(Intro) Congratulations, you got a raise! Now, what are you going to do with it? Without a plan, these hard-earned dollars can disappear quickly making it feel like you never got a raise in the first place. Hayleah is thinking hard about this question as she's preparing her family's budget for a large raise. We talk about how to prevent lifestyle inflation, enjoy the extra room in the budget while still tackling goals, and how worriers can make the best budgeters. I'm your host, Carly Hill and this is the Debt Free Mom Podcast.
Carly: Today I have Hayleah Huskey with me. She is a senior buyer with a mechanical engineering company. She's currently married with a one and a half year old at home. She has always taken care of budgeting for their family, mostly using the monthly format, but it never seemed to work for them. They were always in the red. In her free time, she enjoys spending time with her family and reading. So welcome Hayleah to the Debt Free Mom podcast.
Hayleah: Yeah, thanks for having me.
Carly: So we are talking today about what to do when increasing income happens in our family, and we're trying to budget and we're trying to make sure our goals come to life and not given too much to what we call lifestyle creep. Whereas our income goes up, our expenses with our lifestyle go up, and so then we don't experience much progress with our goals.
I wanna start right away by telling people that I see so often in the people I'm working with, that they almost feel guilty having problems with their budget as their income grows. Because a lot of times we assume, well, once I get to a certain amount of income or a certain size paycheck, then budgeting won't be a problem, or then spending and goals won't be a problem. And so then people feel bad that as their paycheck gets larger, sometimes their money issues seem more stressful when they're like, and shouldn't it be the opposite? Shouldn't you know, shouldn't we have as our income increases, shouldn't we have less stressful finances? So I just wanna say right away that sometimes being high earners or just increasing our income from where we were, where we used to be, to where we are now feels like it should just automatically make our problems easier, and it's not always that way. So I wanna validate that having increased income can be a legitimate problem that we actually have to talk through.
So can you give me a little background first, let's start with budgeting methods that you've tried in the past. What, what did you used to do as the family budgeter?
Hayleah: I've always done monthly budgeting. And so ever, I mean, even before we got married, like, you know, trying to do budgeting on my own and I've always done the monthly format and it just always felt like I had get a budget for myself and I would always go over. And then we got buried, joined incomes and it was still a case, you know, trying to set a budget for groceries or for personal spending.
And it just always felt like things were always over budget and we were using credit cards and that, you know, adding that into the mix, not that it's bad to use credit cards, but I don't think we were using them wisely. And so, I mean, that's been 10 plus years that I've been doing monthly budgeting and I'm, I just got frustrated that every time, like I would, you know, set my number at this amount per month and it would always be like twice that, and I'm like, what, what am I doing wrong? And as our income has increased, like it was still the case, like we were still going over and it's frustrating to think that you have the means, but it's not working. And so, I don't even remember how I stumbled upon your account or pay period budgeting, but I was like, you know what, maybe I should give this a shot. And I think it's, it's hard going from a monthly budgeter to like a pay period budgeter because it's just just, it's hard to break that habit. Like I had my, I had your spreadsheet and then I had my monthly spreadsheet and I was like doing both. And I finally just deleted my monthly spreadsheet cause I was like, that's causing so much anxiety and stress. I was like, let's go back to pay period budgeting.
But yeah, just seeing like the progression of our income. I mean, especially since Covid, you know, my husband switched fields and, that significantly increased our, our salary. And I think one thing that I've learned from going from like a monthly budget to pay period budget and then seeing our income increase is that there's no salary requirement for budgeting. You can make $30,000 a year or 200 plus thousand dollars a year and you still need a budget. And I think having been on that other side of like having not a lot of income to work with and now we have kind of a excess in, in my opinion. Yeah, I just, it's hard to do the monthly budgeting. It, it doesn't make sense now that I've kind of seen the other side and seen what pay period budgeting does. So yeah, that's just kind of my progression is I'm trying to push away the monthly budgeting cuz it just didn't work for us.
Carly: So what pay schedules are you each paid on?
Hayleah: So I'm paid on a weekly basis. So my husband is currently on a bi-weekly basis, but he is switching jobs in the coming weeks. And so we're als, you know, we're seeing another increase in income, but we're also seeing a, what is it, semi-monthly. So it's gonna be two set dates. And so that's gonna be new. And so I'm gonna have to kind of refocus my budget again in a few weeks to try to figure out, well, how are we gonna make this work?
So I'm gonna have to like switch things up a little bit, but also try to budget within our new salary for him.
