Latest / Life. Money. You.® Podcast / S3|E11: Beyond the Budget

Transcript

S3|E11: Beyond the Budget · Life. Money. You.® Podcast

• 0:12
  SPEAKER_01: Hello, everyone, and welcome back to another episode of the Life Money You Podcast.
• 0:18
  SPEAKER_01: I'm Danny Bushik, Life Money You Program Manager, Certified Financial Coach, and your podcast host.
• 0:26
  SPEAKER_01: And what we're seeing right now is a shift in the questions people are asking about money.
• 0:32
  SPEAKER_01: Credit card debt in the U.S.
• 0:34
  SPEAKER_01: is at a record high.
• 0:36
  SPEAKER_01: Interest rates are hovering around 21%.
• 0:39
  SPEAKER_01: And nearly half of Americans say carrying credit card debt just feels normal now.
• 0:45
  SPEAKER_01: At the same time, many people look at their savings or retirement accounts and feel behind.
• 0:51
  SPEAKER_01: So today, we're taking down the seven questions financial coaches are hearing everywhere right now.
• 0:57
  SPEAKER_01: The questions showing up in real conversations with real people like you and me.
• 1:03
  SPEAKER_01: I'm joined by Kim, who works with our financial coaches, navigating these exact pressures every day.
• 1:09
  SPEAKER_01: Kim, will you take a moment to introduce yourself to our listeners?
• 1:14
  SPEAKER_00: Yes, of course, Danny.
• 1:16
  SPEAKER_00: Thanks again for having me on.
• 1:18
  SPEAKER_00: I am Kim Chavez, the senior lead over our financial coaching program, or as we like to say, the coach of the coaches.
• 1:26
  SPEAKER_00: I get to work really closely with our financial coaches.
• 1:29
  SPEAKER_00: I'm really excited about today's episode where we get to kind of drill down a little bit further and deeper into what's been real heavy these days.
• 1:38
  SPEAKER_01: Yeah, definitely.
• 1:40
  SPEAKER_01: So without further ado, let's just hop into it, Kim.
• 1:44
  SPEAKER_01: The first question for us here from our coaches is how do I get out of debt when everything is more expensive right now?
• 1:54
  SPEAKER_00: Oh, yeah, for sure.
• 1:56
  SPEAKER_00: So, you know, this one is such a common question that we hear and it makes sense.
• 2:03
  SPEAKER_00: Credit card debt right now is at a record high.
• 2:06
  SPEAKER_00: Interest rates are extremely high.
• 2:08
  SPEAKER_00: Nearly half of Americans are saying their credit card debt feels normal, which is not bad.
• 2:14
  SPEAKER_00: You know, I kind of want to take that negative stigma out of it.
• 2:18
  SPEAKER_00: First things first, I want to say if you're struggling with debt, you are not bad with money and you are not alone, which is so important.
• 2:26
  SPEAKER_00: What's different today is the cost of debt.
• 2:29
  SPEAKER_00: So when we think about where we're at right now versus where we were, even just a few years ago, um, things are very different.
• 2:35
  SPEAKER_00: You know, interest rates right now range from around 20% or higher on credit cards, and your balances grow fast.
• 2:43
  SPEAKER_00: So even when people pay on time, a big chunk of that payment goes straight to interest and not necessarily the balance.
• 2:51
  SPEAKER_00: So, of course, it can feel like you are in this never-ending cycle and never able to get ahead.
• 2:57
  SPEAKER_00: From a coaching perspective, this really isn't about overspending, but more so about most people using their cards for everyday essentials and not things like how we used to use our cards, like a big purchase or a vacation or things of that nature.
• 3:12
  SPEAKER_00: Um, so you know, this is just kind of outpaced your income if you think about it in that sense.
• 3:19
  SPEAKER_00: And that's why getting out of debt today isn't really about perfection, it's about strategy.
• 3:24
  SPEAKER_00: So we have to be smart with how we do this like debt payoff strategy when you think of it in that sense.
• 3:29
  SPEAKER_00: The first goal often is really just to slow down or damage control as we like to think about it, you know, trying to reduce that interest, trying to create that breathing room for yourself so that progress can actually happen.
• 3:44
  SPEAKER_00: Um, you know, that's that's a really big important thing.
• 3:47
  SPEAKER_00: And really with the right plan, even small progress can feel doable again.
• 3:54
  SPEAKER_01: Yeah.
• 3:54
  SPEAKER_01: So everyone listening, think of things like 0% transfer cards.
• 3:59
  SPEAKER_01: Think of things like debt consolidation opportunities.
