May 24, 2024 • 24 mins
Ever thought that budgeting was only for those stretching every penny? Think again. As your hosts, Justin Gaines and John Proper, we're debunking the myths surrounding wealth and financial management. Our candid exchange is packed with insights and anecdotes that underscore the importance of a disciplined approach to finances – yes, even for the well-off. We'll guide you through crafting a budget that's as dynamic as your lifestyle, showing you how to steer clear of the budgetary set-and-forget trap that can lead to wasteful spending and unutilized subscriptions.
Join us for a journey where we'll dissect the artistry of meal planning, the clever utilization of subscription services, and the transformative power of intentional budgeting on your spending habits. We paint a picture of the subtle, yet profound, behavioral changes that come from mindful financial planning; from lessening the allure of impulse buys to building a vital savings cushion for peace of mind. Ready to achieve that zero-based budget nirvana? This episode is your ticket to financial clarity and the stress-free existence that comes with having your money matters firmly in your grasp.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to the Balanced Blueprints podcast,
where we discuss the optimaltechniques for finances and
health and then break it down tocreate an individualized and
balanced plan.
I'm your host, justin Gaines,here with my co-host, john
Probert.
Speaker 2 (00:11):
In this episode.
Speaker 1 (00:11):
John and I are going to discuss the pitfalls that a
lot of people think the wealthyuse and what it means to be
wealthy when you're budgeting,versus what we talked about in
our first financial episodeabout budgeting.
I hope you enjoy the episodeEffectively.
What I'm talking about here isand I was definitely guilty of
(00:34):
doing this when I was growing up, and I hear my friends do it
and I hear clients do it all thetime and it's the misconception
that if you're wealthy, youdon't have to think about your
budget and you don't have tothink about your budget and you
don't have to think about money.
You want to have so much moneythat you don't have to think
about it, and the reality is isthat that will never happen.
The way you become wealthy andyou have less stress about money
(00:58):
is because you have a system inplace, and not that you
constantly think about money,but that you have a way to know
where every dollar is goingevery single time.
So in that first episode wetalked about a net zero budget
and that just means that everydollar is going somewhere.
But we also gave a tip in therethat I've talked to clients
(01:21):
since releasing that otherepisode and they've been having
some issues with it.
So the tip was you know, if youdon't want to get into the
nitty gritty of this dollaramount goes to food and this
dollar amount goes to gasbecause your gas bill and your
food bills fluctuate have acredit card that you know.
(01:41):
Ok, I can spend $1,000 a monthon this credit card, and then
you just make sure that thatcredit card balance never
exceeds $1,000.
Well, the issue that my clientshave been having and I'll be
honest, there's been times thatI fall into this with my own
budgeting is we fall intobelieving that myth that we
(02:04):
don't have to think about ourbudget.
We don't have to think about itbecause we know that we have a
thousand dollars there and it'llall work out, because if you
have a system in place, you satdown, you did your budget and
you know that you can spend athousand dollars on there.
So that's all you think aboutand you just keep going.
And so what ends up happeningis you don't end up actually
re-looking at your budget andverifying that your numbers
(02:25):
match each category, and thenyou're three months in and
you're running a credit cardbalance or you're behind on a
payment because you wanted tobelieve that you didn't have to
think about your budget.
So the number one thing is ifyou're going to make a budget,
that's step one.
Step two is whatever frequencythe budget is, whether it's
(02:45):
weekly, bi-weekly, monthlytypically, that's going to line
up with how frequently you getpaid.
But what you want to do is haveit so that you have your, your
idealistic numbers and thenyou'll have, you know, a
spreadsheet that you can writedown.
Either write down or even justuse google sheets, you know,
microsoft excel, any of thoseand just put in the actual
(03:07):
numbers.
And what this will allow you todo is go through and audit your
credit card statement if you'reusing that hack, so that you
can see that, oh, I bought thissubscription, I'm not actually
using it.
Let me go in and cancel that,because otherwise what ends up
happening is we think that thisapp is going to change our life
and help our productivity and webuy it, and then we keep paying
(03:30):
for it every single month, eventhough we really just wanted it
for the seven day free trial,and then we were going to cancel
it, but we didn't, and nowwe've paid for three months of
it because we didn't realize,because all we were looking at
is did my credit card staywithin $1,000?
And it did, so we're good, butwe don't look at the actual
expenses, and so that is alittle bit of a pitfall that I
do find my clients falling intois just thinking that when
(03:54):
you're wealthy or when you'reset up financially, you don't
have to think about yourfinances, and that is 100% not
the case.
Speaker 2 (04:00):
That's actually a great point too.
I've never thought about it interms of like.
That's actually a great pointtoo.
I've never thought about it interms of like, if you're just
setting it at $1,000, butnormally you would spend $900,
(04:21):
you might actually be spendingvery well, very easily as well.
But because I just have thismindset of it's $1,000, I might
find ways to spend an extra $100or close to so it's still under
$1,000.
Like you said, with those apps,if you don't need them, it's
like get rid of them, even ifyou're under budget.
Speaker 1 (04:37):
Right, the reason I brought up the apps.
I literally just did it lastweek.
Where at the beginning of themonth, so I it last week where
at the beginning of the month,so I get paid once a month and I
get paid in the middle of themonth.
I should say the bulk of myincome for the business comes in
once a month and it's in themiddle of the month, but I know
roughly what that is within thefirst five days of the month.
So last week I was looking atthat and just looking at what I
(05:00):
need to adjust each category toin order for everything to line
up and things were going to betight.
So I was like, oh man, how canI, where can I go to cut
expenses?
And that's where I went andsaid, you know what?
I haven't done this in a while.
Let me audit my credit cardstatement because I use I use
this credit card hack.
So I said, let me, let me auditthis credit card statement.
