Live Financial Planning Session: Expert Budgeting and Spending Tips

Summary

NerdWallet's Smart Money Podcast

Episode: Live Financial Planning Session: Expert Budgeting and Spending Tips
Release Date: December 30, 2024
Host: Sean Pyles, Sara Rathner, and NerdWallet Personal Finance Experts

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Introduction to the Live Financial Planning Session

In this special episode of NerdWallet's Smart Money Podcast, hosts Sean Pyles and Magda Domini welcome Brinker, a listener from Chicago, to participate in a live financial planning session. This episode marks a departure from the usual format by offering personalized financial advice based on Brinker's real-life financial challenges.

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Meet the Guest: Brinker

Brinker, a 30-year-old executive assistant residing in Chicago's South Loop, shares insights into her personal life and financial journey. She works in affordable housing and enjoys spending time with her dog, Penny, and her family. Brinker highlights the contrast between her professional environment surrounded by wealth and her personal upbringing marked by financial instability following her parents' divorce.

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Brinker's Financial Background and Upbringing

Brinker discusses how her family's financial struggles after her parents' divorce have influenced her money habits today.

• Quote [06:59]: "I ended up moving into a complex called River City... I used a company called the Guarantors... [which] drained all the money I'd saved over Covid."

Brinker reflects on the disparity between her private school experiences and her home life, leading to an internal struggle with money management and aspirations influenced by her environment.

• Quote [08:29]: "It's definitely altered my little lizard brain, unfortunately. Some for the good, some for the bad..."

She acknowledges the aspirational standards set during her upbringing, which drive her career ambitions but also contribute to financial challenges like lifestyle creep.

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Current Financial Challenges

Brinker candidly reveals her struggles with budgeting, debt, and impulsive spending.

• Quote [09:44]: "Ooh, irresponsible. I am so irresponsible... I just realized, ooh, probably shouldn't have bought a $50 item at 2:00 in the morning."

Her financial difficulties stem from significant debt accumulation, including personal loans and credit cards in collections, totaling approximately $25,000.

• Quote [12:11]: "I would really like to just kind of save in general... and get this debt out of the way because it's about 25K."

Brinker outlines her monthly income and expenses, illustrating a precarious financial situation where spending habits leave little room for savings or debt repayment.

• Quote [15:00]: "As long as my account's not at zero, I can afford it, theoretically."

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Expert Advice from Magda Domini

Magda Domini, a Certified Financial Planner from NerdWallet Advisors, provides Brinker's first personalized financial advice, focusing on addressing both spending habits and debt management.

1. Understanding Spending Patterns

   • Magda: Emphasizes the importance of comprehensively tracking expenses to identify key spending areas.
   • Quote [14:58]: "The first thing I want to tackle is your spending and what's happening here."

2. Implementing Behavioral Changes

   • Returning Unnecessary Purchases: Suggests dedicating a day each week to return items Brinker regrets buying.

     • Quote [19:00]: "Pick a day that you do returns... you could save maybe hundreds of dollars."

   • Capping Uber and Uber Eats Usage: Recommends limiting rides to a specific number per week to reduce expenditures.

     • Quote [29:09]: "Maybe three rides a week... and then you can make conscious decisions."

3. Debt Reduction Strategies

   • Prioritizing Smaller Debts: Advises tackling smaller credit card debts first to alleviate the emotional burden and build momentum.
     • Quote [27:13]: "We could tackle a lot of these... pay down three of these cards."

4. Establishing a Savings Habit

   • Automatic Transfers: Encourages setting up automatic payments into a high-yield savings account, even if it's a modest amount, to build an emergency fund.
     • Quote [31:16]: "Set up at minimum, an auto payment from your checking account into a high yield savings account."

5. Adopting a Minimalist Approach

   • Reducing Impulse Purchases: Suggests practicing minimalism to curb unnecessary spending.

     • Brinker: "I implemented minimalism years ago... but lifestyle creep has challenged that."

   • Visual Cues for Enough: Recommends physical reminders, such as viewing her current possessions, to reinforce spending limits.

     • Magda: "Sometimes I will go to where my enough is, which is my closet..."

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Specific Strategies and Recommendations

Magda provides Brinker with actionable steps to regain control over her finances:

1. Deep Dive into Budgeting

   • Detailed Expense Tracking: Utilize budgeting apps like Monarch to categorize and monitor where every dollar is going.
     • Quote [17:54]: "It's very detailed."

