- Are you worried about money, and that if something unexpected happens, you don't know how you'll cover it? Well, let's talk about how
not only to save more money, but also how to have peace of mind. (upbeat music) All right, today we are
part three in our series, which is Baby Step 3. So, what is Baby Step 3? Well, before we get to that,
let's review 1 and 2. Baby Step 1 is saving a $1,000 starter emergency fund. Baby Step 2 is getting
completely out of debt, but your house, using the debt snowball. And then Baby Step 3 is having three to six months
of expenses in the bank. I want you to get to this point, where you care more
about savings than stuff. So, in today's episode, I want to tell you how to bulletproof your emergency fund. And we're gonna talk to
a super motivating couple who is in this step and
they are staying the course, because I want you to do that too. (sighs) Let's be honest though, Baby Step 3, it's hard, yes. Because when you're getting out of debt, you're getting all these quick wins, you're hitting milestones, and you're like, yes! The
celebration continues. But building up your emergency fund can make you kinda feel like womp-womp. All we're doing is saving. But listen, don't let
your foot off the gas, you want to stay intense here because this is what it's about, you guys. This is the final sprint. So after the savings is done, you can actually breathe a little. Then you can focus on your retirement, and your kid's college, and
doing stuff for your future. You really do— you have a buffer between
you and emergencies. And honestly, that is not
the case for most Americans. In fact, 40% of Americans, they go into debt when an emergency hits. That means, if the car breaks down they use debt to cover it. So, they end up adding
interest and payments onto something that was already a crisis. It turns a really tough situation
into many sleepless nights by dragging it out even longer. This is because the personal
savings rate in America is less than 5%. 5% you guys. In the words of my friend Chris Hogan, "That is not okay." Now listen, if you don't learn to shift your spending into savings, you'll never get out of
the cycle of Baby Step 2. And as a spender, here's how I've shifted
my mindset into savings. (light piano music) So, you're either naturally
a spender or a saver, and I am a spender. And I can tell you, when
I look back on my life, a lot of my spending impulses came out of a place of immaturity. It's kinda like a five
year old just being like, I deserve it. I want it. And so, I really did, I had to reign in my spender tendencies. But once I did, the idea of security felt so much better than spending to me. And when you recognize that, you can take the impulse out of it and learn to spend on a strict budget. It's way more mature than just doing what
feels good in the moment. So, when you take that mindset of knowing that you can
spend within your limit, then you can have the
patience to really save money. And it's so worth it, for the security of just
knowing that we're good. We have money in the
bank. We have money saved. This is a totally different feeling than having a goal to save
toward something special. Savings toward a house,
or a new car, or a trip, naturally that's motivating, because, in our culture, we want something tangible for our work. So it's understandable. But an emergency fund—you
can't really feel it tangibly. I mean, unless, I guess, you cash it out and have a bunch of dollar bills and throw it around at your house. I guess you can do that, but it's a different feeling, okay? When you have an emergency fund there is a gratification that
you just have peace of mind. And remember, this is about putting
money toward your future instead of paying off your past. How easy could it be just to quit your job if you had money in the bank. Yes, this stuff, it
really gives you freedom. And there's no easy
path to Baby Step 3. You have to work at it, but it is so worth it. Remember, debt steals your
future, savings secures it. So, let's talk about how to
bulletproof your emergency fund. (upbeat musical tones) Family is one of the most
important parts of my life, and making sure everyone is
taken care of is a top priority. That includes more than
just meal planning, entertaining the kids, and taking care of all
the day-to-day needs. That's why I recommend
having life insurance. Now, when you're shopping
for it, you might wonder, should I get term life insurance
or whole life insurance? I always recommend term insurance. It's going to save you tons of money that you can put toward
paying off your debt and funding your emergency fund. For a 30-year-old male, a
20 year, $250,000 policy would cost just $15 a month for term life. However, the same policy for whole life would be $190 per month. That is a huge difference. Winston and I use Zander Insurance. They do all the work for you by finding you the best prices and options customized to your needs. To learn more, call Zander
today, or go to zander.com, because that's who we trust
to take care of our family. (upbeat musical chords) All right, when it comes
to your emergency fund there's three things that you need to know to make it bulletproof. Number one: How much should it be? Well, the good news is, since you've already
