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NerdWallet's Smart Money Podcast
Will Your Streaming Bill Jump? Plus, How to Pick a Budgeting App You’ll Actually Use
00:49:08
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- [00:01]
Sean Pyles
These days I'm all about quality over quantity, especially in my closet. If it's not well made and versatile, it's just not worth it to me. That's honestly why I love Quince. The fabrics feel elevated, the cuts are thoughtful, and the pricing actually makes sense.
- [00:14]
Elizabeth Ayola
Quince makes high quality wardrobe staples. Using premium fabrics like 100% European linen, 100% silk and organic cotton poplin.
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Sean Pyles
Quince works directly with safe, ethical factories and cuts out the middlemen. You're not paying for brand markup or fancy retail stores, just quality clothing.
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Elizabeth Ayola
The Quince linen pants don't wrinkle like every other linen I've owned, and they look put together without trying too hard.
- [00:39]
Sean Pyles
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- [00:44]
Elizabeth Ayola
Go to quints.com smartmoney for free shipping and 365 day returns. That's a full year to wear it and love it. And you will now available in Canada too.
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Sean Pyles
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Anthony Palomba
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Rashaundra
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Elizabeth Ayola
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Sean Pyles
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Rashaundra
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- [01:36]
Sean Pyles
There's an apparent winner in the fight over who gets to buy Warner Bros. But will consumers win too? 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.
- [01:51]
Elizabeth Ayola
And I'm Elizabeth Ayola. Later this episode, we'll be discussing how you can find the best budget app for tracking your money. But first of all, we have our weekly Money News roundup where we break down the latest in the world of finance so that you can be smarter with your money. In December, it looked like Netflix was all set to buy Warner Brothers Discover in a move that was expected to shake up the movie and streaming industry.
- [02:15]
Sean Pyles
But then Paramount Skydance stepped in with a hostile bid, and Netflix finally decided to walk away last week. A our news colleague Rick Vander, knife stepping in for Anna Hilhosky is here to talk about it. Hey, Rick.
- [02:26]
Rick Vander
Hey. Thanks, Elizabeth. And Sean, it's good to be here. In a minute, we'll dive into the latest Hollywood drama and what it might mean for your streaming habits and your entertainment budget. But first, I think we want to acknowledge what's dominating the headlines this week. And that, of course, is the joint US And Israeli attack on Iran that began on Saturday.
- [02:44]
Sean Pyles
Yeah, that's been capturing, I think, all of our attention. Can you give us a quick summary of what the latest is there?
- [02:49]
Anthony Palomba
Sure.
- [02:49]
Rick Vander
In a nutshell, a massive air and missile attack targeted more than 100 sites in Iran, including an Israeli strike that killed the country's supreme leader, Ali Khamenei. Iran is retaliating with drone and missile strikes across the region and the conflict has been spreading to other nations in the Middle East. The situation is evolving rapidly and President Trump has said the operation could last four to five weeks. And effects of the war that we are feeling here at home include spiking oil prices, some turmoil in the stock market and travel, just disruptions. We'll be rounding up the latest consumer effects in our Friday edition of Money Nerd, which is our free weekly email newsletter.
- [03:28]
Elizabeth Ayola
We'll put a sign up link in our show notes.
- [03:31]
Rick Vander
And with that, we'll turn back to Hollywood. Our guest today is Anthony Palomba. He's a media scholar and assistant professor at the University of Virginia Darden School of Business. Welcome to Smart Money. Anthony.
- [03:43]
Anthony Palomba
Guys, thank you so much for having me. This is wonderful.
- [03:46]
Rick Vander
First, could you set the scene a little? It seems like there have been a lot of mergers in entertainment in recent years. Can you give listeners a sense of what brand names these two companies, Paramount and Warner Brothers, currently own?
- [03:57]
Anthony Palomba
So if you go back through the annals of Hollywood history, Paramount and Warner Brothers were right there, right at the nascents of this burgeoning industry that has enveloped film, television, gaming. Remember, Warner Brothers does have a gaming division, international theme parks as well through Warner Brothers. And both companies are legacy media firms. And so this means that the IP that you and I watch engage with, wear on our shirts, have on our coffee mugs, a lot of it comes from these entertainment brands that really for the bulk of their history were the arbiters of pop culture and determine who was in, who was out. And what we're seeing here, I think, is the realization that we have melting assets not unlike melting glaciers. And so what do you do with assets that have been paid off but may not hit the cultural zeitgeist like they once did can you still monetize them effectively and can you bundle them together? And so that has been the impetus at a macro level for a lot of what you're seeing with a lot of the mergers and acquisitions that have been going on for, say, the last 10, 15 years.
- [05:07]
Rick Vander
In December, it looked like Netflix was going to buy Warner Brothers, but then Paramount entered the picture, and after some back and forth, Netflix decided to walk away last week. Can you walk us briefly through the events of the last few months and tell us where we landed?
- [05:20]
Anthony Palomba
It is not unlike a romance novel or some sort of telenovela. I frankly have struggled myself, admittedly, to keep up with all of the bidding. So this came to a head because Netflix, on the other hand, is on the hunt for ip. That's largely what they're interested in. They have scale. That's not the issue. The issue is you and I can name Stranger Things than K Pop Demon Hunters and that we might struggle with a third brand or at least a third franchise that can build itself into an ecosystem. Right. When I say ecosystem, you should be thinking about Lord of the Rings, Game of Thrones, Jurassic park, these things that just are able to continue and continue to unspool different kinds of stories. So Netflix swoops in saying we need more of that. Paramount, on the other hand, is saying we are the sixth or seventh biggest airliner and increasingly we are losing leverage. We need people, period. We have all of the ip, Teenage Mutant Ninja Turtles, we have a lot of horror franchises. We've got a lot going on here. We just. We need people. We need eyeballs. So these two lovers, as it were, both prized Warner Brothers, frankly, for different things. I would be remiss if I didn't note that, you know, Dave Ellison's father is Larry Ellison of Oracle, and him and President Trump already were able to get a sign off to have an investment in TikTok. And so that has kind of been one strategy for Paramount, Skydance. And so what you're seeing here is a scaffold of being able to monetize social media along with legacy media as well.
