By Daniel Rodriguez | Dr. Budgets
Becoming a dad is the most challenging, yet rewarding thing I have ever done. Although nothing could have prepared me for this experience (not even this blog post!), there are some things I wish I knew before becoming a dad. Below are the 7 things I wish I know before becoming a dad…
1) It’s Expensive. Yes, I did read the articles that state that raising a child until age 18 costs roughly one-quarter million dollars. Take a moment to let that soak in… having a child increases your expenses for the next 18 years by $1,200/month… per child! Get ready for some major adjustments! My wife and I didn’t have to move because we already owned a two-bedroom condo (so no extra housing costs… at least not until baby number two comes along), but child care, doctor’s visits, diapers, food, clothes, and general baby stuff has taken a chunk out of our budget. Oh, and this doesn’t include saving for college. So yes, having a baby is expensive! But would I do things differently if I knew this before becoming a dad? Absolutely not! Having a baby simply forced us to redesign our budget… we made it work. My business continued to grow, so I was able to give myself a “raise,” we cut down a bit on discretionary spending (this wasn’t too difficult because we had much less time to do the things we used to!), and we were also able to refinance our mortgage to a lower interest rate. We have made some adjustments, but being a dad has been worth every penny!
2) Your Schedule Shifts. Before becoming a dad, I was in the habit of starting my workday around 7:00am, and I would often work past 5:30pm. This changed very quickly! My workdays now start around 8:30am because I drop off my daughter at daycare every morning. My day now ends at 4:30pm because I also pick her up from daycare after work. Does this mean I am getting less done? Nope! I have been forced to accomplish more in a shorter timeframe. I have been able to shift my schedule to have more time off from my business, but paradoxically, less time for yourself because of all the added duties of being a dad. It’s all good though! Too bad I didn’t know this before becoming a dad… I could have worked less and spent more time playing!
3) Your Weekends Change. This one is very similar to my schedule shifting, but I thought it was important to mention it. Before becoming a dad, I would put in several hours of work on the weekends. Now I put in little (1-2 hours) to no time into working on the weekend. Does that mean I have more time on the weekends? I wish! My weekends are now spent caring for my lovely daughter with my wife. It is a different kind of work! Can it be exhausting? Yes! Is it amazing to watch her grow up in front of my eyes? Yes! Life is very different now on the weekends. Also, our social calendar now revolves around her nap schedule.
4) It’s Challenging, Yet Rewarding. As I mentioned at the beginning of this post, becoming a dad has been the most challenging, yet rewarding experience of my life. I have had more sleepless nights (and sleep interrupted nights) in the first year of being a dad than in my entire life up to this point. “Grumpy Daniel” has made several appearances. I have found it hard to function without much sleep (especially since I don’t drink coffee!). And as much as I love my daughter, caring for her takes up so much of my energy that I am often exhausted at the end of the day (although it has become easier as she has gotten older). There are also a million decisions that need to be made as a parent, which can be very taxing. But even with these challenges, I can’t imagine my life not being a dad. I love this little being with all my heart. I smile and laugh more than I ever have. And I get to experience the world anew through her curious eyes. My favorite part of the day is when I walk her to and from daycare. My little girl has literally changed my life for the better.
5) It’s Not Easy, But You’ll Figure It Out. I was so nervous before my daughter was born. I was about to step into the unknown world of fatherhood. I had absolutely no idea what to expect. I was wondering what I was getting myself into. I didn’t know anything about being a dad! Becoming a dad is not easy, but you figure it out… quickly. I was thrust into fatherhood on the very first day, so I learned fast… and I haven’t looked back! Every day seems to challenge me as a parent, but every day I figure it out… and I’m sure this will continue the rest of my life because I don’t think I will ever “figure out” parenting completely.
6) It Will Challenge Your Relationships. I don’t understand why anyone would have a child to save a marriage because of how much it challenges your relationships… especially the relationship with your spouse. Becoming a parent will test the best of marriages, but lucky for me, my wife and I built a strong foundation of trust and communication before having a child, so all the challenges we have faced together as parents have only strengthened our marriage. The relationship with my friends and family have also been challenged because I don’t have as much time to spend with them. I have made as much of an effort as possible to make time for them, but sometimes I fall short. Lastly, my dog has probably felt very neglected since my daughter was born since he is no longer the center of attention. Lucky for him, he gets to walk with my daughter and me to daycare every morning, and my daughter is slowly becoming his new best friend (especially when she throws food on the floor!).