Carly: Yeah. That's one of the more complicated combinations because one of them is based on a date of the month, like first and 15th, and one of them is based on a day of the week, like every Wednesday or something. And so like when you have a weekly and a biweekly, those kind of fit nicely together, because there's always two weekly and one biweekly. But yeah, the semi-monthly and the biweekly, it's like they're almost compatible. But then two times a year you have this mismatch and it's like, what is going on?
So yeah, laying it out by pay period can actually identify long in advance when you're gonna have your weekly pay periods where it actually skips like several semi-monthly paychecks just based on the way the dates fall. So laying it out that way can actually help that not feel like a surprise or like a con, you know, like, why am I not getting paid this week? Oh, it's because it's not the first or the 15th.
Okay. So that really helps for me put some context into maybe what the pain points have been. Not necessarily with the income itself, but just the way the budget is laid out. So with this issue of trying to decide how to best use your increasing income, when you were having the monthly budget, did you feel like not only was it not aligned with the days of your pay periods, but also that 30 days was such a long period of time that like it was, it was tricky to maybe track all of your spending or just keep track of what all was included in that credit card balance per month?
Hayleah: I think the 30 days was way too long. And I think one thing I appreciate about the pay period budgeting is as I'm adding in, you know, certain expenses during the pay period, it deducts it from how much our paychecks are. And I think that's what I was missing before, is I wasn't seeing how much leftover I was gonna have within the pay period. I could bank on mortgage coming out on a certain date, but I think it was just so much time and me thinking I had $10,000 to work with for the whole 30 months, but 30 days.
But yeah, I think it was just too long. And I think just my method wasn't really working. Like I, I mean, this is something I built myself, like trying to go from my dad taking care of a lot of things for me. And then he was like all right here, you're on your own. And me being like, what the heck? I, I don't know how to do this. They didn't teach that much in school. Like it's just not taught, and I really hate that. Like financial literacy is absolutely needed. But yeah, I think just not really having a in-depth method as far as my tracking, it just didn't work within the 30 days. It was just too much time. Things would slip through the cracks. I wasn't paying things off on the credit card. So I just had so many factors working against me. That's why it just didn't work.
Carly: I think 30 days is a long period of time for anybody, but especially honestly as that income is growing, there's more money to keep track of, there's more money to decide what to do with throughout the month. So then it's like, okay, for 30 days I have one set of numbers that I'm trying to send in all these different directions and make sure I have savings and make sure I'm paying down debt and still cover all my bills that it's just a lot to manage. And so sometimes, you know, breaking it down into the pay periods, I think is beneficial for anybody because it's a shorter window of time that we have to track. But especially as that income is increasing, so you're working with more dollars per pay period helping to chunk it into smaller sections so that you're like, okay, once it's payday, I can move forward and just pay attention to these two weeks instead of a full month is helpful. When you do have that increasing income, like you said.
So I'm curious, as your income has been increasing, like you said, since Covid, and you're trying to resist lifestyle creep, have you tried to actually add in small ways to give yourself more personal spending or give yourself more of a restaurant budget at least a little bit? Or has your aim been to "pretend like you didn't get a raise" is what some people say they do?
Hayleah: I think I aspired to think or to try to think we didn't get a raise. But that was easier said than done. I just, yeah, I think breaking it down by pay periods and thinking, oh, this is what we realistically spend in that two weeks. And then kind of assigning a number to that. I think that's what helped. But I don't, yeah, I didn't take into account like, oh, well, we're making X amount more than what we used to. Let's just put that to savings or to debt. No, that didn't happen. That's what I would've loved to have done. But that's just not reality. Because even with our salary increase, like we bought a house and we had a baby. you know, It just kind of was a fast progression. He got a job in August of 2020 and by February of 2021 we were in a house you know, getting ready to have our baby.
And so we really didn't have time to reallocate that extra money into an area where we needed it, like to debt and things like that. We were consumer debt free when we got into our house. But once we were in that house, we're like, oh, well we need to get furniture, you know, get new things. But as far as like on a weekly basis, we did increase our eating out budget. We did increase the grocery budget, but I think that's just with our growing family. I would like to kind of have that mindset, like now that he's getting another pay increase, like, okay, I know that we're good with this salary, like anything extra from this, how do I want to move that like into a, you know, do we wanna pay off debt? Do we wanna add to our savings or emergency fund? So it's just really hard to kind of pick and choose because I'm the type of person who's uncomfortable with having that debt. But also I'm responsible for it cuz I'm also like, oh, money, let me spend it. So yeah, it's just been high of a, a hard transition in knowing like we have so much, we have so much extra compared to what we use too and what to do with that responsibly.