(05:22):
And I went through and there waslike three subscriptions on
things that I've been tellingmyself if you don't use this
this month, then you need tocancel this because you're not
using it anymore.
And I just wasn't doing it.
I wasn't going in and cancelingit, and so there was probably,
you know, 75, 80 dollars ofsubscriptions that were just
being wasted away, because withthose in there I was still
(05:44):
staying below that minimumcredit card balance, or the
maximum credit card balancereally.
And so, by removing these, whatit allows me to do is either
spend more on something else,eat out, go, do you know, buy
some clothes, whatever the caseis that I need or the other
thing that I do is I have it setup in an Excel document where I
(06:07):
put in I have all my monthlypayments in there, but then I
have the credit card balance,and so if the credit card
balance is below what thatminimum, that max, is set at, so
if the max is a thousand butthe balance is at 800, I have
another box that, in order tostay at net zero, if I don't
have to pay $1,000 on thatcredit card and I'm only paying
(06:30):
800, there's $200 that needs togo somewhere.
It can't just sit there,otherwise we're no longer in a
net zero budget.
And so I have a separate boxthat's literally just called
money to move, and it'llcalculate out when I change all
the numbers and it'll calculateout when I change all the
numbers and it'll say okay, youhave $200 that needs to move.
And then what I do is I eithermove that money into my six
(06:53):
month savings, which is in itsown separate account.
I can have it if you're usingthe CD laddering approach that
we talked about last week.
You can look at and move those,move that money into the CD
ladder, or you can just put itinto an investment account.
If you're trying to save up fora house, or you're trying to
save up for a car or you makepayments, you can move it in
(07:15):
there.
But what you want to do is makesure that that $200 is earmarked
for something, becauseotherwise it's just going to
disappear, because you're goingto spend it on something that
you're like oh, I have free twohundred dollars.
Which brings us to our nextpitfall.
Is the reason why you want tohave that net zero budget is a
lot of times what you'llpsychologically.
(07:36):
What you'll do is, if you knowthat you spent two hundred
dollars less, you'll tellyourself oh, I spent two hundred
dollars less last month.
I can buy this and it's lessthan $200, the $50 purchase, and
a lot of people will forgetthat they already used that
justification and now they useit five times or six times for
$50 transactions.
(08:04):
Hundred dollars this month, andyou justified it with because
you were under 200 last month.
But now you're going to be overby 100 this month, accounting
for that 200, and you're over byreally 300.
So you're net over by 100.
But that's why you want everydollar to have a job is because
if you don't do that, you startto rationalize oh, I was under
budget last month, it's no bigdeal.
You end up overspending morethan what you were under in
prior months yeah, yeah, you'rereally gonna stay on top of it.
Speaker 2 (08:28):
I actually just redid mine less, or this morning too,
very early morning, um, and itwas for that same exact reason
of like what things can I justneaten up, like I already do
pretty good, so I just wanted torank, like OK, what things?
Like Audible, for example.
I think it's a great, greattool, but I'm very behind on my
(08:52):
monthly credits, so like I'dlove to pause it.
It's a different story, becauseif you get rid of your
subscription, you lose all yourcredits?
Speaker 1 (09:01):
I was just going to ask you because I've been in
that position before.
I'm not in that position before.
I'm not in that position rightnow.
I actually I just had to buycredits on there, but, um, I've
been in that position beforewhere I'm like can I pause this?
And what happens to the creditsif I pause it?
Speaker 2 (09:12):
so that's unfortunate so like I've been putting off
but I need to go through and belike what are?
This is embarrassing, but maybeI'm at 16, like what are 16
books on free credits like I canget.
So then I have those locked in,they're in my library and then
I can cancel this for the timebeing, just because it's it's
yeah.
Once you start to fall behindthat much, it's hard to catch up
(09:35):
and I want, I don't want tolose those credits, but like
that's a good one of, like Ineed that one to be positive and
you're at a yeah, and you're ata threshold.
Speaker 1 (09:42):
There too, you have 16.
I mean you're talking in theory.
If you were to go and grab 16books, you'd have a year's worth
of reading.
Speaker 2 (09:50):
Oh easily.
That's why I know, if that'swhy I know it shouldn't be
paused Like I'm past the pointwhere, like, all right, we'll
just read two or listen to two amonth and catch up.
Speaker 1 (09:59):
It's like pause it, but yeah, you got to listen to
one a week now.
Even then, you'll be caught upin four months.
You'll have have the four.
You'll be caught up in uh fivemonths yeah, because he's fun.
Speaker 2 (10:12):
but but yeah, I was going through, I was tidying and
then I'm also guilty of Iactually I do more of the like
what's my exact spending andwhat's my exact making.
But I might actually try moreof the credit card one, because
I'm also guilty of like oh, sayI, I don't watch the credit card
(10:34):
thousand dollar limit because Idon't use that technique, but I
might because there might be anexpense that would pull me over
.
But I'm like, oh, it's aone-time expense this month, you
know.
It's like, oh, it's something Ineeded, whereas if I had the
thousand dollar limit I'd belike, even if it's something I
needed, but this, this or that,I could be like maybe push it to
the next month if I'm under, sothat that might maybe help more
(10:55):
, cause I fall into thatdownfall.
A lot of like I need this, it'sa one-time thing, but then each
month I need this, it's aone-time thing sometimes comes
Right.
Speaker 1 (11:04):
And it's like oh, it's $10.
It's funny I never even thoughtabout that that the credit card
technique allows you to alsosee, like your rationalization,
there is it's only $10.
But with this you would seeI've already spent $1,000.
So, yes, it's $10.
But what could I have cut out?
And that's the other thing youcould do is you could go and say
(11:26):
like okay, I want to buy thisone-time thing.