2. Addressing Debt

   • Snowball Method: Focus on eliminating smaller debts first to create a sense of accomplishment and reduce the number of active debts.
     • Quote [26:02]: "The avalanche and snowball method are the two pretty common ways... prioritize some of these smaller debts first."

3. Building an Emergency Fund

   • Auto Savings: Start by transferring a small, manageable amount each month to a separate savings account to gradually build a financial safety net.
     • Quote [31:16]: "Get a separate savings account so we can start to build an emergency fund."

4. Behavioral Adjustments

   • Return Days: Set aside specific days for returning unnecessary purchases.
   • Spending Caps: Limit discretionary spending categories, such as dining and transportation.

5. Utilizing Resources

   • NerdWallet Advisors Membership: Brinker gains access to ongoing support and personalized advice through her one-year membership, ensuring she doesn't navigate her financial recovery alone.
     • Quote [33:03]: "You'll be working together as you have this year long membership in NerdWallet Advisors."

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Conclusion and Future Steps

By the end of the session, Brinker feels empowered with a clear roadmap to address her financial challenges. She expresses newfound confidence in tackling her debt and implementing the strategies discussed.

• Quote [32:47]: "I feel like I have a really good rote map so far and I'm ready to tackle it."

Magda reinforces the importance of continued support and encourages Brinker to utilize her NerdWallet Advisors membership for ongoing guidance.

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Key Takeaways

• Comprehensive Budgeting: Understanding where money is spent is crucial for effective financial management.
• Behavioral Changes: Implementing small, consistent changes can significantly impact spending habits.
• Debt Management: Prioritizing smaller debts can provide emotional relief and pave the way for tackling larger financial obligations.
• Savings Habits: Building an emergency fund, even with minimal contributions, is essential for long-term financial stability.
• Support Systems: Leveraging professional advice and resources can facilitate successful financial transformation.

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Notable Quotes with Timestamps

• Brinker on Financial Irresponsibility [09:44]: "Ooh, irresponsible. I am so irresponsible... swipe the card, ching."
• Magda on Lifestyle Creep [14:42]: "It's all about figuring out how we can fit that lifestyle in and still accomplish your goals."
• Brinker on Spending Motivation [24:18]: "I want all of it. You have enough."
• Magda on Savings Habits [31:16]: "Get a separate savings account so we can start to build an emergency fund."
• Brinker on Financial Roadmap [32:47]: "I have a really good road map so far and I'm ready to tackle it."

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This episode serves as an insightful example of how personalized financial planning can help individuals like Brinker navigate complex financial landscapes, offering both practical strategies and emotional support to foster long-term financial health.

Transcript

[Cody Goff]

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[Sean Pyles]

Cement Mobile for details Happy Holidays nerdy listener. We are taking the week off to relax, spend some time with our families and balance our checkbooks.

[Magda Domini]

Just kidding about that last one.

[Sean Pyles]

I mean, who has checkbooks in 2024? Please enjoy this episode from our archives. And as you sit listening to this episode, sipping some hot chocolate and hopefully enjoying some time off, think about where you need some nerdy help with your finances. Then send your money question our way. Leave us a voicemail or Text us at 901-730-6373. That's 901-730 N E R D or email [e-mail] all right, here's this week's episode. We'll talk with you all in the.

[Magda Domini]

New year welcome to NerdWallet's Smart Money podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Pyles. You've heard us say many times on this podcast, episode after episode, that we are not here to give you individualized personal finance advice. Except this episode we're going to be doing exactly that.

[Sean Pyles]

A few weeks ago, you may remember.

[Magda Domini]

That we put out a call inviting you, dear listener, to contact us if you want a financial planning session and allow us to record that session. Lots of you contacted us, and today we're going to hear from one of you. We're coming to you from a studio in Chicago where our listener lives. But before we get into that, I'd like to introduce you to Magda Domini. She's a certified financial Planner from the NerdWallet Advisors platform. One thing I want to be clear about is that Magda and nerdwallet Advisors are a distinct platform from nerdwallet. Magda will give our listeners some specific advice to improve their finances, and that advice will be given on behalf of NerdWallet advisors, not NerdWallet. Also, we want to mention that in exchange for participating in this series, our listener is receiving a one year membership to the NerdWallet Advisors platform. Magda, welcome to Smart Money.

[Brinker]

Thanks, Sean.

[Magda Domini]

So tell us a bit about NerdWallet advisors and your role there.