Carly: So let's go through and triage of all the different goals that we could be working on and see what your main goal should be.
So, when it comes to an emergency fund, do you have like three months of either income or savings in an emergency fund?
Hayleah: I would say, We have about a month and a half. Like we took, my husband recently got a bonus and so we took all of that and just put it away. I was like, we're moving this to a totally different account. We have no eyes on it all the time. I was like, let's just do that because, we don't know what's gonna happen. Just, you know, I would feel better knowing that somewhere else.
Carly: Okay. So I would say if sometimes when we don't feel like we're making much progress, it's because we don't have a clear idea of exactly where our extra should be going. And so then we end up putting a little bit here and a little bit on this debt and a little bit into this goal and a little for fun, and people try to spread that extra super thin so that they feel like they're making progress in all those areas at the same time. But what actually happens is that we don't feel much progress at all because everything is growing by 2%, for example, instead of allocating all of the extra to one goal and being like, wow, that goal jumped by 20% this month.
So I really do try to help people come up with at least what their next, like number one, number two, number three goals are so that they can then focus all that extra onto one thing and see a true forward momentum. And then as we do that and we move from goal to goal, then we're like, oh, now I see a much clearer connection between leaving money available, extra money available, each pay period, and actual progress with my goals. So I think especially as you are high earners, which means that you'll be able to save relatively quickly compared to what some other people can do, and then also you're in the midst of job changes, which just adds some volatility to your financial situation, even if the paycheck is getting larger, I would say goal number one would be to grow that emergency fund from one and a half months to three months. So kind of help yourself to put some blinders on and be like, I know the debt bothers me, but my goal right now is to go from X amount of dollars in savings to Y amount of dollars in savings. And then once we get that goal, we can actually give ourselves permission to not try to keep adding to that.
Because I think what happens is, you know, like you talk, you mentioned a lack of financial literacy as we're growing up, we're told this idea of like a certain percent that we should always be saving. And so we're like always put 10% into savings or something some percentage. So we get into this mentality that a portion of our check should always go into our savings account for, for a rainy day or, you know, whatever our grandpa used to say or whatever. But actually if we say, this is the dollar amount that I want in my emergency fund, and I'm just gonna focus on that until I reach that amount, once I reach that amount, I'm gonna just let that sit there.
So like for example, we have $15,000 in our emergency fund, and once we got to that number, I don't continuously add to that because that's not my focus anymore. So we just leave that, sit at the I ideal amount that we've decided and we move to another goal. Then once you do that and you have that three months of emergency fund, you can again narrow your focus onto your debt and see more progress with those payoffs because you're not trying to split yourself in too many directions.
So then at, at that point, then you're like, wow, you know, we have this emergency fund that's much fuller than what we've ever had. So we really can allow ourselves to feel a sense of security about that. And go ahead and focus on the debt payoff and see those start to be knocked off in a much quicker timeline than what we had before.
Another thing with the increasing income is I do like to encourage people to give a little bit more to themselves in personal spending cash or restaurants. I do think it's really healthy to celebrate the idea that you are working harder, that you're getting promotions, that you're switching to jobs that are more financially advantaged to your family. And some of that budget should reflect that because that helps to see a better connection between the hard work that you're doing and the payoff that it has in your life.
So I think there's a difference. Lifestyle creep to me is when all the extra goes to lifestyle. When as soon as we get a promotion, we're replacing the Camry with a giant truck. Those kind of things are lifestyle creep to me. Getting a, a big promotion that's gonna add a thousand dollars a month to your budget and giving yourself 50 more dollars in personal spending cash is not lifestyle creep. So I would encourage you guys to, especially once he's in this new job, and you kind of know what the pay schedule is and the, the actual take home pay, what's that gonna be? To sit down together and be like, okay, out of this additional money that we're getting for our family, what little chunk of it do we wanna have fun with, and where do we wanna add that? Whether it's starting a vacation fund that you don't have right now, or adding a babysitter and a date night to your budget, whatever it is,just something that the two of you are like, Ooh, that does feel good. Because so often it's more about the gesture than it is about the amount. So just adding, you know, adding a little piece to the budget that just feels like there's a little more room starts to feel like, Ooh, I feel so fancy by having this extra budget, when really, like I said, it could, it could be something as small as 50 bucks a month and it's still gonna feel like you're celebrating.
