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This week, we asked you to send us your biggest financial conundrums — and a CFP (Certified Financial Planner) answered! Chelsea sits down to talk with CFP Brittney Castro all about how to make good money moves even when you're on a low income, from working out your emergency budget to what to do with the money you can afford to save.

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Hello, everyone.

And welcome back to another episode of The Financial Confessions with someone you have seen before. Very excited to have back in our Los Angeles studio Ms.

Britteny Castro. Yes, I'm excited. Woo, me too.

Last filming of the day, we should note, but high, high energy, high spirits in here because you guys have sent us a truly chaotic number of questions. You guys had a lot to ask her. We cannot get to them all.

But we will do as many as we can. But before we get to your questions, for those who may not know, tell us a little bit about yourself. Yeah, great.

I'm a certified financial planner, founder and CEO of Financially Wise Inc, which is a financial planning company based here in Los Angeles. And I'm also the in-house CFP for Mint and Turbo. Ooh, tell us about-- what are Mint and Turbo?

I've never heard of those. Mint and Turbo-- so Mint is a financial budgeting app. It's a great way to track your spending, link your accounts.

There's new goal setting feature, which helps you set financial goals and see the progress towards those goals. And then Turbo is another app that you can use to get a bigger picture overview of your personal financial landscape, learn more about things-- how to improve your credit and a little bit more of like the net worth. So both great to help you manage your money.

And leveraging technology is always smart because we're all pressed for time these days. The more apps that help us, the better. Very true.

I myself have been using Mint for seven years now. So yeah, I'm probably-- Happy anniversary, Mint anniversary. Thanks.

I'm probably like the first-- how long has Mint been around? Do you know? I actually don't know that question-- [INTERPOSING VOICES] I'll give you the answer.

And then you ask that gain. Producer Ryan, jump in. Mint was founded in 2006, acquired by Intuit in 2009.

Wow, so that's like the oldest app in the world. That's so long ago for app life. Like, that is a really long time.

That's a long time. That's 14 years now. Woo.

That's when I graduated high school. So yeah. Although, let the record show I skipped a grade.

I'm slightly younger than that makes me sound. All right. So as I said, we asked you guys on Instagram to send in your questions for Brittney.

And we wanted to find a theme this time that's a little bit more nuanced than just money questions. So these are money questions that are specifically applicable to people who are on a tight budget. Ah, got it.

Because one thing that we often hear on TFC is that-- I mean, we have a lot of people who come on the show who have a fair amount of financial privilege. And a lot of the advice can tend to apply towards people who are a little further along on their financial journey. So we want to talk to the people who are just starting it out, making it work, et cetera.

So I'm going to get right into them, dive in. I really loved this one because it uses numbers. How do you get out of debt when you only make $1,600 a month and your bills are $1,300?

Wow, OK. I love the details. Here, I would just say, well, out of the $300, what does the debt look like?

Make a list of each debt you have-- the balance, the interest rate, the minimum payment. And then come up with the schedule of maybe allocating another $100 toward the debt with the highest interest rate first, while paying the minimums on the rest. That's the best way to pay off debt in terms of saving you the most interest long term.

And then I would also suggest that you consider saving some of that money, whether it's $200 or-- this is the art of money-- and building a cash cushion because, I think, a lot of times people forget to build savings and have that emergency fund there, which is usually like three or six months of your expenses so that if something does come up, you don't fall right back on the debt instrument that you worked so hard to pay off. So if debt's a focus for you, then find a balance of paying down debt using some of the money for that, and then also putting some away for your emergency fund, or what I call a cash cushion. Yeah, that's so true.

I find it-- it's funny. I would also say, for what it's worth, to this person who's earning $1,600 a month-- we don't know a lot about their situation and there could be constraints. But if at all possible to find an additional stream of income, even $100 a month extra to put toward that emergency fund if you don't have it because you really don't think you'll need it until you need it.

And then if you don't have it, that is the kind of thing that can derail your entire life. How can I rent and save for a house at the same time while on a low income? I love these very detailed questions.

Well, it really depends what the situation is, how much of a down payment you want to save. Look at your budget, number one. So using apps that help you review your spending is very key.

I mean, Mint has a great budgeting app. But I think it's really important to figure out, OK, if you're paying x amount of dollars for rent, how much more can you save right now? And what is the priority of the home goal in relation to other savings?

Because if you need to still build your cash cushion, or if you have debt, or maybe retirement is a focus, you need to put a game plan of, OK, first we need to take care of building a cushion and maybe eliminating debt. And then you can get more aggressive with home savings. I mean, it really is the art of money management, figuring out the priority of financial goals.

And then put some sort of goal to the home down payment, like do your homework, crunch some numbers. What is the amount that you want to save? How realistic is it for you to save that amount?

Down payments could be $100,000, $50,000. So it's usually not an overnight goal. It might take three to five to seven years, sometimes even longer to build that up.

So really, look at it realistically, and then determine every month how you can set aside money. And I think the number one thing is make your savings automatic. Whatever goal it is, just make it automatic.

Have a home savings account automatically save. Even if you can't save the full amount, start with something-- maybe $100 every month into that, and then review. And like you were saying earlier, find ways to increase income so you can save more.

I think it's always nice, too, when you have really clear goals because once you see the numbers, usually you can be-- well, I don't know. For me anyway, I'm more motivated to like, oh, now I know how much I've got to save. So let me go figure out how to do that-- either cut back on expenses or make more money so I can save to reach this goal that is now important to me.