• 4:02
  SPEAKER_01: You can even sometimes um uh get lower interest rates by calling and talking through your situation.
• 4:10
  SPEAKER_01: There are so many opportunities that are untapped.
• 4:13
  SPEAKER_01: So make sure that you consider those as you're thinking of how to um stretch your budget.
• 4:19
  SPEAKER_01: Question two, Kim.
• 4:20
  SPEAKER_01: Should I pay off debt or build an emergency fund first?
• 4:25
  SPEAKER_00: Uh, this is such a tough question because these are both two needs, right?
• 4:31
  SPEAKER_00: They are both needs.
• 4:33
  SPEAKER_00: There's not there's no avoiding either one, essentially.
• 4:37
  SPEAKER_00: So, you know, we don't necessarily see this as either a decision or I need to do this or that.
• 4:45
  SPEAKER_00: Think about it in phases, right?
• 4:47
  SPEAKER_00: You should be doing both.
• 4:48
  SPEAKER_00: But if we can't do both right now, let's do phase one and then work on phase two.
• 4:53
  SPEAKER_00: You know, for most people, the first step is building a small emergency cushion.
• 4:58
  SPEAKER_00: You want to have a small emergency cushion, even if it's a little bit, even a few hundred dollars, so that the next time an unexpected expense comes up, it doesn't immediately turn into more credit card debt.
• 5:11
  SPEAKER_00: One, um, something that basic buffers in place from you know paying off your debt to actually having that savings and cushion, essentially.
• 5:21
  SPEAKER_00: Um so what keeps people stuck though is trying to really fully fund your savings and deprioritizing your eliminating your debt, essentially.
• 5:34
  SPEAKER_00: So the way that I like to think of it is really just keep it simple.
• 5:38
  SPEAKER_00: Have a little bit of a cushion established, even if that means you start out slow, start somewhere, um, then pay down, you know, either your most expensive debt or your least expensive debt.
• 5:49
  SPEAKER_00: I was gonna touch on like there's the debt payoff strategy where you're looking at either like your avalanche method or the snowball method, all of those things that our coaches are experts on, chatting with you to kind of find what makes the most sense for you, all while also still trying to establish that cushion in savings.
• 6:09
  SPEAKER_01: Yeah, that's great.
• 6:11
  SPEAKER_01: So I'm going to preface question three with a couple stats.
• 6:15
  SPEAKER_01: So nearly six in 10 US consumers now earn income outside of a fixed salary.
• 6:21
  SPEAKER_01: So that whole budgeting technique of knowing what income will be month over month is kind of not useful.
• 6:27
  SPEAKER_01: So, Kim, my question to you is how do I budget when my income changes month over month?
• 6:34
  SPEAKER_00: This is such a good one.
• 6:35
  SPEAKER_00: Um, you know, because the tone is different than it used to be, right?
• 6:39
  SPEAKER_00: Where so sometimes now that people aren't on a set salary, you're getting either a bonus or some sort of something.
• 6:46
  SPEAKER_00: Commission.
• 6:47
  SPEAKER_00: Yeah.
• 6:48
  SPEAKER_00: Exactly.
• 6:49
  SPEAKER_00: Um it's not the same tone as it used to be, where people are like excited about this bonus and commission.
• 6:56
  SPEAKER_00: Now they're like, oh my gosh, how do I work this into my budget?
• 7:00
  SPEAKER_00: Um, you know, when your income changes month to month, budgeting works best when it's based on your lowest and most predictable income.
• 7:08
  SPEAKER_00: So always keep that in mind is my first tip.
• 7:12
  SPEAKER_00: Not your best month.
• 7:13
  SPEAKER_00: Of course, we all love those months when we get like that extra commission, that extra bonus, whatever it is.
• 7:19
  SPEAKER_00: But, you know, think about almost essentially the opposite and focus on your lowest month and go from there.
• 7:25
  SPEAKER_00: Doing so creates a stable foundation so that anything above that becomes flexible so that you can put into that starter emergency savings so that you can catch up on that one credit card that maybe you fell behind, or maybe you want to get ahead even on a mortgage payment, where whatever it is, starting with that lowest number at the beginning or as your core allows for everything else to feel a little bit easier.
• 7:53
  SPEAKER_00: Um, and here's the key coaching piece.
• 7:56
  SPEAKER_00: So tools don't matter as much as behavior matters.
• 8:00
  SPEAKER_00: I know we were talking about that a little before.
• 8:02
  SPEAKER_00: So some people love apps, other people love spreadsheets, or like me, I'm a pen and paper girly, and that's okay.