[Brinker]

Sure. So I'm an advisor with NerdWallet Advisors, and what we offer is affordable financial planning memberships where you get access to a certified financial planner like me. And that's for a low monthly fee. And what we do is we'll do a review review of your finances and we'll create a financial plan with some bite size action items that you can really start to take action on quickly. And you'll get unlimited access to myself or your planner with calls or a chat function in any capacity.

[Magda Domini]

Great. So how long have you been an advisor?

[Brinker]

I've been in this industry for about 15 years now. I got my CFP certification back in 2016, but I've been advising clients for 12 years now. And I've kind of considered myself a finance nerd since I can remember.

[Magda Domini]

Love to hear it. So have you ever recorded one of your sessions for a podcast?

[Brinker]

I have never done that, but I am very grateful to be here and excited that we can talk finance and folks might learn a thing or two.

[Magda Domini]

All right, well, I think it's time to get to some financial advising. In a moment, our conversation With a listener here in Chicago. Stay with us.

[Sean Pyles]

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[Magda Domini]

Let'S get to our guest star for this episode. Brinker is a Smart Money listener here in Chicago. She's 30 and lives in an area of the city called South Loop. She's here with us now in Studio Brinker. We are delighted to have you on Smart money.

[Brinker]

Hi, Sean. Thanks so much for inviting me. I really appreciate it today.

[Magda Domini]

Oh, we appreciate your time, too. So tell us a bit about yourself. I mean, what do you do for work? What's your living situation like? Like, what do you do for fun? All of those things.

[Brinker]

Yeah. So I'm an executive assistant. I work in affordable housing. It's really fun. I love helping people. I. And when I'm not helping people just kind of keep their day to day together. I have a lot of fun with my dog. She's a Yorkie. Her name is Penny. She's the sweetest little peach in the world.

[Magda Domini]

What do you do for fun around the city, especially in the summertime, like we're talking right now, There are a lot of things to do in Chicago.

[Brinker]

Yeah, I stay inside and rot. No, I'm kidding. No, I love to be outside. Me and Penny go on very long walks, and I love to spend time with my mom and my cousins. Just kind of family time overall. And, you know, just kind of like, just enjoy the hot weather before it gets frigid and just unbearable.

[Magda Domini]

Coming from living in Chicago for years, yes, I totally understand that it's rough.

[Brinker]

The winter's gonna be rough.

[Magda Domini]

Okay, so let's turn to money. I'd like to hear about what kind of money lessons you learned growing up. Like, how are your family finances managed?

[Brinker]

Oh, gosh, you know, I don't think I had any specific lessons, which is probably why I'm kind of here today. It was more like my dad was a breadwin and my parents had a production company back in the early 2000s 90s, so they were entrepreneurs and business owners. That was great, you know, until they got divorced in like 2004. I was about 9. And I kind of saw my dad, you know, just kind of, you know, exit the family. And it was just my mom and I. She's a stay at home mom. And it was just kind of, well, how do we survive, you know, if dad's not here, who's gonna make money? And it came down to essentially just being on food stamps a lot of the time. There's occasionally, yeah, it's okay, you know, it's character building, I guess. There was a couple times when maybe the electricity was off. We didn't have the luxuries, like being able to have cable TV back in the day and way before the streamers. So it was a weird childhood growing up because I also went to private school and it was like, I'm seeing all of these children and who are my age back in the day who are having these very luxurious experiences, going on these nice vacations and that kind of thing. And then I come home and like, ooh, we have food in the house, you know, and it was kind of a weird way to grow up, to be surrounded by people who came from wealthy families. And then I myself was not, you know, things just really fell off once my parents got divorced.

[Magda Domini]

How do you think that upbringing, being around so much money in school and coming home and not having as much affected the way that money now.

[Brinker]

Yeah, so it's definitely altered my little lizard brain, unfortunately. Some for the good, some for the bad, for the good. It's kind of set a bar of how I would like to live and how I feel comfortable living and that kind of thing. And how I strive to, you know, whether it's make money in my career or just kind of maybe a lifestyle, you know, maybe we see on social media, you know, a lot of the, you know, glitz and glam. Even though those are usually highlight reels, that's sometimes how people live. And that's kind of been the standard that I've set myself.

[Magda Domini]

Aspirational.

[Brinker]

Yeah, it's very aspirational. And I think it's helped me out A lot in terms of how I want to tackle my career and how much money I want to make. And it's, at the end of the day, not been the best. You know, it's. I've. I've been trying to live within my means. You know, I don't own any real designer items. I mean, I've got like a vintage Fendi bag from like, Poshmark, but, you know, it's never been like going to buy one of the $10,000 Chanel bags. You know, I don't go to vacation in Monaco or anything like that.