7) It Makes You Want to Become a Better Person. The last thing I wish I knew before becoming a dad is that my daughter makes me want to be the best version of myself. When I met my wife, she was an inspiration to me to become the best version of myself. Now, my daughter has amplified that desire. She has inspired me to think about work/life balance so I can spend quality time with her. She has inspired me to focus on my health more so I can be in her life for a very long time. And she has inspired me to be the best possible version of myself so I can set a great example for her as she grows up. It has also brought a renewed focus to search within myself to discover what is truly important to me so I can live a life she can be proud of.
So, there you have it… the 7 things I wish I knew before becoming a dad. What are some things you wish you knew before becoming a parent? If you know someone who just had a baby or is pregnant and needs someone to guide them in adjusting their spending to accommodate, please have them contact us to schedule a consultation. Happy parenting!
- Published in Family
By Jeannie Rodriguez | Dr. Budgets
Daniel and I met in 2011. We knew right away that our relationship was special, so it might not surprise you to learn that we started talking about some pretty serious stuff early on: kids, marriage, and, especially, money (he is Dr. Budgets, after all!). Before too long, Daniel had looked at where I was spending my money and made some suggestions to pay down the debt I had been struggling to eliminate. Dr. Budgets was founded about 1½ years after we met*, and so that makes me Dr. Budgets’ first client! As the “OG” client of “Dr. B,” I have some insights to share 🙂
Dr. Budgets has had many success stories… Clients have done amazing things! But, after you accomplish your financial goal, what comes next? Can anything top the feeling of paying off the debt that has been weighing on your shoulders? The answer is YES! What comes after paying off your debt is EVEN BETTER. If you stick with your spending plan, the accomplishments that follow continue to add to your overall sense of well-being. Maybe what I’m trying to describe is best said in a previous blog post:
“I soon realized I wasn’t worried about money at all. I never need to worry because we have automatic payments and buffers, and anything I need or want to buy is accounted for in the budget.”
Can you imagine that? Not having to worry about money? Let me tell you, it’s a beautiful thing. It took some work to get here though. First, I had to learn to live without my credit cards to pay off debt. Then, I had to learn to spend within my (and, eventually, our) spending plan. I also made some lifestyle changes to pay off my debt even faster, including renting out a room and getting a side gig to earn money on the weekends (but I was able to let go of both of those after I paid off my debt).
Now that I’m on the other side of debt and well into my “coaching” with Dr. Budgets, I can say my feelings about money have never been better. For example:
- I love my job, and I continue to love to work after having our daughter. But it’s nice to know that I don’t have to work at my job if I didn’t want to work anymore. I’m not a slave to my job, and I think that makes me love my job even more! Life is too short to hate what you do.
- I love our home, but it’s not our forever home. We’re working toward buying our dream house – not just a “it’s bigger than what we currently have and we need the space so we’ll take it” house. We’ve talked about amenities and location, and it’s within reach. I can actually see our daughter happily playing in the backyard of our future home. Paying off debt felt good, but debt is the past… Now, we’re working toward our future.
- We live in uncertain times and sometimes I’m nervous about the future. When I was in debt, I was VERY nervous about the future because I was one emergency away (car breaking down, a trip to the ER, losing my job) from being in a financial crisis. When I paid off my debt, I was able to create a financial safety net. Having savings gives me a sense of security.
Those are just a couple of examples of how life is better after paying off debt. But, besides these incredible side effects, what comes next after paying off debt? Here are some ideas, from Daniel:
Evaluate your spending plan. You’ve likely had a line item for debt repayment that can be re-directed. Determine how much of that you want to go into savings and other items in your budget. Maybe you want to give yourself a little breathing room in discretionary spending, or maybe you’ve become very comfortable with your spending plan and can put that money entirely toward your next financial goal.
Celebrate! You’ve accomplished something remarkable! Take a moment to acknowledge your sacrifices and reflect on your achievement. Set a budget and treat yourself to something to celebrate… you deserve it!
Create or Increase Emergency Savings. If you were able to put money toward emergency savings while paying down debt, that’s great! Maybe beef it up a bit to cover a longer stretch of time (6 months instead of 3 months, for example). If not, creating an “emergency savings” or “short-term savings” account should be your first priority.
Set your next financial goal. Get excited about your next financial milestone! Do you want to take a debt-free vacation? Save for a house or buy a new car?