So I think the more clarity you have, the better. I totally agree. And I will say for what it's worth, my husband and I are not even particularly interested in buying a home anytime soon.

But we still do everything we can to minimize our rent relative to our income because there is so much better stuff that that money could be doing. And it is so easy to let living costs creep up. And we made a very active decision that we were going to keep our rent as stable as possible year after year because yes, of course, you can make some superficial upgrades.

But whether you're saving for a home or putting that money in the market or in your retirement, whatever you're doing with it, there's a lot more work your money can be doing than just paying for a slightly better rent. I think that's key, too. And you have to ask yourself, what is priority for you?

Because everybody's a little different. In cities like New York and LA, rent is expensive. And there's basically no limit to how you pay.

There is no limit. There is rent here in LA that's the same as mortgage I've seen. So if that's your cup of tea, great.

If you're willing to pay more per month for rent so you can have a nice place with all the amenities, but it means you're going to take longer to save for the down payment or get the home, go for it. Or maybe it's vice versa. Staying in a more rent controlled area or lower rent area or knowing-- Or roommates.

Roommates, knowing that you're out able to save more for home, and then eventually get in the home and have that piece of property. Absolutely. And you have to really decide-- because it's not totally true.

People will say, well, renting is just throwing that money away. It's not true. It's not true.

You have to live somewhere. And the home that you live in is a huge part of your quality of life and your day-to-day experience. But you have to be really honest with yourself about what's the difference between the home that I need to live out a good life, and be productive, and enjoy myself, and have good mental health and what's just superfluous extras that you don't really need because if you're not-- if it's not a mortgage, if you're not building equity in that home, those extras aren't bringing you back anything long term.

They're just little extra things. Like, I will probably die in New York City without ever having a washer dryer in my unit. But I can live with that.

I can go downstairs to the laundry room. That's a trade-off. What percentage of income should go to each expense category?

I love it. General rule of thumb is 50-20-30. So if you have a net income per month, which is after deductions after taxes, 50% is for fixed bills-- rent, mortgage, utilities, health insurance, the things you need to pay. 20% is the goal to save for all the goals.

So this would include debt reduction, building your emergency fund, home down payment fund, retirement. So based on your age, life stage, priority of these goals, that's the art of money, figuring out how do you split that 20% across these various things. And usually, I always tell people it's best to have a focus of like three goals max at one time because more than that-- I mean, you can do it.

I don't want to discourage. But sometimes, it's too complicating. And it overwhelms people.

So I think having per year the three that you're going to really focus on is key. And then the rest, 30%, I like to say is all the fun money, so variable. So whatever you want to use that on, it's up to you.

I think you should use it on things that bring you joy and happiness. Don't just waste money. Really be clear, you've got 30% to use for food, travel, whatever is important to you.

For me, health and well-being is important. So I'm willing to spend more on self care, on meditation retreats, on things that grow me as a person. So if you look at my spending, you would see a lot of my variable is there versus maybe other people really want to buy nice things, or want to travel more.

It's all up to you. Food. Food, yeah, like if you're a foodie.

So I eat good food. But I mainly grocery shop if I'm going to do that. So it just depends.

But 50-20-30 is a starting point. And then you've got look at the numbers and see where do you fall. If you're spending more like 60%-70% on fixed variable-- or fixed expenses, then OK.

That's OK. But ask yourself, how can you start to work these numbers so you can save the amount that you need. And don't get discouraged.

Most people can only really save 1% to 5% in the beginning. But the idea is just to start saving something, and then work on increasing income, or reallocating expenses so more and more, year after year you can save closer to that 20% amount. Ooh, this is a really good one.

Should I use my emergency fund to pay off credit card debt? Or should I keep paying interest? Good question.

A dilemma if I've ever heard one. It's a common one. Honestly, it really depends.

What is the debt? How much do you owe? What's the interest rate?

And then what is your emergency fund status? Is it zero? Do you have something there?

Because if you deplete your entire emergency fund to pay off debt, it's not very smart. You want to make sure you have some money left over because that's what it's for. If there's an emergency or unexpected event, you don't want to then have to use a credit card.

So ask yourself, how much do you want in the emergency fund? Typically, we encourage people to have three to six months of their core expenses. We often will say three because six can be especially-- if you're on a tight budget, six can be a lot.

A little daunting. And I mean, I don't even like-- I don't even want to particularly keep six months just in cash. I feel like above three, I like to put it elsewhere, personally.

No, I think it's good. I think it's good. And that's the question to ask yourself because some people have a more volatile career, or they have kids, and they might feel more comfortable having a little bit more.

But it is usually a goal that you have to work toward. It may take a year or two to actually build it. So keep that in mind.

But yeah, I think with the debt, you just don't want to take all your cash and pay it off. So you just want to make sure you have enough left over. Yeah.

I mean, I feel like this might be a bit of a spicy take. But I feel like I wouldn't do it. I would not take my emergency fund to pay off that interest.

I would challenge myself to have a separate stream of income just for paying down that credit card debt, if possible. And I feel like, for most people, if you really push yourself for a couple months, you probably could find that additional source of income just because I feel like the snowball that you can get yourself into if you already have credit card debt that's weighing on you if you don't have an emergency fund, and then would have to put those emergency purchases on a credit card, you could get yourself into such a nightmare scenario. But that's just me.