[Magda Domini]

But you've wanted to have nicer things because you saw this growing up.

[Brinker]

Exactly. Yep, exactly.

[Magda Domini]

Well, so how would you describe your finances now? Just broadly.

[Brinker]

Ooh, irresponsible. I am so irresponsible. It actually angers me because I've tried to slow down on my spending and I've tried to adopt better habits, but for whatever reason, it's just like swipe the car, ching. You know, whether it's just me just blindly shopping online, late night scrolls, you know, I just realized, ooh, probably shouldn't have bought a $50 item at 2:00 in the morning.

[Magda Domini]

So it seems like you are in conflict with yourself sometimes. You know what you ought to be doing, the responsible, quote unquote thing to be doing, but then your actions are taking you in another direction.

[Brinker]

Yeah, totally contradicts everything I want to do. I hate it.

[Magda Domini]

Yeah. Well, you wrote to us about some challenging debt that you are working through right now. Talk with us about that.

[Brinker]

Ooh. Oh, my gosh. So this has kind of been a long road of how I got here, and I can kind of pinpoint exactly where it started and why it's happened, why it's snowballed. But essentially a very long story short, I'll probably try to do the SparkNotes edition of it. I ended up moving into a complex called River City, one of Chicago's kind of more famous architecture buildings, that kind of thing. I think my rent was like 1995. And so I was fortunate enough to, during, like the part of the pandemic, be like, stay with my mom and save up a little bit. But the amount of money it cost me to get into that building. I used a company called the Guarantors, which is a lovely company. Helps people who, you know, don't have maybe the 700 credit score that all the landlords really want you to have or anything in collections, that kind of thing. I use them so they charge a service fee more or less. They want to hold this amount of rent.

[Sean Pyles]

A security deposit?

[Brinker]

Yeah. For a security deposit, yes. Thank you. And then I had to also pay the additional building fees, which was another security deposit and dog fees, move in fees, that kind of thing. So all of the money that I'd really saved over Covid just kind of went down the drain there. And, you know, I didn't think that anything of it. I was like, oh, spend it back, get it right back. It'll be fine. It was not fine.

[Magda Domini]

Yeah. And how long has that been going on for? That you've been dwindling your savings and now you find yourself in a tough spot financially?

[Brinker]

That was basically the starting of it. You know, I emptied out my savings and was never able to recover.

[Magda Domini]

So it's been a few years.

[Brinker]

It's been some years, yeah.

[Magda Domini]

Well, let's talk about your financial goals. Do you have any specific financial goals right now besides resolving your debt? How would you say you are making progress on them or not?

[Brinker]

Sure. I would say some of my goals are savings, for sure. I would really like to just kind of save in general at some point in the near ish future, maybe like five. I'd love to make a move abroad. And so that costs money. And so whether that's finding a flat and paying whatever visa fees that need to be paid, I would like to save, you know, 30, maybe 40 grand, give myself a cushion. And then I would also like to save and, you know, get this debt out of the way because it's about 25K. But it's, you know, a monster when you know, you have to pay it.

[Magda Domini]

You know, it weighs on you financially, personally, emotionally.

[Brinker]

It does, yes.

[Magda Domini]

Okay, well, have you ever used a financial advisor before?

[Brinker]

I have not, no. This will be a first.

[Magda Domini]

Okay, great. Well, Brinker, I know that you two have been sitting across from each other for a little while now, but let me officially introduce you. Brinker. Magda. Magda Brinker. So, Magda, I'm curious if you have any initial thoughts about Brinker's finances based on what we've just been discussing?

[Brinker]

Yeah, I think initially your situation, I've heard before in bits and pieces, and it is so hard to come from a upbringing of not having a lot and being surrounded by people that do, because it's always the, well, how did they do that? Why can't I have that? And that really a can be really motivating. And it sounds like it was for you and your career to be like, I want to get that. Because, you know, looking at some of and we'll get into it. But, you know, your income is actually pretty good. And it's great that you have a motivation to excel your career and earn a high income, because that's going to really help your finances. But ultimately, I think what also happens with that is what's called lifestyle creep. Right. And that is the first thing that I noticed that I think you even, you're. You're saying in different words, right? You are making money and you deserve to spend it. And that is absolutely true. You do deserve to spend it. It's all about taking into considerations what you're trying to accomplish in conjunction with what you want to spend. So if you have goals like saving for a trip or one that will impose on everyone, which is retiring, we do. We just need to figure out how we can still enjoy life. I don't ever want to be somebody who sits and says, you just can't spend any of your money. That's no fun. It's just about figuring out how we can fit that lifestyle in and still accomplish your goals. And so I think we can talk about ways to do that.