If you’re working toward a financial goal, such as paying off debt, good for you! Keep it up! If you aren’t (but know you should), you may not have realized all the wonderful things that come along with achieving your financial goals… hopefully, this will help motivate you to get started! As always, if you want help please contact Daniel for a complimentary consultation – you have nothing to lose!
*Fun fact: I came up with the name Dr. Budgets… It’s a play on Daniel’s initials “DR”
- Published in Debt
By Daniel Rodriguez | Dr. Budgets
Being in the honeymoon stage after getting married is an exciting time! You’ve just committed to your partner and are starting your lives together. This new life together might mean moving in together, figuring out how to pay for your wedding debt, taking on new joint expenses, or preparing for some big expenses in the near future (buying a house, having a baby, etc.). This may lead to some stress around money. I enjoy working with lots of couples, so I thought I would share these 5 things you must do after getting married to help ease the stress of mixing marriage with money:
1) Combine to Save. Marriage has several financial advantages, especially when combining certain expenses. One big one that I have seen with clients (and in my own life!) is health insurance. If the person you are marrying works for a company with a great health insurance plan, then you could save hundreds, if not thousands, of dollars per year. After you get married, make sure your spouse adds you to their health insurance plan so you can reap those benefits. Often, there is a short window (30 days) to do this, so make it a priority after getting back from your honeymoon. Another area where you can save is auto and home/renter’s insurance. There is often significant monthly savings when you are both on the same auto insurance policy. And while you are at it, you can bundle your auto and home/renter’s insurance policy to save even more! Talk to your insurance professional after you get married (or even before if you live together before marriage) to determine if you can save some money on your insurance. There are many other areas where you could combine to save, for example, combining your cell phone plans, Netflix accounts, Costco memberships, or Amazon Prime memberships, so take a look at your particular situation to eliminate any overlap you have in your expenses.
2) Plan to Pay Off Debt. A survey of 1,010 randomly sampled newlywed couples found that entering marriage with consumer debt has a negative impact on newlywed levels of marital quality. The study also found that the large majority (70%) of newlyweds in this study brought debt into their marriage relationship. So, does this mean you should wait until you have no consumer debt to get married? Of course not! But you should come up with a plan to pay off that debt together as soon as you get married. And once you have that plan, stick to it! I have seen the huge impact that debt has on couples and their relationship, and I’ll tell you this: the couples who pay off their consumer debt seem happier. So, come up with a debt repayment plan together after you get married, and then say goodbye to consumer debt for good!
3) Merge Your Finances. There is no right or wrong answer on whether to merge your finances after marriage or not – every couple is different (for more on this topic, read Merging Your Finances After Marriage). The key is to have an open and honest conversation about money and your financial goals so that you can then work together to achieve those goals. When it comes to merging finances, I usually suggest using a joint account as the central account for a couple, which means all the income flows into that account and then common expenses are paid out of that account (mortgage/rent, utilities, auto expenses, groceries, insurance, etc.). But also…
4) Separate Your Finances. So, once you have a joint account as the central account for income and expenses, then I like to create separate accounts for each person which gets funded every week, two weeks, month (whatever works best for the couple) with their allocated “allowance” that they can spend on whatever they want. This allows each person to have some “fun” money without having to consult with the other person. In my marriage, we do this, and it is nice to be able to buy a gift for my wife from my personal account… it feels more like a gift from me when I’m using my “own money” for that. Here, again, you should have open and honest communication about what is a fair amount for each person to receive as their “allowance.” In my household, my wife gets more every week than I do, but we both agreed on that amount. Side note: if you own a business, be sure to keep a separate “business” account for all your business income and expenses, and then transfer your “salary” to your joint account (more on that here: 4 Money Tips for Small Business Owners).
5) Start a Joint FUNd. Once you have done the first four things you must do after getting married, hopefully, you have some money left over for fun! I like the idea of a FUN Fund (or FUNd for short) as a short-term savings account for joint experiences. Research has found that people who spent money on experiences rather than material items were happier and felt the money was better spent. Use this account to save for joint experiences, special occasions, stay-cations, travel, etc. When you spend this money on yourselves, you can spend it “guilt-free” because you know this money is for FUN!
Getting married is such a joyful occasion, and hopefully following the 5 things you must do after getting married in this post will help continue that happiness deep into your marriage. If you know a couple who is about to get married or just got married and wants a personalized plan on how to do any of this, please have them contact us to schedule a consultation. These are my five financial tips for newlyweds. Do you have some other ones? If so, please let us know in the comments section below.