I'm very into the emergency fund. I am, too. And I think it is so tempting for most people to take it all and pay off the debt.

And then they just fall right back into the cycle. And that's the hardest part about debt, is like getting out of that cycle. So yeah, I think you're right.

Keeping cash is always good. Some of these questions are so hilarious. Oh, I'm excited.

What investment or savings options are there for only having an extra $5 to $20 a month? Wow. Well, savings accounts are available for anybody.

So it doesn't usually matter how much you can set aside. So I think before we even answer that question, you have to answer, what are your goals? Because if you don't have that emergency fund, that might be a goal that you need to start with.

So then the $5 to $10 a month should go into some sort of high yield savings account. Figure out how much you want, the timeframe to build it, and just set up the system so it's automatically saving into that account. And if you have it already-- maybe your cushion's already full, you have the three months that you want-- then you can invest the money.

Most investment accounts you can open up with no initial amount. But usually when you decide to invest the money into some sort of mutual fund, or ETF, or portfolio, you need a minimum for that. So it might mean you accumulate until you get to that minimum, whether it's $1,000 or $3,000.

But at least start the system, get the money in there. I think that's great. There are also-- sorry, I was just going to say there are also lots of-- there are apps and things that are geared toward investing very small amounts that are more accessible.

Yeah, like a lot of the robo apps. And then Mint, on the budget app, they also have this new goal setting feature, which is really nice because you can set a goal. Like, say you want to build your emergency fund.

And you want to build it in three years. And it'll calculate-- I've used it. How much you need to put aside every month in order to reach the goal.

And let's say it shows $100. Well, you can only save $10. Start with $10.

That's still better than nothing. And again, the idea is then you could track your progress in the app. It's really cool to see, OK, you're accumulating money in this outside savings account for emergencies.

And then every time you can, whether you get more income, increase it because I think if you do things automatically, it takes the thinking out of it and the emotions out, which is so important with money. Take your emotions out as much as possible and just set up systems. I totally agree.

I would also say, for what it's worth-- so I know I'm pushing the side stream of income. But at those amounts, not only is it very important, if the goal is to add-- if you want to double it and have another $20 a month to go toward a goal, that's relatively easy to do. And we have a video about the 12 best side jobs you can do from bed.

You want to leave your house to do a lot of these side jobs. And whatever it may be that you can find and however-- even if you have only three extra hours a month to throw at something, at that margin, you're talking about doubling your savings. So I would challenge yourself to do that and challenge yourself to see where you can cut costs as well because I think that most of us, if we're honest with ourselves-- and not all-- to be fair, I'm sure that some people are at a place where every single dollar is accounted for.

But I would say for most people, even myself when I was earning almost no money, there were still things I was spending on that I could have gone without, or didn't really need. Yeah, I think there is a lot of waste that happens when there's not enough clarity with the budgeting, with the planning. It's very easy to waste money on who knows what.

Parking, fees, subscriptions you don't use. You're not planning ahead, so you're taking Uber too much. Even not shopping smart, not using coupons.

Eating out too much. Not following sales. Not thinking through things.

I mean, there's so much. Money is easy to spend. Very true.

I think that's the reality. We live in a world that's easy to spend money in. And I'm with you.

I always like to focus on the income side because it's unlimited. And to me, that's more inspiring and more motivating. Like, oh, OK, well, if I just made another $500 per month, then I could save, then I could reach my goal.

That's exciting versus cut back $500. You're like, oh, I already feel like I'm tight with my money. I don't like when there's a tight energy with money.

I like to keep it open, abundant. There's a limitless mindset when it comes to money. But it's hard to do that, to push yourself to earn more, or to have more income if you don't have specific goals you're reaching for.

I 100% agree, which I think is why financial planning is so key because if you're literally-- also too, let's say it's a fun goal of travel and you want to travel-- I don't know-- Miami this year. And it's going to cost you $2,000 to take a summer vacation to Miami. Now, you know what the number is.

Now, your figure out, OK, how many months do you have to save for it? How much is it going to cost to save? Well, to me, that's a motivating goal because you want to go on this vacation.

You're going to probably work and find ways to be creative to make money for yourself that maybe you weren't open to before. But I think when you tap into the creativity and open your mind of what's possible, the opportunities actually are there. Most of the time, we're just closed and narrow focused.

We don't see them. So when I think of like the income side, I think like, oh, let me open up to what's possible. Maybe I can make more.

Maybe I can increase my rates. Maybe I can ask for a raise at work. Even though those things might seem scary, it's so cool when you actually do it and overcome.

And then you're like, oh, I can do it. And once you do it once, it really builds a momentum to keep doing it. I agree.

And I think if you're somebody who's not had a lot of experience saving or has a hard time doing it mentally, I highly recommend finding-- whether it's the first thing you do or you do it in tandem with your other savings goals, find something fun that you really want to save for because it teaches you the feeling of saving. And it teaches you the act of saving. And it teaches you how to enjoy the feeling of saying no to things so that you can say yes to something you're even more excited about, which is a skill everyone has to learn.

I know. And it's delayed gratification. We've got to bring it back.

We do. Delayed gratification-- because it does, it feels so good to work for something and get it. And then you have it.

And you're like, yeah, I earned it. I worked for this. Whatever it is, I was just thinking of a new furniture piece I just recently bought.

And I was like, yeah, it feels so good. I enjoy it because I didn't impulse buy it. You worked for it.