- [06:58]
Rick Vander
And we've both been using the initials I.P. and that's referring to these companies intellectual property. Anthony. In the end, Paramount will pay about $110 billion in cash for Warner Brothers discovery. What are they getting for that kind of money? And why did they go after this deal so hard?
- [07:13]
Anthony Palomba
So Netflix really wanted the studios and streaming services. They were not really interested in some of the legacy assets differently. Paramount is getting the whole kit in caboodle. That means Discovery, that means international theme parks run by Warner Brothers, a gaming division that I would push and push and say has not received enough attention. Remember, Paramount does not do video games. Netflix was trying to and has been trying to scaffold a gaming arm. And so they're getting all of those assets together. Now. It's interesting because you have Versant from NBC that was kind of a Spinco of sorts, right? They kind of spun off some of their assets that perhaps aren't performing so well, or let's say tired assets. And so that is a challenge when you're trying to think about raising the stock multiple, to say, we look really, really good, we don't have those assets anymore. That's why, in part, they did Versant. Right. They were able to spin off those assets that were dragging down their stock multiple. Paramount now has an opportunity, potentially with all of these assets to think through, well, what do we really need? What is mtv? That's a scary question. Maybe for another podcast. What is Comedy Central?
- [08:22]
Rick Vander
Right?
- [08:22]
Anthony Palomba
What are these brands that are on the shelf? Do we do another version? Do we do kind of another spinoff? We know that WVD was getting ready to spin off Discovery into Discovery Global. They were already kind of having these machinations in the background anyway. So I think there's going to be a lot of sifting through what they want to keep to keep their multiple up, as it were.
- [08:42]
Rick Vander
And from the Warner Brothers perspective, why were they looking for a buyer in the first place?
- [08:46]
Anthony Palomba
I think they're out of options. Without sounding too dramatic, I think when you tell the NBA to go take a walk, it's pretty bold and you better have something in your back pocket. I think Zaslav ran out of options. He also has a bit of a sweetheart deal out of this. He gets paid handsomely, so he makes out pretty well. That should not go unstated. Ultimately, you either fight on scale or you fight on ip. Warner Brothers has a lot of cable assets. I frankly don't think they know what to do. When was the last time you binge watched Law and order on TNT? For me, it was about 10, 15 years ago. And so if you're not in the business of making content, you might as well be in the business of distributing content. And if I were to forecast, I think that they will pay attention more and more to distributing.
- [09:34]
Rick Vander
So what does this merger tell us about the state of the streaming landscape from a consumer perspective? Do we even know what this deal will mean for consumers?
- [09:42]
Anthony Palomba
So for my creative buddies and friends and colleagues in Hollywood, it's one less place to bid, right? It's one less place to sell your wares if you have less and less competition in art, compounded by the fact you have the creator economy really taking over. And you've got influencers like Mr. Beast Larae who are exceptionally talented, frankly, and are also taking cuts of the pot. And so we also know that consumers don't necessarily need to spend to be entertained. I can go on YouTube right now and see Larray, one gay guy versus 20 straight guys. Because everybody's doing that thing now where like, you sit in the middle of a circle and you kind of debate things out. I don't know, have to pay for that. I just have to watch an ad. That dynamic is forcing these companies to kind of get together. So for the consumer specifically, you may see steeper streaming service subscriptions. They might try to bundle more things together. It could be that if Warner Brothers gets it together with streaming, could be a streaming channel. From Warner Brothers, we know that they are releasing another Mortal Kombat movie in the coming year, I believe, and they do a lot of good stuff with the Mortal Kombat franchise for gaming. That's plausible from a consumer standpoint. Where you get entertained is shifting. And I think a lot of these media legacy firms simply are struggling to figure out, do we use influencers, do we work with them? Do we not work with them? And that gets into the oversight that they're going to go with with the doj. Warner Brothers and Paramount are going to go through the ringer. Paramount's going to have to say, you know, we compete in the attention economy. We don't compete in streaming, we don't compete in television. We compete against YouTube and TikTok, and we're very small. The problem with all of this is that the lines are blurted. What is television? What is streaming? It's so messy right now. It is very, very difficult to have properly demarcated lines for anything.
- [11:28]
Rick Vander
Do I anticipate any problems with the current fcc? I know we. You've mentioned that there's already a relationship between the Ellisons and Trump. Will that smooth things over to any degree?
- [11:39]
Anthony Palomba
I think it'll smooth things over. I thought it was very telling that we didn't really hear from Trump at all during this. I don't know if that meant that he was confident the whole time, or maybe he didn't care or he was busy with Lord knows what. But as we get into these regulation matters, this is also shaping jurisprudence for the future. You know, what is streaming? What is television in 2026 is going to have to be vetted. Also, do we understand future mergers and acquisitions in media and entertainment? Does it no longer matter that you're a GAM firm or a movie firm or whatever it may be? It may not, as there's a lot of blurring. I don't anticipate too many hurdles here, provided this is accomplished within the Trump administration. But you know, the courts have also pushed back on Trump. They pushed back on him against the tariffs a few weeks ago. So it is not to say that courts will not come out against him here. But I'm far more interested in seeing what the new lens is because I think unfortunately a lot of jurisprudence is behind the times and this might force a lot of regulators to understand the different mechanisms that are at play here with how we define and operationalize media consumption.