Thing you could do is you couldgo and say like okay, I want to
buy this one-time thing, butthat means I need to go and
eliminate something, whetherit's a subscription, whether
it's, you know, something thatconsistently comes up.
Another thing that I foundthat's actually helped our
budget for our household quite abit is I just paid for door
dash.
It's like the premium.
(11:46):
It's a hundred dollars a yearand I didn't even know they had
a subscription like that.
So they have a premium and whatit does is so you pay the
hundred dollars and then youdon't get the delivery charge so
we were getting hit with, or wewould have been getting hit
with, seven or eight dollardelivery charges every time
every time.
So I said, okay, even if we justuse it for our groceries,
(12:08):
weekly, $7 times 52, that's $350.
It's 350 plus dollars.
I'm going to spend a hundred tosave 250.
Like that makes sense.
And then cause?
Then I also was like okay, soif I spend a hundred, even if we
only use this twice a month,we've saved money.
And that's just if we use itfor groceries.
And that's just if we use itfor groceries.
(12:29):
That's not if we use it.
Okay, we don't want to go outtonight, but we also don't want
to cook, let's order somethingin.
And what I've found is so inthe past, our grocery bill, we
would be over one week and thenthe other.
You know, in month we'd be overone week, pretty much dead on
(12:50):
one week and the other two weekswe would be under our budget.
With doing this, we've beenunder budget every week for the
past six weeks and that's withtipping the driver, with the
fees, and I think what it is iswe're no longer buying stuff
accidentally.
That's already in the house,because you're literally placing
your grocery order while you'salready in the house because
you're literally placing yourgrocery order while you're
(13:12):
walking around the house andmeal planning.
I think that's the key part, too, is we meal plan, and that was
before.
Even when we weren't usingDoorDash, we were meal planning.
We literally sat down and wewould look at our calendars and
we'd say what night are we out?
I'm not going to be there, okay, let's make sure that we put
that on the calendar that we'reout.
What days are we going to behere?
(13:32):
Let's plan out meals that we'regoing to eat together and then
we grab some lunches and thenovercook meals, so that we have
that for lunches as well, and sothat I mean, that's a big part
to staying on budget when itcomes to grocery bills, but I
think we're just not buying theextra stuff.
Speaker 2 (13:50):
Well, you're not walking through the aisles too
and seeing like, oh, I reallywant this, or look at the
marketing on that, or, orthere's a deal on that, I don't
need it, but I mean that'sprobably yeah, I think there's a
lot of stuff that you know.
Speaker 1 (14:03):
We just grab those other things because we also
lump into our grocery budget.
So we there's two people in thehouse we spend 200 a week on
groceries.
That's what's budget.
But that 200 a week alsoincludes, you know, your, your
toilet papers, her makeup um,not all of her makeup, but like
the everyday using stuffobviously really expensive stuff
(14:24):
we don't put in there becausewe'd be over 200 every time, but
um, whole, not other storythere but the basic stuff your
lipsticks, your body wash, allof that stuff we include in our
grocery haul.
When we need to get a newshower liner to replace the one
that's in the bathroom, which weprobably do every four to six
months, we take that out of thegrocery bill as well.
Speaker 2 (14:49):
So you guys are $50 each a week.
Speaker 1 (14:53):
No, $100 each $200 grocery bill, so $100 each a
week.
Oh, $200 a week A week, yeah,okay, yeah, yeah, yeah.
$200 a week, $100 each, yeah,yeah, and so that's the number
we use for the budget.
And then, like I said, we'vebeen under almost every week
(15:15):
while using DoorDash, which isnot what I expected.
I honestly expected us to befor it to be a little bit more
expensive, but we were gettingback the time and so a lot of
times, like you know, the two tothree hours that we were going
to end up spending groceryshopping.
We use that to clean up thehouse.
We use it a lot of times.
I'll use it to work.
You know there's all sorts ofstuff that we just do.
(15:38):
There's times we just sit andrelax because we have such busy
schedules with our workschedules that it makes sense,
but it was.
It's honestly been mind blowingto me that we've been able to
stay on budget.
Ultimately, what we've beenunder budget the last six to
eight weeks.
We've paid for the subscriptionfor the year.
Speaker 2 (15:59):
Yeah, no, that's definitely about it.
Like you said, your time alone.
I mean the amount it savesthere.
I also didn't know DoorDash didgroceries.
I thought it was like justInstacart, so that's interesting
.
Speaker 1 (16:10):
Yeah, doordash, uber Eats does it as well.
Uh, I think I ended up usingdoor dash so I was looking into
door dash for our liquor storeusing that.
So I was looking into door dashquite a bit and then it was one
of those things that we wereusing and we were going direct
to target for their delivery.
We were going through uber eatssometimes and through DoorDash
(16:33):
other times and shopping for thedeals and then I finally was
just like you know what?
I bet if we just consolidatedall of our purchasing power into
one app, we would probably berewarded for that.
And that's ultimately what wedid.
As we just said, let's use thisone and let's do it.
I think the other benefit thereis there's been weeks in the
(16:56):
past where, oh, we don't want todo grocery shopping on monday,
so we'll do it on sunday, sowe'll do it on monday, and then
we don't do it on monday, or oneof us has an event, so then
it's like, okay, we'll sit down,we'll do it on tuesday and you
end up eating out those nightsand you end up spending more
money, and so this just allowsus to not ever have to worry
about that.
You know, at the very the mostrelaxed and laid back we've ever
(17:21):
been about it was we didn't getaround doing it on sunday.
It was a really nice sunday.
We were doing a bunch of stuffaround the house, trying to get
things out for spring and getthe patio set up, and so it just
kind of slipped our minds andso we ended up putting the order
in at like 8 30 at night, butscheduled it to be delivered
while I would be in the officethe home office the next day.