- Published in Love and Marriage
By Daniel Rodriguez | Dr. Budgets
Life is short. Recently, I have been in a reflective mood because that has become very apparent to me. I started thinking about my life and whether I was living it the way I truly intended. The Dr. Budgets tagline is Spend Wisely. Live Wealthy.™, so I started thinking about it in terms of spending my time wisely to live wealthy because time is finite, and you can run out of it at any moment. Dr. Budgets takes a lot of my time, and I asked myself “Is it time well spent? Why am I doing this?” After much reflection, it turns out that I have a true passion for what I do, so I dug a little deeper to figure out why. Why am I so passionate about what we do at Dr. Budgets? I could help people in a variety of ways, so why money coaching?
The story of why I am so passionate about what I do for others through Dr. Budgets starts with why I do it for myself. My parents were divorced when I was very young, so I never knew anything different than having divorced parents. From the time I started school, I would be with one parent during the week and the other during the weekends, and every so often it would switch, which meant I would then switch schools (1st grade with my dad, 2nd-4th grade with my mom, etc.). When I was 12 and heading into 7th grade, my dad ran into hard financial times… his business failed, so money became very tight. My mom wasn’t making very much either, but she made it work while she was attending school at UCSD. To make ends meet, my dad decided to move to Rosarito, Mexico, which meant that for 7th grade I was going to switch schools again, but now to a different country. We also moved to a very poor part of town, so the house we lived in had no hot water (bathing in the winter was torture), broken windows, and was bug infested. Luckily, we always had food, but sometimes it was rice, beans, and tortillas several days in a row. This transition was very hard for me as a 12-year-old boy, and I would look forward to going to my mom’s house on the weekends… a house with first world amenities, like hot showers! After I finished 7th grade, my dad moved to Tijuana, Mexico where I attended 8th and 9th grades. The place in Tijuana was in an even poorer neighborhood (we now lived in an RV on somebody else’s property and used an outhouse). Those were the hardest three years of my life, and I believe those years shaped the view I have of money and the world to this day.
I realized that the reason I choose to spend my money wisely is so that I never end up in the same financial predicament as my dad. Being free of debt and having money in the bank gives me comfort and the freedom to live how I choose to live, and it means that I (or my kids) never have to live the way I did for those three years. I carry that same passion for finances to my clients because I want them to have the freedom to choose how they want to live, and to never have to face the type of decision my dad had to make. I see so many people who are slaves to their jobs because they are living paycheck-to-paycheck. I want to change this so that they feel like they have a choice to be whom they want to be and do what they want to do.
Life is too short to live otherwise, so that is why I started Dr. Budgets.
That is why every person who transforms their habits because of the money coaching they receive equals a better life for them, and maybe also for their children. Which means their children will never go through what I went through.
So that is why I do what I do. Why do you do what you do? I would love to hear your story. Please share it with me in the comments section below! If you know someone who is ready to improve their spending habits, please have them contact us today. Thanks for reading!
- Published in Health and Wealth
By Daniel Rodriguez | Dr. Budgets
When it comes to budgeting, I don’t do budgets in the traditional sense. What I mean by that is that I don’t do budgets that feel like “I’m on a budget.” Budgets seem to have a bad reputation, and the way many people budget, rightfully so. January is the wonderful time of New Year’s Resolutions, and many people resolve to finally get their finances in order. They set out to pay off their debt, save some money, and put themselves in a position where money isn’t a source of stress and anxiety for them anymore. To do so they put themselves on a budget (what I like to call a “crash budget”), which ends up feeling very restrictive because they decide to not spend money in the areas that are important to them. They literally take the “fun” out of their budget. This is a recipe for failure, which is why I don’t do budgets.
The alternative to this is to create a healthy spending plan, which is different because you start with your goals and then set realistic parameters about where to spend your money. This allows you to balance out progress toward achieving your financial goals and spending money on what you enjoy. Instead of “being on a budget,” you use a spending plan that guides you and motivates you to gradually modify your behavior to the point where you are spending less than your income. That sounds simple, right? It is definitely simple, but not easy to implement, which is how I have been able to build a business around this concept. The amazing thing is, though, once you consistently spend less than you earn, magical things happen… debt starts to disappear, checking and savings account balances begin to increase, and the stress and anxiety you feel about money start to melt away!
The way most people budget usually doesn’t work for a sustainable period of time. A healthy spending plan when constructed properly and applied consistently over the years can create lasting healthy spending habits, which then naturally leads to the achievement of your financial goals.