- [12:52]
Rick Vander
So Netflix, obviously you mentioned they have scale. They were looking for IP in their original bid, but in the end they decided the price was too high. And I think the quote was the deal was always a nice to have at the right price, but not a must have at any price. So from your perspective, are any clear winners among the three companies involved? Did Paramount overpay? Did Netflix dodge a bullet? Is Warner Brothers happy with the price? And finally, can this be called a victory for consumers in any sense?
- [13:23]
Anthony Palomba
Warner Brothers is certainly happy with the price. Their stockholders were very, very happy, even though Zaslav, especially in December and January, really wanted to be left alone. Perhaps he was just being coyote. After all, it is the most either of the companies were willing to pay for the product. So of course Warner Brothers does win there for Paramount. It's an awful lot. And as I alluded to earlier, you better be thinking through how you're going to be using TikTok and other things to monetize this IP. Because I would argue you've overpaid. Unless there's something that we're all not seeing and unless you're really going to ratchet up, like I said, social media gaming, for that matter. Netflix got $3 billion free cash flow, which is pretty nice. They're able to invest that back into ip. They're able to invest that back into gaming. I mean, whatever they want to get into, they can. And let's remember, Netflix just signed a bunch of influencers and YouTube people to do video podcasts. And so they may say to themselves, great, we can go hire fresh young talent with this. While Paramount and Warner Brothers goes to figure out what to do with tds, tnt, the Food Network, and all of these other brands that are weighing down on their corporate multiple. Moreover, Netflix is a tech company. They are entertainment and media, but they have a tech bed that cannot be understated. And so they will be just fine. What does all of this mean for the consumer? I think the consumer is going to find that the IP and the content that they want are going to be on less services. And it could full well mean that we go back to kind of a cable bundle, frankly, because it's increasingly looking like only three or four will survive. My suspicion is we will have Disney, obviously, we will have Netflix. We will have some Paramount, Warner Brothers, Frankenstein. And there may be another there that we will have as well. Apple could be that fourth one. And of course, you have smaller ones, Crunchyroll, which does fantastic work with the animation. But it could be that people get back to that point. The problem is everybody's on their island. But if you're going to create really good content, you kind of need to rely on each other. The reason why cable was so damn successful in the 80s and 90s is because it was a bundle. You paid 120 bucks. You're not going to ship from bundle to bundle. It's the same set of cable channels. And so that buoy, if you will, that financial stability allowed a lot of cable companies to innovate. Now, if you're on your own island, there's the Disney island, there's the Netflix island, everybody's on their own island. You're not able to spread around the costs of, frankly, failure. If you talk to any artist, they fail way more than they succeed. But that's how you get to the good stuff. I am worried from a consumer perspective, what pressure this has on artists, what pressure this has on the creative community, and if people will be able to innovate more on these streaming services than they are on YouTube. Because I would argue that YouTube is doing circles around a lot of these legacy firms. And the trick is YouTube doesn't pay for any of the content. I'm being facetious. Of course, they pay a little bit. But influencers and all of these people who are coming on, they finance their own stock, they have brand deals, and the consumer doesn't pay either.
- [16:39]
Rick Vander
So, Anthony, that's super illuminating. Thanks so much for joining us on Smart Money. A lot to chew over there.
- [16:46]
Anthony Palomba
My absolute pleasure. Thank you so much.
- [16:48]
Sean Pyles
And thank you, Rick. Up next, we answer a listener's question about how to figure out which budgeting app works best for you. But before we get into that, a reminder listener to send us your money questions. Maybe you're wondering if cutting a streaming service or two is a smart way to improve your budget or you want help getting out of credit card debt? Whatever your money question, leave us a voicemail or text us on the Nerd Hotline at 901-730-6373. That's 901-730-NERD. You can also email us at podcastnerdwallet.com or leave us a comment on Spotify or YouTube.
- [17:19]
Elizabeth Ayola
And we have a special call out for our listeners in the Scottsdale, Arizona area. Sean and I are going to be in your city in a few weeks and we want to meet you in real life to talk to you about your money questions. Send us an email with the subject. Scottsdale if you want to hang with me and Sean to get some help with your finances. In a moment. This episode's Money question. Stay with us. Today's episode is sponsored by Spectrum Business.
- [17:47]
Sean Pyles
Picture this. You're running a business and the Internet drops during business hours. Your to do list instantly becomes 1 panic, 2 stare at the router like you're negotiating with it and three start
- [17:58]
Elizabeth Ayola
offering customers a brief moment of mindfulness while the checkout screen loads.
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Sean Pyles
For business owners, being connected isn't a perk, it's how you take payments, talk to clients and keep things moving.
- [18:08]
Elizabeth Ayola
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Sean Pyles
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- [18:28]
Elizabeth Ayola
Our colleague Carrie is a Spectrum customer shout out to our social media team and she told us that she chose Spectrum because people online kept recommending it as a reliable and affordable option for Internet and phone service.
- [18:40]
Sean Pyles
Carrie told us she was actually a little hesitant to switch at first because she'd been using a different service for a while. But after a year with Spectrum, she's had a really good experience. Her phone gets strong, reliable service and it automatically connects to Spectrum WI FI everywhere.
- [18:53]
Elizabeth Ayola
Join the millions who rely on Spectrum Business. Visit spectrum.combusiness to learn more one more time. That's spectrum.com business restrictions apply.
- [19:02]
Sean Pyles
Services not available in all areas.
- [19:06]
Elizabeth Ayola
We are back and we are answering your money questions to help you make smarter financial decisions. Now on this episode we have a question from a listener named Reshaundra and she has a question about budgeting apps.
- [19:19]
Sean Pyles
And we have Rashaundra here joining Us for the conversation. Hey, Rashaundra. Welcome to Smart money.
