[00:00:00] Intro: Forget the civilized path. It’s time to break the chains of debt and dependency, take control of our financial lives, and live free. This is the Fiscally Savage Podcast.

[00:00:15] Dylan Bain: Hello and welcome to Fiscally Savage. I’m your host, Dylan Bain. And today, I want to tell you about a time I’m sitting at my kitchen table in our small apartment in Flagstaff, Arizona. My wife and I had been struggling all month with trying to keep our finances together. We had just learned that we were about to have a second child and I had already made the decision that I was leaving teaching. And so, what was supposed to have been a very momentous occasion was actually kind of terrifying because I was gonna quit my job and we were gonna be missing that income. So, we were sitting down and we were trying to work on a budget. And we had been doing pretty good and we’re going line by line with what we are hoping our spending will be. And we get to food and at that moment, as I’m saying to her, “Well, I think maybe we could reduce this line maybe by a hundred bucks,” she turns red in the face and just completely flips out on me. And I’m struggling with this because she’s clearly activated by it and I’m not sure what to do. I don’t see any other mathematical way to make this work. We are going into debt more and more every single month and I’m just sitting at the kitchen table, my wife is upset, we have another kid on the way, and I am just dumbfounded as to what else I’m supposed to do.

[00:01:42] And I tell that story, ladies and gentlemen, because when we start looking at our financial picture and we start saying to ourselves, “Hey, I want to have my financial house in order. I want to have first financial stability and then I want to have financial sovereignty,” we discover something unexpected almost immediately and that is money is emotional. Getting your financial house in order will bring up all sorts of emotions. And if you are in a committed long-term relationship, when you sit down with your partner and start working on a budget, I promise you that you will find out things about your partner that you to that moment had not fully understood. Why? Because money’s emotional. And at the end of the day, those emotions are what are actually going to spell success or failure in your budgeting process.

[00:02:38] And if you’ve ever been somebody who’s really struggled to lose weight and you’ve looked at it and said, “Well, I’ve gotta track calories and track macros,” you know what this is like because you have the same emotions that go through it. You have past failures. You have issues from when you were a child. You have guilt and you have shame and you have fear. All of those things are hitting you on a very primal level. It’s the bottom level of Maslow’s hierarchy of needs. Those are your physiological needs — your food, your shelter, your water, your warmth, your sex. All that stuff are on that bottom tier. If you wanna fuck somebody up, go after that bottom tier. And underneath that tier, the very bottom, the foundation of Maslow’s hierarchy of needs, is your money. And so, when you start getting your financial house in order, you’re going to encounter a lot of these emotions.

[00:03:31] So, the bottom line when you get started is that you’re going through a process and you’re going to find a lot of old wounds and a lot of old defenses that you’re gonna have to work through. But I want to also have a moment to look at the story at the top of the show. When my wife and I first started budgeting after we found out that she was pregnant with our second child, we had to sit down. And from my standpoint, I mean, let’s face it. I’m a dude. If you give me a mission and tell me I’m only allowed to eat beans, rice, and oatmeal, I’m gonna be happy as a clam because I’ve got a purpose and I’m willing to starve my way through it. But my wife, to her, she doesn’t operate that way. She’s at that time was working on her PhD. She was working on creating her financial future and a career for herself that was fulfilling and edifying to her. And she was also trying to raise one beautiful daughter, which was my oldest, and now is preparing for the advent of not having one child but having two. And so, for her, that budget was a statement of restrictions. And so, what she’s actually hearing is not necessarily, “Hey, this is a plan for the future.” She’s looking at this as a threat to her children. And it’s important when you start this process, particularly when you’re making your very first budgets and you’re working with that person in your life, that you understand that budgets are a statement of values, a conversation, and a starting point.

[00:05:01] And so, we’ve talked about this a little bit last week. When we say that budgets are a statement of values, budgets are how you manage your money on a month-to-month basis and how you spend your time and your money. And again, the way you get money is you exchange your time for it no matter what you do. But how you spend your time and your money is the measure of the type of person you are. We look at things like, you know, government spending. Not once have I heard somebody actually be upset by how much the government spends on something they like. And you can see this a lot with our deficit hawks. Deficit hawks tend to be Republicans who also tend to really like military spending. And yet, if you look at your income taxes, almost 60 cents out of every dollar goes to the military and they never complain about that. But that fraction of a cent that comes out of every dollar in income taxes you pay that goes to food stamps, they’re hyper-focused on that. And why? Because it’s a statement of values. And that applies for individuals, that applies for institutions, and that applies for governments.