So I did a custom budget for you in the fall. I think it was in October. And I looked at some of the, just the general trends of where some extra money was going, and I noticed that one of the things I had suggested was too much money was going into savings. Which is actually a really common thing that I have to tell people. Like, they'll, they'll list out, you know, their worksheet and they'll say everything they're doing, and then when I put this really large chunk into savings into the budget the budget itself comes up negative overall. Which means that the savings goal basically is too large in relation to the other expenses and income. So since from October to now, have you felt yourself maybe shifting towards more realistic numbers or do you still kind of find yourself, okay, I have this goal that I'm gonna put all this into savings and then I end up pulling some of it back out?
Hayleah: I think for a while we did kind of pull some out of savings, which I was like, oh, that's so frustrating. I don't wanna do that. And so I, I think we did kind of take a step back because we did have some things come up where we needed the savings and so we pulled it out. But yeah, now we're kind of like, now that we've put his bonus back into savings, I'm like, okay, do I wanna keep growing that because we have a goal? Or do we want to whittle down our credit card debt because, I know come fall we're gonna have student loans due again. So , you know, it's like try, it's, we're pulled in so many directions, like I don't know what to do with it. And so I think we did kind of take a step back and realize like, we could put some of that money somewhere else. But it was really hard to shift, like not having. I know we have at least one month of expenses, and so I feel okay with that, but it's really hard not to, like you said, put every little goal, put money into each one.
Carly: Yeah. Sometimes when you feel the squeeze, suddenly you're able to find money that you didn't think, you know, like when we have so much in savings, it's like, well, it doesn't really, you know, if I don't put any in savings, it's not gonna hurt anything. And then that savings gets down to like a critical mass number where we're like, oh, pause everything and put it back in. So it is funny how sometimes having the numbers be lower than what we wanted actually makes us much better savers than when we have a lot of money.
Hayleah: Yeah. It's interesting when that happens.
Carly: Yeah, because like I said at the beginning, I think, you know, kind of a theme of this episode is we assume that when we get to a certain point, whether it's how much is in our savings or how much we're earning or how much debt we've paid off, then all of a sudden these certain pieces will just get easier by themselves. And then we get there and we're like, okay, it's not getting easier.
I remember when we were like so laser focused on paying off our debt and then we paid it off. And I don't, I don't know what I thought was gonna happen, the sky was gonna partner and you know, I mean I just thought like I had such a focus on that being my one thing that I was like, once you're debt free, like you are set for life. And then we paid off all the debt and it was like, you know, we celebrate for a week. And it's like, okay, now we still have to like, start to invest and so all that extra money that was going into debt is now going to retirement and our life feels exactly the same.
So it is kind of that like being able to handle that disillusionment of, okay, I got to this point, whether it's paycheck size, savings amount size, debt payoff, whatever it is, I got to this point and now I have to kind of grapple with it not being as amazing as I thought it was gonna be before I start to move forward with. Okay, what's next?
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Carly: So you've mentioned paying off debt a few times that it's really a focus for you, that it bothers you that it's there. Do you have a specific like order of debt or debts that just bother you more than others do that you're like, man, if I could really eliminate these two or whatever then I would feel more comfortable?
Hayleah: I feel more inclined to pay off credit cards, and I've been trying to like paying off the ones with the higher interest and you know, seemingly high balance. So that's my game plan is to go from like who has the highest interest rate and what go down that path. Like pay off each card. Instead of, I think whereas before I was trying to piece it out to every single credit card we had because I'm still trying to figure out how to work the reward systems and things like that with the cards. Which is our primary focus is trying to use them and get points to maybe go travel and do things. So that's kind of our, that's our goal strategy based on like your recommendations from our custom budget.
Carly: So one thing too, especially when people have that, that impending additional expense, whatever it is, I know I did a custom budget just a few weeks ago that had the same kind of thing where their budget worked right now, but starting in September they were gonna have a preschool fee was the, the one that I was working with.
And so they were like, well, we're okay right now, but when we add preschool tuition in the fall, we're not gonna be okay. And so we kind of looked at a really short timeline of what are the debts that maybe by eliminating them, we eliminate the minimum payment associated with them and we actually create the room for the preschool tuition.
So that was something we looked at too, to be a little more custom with the order of the debt payoff. So for example, if they didn't have that, I would've just ordered them either smallest balance to largest or highest income, or highest interest to lowest interest. But because they had this specific amount, they knew the amount it, I think it was like $340 or something. So they knew in September our, our expenses increased by $340. We actually looked at their list of debts and said, okay, which debts do we have time to pay off that? Maybe the minimum payments could either add all the way up to $340 or even just close to $340 to help with that room.
