end of your tax statement other than that I think everything else you're just like this is my money I'm gonna go spend it I'm gonna go into debt and I'm not gonna pay taxes no just haven't thought about it like this am I scaring you like the 20 000 I was thinking that you were meaning just you know that would be for taxes and for you know just a general savings yes we wanted an additional twenty thousand dollars savings so you probably want forty thousand dollars yes every single from now on this is like the most basic thing anyone with a business should do any time uh like personal business like you you are the business right okay yeah so anytime you get a dollar put 30 cents aside in a savings account that's your taxes just do that hopefully it's not that much it's probably gonna be close to like 25 for you but just do that set aside 30 percent okay um yeah you know taxes taxes so no income tax here it'll probably be closer to 25 but you need to set money aside you're going to get into a bad situation where the IRS coming to knock on your door mmm I um I don't know how to not to touch the same you know like I thought about getting a safety deposit box so that way it's like away from me you can have a couple different kind of savings because yes now okay so why why why can't you why why do you always touch the money I feel like like something always happens well that's why we have an emergency fund if there's an emergency and you don't have the money to pay for it you take it from there but you don't want to take tax money this is why we haven't even talked about an emergency fund but that would be the extra twenty thousand dollars but you never touch it unless you have to but what always happens what are you doing in your life that you're always getting into some kind of pickle because usually recognizing that you're able to then counteract that in life you know but if you're just always getting into it then clearly something's wrong can you give us any examples what's happening um well I think I when I started making more money I wasn't used to making that much money and um and so like I went from before like always you know just barely getting by and then when I had money start coming in and and on top of that when I got my first credit card it was like oh now I have this money and now I don't even need to spend this money I can spend this credit card money and then it was like it just felt really good and so it was you know and then wanting to live in a mindset of abundance so it's like I want to buy why live in a mindset of abundance that's good oh because it feels good I'm glad we're doing things that feel good instead of just smart okay that makes sense um so as a spiritual coach uh and like helping people through things do you know that that mindset is complete and has put you in a bad position um the mindset that you just explained not your whole spiritual thing but the mindset of abundance and it feels good to spend money it's hurting you um do you agree well I think now like in retrospect I can see where there were a thing you know now after being in this more financial tight spot which I haven't experienced in the last two and a half years um because of the increasing debt and because of having a Slowdown month whereas usually I had more money because I had less was paying less on my credit cards I had more money and then I you know was running out and the um and then I started to like I went through everything and I actually canceled so much stuff like subscriptions and I was just realizing like I didn't think I could do that you know like I thought after it was so it was like ego deflating to be like I guess I don't need to go to see like the most expensive hair stylist or I don't need to go get a blowout or you know like all these things that felt really good um your lifestyle just inflated with that money but it over inflated and now you're in a position where you're financially to be very clear but we're going to hopefully find ways out of it but the taxes that's all we've talked about so far and we haven't even gotten into the credit card debt we haven't even gotten into the car that way we haven't gone into you not having an emergency fund being able to survive so so far not so good credit card debt um yeah so it's just it's always hard to just get into because this is this this is so bad and I don't want to this is so on here I this is this is something this is something that pisses me off more than almost anything in the world we have a previous balance of a thousand eight hundred forty six dollars 290 000 payments cool we are making progress yay progress is happening fantastic but guess what we're doing 343.67 of purchases we're purchasing more than was even paid on when we're already basically at the credit limit of two thousand dollars and while that's all happening 41.59 of interest is being charged why are you purchasing four thousand dollars in your checking account bringing in uh what six thousand five hundred dollars a month why are you purchasing on a card that is already almost maxed out um I kind of do this been doing this dance uh with like credit cards where um I don't want to spend the money that I have like I feel like it makes more sense to like if I'm going out to eat or whatever you know buying something from Amazon if I need you know like a household need um then I would rather do it from the credit card pay off the credit card so I have more money what pay off the credit card you're not paying off the credit cards you spent more than you pay it off and you're losing an additional 41.59 in interest you're losing that because you're doing that do you know that does that make sense yeah the interest sucks the interest sucks it absolutely does that it's