Sarah Needs a Budget
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Dan:Past performance is not indicative of future results. Hey, everybody. Welcome to episode 1 of the F Money podcast, learning the personal finance lessons you wish you'd been taught in high school. We're gonna run through budgeting, savings, investments, cars, etcetera. We have a whole list of topics for you, and we'll be tackling them each week.
Dan:My name is Dan. I'm the host this week. I am a software engineer and hobbyist investor currently taking a break from the technology industry while I day trade options and work on this podcast. Sarah, tell us about yourself.
Sarah:I'm just a dumb [bleep].
Dan:That can't be the whole story?
Sarah:No. I'm just a dumb [bleep] with a little bit of money. No. I was the founder of a company. I sold the company, had a very high paying job, lost that high paying job.
Sarah:I always thought I was okay with money, but I realized I need to get better. I have all my money with a financial planner, and that seems to be, like, a really good way to get Dane Cook'd, you know, when you give all your money to someone and then they steal it. And, you know, Mike Tyson has been in the news, and I recently learned that he was one once worth $400,000,000, and now he's only worth, like, $18,000,000. So I wanna avoid that as well. So I called upon you, Dan.
Dan:He sold his tiger. I remember when he had to sell his tiger years ago.
Sarah:Yeah. I don't wanna have to sell my tiger.
Jon:Common problem.
Dan:Cool. Well, hopefully, I can help you out. And I brought my buddy Jon along for this, series. Jon, tell us about yourself.
Jon:I am Jon, and I am an accountant and tax professional. I help individuals and business owners daily, make important financial decisions. A lot of the same concepts apply to Sarah's case here. We're gonna help her along and see what we can we can do for her.
Dan:Awesome. Well, thanks for joining me on our first episode this week and next week. The first two episodes, we decided to tackle budgeting. This is the starting point for a lot of people. You need to be able to write down how much money you're spending and where it's going before you can figure out how to not spend that money. We created a template, gave it to Sarah to fill out before the episode so we know, what her monthly expenses look like. We'll share that template in the show notes if anybody else wants to be able to do this after the show. Yeah. Unless anybody has anything else, I think we'll jump right into the budget.
Sarah:I'm scared.
Jon:We're here for you. Don't worry.
Dan:We've already seen the numbers, Sarah.
Sarah:I know I even did this, but then I black out. Like, I look at my credit card statement every month to make sure there's no fraudulent charges, but I push it off because I don't wanna see it, and then I black out because I don't wanna know. I have the opposite of a budget.
Jon:I thought you said you're trying to not be Dane Cook'd.
Sarah:Yeah. And I'm about to be. That's the problem. That's why we're here.
Dan:Not to spoil episode 2, but while we were preparing, I said, Sarah, what is this transaction, this large transaction on your credit card statement? And, she's like, I don't know. I'll have to look into it. Which statement was it on? And I send her the statement, and she goes, oh, Taylor Swift tickets.
Dan:Aw. Totally blacked out when she bought Taylor Swift tickets too. Totally forgot that she
Jon:We can't blame her for being a Swifty.
Sarah:Yeah. Let me live.
Dan:Alright. Let's dive into the the categories. We kinda set this up like what most people would spend their monthly things on, the recurring things that you have to pay for in your life to live. Most of you will recognize these. Maybe you'll have a few extras or a few less.
Dan:But ultimately, the template should work for most people, and it's pretty customizable. We'll dive in first. And we have rent of $4200. Sarah, is this a particularly nice place you live in?
Sarah:So it's a bungalow, but it does have a yard in LA, which is very nice. Also a pussycat doll used to live there, so it's decent. But I will say the only reason I live in a house and not an apartment is because of my dog. And when she crosses the rainbow bridge, I am prepared to downsize. So give me some credit there.
Dan:Okay. Okay. How is Daisy these days?
Sarah:9. So it's almost time.
Jon:Okay.
Dan:Alright. You're getting you're getting close. Okay. Yeah. I think, what do you do you know what rents go for in LA?
Dan:Can you like, what do you think you can save here?
Sarah:Probably, like, in the threes. It's not a drastic amount of money, and I'm not trying to live with a roommate. So
Dan:But you think you could get 5 to 600 off a month from where you're at probably?
Sarah:For sure.
Dan:Okay.
Sarah:Yeah.
Dan:Alright.
Jon:That could help address other issues that we see further down, so that's actually a pretty good amount to shave off of basically what's overhead.
Sarah:Well, we need to talk to my dog before we make a change.
Dan:Yeah. That's, like, 10 12%, something like that. That'd be great. Okay. Moving on to your car, which is listed at $671 a month.
