Budgeting & Debt with Chelsea Brennan from SmartMoneyMamas.com

Do you get the feeling that ADHD is in the way of your relationship with money? While it may feel like you’re struggling alone, money is a struggle for many people, with and without ADHD. This week on the show, SmartMoneyMamas.com’s Chelsea Brennan sits down with us to talk about foundational skills for budgeting and getting out of debt that will go a long way toward living a healthy life with money AND our ADHD!

About Chelsea Brennan

Chelsea Brennan is the founder of Smart Money Mamas and the annual online summit, Mamas Talk Money. An ex-hedge fund manager turned financial educator, she helps moms connect with all aspects of their money in a way that lets them overcome emotional blocks, identify what they most want, and create the healthy money habits that will help them achieve their goals while modeling positive money relationships for the next generation.

Links & Notes


Episode Transcript

Brought to you by The ADHD Podcast Community on Patreon

Pete Wright:
Hello, everybody. Welcome to Taking Control, the ADHD Podcast on RashPixel.FM. I’m Pete Wright. I’m here with Nikki Kinzer.

Nikki Kinzer:
Hello, everyone. Hello, Pete Wright.

Pete Wright:
Oh, Nikki.

Nikki Kinzer:
You’re going to be okay. You’re going to be okay.

Pete Wright:
So it begins.

Nikki Kinzer:
We have an expert here.

Pete Wright:
I know.

Nikki Kinzer:
She’s going to pull through… or pull you through any kind of fear or anxiety you have around money.

Pete Wright:
Well, I’ve been listening to her podcast all morning. Now that we’ve had a chance to talk with her, she seems very gentle. I think that I’m going to learn some things today. I hope that I am a good avatar for all of you who have struggled with money, and debt, and budgeting. I pledge to do my part, to do my part to act as your avatar. Before we dig in, head over to takecontroladhd.com. You can get to know us a little bit better. You can listen to the show right there on the website, or subscribe to the mailing list, and we’ll send you an email each time a new episode is released. Of course, you can connect with us on Twitter or Facebook at Take Control ADHD.

Pete Wright:
If this show has ever touched you, or if you have ever had a feeling that you would like to support us monetarily to cover Pete’s pain confronting topics that are triggering, then you should visit us on Patreon, patreon.com/theadhdpodcast. Patreon is listener-supported podcasting. You spend a few dollars each month for us, and that goes directly back in to us growing the show for you, for building the community, for adding new features to the show, for doing the kinds of things that we love to do to support the ADHD community.

Pete Wright:
Speaking specifically of the podcast… If you’ve never visited Take Control ADHD and looked at one of our episode pages, you can see the entire transcript of the show. That is a human-powered transcript of each episode that is directly subsidized by our community members. Those kinds of features and more… Patreon.com/theadhdpodcast. Thank you all for your support.

Pete Wright:
Chelsea Brennan is here. She’s the founder of Smart Money Mamas and the annual online summit, Mamas Talk Money. It was actually one of our members who attended that summit and just adored you, Chelsea Brennan, and came back to us, and said, “This Chelsea Brennan… You’ve got to have her on the show.” It’s been way too long. I have been listening to your podcast zealously since then. I have to tell you, I have never wanted to have somebody call me Mama more than I do right now.

Chelsea Brennen:
Well, how are you doing, Mama?

Pete Wright:
Welcome to the show. There you go, Chelsea Brennan. That was a cue.

Chelsea Brennen:
Well, we’re good. I’m so excited to be on the show with you guys.

Pete Wright:
It’s good stuff. It’s been a long time coming, right, Nikki?

Nikki Kinzer:
It has.

Pete Wright:
We’ve had money on the mind for a while.

Nikki Kinzer:
Yes. We did a series… Gosh, it was what? It had to have been three or four years ago. It was a long time ago. Yes, it’s definitely time to be talking about this, especially during these times when we’re in the middle of a pandemic, and a lot of people have lost their jobs, and a lot of people are uncertain about their financial situation and the future. It’s definitely good timing. I’m so excited to have an expert come on the show because, really, Pete and I don’t know what we’re talking about. We think we do, but we really don’t. If anybody listened to the show last week, we have two different, kind of, mindsets, too, because I married a husband who is really good with money.

Chelsea Brennen:
It’s a loaded pause.

Nikki Kinzer:
Yes.

Pete Wright:
I’m telling you, I am leaving all of that in the edit.

Nikki Kinzer:
Yes. All of it, leave it all.

Pete Wright:
All of that juicy, juicy pause.

Nikki Kinzer:
Because I just want to be careful. Yes, I’m going to give him praise because he’s very good with his money. Because of that, I’ve learned a lot. I am a little bit more comfortable with talking about this, but Pete, you’re just a hot mess. I’m so sorry.

Pete Wright:
Well, no. I’ll tell you. I come from the background of having struggled with money. I, too, married somebody who helped me straighten stuff out. If I was not in a relationship with a partner who kept me balanced in that area, I would be in much, much more trouble than-

Nikki Kinzer:
Yes, I agree with that with me, too, because as I mentioned last week, too, if my husband, when we first got together… Chelsea, I don’t know if you heard this. He had a bonus, and I’m thinking, “Ah. You buy something. Get something that you’re proud of.” He’s like, “Oh no. I’m investing all of it.” “You’re what? You’re doing what?” If it wasn’t for him, I’m sure I would have been in the same amount of debt as I was when I married him.

Pete Wright:
You know what he did though? He bought his future, Nikki. That’s what he did. He bought his future.

Nikki Kinzer:
Oh yes.

Pete Wright:
What do you think of that?

Nikki Kinzer:
Look at that.

Pete Wright:
Somebody put that on a shirt. Intern, put that on a shirt. Chelsea Brennan, how did you get into this business of helping? I realize you’ve said exactly three words.

Nikki Kinzer:
Right, right.

Pete Wright:
One of them was to me, and it was, “Mama.”

Nikki Kinzer:
This is not about us.

Pete Wright:
Let’s go. Clearly, we bring baggage to you. Please, tell us about yourself.

Chelsea Brennen:
I want to kick off, first though, that it’s impressive to me that both of you have partners that you feel like have improved your financial situation, that you guys are working together, because that is so uncommon in most relationships, right?

Pete Wright:
Really?

Chelsea Brennen:
I think that’s where a lot of people struggle, is that they don’t talk well about money with their partner where especially if one person is better with money than the other, the person who’s not as good feels less than and feels like they’re being talked down to. Finding that balance is a really amazing thing. First of all, congratulations on that. That’s great.

Pete Wright:
That’s amazing. I did not know that that was uncommon.

Nikki Kinzer:
I didn’t either, yes.

Chelsea Brennen:
It’s a big problem. My background is in super boring, corporate… I was a hedge fund manager. I managed a distressed debt portfolio, which basically means debt for companies that are going bankrupt. I did that for several years. Before that, I was on Wall Street at Goldman Sachs. All of this gave me a deep understanding of investing, and in finance, and money, but it lacked purpose, right? It was a real struggle for me of… You’re helping the rich get richer in that role, and it has its purpose, but it just reaches a point where I wanted something that was more.