[00:06:06] Budgets are also a conversation. They’re a conversation with yourself and with your partner. The curiosity is key. When you’re creating a budget for the first time and you say, “Well, hold on a second. I’m having these feelings and these emotions about this thing” or “I’m feeling really tight” or “I suddenly feel very hot,” there’s ways that the body actually will manifest the emotions — tightness across the back, sickness in the stomach, sudden anxiety like you can’t sit still, suddenly feeling flush and hot like you’re being suffocated or it’s really stuffy in the room. All of those are somatic ways that the body manifests emotions into your physical space. And it’s your opportunity when these come up when you’re budgeting because they will to have the conversation with yourself and ask maybe a good sentence prompt for you to ask is: what do I feel I need to protect myself from and what do I feel is threatening to me? And this conversation, if you are in a committed relationship, is also for your partner because you’re gonna see that other person activate in the same ways. And so, sitting there and telling that person, “You know? You really gotta get your shit together,” you know, I don’t know about you. My parents tried that tactic and it really wasn’t that great of a way to go about it and I’ve never really had success with that in any arena. Like people don’t actually respond to shame and judgment in a healthy way. Instead, having the curiosity and asking your partner the same questions: what are you most afraid of? What do you feel you need to protect yourself from? Those types of questions, that curiosity is key.

[00:07:44] And budgets are a starting point. You’re not gonna get this right the first time you try it. You’re just not. And it’s an iterative process. This is something that you rinse and repeat and you work on over time. And so, when people come into my practice. And for those of you who don’t know, one of my roles and the reason this podcast exists is because I’m a financial coach. A big part of my job and what I do with Fiscally Savage is I help individuals and couples be able to work through their budgets maybe for the first time. I help them look at it from the standpoint that their budget is a statement of values. And for married couples and people in long-term partnerships, they maybe never have actually had the conversation about what their values are as a couple in a real sense based upon how they spend their time and money. And those conversations can be hard and a big part of my job is to help facilitate that as a financial coach. The same thing is true with the conversations. How do you even start a conversation like that? Most of us never even had a conversation. Having a coach in the mix can help facilitate that. And then, of course, creating a starting point in helping people see the rocks in the river that are now going down together or as an individual and being able to point out, “Hey, I’ve seen these rocks so let’s prepare you for it.” So, if you’re interested in getting some extra help with your finances, go to fiscallysavage.com. You can download my free tools, which we’re about to talk a little bit more about, and you can also book an appointment to just have a 30-minute fact-finding discussion. It’s free and I’d love to have that conversation with you.

[00:09:25] But let’s now talk about what actually a budget is and how do I do this thing? Like Dylan, you talk about it a lot and it sounds kind of cool like, I mean, at least in my own head, I like to think that I made this sound like it’s a fun process. And on a lot of levels, self-discovery can be fun but anyone who’s done the work also knows that self-discovery can be terrifying. So, how do you start the budget? Well, let’s start with this spending analyzer. Last week, and there’d be a link to that episode in the show notes, we talked about creating a spending analyzer. That was, you go back through three, you know, a minimum of one month, preferably three months, of your actual spending and you categorize that spending and categorize your income so that it fits into buckets. Why do we do this? Because when you create a budget, you want to start with reality.

[00:10:14] One of the things with the story at the top of the show, when my wife came to me and told me that she’s pregnant, we were overjoyed and then I was terrified because I knew the numbers weren’t gonna work. And now, I have another bundle of joy that I owe everything that owes me nothing, where my sole job is to help this new, beautiful, what had turned out to be a baby girl, make it to adulthood as the most beautiful and best version of herself possible. And that’s gonna require the financial foundation that I provide as her father. And when my wife and I sat down to create a first budget, we made up fantastically fictitious numbers. And that’s where a lot of people start and this is where budgeting actually goes wrong for most people because they don’t have a realistic understanding. So, I created the spending analyzer to help with that. Again, you can go to fiscallysavage.com/tools, link to that in the show notes, and you can download it for free. Use the exact same tools that my wife and I have been using now for almost a decade. And when we start with reality, now we actually have the best chance of success right out of the gate. So, when you start how to budget, your first step is gonna be start with the spending analyzer and start with reality. Because once you’re done with that, you actually know what your spending realistically looks like.

