How My Client Found Balance Between Debt Payoff and Saving

Today's episode is about one of my amazing clients. When we began working together, she was frustrated and unsure how to get out of what she called the paycheck to paycheck cycle. Fast forward just three months. She paid off 5, 000 in debt, saved 2, 500 and has even started planning and setting aside money for travel, just amazing as she learned and was able to stick with it and get these results. When this client reached out for help, her specific statement was, my spending is not good and I'm creating too much debt. I'm sure a lot of you are like, I feel the same. Whether those are your exact words or not. And so then her specific request, when asking about the program and what it looked like to work together, she says, I want a plan for paying off debt and still working on savings. With that request, I can see the importance for her to be in that balance, and that is a balance a lot of listeners are still trying to find or seeking. And it is, we know how important it is to save, but how do we get this debt paid off? A little bit more about my client. She was using a budget, but despite having that budget, she was still accumulating debt. Slow growth, but it was still growing and she says, I'm struggling with overspending her specific question to me. I'm doing the work. So why isn't it working? Her frustration is obvious and I totally understand. She's trying to do what she's heard multiple times. out there anywhere from, you know, individuals, social media, wherever you're getting it from, create a budget and spend accordingly. If it were only this simple. That's a great start. That is a great start. And you may be in that same situation. You're like, well, I have a budget and I'm trying to spend you know, and life gets in the way. You're struggling to make progress. And I want you to remember that what you have is working, but it is missing a few things to have you be successful. And before I share specifically how I got results for my client, I just want you to know you can start right now. finding these missing things with a retirement ready VIP session. It is in that session, the very first step that we look at your overall financial picture. I can let you know what may be missing, what you need to add, but that is a great start to get you going. With my client, That is what we did. We looked at her financial picture. She gives me her, her prep work. This is done through a questionnaire and a spreadsheet acknowledging all of the things. But with her, since she had a budget, I also had her include that. No need to reinvent the wheel. She's already aware, you know, of a lot of her expenses. We don't have to try to Well, we don't have to create from scratch, and we have a lot of things already at our fingertips. With that, looking at her, what she had going on, what she knew she needed as far as the financial picture. There were three things that I added to her financial process to help her be more successful. The first thing I did was I adjusted her budget to include savings for those upcoming financial commitments. Now you've heard me talk about irregular expenses, unexpected expenses, emergencies. Not necessarily, but sometimes that is a term used. But if you think about financial commitment. When you buy a car, you are committed to its registration, its insurance, tire replacement, car repairs. I could go on and on, but the registration and insurance, that comes, you know, once a year, once every other year, quarterly, those types of things. Making sure that she was including those upcoming financial Commitments first were so important and when we worked with her overall financial picture, I created the simplify three budget with her. This is three categories. The third category being that savings and we first start filling these financial commitments. This savings number later turns into sinking funds. We all, we've talked about those before. Savings goals, the things that you really desire to have. It is also where you find your debt payoff funds. If you want to know more why I believe savings is the number one habit for financial success, make sure you listen to episode 30. It will share with you how that is, why that is. And knowing this number gives you the power you need to be able to achieve all of those things. So, adjusted her budget, make sure those were included. The second thing I helped her put into place was a cash flow system. A way to manage her money that supports her process of saving and spending. Taking those three buckets and identifying an account for it to quote control. It's not restrictive, it just gives you a quick, easy peasy look at and you know what you can spend. Not a lot of time is spent, you know, with on your financial decisions. You know where to look to make that decision. You know what you have, you know what you're going into the future. And really, this helps you control your spending without it being restrictive. When she talked about controlling her spending to not grow her debt. I know this is what I get from a lot of clients, a lot of people I talked to on the phone and really, yeah. If you think in your head you're just controlling your spending to not grow your debt, there's other things you're missing. But because of that, your debt grows. And you're looking at it growing greater and greater, and it gets to a certain point you become very embarrassed, and you don't want to reach out for help. Because, honestly, and I know this, you think you're the problem. You think it's your overspending. And even as I'm sharing this about my client, It wasn't her overspending. She would either have one of her financial commitments pop up, she would pay with it, you know, out of her bank account, and at the end of the, you know, paycheck, she's out of money, so she's using her credit card. This is an ebb and flow. Maybe she had all, everything paid, it was the end of the pay period, and that financial commitment popped up. We use our credit card. I'm sure that was resonating with a lot of you. And this is really called your debt driver. Being able to have a very simple cash flow system supported her in that process of saving and spending. She was able to not quote control herself, you know, just in her mind, she was able to have the guardrails, the boundaries, the knowledge of what she had available for what things. The third thing we did was we created a debt payoff strategy. And in doing so, we made sure that we were supporting savings first. Just like I said, you have to