- [19:23]
Rashaundra
Hi. Thank you for having me. Sean and Elizabeth, nice to meet you both.
- [19:28]
Elizabeth Ayola
Nice to meet you too. We like to start the show with a little icebreaker. Okay.
- [19:33]
Rashaundra
Okay.
- [19:33]
Elizabeth Ayola
So I'm going to throw you a question, no pressure, and I want you to tell me the first answer that comes to mind.
- [19:39]
Rashaundra
All right? Okay.
- [19:41]
Elizabeth Ayola
Okay. So, Rashaundra, you have won $200,000 cash. Okay. Now you can only spend this money on three things. What are you going to spend the money on?
- [19:52]
Rashaundra
I would probably, off the top of my head, pay off my house and my car.
- [19:58]
Elizabeth Ayola
Very financially responsible decisions.
- [20:00]
Sean Pyles
There not a vacation in sight for you. Maybe after you pay off your house and your car, you can fund a vacation with that.
- [20:06]
Rashaundra
Exactly. Then I'll be able to retire. Because that's the biggest thing that limits people from retiring is their home or their mortgage.
- [20:12]
Sean Pyles
Well, I'd love to hear a little bit more about your life, Ashaundra. So where do you live and what do you do for work?
- [20:17]
Rashaundra
So I live in Tampa, Florida. As far as what I do for work, I am a clinical pharmacist.
- [20:23]
Elizabeth Ayola
Oh, love that. And then do you. Who do you live with? Do you live solo? Are you married? If you don't mind answering. Do you have kids? Tell us the spiel.
- [20:30]
Rashaundra
So I live with my husband. We are, I guess, what they call dink. Double income. No kids. We do have a little dog, Roxy,
- [20:40]
Sean Pyles
that's called Dink wad. Are you familiar with that term, Rashaundra? Double income? No kid with a dog?
- [20:46]
Rashaundra
Oh, no, I have no. Okay. I'm at the Google that one.
- [20:49]
Sean Pyles
How much are you two bringing in together? I guess your individual salaries and your total household salary.
- [20:54]
Rashaundra
My take home is probably close to 150k. I'll probably say he's probably closer to 100.
- [21:02]
Sean Pyles
Okay, nice. That's a pretty solid household income, especially in Florida.
- [21:05]
Elizabeth Ayola
And then how do you guys manage your finances?
- [21:08]
Rashaundra
Me, I do financing. Different strokes for different folks. I pretty much do, like, pay the bills. We have a. A joint account, and he has his side account. I don't have a side account, and that's my personal thing. I don't like having a lot of different accounts. It's hard for me to manage. I'm the executor of my dad's estate, so I have an estate account. And I still have some of his accounts that are still open that I'm working. Working with too. So I have several accounts open. So I don't like having, like, my Own personal, like, checking account, but he does.
- [21:45]
Elizabeth Ayola
Okay. Well done to you for managing all these different accounts. I know that sometimes it can feel like a circus. Managing finances. Tell us the pain points in your budget. Right now.
- [21:55]
Rashaundra
We don't have a budget, per se. One of my goals for 2026 is to kind of know where our money is going, and so that way we can better prepare for retirement for us both.
- [22:08]
Elizabeth Ayola
And then how are you currently managing those accounts?
- [22:10]
Rashaundra
The accounts that I have are online, and then the estate account is with a different bank. It's still ongoing litigation with my dad's estate, so.
- [22:20]
Sean Pyles
Okay. And then it seems like you are just trying to get a grip on where your money is going. So thus far, have you been using any sort of budgeting app? How do you get a feel for that? If you want to? Are you looking at your monthly credit card statements? What's your, I guess, source of truth for this right now?
- [22:35]
Rashaundra
So my source of truth is just basically looking at the checking account and just kind of looking to see if it goes up or down. And so if it dips too low, I'm like, okay, we need to. We need to save a little bit.
- [22:47]
Sean Pyles
That's one way to do it.
- [22:48]
Rashaundra
If it gets too high, we can, we can start looking at. If we can move it into. We have a high yield savings account. Can we move some of the funds into a high yield savings account?
- [22:58]
Sean Pyles
So when you think about managing your finances and having a better grip on your spending, is this something that you would be tracking down to the penny, or are you more of a looser budgeter and you just want to know generally that you have your expenses met, you're saving some money on a regular basis, but you won't be sweating the details as much. How do you think you might fall in that continuation?
- [23:18]
Rashaundra
Definitely the latter. Would like a little bit less.
- [23:21]
Sean Pyles
Me too. Yes.
- [23:24]
Elizabeth Ayola
All right, Rashonda, we want to help you with your budget. So now we're going to dive in. Thank you so much for sending your numbers over. So what we're going to do now is talk through your budget. That's the fun stuff. So I want to start with your income. You are a dink. I'm not a dink. I'm envious of you guys. Or what was it, Sean with the dog? Dink?
- [23:42]
Sean Pyles
What dink? Wade. Double income. No kid with a dog.
- [23:46]
Elizabeth Ayola
Okay, so we're going to start with your income. Now, you said that your after tax income is just over $10,000. And I want to clarify, is that just your income or also with your partner.
- [23:59]
Rashaundra
So that is my income plus what he contributes to the household.
- [24:04]
Elizabeth Ayola
All right, so we're going to start with the must haves and the needs because we have to make sure our bills are paid so that the house can keep running. All right. So your monthly housing cost seems relatively low. I was jealous when I saw how much you're paying at a little over $1,200. Are you renting or you're paying a mortgage? You're paying a mortgage because you said in your first answer that you would love to pay your mortgage off if you won that money.
- [24:27]
Rashaundra
I am paying a mortgage.