[Magda Domini]

Yeah. So bringer, how thoughtful or intentional or not are you around the lifestyle creep that you've been experiencing?

[Brinker]

Ooh, it's been not thoughtful in the case that I've been just going full force into lifestyle creep. But then it's been thoughtful in a way of, oh, I. It's happening.

How do I. Rear view mirror. Well, that's.

[Magda Domini]

I'm, I'm really interested in that dynamic, this push and pull that you have internally where, you know, like, okay, I, I probably shouldn't be swiping this day, but then you do it anyway. So what is that internal monologue? Like, how do you justify it when you're having a day where you're like, I just want to buy this thing.

[Brinker]

You know, I think I just go for it. And I, you know, I see honestly that it's made a small dent in my account, but not, not so much where I'm going to, you know, be eating ramen noodles for the next, you know, 13, 14 days while I'm waiting for my next check. You know, I'm kind of in the, in the mindset of, unfortunately, again, spend a check, get it right back, you know, and as long as my account's not at zero, I can afford it, theoretically.

[Magda Domini]

Well, let's talk about that check. How much do you have coming in on a bi weekly or monthly basis?

[Brinker]

Yeah, so I get paid semi monthly. So for me, it's the 15th and about the 30th of every month and it comes out to about $2900.

[Magda Domini]

Okay. Each paycheck.

[Brinker]

Yes.

[Magda Domini]

And then what's your rent currently?

[Brinker]

$18.95.

[Magda Domini]

And then at the end of the month, are you finding yourself left over with much or is a lot of it going toward your current debt payment payments?

[Brinker]

I do not have anything left over because of my egregious spending habits and shopping and whatnot and Uber Eats, et cetera. So besides the pre range payment plan that I'm already on, not really tackling the debt like I'd like to.

[Magda Domini]

So there's a lot to pick apart here. Have you ever used anything like a budgeting app or budgeting template, Something to break down where your money is going on a monthly basis so you get that sort of high level and also detailed view?

[Brinker]

I just started using the Monarch app, which seems to be really great. There's a lot that I had to kind of go in and toggle myself, but it gives me a really good kind of overall view of where my money's going. So I've spent a lot of money since January on Uber, between Uber Eats and Uber itself, which is about $3,500.

Okay.

Not awesome.

Yeah.

So it says shopping is kind of like the next. The third biggest group says I've only spent 802 on shopping. I would say, you know, maybe this month. You know what, let me, let me double check. Oh yes. In the month of July. Got it. Thank you. Yes.

[Magda Domini]

I just want to say year to date. That's pretty good.

[Brinker]

Yeah, yeah.

No, no, no.

[Magda Domini]

A single month. Yes.

[Brinker]

No. Yeah.

[Magda Domini]

Okay.

[Brinker]

So that's.

Yeah. So for the month of July it's been about 800 bucks. Travel and lifestyle for the month of July has been about 796. I mean, my goodness, we're only in the 15th. Food and dining. $367. I'm assuming they're counting Instacart or any type of Aldi's run. I do health and wellness, which is $286. That includes my personal trainer and gym membership. Is a personal trainer necessary? Probably not. And then the rest is like bills, utilities. It's got auto and transport in there. I don't drive.

[Magda Domini]

Pretty detailed breakdown though.

[Brinker]

But yeah, it's very detailed.

[Magda Domini]

Magda, hearing these numbers, let's think about these. Chew on these numbers a bit and get to your analysis and advice. What is the first thing that comes to mind as you're hearing Brinker Talk through these expenses and all that.

[Brinker]

So first, when I just do a basic calculation, you're about $500 away from already spending your paycheck right now.

That's spot on.