Chelsea Brennen:
Right before the birth of my second child, I left that job to start Smart Money Mamas, and start running that full-time, and to focus on… Let’s talk more about the personal side of money. Let’s get away from this big institutional investing and really help families and women thrive with money, both so that they can live lives that they really want and so they can set a better example for the next generation, right, because when we talk about parents, we have this opportunity to teach and to change the narrative. I really wanted to focus on moms as I started my journey in education.

Pete Wright:
You could have been Gordon Gekko. That’s what I just heard.

Chelsea Brennen:
For a little while, I got to do that. That was-

Pete Wright:
That’s amazing.

Chelsea Brennen:
It had its own interesting background.

Pete Wright:
Horrible. What a turn! You literally made the Darth Vader turn.

Chelsea Brennen:
Especially because I used to cover metals and mining companies, we were looking at coal companies and steel companies-

Pete Wright:
Oh.

Chelsea Brennen:
It was real dark side to turning it around.

Pete Wright:
Wow. You’re my hero. That is an amazing turn. You are the storybook. You’re Joseph Campbell all in one. Right there, the hero is turning. Look, okay. That is an incredibly valuable background in coming to this conversation about managing money with heart. As we talked about, we want to cover kind of two topics here, but I think they’re really nested topics. They’re one big topic. We want to talk about budgeting, and why Pete doesn’t do it, and getting out of debt. As you said in our pre-show, those are really two things. We want to talk about one really important foundational lesson before we talk about the other. How do you start this before I start peppering you with questions?

Chelsea Brennen:
Right. We’re going to start with… Actually, the first two steps are nothing to do with numbers. I want people to pull away from the numbers for a second, especially because I think the numbers are what scare a lot of us. The first thing I want you to think about is, what do you believe about money, right? What are your earliest money memories? This feels a little soft to a lot of people who are like, “I just need to figure my money out. I just need to get to the numbers.” If you go there first, if you go there before you deal with the emotional side, you’re going to keep getting sucked into the same cycles.

Chelsea Brennen:
Let me tell you what I mean. Most core money beliefs are set by age seven. There are things that we see as children that we do not have the perspective to understand. Often it’s things that something our parents said in a store, our parents arguing about money. We drew this big conclusion because as kids, we want to create order out of chaos, right? We draw this big conclusion that lacked perspective that is probably wrong, that then we carried through our entire life, right?

Chelsea Brennen:
The example I most commonly use is, this woman who was in the grocery store with her mother… She asked for this small toy. Her mother said, “No. Daddy only gave me this much money for groceries.” In her mind, in that moment, she decided that her dad was the determinant of what was worthy of buying with money and that men controlled money. Both of those things, even as she embraced really feminist principles, even as she built her own career, this was something that lived in the back of her mind, right? She was always looking for someone else’s approval. She was always looking for her boyfriend’s or her husband to take care of the big decisions.

Chelsea Brennen:
Once she realized that, it was easier to make a shift. It was easier to look at that, whatever that belief was, and say, “Hey. I don’t actually think that. That actually has problems in it, and I can start to unwork it a little bit,” right? That’s just one example.

Chelsea Brennen:
I’d take a moment and think about, what are the words that come up when I think about money? Are they generally positive words? Are they generally negative words? What fears do I have? Then take a minute. I often recommend taking a day or two writing it down, writing those initial things down, taking a day or two, and coming back and saying, "Is this actually the relationship I want with money? Is this the relationship I want with something that touches almost everything I do, right? Where I live, what vacations I go on, what I buy at the grocery store?

Chelsea Brennen:
If not, then start to rewrite those beliefs. Sometimes that means completely inverting them. Sometimes it means changing them slightly, but kind of work on those beliefs. I am far from someone who has any expertise in ADHD, but what I have heard from women in our community often that have ADHD is, “I can’t handle money,” right? “I’m too impulsive,” or, “This is not going to be something that I can do. I’m just bad with money.” It keeps coming back to, “I’m just bad with money.” I think that that is a core thing we have to change before we can tackle budgeting and tackle debt. We have to think about, “Okay, maybe I have to handle money differently. Maybe I have to find a strategy that works for me, but I am good with money,” and kind of repeating that thing.

Nikki Kinzer:
I love that.

Pete Wright:
Oh, I do, too.

Nikki Kinzer:
Because it really is addressing the limiting belief first. As in anything that we talk about with ADHD, we have to address that first, that mindset, before seeing anything different and believing that you can do something different. I’m really glad that you pointed that out. That’s great.

Pete Wright:
I’m very curious, Chelsea, what your earliest memories are of money that defined your career in finance because something that you must have learned before you were seven drove you to your aspirational role as almost Gordon Gekko and then back out of it again.

Chelsea Brennen:
Absolutely.

Pete Wright:
What was that? Can you give us that example?

Chelsea Brennen:
I can. I don’t have a specific moment because it was embedded in my entire childhood where my dad had a real idolization of wealth. I got the message really early on that wealth equals your worthiness of love, and belonging, and attention, right, and that he wanted my brother and I to be financially successful, to be outwardly successful in something that he could brag about, right? I really absorbed this in a big way. It made me a perfectionist. It made me someone who wanted to always be doing the next big thing. In college, when I had to struggle with this really big decision of, I love education. I love teaching. Clearly, right? That’s what I do now.

Chelsea Brennen:
I had to make this decision of, was I going to go teach middle school, which was one of the things that I wanted to do, or was I going to go into investing? I pulled back and forth with the decision for a while. What I ended up deciding was, “Well, if I go into investing first, I can earn all the money. I can build the wealth. Then later on, I’ll have earned the right to go back and teach.” Obviously, this was a hugely problematic thing, right? It influenced my ability to even spend the money that I earned, huge amounts of money, right?

Chelsea Brennen:
I always call it stupid money. I couldn’t spend it. You talked about your husband with the bonus. I got my first big Wall Street bonus, and I couldn’t buy a bicycle, guys. I stood in the store, and I cried because I could not see my bank balance go down. This is something that I have spent a lot of time unwinding. Especially, I think that it’s important that we recognize that this isn’t something we switch once and then it’s just better because we’ve grown our whole personality, our whole mindset, around it, so it’s an ongoing journey. It’s something that I thought I had largely overcome.

Chelsea Brennen:
Then I leave this job where I’m making high six figures to zero because I’m starting a new business. My husband’s a stay-at-home dad. Now we’re not getting a regular paycheck. It all came back up for me again. I was convinced that my husband wasn’t going to love me anymore. He was going to get sick of me leaving the business, that I was failing my kids. I had to keep working through this to separate kind of my own self-worth or my net worth. That’s my limiting belief. You kind of do have to look back and say, “Where is this coming from? How can I overcome it?”

Nikki Kinzer:
It’s really interesting.

Pete Wright:
One of the first questions that came for me listening to one of your episodes this morning was… You framed a question in terms of how important it is to come to an understanding of what happens after you get out of debt. That seems like a related concept to what we’re talking about here. If you’re living in a state of constraint around debt, why is it important to create this vision of your life beyond it?