(17:43):
And so boom, it's done, and wetook the 20 minutes of meal plan
and prep and do everything, andthen when it gets delivered and
I step out of the office towalk around a little bit and put
groceries away, and then we'reback on track and we didn't have
to eat out that night.
Speaker 2 (18:00):
That's a great case of an app work, the subscription
doing well.
But so then what else?
You listed a couple downfalls.
Any other ones that come tomind?
Speaker 1 (18:21):
Those are the big ones that I feel are very easy
to fall into.
You know, the the main one isis that mindset of just and,
like I said, growing up I hadthat total mindset.
I was like I'm gonna be wealthy, so I never have to think about
finances, I never have to thinkabout my money, I can just buy
whatever I want.
And it's so backwards, it'sjust so not even true.
And the crazy part too is whenyou, I find for myself and even
with my clients, when you startbudgeting, you start investing
(18:44):
and putting yourself up forretirement and doing all these
things, you end up not wantingto spend money on all the BS
because you just see how muchit's helping you and how much
it's growing to and how muchless stress you will have.
Because you have your six monthsavings now and because you're
not in credit card debt, you'rejust like, wow, this is a much
less stressful life and you wantto be in that space.
(19:09):
You're like you know what?
I don't actually need that, soI'm not going to buy it.
I don't absolutely love thispiece of clothing in the store,
so I'm not going to buy it.
I'm not saying you can't buyyourself gifts and you can't.
You know, splurge here andthere, but it's making it.
So it's a splurge here andthere, not just a constant.
I feel like it or I'm depressed, so I'm going to go to a
(19:39):
Sheehan Hall or a Timu Hall oran Amazon Hall.
I'm going to go spend $100 andfeel better about it.
That emotional coping mechanismchanges and you start to be
like you know what that mightmake me feel good right now, but
it's going to make mefinancially stressed in two
weeks when I start doing mybudget again and reevaluating
things.
So let me just not do this.
Speaker 2 (19:58):
Let me go do something else in its place,
which is the importance of doingthat budget?
Because you never check it, younever get stressed, so you just
keep spending.
Speaker 1 (20:03):
Well, where you get stressed is you can't with the
credit card technique.
Where you end up gettingstressed is if you're not
constantly sitting on top of it,you can't cover the credit card
payment.
And then you're like, oh mygosh, I don't have the money to
cover this credit card payment.
How did this happen?
What happened here?
And hopefully you don't justifyit and say, oh well, it'll only
(20:24):
be a little bit of interest,because it's one time, no big
deal.
Hopefully what you do is thatbalance is going to roll over
onto your credit card statementand do is that balance is going
to roll over onto your creditcard statement and it's going to
tell you what the balance isand then the interest is going
to go in there.
So if you had a thousand dollarbudget, you now decrease that
thousand dollars by whateveryour rollover balance was plus
whatever the interest was, andnow you only have six hundred
(20:47):
dollars this month or this.
You know whatever the intervalis to spend and if you do it
that way, you won't end up inthe hole as much or as far.
But if you're not doing thebudget, what I've seen clients
do is they go oh, I spent $1,200this period.
They pay the $1,200 and nowthey missed their car payment
(21:07):
because they had the money inthe bank account there that day
and so they paid the credit card.
But then they realized therethat day and so they paid the
credit card.
But then they realized, ohshoot, I had a paycheck coming
in two weeks.
I had the car payment comingbetween now and that next
paycheck.
I just paid that credit cardand now the money's not there
for the car payment to come out.
Now you have all missedpayments, which is impacting
(21:31):
your credit score, andeverything just starts to
snowball and everything startsto go downhill really, really
quickly with that snowballeffect.
And so doing, the budget allowsyou to see the timing of
payments and the timing ofincome so that you can line
those things up and make surethat you're not putting yourself
in a situation Because I'vedone reviews with clients where
(21:51):
they don't think they have anymoney and they think they're
broke, and the reality is isthat if they adjust how they're
paying things, they would not bein that situation.
But the problem is is that theyyou know, they've done out
their budget on paper and itsays they can spend a thousand
dollars every period.
And they're doing this.
They're they're paying athousand dollars from one
(22:13):
paycheck period.
And they're doing this.
They're.
They're paying a thousanddollars from one paycheck.
And then their rent comes duebetween the next, between that
point at which they pay thecredit card, and their next
paycheck.
And so now they have to calltheir landlord and say, hey, I'm
going to be a couple daysbehind on rent.
I get paid this day, and theyget paid and they pay that money
.
And so you know, it's just thatawkwardness between you and the
landlord.
You probably get hit, hit witha late fee.
(22:33):
And then they're doing the samething with their car payment.
And it's not an issue of nothaving the money, it's an issue
of the timing.
And so if you know the timing,you sit down, you see those
things.
You can say, ok, I can spend athousand dollars per period, per
month, whatever, on the creditcard, but I need to pay 250 out
(22:55):
of every paycheck so that I havethe timing line back up on
these.
Or I need to pay 500 out ofthis paycheck and then this
one's going to take the carpayment and then I'm not going
to pay anything, because therent's going to come out, and
then my fourth paycheck in themonth or, for you know, if
you're getting paid weekly, thatfourth paycheck, that's what's
going to cover the other half ofa thousand dollars on the
(23:16):
credit card.
Yeah, because of timing.
So it's not uncommon, actually,for timing issues to cause
budget issues and make you feellike you don't have any money.
And it's not because you'reliving above your means, you're
living right at your means,which you know.
If you're using a zero0 budget,that's where you're going to be
, but your timing is all messedup and so if you get the timing
(23:38):
right, then you'll have it wherethat $0 budget falls right into
place.
Speaker 2 (23:44):
Yeah, that's a good thing to look at too.
Good, I think those are somegood downfalls.