John Maxwell said it best: “A budget is telling your money where to go instead of wondering where it went.” When you create a healthy spending plan (the budget I believe John Maxwell is referring to in his quote), then you are in control of your financial destiny. You consciously decide where your money will be spent rather than wondering what happened to all the money you earned over the years.
So that is why I don’t do budgets. Instead, I create healthy spending plans. This, in turn, allows me to transform my clients’ lives. If you know anybody who has a financial New Year’s Resolution, please have them contact us so they can finally achieve their goals this year. Happy New Year!
- Published in Spending Plan
By Daniel Rodriguez | Dr. Budgets
Many people probably find it overwhelming to bring some structure and planning to their personal spending. This is probably why only one in three Americans prepare a detailed household budget. This, in turn, is one of the reasons why people are still in debt. If you are a business owner, then this adds another layer of complexity, which is probably why so many small business owners are flying off the seat of their pants when it comes to their finances. When I work with small business owners at Dr. Budgets, there are four things I recommend they do when it comes to organizing their personal and business finances…
1) Separate Personal & Business. Keeping your personal and business finances separate is a critical first step. This starts with simply having a separate checking account for your business, and then using it exclusively for business. If you use a credit card for the business, then having a credit card dedicated exclusively for business expenses is a must (whether it is a business card or a personal card you only use for business). Also, even if you have a very simple business, you want to have both a personal AND business budget.
2) Track Your Spending. You want to track your business expenses using some sort of software. If you have a simple business without much activity, then you can probably get away with using a spreadsheet. As your business grows, consider using bookkeeping software such as QuickBooks. This is so important that clients of Dr. Budgets who are small business owners receive bookkeeping in QuickBooks as part of their coaching package. Also, track your personal expenses. If you have a record of those expenses available, your tax accountant may find that some of those expenses on the personal side can be written off on the business side.
3) Pay Yourself a Salary. Many people who own a small business don’t have a plan on how to pay themselves. As money comes into the business, that money usually is spent on both business and personal expenses. It is important to create some stability in your personal spending by paying yourself a consistent salary (as if you were working a job). Set a reasonable salary that will balance your personal budget, while ensuring that you don’t take too much money from the business. A fine balance has to be stuck here because if you pay yourself too much, your business runs out of money, but if you don’t pay yourself enough then you run out of money on the personal side. I spend a lot of time with my small business owner clients to come up with a salary figure that strikes that balance.
4) Save for Taxes. Many small business owners (especially new business owners) tend to forget to save for taxes. When you are an employee, it’s easy because taxes are taken out of your paycheck before you can spend the money. As a small business owner, you have to put some money away to prepare for the inevitable tax bill. If this habit is built at the very beginning, then it just becomes another “bill” that the business needs to pay every month (by transferring money to your business savings). Unfortunately, many small business owners don’t do this, and then when the inevitable tax bill arrives, they are shocked. Not saving enough money to pay your taxes is an easy way to get into debt as a small business owner, so you must plan for this by setting aside some of your business income every month.
Being a small business owner is a challenge even without factoring in the financial side of things. Doing the four items above can help mitigate some of the stress associated with running a small business. If you know a small business owner who prefers to have an expert look at their spending on the personal and business side, please have them contact us to schedule a consultation. These are only four tips for business owners. Do you have some other ones? If so, please let us know in the comments section below.
- Published in Organization Tips
By Jeannie & Daniel Rodriguez | Dr. Budgets
This month we wanted to write something from our perspective as brand new parents. Our daughter just turned three months old, and we couldn’t be happier (tired, but happy :-)). Since this is a money-focused blog, we want to share with you our 5 initial thoughts on having our first child as it pertains to money…
Plan Ahead. Before the pregnancy, we started to think about how to structure our health insurance and how much to put into our Flexible Spending Account (FSA). Timing obviously helps with this…we found out we were pregnant in September, and open enrollment was in November. We switched over to a lower deductible and lower out-of-pocket maximum health insurance plan and maxed out our FSA to take full advantage of what was offered through work.
Disability & Paid Family Leave. We live in California, which is very generous when it comes to maternity leave. Figuring out how to get disability and paid family leave benefits can be confusing though! There are no clear step-by-step instructions on how to obtain leave and it can be frustrating. For those who are eligible, you can receive up to four weeks paid short-term disability (State Disability Insurance or “SDI”) before the baby comes, and six weeks after (eight weeks if you had a cesarean section). The four weeks of pre-delivery leave can only be used before the baby arrives, so plan accordingly. Then, at the completion of SDI, you’re eligible for Paid Family Leave (PFL) to bond with your child. You can get six weeks PFL – and if your significant other pays into SDI with his/her job, then they’re eligible for six weeks paid bonding time too! Also, you don’t have to use the six weeks consecutively… you can use chunks of time up to a year after the baby’s birth day.