- [24:29]
Elizabeth Ayola
Okay. And I'm guessing you have a low interest rate.
- [24:33]
Rashaundra
Yeah, we have one of those Covid rates. So I refinanced my house around Covid, like 2020. And when I say my house, it's. I have a house and he has a house. His house is on rental, but it basically is paying for itself. So like my current interest rate is like 2.75 ish.
- [24:53]
Sean Pyles
Nice.
- [24:54]
Rashaundra
So, but I, I refi from a 30 year loan to a 15 year loan. And so I was trying to match my 15 year loan with the time that I would be expected to retire.
- [25:06]
Sean Pyles
Okay, so do you have just nine years left of paying off your mortgage then? Is that right?
- [25:10]
Rashaundra
Yeah, if 15. 15 from 2020. I haven't done the calculations. I'm just paying.
- [25:17]
Sean Pyles
But you're getting there.
- [25:18]
Rashaundra
I'm getting there.
- [25:19]
Sean Pyles
Okay.
- [25:20]
Rashaundra
Yes.
- [25:21]
Sean Pyles
I know that homeowners insurance has been a really complicated and difficult topic for Florida homeowners. How has that affected your budget?
- [25:29]
Rashaundra
My first insurance, they dropped a lot of people or they went bankrupt. So I was on the state insurance, I call Citizen. I was on citizens for a while. Their rates were pretty relative. And then just recently, if there is someone that can pick up your homeowner's insurance, then the state needs to kind of turf you off. So I got turfed off again. And so it has gone up, but not necessarily like significantly. I don't live in a flood zone. I did have some like roof damage with the last couple of last hurricane. The hurricanes from 2024? No, not 2024. Actually previous hurricanes, I'm. Oh yeah, that was like.
- [26:09]
Elizabeth Ayola
Ian, I was just going to say the good news is you have that awesome rate and your mortgage payment is around the 25 to 30% recommended amount for your budget. So you're in a good spot there. So even if we were to look for somewhere to squeeze, it doesn't necessarily have to be your mortgage.
- [26:24]
Sean Pyles
Now that Said there was one area of your budget that really stood out to me as being more expensive than I was expecting, and that's your car payment. I'm seeing that you're spending around $1,300 a month on your car payment. Is that just your car or is that your car and your husband's car? What's going on there?
- [26:41]
Elizabeth Ayola
Tell us.
- [26:42]
Rashaundra
It's my car. I have a lease.
- [26:45]
Sean Pyles
What kind of car do you have?
- [26:47]
Elizabeth Ayola
This is a safe place. But tell us what's happening.
- [26:48]
Sean Pyles
Yes, we are not judging, but we do need to know.
- [26:53]
Rashaundra
Well, everyone will be judging. I have a Mercedes. I have a pretty good sized Mercedes.
- [27:00]
Sean Pyles
And on top of that, you're paying $320 a month for car insurance. So you're spending around $1,600 a month for your car. Does that feel comfortable for you? Again, I'm all about affording the luxuries that you want to have in life. I have a BMW myself, but I got it in a way that was affordable for me. So how do you feel having this expense in your budget?
- [27:22]
Rashaundra
I feel good with having it. I know some people would probably rather buy than lease. I've been leasing for a while. I started off with a pretty relatively low monthly payment, and then they would show me something else that was a little bit bigger, so. And then the price would escalate as well when you would release. But everywhere else, I really am very frugal with. So, yeah.
- [27:50]
Elizabeth Ayola
And I want to say there's nothing wrong with, as Sean said, having a luxury part in your budget because money should be enjoyed. Right. So as long as you can afford it, there's nothing wrong with where you decide to put your money.
- [27:59]
Sean Pyles
Yeah. I will say the one thing that stood out to me, since we're using the 50, 30, 20 framework here, all of your needs add up to around just shy of 57% of your income. And so in that case, if you were looking for somewhere to trim back, eventually, you might want to look at that car payment after your lease term is up and see if you can get something a little bit less expensive so that you can be closer to that 50%. And the reason why we emphasize that 50% is so then you can have more money elsewhere to save for your home projects that you want to fund or your retirement, these other goals that might not be as attainable if you're putting all this money towards your car.
- [28:40]
Rashaundra
Understood.
- [28:41]
Sean Pyles
Okay. Well, now I do want to turn to another part of your finances, which is your savings and your debts, and this category of the 50, 30, 20 is generally supposed to be around 20%. So it's savings and additional debt payments beyond your standard monthly payments, which for you is really just your mortgage. And we'll consider your car in there as well. So you're at about 24% of your budget being your savings and debt payments. And that's just, you know, a little bit higher than the standard 20% there. But that's not a bad thing necessarily because you're putting about $2,400 a month toward your retirement, which is phenomenal to hear. Congratulations on that. So I want to hear about your retirement savings and also how you're saving, what accounts you're using, all of that.
- [29:28]
Rashaundra
Okay. It's complicated, just like any relationship. So I have my High Yield savings account that I just recently opened last year. So it just started to kind of see actual dividends from that. And then as far as my retirement, I am a federal worker, so I do have what's called a TSP, a thrift saving plan. So instead of a 401k, I have the TSP. We get a statement once a year. We're close to about 890k. I have them pull about 12% of my pre tax income to my tsp, every paycheck and then they match, I believe 6%.
- [30:17]
Elizabeth Ayola
Okay, wonderful.
- [30:18]
Rashaundra
And then they also pull for my pension. A poll was called fers. I do not remember what that stands for.
- [30:26]
Sean Pyles
Got to love the acronyms.
- [30:28]
Rashaundra
Oh, we're full of acronyms. On the federal side, we're full of acronyms. So it's basically like my pension and then I contribute and then my employer contributes.