completed Baby Step 1, you already have $1,000 saved. So great. Now you just need to
know two simple things to determine how much more money you need. Number one: Do you first lean
toward three or six months? So those of you that might lean toward just having three months saved, maybe you have dual income, a stable job, you feel good about where you're at, you might just need three months. Those of you that lean more six months, maybe you're a single income
family, or a single person, you're commission-based, freelance, irregular income, a little
bit of instability there, maybe you want more like six months. Now, if you're married, there
might be some compromise. I find that most men just
want three months saved, and most women want six months saved. So, sometimes you just
got to meet in the middle. All right, next you need
to determine your expenses. So, we always say your
emergency fund needs to be three to six months of expenses, but people fall in two camps here. For some people, their expenses
are just the bare minimum, like the Four Walls. That they have food,
shelter, utilities, gas, the main things, those are covered. And they consider that
expenses, which is great. Others of you are in this camp over here, which is where you want your lifestyle to stay exactly the same. So, if someone losses a job, you have enough money saved that your lifestyle
doesn't have to change. And so, Winston and I,
we looked at our budget, and we said, okay, here's how our lifestyle can stay exactly the same. So we took that number
and multiplied it by six, and that is ours. Again, neither camp is right or wrong, it's just what you want. All right, the second
thing that you need to know to bulletproof your emergency fund is where do you keep your emergency funds? Any savings account will do, I really recommend a money
market account, though. There's also banks online, and they pay more interest than
just traditional banks. But do your research. You don't want any hidden fees that will hit you if
you pull the money out. Because, remember, this is like insurance, it's not an investment. This emergency fund is insurance.
It is not an investment. I will repeat it again,
and again, and again. You want to be able to
get the cash out quickly, so put it somewhere so that you're not tempted
to use it on non-emergencies. Which brings me to number three: What is an emergency and what isn't? So three questions to ask yourself: Is it urgent? Is it unexpected? And is it necessary? So, a vacation you're dying
to take—not an emergency. The car breaks down—an emergency. Your air conditioning breaks in mid-August while you're pregnant—
that's an emergency, yep. A new couch—not an emergency. Your kid hits their
head on the coffee table and needs four staples— may have happened to me as
well, an emergency, yes. So, you have to figure out what is an emergency and what isn't. But it also comes down
to you and your spouse being on the same page about this. And you really need to do what
feels right for your family. So, to get started,
download my cheat sheet on how to calculate your emergency fund, and I will put a link in the show notes. All right, coming up next, I'll interview a couple
who is on Baby Step 3, and they have become obsessed with saving. - We felt stressed, overwhelmed. We were making a decent income, but not knowing kinda
where our money was going month to month. There was that overwhelming feeling of, this is how it's gonna be forever. Back in 2014 we had about, close to $100,000 in debt, and I was laid off from my job. - That was a scary feeling. And only having a little bit of savings was a terrible feeling. - So we made the decision
to sell our house, take that money, pay off
credit card, pay off a car, pay off a school loan, and then we were left with about $40,000 or $38,000 worth of debt. - Once we started paying things off, then we could see a light
at the end of the tunnel, but it took a little bit to get there. At first, it was very overwhelming, but then we made a first big payment, and the first one was like
$6,000 or $7,000. Then once that was gone,
then the momentum built. - You start rolling
through the debt snowball and the more you get through it, then it's like, okay, we can do this. - And then it was exciting. And then it wasn't as overwhelming, and the anxiety was calm at that point on. Okay, we can do this. This is short term,
then it's gonna be over. Once we started Baby Step 3
it got a little easier because we finally felt like we were working to
actually save something. So now knowing, okay, we're
gonna save as much as possible so that if we ever get
in that situation again, we don't have to worry. I mean, I get a little
obsessive with the saving because it's security,
and security feels good. - Yeah, it's a lot of sacrifice, but if you kinda step back and look at, okay, at the end of this, it's gonna be a much bigger payoff than whatever it was we were
gonna buy or do at the time. - I feel like now I'm
actually making money, and I'm more motivated, and I want to make more. I
have a little more of a hunger because I don't feel
as tied down to loans. It just feels better.