• 8:09
  SPEAKER_00: So, according to research, you know, progress isn't blocked by lack of knowledge.
• 8:14
  SPEAKER_00: It's blocked by our habits, our stress, our shame, all that extra stuff that we carry.
• 8:20
  SPEAKER_00: So, you know, when I think about budgeting with variable income, it's less about control and more about being flexible.
• 8:28
  SPEAKER_00: When people feel safe restarting, you know, restarting your budget, you know, figuring out where you're at right now because your budget two years ago is not your budget today.
• 8:40
  SPEAKER_00: You can start over and start fresh.
• 8:42
  SPEAKER_00: That's when change actually sticks.
• 8:50
  SPEAKER_01: Life can be unpredictable, but your finances don't have to be.
• 8:55
  SPEAKER_01: Start building your emergency savings today and secure the future you deserve.
• 8:59
  SPEAKER_01: Because when it comes to peace of mind, it's truly priceless.
• 9:03
  SPEAKER_01: Take the first step toward financial confidence.
• 9:06
  SPEAKER_01: Visit bcu.org slash rainydaysavings and open your emergency savings account today.
• 9:13
  SPEAKER_01: Life Money You, because security isn't just about money, it's about financial freedom.
• 9:22
  SPEAKER_01: Question number four.
• 9:24
  SPEAKER_01: What should I do with extra money, debt, savings, or investing?
• 9:28
  SPEAKER_01: I know you touched on it briefly, Kim, but uh a fact to consider around this is that a quarter of Americans have zero emergency savings.
• 9:36
  SPEAKER_01: So what should they do with that extra money?
• 9:39
  SPEAKER_00: Yeah, for sure.
• 9:41
  SPEAKER_00: And it's it's interesting, right?
• 9:43
  SPEAKER_00: Because extra money right now, like, oh my gosh, you almost never hear it anymore.
• 9:48
  SPEAKER_00: And you know, kind of touching on the last question, I always just think it really depends on your scenario and circumstance.
• 9:56
  SPEAKER_00: What is the one thing that you are most focused on?
• 9:59
  SPEAKER_00: I I talk to people all the time and I tell them, like, what's that thing that's keeping you up at night or causing that pit in your stomach?
• 10:05
  SPEAKER_00: Is it that you don't have savings right now?
• 10:08
  SPEAKER_00: Or is it that you are behind on a credit card?
• 10:11
  SPEAKER_00: I really think that it depends and is really dependent on you.
• 10:16
  SPEAKER_00: So whatever it is, essentially when you have that extra money, think about that.
• 10:22
  SPEAKER_00: So again, kind of alluding to what I was talking about a minute ago, where it's not so much about having the income, but more about what we're doing with it, like our our behavior and how we react.
• 10:34
  SPEAKER_00: Time and time again, I hear people who are like, well, I got this bonus and I was so excited.
• 10:39
  SPEAKER_00: So I booked a trip to Vegas and I went and spent it all.
• 10:42
  SPEAKER_00: And I'm like, okay, but then here we are back to reality.
• 10:46
  SPEAKER_00: And like it's it's challenging.
• 10:48
  SPEAKER_00: Again, we say it all the time where you don't want to take away having that fun or you know, taking advantage and being happy or whatever it is that that maybe these bonuses or that extra money will fulfill.
• 11:02
  SPEAKER_00: But also you want to be mindful and think about think about SMART goals, you know, wanting to have these realistic goals for yourself and actually achieving them and then allowing the fun to come later.
• 11:17
  SPEAKER_00: Um, you know, for us, a couple of years ago when we were real focused on eliminating our debt, my husband and I decided that we weren't gonna do a big family trip for a year so that we could refocus and re-um prioritize that money towards eliminating our credit card debt.
• 11:35
  SPEAKER_00: And then we knew once that was gone, we could really establish the savings that we wanted and then take the vacation with our boys that we really, really wanted.
• 11:44
  SPEAKER_00: So it's not a forever pause, essentially.
• 11:48
  SPEAKER_00: But maybe right now we just remember maybe I don't need that purse.
• 11:52
  SPEAKER_00: I've got the four other at home, or maybe we need to do this trip.
• 11:56
  SPEAKER_00: The Backstreet Boys are gonna do a tour in Vegas again soon.
• 12:00
  SPEAKER_00: Like, you know, all the things that come with that.
• 12:04
  SPEAKER_01: Yeah, yeah.
• 12:06
  SPEAKER_01: And you know, the reality is according to uh Investipedia, 67% of Americans report living paycheck to paycheck in 2025.