- [30:40]
Elizabeth Ayola
Saving so much money is incredible. You guys are doing really good with your savings. So you're seemed really disciplined there. How's your emergency fund looking?
- [30:47]
Rashaundra
I will probably say that's our emergency fund is our savings. Everyone says you have three times your expenses. But then I need to know what my expenses look like per month to make sure I have enough set aside in my savings. Like right now, like if something big does happen, I can go into my savings, but also I want to have that part, you know, our retirement as well and how to differentiate the two.
- [31:16]
Elizabeth Ayola
How much do you have in that high Yield Savings account?
- [31:18]
Rashaundra
About 155.
- [31:20]
Elizabeth Ayola
Wow. Very, very impressive.
- [31:22]
Sean Pyles
That's a good amount of cash in your account. Congratulations on that. I'm sure you're earning pretty solid interest. This is in a high Yield savings account. So you mentioned not knowing exactly how much to have in an emergency fund. And so since you and your husband are both working. You're probably going to be safe with a three month emergency fund. And that's based on your bare bones budget we sometimes call it. And that 50, 30, 20 category is going to be that needs amount. So in your case it looks like about $5,800. So that times three is going to be what you would need or ideally have in an emergency fund. Obviously you're well beyond that. You mentioned you don't like having a lot of different types of accounts. If you've listened to a lot of smart money, you know that I am a big proponent of savings buckets and sinking funds with different categories. Maybe one day you can think about doing that and breaking out this amount, this three month worth of expenses into a different savings account. But for now I think it's okay since you already have so much set aside for savings.
- [32:22]
Elizabeth Ayola
That's right. Well, thank you for sharing your savings. Okay. And then I also want to clarify, you don't have any debt?
- [32:29]
Rashaundra
Yeah. Besides the mortgage and besides the, the car payment, I don't carry a credit card balance. So I use my credit card to get the points and all the extra stuff. But other than that, when the statement comes, I pay it off.
- [32:42]
Sean Pyles
That's what we like to hear.
- [32:43]
Elizabeth Ayola
Yeah. Now before we go into your wants, briefly, I just wanted to circle back. Rashaundra, I see that you are spending again, no judgment, $800 on groceries. So tell us about that. What are you eating first of all? What are you buying? What you eating?
- [32:59]
Rashaundra
So I know it's just me and my husband, but we do eat a lot of protein. I work out. I work out a lot. He works out too. We probably every other month we're going out to eat with very rare. We don't uber eats, we cook at home. But to have quality protein, quality vegetables, quality fruit, it costs money. It's not cheap, so. And it will like, it will go bad. So we're constantly going to the grocery store.
- [33:28]
Sean Pyles
You're going to the nicer grocery store.
- [33:30]
Rashaundra
I'm picking and choosing. I don't know if you guys have it out there, but I love my Aldi. I don't have any qualms at shopping at Aldi, the Big Sam's club. But there are certain things, like I eat a lot of protein bars. Those are not cheap. So I put all that into my grocery bill.
- [33:48]
Elizabeth Ayola
Man, I feel so seen. I started working out intense. I don't want to say intensely, but for a girl who doesn't like working out, I don't know, four or five times a week, maybe last year. And I was working with a trainer, and the amount I spent buying protein made me not want to keep training. So it is expensive. I hear you.
- [34:06]
Rashaundra
Yes, it's very expensive. My husband's like, you eat. You eat, like, so much chicken. And so we go to Restaurant Depot to buy, like, my chicken breast, because I go through it so quickly.
- [34:19]
Sean Pyles
Hey, that's economical. Saving some money.
- [34:21]
Rashaundra
It is, yep. We save some money there. Going to Restaurant Depot, and then I'm
- [34:25]
Elizabeth Ayola
going to pivot quickly to your medical insurance situation. I saw that you're paying 150 out of pocket.
- [34:30]
Rashaundra
We do have, you know, good insurance, but there's still things that we have going on. So, like, right now, I am actually healing from a surgery that I had last year, so I'm still doing physical therapy, so I still have to pay my copay. We also have other things that we go and see the routine doctor for. So give or take, it could be a little bit more than that per month. That was just kind of like a rough estimate to try to put something there, because I know we're spending money on our copay. One of the good things that I decided to do, and I've been doing it for a couple of years now, is to do a fsa. A flex spending account. Yeah, I remember that one. And so that definitely helps to lower my income. It also basically puts the money back into our account until we use it all up.
- [35:18]
Elizabeth Ayola
Thanks for sharing that. I also want to hear about your ongoing contractual obligations where you are spending over $700.
- [35:26]
Rashaundra
What are.
- [35:26]
Elizabeth Ayola
What are you spending that on?
- [35:27]
Rashaundra
My gym membership is pretty high. I do CrossFit. CrossFit typically is a higher membership per month, so we're looking at about $130 a month for that particular gym membership. I've been doing that since 2013. So when Covid happened all for Florida, at least all the gyms shut down. I have a. Also another online membership that's not as pricey. I think it's $160 for the year, $15 a month. I still have that because I do have some workout equipment because of COVID still in my garage. And so every once in a while, I do work out at home.
- [36:07]
Elizabeth Ayola
Okay, and then I see you're spending 300 on hair and nails. So is that a contractual obligation, or that's just a want?
- [36:15]
Rashaundra
This is. I guess it's a want, then. It's not a contractual. It's a want. But for me, as a girl, I
- [36:23]
Elizabeth Ayola
love, well, Listen, girl Mess says you gotta do your hair and nails.
- [36:27]
Rashaundra
So I have. I feel like I need to have my nails done. And then even though my hair is up in a bun, actually I have what's called sisterlocks, and they do any kind of lock or locking of your hair. You do have to go in regularly every six to eight weeks to get it re. We call it retwisted or retied. And so this is an investment because sister locks, I see Elizabeth shaking her head. It is very pricey to get them installed, so you got to keep them up. Yeah, they can be very expensive. And I've had mine for almost seven years. And so to me, that's a contract with my hair. So if I want to keep my locs looking nice, I do have to go on a regular basis.