[00:11:42] Alright. So, the meat and potatoes of the budgeting world in my mind is what’s called a zero budget. Now, mad props to Dave Ramsey. You know, he is a titan in this space. Me and Dave, you know, we have our disagreements. I don’t agree with everything he said, particularly when, you know, some of the finer points. But one of the things that he taught me early on is this idea of zero budgeting and I found it to be absolutely useful in all of these situations. The goal of a zero budget is to give every dollar that passes through your hands a role. And so, as income comes in, you wanna have those dollars allocated to the places that they need to go — their final destinations. And so, when you start up setting up your zero budget — again, go to fiscallysavage.com/tools. You can download the spreadsheet and see exactly what I’m talking about. But you wanna start with your income. You need to project your income for the coming month. Now, depending on how you’re paid, this could be absolutely critical or maybe not that difficult. So, this is very critical for people with variable incomes. So, and I’m thinking like, you know, your wait staff, people who are working in the restaurant industry, commission salespeople, such as real estate, mortgage bankers, mortgage brokers, that type of thing. When you have a variable income, some months you’re going to do fantastic and other months you’re going to have zero. When I got out of college for my undergrad, the first job I had was doing mortgage banking and there were some months where I would net and I would bring home 14 grand and there were other months where, well, I actually had to pay to work at the company ’cause I had to pay for my benefits out of my pocket. So, when you have that level of variable income, you need to sit down before the month starts and project what your income’s gonna be. Particularly for people in sales, you typically know what your month ahead sales are gonna be. You have a pipeline that’s established so this isn’t all that bad. If you’re working in the gig economy, well, you know about what your income is going to be and how much you’re willing to work for the next month and any things that might be getting in the way. So, you need to sit down and project that income.

[00:13:56] Now, here’s my side note on this. If you are one of these people and particularly if you’re like in real estate, great example of this. A lot of real estate agents will have their own corporation set up to handle their real estate transactions so when things close, money goes in the corporation. But they don’t take all that money out and then pay themselves as income. Instead, they settle down on what their salary’s going to be to render their income predictable, even when their commissions are not. If you are an Uber driver, if you are in the service industry, if your income is variable, I would encourage you to do your finances this way as well, because now you’re taking on the variability and leveling it off and making it consistent. Okay, so the end of the side note.

[00:14:42] The other thing about projecting your income is some expenses you might have saved in order to pay. In my own personal situation, I pay my car insurance all upfront so when the bill comes, I pay the six months and I pay it all in one lump sum. But between when I pay that lump sum and then the next one is due, I pay the premium to myself. It’s an expense, so it goes down to my expenses, which we’ll talk about in a second. But when that’s due and I gotta pay it, the money coming back from savings, that’s now considered income because savings are expenses you pay to yourself. And so, when you take the money out of savings, when the actual expenses that you were saving for show up, well, that’s now income. It’s the opposite of an expense. When it goes to savings, it’s an expense. When it comes back out of savings, count it as income.

[00:15:36] Okay. So, start with your spending analyzer so you’re in reality. Your goal of this is to give every dollar a roll, project your income for the month ahead. Now the big one and the one that everybody fears: estimate your expenses. Now, if you’ve used the spending analyzer, you know what categories you’ve used in the spending analyzer. Use the same one in your zero budgeting. So, categories would be like rent or mortgage, groceries, dining out — and note that groceries and dining out are not one super category called food. You literally want those ones separated — car expense. That might be your gas, maintenance, oil changes, and of course you have car payment. That would be a separate thing. Student loan payments. Credit cards are not included as expenses but the things you use the credit card on are included in expenses. Credit card payments are kind of a different thing, right, because ideally you should be paying off that credit card at the end of the month. So, on everything you put on the credit card plus the interest charged with the credit card, those are your expenses, not the payment to the credit card.