So we identified two, I think it was like one credit card and actually one car that they had like, you know, just a couple thousand left on it. And, and that's another thing with with debt payoff is we can look at not just the interest rate, that that's a big piece of information, but also look at how close are we to paying off the total balance and how high is the minimum payment. Because cars, for example, generally have a lower interest rate, but a much higher minimum payment. And so, when cash flow is the question, like when we're trying to open cash flow in the monthly budget, then I start to look more at the higher monthly payments than I do at the interest rate.
So for you, if you know student loans are starting in the fall, and I wanna try to make a little bit more space in my budget to afford those payments while still being able to target my other goals, then maybe we can look at the list and say, okay these two credit cards maybe don't have the highest interest rate, but they have a higher minimum payment. So if I eliminate those, then the student loan payment fits nicer into my budget. If that makes sense. What I do is I default to first listing them smallest balance to largest, but I also list the interest because a, a lot of times it's you can kind of get a two for one people's smallest balance also ends up being their highest interest rate. And when that's the case, then we for sure target that one first, cuz it means we're gonna eliminate a, an entire debt the quickest and it also happens to be the higher interest rate. So I think for you guys taking a look at your list and not just focusing on the interest rate, but also saying in light of the fact that we're gonna have these student loan payments coming in August, is there maybe a different one of these debts that I wanna target first because the minimum payment going away will help us with the student loan payment.
I also wanna say, I like that you said that you're not gonna prioritize paying off the student loans because that's gonna be for the long haul. I, that is wise. I know there are some people who feel different, but in student loan interest rates tend to be rather low and the balance tends to be rather large. And what we don't wanna do is avoid bigger goals or even just fun, like vacations. Like, okay, we'll take a vacation when we're debt free. And then you're looking at a $60,000 student loan and it's like, okay, I'll be, quite older when by the time I have a vacation. So I do, I like that you said that. I like that you have that in your perspective, that this is not something to have this focused intensity on a five to six figure debt, because when we're talking about that long of a span of time and that low of an interest rate, we can actually work backwards against ourselves where we think that like, oh, we're gonna be debt free. We're gonna pay this off. When really, if we look back and we could have spent some of that money investing in retirement, like I said, or you know, just preparing to replace a car in cash, like you said. So for example, if you were so laser focused on paying off the student loans that all your extra money went to student loans, and then your husband needed a new car and there was no extra money for it, so you ended up taking out a car loan that would be that backward progress that we're talking about. Where it's like, okay, we would've actually been better off, minimum payment on the student loan, saving up cash for a car and replacing the car in cash. So I think in that perspective of coming up with a list of the order of your goals for you, I think that savings account first and then focusing on the high interest consumer debt as number two. And then maybe number three is to then pause all of the rest of that and, and start to save for a vehicle in cash because avoiding a new debt is the same thing as paying off an existing debt.
Hayleah: That's a good idea. I like that. I think that seems doable. It'll make me feel better.
Carly: And, and really so much of it is not about having a, a specific right or wrong. So for example, the three things that I just suggested to you, that is not the only way for you to have success with this, but having a plan is so much better than having no plan at all. So whether you actually decide that these are the three specific things for you, or you come up with a different order, it's much more important to focus on having a clear order to your goals than it is to do the specific order that I suggested.
When we're coming up with that order of goals and it feels more clear and it feels more focused sometimes when we get those increases in income it can be hard to remember why we're doing the things we're doing and so then that kind of stops us from getting momentum with those new paychecks. So I also wanna say to remember your bigger picture why. Why is it good to pay off your debt? Why are you wanting to focus on paying off a or buying a car in cash?
So paying off debt is not actually a goal by itself. What we want to do is pay off debt so that we can do other things. So what we see is that having a long list of debts tends to hold us back from the things that we wanna do with our money. But those things that we wanna do with our money are actually the goal. So sometimes when we have a budget and we're setting it up by pay period and we feel like we're doing all the right things, but we're still not finding progress, sometimes it's simply because we've lost why we're doing it. And so we wanna identify for your specific family, what is that means to an end? And once we know that and we remember that, then it's like, okay, now I start to see that I really do want that more than I want whatever I'm adding to my cart in the moment.
So for you guys, if, if you think about okay, being debt free, paying off those credit cards, being consumer debt free, let's say that. What, what do you picture, like, what are the things, what are the doors that seem to open for your family if you were on the other side of having those consumer debts paid off?