have a money set aside for those financial commitments to stop that addition of debt and being able to have that first, then you can create your, you know, payoff for that. Whatever it looks like, and this can be different for everybody, depending on who you are, what you have to pay off, what you're making, what you desire, there's a lot of things that, that feed into this, but it's important as you, as you head into it, that you think about formulas and boundaries. With my client, she was in a field where overtime is fairly regular. It's not consistent, but it is regular, and she decided she wanted to lean into that to support her debt payoff. We were already covering all of the minimums with her budget, so that was not a concern, but to be able to throw additional money was going to come from this overtime. I love to coach clients about this, and this is quote extra money. This is extra time you're putting into work. Even if you're doing a side hustle for this, or you're taking, you know, like I said, taking on extra hours, there's something that you're adding additional to life. It can be detrimental to want to throw all of it at debt. You become, you create this relationship with the With that circumstance that you've, that you're doing, to increase your income, whatever, even if you're cutting expenses, to pay off that debt, you've really got to find that balance of savings and debt payoff. Just like she requested when we, you know, we're talking about working together, I really wanted her to, at that moment, reflect on that. We talked about creating that formula. When I say formula, this is going to be a percentage. This is something you need to think about before the situation is there. Is it a 50 50? Is it a 75 25? And when you think about that, and I'm talking percentages of what you have in that quote extra income, are you leaning towards wanting to pay off more debt? or leaning towards or have a need of increasing your savings. And that is where you can get your percentage. As my client, obviously with her savings, she was in a 75 25. She'd paid off 5, 000 in debt, 2, 500 she had accumulated in savings. And as she continues to pay that down, that savings is only going to grow. As she starts seeing the light at the end of the tunnel and being able to do all of those things. A quick recap about what We walked through to help add those missing things. We restructured her budget to make sure, make sure it included all expenses. A lot of times individuals get caught up in a paycheck budget, a monthly budget, and what we really need to be creating is a lifestyle budget. There are things that are happening outside of those, those time frames that are causing these, those, those things. Blow up issues, or if you're able to save, you know, using that paycheck or that monthly that you're always dipping into it. And I know I hear a lot of people like I I'm always dipping into my savings. And you should, but if you haven't defined and understand the reason why, it creates that scarcity of mode of like, why am I even trying to save, I'm never going to be able to save for my home remodel, save for my vacation, you know, save for those savings goals because your money is being taken by those, you know, financial commitments that you don't recognize as being bills, as being expenses, just like grocery, just like fuel, just like your utilities. So really restructured her budget to help her have a more holistic idea of where money was needing to go. We created her a cashflow system to help manage her money for easy to track spending, knowing where money's going and that flexibility with her savings. Having that flexibility on her savings was huge. Then the thing, the third thing we created was the debt payoff strategy, helping her, you know, focus her regular pay on consistent debt payments, and then using her overtime strategically for debt and savings. Remember her goal when she came to work with me? That's what she wanted. The key moment for her was, In the program, long term, there is a spreadsheet to help you flow all of this, to see the growth, to, you know, get yourself moving ahead. And once she saw her progress in her spreadsheet, she felt motivated and empowered. To continue to curb what she called non essential spending. Now we never talked about cutting expenses. We never talked about any of that. But with her now easy cash flow and the spreadsheet, she's got such information. Perfect information for her to make all of those decisions. So she paid off 5, 000 debt in three months. She saved 2, 500 during that same period. Right there you can see the 75 25 she's leaning into that. She gained control over her spending habits without having to control her spending, feel bad about it anymore. She just immediately had that information at her fingertips. She started saving for travel and aligning her financial habits with her priorities. This was the testimonial she gave to me. So glad I did my work with you. I went from paycheck to paycheck and making minimum payments on my credit cards to paying off 5, 000 of debt and saving 2, 500 in three months. Months. It makes me happy to open my spreadsheet and see my progress, and it's definitely helped me curb my non essential junk spending. No more shame or worry. She can now direct her financial decisions about saving and spending with ease. All right, listeners. As you've listened, as you take time to reflect on your situation, do you find yourself similar to my client? Even if you're budgeting and you're not seeing results, you struggle with controlling your spending, again, That can be a spiral. And maybe you feel bad about your debt. It's time to build a plan and create a cash flow system that connects your goals to your actions. Remember, this is customized for anybody. It's personalized. It's yours. I don't just cookie cutter this. for everybody. If you at any point during this episode thought, that's me, let's chat. I would love to chat with you and help you better understand your situation and what coaching would look like. what we can solve. Schedule your free Q& A call. Also explore the Retirement Ready VIP session. It's a one simple step to get exposed to coaching, to find those things that are missing, and what the solution would be in moving forward. So  excited to share with you another amazing client of mine, and I'm just grateful to be able to help people on their financial journey, making it easier, getting rid of that shame and the guilt, making future goals possible. Thank you for tuning in and until next week.