Dan:This better be a pretty nice car. What do you drive, Sarah?
Sarah:I drive a Kia, a Kia Sportage, but it's half electric, and it has a moon roof.
Jon:Those are nice features.
Sarah:Listen. It was a whole thing. I know I messed up. This smooth talker mani took advantage of the fact that I was leaving that day with a car. I also got cocky.
Sarah:I've negotiated 2 cars very well. So I went in on my own and I was stressed out. I really needed I was done searching for a car. I was done. I was getting a Kia, and I should have taken someone to run some checks and balances by.
Sarah:Like, $670 is not an appropriate amount for a Kia of any kind.
Jon:Are you gonna be owning it at the end?
Sarah:No. I lease.
Dan:So you're in a $671 lease for a Kia?
Sarah:Yeah, guys. I [bleep] up. Rub it in.
Jon:How long is the lease for?
Sarah:4 years. Like, I know.
Dan:Ending next year?
Sarah:I have 2 more years. I've tried to I've tried to swap it out, but I'm gonna be $11,000 upside down on it. Once I can, you know, get it even, what's the right term for that?
Jon:Break even?
Dan:Yeah. Like break even.
Sarah:Breakeven?
Dan:Yeah.
Sarah:Then I'll evaluate.
Jon:Not dissimilar. A lot of people are in the same boat. They regret their car decisions, and at least you recognize that it was a mistake.
Sarah:I will never do it again. I always hear, like, rich people always talk about the one thing they regret buying, the one nice thing, and it's a car. And I will never do that again. I will drive the next car I have. I will probably drive this Kia.
Sarah:If I make it to the end of the lease and buy it out, I'll drive it till it hits the ground. I'm never paying for a car like this again. Huge regret.
Dan:We have plans to do an episode whole episode on cars and car buying and car leases. So, this will come up again, I'm sure. Quick question. Do you know what your buyout on this is at the end of the lease? Like, is that actually worth doing to salvage this?
Dan:Like, maybe if you're paying so much up front now, your buyout is actually a good price.
Sarah:Dan, I don't even know the MSRP on this car. Okay? I, like, blacked out. Manny, like, he was smooth.
Dan:Okay.
Sarah:He wishes me a happy birthday.
Dan:Yeah. He's hoping you come back in 2 Yeah. In 2 years and trade in your lease for nothing and then get something.
Jon:You're his favorite client.
Dan:Okay. Let's move on from the car. We'll do we'll do a whole episode, and we can dive more into the car. I do wanna find out that buyout price, though. You might might be able to salvage this later.
Sarah:Yeah. Me too.
Sarah:I'd like to know the MSRP.
Dan:Sticking with cars for a second. Car insurance, $389 a month, Sarah. Something feels wrong here.
Sarah:Feels feels high, and, I know why it's high. That's because I have 2 speeding tickets, but I want everyone to know I was only guilty of speeding once. The other time I was in Utah, the cop admitted to pulling the wrong car over. The only thing I was guilty of was saying there's no no way I was going 92. I couldn't have been going over 5 over the speed limit, and then he gave me a ticket for 5 over the speed limit.
Sarah:So once guilty of 1 speeding ticket, guilty of opening my big mouth.
Dan:Okay. One speeding ticket, one big mouth ticket.
Sarah:Yes.
Dan:Adding up to 389 a month in insurance.
Sarah:Big mistake. Very expensive mistake. Yes.
Jon:Jon, anything on car insurance? Well, insurance in general, I am not a huge fan of. I will spare everybody my insurance lecture and how much I despise it, but it is a necessary evil. And I assume that's gonna queue us up for the next insurance on the list.
Dan:It is not. Oh, I think I deleted it. It is, we have health insurance, and I don't have the number. 700 something.
Sarah:700 and something, which is 700 and something too high. It's too much.
Dan:It's definitely tough when your your employer is not paying for it. So you're paying this for yourself. So $750 for one person. Correct?
Sarah:Yes. Thank you for rubbing that in. 1 person. No spouse.
Dan:That's not what I meant.
Jon:Hear that, fella. She's available and not great at managing her money.
Sarah:Good at spending yours.
Jon:That could be the solution for you, Sarah. I don't know.
Sarah:Yeah. End it here. That's the solution.
Dan:Alright. So the 2 insurances together, you're talking about $1,000 in insurance. Jon is saying this is the sucker's bet, but we all gotta pay it. So let's move on. Sarah, we found one that you're doing right going through this budget.
Dan:Internet, cell, and utilities is coming in around $500 a month. Clap for yourself. This feels totally reasonable.
Sarah:I mean but also sad that $500 for all of that is reasonable. You know what I mean?