Hayleah: I think for so long we, you know, we were married seven years before we were able to get into our house and have a baby. And we were very intentional about making sure we were ready to take on those in that, you know, cost of living. And I think just experiences is, is important for me. Kind of growing up in a household where material things were, were valued and , not really traveling very much like I would love to travel and I think that's important to me. And just providing those experiences for my daughter and getting my husband on board. He is not a huge traveler.
Carly: Hey, mom and me daughter trips would be fun too.
Hayleah: Exactly. So I think just like, just opening a door for more experiences, because I think for so long we felt very hindered by our budget and not being able to afford certain things or relying on family members to help us out, to fly somewhere. To feel like you, you've made it to where you can do those things yourself and you're not having to rely on somebody else because it's really hard. Like, yes, people do that out of, you know, it's a joy for them to give. But like to be on the other side of that, to be able to give that to somebody else or to give it to our family I think is really important.
You know, just for us to steward our money well. This was the first year where we were able to like contribute to my brother-in-law's church plant. And that was rewarding to know, like we have the means to do that and not feel like, oh, I wish we could, but we really can't.
And I think just opening the door for us to, like I said, to have more experiences and to give where there's a need I think is important. And I feel like that would be the responsible thing to do with our money because, I am that type of person who's an emotional shopper, and when I see that extra money, I'm like, oh, I really wanted this for a long time, or this is really nice. But you're right, it's a momentary happiness. Like once I get it, it's not as exciting. But I think taking on experience as like going on a trip, like, you know, in a few weeks we're going to London and like we wouldn't have been able to do that. And so I wanna be able to give that to my family more than just stuff.
Carly: I love that. So what we wanna do then is make those things more visible and more front of mind. Because sometimes, like you said, that being that emotional shopper, it's easy to get those things in front of us. We see 'em on our phone, we see 'em when we're walking through Target, we see them. And so we think of them as more available or more enticing than the bigger things that feel far away and feel abstract. But having those become more available to us, to our eyes, to our mind, can help us to be like, no, actually, I, I find myself wanting the thing that's in the future more than wanting what's here today.
So even, you know, I call 'em silly because people, other people often call 'em silly. I don't call 'em silly at all. Things like printing out a picture of where you want to go, y ou know when your credit cards are paid off or, or actually planning, like, this is the trip that my daughter and I are gonna take as soon as X, Y, Z happens.
So having those things become really specific can suddenly be a really big momentum boost where we're like, okay, instead of having a hypothetical, it would be nice to travel once our credit cards are paid off, actually be like, my daughter and I are going to florida the month after our credit cards are paid off. Then we suddenly get this like, focus to what we're doing, and we're like, I can do this because that's what I wanna do. So getting specific with it, whether it's like changing your phone background to something or printing something out. I am a huge fan of the thermometers that you color in as you're getting closer to something. We all did that when we were kids and we loved it. It's like adults actually love that too.
Hayleah: It's so visual. Yeah.
Carly: Yes. Yeah, because it can feel, when you go online and you make an extra $200 credit card payment, nobody claps for you. Nobody like, you know, it's just like, it feels like paying a bill. But if we have like a little chart on the side of our fridge and when we make that payment and then we color a little closer, and at the top of it, it says, "A new stove" or you know, whatever that thing is, then we're like, I know why I'm doing what, what what I'm doing. I see a clear connection between the goals that I'm trying to accomplish and the way that my life will be different once those are accomplished, then it starts to get more fun, right? Like if we can make it a game, I'm a huge fan of competing against ourselves and making games for ourselves.
You know, so even little things like I've done before with goals in the past where I'm like, if I do it by this date, I get this much. If I do it by this date, I get this much. And so then it's like a race to the finish line for myself of, of what can I accomplish? You know, what can I do? And so maybe if you're looking at the budget and it just kind of looks bland, all this money that we're earning and all these paychecks that we're increasing is not translating into anything in our actual daily life, then adding some of those goals and some of those benchmarks into your plan can really start to shift it to "this is really fun to have a bigger paycheck", not just because I can go buy stuff, but because my goals are being knocked out one at a time and just like I said before where, and it's not about having a specific right or wrong plan, it's about having a plan. Having a reward, whatever it is, could be large or small. Having that kind of dangling the carrot for yourself can be like, oh, now we get why we're doing it, and we're, we're excited to make that happen.