• 12:15
  SPEAKER_01: And so moving on to question number five, Kim, I make decent money, but why do I still feel stressed?
• 12:23
  SPEAKER_00: Yeah, yeah.
• 12:25
  SPEAKER_00: You know, the biggest thing to me in my perspective is the cost of living has also changed dramatically.
• 12:33
  SPEAKER_00: You know, housing, groceries, insurance, childcare.
• 12:37
  SPEAKER_00: I I was speaking about my kids starting summer camp here in a few weeks.
• 12:41
  SPEAKER_00: And oh my, like I I almost want to like guilt them to help them understand like, hey, that basketball camp that you want to go to for five days is$350, which is just yeah, wild.
• 12:53
  SPEAKER_00: But, you know, um, you know, these costs have grown much faster than many of our paychecks.
• 13:00
  SPEAKER_00: So even people who earn good money are finding their budget stretched thin with less margin than they expected.
• 13:07
  SPEAKER_00: You know, things like debt, variable income, caring for your family, just a few, you know, things that we have, and then throw in an unexpected blowout, a tire blowout, or a refrigerator repair, or you know, whatever.
• 13:21
  SPEAKER_00: It creates constant pressure.
• 13:24
  SPEAKER_00: So you can look fine on paper, but still feel overwhelmed with regular, regular degular life, as I always like to say.
• 13:31
  SPEAKER_01: Yes.
• 13:32
  SPEAKER_01: We love Kim's regular day.
• 13:35
  SPEAKER_00: But there's an emotional layer to all of that.
• 13:38
  SPEAKER_00: So, you know, think about also as your income grows, the expectation grows, right?
• 13:44
  SPEAKER_00: Mo money, mo problems.
• 13:45
  SPEAKER_00: I think they've said like all of those things come with it.
• 13:49
  SPEAKER_00: And it's so hard because a lot of people are like, no, but Kim, I make much more money now than I did 10 years ago.
• 13:56
  SPEAKER_00: And I get it.
• 13:57
  SPEAKER_00: I I totally get it.
• 13:58
  SPEAKER_00: So if you feel anxious, you know, despite earning well, that doesn't mean that you're failing.
• 14:04
  SPEAKER_00: It just means that we're needing to navigate a much more expensive and uncertain financial world.
• 14:10
  SPEAKER_00: So um, you know, that's why really when I think about coaching, it's not always just about numbers, it's about creating that clarity, having that flexibility and peace of mind so that money stops feeling so heavy.
• 14:25
  SPEAKER_00: Yes, yes.
• 14:27
  SPEAKER_01: And it's interesting because there are a lot of resources that are underutilized.
• 14:34
  SPEAKER_01: So a leading question, number six here Am I using my employer benefits the right way, Kim?
• 14:40
  SPEAKER_01: Right.
• 14:41
  SPEAKER_00: Like I guess follow-up, right?
• 14:43
  SPEAKER_00: Are any of us?
• 14:44
  SPEAKER_00: I I think it's like a huge thing.
• 14:47
  SPEAKER_00: And I am constantly like looking at our employer benefits just to see like, are could I get discounted tickets to the zoo?
• 14:55
  SPEAKER_00: Or when I think about like these Disney trips that my kids are so excited about, like sometimes we can catch some really good discounts on tickets and exclusive things like that.
• 15:05
  SPEAKER_00: But this one always comes up for me because, like I was mentioning with summer camp, like I'll use that for example.
• 15:13
  SPEAKER_00: I started taking advantage of the dependent care HSA option that we have here, like the pre-tax.
• 15:21
  SPEAKER_00: And forgive me, I am not a tax expert.
• 15:24
  SPEAKER_00: I don't know exactly how much it's saving, but I know that it helps my pockets feel a little less heavy when I'm doing things like considering summer camp for my kids.
• 15:34
  SPEAKER_00: So our to to give an example, um, every pay period, a certain amount of money comes out of my paycheck and goes straight to this dependent care bucket is what I'll call it.
• 15:45
  SPEAKER_00: And my boys do also participate in after school care more for fun, not because we need them to be picked up.
• 15:52
  SPEAKER_00: But um, anywho, with that, I don't necessarily have to stress so much over, oh my gosh, like this is gonna come out every two weeks.
• 16:00
  SPEAKER_00: The same with as we're leading up to summer camp.
• 16:03
  SPEAKER_00: Having that dependent care bucket set up where money is going into it every two weeks when I get paid allows me to be a little more flexible with having the kids sign up for summer camp, with my oldest wanting to participate in this basketball camp over the summer.