Chelsea Brennen:
Absolutely. Pete and Nikki, I said earlier that the first two steps weren’t about numbers. This is actually the second step, which is about life’s planning and goal planning. What do you want your life to look like? Where are you headed? When you talk about, Pete, why we do that beyond debt, the first reason is, we hear from people a lot that they learn that they need to get out of debt or they’re so stressed out by their debt that they’re finally like, “I’m sick of it. I’m going to get rid of it. I’m going to do everything I have to do to get rid of that debt.” Then the debt is gone, and that big scary monster they were fighting for so long is gone. They don’t know what to do, right? They no longer have a purpose for that money, and they fall right back into old habits because their only focus was fighting that big scary monster, right, and they end up in a cycle.

Chelsea Brennen:
The second reason is, for some people, depending on how much debt you have, this is a long journey. This can be years that you’re working on paying off your debt, right? You need to have a bigger motivation than watching the balance come down because at first, early in your journey, your first few months, that’s really exciting. It’s like, “We paid off $400 of debt. We’re amazing.” By month six, you’re like, “Ugh. I really just want to go out, and have a super nice dinner, and go do whatever that I want to do. I don’t want to worry about this debt anymore.” If you have a bigger vision, if you’re paying off the debt as a stepping stone to being able to buy your dream house or a stepping stone to being able to retire and have the retirement that you want, if you have a bigger vision, then the motivation is longer lasting.

Nikki Kinzer:
Which is probably why a vision board can be so helpful, right? I have a vision board, for the people that can’t see the video, behind me. It’s actually the same bulletin board that Chelsea has, too.

Chelsea Brennen:
Also have this behind me.

Nikki Kinzer:
Yes. I can see why that would be important though because if there were something you are really reaching for, having it in front of you, which is really important for ADHD because they can so easily forget what the motivation is… Anyway, that was just something to add, that having it in front of you.

Pete Wright:
I would add to that… I’m going back into the motivators that have fueled me in my sort of roller-coaster cycle of dealing with debt in the past. One of those motivators is exactly what you said. It’s that act of just sort of falling into hyper focus on watching the balance go down. Then once it comes down, what do I… I guess I better start collecting antique cereal boxes or something stupid. What else do I have? You feel like there’s this massive void, an emptiness that comes with it.

Nikki Kinzer:
I’ll tell you something that I could see myself doing, is, “Hey, I just paid off $400 of debt. I can go ahead and spend another $50 on this. It’s okay because I already did $400.” Instead of really doing $350 or $400, I’m doing $350, but in my mind, I’m still rewarding myself when, really, it’s not helping me. I can totally see myself doing that.

Pete Wright:
Better yet, I just paid $400 off on the credit card over there, so I better go spend $150 off of this credit card over here because I paid that one down. I’m a good boy. I need to be rewarded for my good deeds.

Chelsea Brennen:
I think that comes back to goal setting, too, is deciding what rewarding yourself looks like, right? I think that there’s a lot of things we buy to fill other voids that we think are bringing us joy, but really, we buy them and then we feel just this… a little bit later. I think as you go through this exercise and as we start to go through the budgeting journey that we’ll talk about in a second, it’s looking through your past expenses and saying, “Why did I want this? What is its rank? Does it actually bring me joy? What are the things that I can do?”

Chelsea Brennen:
One of the exercises we talk about on Smart Money Mamas is, what are the things that really make you feel closer to your family, make you feel more content and joyful? Let’s talk about ways that you can get those same feelings that cost less, right? All families have something. My family is major board gamer. My husband and I love sitting down and playing board games. We have a local shop that they don’t even charge for table time. You can come in. You can use games off the shelf. We usually pay a few bucks for drinks or drinks and snacks, and that’s it. It’s a date night. It cost us less than $20, less than $10 often. That’s plenty for us. We’re able to ditch the nice dinner out and movie because we don’t actually like that as much. It doesn’t actually let us connect as much. It’s really just thinking about, what does rewarding yourself look like? because I don’t believe that on any debt-payoff journey, you should restrict all joy because you’ll never be able to sustain it.

Pete Wright:
That was actually my very next question. It was the sort of the ADHD angle on this budget deprivation sensation, right, that, to me, I can see the connective tissue between maintaining a budget and finding a way to feel good about it and feel like I’m sort of rejecting myself. That rejection sensitivity sort of crops up that says, “Because I am not spending as much, because I feel like I have to make a choice to go not take the family to a movie tonight, which will cost us $80 bucks, $100 bucks, that I am somehow a bad person.” That’s the ADHD connectivity that I can see how I could arrive there from a negative experience, a negative family experience, negative sort of sense memory of managing money.

Chelsea Brennen:
I think that we have to decide why it’s a negative experience to not go out to the movies, right? I think when we have that broader goal that is speaking, it is us being true to ourselves. Well, maybe that decision isn’t about deprivation. Maybe it’s about living more in alignment with who we are and who we want to be. Then that’s okay to skip the moves if it means we’re going to make popcorn at home and do something together. I think that we need to find ways to make the budget not feel like deprivation.

Pete Wright:
Well, I don’t want to make this too anchored in time. It is the world that we’re living in. I was sort of reflecting on this, this morning, just how remarkably clear-headed we, as a family, have become, thanks to our isolation efforts, right? We’re eating out, obviously, much less. We are not doing the sort of expensive outside things that we used to feel like we can’t live without. This has been a real opportunity to be able to reflect on, what really are the necessities? What are the things that we really can’t live without? Is there a way for us, as you say, to get that same sort of joy and do it together at home in a new way? This has been a real benefit.

Chelsea Brennen:
It’s such a hard topic with what’s going on in the world because some people are really struggling, right? We’ve had unemployment and issues. There are a lot of people who, just like you just said, Pete… They’re home. They still have their jobs. They are actually spending less than they ever have before. This is an opportunity to reset and to say… A lot of those people have said through this crisis, “Okay. I need to go back and look at my budget to make sure we’re going to be okay even if we do lose a job.” We’ve heard from a lot of people who are saying, “I never realized how much fat I really had in my budget until I’ve been home, and now seeing how much less we spend.” I think we can do that exercise without global pandemic, but it has forced us all to look at it.

Nikki Kinzer:
Right.

Pete Wright:
Well, it is. I want to echo what you just said. I mean, it’s just how powerful it is that… I mean, there are people, obviously, really struggling. How are small businesses surviving? Those kinds of questions that obviously have to be addressed somehow: finding the balance of supporting the economy, tipping well to the people who are bringing you things. All of those things… I feel like I’m heart heavy, but also, opportunity to reflect on how I manage that. Before we start into the steps because I’m anxious to get into some steps and strategies, can you just give us some reflection on good debt versus bad debt, school loans, mortgages? What’s your perspective on this because I hear conflicting things from people who feel strongly about such things.

Chelsea Brennen:
Yes. I think that the good debt versus bad debt argument, right… The basis of it is always that good debt is any debt that helps you earn more money over the long-term, right? Buying a really fancy car with a big car loan, bad debt, by this definition, right, because it’s diminishing value. You’re never going to get your money back. You’re paying a high interest rate, just not beneficial. Student loans… If it means that you can go earn more money, which we can talk about what that really means and whether-

Pete Wright:
That calculation has actually changed a lot in the last 10 weeks.

Chelsea Brennen:
It has changed a lot. It’s changed a lot over the past several years, right?

Pete Wright:
Right.