time to find a new dance partner instead of these credit cards that is that's terrible you spend the money when you have the money if you don't have the money you don't spend the money it's okay don't make don't make fun of the laugh people have made fun of the laugh it's the normal coping mechanism when someone is confronting you so it is okay it's you don't have to bash her on the laugh I'm sorry I just wanted people to know that because they do um so you have the debt and we're going we're doing Amazon purchases we're getting some dong food of some kind in Amazon and Amazon and Amazon and Amazon and donuts or that's dong this dong thing keeps poking up I thought I said donuts and Amazon and Casa honest Mary's honest Mary's Dong Dong Amazon honest Mary's honest marriage honest Mary's honest marriage dong honest Mary's dong and honest Mary's are just like a couple which is made for each other we're just going there and going there [Music] um why why are you having all this fun when you have no money why are you just like I'm just I don't I don't care my life I'm just gonna go spend money why are we doing that uh well my with spending money on honest Mary's I figure it's cheaper than going and buying groceries like it it really does that works no it's not it depends where you go I see a lot of Whole Foods in the other statements yes maybe if you go to the most expensive place and get the most expensive thing yes if you go to HEB and just get some one dollar noodles that is not even close to being able to be justified um do you cook I I do like I used to meal prep but I really when I was doing it I just was buying like like such in bulk and then all the time it took to take you know to start to do that and I figured you know I'd rather be working more and then not having to spend as much time cooking maybe it can be justified if you can mathematically justify it I can oftentimes mathematically justify me you know picking up a takeout or something because I know that to spend the time of cooking and prepping all that stuff I know I'll be making more money than his friends I don't know if you are though is the thing that those honest marriages were stacking up and no you can't afford it obviously it's objectively clear that you can't afford it if you're not paying it off you know in total and interest is occurring so no that makes no sense you're gonna have to cook some Ramen or hot dogs to tell you out of this we'll get to that we'll get to that this is the negative part of the video this is the negative part of the video where I hopefully am demonstrating to you just how terrible this situation is because vast majority of people who come in here they don't know how bad it is until they are here and I show them so we have another credit card 2 648 with only 53 dollars paid why only 53 is the time of the statement time of this statement you might have done more at a certain point But at the time of the statement 2648 uh good news no purchases no interest either this is interest-free currently yeah it's a balanced transfer card okay yep that makes sense with no interest but we're back to one with interest this is the Capital One Venture Card with a new balance of 480 uh 4 845 dollars did you fracked up just so much 36 Cents and that has a minimum payment of 48 a month and the interest that is being charged no no interest so this was a transfer again you recently opened it I think I I don't think that was the intention of that one oh yeah I just I recently opened it okay well recently opened it we got it to 4845 of previous balance we paid 848 that's exciting guess what we immediately purchased the 848 dollars back what's the point again with the credit limit being five thousand dollars you're basically there your credit must suck your credit score must suck but right I mean you're you're completely maxed out credit limits um yeah my credit's okay what's okay or it's fair I think it's fair right now oh I'll take a look at it but what are you doing what are we doing we're in debt and we're just struggling to survive Casa De Lucas De Lucas honey oh there's honest marriage she's back uh Chinese milk and cookies love the place most Hearts coffee evolve something Wellness Casa De Lucas is back again for more with flavor power and look who's back honest Mary's and evolve Cairo again we're just spending money on both when we don't have the money to do it thoughts give me something here I need to know that you're at least taking this in or else what's the point um yeah I see a lot of this spending um it's like it feels like I mean it's hard not to spend this is gonna be offensive but I have to be offensive I I the the spiritual advice and all the stuff on the other side I don't understand exactly what you're saying we can talk about that uh but I don't know what's that in there are you in a place where you should be giving that kind of advice to people if you can't even stop yourself from something that's basic as spending well I don't give people Financial advice I know not Financial advice but life advice if you can't even take control of your own misbehavior should you be giving advice to other people [Music] um well I think maybe not Financial but life advice you're not taking control of your life and finances whether we like it or not is a huge part of our life but this is a part of your life and you cannot control your spending you've just admitted so so should you in fact be giving advice to other people if you cannot control an aspect of your life that is clearly wrong hmm I'm definitely willing to shift it you're spending good why haven't you though well I have in this since the last month in December uh I had to like I had to cut back on things you didn't cut back on anything we just went through