I took a few months and thought about it and prepped for it. And then I purchased. And I was like, oh yeah, it is nice, that delayed gratification.

It is. It's very rare that you make a impulsive purchase that you don't end up regretting on some level, especially because half the time you just could have gotten it for a better price if you'd taken your time. Better price, yeah.

What is the best way to identify unnecessary expenditures? Show me, I'll tell you. My colleague had an excellent tip for this, which was go through your bank statement, credit card statement, checking, whatever once a month.

And every month, you have to highlight everything you don't remember buying. Oh, that's so good. Because then you know that wasn't worth it because you can't even remember buying.

That is so good. And also, just use a budget. And once a month review and say-- look at it almost from an unbiased objective point of view, remove yourself, and ask yourself, whoa, did you really spend that much on food?

Or maybe you saw fees or whatever it was. You can get really clear on unnecessary spending when you remove yourself from the scenario. And not to shout it out, but one thing that Mint does that really helped me, especially when I was first getting on a budget, is they send you text messages if you're going way over your target spending in a category.

It is so helpful. And it is like-- I have literally been-- because my category that I always go over is restaurants and dining and that kind of thing. And so I've literally been in situations where I'm at a restaurant actively.

And I get a text message on my phone that's like, you're away over in your food and dining budget this month. And I'm like, wow, you're probably right. I should probably not get entree, appetizer, and dessert.

I should probably reel it in because I think it's so easy in the moment to feel like-- when you want something in the moment, it feels like a need. It feels like a necessity. And only when you force yourself to pull yourself out of that are you capable of being like, I could probably live without that.

It's so true. And it's also good to have that balance. Go enjoy the restaurant, but maybe not every night.

Right, right. And that also then keeps it spicy and exciting. Yeah, it should feel like a treat.

So then you don't get bored because if you're eating out every night, then it could also get boring. So yeah, but having those reviews however often-- weekly, monthly-- are key because you can really stay in the know with your money and your spending versus let a whole year go by and like, where did all the money go? And there was a lot of waste.

Try to pay attention to things that are happening month by month and, then course correct. That's how I like to do it. I also recommend once a year doing a price check on the things that you pay for regularly, and particularly if it's something like, for example, your phone, internet, all that provider.

Those people are in competition with each other. And they want your business. So it is a good time once a year to do a shakedown and make sure that you cannot get a better deal elsewhere, or even get a better deal at your provider because otherwise you'll go elsewhere.

You should be holding all of your people that you buy from hostage. They should be giving you the best deal, or they don't get your business. And it's really easy to get locked into a price for something and feel like that's the price forever.

But it's not. Yeah, it's very true. Auto insurance is another one.

Sometimes-- If you've got a great record. Yeah, great record, shop it. Just think of so many things you could do.

That is so great. Once a year, review. Or even if you have-- let's say you have-- I don't know-- beauty products that you regularly buy.

You could maybe get those products at a better price elsewhere, or if you used a loyalty program, or if you shopped at the actual brand rather than at a third party store. You should never take for granted that the price you pay for something is the best price out there. Yeah.

And there's so many cool things these days, like the cute coupon app that hovers over my browser. Honey is really good. Honey is so amazing.

Also, Retail Me Not-- I don't buy anything online without running it through Retail Me Not. I always look for a coupon. And I used to hate looking for coupons because when I was growing up, my mom-- I actually loved it.

My mom would have the Sunday ad coupons. And that was my favorite thing to do with her. And she would use the coupons at the grocery store.

But now, you would never do that because we have the apps and whatever. Everything's like so different. But something about the Honey and these other apps or sites online that will allow you off on the coupon, I love it.

I love doing that because you can usually always find one. You almost always can. For every purchase.

And you can often use them together. And any coupon-- I think with most stores-- I don't know if all-- but most stores, if you find a coupon online, they will honor it in the store. Yeah.

Or if you sign up to the email list, you'll get the initial 30% off. OK. That doesn't require you opening up a credit card at the store, which I think is the dumbest thing.

Yeah, never do that. But if you just sign up for the email list and unsubscribe later, you get 30% off of your initial purchase. Do those.

The only card that we-- the only score card that we actually use, and it's worth it, is Macy's because Macy's in New York has everything. And we make a lot of our big-- our winter coats and any big thing like that in that genre, we will buy at Macy's. But the Macy's card, I think it's always 10% off [? with your Macy's. ?] It's a lot of discounts.

But let's be clear. I would only ever get a store card at a place where I'm making regular big ticket purchases and the discounts have a meaningful impact on my budget. And you're responsible.

You're on top of it, responsible. I'm a very responsible person. So you will never let the thing slide.

But even being a responsible credit card user, I love J. Crew. Every time they're like, do you want to J.

Crew card? I'm like, no, I don't. No, I don't because I don't need a bunch more J.

Crew. No thank you, magic words. This is a philosophical question, less so a financial one.

Should birthdays slash unexpected slash gifted money go straight to savings and goals? Or should it be for fun slash splurge? So my rule of thumb with any unexpected money, whether it's a refund, inheritance, gift money, take it and divide it either into two or three.

So one third, if you're going to do the third, could be used for savings for goals. It could go to your cash cushion goal, your home down payment goal. You could invest it for retirement.

A third you can use for any debt that you might carry, to pay off some high interest debt. And then a third, yeah, go enjoy it, splurge-- buy yourself something nice, use it toward a weekend getaway, something you really feel you've been wanting. And that third approach I find is usually nice because you feel good like, oh, I'm putting some away for my future or using it for debt.

