BBP REAL LIFE BUDGET | Paying Off Debt + Debt Free

It’s time for another Real Life Budget. I asked my readers to submit their REAL information. Real spending, real debt, and real savings goals.

I am taking those real-life numbers and showing you how I would organize and budget that information using my Budget By Paycheck® Method.

Today, we are looking at TBM Family member Christina's information. Christina and her husband are on a debt payoff journey and feel like they are not making the progress they should be. For the first time, I am showing how to use a debt reduction calculator to show how your decisions affect your debt journey.

Trust me, if you have debt, you don't want to miss this video!

CHAPTERS:
00:00 Introduction
03:07 Why & Personal Story
06:04 Income
07:55 Fixed Expenses
09:15 Variable Expenses
10:30 Debt
12:52 Savings Goals
14:26 Budget By Paycheck Method
21:01 Debt Payoff Scenarios & Visuals
32:28 My Recommendations

ABOUT ME

Kumiko Love is a single mom who empowers women everywhere to regain control of their financial lives. An Accredited Financial Counselor with over nine years of experience in the finance industry, she founded The Budget Mom, a community of millions of women on a path to financial fulfillment.

She's also the creator of the wildly popular Live Rich Planner® and Budget by Paycheck® Workbook. Love has been featured on Good Morning America, the Today show, CNN, CBS, ABC and in USA Today, US News, World Report, Huffington Post, Money Magazine, Parents Magazine, the Washington Post, and Real Simple. She lives in Spokane Valley, Washington.

YOU CAN FIND ME AT:

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[Raymondjohn]

40 now, and everything is paid for. Fortunately, I had a college economics teacher who taught me a lesson when I was 18 years old. That lesson was: you can't buy something else for every purchase you make. Having multiple sources of income is prudent, as is living within your means. I have a 13-year-old vehicle because it is all I need, I like it, and I can do whatever I want with it. My net worth is $4 million, and I can pay my bills without stress, but I don't live like I have that. I have no complaints.

[msPiggyBankz]

I live in Brooklyn, NY so I get some of these costs. However, $3, 000 for birthdays and Christmas for 2 kids under 2 makes absolutely NO SENSE, when you have debt like this.

Those top 3 debts need to become priority. Sacrificing a little to tackle those will be worth it in the long run. Interest is what is keeping you stuck.

[ladynoluck]

I appreciate her wanting to spend a lot on her daughters’ birthdays and Christmas, but they are 1 and 2! At those ages, they will not really appreciate anything you do and will probably love the balloons more than any big cake, venue, or gifts. I’m glad you recommended a cut there (and it will still give enough money to celebrate pretty big!).

[docdoctme]

I love these real life budgeting episodes. This example shows that even with a good income, money needs to be spent properly. Thanks for sharing your talent.

[EE-insu]

After a YEAR of paying my student loans, I actually called the loan company because the checks were being cashed, but the number didn't seem to be going anywhere. This is when I first learned about my nemesis - interest! The woman on the phone was kind enough to tell me that the minimum wouldn't be touching my principle for a very long time, but that it was totally okay to send them more money, allowing me to check a box that said 'apply to principle'. It was a light-bulb moment! It was still awful to pay off, but when I restructured my priorities, I could find a spare $50 - 100 to send to the company, and I really started to see the amount going down. I am DEFINITELY an avalanche person!

[jadiecakes]

$6k in gifts is crazy, especially when you have that much debt. they already have $1200 saved which is HEAPS, put that $600/month towards debt and knock out the debt omfg. Like yeah gifts are fun, but thats just trying to keep up with the jones'.

That pays off
no 8 in one month,
no 3 in month 2 (if they throw like an extra $200 at it),
no 7 in month 5 (maybe even 4 but lets assume 5)
no 6 in month 9
no 5 in month 11 (cause remember minimum payments are still going towards it, so by now its like $1200 with approx interest if not less))
just leaving the 3 big hitters, but also freeing up $300/month in minimum payments, which is now $900 towards those (even using that $300 towards gifts instead and continuing to throw $600 at the debt), however with those insane interest rates, i would be considering debt consolidation with a bank/CU to save on that interest. It makes it a lot easier to make a dent in those debts when your payinf 10% instead of 20+% APR

[kimwoodruff]

Great video, sorry, but when you have that much cc debt and high daycare costs, a 3000 birthday party is too much for any child at any age, too much on Christmas and hubby's birthday as well, some sacrifices are necessary to live the life you deserve.

[tw]

The amount of money they spend on beauty and birthdays blows my mind (and I live in a very expensive area)

[glowyourconfidence]

3 year pay off section on credit card statements to show what the “minimum” payment is sooo valuable and a section often overlooked!

[sharonostrowsky]

Not sure what type of bday celebration they’re throwing for a 1 & 2 year old but $3k seems so crazy high to me & like a SF that can be lowered (along w Xmas) to pay down debt.

[megspositiveoutlook]

Something I’m learning from these debt videos is how difficult it is for many people to conceptualize their debt within their income.

A lot of people have pretty substantial debt, but they spend their money like it doesn’t exist.

In this case it’s a lot of their sinking funds, and even some of their monthly payments (peloton, water delivery, beauty, etc). It seems like the biggest hurdle is recognizing that even if they’re making six figures, with six figure debt: No. You. Don’t.

When that debt is paid off, you can go on expensive trips, plan expensive birthdays, and take on the expenses of a higher earning family. Until then, if you want to see ANY movement on your debt, you need to live as though you are a much lower earning family. Because in reality you are.

There doesn’t need to be shame in that, plenty of families live at those means.

[melanierhine]

Love the extra stuff you added to this video to show differences in how long it takes to pay off based on different decisions/scenarios! Keep doing this! I am a numbers nerd....😂

[jacquelineruff]

This budget just shows that it doesn't matter how much or little you make, it's all a mindset. You have to know what you want and know what you need to compromise on to reach those goals whether you make $30, 000 or $100, 000 per year.

Kudos to the watcher you submitted her budget. It was probably difficult and I hope Miko was able to give some recommendations that will work for you and your family. ❤

[sadecoleman]

Congratulations Miko and thanks for providing such great information that I can use towards my budget as well.

[rachelbraswell]

Miko, your videos always help my mind get back on track! Thank you!

[anni_dazumal]

Greets from Germany, I love that kind of videos - I learn so much ! Really thank you for being you - and work out those super budgets - with so many super ideas !

[RockyRaccoon]

I appreciate the in depth explanation and the visuals help a lot. The good explanation helps me understand a lot better and I love the indepth explanation

[luxeydaze]

I love all the BBP videos. This one was probably one of the best ones. Lots of advice and alternatives. Thank you for helping others without judgment.

[cjack-caldeira]

It’s so good to see how you approach each budget and I can only imagine how life changing this must be for Christina. Thank you - these videos are so helpful 😊

[laurynpawl]

Thank you so much for this video. That spreadsheet program was explained so well. I'm so glad you made a video like this to show what happens when minimum debt payments don't even cover the interest. Helocs are a good example too. Thank you for sharing.