It's a better feeling. - Just feeling that security of, hey, if something happens,
we're gonna be okay. And it really changes your
perspective on working and on life in general. - Well, Nick and Amanda,
thanks for being here. - Thank you. - Yeah, thanks for sharing
your story. I love it. You guys started on the Baby Steps. You kinda started your money journey. So tell me what caused you guys
to begin this whole process? - So I think, before we got started with Financial Peace University, we were stressed out every month. Not knowing where our money was going, get to the end of the month and scraping money together to see, are we gonna be able to pay our mortgage? Are we gonna be able to buy food? And it was just that
overwhelming stress every month. It's like, okay, we have to do something different in our lives if we're gonna break the cycle of this. And so that's kind of why we started Financial Peace University and started on the journey. - Yeah, so you guys were living a pretty, quote unquote,
normal life, you would say. Because that's how most people
function with their money. But you got to the point that it's like, the stress and just the mundane task of, we're stuck in this process,
caused you to change. - Yeah, it was kinda
looking at the incoming and outgoing every month. It was, everything you make
was continuously going out and you were left with nothing
at the end of the month. Working so hard, going
to your job every day, and it's like, there has
to be more than this. - Totally, so what kinda got y'all, what introduced you to
Financial Peace University? - I was checking my email on the way home from driving to Illinois,
driving back here to Tennessee, and something popped up in my email about Financial Peace
University at our local church. And I knew, kind of, I
knew about Dave Ramsey and the Baby Steps and everything, but we hadn't actually
tried to live by it. It was kind of like,
yeah, I understand it. And then I was like, hey, do you want to try,
do you want to do this? - And she's like— - Yes. - Absolutely, let's try it. What do we have to lose? We had nothing to lose. It can't get much worse than kind of what we're doing right now. - I married into a lot of debt with him, so for me, I had no emotional
attachment to that debt, which was frustrating. And I think I was probably
a little bit resentful. (group laughs) - A little bit. - A lot, okay. And I was exhausted. I was sick of going to work, working so hard to pay his school loans. I mean, it was "our school loans," but it did not feel like that to me. - Did you ever get to a place then, because I do hear that
a lot with spouses, of one spouse brings in a ton
more debt than the other. How did you navigate that? Or how did you overcome that? Do you feel like you got in a better spot, or were you just always frustrated through all of Baby Step 2? What was it like for you? - It was hard because I came in with zero debt. I came in with no debt
and a savings account. So then I come into $80,000 or $90,000
in school loans, and that was very overwhelming. So I had to, we had to work through a lot of those issues of, I'm sick of working to
pay off your school loans, let's kick it in gear. I felt like I was kicking it more in gear and he was just kinda like, well. And he's a dreamer and I'm the nerd, so the fact that the dreamer
wanted to learn about money, I was like, sign up now,
do not change your mind. Just, yes, we're doing it. - Go forward, and it was so
worth it, the nine weeks? - Absolutely, it very
much kept us accountable to have to go somewhere. You
have to leave your house, you have to go to this
class, you watch Dave talk, you go through the conversation
pieces in the book, and you talk to others
who are going through a very similar experience. Some worse, some not as bad, but it kinda makes you feel like, okay, we're normal, but we're all in this together to try and break the cycle. So it gives you that accountability person to bounce it off of, to give you encouragement when you get a little down on things. So it was totally worth it. Loved the experience. - So good. Okay, if you guys are curious about it, make sure to click the
link in the show notes because we have all the information about Financial Peace University. Make sure you check that out. Okay, so you guys are on Baby Step 3, which is big. That's a big deal. We talk a lot about Baby
Step 2 on this show and the idea of getting out of debt, but you guys have transitioned
to Baby Step 3. So, tell me about the difference
between Baby Step 2 and Baby Step 3 for you guys. - You know, paying off
the debt in Baby Step 2, we got to the end of it, and for me, I was expecting this big bang this like parade, and the band going off, and like, hey, you paid your debt off! And for me it was very
kind of anticlimactic, it's like, okay, well,
let's keep going. Next. But I would say the excitement of then, instead of paying other people your money, you get to keep your own money. It's a crazy thought,
you keep your own money, put it in the bank, see it
grow, and the sense of security, it's extremely motivating