And you get to enjoy some of it today. And I think the balance act of money is so key, especially our generation, the world we live in. We can't have all our money go to the future.

And you can't just go YOLO and spend it all now either. You really have to find this optimal balance between the two. And I think either two or three is always a good way.

I like that. That's true. And plus, I mean, listen, the ultimate reward is that when you spend the fun money, you get to feel totally good about it.

Feel guilt-free. And that is the whole point of putting some away for the future or using it for one of your goals because then you could just really enjoy it fully without the guilt. There are moments when you're spending on fun stuff where even in the moment you feel a little gross.

You're like, this is too much. I shouldn't be doing this. If that feeling comes up, I really think it's because something is-- you're avoiding something.

You're avoiding saving or not looking at your budget because a lot of-- or maybe it's just up a concept you have to ditch, like that you can't enjoy money because I do work with a lot of people who have the savings, who are making good money. And they still feel guilty when they spend money. And one of the things I say is, no, go enjoy it, spend-- I almost have to give them permission because there is this sometimes a money personality of just allowing you to have that fun and enjoyment with your money is a learning, too, for some people.

So it's a balance. I mean, but if you're completely avoiding and not looking at anything financial related, or you know it's a little outside of your range that you told yourself you'd spend on then, yeah, you might feel the guilt. Don't want that guilt.

No, guilt is no good. It robs you of the joy that this purchase should ideally be bringing. What is a good way to improve one's credit score if you can't get approved for a lot of credit?

Oh. Well, paying your bills on time is a good way to improve your score because that is a huge part of your credit score calculation. And what bill's count in that?

Any credit debt that you have now. So credit card debt, maybe you have a mortgage loan or a personal loan, student loan, car loan. All of these would be considered part of your credit history.

And those go into your credit score calculation. So paying those things on time is very key. Also, paying down debt-- so credit utilization is huge.

If you keep it 30% or under, that's considered good. That doesn't mean you need to carry a balance. If you can pay off the whole thing, pay it off.

That's the best approach. I think a lot of people sometimes think keeping a balance on their credit card is actually helping them. It's not.

And apps like Turbo are great because you can monitor your different credit accounts, and then learn debt to income ratios. You can learn different things that go into your credit score. You can even see if there's any better options for credit card debt or loans at a lower interest rate.

So you can obviously save money by not paying so much in interest. So there's many things that are available to you, which is nice. But yeah, I think just understanding the main factors of a credit score are so important because a lot of people worry about small things with their credit score.

Like, am I going to get an inquiry if they look at this? I'm like, well, in reality, that shouldn't knock your score that much, maybe a few points. You should focus on just paying the debt on time and keeping the utilization low because that's a majority of the credit score calculation.

So focus on the things that impact it more than these little things that keep people up at night. I just don't think it's smart. And actually, fun fact-- if you have no access to credit-- like, let's say you have a terrible credit score like I used to have-- one thing that is available that can help you start to get on that good payment plan, even if you can't get access to a line of credit, is a lot of banks offer-- well, I always call them rehab credit cards.

But basically, they're a credit card where you prepay it as if it were a debit card. But the bank treats it like a credit card. So it goes toward your credit history.

I think mine was like $500. And I had to pay the bank $500 when I got my limit. And they just held that $500 collateral.

But I used it as a credit card. So it's no risk for the bank, obviously. But it is reported by the bank to the credit bureaus as a credit card.

So it's a great way to open that up to yourself. And I think they start as low as like $250. Discover has one for $200 that you can just start building that credit even if you don't-- because I remember when I had like a 460 credit score.

There was nothing worse than that feeling of you knew that they would not give you a dime. They were never getting loan-- nothing could be on credit. And you could feel like your hands were totally tied.

And that card really turned my life around and a lot of ways because it started-- it allowed me to start building something positive, which was great. And it usually doesn't take that much time, getting a secured card like you're talking about. Yeah, like 20 minutes.

Yeah, it doesn't take that much time to get it and even to build that-- usually a year, you can go back after a year of using it and say, now can I get a real credit card, a bigger limit? It's really not as long as people think. But the secured credit card option is really big now even for teens just starting now because credit debt is not what it used to be.

I mean, it's still available. But before, it was like you can get unlimited. And now, it's a little bit more tight.

Totally. But yeah, it's always an option. Yeah.

And I think my score jumped like 100 points in a year, like some crazy amount. Yeah, it doesn't take that long. It does not.

Recently, I had-- can I tell you my credit nightmare recently? Yes. So I'm obsessed with my credit score.

It's all I care about. It's all I think about. Like literally, because it was so bad and because I still have things on my credit report that happened years and years and years ago that are still not off.

So even though my history for years has been perfect and I have really great indices and all the different metrics, I'm still only like just a hair over 750, which is when you get into the excellent territory. But it's not what I want it to be. But I'm vigilant about it, especially because I'm on the cusp of good and excellent.

And I have this-- it's actually my-- I don't think it's my rehab. It's the first line of actual credit that I got after my secured card, which was like a $300 credit limit from my bank at the time that I never use. I only keep it open because it's my longest credit history, which is very important.

Which is good. It keeps it open by-- it extends it by like a year and a half. So I can't close it.

But I always forget that it has a $25 annual fee. And it came and went on my card. I didn't pay it.