[00:16:40] Now, understand that when you’re doing this, you’re looking forward to the next month. Why are you doing that? Well, because a budget is not a set it and forget it type of document. When you sit down with your partner and look forward to the next month, you want to have the conversation about what’s coming up. When my wife and I first started doing this, I learned something right off the bat. My God do daycares charge a ass ton of fees. I didn’t know. And I didn’t know ’cause my wife just paid them. And I always wondered like, what are these fees? But she knew them and so because she handled that part of the business that is our marriage, I had no idea. But she could say, well, this month we have to pay these extra fees for X, Y, and Z or this month we don’t have to so we have a little extra cash. The same thing is true for me. I handle all the maintenance and insurance and all that other stuff for our cars. So, she has no idea when we pay our car insurance unless I tell her. So, sitting down to work on a budget together, we can actually now plan for what’s coming up.

[00:17:43] So, once you’ve done this exercise of projecting your income and estimating your expenses, now what you wanna do is adjust the expenses until income minus expenses equals something close to zero. Couple notes on this. Number one: there is no benefit to trying to make this exact. I mean, let’s face it. I’m a CPA. I’m a corporate auditor. When I first got into accounting, I was like, everything has to balance to the penny. No, it doesn’t. No one is gonna give a shit if you’re plus or minus 20 bucks on your budget. 20 bucks doesn’t make you or break you. It doesn’t put you into bankruptcy. And trying to get down to exactly zero is a great way to drive yourself utterly insane. The second thing to note is, again, savings is an expense you pay to yourself. So, savings are an expense when you are putting into the savings and they’re income when they come out. And keep in mind that budgeting and estimating your expenses is an evergreen thing. You’re gonna do this again next month, too.

[00:18:42] Okay. So, we projected our income, we’ve estimated our expenses — income minus expenses is close to zero, close enough. And now what? Okay. Well, now the big meeting’s done, ladies and gentlemen. And now it comes time to work the process. If any of you have ever trained in your life for anything, you kind of know how this works. When you sit down and you plan out a process, that’s a big, expensive energy and you gotta think about things and you’re gonna have meetings and there’s gonna be debates and you’re gonna have to make judgment calls and value judgments and all this other good stuff. But once that’s done, you’re not over. Like there’s extra stuff coming and that is to actually work the process. And this, ladies and gentlemen, if estimating expenses is the part that everyone fears, then tracking it is the part where everyone fails. Because even if you get through being able to estimate your expenses, well, you gotta track this. You have to now work the process. Remember your budget’s a first step. It’s a conversation. It’s a statement of values. You need to now go live your values, continue that conversation, and take the most important step of all — the next one, always the next one. And so, what you wanna be doing with your budget is to sit down and have weekly business meetings with yourself or your partner and you’re gonna track your income. Did I project it well? You’re gonna track your spending. Did I have an unexpected expense? One of the things that killed me when I was in Flagstaff all the time were all the random shit that came out of nowhere. I mean, like even under the best of circumstances, we couldn’t have made it. But we were typically hundreds of dollars into the red because, oh, my car door fell off. Oh, I need a new tire. Oh, Harper’s sick. Harper’s, my oldest daughter, if you didn’t know. And so on and so forth. With this system though, we sit down at the, say, Saturdays. Saturdays are when my weekly business meeting with my wife is. And we sit down and we actually look at it and go, how are we doing on our spending? Wow. Groceries are way more expensive than they were before. Okay. What has that meant for me? Well, it means that I need to buy new weights for my gym in my garage. Well, that’s gonna have to wait till next month. So, instead of doing the really heavy weights that I want to do, I’m just gonna have to do more reps and that’s okay because I know I’ll get it next month. But for right now, food is just a little bit more expensive and that’s okay. You adjust your budget in flight. It’s not just this thing of like, aha! Yes, we made the thing. We checked the box. Huzzah! We pat each other on the back and then we just go off into the sunset. No, no, no. This is a process and so now we need to adjust it in flight.