Chelsea Brennen:
Depending on what your major is and what you want to do with your life. That’s not necessarily a high ROY, but that’s typically defined as good debt. Mortgage fits in that bucket, as well. I think the hard thing with the mortgage is that when you look at the longevity studies of building wealth through home ownership, you’re actually mathematically… You guys will see this if you Google around. You’re mathematically better off taking that money, and putting in the market, and renting, mathematically. The problem is you have to be able to take the difference, the down payment you would have put towards your house, all the money you would have put towards home repairs, and actually invest it, which most people won’t do.

Chelsea Brennen:
A house and a mortgage can be good debt only because it’s a forced savings vehicle. You have to pay your mortgage every month, which means you have to build equity. That is a positive thing. Even though there might be more optimized ways to do it, it’s the most automatic way to do it. Debt is still always just debt, right? You’re always going to pay an interest rate. When you can avoid it, that’s likely going to be your best scenario.

Chelsea Brennen:
Let’s take student loans as an example. We’ve seen that going to the best, most expensive private college often does not have this huge ROY versus going to a state school that is lower price. We have this idea of what that value is in our heads and the prestige, but it doesn’t actually monetarily come out the other side. Instead of telling kids, if you’re parents, or you’re someone who’s considering going back to school, instead of internalizing this message of, “Student loans are good debt. It’s okay. Let’s take out student loans,” let’s think about the ways to get that degree but minimize our debt, right?

Chelsea Brennen:
How can we actually read about applying for financial aid? What scholarships can we apply for? Because scholarships… There’s tons, and tons, and tons of them out there. Many of them get very few applications. How can we be better about optimizing that? We still want to reduce debt overall, but that’s generally the split, is, is this debt helping you earn more money or is it something that you’re paying in the future for something you experienced in the past?

Nikki Kinzer:
Good. Good explanation.

Pete Wright:
Thank you. I have monopolized the peppering-question segment. Let us talk about some strategies. Nikki, where do you want to start?

Nikki Kinzer:
Well, I think the basic question that I get a lot… I say basic, but it’s not basic because it’s so layered. I’ll get somebody that will want to work with me. What do you want to work on? One of the very first things they’ll say is, “I want to work on my finances. I want to set a budget.” I know kind of how I approach that, so that’s kind of what I’m helping them with, but I’m always telling them to go talk to a financial advisor, too, or an accountant, or an expert because I’m not an expert. I guess that’s where I would want to start, is, where do you even start with this big, huge issue of, I want to get financial control back or this budget thing? What is a budget exactly?

Chelsea Brennen:
All right. First steps first, right? Let’s know where we stand. I think that we hear from people all the time. This sometimes surprises. Maybe this is like the relationship thing. You guys would be surprised. People don’t even know how much debt they have, or they don’t know how much money is in their bank account, right? It’s like they’re afraid of it, and so they just kind of ignore it, and hope that it fixes itself, and then it doesn’t. I think the first step is always, let’s get a lay of the land. Set aside for yourself 30 minutes, log into all of your accounts, write down your checking balance, your savings balance, each of your debts, and how much your monthly payments are. Let’s just get a full picture of what is happening.

Chelsea Brennen:
The next step… There’s different strategies for this, right? One of my top strategies, the things I like to do first, is what I call creating a ramen budget. This is sitting down and saying, "If I had to go back to college eating ramen noodles and spending as little money as humanly possible, what do I need to survive and keep a roof over our heads and food in my kids’ mouths, right? Mortgage, or rent payments, debt payments that you already have need to be included in there, right? Food, basic expenses… We’re keeping basic expenses. Insurance…

Chelsea Brennen:
Then you’ve already looked at your numbers, right? We’re going to take our ramen budget, and we’re going to compare it to our income. Let’s say your ramen budget is $2,000 a month, and you make $4,000 a month. Now you see that you actually have a lot of choice. That extra $2,000… I think a lot of people get stuck in this place of, “I want to fix my finances, but I have no money to pay off debt,” or, “I have no money to do the things I want to do.” This exercise, in most cases, shows you that you have room to maneuver. If you’re truly in impoverished situation, there’s not going to be that gap, right? You’re living on your ramen budget all the time. In that case, the work is really more around figuring out how to increase income inside household and change the pattern. First, you want to create that ramen budget before we even go and look at where your spending has been, historically.

Nikki Kinzer:
Is that a minimum payment of credit card? Say you have credit card debt, and your minimum payment is $20. Somebody’s been paying $100 on it. The ramen is $25. Is that correct?

Chelsea Brennen:
Yes, whatever your minimum payments are. The goal is to say, “Okay. Now I have this base budget. I know how much money I have to allocate to other things,” right, because we do have other thing we like to enjoy, whether it’s a date night out with our spouse or paying off debt. Now we get to take the choice and say, “Where does that money best serve me in different ways,” right? Of the extra money I have sitting around, how much do I want to go to retirement? If I want to pay off debt, what order do I want to pay those debts off, right?

Chelsea Brennen:
Sometimes we see this where you have somebody with six credit cards that all have a balance. Let’s, for simplicity, say that they all have $20 minimum payments. On all six, you’re paying $100 just to try to pay it off. The problem with that is it’s kind of running in place where you’re not really seeing a big impact on any of them, and then you just get frustrated. The better thing to do is to take that extra money from each and throw it at one debt until it’s completely paid off. Then take everything you were throwing at the first debt and throw it at the second debt. You get that positive feedback of, “Hey, I completely get to close this credit card now. We’re on a roll. We got this,” and keep moving forward.

Nikki Kinzer:
I heard in the past, you can consolidate credit cards. You could apply for one credit card, put all of your six credit cards onto that one. Do you recommend that or not?

Chelsea Brennen:
Not unless you absolutely need to, or you have a very solid plan, and you’ve already created the habit of paying off the debt. The reason for that is that even while, in some cases, consolidating the debt can reduce your interest rate to some extent, instead of having six or seven different debts that are reasonably sized that you are paying off, you now have this big monolith. The emotional side of that is really hard.

Nikki Kinzer:
Overwhelming, right? Okay.

Pete Wright:
Isn’t there some sort of impact on your credit, right? Because if you were consolidating all your debt and closing off the credit cards that you don’t have anymore because that seems like the smart thing you do, then you have, potentially, higher debt to available credit ratio, and that is damaging to you.

Chelsea Brennen:
There’s a few things. One, depends on how you consolidate, right? If you’re actually going and getting a personal loan, that’s different than going through a debt management agency, in which case, even just going through the process of consolidation can lower your score. Not everyone who consolidates has to close those credit cards, Pete. This is where we get the sliding slope, where you can consolidate.

Pete Wright:
Even more dangerous.

Chelsea Brennen:
Now you have a bunch of cards with a zero balance, and you’re just going to make the process worse. That’s why I say we want to have the habit first. Then you’re right. On the two sides for your credit score, one, if you did that, if you completely consolidated and you closed all your other credit cards, your debt utilization would go up, which is a huge factor in your credit score, and your credit age, your average credit age, would go down. That’s a big deal in your credit score, as well. If you had a credit card that had been opened for 10 years and it was your longest card, and you closed it, now the credit agencies may look at your account and say, “Oh, you only have two years of credit history,” in which case, you’re going to get dinged on that, as well. Those are always things to keep in mind.