all this it's like 50 honest Mary's what are you cutting back there's no cut back you should I cut back on things that you're not seeing now oh dude no this has to stop and that's why these are all maxed out this Capital One what did we do here uh some mastermind.com for 47 And Hive Labs Hive Labs dolls kill oh what dogs kill dogs dolls kill and honest Mary's honest Mary's Michael stores and TR uh no Traders is fine but Traders honest Mary is honestable it's not find this on her credit card because you're spending money on a card that's pretty much maxed out that makes no sense you should be doing your checking account but either way at least it was a grocery store and not honest marriage for the 53rd time so what does real cutting back look like no honest Mary's you know you can't afford to go out right you know you can't afford to buy any designer clothes you know you cannot afford to go to anything but great clubs you know you cannot afford to go out to eat at all right to be very clear not a single time hmm I'm speechless do you know you cannot afford that though I get my lot I feel like it saves me so much time though so I can work on my business what kind of how many hours a day are you working it depends and now I'm doing more things now on the average an average how many it is we're hours a day are you working five then you don't have time that's stupid that's the stupidest thing I've ever heard I'm sorry I'm digging into you but that's dumb that's dumb and you need to know that's dumb that's why I'm being rough five hours a day oh poor me I'm working five hours a day and I can't cook what do you mean it saves you time are you taken out from honest memories every day can you go and eat there I take it out okay yeah well at least that's a thing of five hours a day working you can congratulations cook you can there are 19 more hours um oh no there's 18 more hours take away eight of them to sleep 10 more hours we can't make a bowl of mac and cheese in 10 hours put chicken in the oven for in 10 hours I'm confused I'm very confused can you do you are you understanding this are you going to try to justify it you got to give me something here I'm just talking to a wall well because I like to eat very hot that's part of my spiritual life is eating you know very healthy and then buy some romaine [ __ ] lettuce from HEB I don't care sorry continue I interrupted it's and it just it costs more to eat healthy yes even if at like the grocery store like it really does you are spending you don't have to get the top of the line organic crap to be healthy hmm just don't eat Panda Express every day like I do it would I think it would take just some open-mindedness or seeing what else is possible for shopping I how to save and Shop you need to go on a shopping trip yeah we might need to go on a shopping trip let me know if you guys need a bonus episode of us going on a shopping trip guess what on that last one that Capital One card a thousand one hundred thirty six dollars of interest that is money you lost this last year last year over a thousand dollars gone gone from your life 1.5 of your income gone because you're just carrying an almost maxed out balance on there you have 14 457 dollars of basically maxed out credit cards yeah I didn't know that about the interest like over a year then I'm very glad you're here today so you at least know that hopefully that is a wake-up call yeah and once the interest rates start on those other things dude you're just digging yourself into a hole that is almost impossible to get out of sometimes hmm you're clear of spending all your money all of your money I just put on the cards you don't have to be doing that and we'll do good grocery shop do you have Credit Karma on your phone yeah you do yeah and Experian open up Credit Karma let's see okay it's not fair your credit score is not fair we went down yeah you know why because we have maxed out credit cards 593 credit score [Music] what is that is that bad is what it is bad yes it's not good it dropped down from 5.95 so there's your drop your major drop you're at 579 for a second so you went up let's see oh okay so a year ago we were at like 607. okay and yes it's because your credit card use across the board is 89 percent clear thing did we look at that uh that was a like a loan type of account but they closed on me because of my current credits well you owe still I owe on that 61 bucks of 130 I don't know why you did this I don't know that either well guess what that's on there um credit age is bad no derogatory marks good thank you always make your payments mm-hmm aren't crazy okay whatever total account so what I wanted to see in here is that our girl Ally Financial there she is with only six percent paid off we have a thirty thousand dollar car loan actually we can round down twenty nine thousand dollars and what was that payment again that is 500 34.13 yikes a month when you your minimum payments and all these things it's gonna be like a third of your income and then you have a stupid expensive rent you have no money left essentially I mean you do but we'll talk about it let's see hey you reached the Milestone it's very excited because you made four payments um what's the interest rate on this car I can't see on here uh where'd you get this car in the summer like in well four months ago so four months ago okay what's the car what kind of car is it yeah what's the car it's a Toyota RAV here for a 2020. okay okay yeah and the the reason I bought that car is because so I had a Toyota 22 months six years yeah sorry go hon uh my car got stolen I added a Toyota Camry and I had uh two payments left and then it got stolen does Insurance not cover that they did they paid for that car and then I took that money and