- [37:12]
Sean Pyles
Rounding out the 50, 30, 20. Usually there's 30% for your wants category. It seems like there are a couple areas that I would maybe say your wants have turned into some needs, like having a nicer car. Having a car in Florida especially is a necessity. Having a really nice Mercedes is a little bit of a want. Right. So you've made this want into a need. And so I think it's okay that right now your wants is about just under 20% of your budget. So in all, I think you're doing a pretty good job of enjoying your money. You're doing things like you're investing in your appearance in ways that are valuable and helpful for you. You're getting the car that you want, you're getting the food that you want. It seems like you're managing your money in a pretty well rounded way. So is there any area of your spending or your savings that you think you would want to adjust, or is it really the understanding your cash flow and getting a budgeting system that you'd like to improve?
- [38:08]
Rashaundra
I think the latter, Sean. Just kind of seeing where the money is going and then being able to make those tweaks that I feel like there's something that's coming up that we can kind of plan for. Like if we wanted to go on an expensive trip, is there something that I could start looking at our budget and say, hey, this is what we. We put aside for our emergency fund. This is where we're putting aside for this. How much money do we have left over?
- [38:35]
Elizabeth Ayola
Okay, well, I am happy to tell you that the first step in understanding your budget better is choosing a budgeting style, which we spoke about a little bit earlier. And it sounds like based on what you've Told us you are a little bit like Sean and I and you like to go with a maybe pay yourself first or loose kind of approach to budgeting. So now an app that may be good for that because I know in your original question you asked us about budgeting apps is one called Empower. And it can be helpful as it's primarily an investment tool. But what it does is it lists out your transactions by category so you can kind of see see a snapshot of where your money is going. And you can also monitor your checking, your savings, your credit card accounts, and also your investment accounts. And I know that you said it being low cost was important to you. I'm happy to tell you that Empower is free.
- [39:22]
Rashaundra
Oh, nice. I like free. Free is for me.
- [39:28]
Elizabeth Ayola
Another thing I will say is when you are new to budgeting or just starting out, it can be a little annoying to track every dollar. But it can also be extremely helpful so you see exactly where your money is going. Some feelings that can come up when you see where every dollar is going is sometimes embarrassment, sometimes shame. Oh, I spend that much on Uber Eats. Oh, I order that many things a day. But it's really helpful to help you to make adjustments to your budget. For people who like to track every dollar, a zero based budgeting style can be extremely helpful and it can be a good starting point. Now, if you're not familiar with zero based budgeting, how it works is you ensure every dollar has a home and it's allocated to a category like your needs, your wants and your saving. Kind of like in the 50, 30, 20 breakdown of your finances. Now, since every dollar is accounted for in the zero based budgeting, your income minus your expenses should equal zero at the end of the month. And there are two apps that you can look into for that. One includes everydollar, the other one is Ynab and both have free versions and then paid versions. And obviously the services that you get with each vary because free sometimes means not as many services.
- [40:37]
Sean Pyles
Yeah. And choosing the right budgeting app can be a journey of self exploration in some ways and finding out what kind of app works best for your style. NerdWallet has a budgeting app that can help you get a grip on your finances. There's also another app called Monarch that can help you understand your money. And a lot of couples like using Monarch because it can help them manage their money together. What I would recommend for you, Rashaundra, is downloading maybe three different apps and see which one you like. The interface of which one is easiest for you to connect your accounts to it. It seems like you want a lot of automation in how your money is being tracked. So which service allows you to do that in the easiest way for you? Just spend maybe 20, 30 minutes poking around the app store on your phone, find some that look good to you. Look at some reviews online. We have loads of reviews of budgeting apps on the Nerdwall website as well that you can check out and just play around with them. It might be a journey over a couple months where you're seeing, oh, I actually like this one better or this one looks nicer, but it's not actually linking my account in the way that I really need it to. So that one's kind of out of the running here. So just get a feel for it because the best way to learn is really by experiencing the apps through using them.
- [41:45]
Rashaundra
Yeah, that sounds like a great idea,
- [41:47]
Elizabeth Ayola
Sean, based on what we've shared. Rashaundra, which budgeting style or maybe app stands out to you the most?
- [41:53]
Rashaundra
I would probably go with the first one as far as empower. I just basically want something a little bit easy for now, something that I'm not necessarily spending too much time having to track down every last dollar, but doesn't mean down the road that I may get to a point where I do want an app that does track every dollar. I just kind of want to, I guess, put my toe in for a little bit and then kind of see and go from there. I don't want to have something that's going to have me scrutinizing every dollar and I'm staying up late at night trying to figure out my budget when I could be doing something else.
- [42:28]
Elizabeth Ayola
Absolutely. Did you have any other financial goals that you wanted? Improving your budget to help support? I know that you messaged us, or rather emailed us, and told us about you wanting to retire in 10 years. Again, I am jealous.
- [42:45]
Rashaundra
Well, I'm probably older than both you and John, but as far as I started working fairly early in my care. So for federal employees to receive your full pension, it's 30 years of employment. So I'm close to 25, but not at 30 just yet. So I still have about less than 10 years that I can get my full retirement from the federal government. So I think that's a big thing. As we're getting closer to that time, I still feel like I just started. As we get closer to that time, I definitely want to be prepared so that if I want to walk away,
- [43:22]
Sean Pyles
I'm able to what I'm hearing is that in 10 years you're going to have your house paid off and you're going to be eligible for a pension. That's really exciting. You're also in a position where you're going to begin thinking about how you can use your retirement funds. And there's a lot of factors to consider when you're sorting out how you might pivot into some kind of retirement. Have you worked with a financial planner before to talk about these things?