I got a report from that bank that I was late on a payment. And my credit score dropped, I think, it was 26 points in a matter of days because of that, because all of the sudden, I had a not perfect payment history. And I, that night, spent like an hour and a half on the phone with that bank, crying, literally crying.

And the woman was so nice. And she was like, I'll take this off right now. And we'll get it reported out to the bureaus.

And your score should be back where it was in a week and a half. And it was. Amazing.

The power of a phone call. The power of crying. It's a lost art.

No, I swear to God. No, but it's totally-- a lot of people don't know that that's possible. I think so, too.

I love that you shared that story because literally I think of the phone call as a lost art. Pick up the phone and explain the situation. Or go in person.

Go in person, if you can, because usually you can handle it and figure out a solution. And it's more workable than we think, even credit card companies, even the IRS, even insurance companies. I mean, I think that's one of the biggest things you have to realize when it comes to money and finance.

Yeah, there are a lot of rules, a lot of no's. But if you hang in there, make the call, go the extra step, show up in person, explain your situation and talk to somebody who can be that decision maker for you, Chances Are you might get what you want. Totally.

And as someone who has to do all the-- well, actually until this year-- but I, for many years, paid my taxes myself rather than having them withheld from my paycheck. So I'm very familiar with the technology that the IRS has to offer. I love the IRS.

They get a bad rap. I love it. I love paying taxes.

I just did something online today. And I was like, this is so easy. I logged into my IRS account.

I could see all my stuff, even the state of California. I could see all my taxes there. It's really-- once you figure out the language and the system, it's very user-friendly these days.

But you have to create an account. Always create an account. Create an account.

You should have your online account with the IRS and with your state. You should just be very familiar with how all these things work Yeah, and it might take a minute. There's a learning curve.

I do know that. And I'm in finance. And sometimes, it's frustrating the things that you've got to learn.

But once you learn it, it's feels very empowering. And you're like, oh, not that bad, not that scary. No.

And also fun fact, the IRS has a fun authentication step, where you get a picture. And you have to name the picture. Oh, right.

And anytime you log in, you see the little picture. You see the little picture. And you have to give it its little name.

It's very sweet. I don't know. It's cute.

I like that. Yeah, I just did it today. But also, like paying taxes, you should embrace it.

It never ends. You just have to accept it. It just doesn't end.

And with the right program, like TurboTax, it's easier than ever. OK. Does getting multiple credit cards help boost credit score?

It depends. If the goal is you need to get higher credit limit available to you, it can. I think the key is once you have them, multiple credit cards, monitor them so that you pay your bills on time, you keep the utilization under the 30%.

It might help in the sense that if you keep them around, you'll have these different history-- it's a history of the credit line with that person, with the lender. So I think it can, for sure, if you're responsible once you have them because, if you get them and you're not responsible, it could actually really hurt you. Totally.

I was recently laid off. What is the best plan of action for my budget? I have a small emergency fund and am getting a severance.

Oh, great question. I actually have been dealing with this a lot with my clients recently doing job changes. And severance packages are great.

So don't freak out, first and foremost. Review your budget, see where you can cut back. If it's going to take a minute or a few months to get a new position, be realistic.

What in your budget can you sacrifice so that your expenses are lower during this two or three-month transition period? Look at how much do you need to cover your bills per month-- $3,000, $5,000? Come up with the exact amount, which should be really easy if you're budgeting.

You should know that number. And also, look at if you're going to take from your cash cushion. So if the emergency fund is going to give you that $3,000 per month for the next three months, then know that's the game plan.

And after that, you're going to need to be in a job or the cash is done. But usually, if you get a severance, that will help supply the income for the time being. So also, just review the numbers and see how long that severance can get you.

A lot of times, a severance can get you through without needing to tap into the emergency fund until you get the next job. But I think key is so don't panic. A lot of people get in a really panicky situation.

That's why you had the emergency fund. That's what it's there for. Allow yourself to use it and know, when you get the new job, you'll replenish it.

So that's OK. One thing that my husband and I do, because we're both in specific situations that are in some ways more unpredictable-- I own my own business. And he's not a US citizen-- is we create a worst case scenario budget.

We create a budget that's like, what if one of us loses our income? How can we reduce down all of our expenses? How could we get by?

What would we do in that case? And we just really think it through because, in many ways, that fear is something that makes the actual acts of decision making so much harder. And you have to force yourself to be like, well, what if this were to end tomorrow?

And obviously, when you own your own business, that reality feels more close and more possible. Or if you could have to leave the country unexpectedly, that is more possible. But that could happen to anyone.

No one's job is guaranteed tomorrow. So really, forcing yourself to go through the logical end of that and say, well, how could I adjust my life so that it wouldn't be the end of the world? If you take the time to do that exercise before you're faced with it, it provides a lot of security knowing that what you would do in that case.

I think so, too. I think what you're saying is key. Just do some planning, know the numbers now.

So that will better prepare you for anything to come your way. You're more capable than you think when you're very clear about what's happening now. If you're avoiding things and not looking at your money, when those situations come-- because life is going to happen.

It's never straight line linear. There's curve balls. There's twists.

There's turns. And you've got to act accordingly. But if you're more clear and in there with your money, then you'll be more able to make the decision needed, and capable of making the decision versus being paralyzed by fear.

Totally. So this question our social media manager sent to me with an all caps qualifier of MULTIPLE PEOPLE ASKED THIS. So I'm assuming this was a popular question.