I put so some of the money that I had set aside I took some of that and added it to my down payment on this oh perfect how much was your down payment uh 16 000. okay interest rate do you know how to log into that account where you pay on Ally I'd have to go like through the website you know how to do that yeah go ahead and do that we need to know that interest rate where'd you get it from uh Capital Motors is it like souped up in any way it's the yeah what Ellie XLE XLE premium Adventure what is it I think it's the XLE premium I think you immediately put down fifteen thousand dollars over that yeah yeah I think you maybe lost fifteen thousand dollars what do you mean it's worth about thirty thousand dollars hmm your loan is about thirty thousand dollars you lost fifteen thousand dollars immediately because alone that increased how much it was because they probably overpriced it and they you know a lot of things that happened at the car dealership they probably left you on it a bit um you probably didn't let me guess you didn't do any like checks on the price what is this car actually worth I believe I did like look it up and at that excuse me at that time uh it was like during I don't know if it was like a car thing but if there's like a car crisis going on there was like every car was being sold like crazy I never heard of the car crisis but yes it was super marked up yeah because of where cars have gone since then and it was a used car uh you lost 15 sorry 2019 so okay so you're probably a little underwater on it like that hmm interest rate 7.5 interest I thought about refinancing interest rates are going up and your credit's absolutely disgusting what are you going to refinance sorry I try not to be mean this is just my reaction to the death of money which is where we are currently at right now well if someone is going to have [Music] your monthly payment no that's not your take home now that's not your take home that's your pre-tax so this is well above what would be recommended I mean I don't like no one would recommend any car debt but if you're going to have cardet you're going to be based on your take home well above probably eight percent of take-home and then the interest rate is absolutely disgusting interest rate plus depreciation already lost fifty thousand dollars probably already lost more money because it's a 2019 on 2020 so no this is bad this is bad okay so let's think about Solutions then I've had a lot of negative listening Solutions and then I'm curious if you'll actually do them and give me your honest opinion let's build you a nice old budget shall we what is your rent again one more time uh two thousand one hundred two thousand one hundred utilities on top of it most likely a couple hundred bucks 180. that's like all the things 200. you're probably paying health insurance for yourself I am how much uh I mean it's like 30 bucks a month just like nothing health insurance oh yeah okay and you had pet insurance as well I was Dental oh oh I saw lemonade lemonade my rental is how you said so it's like all that combined that's probably extra 50. right for what yeah probably okay and you have a car payment 534 13 how much do you have to drive how much do I have to drive have to drive not I want to go to this place and do this thing how much do you have to drive on a monthly basis uh in the sense of like how much and yes am I spending on gas or how much how often do you have to drive uh once a day once a day how far not very far what do you think you spending gas in a month then 150 150 I guess then we have minimum monthly payments on the cards let us see minimum monthly oh God for Capital One 160 7 sorry 167.00 Capital One on a monthly basis then we have on the Venture 48 then we have on the Discover 52. then minimum monthly payment on Chase your credit card's minimum monthly payment 327 dollars yikes yikes yikes car insurance it's two payments of 75 a month why do you do it that way I also make it more stomachable yeah people let's see where we're at right now because those are the required payments before things just absolutely go to essentially those are the things you have to do have to do required on a monthly basis again we're at 2 000 for rent we're at 200 for utilities we are 330 dollars for health insurance for other insurances we're at 50 and we're at 5 24 for your car payment 150 for gas 327 for credit card payments 150 dollars for car insurance so far in our budget we are required to spend three thousand five hundred fifty one dollars just for things to not completely fall apart now if we're looking at an average month of six thousand five hundred dollars we have three thousand dollars left that is great some months are going to be less some months are going to be more but that is our average month and I am just taking your word on that and I hope that is correct okay you are going to put in your budget 500. a month on groceries on groceries and you're gonna go to HEB or Kroger things like that and uh you can buy in bulk at Costco we're not doing Whole Foods anymore we're not doing Trader Joe's anymore going to the regular cheap grocery stores even Walmart I do not care 500 a month not a penny more also we have two thousand five hundred dollars a month on average left that's incredible now what I recommend in this case an official Financial advice only what I do where I In Her Shoes what I would personally do we have a month where we make seven thousand five hundred so a thousand more than the usual six thousand five hundred that extra thousand I would just keep in the checking account and pretend we're only working with six thousand five hundred that extra two thousand five hundred dollars that you have left over in your budget two thousand five hundred dollars