Anything else?
Speaker 1 (23:52):
Those are the big ones.
I think we'll probably wrap itup there, so thank you for
listening.
We hope you enjoyed the episodeand until next time, stay
balanced.
Speaker 2 (24:01):
Thanks for listening to our podcast.
Speaker 1 (24:03):
We hope this helps you on your balance freedom
journey.
Speaker 2 (24:05):
Please share your thoughts in the comments section
below.
Until next time stay balanced.
Welcome to the Balanced Blueprints podcast,
where we discuss the optimaltechniques for finances and
health and then break it down tocreate an individualized and
balanced plan.
I'm your host, justin Gaines,here with my co-host, john
Probert.
Speaker 2 (00:11):
In this episode.
Speaker 1 (00:11):
John and I are going to discuss the pitfalls that a
lot of people think the wealthyuse and what it means to be
wealthy when you're budgeting,versus what we talked about in
our first financial episodeabout budgeting.
I hope you enjoy the episodeEffectively.
What I'm talking about here isand I was definitely guilty of
(00:34):
doing this when I was growing up, and I hear my friends do it
and I hear clients do it all thetime and it's the misconception
that if you're wealthy, youdon't have to think about your
budget and you don't have tothink about your budget and you
don't have to think about money.
You want to have so much moneythat you don't have to think
about it, and the reality is isthat that will never happen.
The way you become wealthy andyou have less stress about money
(00:58):
is because you have a system inplace, and not that you
constantly think about money,but that you have a way to know
where every dollar is goingevery single time.
So in that first episode wetalked about a net zero budget
and that just means that everydollar is going somewhere.
But we also gave a tip in therethat I've talked to clients
(01:21):
since releasing that otherepisode and they've been having
some issues with it.
So the tip was you know, if youdon't want to get into the
nitty gritty of this dollaramount goes to food and this
dollar amount goes to gasbecause your gas bill and your
food bills fluctuate have acredit card that you know.
(01:41):
Ok, I can spend $1,000 a monthon this credit card, and then
you just make sure that thatcredit card balance never
exceeds $1,000.
Well, the issue that my clientshave been having and I'll be
honest, there's been times thatI fall into this with my own
budgeting is we fall intobelieving that myth that we
(02:04):
don't have to think about ourbudget.
We don't have to think about itbecause we know that we have a
thousand dollars there and it'llall work out, because if you
have a system in place, you satdown, you did your budget and
you know that you can spend athousand dollars on there.
So that's all you think aboutand you just keep going.
And so what ends up happeningis you don't end up actually
re-looking at your budget andverifying that your numbers
(02:25):
match each category, and thenyou're three months in and
you're running a credit cardbalance or you're behind on a
payment because you wanted tobelieve that you didn't have to
think about your budget.
So the number one thing is ifyou're going to make a budget,
that's step one.
Step two is whatever frequencythe budget is, whether it's
(02:45):
weekly, bi-weekly, monthlytypically, that's going to line
up with how frequently you getpaid.
But what you want to do is haveit so that you have your, your
idealistic numbers and thenyou'll have, you know, a
spreadsheet that you can writedown.
Either write down or even justuse google sheets, you know,
microsoft excel, any of thoseand just put in the actual
(03:07):
numbers.
And what this will allow you todo is go through and audit your
credit card statement if you'reusing that hack, so that you
can see that, oh, I bought thissubscription, I'm not actually
using it.
Let me go in and cancel that,because otherwise what ends up
happening is we think that thisapp is going to change our life
and help our productivity and webuy it, and then we keep paying
(03:30):
for it every single month, eventhough we really just wanted it
for the seven day free trial,and then we were going to cancel
it, but we didn't, and nowwe've paid for three months of
it because we didn't realize,because all we were looking at
is did my credit card staywithin $1,000?
And it did, so we're good, butwe don't look at the actual
expenses, and so that is alittle bit of a pitfall that I
do find my clients falling intois just thinking that when
(03:54):
you're wealthy or when you'reset up financially, you don't
have to think about yourfinances, and that is 100% not
the case.
Speaker 2 (04:00):
That's actually a great point too.
I've never thought about it interms of like.
That's actually a great pointtoo.
I've never thought about it interms of like, if you're just
setting it at $1,000, butnormally you would spend $900,
(04:21):
you might actually be spendingvery well, very easily as well.
But because I just have thismindset of it's $1,000, I might
find ways to spend an extra $100or close to so it's still under
$1,000.
Like you said, with those apps,if you don't need them, it's
like get rid of them, even ifyou're under budget.
Speaker 1 (04:37):
Right, the reason I brought up the apps.
I literally just did it lastweek.
Where at the beginning of themonth, so I it last week where
at the beginning of the month,so I get paid once a month and I
get paid in the middle of themonth.
I should say the bulk of myincome for the business comes in
once a month and it's in themiddle of the month, but I know
roughly what that is within thefirst five days of the month.
So last week I was looking atthat and just looking at what I
(05:00):
need to adjust each category toin order for everything to line
up and things were going to betight.
So I was like, oh man, how canI, where can I go to cut
expenses?
And that's where I went andsaid, you know what?
I haven't done this in a while.
Let me audit my credit cardstatement because I use I use
this credit card hack.
So I said, let me, let me auditthis credit card statement.
(05:22):
And I went through and there waslike three subscriptions on
things that I've been tellingmyself if you don't use this
this month, then you need tocancel this because you're not
using it anymore.
And I just wasn't doing it.
I wasn't going in and cancelingit, and so there was probably,
you know, 75, 80 dollars ofsubscriptions that were just
being wasted away, because withthose in there I was still
(05:44):
staying below that minimumcredit card balance, or the
maximum credit card balancereally.