Okay. Which is something that you're saying. So there's two things that we would want to think about with kind of what you're describing. There's the debt and how do we handle it and what do we do with it. But I, for the beginning parts of, of this stage of really deciding, like, I want to make a change, I want to do something different, I actually want to prioritize your spending. Because focusing on getting rid of your debt quickly or having a quick fix tends to not solve your long term problem. If we don't fix the habits that created the debt. Right. So if, and I find that if folks will get rid of, cut out the debt for, you know, three or four of their 10 cards, then they go, oh, I have $5,000 I can spend. And we go right there. So it's not as though I don't want to tackle that. And I want to talk about that in a moment, but the first thing I want to tackle is your spending and what's happening here. So I'm super excited that you signed up for an app and that you can actually do the work and look at it. Because the first part of this process is actually understand that dollars in and dollars out and it is work. People think, oh, I'll just plug in my stuff and everything shows up and I can see everything. And that's not always true. Like, you have to mentally go in there and kind of categorize it and make sure it's accurate, which is what you're starting to do for you, though, depending on how this goes, I also want to talk about some behavioral changes that you can do that actually wouldn't require the app and it would be supplemental to that process. So one thing that came to mind when you were talking about shopping is that it sounds like right after you do it or shortly after you do it, you almost say, why did I do that? And so something that I would challenge you to do is create one day a week that's your return day. Every Sunday, you sit down, you look at what you bought, and you return as much of whatever it is that you just bought that you said after you bought it. Do I really need this? Right there. You could save maybe hundreds of dollars by actually taking action on what your internal body had already said. Why did I do this? Most of the things you purchase can be returned. If I had a dollar for every time I'm there handing that thing back to them, I'd be a lot wealthier. So that's one thing that you could try to implement is pick a day that you do returns.

[Magda Domini]

I have a question for you, Brinker. So going to the why did I buy that question, what is your answer to that?

[Brinker]

Usually I justify it by saying, if it's a piece of clothing, I'm trying to keep my wardrobe as updated. I'm a big furniture person as well, and I just constantly rotate things in and out of my space. And so I'm. I just usually think to myself, okay, well, you know, this is. My current desk is ugly. Let me get a cuter looking desk. Maybe something that's a little more functional. Which the functional aspect of it is what trips me up because it's just a desk. Like, I have a, you know, two screens on it, my laptop. That's it. I just need a surface. I don't need something that's, you know, hundreds of dollars.

[Magda Domini]

Yeah. You can rationalize this, but then you still have that impulse to make that purchase, right? Correct.

[Brinker]

Yeah.

[Magda Domini]

Have you found any techniques to try to curb your spending?

[Brinker]

Yes. So I did. I. So I implemented minimalism years ago. I mean, like, we're talking maybe like 2017. And back then I was working and I mean, like, it was. It wasn't my official big girl job, but minimalism, excuse me. Minimalism really helped me curb off that, you know, to just keep me at the bare minimum of what do I actually need, you know, food, water. Okay, can I wear this T shirt more than five times without it disintegrating? Okay, maybe instead of spending $7 on a T shirt from a fast fashion, maybe I just do 48 or $30 or something like that so that I can keep rewearing the T shirt over and over again. Minimalism really helped me just kind of like, honestly live better and make better choices. But when we.

[Magda Domini]

But then what happened?

[Brinker]

When we get the lifestyle creep that I've been experiencing, especially with like a big girl job and my own, you know, adult money and that kind of thing, then I'm like, okay, well, instead of just, you know, kind of stereotypically sticking to maybe like black, white and gray for like a minimalism aesthetic, you know, I can get color and like, a lot of clothing comes in different colors and styles and patterns, and I'm like, I need it all. Like, give me all of it.

Well, I want to ask you one question, what you said, which is that I need it all. That word is something that I think sometimes we say to ourselves so loosely, but we all know that. And you would say, you don't need it, right? What is the word that we actually are saying? We want it. Right? And so I do think if there is time at all during any exercise of purchasing. A funny story I tell a lot of clients is that when I was in high school, which tells you a lot about me, I would go to a store with my girlfriends, usually Target, and everyone would be ready to check out. And I would make everyone stop before we checked out and take one thing out of their cart because I said, there's no way you made it through this whole store without putting in something there that either A, you didn't come for, or B, you don't actually need. So the exercise of just pausing for one minute before you purchase anything to ask really need versus want.

[Magda Domini]

I'm also someone who loves to shop online and can find myself buying things that I don't need. Two things that have worked for me are one, just remembering that I truly have enough. And that word enough has been really beneficial. And when I forget that I have enough, sometimes I will go to where my enough is, which is my closet, just looking at my stuff. I'll be like, oh, yeah, I actually do not have space for anything more because my house is tiny and so is my closet. Have you ever tried anything like that just to curb yourself physically from pressing the buy button?