Pete Wright:
Of all of that, I come back to the emotional satisfaction of completing this sort of avalanche or snowball. I know there are variants of what you call this. The number one thing for us was the emotional satisfaction of having gone through this process. Having a spreadsheet of six or eight debts, including car payments, and school loans, and all those things, and watching them disappear actually provided so much more positive momentum than any sort of consolidation could have done. For us, it was huge. It kept us paying ahead and not spending behind us.

Chelsea Brennen:
I think that that visual aspect Nikki was talking about earlier is powerful here, too, is we see a lot of people have success with literally printing a debt-free chart for each individual card. We’ve got $600 on this card. Each time we pay off $20 bucks, we’re going to color in a square. Just having that constant reminder that you are actually making progress, because I think sometimes, especially when you’re first getting started, and you haven’t built that snowball or avalanche yet, the steps feel really small and insignificant even though they’re not. Reminding yourself that even though it feels like nothing’s changing, things are getting better and you are making progress, is a way to make sure you keep going.

Nikki Kinzer:
If you have six credit cards and you have to choose one that you’re going to pay off, do you look at the interest rate? Do you look at the amount of the debt? How do you choose which one to focus on?

Chelsea Brennen:
As Pete said, there’s multiple strategies to do this. The first that is the most commonly discussed is popularized by Dave Ramsey, is to look at the balance and to pay off the lowest balance card first, and then the next lowest balance, and the next lowest balance. His logic in that has always been… Comes back to the emotional momentum, right? If you start with the smallest balance, you can completely pay something off to zero the fastest, and then you can take that payment and move it over. By building up payments, by the time you get to the biggest one, it’s faster to pay off because you have more money going towards it. You have all the minimum payments from the previous cards and whatever extra you have.

Chelsea Brennen:
The second most common is the avalanche. The avalanche is looking at interest rate. It’s paying off your highest interest-rate debt first so that you’re paying the least amount in interest. The thing is that even when you take the same amount of money and you do it perfectly, in most cases, the avalanche doesn’t save you that much money. We’re talking about, most, a couple hundred bucks. For a lot of people, the emotional part of the snowball is a better choice. It means it’s higher likelihood of success.

Chelsea Brennen:
My favorite is actually one that a friend of mine, who paid off $80,000 of debt, came up with, and she talks about, which is the big scary monster. We go back to our money stories. Take a look at your debt. Which one feels the most impossible? Which one eats at your mind every time you have to pay it? Which one are you just like, “Well, this is never going to change?” Pay that one first because once you tackle whatever the one is eating your brain the most, the other ones feel easy. It’s like, “Okay. If I can do that one, then I can do anything.” You have to choose which works for you. I think making sure you set an order from the beginning so that you don’t bounce around, you don’t start with credit card A and then jump to credit card C, is important, but any of those methods will work. Just decide what works for your family.

Pete Wright:
Dude, it saved us years going through this. I mean, when you look what it was costing us to not have a plan, it saved us years and to own our cars. That was an amazing and insidious bit of debt that you sort of ignore it. It’s like a separate thing in the garage that’s not a part of our debt until we internalize that and put that on the list, too. It never really triggered.

Chelsea Brennen:
We’ve internalized that car loans are 100% necessary, right, of this psyche of… especially when you have dealerships offering 0% for a year, 2%, or super low interest rates. We’re like, “Oh well. I’ll just pay this $600 bill every month in perpetuity.” Then once you don’t have it anymore, you don’t realize the emotional space you have, like, “Oh, this is so much more relaxing to not have to pay this bill every month.”

Pete Wright:
I had to really think about what I wanted to win with my car. I gamify everything. Now it’s like, I want to drive it into the ground. It has a 170 plus-thousand miles on it. I want it to… How far past 200 can I get it? That’s my new motivation, is let’s not buy. I want to drive it into the ground and then maybe not need a car. Maybe that’s the aspiration.

Nikki Kinzer:
I just have to say, I have a little story that’s kind of funny. Last yer, we bought a new car. We turned in our 2003 Acura because that’s how long we had that car. We’d have the car for that long. Finally, it was time to get a new car because that car was definitely at its end of life. When the Toyota guy was like, “Okay. Well… ” He’s trying to do his little sales thing and trying to say, “Well, come back and see us when you’re ready to upgrade or move on,” we just kind of looked at him. We’re like, “Did you see the car that we turned in?” You’re not going to see us for at least another 15, maybe 20 years.

Chelsea Brennen:
I think-

Pete Wright:
Maybe your kid will be in here selling us the car.

Chelsea Brennen:
I think it’s important to remember here that it seems like everyone talking now doesn’t value cars, right? I don’t care. I used to race go-karts and cars, so I’m never going to get the feeling driving a street car than I did before, so I’m kind of like, “Whatever, if it gets me to point A to point B.” If you go through this exercise and you decide that having a fancy car is… It brings you an immense amount of joy, right? I have friends that have Teslas that are like, “Every time I get in the car, I feel like I’m in the future.” Great.

Chelsea Brennen:
Well, maybe getting out of debt gives you that freedom to get that car. It means that you don’t do other things that maybe Nikki, Pete, and I do, but you have your car. I think that that’s what we have to remember, is everybody’s values are going to be different. You’re going to figure those out as you start your budgeting process. A budget can get even more of what you want. It doesn’t mean depriving yourself from things that are important. It doesn’t mean you have to drive a 2003 Acura for the next 15 years.

Nikki Kinzer:
Right, right, right. I don’t recommend that when there’s an actual hole in the ground. Going back to this getting started on the budget, we need to really look at where we are. What do we owe? How much money do we have coming in? Getting a realistic picture, and then what? Then what do we do?

Chelsea Brennen:
Sure. Then that’s the determinant of, what do we want to accomplish with the rest of our money? What do we have left? We always talk, too, about, in that early making stock of our accounts, our first financial goal should always be to have an emergency fund. I think you’ll hear from a number of experts that you’ll hear the $500 to $1,000 emergency fund. If you have debt, get to $1,000 and then tackle your debt. Throw everything at your debt. I think COVID showed us what a difficult situation that can put you in because $1,000, $500… It doesn’t get you very far when you don’t have a job.

Chelsea Brennen:
I think the first thing we have to tackle as we look at that money is we say, “Okay. Here’s our ramen budget. Here’s how much we have left. What does our emergency fund look like? Should we fund that first?” For some people, that’s going to look like, “Okay, I need to get to $1,000 and then I’m going to fight on two fronts. I’m going to pay off my debt with $300 a month. I’m going to put $300 a month to my emergency fund until I get to two months of my ramen budget, or three months of my ramen budget,” right, so that worst-case scenario, I’m… At least can keep a roof over my head and food in my mouth for a few months no matter what happens.

Chelsea Brennen:
Checking in on that emergency fund and setting that goal first is the next thing that we do. Then it’s that debt order, right? What are we going to pay off first? I think the next step we have to think about is, where are we going to make space for the things that make us happy, right? Is it going to be $15, $20 for me and my spouse each to do whatever we want with a month, no questions asked? Go get donuts, go do whatever you want. That money will go up over time. Is it that we want to make space that our kids can each do one activity a season and that we have money for that?