- [43:45]
Rashaundra
I have. I don't want to say necessarily that I'm not happy, but I think sometimes when you go to certain places, they sign you up for a couple of things and then you don't hear from them. I'm not a big fish. I'm not investing like millions or anything like that. I do actually do have some stock. I got that over there too as well. I know I didn't just throw stuff at you guys. I don't even know why I just thought about it now. Just because I don't think about it. For me, the stock market is more of a hands off approach. So when I hear about the stock market, I don't want to make a quick decision and try to move things around. Because I heard you just leave it in there, just let it rip.
- [44:24]
Elizabeth Ayola
Just mind your business, right?
- [44:25]
Sean Pyles
That's right. Well, yeah, I'll say some financial planners tend to be more on the sales side and they're going to try to push you into a product that gets them a commission. That said, there are other financial advisors, certified financial planners, who are more focused on comprehensive financial planning, life planning, retirement planning. You can consult with them and say, hey, I'm in this period where I'm beginning to think about what my life is going to look like in five to 10 years when I'm eligible for this pension and can retire and don't have a mortgage. What does my cash flow look like? How can I model different scenarios for me and my husband budgeting for two vacations a year? What does that look like? With the money I currently have available to me, they can map this stuff out for you so you can get really concrete numbers and begin to envision what your life is going to look like after you're done working.
- [45:08]
Elizabeth Ayola
And then I'm just curious. I know you said you spoken to a financial advisor at one point, but how did you come up with your retirement number since you seem unsure if you have enough to retire in 10 years? Do you have a number in mind that would make you feel comfortable retiring?
- [45:23]
Rashaundra
I think the biggest thing is just making sure, like, our basic necessities are taken care of. So it's not just paying off the house. I have to still pay taxes and you still have to pay the insurance on the house. So making sure that there's enough money for that. Also, our healthcare will be older and so having enough to cover health insurance, which it seems to be always increasing. So. And like Sean said, still be able to take a nice vacation, you know, here or there. And I'm not trying to go across Europe, but would like to if I wanted to, like, take two weeks and, and go to Europe if we need to for the year. So that would be one of our yearly trips or something like that.
- [46:08]
Elizabeth Ayola
I think what Sean said is very helpful in terms of working with a financial advisor, because then you can get more concrete numbers. But if you just wanted to kind of get a rough estimate, there are two things that you could do. You could use the rule of 25. So that's 25 times of your anticipated annual retirement expenses. Having that before you retire, that's one way to look at it. And there's also the 80% rule. So having 80% of your pre retirement income can also help you know, whether you're on track to retire as well. But again, there's nothing like getting concrete numbers based on your nuanced financial situation.
- [46:41]
Sean Pyles
Yeah. And I really can't underscore how important that is. As you begin to look at your retirement and in these years before, where you are right now is a prime time to talk with a fiduciary financial advisor who can help map this out for you. Because it's just a lot to juggle on your own. I'm sure you understand. I mean, you're managing your father's estate. That's complicated enough. Planning your own retirement is a whole nother ball game.
- [47:03]
Elizabeth Ayola
Taxes are an important thing as well. Of why it can be helpful to speak to a financial advisor. Because some people think you're just going to get to retirement and start withdrawing all that money that you've worked so hard for. But it can trigger so many different tax situations that can eat away at your retirement savings. So now is a good time to start planning towards that.
- [47:19]
Rashaundra
Oh, yeah, exactly.
- [47:21]
Sean Pyles
Okay. Well, Chandra, we've run through a lot in this conversation. How are you feeling about your finances now, your budget, everything else we've talked about?
- [47:29]
Rashaundra
It's a lot to take in and it is a little bit scary. But I know that this is a good step in the right direction so that we can go in with our eyes wide open as far as like my husband and I and what we're going to be looking forward to as far as with retirement.
- [47:46]
Sean Pyles
Yep. And this is just one conversation of many you'll have about this.
- [47:49]
Rashaundra
I got work to do.
- [47:50]
Elizabeth Ayola
And then I'm curious, Rashaundra, I know that you are the one managing the finances, but are you going to go home and tell hubby about all the things that we told you and all of the apps that you learned about? What is that conversation going to be like?
- [48:03]
Rashaundra
He's probably waiting for me to discuss it with him because I did tell him about like I was coming on her wallet. So he's very interested to know what what we talked about and then what we're going to plan going forward.
- [48:16]
Sean Pyles
Let us know how the conversation goes, Rashaundra, because we always love hearing updates from our listeners too.
- [48:20]
Rashaundra
Of course I will.
- [48:21]
Sean Pyles
Great. And thank you so much for coming on and sharing all of this with us.
- [48:24]
Rashaundra
Oh, thank you. Thank you guys for all the knowledge. If you want the nerds to answer your money questions, call or text them at 901-730-6373. That's 901-730-Nerd. You can also email your questions like I did to podcasterdwallet.com we want you
- [48:48]
Elizabeth Ayola
all to join us next time to hear about savings goals and treating yourself, how to balance both. And let me tell y', all, I'm an expert at that. Definitely an expert at treating myself. Anyways, follow Smart Money on your favorite podcast app that includes Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes.
- [49:05]
Sean Pyles
And here's our brief disclaimer. We are not your financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
- [49:16]
Elizabeth Ayola
This episode is produced by Tess Viglund. Hilary Georgie helps with editing. Nick Karisimi and Eve Krogman helm our audio and video production. And a huge thank you to NerdWallet's editors for all their help.
- [49:28]
Sean Pyles
And with that said, until next time, turn to the Nerds.