Best tips for sticking to a budget? Oh, so many. First of all, know a budget is a lifelong thing.

It's a commitment for the long haul. Not to freak you out, but it's to understand what a budget really is. So it's not a quick fix.

It's not a diet. It's not a one-time thing. It's literally something you need for the rest of your life.

So the sooner you're able to grasp that concept and see it as a tool, as a friend, the easier it will be to stay in there with a budget. Another tip I have is to do a weekly check-in. And I think having a weekly money date is the way to do this.

So date your money, and make it fun, make it sexy, make it romantic. And I say that because a lot of people have stress, anxiety, worry, fear with money. And they know they need to do a budget.

They know they need to review what Mint is telling them. But they don't do it because they let excuses come in. They-- I don't have time.

Or I'll do it next week. And that starts to get in the way. So when you can change the energy around your relationship with money and make it dynamic, and fun, and romantic, however you need to do that, even if you fake it until you make it kind of concept-- play music, light some candles, because it's something you need to develop a habit around reviewing.

So one hour, once a week, that's it . And you pick a day and a time. And you've got to stick to the commitment, almost like those gym classes.

If you miss it, you get charged a fee. I almost wish there was something around money with that. So on your money date, whether it's Monday at 9:00 AM, Sunday at 5:00 PM, Friday at 2:00 PM, whatever date and time, pick it, stay in there no matter what's happening in your life.

You do it. And then you get into your budget and review and see what went well, what didn't go well, where did you maybe overspend. And just check in and don't make it more than it needs to be.

Don't you know be so heavy, or negative, or stressed out. Just get in there, look, and say, OK, great. What's happening?

How can I make it better next week? Apps like Mint are so great because there's so many budget tools in there. There's lots of tutorials and tips.

And you realize you're not alone. Everybody needs to be budgeting. Everybody has money.

Everybody has to figure out how to stretch it, how to make it work, how to pay for a life, how to pay for the future things we want. So having a weekly money date is key. And then I think once a year to just review and update, so you have a fresh budget every year because every year so much changes.

You might have more income. Your income might change. Your expenses may change.

And maybe you have a baby. Maybe now you're married. Maybe now you're divorced.

Maybe you moved, got a different job, got different expenses. There's so much that changes in one year. So have fresh budget projections to keep your motivation strong.

This is also why we often stress that having a financial buddy, someone-- I love that, yes. Is so helpful because it's a lot easier to do those weekly check-ins when you have someone you could do them with. You can share your goals with them.

You can motivate each other, hold each other accountable. It's like having a gym buddy. Partially because it can feel really difficult to say no to things, or to save on things if you feel like you're the only one on a budget.

I know. And you feel like it's like almost secretive or shameful. And not at all, you should feel empowered and excited when you say no to something because that means you're saying yes to something else.

But it's really hard to do that if you are alone in it. So having that friend with whom you can really frankly talk about money-- I love-- I'm a big fan of the money-centric group chat, where you can all share your goals, and share your successes, and just keep yourselves-- make a budget feel like a part of living a great adult life and not like this boring, sucky, shameful thing. I think so, too, because I think the moment you realize we all have to do it, it really becomes easier.

And it can feel so-- you can feel so alone sometimes or isolated, especially like-- I remember years ago when I was like, no, I'm on a budget. And I said it like, oh, I'm on a budget. And it was like, what?

Why am I seeing it so negative, Debbie Downer, like energy was low? I'm like, no, I'm on a budget. Own it.

That's not in my budget right now. Cool. Maybe next month.

It's not like a forever thing. That's also important, to remember things are temporary. If you are in a tight money situation and it does feel like, man, this is not as exciting as I want it to be, know that is temporary.

You can make it better. It might not be tomorrow, but it's not going to be forever. If you're motivated to make a change, chances are you'll change.

But I think when you remember things are all temporary, that helps me a lot, too. Totally. Time for two more, you guys.

All right. What should I do with banks who charge overdraft fees in weeks when the budget is tight? Oh, overdraft fees, so lame.

I don't know what else you can do other than keep a little buffer in your account, so you don't get hit with those overdraft fees. You can set the setting so they don't do it. Yeah, so you don't.

And that just means then your transaction won't go through, or it'll get declined, or the check will bounce. You can actually opt out of overdraft. You can do that online usually, too.

They give you a little thing to check. Yeah, it's simple to do. But I think, ideally, you want to just have a buffer, enough in that account.

So that could be your first goal that you work toward, is getting a little buffer in your checking account so when money comes in and money goes out, even if it is still tight, you're never at the ground zero. Maybe your new ground is $1,000. So that might seem like, oh, that's a lot.

But work on getting it to $1,000 as your new ground zero. So then technically when you see $1,030 in your account, you should know, oh, I'm getting close to my new zero, which is $1,000 versus going into that negative. The actual zero.

It's also like, listen, this shouldn't be your strategy. And you shouldn't do it a lot. But I will say, having overdrafted many times in my life, sometimes, if you have a generally good standing with that bank, and you're generally a good client, and they want to keep you, you can talk to someone.

I've had many an overdraft fee waived in my time. Years ago, I had that in my business account because just trying to figure out cash flow of a business takes a moment of when things come in, when your payments go out. But yeah, a phone call, you can eliminate them.

Say, look, this was a unexpected scenario. What can we do? I think I had a few of them got reduced and a few of them just got refunded altogether.