[Brinker]

Ooh. So no. But you know what? I resonate with the word enough because I think based on the way I grew up, I always felt like whether. Whether I wasn't enough or I didn't have enough, that kind of thing, it's kind of translated in into adulthood as I want it all, I need it all.

You know, the one last thing that I'll say in this context, these are all just, you know, ideas of things for you to think about and what you think will ultimately help you potentially change some of these habits. But, you know, if we decide that your goal is to go abroad and that's really something that you're committed to, we can create a separate savings account for that. And the exercise every time you buy something could be, do I want to fund my trip or do I want to buy X? And what you could do, if you can catch yourself is say, oh, $50 item or $50, I'll just transfer it from my bank account into my fund and it sits there and you can slowly, hopefully see it growing. And you can really, in real time, see the trade off between 50, $100 x. And your growth, your fund growing to go study abroad.

Yeah, that, that makes sense. Yeah.

[Magda Domini]

Let's turn to your debt. So talk us through what you have, how you got there. You have a few different forms. It's a little complicated.

[Brinker]

Yes, definitely. Let me pull that. So I have quite a few personal loans, credit card.

[Magda Domini]

What is quite a few?

[Brinker]

Ooh, let's count them up. Let's see. About three personal loans.

[Magda Domini]

And these are personal loans that are covering consumer purchases.

[Brinker]

Yeah. And then I have about five credit cards that have gone into collections.

[Magda Domini]

What are your balances?

[Brinker]

So it looks like all of them are under $500. I have something from Mission Lane. 460 Nordstrom 380. Apparently $28 on a Capital One credit card, which don't know how that slipped through, but it did, unfortunately.

And I definitely think, you know, there's, you may have heard there's two different ways to kind of think about your debt. The avalanche and snowball method are the two pretty common ways. One of them being where you could tackle some of these smaller debts that you know, the $28, $59 and just get rid of them so that you just feel a little bit of weight. It consolidates it a little bit for you artificially. And then the other one would be to tackle just your highest interest rate debt, regardless of its size. I think for you, I would definitely want to prioritize some of these smaller debts first. I think it would be a weight off your shoulders. And frankly, this seems attainable to me based on your income with just some tweaks to your lifestyle. I think there would be no problem in tackling maybe five of these in two months. Because I know that if we're talking about behaviors of shopping, I mean, we could probably return five of the items you bought over the last two weeks and pay down three of these cards.

You would be correct.

Yeah.

[Cody Goff]

Right, right.

[Brinker]

And I was just thinking of a home goods purchase I made this weekend, which it was about $65. And well, tackled some of that almost.

Two cards right there. And so I think that that's really encouraging to me and should be really encouraging to you, is that we could tackle a lot of these. That my, my matter of fact here would be that we, if you even have access to these cards, those go bye bye. It doesn't necessarily mean you have to close them per se, but just throw them in the door and lock in. Right. We just don't want to use them anymore. And then we would slowly start to tackle some of These higher balance ones after that.

Okay.

Yeah.

[Magda Domini]

I mean, one of the challenges that you've been experiencing, Brinker, is like knowing what you should be doing and then doing what you shouldn't be doing.

[Brinker]

Yeah.

[Magda Domini]

And with debt payoff, it seems like that is still a hard thing to get over.

[Sean Pyles]

So do you have any advice for.

[Magda Domini]

Brinker Magda around how she could maybe readjust habits to actually make the progress, return the item, pay off the debt?

[Brinker]

I think one strategy at least for returning the items would be a dedicated time, you know, and it would be really exciting to have a spreadsheet and be. Delete, delete. Right. So motivation to pick a day, do some refunds or returns. And then the other one that's a big one for a lot of people is Uber Eats and. Or Uber for UberEats especially. One suggestion I would have is that we can talk about how many times a week you usually get UberEats. How many. How many times or how many times do you go out to eat or order in?

So order in. Oh, gosh, maybe twice a week. Depends on how busy my schedule is from work. Depends on how lazy and tired I am. Not helping my health all the time. And I super aware that I overspend it on Uber. So I definitely know that it needs to get cut way back.

So for an Uber, you know, maybe we could come up with a number of rides per week and you get. I don't. We'd have to figure out what works for you. But three rides a week, you can decide when you want to use that, whether that's going out for fun, whether that's getting to the office, whatever it is. And when you hit your three, we got to figure out public transportation or walking for the remainder of the week. And it's fairly easy to track. Maybe three is not the right one, but the number we want to pick is less, much less than what you're doing regularly. And then you can, you know, if you use your first two by Tuesday, it's a conscious decision you're making. And you know, all right, I only get one more for the rest of the week, so I have to plan. And that's really what this boils down to is making conscious decisions, even just on a weekly basis, of how do we think through what I'm doing so that I can make the right financial decision. And that's like a. Using less of your brain to try and do it.