• 16:21
  SPEAKER_00: Like all these things that are here and set up and designed to help us as employees as well.
• 16:29
  SPEAKER_00: So I highly encourage everybody to take a look at your employer benefits.
• 16:34
  SPEAKER_00: I know not all of ours are going to be set up the same, but there are probably benefits out there that you have that we don't even realize and consider these things like the pre-tax and all of these options and how they help us save over time.
• 16:49
  SPEAKER_01: Definitely.
• 16:50
  SPEAKER_01: Well, we've made it to our final question of this episode, Kim, and it's probably the one that carries the most weight.
• 16:58
  SPEAKER_01: So for sure.
• 16:59
  SPEAKER_01: Money is the number one issue couples argue about, according to Ramsey Solutions.
• 17:06
  SPEAKER_01: So, Kim, how do I talk to my partner about money without fighting?
• 17:12
  SPEAKER_00: Controversial take, right?
• 17:14
  SPEAKER_00: It's so challenging because I am an open book.
• 17:20
  SPEAKER_00: My husband can literally read me like a book, and I know he can.
• 17:25
  SPEAKER_00: Being on the same page when it comes to finances, especially with a partner, is critical.
• 17:32
  SPEAKER_00: It's critical.
• 17:34
  SPEAKER_00: It's very easy for us to get into the habit of like, well, we'll just book this trip on this credit card and let it be and we'll pay it off later.
• 17:43
  SPEAKER_00: From my own personal take, we had a lot of discussion, a lot of conversation.
• 17:48
  SPEAKER_00: There was a lot at the beginning that was a do as I say and not as I do, where I was very like mindful of my husband's credit and wanting to make sure that he understood the why behind certain things.
• 18:00
  SPEAKER_00: Um, but also here recently, I would say in like the last five years, especially as interest rates started hiking up as much as they have um recently, we've been having deeper conversations over me helping him understand the why behind.
• 18:15
  SPEAKER_00: I don't just want to pay off our credit cards and not use them.
• 18:18
  SPEAKER_00: I want to help you see last year we spent this much in interest on this card.
• 18:23
  SPEAKER_00: That is waste, essentially.
• 18:25
  SPEAKER_00: So helping your partner understand and making sure that you are both on the same page.
• 18:30
  SPEAKER_00: Another plug I kind of just want to mention is many times when we do financial coaching appointments, we have partners on the phone together.
• 18:39
  SPEAKER_00: So spouses will join, boyfriends and girlfriends will join.
• 18:42
  SPEAKER_00: We have people who are trying to navigate, like we're about to move in together, what's the best idea strategy for us to split our bills, you know, different things like that.
• 18:51
  SPEAKER_00: So if you're somebody who maybe doesn't even know where to start, schedule an appointment with us and we can definitely help with like offering up suggestions or navigating through that time with finance being the number one issue that couples are arguing about.
• 19:08
  SPEAKER_00: Guys, we have so many bigger problems in this world.
• 19:11
  SPEAKER_00: Like if we want to talk about finance, please give us a call, let us help you.
• 19:15
  SPEAKER_00: Like we will help navigate through that because that's just one thing that, especially depending on where your goal is, like that's something that we would love to help get aligned with for you all.
• 19:27
  SPEAKER_01: Yeah, yeah.
• 19:28
  SPEAKER_01: And to tout Kim further, our coaches are free.
• 19:32
  SPEAKER_01: So you don't have any obligation.
• 19:34
  SPEAKER_01: You just have to make a phone call.
• 19:35
  SPEAKER_01: You just need to log online at lifemoney.com and schedule a coaching appointment.
• 19:40
  SPEAKER_01: Kim, this has been great.
• 19:41
  SPEAKER_01: And listener, if you're asking these questions, you're not failing at money, you're responding to pressure.
• 19:47
  SPEAKER_01: These are real life questions from people who also care and are trying in a really tough environment.
• 19:53
  SPEAKER_01: If any of this hits home, don't carry it alone.
• 19:56
  SPEAKER_01: Share this episode with someone who keeps saying, I just feel stuck financially, because chances are they're asking the same questions you are.
• 20:03
  SPEAKER_01: As a reminder, we are Life Money You, we're a financial well-being program provided by BCU, a credit union fiercely committed to your financial well-being.
• 20:12
  SPEAKER_01: If today's conversation was helpful, make sure to subscribe so you don't miss future episodes.
• 20:17
  SPEAKER_01: Thank you so much, Kim, and thank you, listener.
• 20:20
  SPEAKER_01: Until next Friday.
• 20:22
  SPEAKER_01: Bye.