boom that goes to the a thousand nine hundred thirty two nearly maxed out credit card that is gone two thousand then five hundred of that the other 500 goes to the two thousand six hundred forty Eight dollar card then that one's only about two thousand dollars does that make sense yeah you're saying to increase the overall income and then use that money to save increase in income would be fantastic what I'm saying of your average six thousand five hundred dollars a month after your budget is concluded including your food you have about two thousand five hundred dollars okay okay and then using that all 2500 goes to your 1932 credit card well you have 500 left over after that point right does that make sense that goes to your two thousand six hundred forty Eight dollar credit card then you pretty much have only two thousand dollars out on that does that make sense okay then the next month happens but uh oh this month we only made five thousand five hundred well good thing on the month where you made 7500 you put an extra thousand just left and you say checking okay so now we can still pretend like we have six thousand five hundred dollars and we can go through the budget boom we have two thousand five hundred dollars left two thousand goes to the now two thousand dollar credit card that is paid off and 500 can go to the four thousand eight hundred forty five dollar credit card and then we repeat this on a monthly basis you are not having a single ounce of fun you don't get to go get any kind of clothes because your closet is probably completely full you don't need to have any fancy haircut do the cheapest way possible you are not going out to eat a single freaking time it doesn't exist it does not exist in your life only five hundred dollars of groceries and then after about six months of no joy in your life six months because you've just gotten yourself into such a disgusting mess you're just laying in a sewer every night when you go to bed that is how bad this is after six months we have no more credit cards no more credit card debt incredible incredible is that fantastic right wow that's only six months that's six months of you going just insane though insane most people can't do that most people don't realize how bad the situation is I having been in a position relatively similar I understand how terrible this is and how it's just going to weigh you down for the rest of life so this is what I would actually do because I now know how terrible this is so after six months boom then you have that but bad news we have thirty thousand dollars owed on a car what I would do in this situation is because the interest rates are just so high on that on those credit cards and they're also just you know less money overall they're easy to pay off I would then for the next four months continue that aggressiveness so now we're looking at you know six plus four months ten thousand dollars is saved up in cash that you're never touching okay ten thousand dollars ten thousand dollars to save stuff in cash good with that so far yeah cool you're not gonna be good with this next part you're gonna sell your car what you're gonna sell your car because you're in a mess you're in a mess we need a restart we just need a restart or or or or you could continue this balls to the wall for another full year would you rather sell the car or go crazy for a year and a half total well then I have to buy a new car that's why you have ten thousand dollars saved up on the side now with that ten thousand dollars you might be a thousand dollars in the hole on this car to pay it off so maybe you have nine thousand dollars after that but you buy a nine thousand dollar car and you're gonna go to all used places and those places are probably gonna try to jib you so you don't think about it because you're buying any cash you're not financing you're probably gonna go on like Facebook Marketplace and Craigslist you're gonna take the car you are going to spend an hour and they are the seller is going to agree to this or you're not even gonna have a conversation with them you're gonna take the car to a trusted mechanic you're going to build that relationship and then this trusted mechanic that you have they will give you the thumbs up or thumbs down on if this is a good purchase for the price and for you know the value of what you're actually buying then you have yourself a 9 000 paid for a car woo congratulations your audit debt and all that took was where were we at 10 months or you can aggressively pay this off and you don't get to have fun for a year and a half what's better Nine Months a year and a half I choose nine months because then you can save up and get a nicer car eventually but you don't have to go crazy to get it what are your thoughts so far unfortunately it's not over but you probably have to go crazy for another four months out of this whole situation to give yourself any kind of starter emergency fund in that case you have at least ten thousand dollars so but that's at the end of either situation that you choose what do you think another four months on the end of either of those to give me an emergency fund yeah because not having an emergency fund is an emergency so you need to go crazy to get it what you could do this during this entire time just ramp up your business or work side hustles you work five hours a day come on give me a break figure something out that brings in more money you have a car drive some ubereats I don't give a crap bringing more money and this Cuts this down yeah but I am first I am for real you have to actually commit to it of not going out to eat we are not going to vessels or Vacations or crap or crap or Crap we're not getting clothes you have to go hard if you just half half this thing you're