And so, by removing these, whatit allows me to do is either
spend more on something else,eat out, go, do you know, buy
some clothes, whatever the caseis that I need or the other
thing that I do is I have it setup in an Excel document where I
(06:07):
put in I have all my monthlypayments in there, but then I
have the credit card balance,and so if the credit card
balance is below what thatminimum, that max, is set at, so
if the max is a thousand butthe balance is at 800, I have
another box that, in order tostay at net zero, if I don't
have to pay $1,000 on thatcredit card and I'm only paying
(06:30):
800, there's $200 that needs togo somewhere.
It can't just sit there,otherwise we're no longer in a
net zero budget.
And so I have a separate boxthat's literally just called
money to move, and it'llcalculate out when I change all
the numbers and it'll calculateout when I change all the
numbers and it'll say okay, youhave $200 that needs to move.
And then what I do is I eithermove that money into my six
(06:53):
month savings, which is in itsown separate account.
I can have it if you're usingthe CD laddering approach that
we talked about last week.
You can look at and move those,move that money into the CD
ladder, or you can just put itinto an investment account.
If you're trying to save up fora house, or you're trying to
save up for a car or you makepayments, you can move it in
(07:15):
there.
But what you want to do is makesure that that $200 is earmarked
for something, becauseotherwise it's just going to
disappear, because you're goingto spend it on something that
you're like oh, I have free twohundred dollars.
Which brings us to our nextpitfall.
Is the reason why you want tohave that net zero budget is a
lot of times what you'llpsychologically.
(07:36):
What you'll do is, if you knowthat you spent two hundred
dollars less, you'll tellyourself oh, I spent two hundred
dollars less last month.
I can buy this and it's lessthan $200, the $50 purchase, and
a lot of people will forgetthat they already used that
justification and now they useit five times or six times for
$50 transactions.
(08:04):
Hundred dollars this month, andyou justified it with because
you were under 200 last month.
But now you're going to be overby 100 this month, accounting
for that 200, and you're over byreally 300.
So you're net over by 100.
But that's why you want everydollar to have a job is because
if you don't do that, you startto rationalize oh, I was under
budget last month, it's no bigdeal.
You end up overspending morethan what you were under in
prior months yeah, yeah, you'rereally gonna stay on top of it.
Speaker 2 (08:28):
I actually just redid mine less, or this morning too,
very early morning, um, and itwas for that same exact reason
of like what things can I justneaten up, like I already do
pretty good, so I just wanted torank, like OK, what things?
Like Audible, for example.
I think it's a great, greattool, but I'm very behind on my
(08:52):
monthly credits, so like I'dlove to pause it.
It's a different story, becauseif you get rid of your
subscription, you lose all yourcredits?
Speaker 1 (09:01):
I was just going to ask you because I've been in
that position before.
I'm not in that position before.
I'm not in that position rightnow.
I actually I just had to buycredits on there, but, um, I've
been in that position beforewhere I'm like can I pause this?
And what happens to the creditsif I pause it?
Speaker 2 (09:12):
so that's unfortunate so like I've been putting off
but I need to go through and belike what are?
This is embarrassing, but maybeI'm at 16, like what are 16
books on free credits like I canget.
So then I have those locked in,they're in my library and then
I can cancel this for the timebeing, just because it's it's
yeah.
Once you start to fall behindthat much, it's hard to catch up
(09:35):
and I want, I don't want tolose those credits, but like
that's a good one of, like Ineed that one to be positive and
you're at a yeah, and you're ata threshold.
Speaker 1 (09:42):
There too, you have 16.
I mean you're talking in theory.
If you were to go and grab 16books, you'd have a year's worth
of reading.
Speaker 2 (09:50):
Oh easily.
That's why I know, if that'swhy I know it shouldn't be
paused Like I'm past the pointwhere, like, all right, we'll
just read two or listen to two amonth and catch up.
Speaker 1 (09:59):
It's like pause it, but yeah, you got to listen to
one a week now.
Even then, you'll be caught upin four months.
You'll have have the four.
You'll be caught up in uh fivemonths yeah, because he's fun.
Speaker 2 (10:12):
but but yeah, I was going through, I was tidying and
then I'm also guilty of Iactually I do more of the like
what's my exact spending andwhat's my exact making.
But I might actually try moreof the credit card one, because
I'm also guilty of like oh, sayI, I don't watch the credit card
(10:34):
thousand dollar limit because Idon't use that technique, but I
might because there might be anexpense that would pull me over
.
But I'm like, oh, it's aone-time expense this month, you
know.
It's like, oh, it's something Ineeded, whereas if I had the
thousand dollar limit I'd belike, even if it's something I
needed, but this, this or that,I could be like maybe push it to
the next month if I'm under, sothat that might maybe help more
(10:55):
, cause I fall into thatdownfall.
A lot of like I need this, it'sa one-time thing, but then each
month I need this, it's aone-time thing sometimes comes
Right.
Speaker 1 (11:04):
And it's like oh, it's $10.
It's funny I never even thoughtabout that that the credit card
technique allows you to alsosee, like your rationalization,
there is it's only $10.
But with this you would seeI've already spent $1,000.
So, yes, it's $10.
But what could I have cut out?
And that's the other thing youcould do is you could go and say
(11:26):
like okay, I want to buy thisone-time thing.
Thing you could do is you couldgo and say like okay, I want to
buy this one-time thing, butthat means I need to go and
eliminate something, whetherit's a subscription, whether
it's, you know, something thatconsistently comes up.
Another thing that I foundthat's actually helped our
budget for our household quite abit is I just paid for door
dash.
It's like the premium.
(11:46):
It's a hundred dollars a yearand I didn't even know they had
a subscription like that.
So they have a premium and whatit does is so you pay the
hundred dollars and then youdon't get the delivery charge so
we were getting hit with, or wewould have been getting hit
with, seven or eight dollardelivery charges every time
every time.
