brought to you by the every dollar app start budgeting for free today. Hey guys, so I wanted to know if you would honestly recommend that I start with a $1,000 a month emergency fund and and why after kind of reading off some stats here, okay, I be 30 I be 30% interest rate on a $33,000 car loan. I have nine K and back taxes owed 5k and credit card debt nothing My ex girlfriend has 50k and credit card tech that I kind of want to help her out with your ex girlfriend on top Unfortunately, yeah, you want to help her with the debt? Yeah, wow, sorry.
I just that guy guy. I'd like to know more Why are we doing this? Well, you know, she's I was a six-year relationship. I lost her last Q4 I was pushing myself too hard fine.
We burnt out after after about 10 years of extremely hard work And I just feel responsible for a lot that I'm sure some of it's mine. I'm sure a good bit of it might be mine You used her card you used her card sometimes well, we would together you know like it was a Like she would help out with like I don't know I think my card insurance for example is on the credit card, okay, I think so I don't even know Listen, how does that change your pain? Does it change your pain? I'm gonna say something really controversial right now.
I'm very excited. She probably wrote in your car lots of times Does she need to help you pay off your car? You know, I'm saying like you probably she made you know your credit card that you may have paid for some things for her I think I think what it sounded like I don't know, but it's not you said she got away It sounds like you're still recovering from this. He's dealing with guilt You still care for her you might feel some deal obviously still care for her But I would I would not feel any obligation to pay 50k to an ex is she asking for money?
Well, not really now do you want to know what I think do you want to know what I might think as your older sister who cares for you? Yeah, this is like when you go on a date with somebody I think this was from Seinfeld and he would leave something in her apartment on purpose So he would have a reason to come back and knock on the door really a move Yeah, I feel like this is a reason for you to come back and knock on the door Yeah, well, I love her. I mean oh and And oh well, you're not you're not ready to let go if you could dedicate a song to her right now. What would you dedicate?
Oh great question I'm saying seriously. What is it? It's also listen. There's too many to count.
I'm writing a writing letters thought every day. Oh, I'm sorry to her art situation Look, I know that's the biggest death, but this 30 this 30% interest rate on this $33,000 core loan is really bugging me. I didn't know what that meant when I signed the contract I thought it meant 30% of the Cars value in total. I didn't know that that was like appreciating.
Yeah, I know that I was every year ago I thought you said 3% when you first said it's 30% No, it's 30% and it's an Italian car. Oh, okay. I'm sick to my stomach for you, Sam You you have to take oh my goodness. What's this no ball?
Where are we out on the snowball? Did we get there? No because your initial question? I'm sorry.
I got hung up on your your low situation. The initial question was do I really want him to go down to a thousand dollars of an emergency fund? Um, yeah, I started where do I start here guys? Yeah, that is where to start Let me just go through the baby steps with you right quick, Sam Just so you see how this all fits and how long have you been listening to the show?
Are you a new listener? I'm a new I'm a new listener. Yeah, you guys are on on my YouTube shorts. Okay, so you only get bits and pieces on that Thanks for watching, but you only get bits and pieces So the first step this is seven baby steps for you to achieve financial pieces what we're talking about So you do them all that I'm saying you do them consecutively in order That's the first thing you got to do them in order if you jump around it won't work And you'll be wasting your time the first step is you get a thousand dollars saved So if you don't have any money saved you got to go out work self-stuff and get it done if you do have money saved You drop it down to thousand dollars and then the next whatever money you have left over is going to go to baby step two Which is you paying off all of your debt except your mortgage?
This is all the consumer debt Okay, and you do this using the debts no ball method debt snowball is we list all the debts smallest to largest you pay minimum payments on everything And then any extra money goes to the smallest debt does that make sense? Yeah, okay after that now we stack up that emergency fund Three to six months of expenses is what we're looking for you get to decide is a three four five or six after that Number three is a three or four thousand dollars a month in expenses three to six months of basic living expenses So just for round numbers. Let's say you're a number Let's say you had five thousand dollars worth of expenses every month What we're saying is is that's three months is fifteen thousand six months is thirty thousand you tracking? Yep, all right, so that's what we mean by emergency fund we give you the kind of we say three months is a minimum So that'd be fifteen thousand on this example.
That's right and it's it for baby step three It's really about your basic budget. It's not three to six months of paychecks necessarily It's what it takes to make your house go on a basic level. Okay, baby step three B It's B because it's not the case where everybody is if you're looking to buy a house now It's when we start saving up a down payment for the house. Okay after that you go to baby step four You could do three B and four at the same time if you want to you're paying 15% of your gross income into retirement funds So that's your 401k Roth IRA that sort of thing then after that if you have kids you're planning for kids You can put an amount of your discretion towards kids college We say a 529 or an ESA is where you would do that and then finally baby step six if you have extra money in your budget again At your discretion you're throwing extra money towards paying off your house early most people who do that pay off your house in like 10 12 years So that's and then finally baby step seven you just live like no one else you give your happy person and you got no cares Right, so that's kind of the big cars with cash.
Hey, okay. Can we talk about I'm dying right now? You did such a good job. Can we talk about this man's car?
Yeah, tell us about it. What's the car? We're seeing this a picture Man the car is like 21k. I bought for a very I think they will appreciate this So I come 29 I I have all my business and I bought an alpha a male because it was the coolest car you could get under love Okay, love up.
How much did you pay for it? Yeah? So all in taxes I had no doubt paying those about 33,000 so that's a loan on paying off. Okay, like yeah, so it's worth 21 I think I can get a little more for it.
I can't like be able to get like 24 26 Okay, I mean you gotta you gotta sell this car right now at 30% interest rate J. I know that's extreme He said it's 3% 30. I thought he said 30 is it 30? Yeah, you asked that twice and he said 30 IRT won't I can't even 30% on this car.
That's painful. Yeah, you gotta get out today. Like you gotta sell it. Do you have any money saved?
No, I can get some money this month. I mean then comes good Yeah, you gotta find you gotta find at least $10,000 So you can get out of this and get yourself a little beer card around until you can save up for a better one So yeah, but is that you know here's the reason I bought this car was the coolest car under 30k and what do you make? No matter how cool is what do you make? Well, I'm 98 $9,200 a month consistently for two years for last you for I was paying myself about 14k a month Really don't overboard with the whiskey and the boys.
Here's what I want you to do Listen, what a life here's what I want you to do I want you to apply that 9200 to get out of debt. I want you to quickly save up what you can to get out of this car buy something cheap and Cash, it's only temporary you're gonna be out of debt in a year and then you're gonna save up You're gonna buy the same car and cash create your free every dollar budget today the simplest way to budget for your life