Chelsea Brennen:
Decide what your priorities are and understand that then this first take that you have, right… Your necessities are covered. Your basic goals, emergency fund and debt, are covered. Your, kind of, necessities that are most important to you are covered. This is going to shift. Now we have to build the practice. We have the plan, right? We know where our money is supposed to go. We know what our basic goals are. Now we’re going to learn. I think sometimes we sit down and we say, “Okay. Our ramen budget is $400 a month on groceries,” or whatever the number is.

Chelsea Brennen:
Then we figure out that, okay, maybe we could do that if we really had to, but in most cases, we spend $650 a month on groceries. Where are we going to shift to make that fit? Understanding that that month where you go over that grocery budget that you set, you did not fail at budgeting. You learned about your lifestyle and where we needed to make moves. Try to embrace that your budget is a living thing.

Nikki Kinzer:
Oh, that is such a good point because I can totally see people immediately saying, “I failed. This doesn’t work. I can’t keep a budget,” after just one month.

Chelsea Brennen:
It happens all the time. I think that that’s a big space of whatever we set up when we first sit down to do this exercise, this is just a starting place. We’re going to learn, and we’re going to figure it out on the go. Once you have that starting place, I think the next thing is habits, right? For me, I think especially at the beginning, and especially if you don’t have a tight attention span or you’re not used to this practice, five minutes a day. Set an alarm on your phone. At this time every day, I’m going to look at my account. I’m going to check on what I spent that day. I’m going to plan for tomorrow, right? Just super quick, what happened?

Chelsea Brennen:
This can be really little things. Meal planning… Food is the silent killer of budgets in America. People spend way more money on food than they think. It happens all the time. We hear at least from moms in our community, is, “I made a meal plan. I only spent this much on groceries. We’re not going out this week. We’re just going to cook at home.” Then comes Wednesday. Their son has soccer practice, and their daughter has ballet. I have to pick them up. We’re just going to go through the drive-thru, right?

Nikki Kinzer:
Yes.

Pete Wright:
Yes, there you go.

Chelsea Brennen:
Had they-

Pete Wright:
Drive-thru is also food.

Chelsea Brennen:
It is. Had they done the five-minute check-in the day before… Part of my five-minute daily check-in is I just scroll to the next day on the calendar and see what’s there. They could have adjusted, right? When they made lunches in the morning, they could have made extra sandwiches to give to the kids to go to their activities for dinner. They could have shifted. I think that that really small step a day, do something every day to check-in on your money, is important.

Chelsea Brennen:
The next stage of that, because five minutes is not necessarily going to cover everything that we have to do, right? You’re not going to be able to pay all your bills in five minutes… is your weekly money meeting. If you’re married, I highly recommend doing this with your partner as much as possible and making it fun, right? This can be a relaxing thing. This can be, the kids go to bed and we put on music, or we get a glass of wine, or whatever we do. We’re going to have 20 minutes, 30 minutes to talk about, what’s the next week? Can we pay the bills? What went wrong in the last week that we need to shift this week?

Chelsea Brennen:
Once again, we’ll go back to the food. We thought we were going to cook six nights this week. By week four, we were exhausted. Should we shift that next week, we’re only going to cook four times where we’re going to cook more food so we eat leftovers the other night, right? Have those little meetings. Start those little meetings every single week with something that went well. Pick something that went well, whether it’s-

Nikki Kinzer:
Keeping it positive?

Chelsea Brennen:
Yes. Hey, this week, I did my daily check-ins four times, and I’ve never done it four times out of seven. That’s a win. Or, we talked about an expense before you just went to the hardware store and bought $400 of tools that we don’t need. It’s like, we had some conversations. Pick wins even if they’re tiny at first and always start there. Don’t start with arguments about where things went wrong because it’s going to cause way too much tension around that conversation. It’s really about building the habits.

Nikki Kinzer:
I like that. Well, the weekly meeting, too, it sort of keeps what you were saying. It keeps the journey alive. It keeps it in front of you. This is an ongoing work in progress. You don’t just set the budget and then leave it alone, which I think can happen, right?

Chelsea Brennen:
I think it totally happens. I think that happens a lot with people who have… We view budgeting in a monthly framework, right? It’s almost like dieting where we’re like, “Well, it’s June 8th, so we’ll start in July,” or July’s already gone. Our brain wants to check in once a month. We can’t course-correct when it’s gone that far. Having those little daily moments and then the weekly, kind of, little bit bigger meetings can be a huge help and make sure that we’re adjusting. I think that when we talk about making them fun or making them more relaxing, setting them on the calendar is helpful for some people. My husband wants warning. It’s like, I can come to him and be like, “Okay. Every Friday, after the kids are going to bed, we’re going to talk about money for 20 minutes.”

Pete Wright:
Oh man. Your husband and I would be so tight.

Chelsea Brennen:
If I walk into the kitchen and I’m like, “Hey. We need to talk about the budget,” his head is going to explode, just totally explode.

Pete Wright:
That’s right.

Chelsea Brennen:
Any kind of routine and setup and giving people the opportunity to get ready to have a conversation that they might be a little bit uncomfortable with makes it a little bit easier. It means if you are in a bad money situation, you’re not nitpicking at each other constantly. We see this come up, too, of every single day, you’re having an argument about something. It’s like, “All right. Let’s just talk about this all at one time.” Then you’re also giving yourself time to calm down from whatever made you angry at your partner to begin with, right, so you’re not just talking about it in the heat of the moment.

Chelsea Brennen:
Those weekly meetings can be really powerful. I think that they’re good marriage and relationship check-ins. I think they’re good dreaming opportunities and a way to say, “Does our life look the way we want it to right now? How can we start getting to where we want to go?” They’re just really powerful things even though they seem, at first… When I tell people they have to talk about money every week, they want to bang their head against the wall. That is not what it is. It can be a very enjoyable activity.

Nikki Kinzer:
Well, it can be. I think that what I see happens to me and to other people is that, oh, you want to go on vacation, so you plan a vacation but you don’t really plan for the money that it’s going to take to go on that vacation. Then you get that handy little credit card. All of a sudden, we have $5,000 in debt that we didn’t have before because we went to Disneyland or whatever, right? I think it does give you the opportunity of, okay, if we want to go on vacation this summer, what do we want to do? How can we save some money so that we’re not doing the credit card? Then I think the same with Christmas, too. How to not overspend… I am so guilty of that. I overspend at Christmas terribly. I mean, it’s awful.

Pete Wright:
I solved that one.

Nikki Kinzer:
What did you do?

Pete Wright:
Oh, I feel so good about this. I can contribute. Share, Pete.

Nikki Kinzer:
Yay.

Pete Wright:
We’re part of a credit union. I don’t know. Their online interface is devilish easy to create new accounts, like new savings accounts. We created new little savings account for everything. One of them is my Christmas account. Starting January 1st, every time I get paid, I put a percentage of that check, maybe it’s $10, maybe it’s $15, into the Christmas account. By the time October, November runs around, we can subsidize Christmas every year now.

