00:14:04 MALE:
For vacations we'll think about, you know, first you want to decide where do we want to go and what kind of a vacation do you want it to be and think about that, a year or six months ahead of time and then you start planning towards accomplishing that goal.
00:14:17 MALE: I would say one thing that worked well for us is like points. So we try to get like debit cards or credit cards that will give us a lot of points that we can use. So what we really try to plan for whenever it comes to vacations are those extra expenditures so we'll tend to spend more on the hotel room if we're spending points on airline tickets or more money on food and things like that daily, because we're not spending so money on the airline tickets.
00:14:40 MALE: Yeah, we try to be smart about that and say how many airline miles do we have and where can we go with that, because that takes a large portion out of that cost that you can reallocate to having fun or doing dinner or things like that.
00:14:52 TONYA: Alright, so building a budget. Budgeting is major for everyone. But budgeting also can be a problem for some people. So how do you recommend that people not just build a budget for themselves but as a couple? What's the first step they should do?
00:15:06 AXEL: When I meet with couples I,m a huge proponent of having a spreadsheet and filling it right then and there. Normally they'll have preassigned homework where they'll come with that information. How they do it, whether they do it on paper or whether they type it out. I like the electronic soft version, soft copy. That's me.
00:15:21 But more importantly I think is not only just having the tool but how do you hold yourself accountable and how are you go to execute it.
00:15:28 TONYA: Absolutely.
00:15:30 DAN: I totally agree. So when we start talking budget or when I start talking budget with someone I always start with looking backwards. At the end of the day I have people come in and are like hey I know I,m not saving money, here's my new budget. I'm going to spend $50 on food this month.
00:15:43 And I go, okay, let's take a look at what's been happening. They've been spending $400 on food, I'm like, okay, you're going to starve. So let's maybe set something a little more realistic.
00:15:51 TONYA: Yeah.
00:15:52 DAN: And so with that I break it down into three categories. So I start with the fixed expenses. And those are just the things that do not change. So your rent or your mortgage, right, that's the same every month.
00:16:05 TONYA: Daycare.
00:16:05 DAN: Daycare. Absolutely. Your variable expenses. So these are the kind of things that do change, your dining out, your clothes, your gas. And then what I call non-monthly's, which are those things coming up that are going to bust your budget, which you're probably thinking about. They can be one off things that only happen once, so like a wedding, or maybe someone's birthday or a gift around the holiday.
00:16:29 They can also be routine things, right, so maybe when you get your tires rotated, that happens at a set amount of time. Or maybe you pay your property taxes every six months. Those sort of once time but they do reoccur.
00:16:42 TONYA: Yeah, absolutely. We just got our auto registration renewal. And we weren't planning for that because we just moved to a new state. But now I know to plan for that in our budget going forward.
00:16:51 DAN: I think car maintenance, registration, all of that are great examples.
00:16:53 TONYA: Absolutely.
00:16:56 AXEL: And clearly in my office we see that all the time. So from my chair we've got ways to help mitigate that. And I usually will help couples with, so without bucket it's more like you've got your kind of bad things, things that are unexpected, things that are emergency like and then your more fun, because you want to spice that chat up a bit, you don't want to think it's all about the home owners deductible or whatever.
00:17:15 So I think it's important for people to have both angles on that because you know when people are getting married, they don't just show up and say, hey, come to my wedding tomorrow. So there's that planning and the non-planned. And I think that's what people have a hard time understanding, well, how much is appropriate? What would I need?
00:17:31 Well, what's your deductible? What's a normal car repair? I mean, those kinds of things, because otherwise it sounds very doom and gloom or it sound very rosy. And it can be both. And we just don't know.
00:17:42 DAN: So, yeah, when we talk about emergency funds we really think about them for four main things. There is home repair, car repair, medical issues, so that could be you having a medical issue, maybe a disability or it could be, hey, I need to fly and see a family member who's ill, some expense from there. Or it could be job loss. So those are kind of the big four.
00:18:03 TONYA: And Axel when you're working with couples are there any items that you see that they aren't including in their budget that you would like to see them include more of in their budget or that you'd like them to take into consideration?
00:18:13 AXEL: I think the key for that is the homework assignment. So normally it doesn't happen in the first appointment. So I send a lot of homework. So that is part of it, is trying to nail down all of that information, because otherwise there's a lot of gaps and you're not really going to be able to plan with 80 percent of the solution.
00:18:29 TONYA: What about you, Dan, are there any items that you say, you know you didn't include this in your budget and I,m wondering why?
00:18:35 DAN: For me that's retirement, because a lot of times when we're just starting out or even if we're not just starting out, that's automatically out of the paycheck into a 401K. And so we start working our budget from what comes in and then we start working on what comes out and we don't even think about it, because that's already come out. You know what I mean?
00:18:54 When our what comes in, it's take home pay. It's after taxes, it's after retirement. So we don't really think about retirement and then maybe we find out, hey, the reason one person's making less than the other is they're putting away ten percent and the other person is putting away two percent. And so having that conversation of what does retirement look like, what do we want it to look like, where should that be coming from, who should be saving it, it's an important conversation that sometimes gets missed.
00:19:16 TONYA: Definitely. Budgeting isn't for everyone but everyone needs a budget. And I think we've identified different ways that couples can create a budget that works for them. Let's have a look at what we've learned.