going to stretch it out to decades this is going to hold you back and you'll never be in a place of financial success because guess what we haven't even talked about the world of investing yet and you're not even allowed to think about that until you're out of these terrible debts your thoughts um it's so no investing no I know pay down the debt first the interest rates far outweigh the potential returns you can get in your Investments it's selling my car that it seems crazy you could work like crazy for a year and a half for another yeah this comes down to basic math it's as simple as that I'm not putting your emotions into this because at this point it doesn't matter math wins yeah I mean the goal I think is increasing the income that'll help but you can't have fun either increasing income just to have more fun no that doesn't work you want to cut down the time you're not having fun by increasing the income um cut down all fun yeah it's a temporary sacrifice you'll be 28 when you can get back to all that stuff or 29 depending what path you go down and then you get to live a fantastic life a controlled life this time we're not going into credit card debt and spending all your money every time you get a Cent and touching your savings but that's again we're far off from that one thing that's critical in this you need to get a budgeting app of any kind or keep a spreadsheet or use cash in envelopes and we can talk about that afterwards if you have questions on that but you need to these items that we talked about in your budget need to be strict you do not spend a single Cent over what we talked about so that you're actually able to put the money necessary towards the debts we talked about um it's not fun it's not fun but it's the consequences of the actions that you have done and it is the dark tunnel before the incredible rest of the Decades of your life where you get a nice new paid for car at some point you get to live in a nice apartment or house because you don't have to worry about all these minimum payments that are just eating you up you get to invest a good proportion of your income and congratulations at some point you get to actually retire and not have to worry about freaking working um but this path right now that's that's never even a possibility in the future if you continue down this path and don't address the root cause now root cause your spending the bull and you clearly don't understand the debt and credit cards and hopefully I've demonstrated that mm-hmm yeah I think it's really important for me to pay this off [Music] what are you actually going to do real world you know yourself what are you gonna do well I know I'm I know I'm actually going to work to increase my income uh outside of my uh the business that I'm already running I can definitely do that I have time to do that um I also have like a a willingness to do that to increase the income and I I feel like I'm willing to limit my eating out why if you know how bad this is why not actually do what's necessary I feel like if I'm in a pinch you know and I need like if I'm working more and I have like I have to film my schedule your pinch meal prep you'll probably never be a pinch um continue that's good well you talked about raising your income yes bad news that is not the issue here you have a fantastic income eighty thousand dollars a year great you're spending you're not willing to cut back is the problem you're addressing the wrong issue you're not getting to the core cause of this problem um well I'll tell you well actually before that tell me about your Investments what do you have in what how much uh I have investments in Robin Hood how much right now over 2500 can I see it what [Music] um oh now it's down one thousand nine well yeah the markets are down 12900 okay where are we on I want to see your position specifically fun fact congratulations sell all of this right now pay off that top credit card yes it doesn't matter the returns you're going to get on that's not even close to the billion percent interest rate you have on this credit card the math doesn't work sell pay sell pay you've yourself in the past take accountability pay it off really yep yep yes that makes me like nervous because I mean it's down should I wait I'm like thinking you know it doesn't matter at this point that's not that much money that's not going to break make or break your retirement there was something massive we think about it but that can pay off a card today and get this snowball rolling and get rid of these minimum monthly payments so quicker this Cuts your monthly thing by one right just by doing that do it what about the taxes that come out of it uh you're down you'll be able to tax loss Harvest you'll be able to claim some of the losses that you've had on that oh yeah oh let's see can you open this I'm assume knowing the market over the past year and a half I'm just assuming the whole it's been down for a while on the games you've gained overall within the last you've gained ninety dollars you'll pay like 15 on ninety dollars don't let the taxes should not be a part of this conversation no yeah you'll pay it but that's not a make or break for this it's not to pay the taxes on that on ninety dollars no you're gonna pay like twelve dollars and taxes hmm to pay down a credit card which I'll save my son yeah this one you're losing 41.99 in interest on on a monthly basis it's not even comparable um what other Investments do you have um Bitcoin how much well I invested over 3 000 but right now it's down two two we've recently had a bounce uh yeah it started to go up which is good yeah uh uh one eight eight eight cool sell it what it was the next car yep this could go up it could I'll tell you what 100 will happen no matter what