Pete Wright:
That is an amazing little gift. Again, buying into your future is… That is so satisfying for me, and yet my head still explodes at the thought of being approached unannounced to talk about money, is crazy. What is that all about? That’s a little budget hack that we used. I mean, it’s effectively, what? It’s envelope budgeting, but it’s one of those things that once it’s out of my check, once I’ve done the transfer, I’m not going to transfer it back. It’s not on a card that I can spend. It’s just there.

Chelsea Brennen:
The finance nerd phrase for that, Pete, is called sinking funds. As you learn to budget, you create these funds for different irregular expenses. Christmas is one that comes up all the time. Vacation is one that comes up all the time, but also things like property taxes, right, that you only pay every three months. I use a service called YNAB, or You Need a Budget, which is what I’ve always used to budget, except for in moments when we really need to kind of reset and then we use paper for a month or two. YNAB has this specific set up that you can create categories to allocate money to that just roll them over every month.

Chelsea Brennen:
We talk once again about money stress. When that big bill comes in, whether it’s home insurance, or car insurance, or whatever it is, the bill that doesn’t come every month, when the money is just sitting there in that separate, whether it’s a whole separate account or a separate line item of your budge that you’ve built up, paying that bill is way less stressful than trying to figure out how to cover it.

Pete Wright:
Totally.

Chelsea Brennen:
It comes with vacation, like you said, too, Nikki, of the credit card, $5,000 on your credit card. We talk to families of like, “Okay. Your pattern right now is that you go on vacation in the summer. You put $5,000 on the credit card. Then you spend six or eight months paying it off. Then the next summer, you swipe it again. Well, what if we did one year where you took a smaller vacation and you started the habit of saving every month? Now from every year forward, you can just pay that in cash. You do not have to pay that bill off every single year and create this cycle, and not so much in pay way more for the trip because you paid off the credit card interest.” We have to do the little shifts. We have to figure out where we are in a pattern of paying for things that we already experienced.

Nikki Kinzer:
I have a question I’m trying to wrap my head around. This is the emergency fund that you were talking about. I’m just thinking, when I was in my 20s and I lived by myself, I made very little money. It really was kind of survival. I did have credit card debt, and I did use credit cards. I can see myself thinking, “Okay. I understand logically why it’s important to have this fund,” but then I also would be fighting myself saying, “Well, that’s also kind of what the credit card is for. If I really needed an emergency, I could use the credit card. Wouldn’t it be better for me to just pay off the credit card and then do the emergency fund?”

Chelsea Brennen:
Our goal is always to get away from credit card debt in its entirety, right?

Nikki Kinzer:
Right.

Chelsea Brennen:
I am not someone who thinks that we shouldn’t use credit cards at all. Just pay them off every month. If you have the self-control to do that, there are rewards for using credit cards, not just the actual point rewards, but security rewards and all that kind of stuff. The problem is if you try to use your credit card for an emergency fund… Let’s say you had $5,000 of credit card debt. You work your butt off for three months and now you’ve got $3,000 of credit card debt, right? You’ve paid off $2,000. An emergency comes, and you have no money for it, so now you need to increase your balance again. You need to go pay for that emergency, and now you’re back at $4,000, or $5,000, or whatever it is. We keep coming back to the emotional. The only way to avoid-

Nikki Kinzer:
I see.

Chelsea Brennen:
Falling back into bad habits is to keep that emotional energy. I think that as soon as we see, “Well, I worked my butt off. I paid off a bunch of debt, but now I’m right back where I was before. What’s the point of this?” that is a really powerful inner voice. We have to save the emergency fund to be able to say, “Okay. I don’t need to lean on the credit cards. I can keep doing my debt payoff journey. Look at what I was able to get myself by creating this emergency fund, by paying off debt?” It’s really just that cycle. It is easy to say, “Okay. The paying-off the credit cards are more important because the interest rate,” but that cycle… We hear it all the time of, every time someone has to backslide. There’s going to be moments of backslide, but ones that are that big, it’s hard to keep fighting through them.

Nikki Kinzer:
What is your advice then for somebody that has a limited budget, but you do find some wiggle room, right, like you said, once you kind of go back and look at the ramen budget? If you’re trying to get that $500 or $1,000 savings, do you then live on the ramen budget until you have that savings or? How do you get to that savings?

Chelsea Brennen:
Yes. This is going to depend on how much wiggle room you have, right?

Nikki Kinzer:
Yes.

Chelsea Brennen:
I think that completely trying to live on the ramen budget… That will work for a month or two. If you have to do it longer than that, I would start to look at other options. Actually, even from the beginning, for most people, I would say look for another way. The first thing we tell people all the time is, “Go through all the crap in your house and sell stuff you’re not using.”

Nikki Kinzer:
Oh.

Chelsea Brennen:
Research has shown that the average American has $1,100 worth of stuff in their house that they haven’t touched in the last year.

Nikki Kinzer:
Oh my gosh. You could totally make half of that already.

Chelsea Brennen:
No, no. That’s just the value of it used.

Nikki Kinzer:
Right. I didn’t think about that.

Chelsea Brennen:
That’s not the value of a yield.

Nikki Kinzer:
Wow.

Chelsea Brennen:
You can go sell $1,100 worth of stuff. Do that, or decide, “Hey, our date nights twice a month are really important to me. Here are the ways that we can make it cheaper, but even then, it’s going to cost us this much money. I don’t want to cut that, so I’m going to babysit for a couple of nights, or I’m going to pick up a small side hustle.” We don’t want to completely sacrifice our time and our mental health, right? Finding little ways to make money, pick up a small freelance gig, something to just give you enough to build that base.

Chelsea Brennen:
There’s also power in inside hustles in additional streams of income that give you more financial security, right? I think that you hear all the time these stats about millionaires and people who build wealth. The average millionaire has seven streams of income. There’s security in that, right? If you lose your job, you still have some money coming in. If your interest changed, you still have some money coming in, right? There’s just different things you can do. I think that finding ways to earn a little bit more, starting first with, let’s declutter and earn a little bit from the stuff that we’ve already paid for, is a good place to start. I think that when you’re first building that up, this is an opportunity to kind of look around and side hustle a little bit.

Pete Wright:
That’s another amazing thing. I think about that. This was a lesson I feel like I learned 15 years ago as a freelancer, which was the benefit of having many clients so that if one disappears, I’m still okay. I’ve not lost my whole job. That’s a big learning for me here, is that, why am I not thinking about that in terms of my household finances?

Nikki Kinzer:
I’m just thinking, too, going into the holidays, assuming that we’ll have stores to shop, and that kind of thing, and people will be hiring. You think about the holidays, and you think about all of the places that temporarily hire people, how if you could just go into the holiday season and just know it’s just temporary, but all that money you make goes into that emergency fund, and then after that, goes off to paying debt, I think it would have a lot easier time with that side hustle along with working my full-time job, just knowing that it’s a temporary thing. There’s this really clear purpose of where that money is going.

Chelsea Brennen:
On Pete’s point, though, about not thinking about that in the frame of your household, I do want to say, for the people that are married and that have kids, this is one of the things that gets risky when you have a sole income earner, right? I think that we hear… Obviously, we speak to moms. We hear from a lot of moms who are stay-at-home moms and who are like, “I really want to start this business or this side hustle. It would only be 10 hours a week, but I don’t know if I should, or I don’t know if it’s worth it. My husband already makes enough money. My partner already makes enough money.” That’s still something.