So I said, okay, even if we justuse it for our groceries,
(12:08):
weekly, $7 times 52, that's $350.
It's 350 plus dollars.
I'm going to spend a hundred tosave 250.
Like that makes sense.
And then cause?
Then I also was like okay, soif I spend a hundred, even if we
only use this twice a month,we've saved money.
And that's just if we use itfor groceries.
And that's just if we use itfor groceries.
(12:29):
That's not if we use it.
Okay, we don't want to go outtonight, but we also don't want
to cook, let's order somethingin.
And what I've found is so inthe past, our grocery bill, we
would be over one week and thenthe other.
You know, in month we'd be overone week, pretty much dead on
(12:50):
one week and the other two weekswe would be under our budget.
With doing this, we've beenunder budget every week for the
past six weeks and that's withtipping the driver, with the
fees, and I think what it is iswe're no longer buying stuff
accidentally.
That's already in the house,because you're literally placing
your grocery order while you'salready in the house because
you're literally placing yourgrocery order while you're
(13:12):
walking around the house andmeal planning.
I think that's the key part, too, is we meal plan, and that was
before.
Even when we weren't usingDoorDash, we were meal planning.
We literally sat down and wewould look at our calendars and
we'd say what night are we out?
I'm not going to be there, okay, let's make sure that we put
that on the calendar that we'reout.
What days are we going to behere?
(13:32):
Let's plan out meals that we'regoing to eat together and then
we grab some lunches and thenovercook meals, so that we have
that for lunches as well, and sothat I mean, that's a big part
to staying on budget when itcomes to grocery bills, but I
think we're just not buying theextra stuff.
Speaker 2 (13:50):
Well, you're not walking through the aisles too
and seeing like, oh, I reallywant this, or look at the
marketing on that, or, orthere's a deal on that, I don't
need it, but I mean that'sprobably yeah, I think there's a
lot of stuff that you know.
Speaker 1 (14:03):
We just grab those other things because we also
lump into our grocery budget.
So we there's two people in thehouse we spend 200 a week on
groceries.
That's what's budget.
But that 200 a week alsoincludes, you know, your, your
toilet papers, her makeup um,not all of her makeup, but like
the everyday using stuffobviously really expensive stuff
(14:24):
we don't put in there becausewe'd be over 200 every time, but
um, whole, not other storythere but the basic stuff your
lipsticks, your body wash, allof that stuff we include in our
grocery haul.
When we need to get a newshower liner to replace the one
that's in the bathroom, which weprobably do every four to six
months, we take that out of thegrocery bill as well.
Speaker 2 (14:49):
So you guys are $50 each a week.
Speaker 1 (14:53):
No, $100 each $200 grocery bill, so $100 each a
week.
Oh, $200 a week A week, yeah,okay, yeah, yeah, yeah.
$200 a week, $100 each, yeah,yeah, and so that's the number
we use for the budget.
And then, like I said, we'vebeen under almost every week
(15:15):
while using DoorDash, which isnot what I expected.
I honestly expected us to befor it to be a little bit more
expensive, but we were gettingback the time and so a lot of
times, like you know, the two tothree hours that we were going
to end up spending groceryshopping.
We use that to clean up thehouse.
We use it a lot of times.
I'll use it to work.
You know there's all sorts ofstuff that we just do.
(15:38):
There's times we just sit andrelax because we have such busy
schedules with our workschedules that it makes sense,
but it was.
It's honestly been mind blowingto me that we've been able to
stay on budget.
Ultimately, what we've beenunder budget the last six to
eight weeks.
We've paid for the subscriptionfor the year.
Speaker 2 (15:59):
Yeah, no, that's definitely about it.
Like you said, your time alone.
I mean the amount it savesthere.
I also didn't know DoorDash didgroceries.
I thought it was like justInstacart, so that's interesting
.
Speaker 1 (16:10):
Yeah, doordash, uber Eats does it as well.
Uh, I think I ended up usingdoor dash so I was looking into
door dash for our liquor storeusing that.
So I was looking into door dashquite a bit and then it was one
of those things that we wereusing and we were going direct
to target for their delivery.
We were going through uber eatssometimes and through DoorDash
(16:33):
other times and shopping for thedeals and then I finally was
just like you know what?
I bet if we just consolidatedall of our purchasing power into
one app, we would probably berewarded for that.
And that's ultimately what wedid.
As we just said, let's use thisone and let's do it.
I think the other benefit thereis there's been weeks in the
(16:56):
past where, oh, we don't want todo grocery shopping on monday,
so we'll do it on sunday, sowe'll do it on monday, and then
we don't do it on monday, or oneof us has an event, so then
it's like, okay, we'll sit down,we'll do it on tuesday and you
end up eating out those nightsand you end up spending more
money, and so this just allowsus to not ever have to worry
about that.
You know, at the very the mostrelaxed and laid back we've ever
(17:21):
been about it was we didn't getaround doing it on sunday.
It was a really nice sunday.
We were doing a bunch of stuffaround the house, trying to get
things out for spring and getthe patio set up, and so it just
kind of slipped our minds andso we ended up putting the order
in at like 8 30 at night, butscheduled it to be delivered
while I would be in the officethe home office the next day.
(17:43):
And so boom, it's done, and wetook the 20 minutes of meal plan
and prep and do everything, andthen when it gets delivered and
I step out of the office towalk around a little bit and put
groceries away, and then we'reback on track and we didn't have
to eat out that night.
Speaker 2 (18:00):
That's a great case of an app work, the subscription
doing well.
But so then what else?
You listed a couple downfalls.
Any other ones that come tomind?
Speaker 1 (18:21):
Those are the big ones that I feel are very easy
to fall into.