Jon:Yeah. Unfortunately, I see this pretty often. For a single person, these all line up. You know, when you have a family with 3 kids, different story, this number gets super inflated. That's when you go in dad mode like myself and turn all the lights off every everywhere you go.
Jon:That's why your dad did that kids.
Sarah:Oh, that makes sense.
Dan:Yeah. My mine's around here as well between water, sewer, gas, electric, cell phone, Internet. So great job. 500. You're like the rest of us, paying paying the right amount for utilities.
Sarah:Finally.
Dan:And then we get to the one that I probably disagree with the most, your cleaning lady of $260 a month. You gotta cut the cleaning lady, Sarah. Not literally. Don't cut her. I had a dream about being stabbed last night, by the way.
Dan:It was very bizarre. Do not cut your cleaning lady, but fire your cleaning lady. You don't work. Clean your own house.
Sarah:No. We're gonna fight about this one. I am the busiest unemployed person ever. I don't know how. It makes no sense to me, but my cleaning lady can clean better than I can.
Sarah:She improves my life drastically. I will sorry to say this again. I will kill my dog before I fire my crew. It's not happening.
Dan:That's brutal. By the way, busiest unemployed person equals going to London for Taylor Swift. Yeah. That's why you're busy.
Sarah:Yeah.
Jon:Dan, I think I know where your dream came from.
Sarah:It was me stabbing it.
Jon:Right? Yeah. That's that's what I was painting.
Dan:That's brutal. Okay. This is you know, we're gonna fight about the cleaning lady. We like your utilities. The insurance is kinda what it is.
Dan:Rent, we think you can reduce. That leaves us with one big redacted number.
Sarah:Yeah. Tell tell them tell them why it's redacted.
Dan:I believe it's redacted because Sarah's afraid that the the audience won't be able to relate to her if we say it.
Jon:There, after seeing the real numbers, there's a high probability of that.
Sarah:I was gonna say I was embarrassed, but call it what you will. I just don't think that number should be out in the Internet world. It shouldn't be in public.
Jon:Everybody should know we've also edited these a little bit, and it's not available for everyone besides on the audio version. You know? Don't be a creep.
Dan:We'll talk about this number on the next episode. Not the number itself, but the percentages of what you're spending your money on. So we could still talk about this in a in a good way without actually revealing what the number is. May have to bleep a few of us saying the numbers out loud so that they can't piece it back together. But, we'll we'll take care of that in the next episode.
Dan:Sarah, anything else you wanna say about your budget?
Sarah:I'm excited to get this on track because it's getting a little scary. Please help me. I'm savable. Right? You think I'm savable?
Dan:We think so. Without spoiling too much for episode 2, we we think it's we think you're savable.
Sarah:And I can keep the animals.
Jon:I'll just say, you're safe. I don't know about Daisy.
Dan:Alright. I think that's, gonna do it for us this week. We will be back with episode 2. We will dive into the spending number and the percentages that Sarah is spending on the different categories. May try to make some tools available on how I did this for Sarah's budget so other people can replicate this.
Dan:We'll see if we can get that done.
Jon:Yeah. Definitely follow along. If you if you haven't done this yourself, you don't have a budget, start now. This is a brutal example so that you at home can feel better about doing this process and get control just like Sarah wants control.
Sarah:Yeah. If I had a budget, I wouldn't be in this position now. I would have had longer runway.
Dan:Yeah. That's a that's a great point. You don't need to be just starting out to start this. You could be at any phase of your life, career, whatever. You can start understanding where your money is going.
Dan:This is the first step to understanding that and then getting it under control.
Jon:Yeah. And you and you don't need any sort of fancy app. You know, this is why we're trying to make this stuff available to you.
Sarah:Well, unless a fancy app wants to sponsor us, and then we'll tell everyone they need the fancy app.
Dan:Absolutely. And then we just roll the fancy app into the budget. And it's like, I gotta spend money on this fancy app because it does the thing. Thanks everybody for joining us this week.
Sarah:Please subscribe to us on Apple, Spotify, or wherever you get your podcasts.
Jon:Jon, any parting words? No. Oh, besides the please follow, subscribe to us on Apple, Spotify, and wherever you get your podcasts.
Dan:Sarah, re read that Sarah, and I'll cut Jon
Jon:Yeah. I was like, what?
Sarah:Please. Let me do it again. Please follow and subscribe wherever you listen your podcasts. Nope. Point that up.
Dan:No animals were harmed in the making of this episode or car salesman.
Sarah:Yeah. Manny better [bleep] hide.
Jon:The man is in trouble after this.