It's also where it comes in really handy to have a really active relationship with your banker. Yeah, that's undervalued these days because banking is online. So most people forget you can actually go to a bank and develop a relationship.

And it's important because, one, that is usually where you have your regular checking and savings. And for these types of things, you want somebody who understands your situation and can be a little bit more flexible with an answer. But two, they can also give you loans in the future.

So developing a strong banking relationship-- so maybe if you're looking for financing down the road, there again, they know you. They know your situation. They're more willing to work with you.

Yeah. I mean, listen, everyone has a different relationship to their money. And there are all different kinds of banks out there.

And it really depends on your needs. But I think, ultimately, what you want to do is make sure that you understand how your bank works, you know how to get the most out of it, and you also are, like you said, doing everything you can to put a cushion in place that you're not living at that zero. Yeah.

That's so dangerous. And that should be really separate from your emergency fund because your emergency fund is in a savings account. When you're talking about the overdraft, you're talking about your checking account.

And that's where you don't want to be at zero either. Yeah. And it can be the first goal you work on.

And if you are there, there's no shame either. Very true. So don't overdramatize the situation.

Just realize, oh, this is what's happening. And I want to improve it, so this won't ever happen again kind of thing. I will say, as a last note on that, when I was constantly overdrafting, the mental framing in your mind is often like, oh, it's like I have a little extra free money.

No, you don't. You're paying $35 for the privilege of eventually accessing your money again. You have to really reframe it as a very bad thing that you don't want to do.

Yeah, a lot of fees. Social events are so expensive-- accurate. How can I still see my friends and be social without breaking my budget?

I'm laughing because this is so relatable. It is. Having a social life is expensive.

You've got to work it into the budget, to be honest. Be creative with your friends. A lot of times, you can see your friends and not have to do lavish things.

I mean, there's free museums. There's coffee shops where maybe instead of eating a full meal, you just grab a coffee, which is a lot cheaper. Picnics.

Picnics. Recently, I've been doing a lot more walks with my girlfriends. They want to meet up.

Power walking. And we're like, great. Let's just go for a walk around the neighborhood.

And LA is not a walking city. So that is something that we do. And then do your best to project what you think an average amount is going to be for social events or gifts and add it into the budget.

Like, it should actually be a line item, like gifts or dining out is part of that. And do your best to not overdo it. Totally.

There's a balance. Some months, you're going to maybe spend more than others and course correct as you go. But you'll start to learn there's other creative ways-- or invite them over to your house for dinner instead of going out.

I mean, there's so many things. Oftentimes, my girlfriends and I now will just go and grab tea at night. Aw, that's adorable.

Instead of having like a dinner because it's not like-- we want to be with each other. But we don't always need to eat a dinner meal at a nice restaurant in LA. There's obviously a time and place for that, too.

I enjoy that, too. But sometimes, you just want to go and talk to the person. You don't need to have a full expensive meal to do that.

Yeah. I have multiple friend groups with whom we have rotating dinner parties slash game nights. Oh, I love.

Those rule. So great. Also, a couple of friends with whom I do exercise classes on a regular basis.

Oh, that's good, too. So I feel like you've got to have a couple routines with friends that are not centered around going out. And I will say, for the most part, if you make it a point to socialize without alcohol, that is a huge way to immediately reduce the cost.

I was just going to say that. Alcohol, when you-- buying cocktails out is like the single most-- especially in New York, the single most expensive waste of money you can do socially. And forcing yourself to find activities that are not like-- get the phrase, "let's grab drinks," out of your vocabulary because it's so expensive.

It really is not worth it. And there are so many other things you can do that are fun, and that allow you to enjoy the moment, and are not just-- I mean, cocktails in New York are often like over $20. Sorry, no alcoholic beverage on this planet is worth that amount of money.

And also, that is such an easy routine to get into that's not a good habit for a lot of reasons. So trying to find things outside of that because it can easily become a default-- the happy hours, that kind of thing-- I think is also very helpful. Yeah, recently-- I'm not a drinker.

So I always forget that because I don't go out and spend money on alcohol. But I forget that people do. And that's part of their spending that they could cut back on.

And there is this thing that-- we did a study recently with Mint about Dry January and how much it saves people. People decide to go one month without drinking. And it saves them money.

First of all, they feel better, which is good because health is wealth, I think. Totally. We've got to take care of ourselves.

If you want to enjoy the money in your life, you've got to stay healthy. But it is a fascinating concept. And I love that you said that because not everything-- you don't need to do that.

There's a lot of other things you can do in life that don't involve money, if you get creative with it. Totally. I mean, I do drink alcohol.

But I would say that it's been a long time that I haven't been just to meet someone up expressly for drinks. Like, we'll have dinner, or whatever. Right.

Every now and then you can do it. But I think it's easy in adult life for that to become a default. And that is unhealthy for a lot of reasons.

Yeah, I think the let's grab drinks, like you said, became an easy default when you're an adult. Totally. And just think, hey, maybe there's other things to do-- That are way less expensive.

Way less expensive. Yeah, that is reason enough, quite frankly. So thank you so much for being here, as always.

It's always such a joy. I love being here. Where can people go to find more of you?

Come over to financiallywiseinc.com. Check me out. All my social profiles are there.

And also, because we've been talking about them so much, download the free apps, Mint and Turbo. They're amazing. We love a free moment here at TFD.

Free. Well, thank you, guys, so much, as always for being here. And do not forget to come back every Monday for The Financial Confessions.

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