You know, the the main one isis that mindset of just and,
like I said, growing up I hadthat total mindset.
I was like I'm gonna be wealthy, so I never have to think about
finances, I never have to thinkabout my money, I can just buy
whatever I want.
And it's so backwards, it'sjust so not even true.
And the crazy part too is whenyou, I find for myself and even
with my clients, when you startbudgeting, you start investing
(18:44):
and putting yourself up forretirement and doing all these
things, you end up not wantingto spend money on all the BS
because you just see how muchit's helping you and how much
it's growing to and how muchless stress you will have.
Because you have your six monthsavings now and because you're
not in credit card debt, you'rejust like, wow, this is a much
less stressful life and you wantto be in that space.
(19:09):
You're like you know what?
I don't actually need that, soI'm not going to buy it.
I don't absolutely love thispiece of clothing in the store,
so I'm not going to buy it.
I'm not saying you can't buyyourself gifts and you can't.
You know, splurge here andthere, but it's making it.
So it's a splurge here andthere, not just a constant.
I feel like it or I'm depressed, so I'm going to go to a
(19:39):
Sheehan Hall or a Timu Hall oran Amazon Hall.
I'm going to go spend $100 andfeel better about it.
That emotional coping mechanismchanges and you start to be
like you know what that mightmake me feel good right now, but
it's going to make mefinancially stressed in two
weeks when I start doing mybudget again and reevaluating
things.
So let me just not do this.
Speaker 2 (19:58):
Let me go do something else in its place,
which is the importance of doingthat budget?
Because you never check it, younever get stressed, so you just
keep spending.
Speaker 1 (20:03):
Well, where you get stressed is you can't with the
credit card technique.
Where you end up gettingstressed is if you're not
constantly sitting on top of it,you can't cover the credit card
payment.
And then you're like, oh mygosh, I don't have the money to
cover this credit card payment.
How did this happen?
What happened here?
And hopefully you don't justifyit and say, oh well, it'll only
(20:24):
be a little bit of interest,because it's one time, no big
deal.
Hopefully what you do is thatbalance is going to roll over
onto your credit card statementand do is that balance is going
to roll over onto your creditcard statement and it's going to
tell you what the balance isand then the interest is going
to go in there.
So if you had a thousand dollarbudget, you now decrease that
thousand dollars by whateveryour rollover balance was plus
whatever the interest was, andnow you only have six hundred
(20:47):
dollars this month or this.
You know whatever the intervalis to spend and if you do it
that way, you won't end up inthe hole as much or as far.
But if you're not doing thebudget, what I've seen clients
do is they go oh, I spent $1,200this period.
They pay the $1,200 and nowthey missed their car payment
(21:07):
because they had the money inthe bank account there that day
and so they paid the credit card.
But then they realized therethat day and so they paid the
credit card.
But then they realized, ohshoot, I had a paycheck coming
in two weeks.
I had the car payment comingbetween now and that next
paycheck.
I just paid that credit cardand now the money's not there
for the car payment to come out.
Now you have all missedpayments, which is impacting
(21:31):
your credit score, andeverything just starts to
snowball and everything startsto go downhill really, really
quickly with that snowballeffect.
And so doing, the budget allowsyou to see the timing of
payments and the timing ofincome so that you can line
those things up and make surethat you're not putting yourself
in a situation Because I'vedone reviews with clients where
(21:51):
they don't think they have anymoney and they think they're
broke, and the reality is isthat if they adjust how they're
paying things, they would not bein that situation.
But the problem is is that theyyou know, they've done out
their budget on paper and itsays they can spend a thousand
dollars every period.
And they're doing this.
They're they're paying athousand dollars from one
(22:13):
paycheck period.
And they're doing this.
They're.
They're paying a thousanddollars from one paycheck.
And then their rent comes duebetween the next, between that
point at which they pay thecredit card, and their next
paycheck.
And so now they have to calltheir landlord and say, hey, I'm
going to be a couple daysbehind on rent.
I get paid this day, and theyget paid and they pay that money
.
And so you know, it's just thatawkwardness between you and the
landlord.
You probably get hit, hit witha late fee.
(22:33):
And then they're doing the samething with their car payment.
And it's not an issue of nothaving the money, it's an issue
of the timing.
And so if you know the timing,you sit down, you see those
things.
You can say, ok, I can spend athousand dollars per period, per
month, whatever, on the creditcard, but I need to pay 250 out
(22:55):
of every paycheck so that I havethe timing line back up on
these.
Or I need to pay 500 out ofthis paycheck and then this
one's going to take the carpayment and then I'm not going
to pay anything, because therent's going to come out, and
then my fourth paycheck in themonth or, for you know, if
you're getting paid weekly, thatfourth paycheck, that's what's
going to cover the other half ofa thousand dollars on the
(23:16):
credit card.
Yeah, because of timing.
So it's not uncommon, actually,for timing issues to cause
budget issues and make you feellike you don't have any money.
And it's not because you'reliving above your means, you're
living right at your means,which you know.
If you're using a zero0 budget,that's where you're going to be
, but your timing is all messedup and so if you get the timing
(23:38):
right, then you'll have it wherethat $0 budget falls right into
place.
Speaker 2 (23:44):
Yeah, that's a good thing to look at too.
Good, I think those are somegood downfalls.
Anything else?
Speaker 1 (23:52):
Those are the big ones.
I think we'll probably wrap itup there, so thank you for
listening.
We hope you enjoyed the episodeand until next time, stay
balanced.
Speaker 2 (24:01):
Thanks for listening to our podcast.
Speaker 1 (24:03):
We hope this helps you on your balance freedom
journey.
Speaker 2 (24:05):
Please share your thoughts in the comments section
below.
Until next time stay balanced.
Popular Podcasts
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy And Charlamagne Tha God!
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.