Yeah, that makes sense.

[Magda Domini]

So how do you track habits that you. That you have in your life, whether it's around Shopping, going out.

[Brinker]

I wing it. Yeah, I don't. I don't track habits probably as much as I should.

I do think, one, we should write them down. So I think the start would be a budgeting app, and we can see how that goes. Some people find them overwhelming, and then they just turn it down and say, like, all right, forget it. This isn't working for me. That is. Some people. Some people thrive off of that stuff. You get super excited. They'll send you a note like you're about to overspend, and you say, oh, great, this notified me. So I would say I would want to start there. The second one would be we would come up with your set goals and track them for a month. Just like, you know, you said you had a personal trainer. That takes a lot of commitment, right? You going in there and you doing, putting in that hard work, you got to get your butt up, you got to go there, you got to work out and all that. It's not any dissimilar from this, is that you got to create a plan and start executing on it.

Yeah, makes sense.

[Magda Domini]

So I want to get into some specific recommendations that you have, Magda, if.

[Sean Pyles]

You could list maybe the top three.

[Magda Domini]

Things that you would recommend Brinker do as specific as you can get. Let's hear them.

[Brinker]

So I think we touched on a little bit of it, but the very first thing that I would want to tackle is to do a deep dive, as you've done with your budgeting app, and actually confirm exactly how much you are spending on average per month, figure out your top spending categories, and come up with the right strategy for you on how to bring that down. The second one would be any dollars that we save after that first month would be make sure we chip away at a handful of those small credit cards and just get rid of them. And at the same time, I would want to set up at minimum, an auto payment from your checking account into a high yield savings account that goes in maybe $25 a month is what we would start with. The point is to build a habit because while we have debt, we're never going to get out of the cycle if we also don't start saving some of our money. So getting a separate savings account so we can start to build an emergency fund.

[Magda Domini]

Do you have a high yield savings account? Currently, I do not. Okay, well, it is my obligation as a nerd to direct you to NerdWallet.com where we have plenty of pages where you can shop around for the best ones. We update these pages monthly. They're super easy to open and they'll earn you a lot more interest on your cash that's just growing as you make these auto deposits over time versus a standard savings account. So I do highly recommend checking that out.

[Brinker]

All right, will do.

Yeah.

Thank you.

[Magda Domini]

Well, Brinker, as we wrap up, do you feel like you have maybe more of a handle on what you want to do with your finances?

[Brinker]

I do, absolutely. You know what? I feel like I have a really good rote map so far and I'm ready to tackle it. I've been feeling like I've needed help for a very long time and haven't been sure where to start, et cetera. So now we've got hopefully a game plan so that I can stick to it and tackle some of these goals. Great.

[Magda Domini]

Well, one thing I want to emphasize too is that this is just your first conversation with Magda. You'll be working together as you have this year long membership in nerdwall Advisor. So reach out to her. She's a great resource for you and you don't have to go through this alone. So that's one great thing too.

[Brinker]

Yeah, sounds good. Well, thanks, Sean. Thanks Magda. I really appreciate it.

[Magda Domini]

And that's all we have for this episode.

[Sean Pyles]

Remember, listener, that we are here for.

[Magda Domini]

You and your money questions. So turn to the Nerds and call or text us on the Nerd hotline at 901-730-6373. That's 901730 N E R D. You can also email [e-mail] also visit nerdwallet.com podcast for more info on this episode. And remember that you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts and iHeartRadio to automatically download new episodes. To learn more about NerdWallet Advisors, go to nerdwalletadvisors.com Smart Money here's our brief. I am not a financial or investment advisor. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. This episode was produced by Tess Viklin, Cody Goff and myself. A special thanks to Magda Domini, Georgia McIntyre and Emily Kanedo and a big thank you to NerdWallet's editors for all their help. And with that said, until next time, turn to the nerds.

[Sean Pyles]

NerdWallet Advisory LLC. Dba NerdWallet Advisors is an SEC registered investment advisor and wholly owned subsidiary of NerdWallet Inc. The advice provided in this episode of Smart Money was for illustrative purposes only and not intended as financial or investment advice specific to your personal facts or circumstances.

[Tess Viklin]

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