Something neat that we learned was that you can transfer your benefit amount from the Visa prepaid card to your bank account automatically! Since things tend to change often, your best bet is to Google instructions on how to do this. For us, receiving this money allowed us to spend just over three months with our newborn daughter, and that time with her and each other was priceless.
Discount on Hospital Bill. It takes a while for the hospital and insurance company to work out the bills on their end before you get a bill for what you owe. And, with everything going on with having a newborn at home, the bills might keep getting pushed to the bottom of the to-do list (below “keep baby alive” and “brush teeth”). If you don’t pay your bills right away, don’t be surprised if you get a call from the hospital billing department about payment. If you do hear from them, be honest about your situation. They might be in a position to offer 20% off your bill (which they did with us!) and/or set up a payment plan.
Amazon Prime. Amazon Prime was convenient before having a baby. If you are unexpectedly at the hospital three weeks before your baby is due, then Amazon Prime becomes a savior! If you are an Amazon Prime member and create a registry on Amazon, you get 15% off eligible items remaining on your registry. As labor began, we used the one-time 15% off discount to order the things we needed for the baby from the hospital room. When we arrived back home a few days later, we had a mountain of boxes waiting for us on our front porch! Also, with Amazon Prime you get free two-day shipping (and, sometimes, free ONE-day shipping), so we didn’t go crazy buying things we weren’t sure we would need before the baby came – we knew that if we needed an item, it was only a few clicks away. This saved us money by limiting what we bought before the baby arrived.
Cloth Diapers. We love cloth diapers! They are cute, cost effective, and eliminate a ton of diapers from ending up in a landfill. Yes, it is a little more work having to wash and dry them, but well worth it for us. We estimate the cost savings here to be minimal the first year (we had to purchase the diapers after all), but upwards of $400 for the second year, and potentially thousands for the future child(ren) we wish to have.
Those are our 5 initial thoughts on having our first child. If you know someone who is pregnant or just had a baby and wants some coaching on how to adjust their budget after this big life change, have them contact us or schedule a complimentary consultation. Happy parenting!
- Published in Family
By Daniel Rodriguez | Dr. Budgets
Do you feel you have so much debt that you will never pay it off? Do you want to travel more without feeling guilty about going deeper into debt to do it? Teresa* had been in debt most of her life and decided she no longer wanted to live with it. Here is the story of her journey…
I am a single woman and I have a son in college who I support. I have a good job and income, but I couldn’t figure out how to stay out of debt. There were times when I would pay it off, but I would quickly get myself back into debt. About 10 years ago I heard about Dave Ramsey, and I thought “this is what I have to do to pay off debt.” So I created my budget and tried to save the $1,000 for my starter emergency fund, but something always came up financially and I could never do it.
When I was deployed, I managed to pay off all my debt and then I bought a house. That’s when my debt snowballed! Closing costs were more than expected, and then everything after that just seemed like a drop in the bucket. My thinking was “what’s another $5,000?”, so I just kept spending.
Between school loans, two car loans, credit cards and a loan against my 401k, I owed over $40,000.
One day, I decided to seek out a financial advisor to help me. He told me he couldn’t help me until I had some money saved. Since I always owed money, I couldn’t work with a financial advisor to invest money and get ahead. I told him I needed somebody to hold me accountable for my spending, so he referred me to Dr. Budgets.
Deciding to Work with Dr. Budgets
When I retired from the military, it was scary not knowing what my next job would be. On top of that, I owed money which was really scary! I wanted to get out of debt for the security. Also, I learned from Dave Ramsey that I was paying interest on the debt that I would rather have in my savings, where it could earn me money.
I contacted Daniel and he described his services – it sounded exactly like what I needed. It was nice to have been referred to Dr. Budgets.
Working with Dr. Budgets
The first meeting was great. I couldn’t wait to get started! After that meeting, he reviewed my spending and came up with my budget, and then we met to discuss the spending plan. I had my little spreadsheet budget that I had created and I thought I’d get something similar from him, but his was so much better!