Hayleah: Oh, I love that. I think I'm a very visual person and so being able to see, I guess the progress, and I think, like you said, like I love how you were like just having a plan is better than no plan. And I just me looking at all the numbers, like it's just so daunting, and like, I'm like, oh gosh, where do I go with this? Like, where do I start? I think that's been really helpful is to have somebody else take a look at your numbers and take a look at your situation and be like, I think this would work. Cuz I love learning from other people and be like, what would you do in this situation? So I love that. I love being able to have a visual for myself. I think that would probably change the game a little bit and kind of take some of the weight off of trying to address all these goals.
Carly: Cuz you don't want to, you don't want it to feel like a burden. Because as soon as we start to tell ourselves that budgeting is a burden, or paying off these debts is just our duty and we just have to do it. Then just human nature is to push against that. Right? And to be like, well, I'm, I'm an adult and I work really hard and so I'm not doing things that are a burden or I'm not doing things that are boring. But when we, we do the exact same thing, but we flip the narrative on why we're doing it, then the exact same plan of saving up paying off debt starts to become fun. And so that's the goal. Is to not avoid those things and say, oh, well if, if budgeting is a burden, then just don't do it, but say, if budgeting is a burden, then let's find a, a better reason to do it.
If you think back to the last six months or a year or two years as your income's been growing, all those months that you were afraid of maybe doing the wrong thing with the money ends up being no progress at all. Right? Where just picking a plan and saying, okay, I know there are multiple options out there for how I could go about my savings and my debt payoff and buying a car, but I'm gonna do, with the information I have and the income that's available to me, we're gonna come up with a plan. And it doesn't have to be the perfect plan, it's just gonna be a plan that's right for us. And then give yourself permission to not question the plan anymore. To say, okay, we've done the planning stage, right? We've done the, the decision making, and now that's done and we're moving into the action phase of this plan.
I know for me, I also question the plan that I come up with all the time. So actually being able to say to yourself out loud, "Nope, I, I already decided what the plan was, this is what I'm doing," can really help to cut back on the amount of time that we spend spinning our wheels.
(overthinking) Do you find yourself to be like an overthinker?
Hayleah: Yes, I am. Yeah. I'm kind of like your worst case scenario person. So I'm always like working through like, okay, well what if this happens? Well then we can even adjust here and there and then, you know, well, what if this happens? I'm definitely on the overthinker side of things which I think could be a benefit, but also, yeah, it can be like a hindrance in many situations.
Carly: Is your husband also or is he more of like a "decide and go"?
Hayleah: I think he's a good balance, but he would probably say he's an overthinker.
Carly: I am a chronic overthinker and so I, I tend to want to mull it over and play around with as many different, that's honestly why I like the budget spreadsheet, because I can play around with hypotheticals. As you, especially once he transitions into the new job and, you know, schedule and take home pay being able to actually input numbers well into the future of, okay, exactly what will it look like to start paying on the student loans, or exactly what timeline are we working with for credit card payoff can help be more realistic with your goals and with your timelines. And a lot of times most people think that by doing that, it's gonna be worse than they thought. But a lot of times, especially for us overthinkers, it tends to be better than we thought, right? Like it tends to be like, oh, it's gonna take five months to pay off that credit card, not a year and a half like I was telling myself. So, as you, you know, figure out what those real life numbers are gonna be for you guys, I would encourage you to set up the budget, not just for this little pay period window of time, but maybe even even go into the next quarter as well, and just look at what's the realistic timeline. What could we potentially accomplish if we stick to the plan? Because sometimes just seeing those amounts with those dates associated with it can help us to be like, okay, it's not as dire as I was telling myself. And you know, I can still have room for my personal spending and pay this credit card off by October or whatever. So those real numbers can really help to align our overthinking with what's actually gonna happen.
Hayleah: Yeah, I go in there and I like play with the numbers. I probably spend way too much time playing with the numbers because it's what I didn't have with my monthly spreadsheet, like I could never do that. But being able to see it in a different way has definitely given me a little bit of peace of mind. It puts it on in front of me so I can actually see it, because I don't always have the mental bandwidth to take on all of, all of the numbers, all the things. And so, I definitely appreciate being able to give my mind some ease, like with having it all laid out in front of me.
Carly: And I've, I've found too that, as I get anxious about those future impending financial changes, it's a hobby of mine to go in and look at my own budget. You know, I spend all day looking at other people's budgets, but I still like to go in and look at my, my own, not just for the sake of the numbers, but because I do actually feel less anxiety about those future things when I can look at the real numbers and be like, okay it does fit. I see that the payment is there. I see that the income and all the expenses are covered. Then I can be like, okay, with our current income we can cover all of our bills and our groceries, and still have room for fun, even with adding in this new bill.