to be in that position. - It makes you want to work more and work harder because it's for, it's a different why, so it's much more motivating. - So I'm curious, for you, Amanda, because he said there wasn't confetti and this big hurrah after
you paid off the debt. He was like, okay, Baby Step 3
now, let's keep going. Did you feel a sense of relief? Did you feel any more emotion? - I felt the confetti. - You felt the confetti. - Press enter, it was like, yes, I'm done with those student loans, and I can move on, and stop
being mad about, mad about it. I can move on now. You own your degree, you own
that knowledge, let's move on. - And so, would you say it's
as motivating as Baby Step 2? Because sometimes people
say Baby Step 3 is a little bit hard to get through because they're just like
saving money, saving money, but you guys feel energized by it? - I think it's more motivating. - Okay, that's good. - Yeah, I believe it's more motivating. You're seeing the— - You really feel like you're
actually winning, I guess in baby step three. Baby step two is, it will wear you down. - You're paying for your past. I mean it's like throwing money backwards. - Yeah, so Baby Step 3 is
just nice breath of fresh air. - Yes. - Saving money, it's a different feeling. - I love it. So, you guys, you really have
changed your whole philosophy when it comes to money. From not just paying off debt, but now actually saving money. And you actually have
a positive net worth, which is unlike a lot
of people in America, right? They don't have savings. So, what's your why? What keeps you doing
this day in and day out? What keeps you on Baby Step 3? What's gonna cause you to do
Baby Step 4, 5, and 6? - I want my son to grow up and see positive spending and
saving, and to be different. And to go to college with no debt, and come out with no debt, and just have a fresh look on life, and not be worried about $80,000 in school loans. We want to live. We want to travel, we want live our life, and I don't want to be
bogged down with Sallie Mae. So that's my why. - That's good. - Yeah, I agree. I see a lot of people
working when they're older and can't retire, and I think that's a huge,
that scares me a lot, the thought of that,
not being able to retire and having to work as
opposed to wanting to work, and enjoy our lives
together as we get older. So that's kind of my big thing. I want that, I want to
look out for my future, and our future, and be able
to retire and enjoy our lives. - So great. - That's what it's all about. - I love it, love it. So how much debt was paid off in total? - $38,000 in seven months. - $38,000 in seven months. And then, how much is saved now? - At the end of this month I think we're gonna be close
to $12,000. - Yes. - Okay, so a lot of the audience watching is on Baby Step 2,
they're paying off debt. But there's a percentage
of them in Baby Step 3. So, those in Baby Step 3 that may not be as
motivated as you guys are in Baby Step 3, what advice would you give them? - Just keep going. I mean, to see your savings account grow, it's such a secure feeling, knowing if something
happens, you're covered. And if you've never gone through, so I guess for us, we've gone
through me losing my job, and know how that feels to not have that savings account there. And I hope people don't
have to experience that. But from somebody who
has, and us that have, it's an awful experience
if you don't have savings. So just know that that is your security. That if somethings happens,
that's what it's there for. - That's your plan B. - So stay with it. - So good. Well you guys are awesome. Seriously, thank you
so much for coming on, sharing your story. It's so motivating seeing
people do this stuff day in and day out, and that's you guys. So keep rocking it. You're doing so great, so great. All right, coming up next, I will tell you one place in house you
probably haven't looked to save money for Baby Step 3. (upbeat music) All right, this episode
is all about saving money, and a great place that
we all love to save money is with our food. So, I brought editor-in-chief
Susan Spencer in from Woman's Day to help us
with some really great tips. Thanks, Susan, for being here. - Thanks so much for having me. - You're like an alum on the show. I feel like you've been back and I love it. So this is great tips because it all
has to do with your freezer. - Your freezer, exactly. You never would think that
this silly little appliance would save you so much money. It really actually does. - So, starting with, I see broccoli. - Yes, you see broccoli. So, frozen foods are your best friend, and they're really a
good way to save money. So first of all, frozen foods are picked at the peak of ripeness, so they're very, very good
for you, extremely nutritious. So there's a nice health
angle here as well. But they also cost a lot less. So if you just compare
broccoli, your friend, fresh broccoli is about $1.99 a pound, whereas frozen is about $1.25 a pound. And you're not losing
anything in terms of flavor, and as I said, it's actually a
little bit more nutritious. - Which is so good, because legitimately, right now in life, if you open my refrigerator, I have a head of broccoli from last week