When I created my own budget, I had just guessed how much I was spending in each category… “this much on groceries” and “that much on my home,” but it wasn’t based on anything. When he actually looked at my spending, he said I needed to increase my grocery budget – I had no idea! He also added categories so it was a more accurate reflection of what I was spending. I loved that the budget was on track and I wasn’t having to readjust it every month because the numbers were now reflecting reality – Daniel was tracking it and reporting back. When I had created a budget before, I set an amount I thought was correct for each category and then I’d adjust it as I overspent. I learned from Dr. Budgets that is not how budgets work!
My favorite thing was the Goal Tracker! Although, at first it was depressing because the first month the debt number just goes down a little. But as I was putting more toward my debt, it started getting exciting and I looked forward to seeing it; I’d print it out every month and put it up at work where only I could see it.
The two biggest things I got from working with Dr. Budgets were the accountability and the advice. It was a tremendous comfort having somebody review and discuss my spending with me. I was able to use him as a “scapegoat” a few times because I like to consult him before any major purchase. This ended up saving me big when a roofing salesman came to my door once and told me I needed a new roof. He was very high-pressure, but I told him that I had to talk to my budget guy. I had to say it over and over! When I talked to Daniel about it, he encouraged me to look into the firm and it turned out they were not very reputable. They were so high pressure, if I didn’t have Dr. Budgets as an excuse, I might have signed up and that would have probably been a big mistake!
It was hard sometimes to stick with my budget. My friends would tell me I deserved to buy nice things, but I told myself I deserved to be debt free.
I was able to pay off the $40,000 in less than two years! I also took a trip to Japan and it was my first “debt free” trip. In the past, I would charge the airfare and the hotel on my credit card, but this time, it was all paid for.
I recently got into a car accident and realized that before Dr. Budgets something like that would have been a crisis for me. This time, I had money to pay the deductible, so it wasn’t a big deal. Also, I believe a new car payment would have triggered a spending spree for me because my attitude before was always “what’s a few more thousand dollars?” – I know I would have bought new furniture.
And I succeeded in another way: I’m thinking about money totally differently now. As we worked together, something would come up and I would approach Daniel with the solution. Coming up with a solution to a money problem on my own was something I would have never done before – I would just spend, spend, spend. Working with Daniel has inspired me to make my own big financial decisions in a way that doesn’t put me in debt again.
What would you tell someone in a similar situation to yours about Dr. Budgets?
I would tell them that working with a money coach is probably nothing like they imagine it would be. Daniel was so helpful and he worked with me. Some people say they don’t want to be restricted by having a money coach, but I want to say “you’re already restricted!” I don’t feel deprived because I know the money will be there to buy the things I want soon.
I know people who would benefit from working with a money coach, but they say they don’t want to spend the money to get out of debt because they’d rather spend the money on buying something – I want to tell them that’s backward!
Lastly, I’d tell people that my dogs never suffered 🙂 That’s to say, Daniel didn’t come in and say I had to stop doggy day care or spoiling my dogs. He made it work by helping me identify my priorities, which simply meant I spent a little less in other categories. I paid off my debt and built up my savings – and my dogs got to keep up their lifestyle!
Watching someone pay off over $40,000 in debt in less than two years is inspirational to me, and I hope it is to you too…especially if you are in debt and feel you will never get out of it. Thank you for sharing your success story with our readers, Teresa! If Teresa has inspired you to get out of debt and you need some guidance, please contact us or schedule your complimentary consultation.
*For client confidentiality, we changed the name of the person to “Teresa.” Everything else is factual.
- Published in Success Stories
By Daniel Rodriguez | Dr. Budgets
Debt can help you fulfill your dreams and move you forward in achieving your financial goals. Debt can also turn into your worst nightmare if you aren’t careful. So how do you use debt, rather than letting debt abuse you?
Step one is to get yourself out of credit card debt. If you are in credit card debt, then you need to figure out why you are still in debt, then take the necessary steps to pay it off. You can use a debt payoff calculator (like this one from The Simple Dollar) to get you going.
Step two is to stay out of credit card debt. It can be easy to use debt in a way that does not support your financial goals. Using a credit card to buy the latest gadget, that new pair of shoes, or to take that vacation when you don’t have the money can have harsh long-term financial consequences… this is when the Rule of 72 can work against you! Unfortunately, poor spending habits can be hard to break. As your income increases, you develop more expensive tastes, and your credit card balance continues to rise. It is a cycle that, sadly, isn’t broken by many people. Don’t be a part of those statistics!