Chelsea Brennen:
If, God forbid, something happened to your spouse’s job, you have some experience to put on a resume. You have a little bit of money coming in. It just is a little bit extra security. I think that making sure that every household has at least two streams of income, whether that’s coming from the same person or two different people, and even if one is massively bigger than the other, it’s just some additional piece of mind because we never know what’s going to happen. We’ve seen that in 2020, I mean, way too many times now. It’s just a little preparation.

Nikki Kinzer:
That’s great. Whoa.

Pete Wright:
Yes, I’m exhausted.

Nikki Kinzer:
My brain hurts.

Pete Wright:
My brain is… It’s on fire. I have two more quick questions.

Chelsea Brennen:
Sure.

Pete Wright:
Quick is dependent on you.

Chelsea Brennen:
I’ll try to keep it quick.

Pete Wright:
One is resources for people who are looking to budget as they go into retirement. Retirement is eminent. Trying to figure out how to improve your relationship with money at this time in your life and careers.

Chelsea Brennen:
I’m still a big fan of YNAB, of You Need a Budget. Regardless of life stage, I think it’s really helpful for retirees because you tend to have a little bit more money in your bank account, right, because whether you’ve withdrawn from retirement account or you’re going to get pension, you get more than one month at a time, not from a pension, but when you withdraw from your retirement accounts. I think sometimes, you look at that balance, and we’re like, “Oh, we can go on vacation. We can do whatever,” not realizing that that budget was supposed to last you longer. Something like YNAB is built to give every dollar in your bank account a job. Whether that job is for June 2020, or for August 2020, it breaks it out. I think that’s really helpful.

Chelsea Brennen:
I think as you prepare for retirement, you can go through the Social Security Administration and get an estimate of how much you’re going to get in Social Security pay. You can sit down with a certified financial planner for an hour. Maybe CFPs are now hourly. You don’t have to have them manage your assets, but they can sit down with you and say, “Here’s a safe amount to withdraw.” Get a really clear picture of how much you’re going to have to spend a month or a year to cover your expense and start to design your lifestyle around that number.

Chelsea Brennen:
So many of us have strong beliefs about what our retirement should be. We’ve never actually squared it with what we have and what we need to do. I think that before you even have that last day, sitting down and having those conversations with an expert and also with your partner of what do we want to do? What do we want to prioritize? is important. YNAB is my favorite budget tool for that process.

Pete Wright:
I have it open right here. I’ve already sent it to my wife. I said, “My expert guest today, who is very smart, recommends this. We should look about it.”

Chelsea Brennen:
I will say, it thinks about money a little bit differently. We tend to think about money as, okay, money comes in this month and out this month. We should look at it kind of in that fixed moment. That is not how YNAB thinks about things. We have a full setup guide and a video on our website talking through the system and how to get set up because we do have people that sign up for it and then they’re like, “This is a lot. I don’t know what to do with it.”

Pete Wright:
This is a lot.

Chelsea Brennen:
As soon as they do it, as soon as they do the setup process, which doesn’t take very long… It’s just you need a little bit of guidance. They have the most amazing reviews. I’ve literally budgeted every single dollar I’ve ever made in YNAB. It has helped us make so many major decisions. We’ve heard that from so many people in our community. It does shift your mindset a little bit, which I think a lot of us actually need because we don’t have healthy relationships with money to begin with.

Nikki Kinzer:
Something that I would highly recommend when you’re looking at retirement is to get that financial advisor, so you’re not feeling like you have to do it on your own, right? I don’t even know how I would plan for retirement on my own. When we went to a financial advisor, they plugged in all of our numbers and everything, and said, “This is what you would have if you retired at age 60. This is what you would have if you retired at age 62. This is good. This is bad,” whatever. As humans, unless you’re Chelsea, I don’t know how you could come up with those numbers on your own, right? I think it’s worth the investment to have an expert look at that stuff with you.

Chelsea Brennen:
I think it is. What I want everyone to know though is that not all financial advisors are created equal, like any other profession. Differently, not all financial advisors have what’s called fiduciary duty. Fiduciary duty means they have to do what is best for you. Other financial advisors, which is actually over 90% of financial advisors-

Nikki Kinzer:
Oh jeez.

Chelsea Brennen:
Only have to have what’s best case. If it’s a good tool, and they might get paid a commission for recommending that good tool, they can recommend it to you even if there’s a better choice. I think that finding a CFP, finding someone who has fiduciary duty is really important to make sure that they’re not going to either want to take over completely, managing your investments for you, taking them out of current advisors, which can mean higher fees and actually, lower long-term use, but they’re also going to give you the tools that actually fit what you want and your goals. Make sure you are kind of looking for that way.

Chelsea Brennen:
There’s a website called XY Planning Network that is all CFPs with fiduciary duty. You can search by location. Almost everyone on there actually will also work remotely, so they can get on a Zoom call with you like this and do the meetings. Make sure you’re finding someone that has that fiduciary duty.

Nikki Kinzer:
Wow. I didn’t know that.

Pete Wright:
Great point, yes.

Nikki Kinzer:
I am so glad you brought that up. See, that’s why we have experts.

Pete Wright:
That’s right. This has been absolutely fantastic, Chelsea Brennan. You’re amazing.

Chelsea Brennen:
Thank you.

Nikki Kinzer:
Thank you.

Chelsea Brennen:
I’m so glad to be here.

Nikki Kinzer:
You are awesome. It was so helpful, so helpful. Thank you for your information.

Chelsea Brennen:
I hope I didn’t scare you too much, Pete.

Pete Wright:
No, I hope we haven’t totally scared you. Oh God, money person. Let’s try to ask everything.

Nikki Kinzer:
I know, right?

Pete Wright:
I hope you’ll come back and not let my-

Chelsea Brennen:
I would love to come back.

Pete Wright:
This was really useful. We need to talk about money probably more often than every eight years.

Nikki Kinzer:
You think, because we have all these questions?

Pete Wright:
Yes, right.

Nikki Kinzer:
What do you think about this? What’s this? What is that?

Pete Wright:
Just flatten the curve. We’re going to flatten the curve on money. This is great. Chelsea, why don’t you give us a little plug. Where would you like people to go find you and all of your great works?

Chelsea Brennen:
Absolutely. You can find us at smartmoneymamas.com. Our podcast is called the Smart Money Mamas Show. We are at smartmoneymamas on all social platforms. I am on Instagram all the time, so if you want to connect with me, ask follow-up questions, feel free to DM me there. I am a little addicted to that. That’s where I’m at.

Nikki Kinzer:
That’s awesome.

Pete Wright:
Acceptance is the first step.

Nikki Kinzer:
You have so many great tools on your website, too. Lots of great information.

Chelsea Brennen:
Thank you.

Nikki Kinzer:
I highly recommend that people go check that out.

Pete Wright:
This is very, very good stuff, you all. Please engage. Don’t be like Pete. Engage five minutes a day. Thank you so much, everybody, for your time and attention. On behalf of Chelsea Brennan and Nikki Kinzer, I’m Pete Wright. We’ll catch you next week right here on Taking Control, the ADHD Podcast.