So then I can start to tell myself, the fear that you're having about it isn't, isn't founded. And that's to me, kind of step one in comforting myself about the things that I'm imagining are gonna happen, not actually needing to be a problem, which so often people who feel anxious about the future of their money tend to avoid setting up a budget cuz they're like, I just don't wanna look at how bad it is. I don't wanna see the numbers. It might fit and it might not, but yeah, either way we have the real information instead of just allowing ourselves to balloon it. Because I think a lot of times if it doesn't fit in the budget, we start to imagine like, we won't be able to buy food and we're gonna default on our, you know, like we go to all those extremes. We're like, hold on. It's a, it's, there's a difference between it not fitting by a, a small amount and you losing your house or something. Worriers tend to avoid budgeting. I myself have found through the past years of doing it that my worrying tends to be calmed down by looking at the real numbers.
Hayleah: Yeah, I definitely agree with that. Just looking at the numbers gave us an idea of when my husband could leave his job. That way we can have a enough overlap. Cuz him just telling me like, "Hey, I'm thinking of putting in my two weeks on this date." and I'm like, well wait, wait, wait, wait, wait, how does that work out With our budget? When can we, realistically, can we afford that? Like that's when mortgage is due, can we do that? My mind started freaking out because I'm like, we're not gonna have a paycheck cuz you're got a different pay schedule and I don't know what it is. And so like, just that unknown was comforted by the numbers that we have and, and I could see it in front of me. And so those numbers gave me so much power to say like, okay, yes we can do that. We will be okay. And so I definitely believe that being able to see it in real time and being able to project what you can do has brought so much peace. As somebody who's, I'm always anxious or a worrier or just overthinker. So, I definitely believe that just being able to see it can bring so much peace.
Carly: I do honestly, genuinely believe that worriers tend to be better budgeters, because we are, we're not gonna forget anything cuz we're worried about not having it. And so I think the, the person, especially for a couple, if two people are managing one set of finances, if one of 'em is very, like, everything's fine. Like I would never let that person budget, if I was, if I was married to that person and one of us had to manage the budget, I'd be like, you're gonna leave stuff out. You're gonna be, you know that painfully optimistic. And so like if there's a worrier in the couple, I'd be, I'd pick the worrier to be the budgeter they're gonna, they're gonna be the reliable, consistent one. Cuz like I said, we worry so much that we know what the bills are.
Hayleah: I told my husband that all the time. I'm like, you'd be so lost without me. Cause he kinda ventures into the like, oh, we're fine. Like, I, we don't need to worry about it. I'm like, but, you don't see what I see .
Carly: Yes, exactly. We need, we need each other. It is helpful to have someone tell us that it'll all work out. But I still wanna be the person building the spreadsheet.
Hayleah: Exactly. Yes.
Carly: All right. Well, Hayleah, this has been a super great conversation for people who not only are maybe looking at higher income and increasing that and wanting to balance lifestyle creep with meeting their goals, but also as we ventured into the idea of having a plan being better than a perfect plan. That's a message that I think everybody can be reminded of. Sometimes we are faced with so many things at once that we just would rather not have a plan. So I, I really appreciate you being willing to come on and share something so vulnerable as, our income is increasing and we're still not sure what to do, and I really appreciate you being willing to share that.
Hayleah: Thank you for having me. It's been nice to be able to talk it out with somebody who loves numbers as much as I do.
Carly: (Wrap Up) So Hayleah originally came on the podcast to talk about lifestyle creep and how to avoid spending all of their family's raises.
But as we worked through some of her reservations beneath the surface, I was able to send Hayleah off with the confidence that having a plan for her money, even if it includes some increased spending money, is so much better than having no plan at all.
If you too find yourself paralyzed by all the different ways that you could use some extra income in your budget, remember that the time you spend wondering what the perfect right thing to do is with your money is time that could have been spent sending that money towards a goal. Come up with your next one to two highest priority goals and then give yourself permission to not be planning or deciding anymore and instead moving in to action.
Go out and make that imperfect plan happen because really that's the only kind of plan there is.
(*Credits) Thanks for listening to the Debt Free Mom Podcast. If you want to join me as a guest on the show, go to dfmpodcast.com. The Debt Free Mom Podcast is hosted by me, Carly Hill, and is produced, edited, and mixed by Kyle Hill. Music for this episode was written by Kyle Hill. Hit subscribe wherever you're listening to join in with every new episode as we grow our confidence and contentment in our personal finances.