So once you are out of credit card debt and are able to stay out of credit card debt, then there are many ways you can use debt to further your financial goals. You could use debt to purchase a property, purchase a car (be reasonable here!) so you can commute to work, or invest in your business. My wife and I have a low-interest rate mortgage that allows us to live in a place we love while keeping our monthly payment relatively low and stable.
Debt can also be used properly for short-term use, such as taking advantage of rewards or cash-back credit cards. The key is to use them wisely and pay them off every month to avoid interest charges. My wife and I use the American Express Blue Cash Preferred credit card for all of our grocery store purchases to receive 6% cash back… and we avoid paying interest by having it set up on automatic payment to pay the full statement balance every month. This way we earn the $360 annual maximum cash-back reward without ever paying a cent in interest! We also use the Target REDcard to receive 5% off at Target and free shipping at Target.com, and the Amazon Store Card to receive 5% off at Amazon.com, which in essence pays for our Amazon Prime membership.
There are definitely ways to work the system and use debt to your advantage. Carrying a credit card balance is not one of them, which is why that is step one. So, if you are still in credit card debt, bookmark this post and come back to it when you are out of credit card debt. If you are ready to get out of debt so you can start using debt to your advantage, contact us or schedule your complimentary consultation today to get started!
- Published in Debt
By Daniel Rodriguez | Dr. Budgets
You have a balance on your credit cards and you have decided to pay them off in two years. That’s great! So you simply take your total balance and divide it by 24 to find out what you should pay each month… then, two years later, you’re out of debt, right? If only it were that easy!
Paying off debt isn’t just about figuring out the numbers. There are a lot of emotional considerations involved that may make it hard to pay off debt, which might explain why the average American household carries $15,762 in credit card debt.
Here are the 5 reasons why you are still in debt…
Lack of Motivation. Maybe you tell yourself you want to get out of debt every year, but at the end of the year you have the same amount (or more) debt than you did when the year began. You have a desire to pay off your debt, but your actions are painting a different picture… your desire to purchase what you can’t afford is stronger than your desire to pay off your debt. The reason why you are still in debt is because your goal to pay off your debt isn’t strong enough (or at least not stronger than your desire to swipe your credit card).
Lack of Knowledge. Maybe your goal to pay off your debt is strong, but you just don’t know how to start paying it off. Do you pay off the credit card with the highest interest rate or the one with the lowest balance? Do you do a balance transfer to a 0% credit card? Do you continue to use your credit cards while you are paying them off or do you cut them all up? You can pay your debt in a variety of ways, but if you don’t start somewhere it won’t pay itself off! My recommendation is you start by putting your credit cards away and stop using them until you are completely out of credit card debt. Once you put your cards away, you can then decide whether to pay off the highest interest rate or the lowest balance card first. If you haven’t started because you feel you don’t have enough knowledge, then this is probably the reason why you are still in debt.
No Budget. You can have the motivation and a plan for how to pay off your debt, but without a realistic budget (healthy spending plan) your progress will be limited. If you don’t know where your money is currently being spent and you don’t have a plan for how to spend it, then you can easily miss opportunities to make a significant dent in your debt balance. So, figure out how you are currently spending your money using a spending tracker like Mint.com, then develop a budget so you can allocate as much as possible toward your debt repayment goal. If you don’t have a budget, that could be the reason why you are still in debt.
Financial Emergency or “Financial Emergency.” Sometimes true financial emergencies happen… unexpected hospitalization, major auto repairs, or having to take a last minute trip to attend a funeral. Most of the time, though, they are probably only a “financial emergency.” Needing new tires or routine maintenance on your car is not a true emergency. Having to pay your car registration is not an emergency. Your annual insurance bill is not an emergency. Taking that last minute trip with your friends is not an emergency. I could go on and on, but the point is that all of these so-called “financial emergencies” are all things you can plan for in your annual budget. If you find yourself constantly encountering “financial emergencies,” that may be the reason why you are still in debt.
No Accountability. So, you have the motivation, knowledge, and a budget that factors in “financial emergencies,” but you are still not making much progress toward paying off your debt? The biggest reason could be a lack of accountability. When you have someone hold you accountable to your goals, something magical often happens… you start achieving those goals! Accountability is often the missing ingredient to achieving your goals because with accountability you have someone to report to about your progress. And it is much more enjoyable to tell that person you are on track with your goals, rather than having the conversation that you are failing miserably. So, have someone hold you accountable, whether it is your spouse, a friend, or a Dr. Budgets money coach. If you find that you have done everything, but you are still in debt, then the lack of accountability is probably the reason why you are still in debt.
- Published in Debt