that we didn't end up using, but when it's frozen it stays— - Exactly, and also, I think
vegetable manufacturers are putting out really,
really yummy things that kids actually really like. So these veggie tots are
particularly delicious. - And they're from cauliflower,
by the way (laughs). I was like, my kids will eat it, it just looks like fried and
good, my kids will do it. So good frozen veggies, the way to go, save some money that way. All right, up next, is what? Bread? - Well bread, I mean, this is something that is often on sale, but if you buy a couple of loaves and stick them in the fridge
or leave them on the counter, they're gonna go moldy. However, you can again
put them in your freezer and that'll save you money because it'll extend the life of the bread. But our tip is to actually split them. So if you buy English muffins, split them. If you buy a beautiful
loaf of artisanal bread, slice it and put the individual
slices in the freezer, and you just pull them out whenever you want a piece of toast. - So easy, that's so great. - And there's lots of other
ways to extend the life of food. My favorite tip has to
do with fresh herbs. So these cost about $2.50,
$1.99, something like that, and I don't know about you, but I always end up using one sage leaf, and the rest goes bad. So when they're starting to maybe look a little bit not so
great, you chop them up and mix them with a
little bit of olive oil, and just put them in a
regular ice cube tray, stick them in the freezer, and then you can just use them in soups, or stews, or in dishes,
whatever you want to do. - [Rachel] That's so smart. I love that. - Another thing that's super
expensive at the supermarket, and you should always
buy them in the bulk bin, is nuts and nut flours. And they actually have
a tendency to go rancid if you just leave them out. So we suggest keeping
those in the freezer, it extends their life, and
again, they'll last a lot longer. - Love it. - So you won't lose money that way. - Keep it frozen. I know, my freezer's a little nuts, if we were to open mine at home right now. So, your next tip is probably my favorite because it makes me feel better about life. A little bit of control. - Control and organization is key. So you can do all of these things, but if you have a freezer
that looks like a black hole, like mine does, then you're
not gonna save any money because you won't be able to find anything. - And we're terrible. I'll save a little thing of meat, and just wrap it in saran wrap, and put it in a bag, and freeze it. I'm like, I don't know how
long that meat's been there. So, this literally is about
to save the Cruzes a lot. - And frugality is important, and it's really good, and so we're gonna help you here. So, a couple of tips: First
of all, you can purchase, for not very much money, these bins were about
$7–10 a piece, you can purchase different
bins, put them in, and just pile things in here, which is just a good organizational tool. But you don't actually
have to buy anything, you can use old canvas bags, you can use pieces of cardboard. The idea is that you want
to sort of stack things in ways that you can sort
of see exactly what's what. So you've got your meats together, you have your fish together, you have your vegetables together, and that will allow you a
certain level of organization. And of course, labeling,
always extremely important. These are really cute labels, but you can also just
write on the plastic bag with a sharpie, super easy. And another tip is, when you're cooking something
like a soup or a stew, and say you bulk cook
on a Sunday afternoon and you want to freeze some of it, put into a plastic bag,
label it of course, and freeze it flat like this so you can stack things on top of it. It saves you a lot of space. - So smart, verses just pouring
it in and it all bulks out. - Right, exactly. And then you know exactly what it is and you know exactly when
it's going to expire, because you put a date on it, and that helps you actually
really use your freezer. - I love it. - And then, just a final tip, as you put new foods into your freezer, move the old ones forward. So you've got the things
you have to eat first are on the outside. - That you can see, visually. Open the freezer and it's all right there. So good. And it is amazing because the food
budget, it eats up so much money, and it's so easy to waste stuff. I hate to say it, but I'm guilty of that. And so, tips like this saves
money over the long haul that you can put into your
emergency fund you guys. So great. Well, for more great tips like this, make sure to go to womansday.com or check out the latest
issue on newsstands today. Susan, thanks for being here. - Thank you so much. - So fun. (upbeat music) I hope this episode motivated
you to stay on track and push through Baby Step 3. Thank you guys so much for watching, and if you haven't checked out my podcast, make sure to do that. And also subscribe to
YouTube and Facebook. And as always, make sure you
take control of your money and create a life you love. (musical chords)