these these credit cards will keep killing you it doesn't matter get back into that [ __ ] if you want to in the future right now you are taking care of your past sins you [ __ ] up take care of it be an adult um because I also have another account on here uh four hundred and forty dollars yep okay take it out take out all this money unless it's in like a Roth IRA or tax advantage deferred account this makes no sense right now you don't need this dude I am so about investing you have no idea but the interest rate on these credit cards do not mathematically justify being in that especially in a risky asset the way your account was balanced in the Bitcoin you're like 50 50. it makes no sense sell it out all into this and you're almost halfway done you're almost halfway done with your credit cards at that point well well you know you're almost two cards done but the other cards are just higher balances okay will you do that will you be an adult will you act like you're 27 years old and not 13. I'm willing to sell Robin Hood and I'm willing to sell the 440. why not Bitcoin because it's going to go back up no it's well you don't know that I do you do not know that nobody knows where faith comes in okay well I don't you're gambling like I do have money in Bitcoin and I hope it goes up I do not know anything you do not know anything one thing I know for a fact these credit cards are killing you mm-hmm okay so here's what I think is actually going to happen this is what I think I'm going to be a little rude for a second then I'll give you the final word but this is what I think is actually going to happen I think you're not going to cut back on food you might do it for like a week because you have a fire litter under your butt and then you'll see this video like Okay cool so you'll cut back a little and then you'll just continue going hard you'll uh pay off 400 on a credit card and then you'll spend 450 these will continue to be maxed out your car you're not going to sell it you're not going to get rid of uh your crypto and stuff like that this is continue to build you're never going to be able to get to a place of wealth within the next 10 years as this goes out the just for example One credit card if you just do the minimum monthly payments nine years on uh the 1 932 dollar balance with everything you'll pay a total of 4 561 and that's not even if you purchase any more stuff so I think you're going to continue into a dark hole of not doing this unless you actually take responsibility and do the sacrifices necessarily unfortunately that is where I think we will be and that makes me incredibly sad and I hope I hope and pray that I am beyond wrong you can have the final word I have a question what about the there's different types of companies that settle out the loans and give one a single payment where they close out that credit card you're talking about consolidating consolidation yeah well consolidating right now you might be able to get an interest rate go well your credit score you might be able to get something like 15 uh that doesn't make a difference be well it it could what matters most right now I'm good with consolidation if we have a ton of credit cards and the balances are high and the interest rates are high two of these credit cards are not even accruing interest right now in the smallest one that is a community interest right now is two thousand dollars you can take care of that in a month you can take care of that selling that crap you know so really we're at a point where I don't think it's a step that's necessary in here you're just gonna go crazy and take care of this instead of trying to take shortcuts so no to don't take this that's a shortcut don't do that it can work in some context I don't think it's gonna it's gonna be the you're gonna feel like you did something when you did that and then you're gonna take your foot off the gas doing this plan that you've laid out like I'm gonna consolidate you're gonna feel like you've done something like oh cool I've accomplished or we don't need to go crazy anymore no go crazy take care of this it's a really get it like to really get the pile up and just how deep this is I mean is there any is there anything else suggested I don't know there will be a lot of different conversations to be done when it comes to getting an emergency funding investing and stuff but you're well beyond that right now um this is the first thing first thing for Rachel unfortunately I'm not very optimistic but I just hope I'm wrong I hope I'm completely wrong these really bad credit card debts a terrible card debt no student loans as far as we talked about those two loans right which is right next to me who's the news no student loans cool um the rent's pretty high for her a lot of these things the minimum monthly payments everything's bad and the business is inconsistent we're not budgeting no emergency fund no savings we've drained things and our portfolio for investing is pretty much all crypto Hammer Financial score two out of 10. make sure to check out all the fun things in the description including my Instagram and Twitter don't forget to subscribe thanks

Channel: Caleb Hammer

Views: 3,726,679

Keywords: crypto, graham stephan, meet kevin, make money online, biaheza, shiba inu, how to make money, finance, financial education, inflation, personal finance, day trading, ryan pineda, compound interest, student loan forgiveness, mark tilbury, dave ramsey, the dave ramsey show, financial independence, budget, elena taber, ramsey, biggerpockets, the plain bagel, how to invest in real estate, budgeting, budget money debt cash, real estate investing, dave ramsey show, dave ramsey live

Id: 87qL_bZnAMk

Length: 60min 9sec (3609 seconds)

Published: Fri Jan 20 2023