[00:21:25] And this is where you’re continuing that conversation with your spouse because he or she may come to you and they’re all skittish and they don’t wanna talk about this. Okay. Remember how do you have this conversation. Curiosity leads. Curiosity first. What are you afraid of, honey? How can I help create a sense of safety for you? Because there’s a lot of shame that comes with money. There’s a lot of things that are gonna come up. And so, this is your opportunity to really engage with yourself and with your partner. But it’s not gonna happen if you don’t sit down on a weekly basis, particularly in the beginning, and really work this process. And let’s face it. Relationships are challenging. Relationships with ourselves are challenging, let alone another person. And so, when you sit down on a weekly basis and say, okay, what did we spend, knowing that this is a statement of values, conversation, and a starting point, you’re increasing the level of communication in your relationship. Now, some people are afraid of that. They’re afraid to be seen and they’re afraid to reveal themselves to other people, even if that other person is yourself. But I want to ask you. How many relationships are hurt by more and better levels of communication? And if that question doesn’t linger, let me ask the question a different way. How many marriages and relationships end because of financial stress? Wouldn’t you want to give yourself the best chance of success by actually working the process and being able to be curious and have your partner be curious about you? I mean, when I was first doing this process back in Flagstaff, I couldn’t have imagined what the conversation was gonna be but I knew I was scared and I knew she was too. And I got an opportunity to learn about myself and my wife in a very deep way by tracking my income, by tracking my spending, by using my budget as a statement of values, conversation, and a starting point.

[00:23:25] So, this might seem like it’s a lot of work but it’s really expensive to not do it. And if you’d get it wrong and it all goes sideways and it isn’t that great, just take a breath. Understand that budgeting and financial management is an evergreen commitment. There is no God-given reason why you should know how to do this and your parents were probably bad at it and the school system would’ve been even worse to try to teach you. But budgeting’s a skill and not a natural one at that and skills take time to learn. This is an opportunity for you to learn patience and self-love to give yourself the grace to make mistakes and learn. Making mistakes are a critical part of every learning process, just so long as they’re all new mistakes. Because a mistake you make multiple times isn’t a mistake anymore. It’s a pattern. But I can tell you for myself, even now, even with all of my expertise, I still make mistakes and they’re always kind of entertaining to me ’cause I always think I’m like, damn it! I made that mistake. I can’t believe I did that. And I have to stop and breathe for a second and ask myself, okay, did I make the mistake before and I just failed to learn or am I making new mistakes? Which means when you make new mistakes, you are making progress, my brothers and sisters, progress. And if we can keep moving forward one step at a time, we can get to the mountaintop and you will always be learning. This evergreen commitment is an always an opportunity of self-discovery about yourself, about your marriage, about your relationship, about all these things. You’ll be learning from last month to apply it to the upcoming month because every new month is a new opportunity to be better than you used to be. This evergreen commitment gives you the opportunity to take time to be clinical and not critical of yourself; to understand why is it that I have to have those Chick-Fil-A sandwiches? Does that fit into my values? We talked last week about coffee and if that cup of coffee from a Seattle-based coffee chain helps you show up every bit of your life just a little bit better, then by God, go drink the damn coffee. And in my case, I knew I was doing something less than ideal with all the Chick-fil-A sandwiches that I ate. And Chick-fil-A is amazing but I was also eating my feelings. And the reality here is that I had to understand that. Clinical not critical. To be able to say, yes, I’m under a lot of stress and yes, this is something that I’m struggling with and yes, I’m gonna keep doing it because it helps me continue on my graduate school path rather than you lazy, fat, slob. Clinical, not critical. And this evergreen commitment is an opportunity to just breathe; to sit with some discomfort, knowing that you’re gonna be okay.

[00:26:27] And that discomfort, ladies and gentlemen, is so real because I remember going back to that kitchen table in Flagstaff and looking at my wife being angry and struggling that we’re going further and further into debt every month. I don’t know what else to do. And I’m looking down at the budget we’re trying to create and I’m seeing freedom and I look up at my wife and I see in her eyes the truth of what she’s hearing. I see freedom and she’s hearing “I will starve your babies,” which is not the husband she married or the father of her children she wanted. And so, it was an opportunity for me to embrace my wife and to make her a promise and commitment that she would have plenty of food while she went through this pregnancy and that her oldest child would always be fed. I’m learning about my wife, about her fears and anxieties. I’m learning about myself and my blind spots. And each month we were able to continue to move that budgetary needle. Failure after failure was progress after progress until one month after nine consecutive attempts, we got it. Ladies and gentlemen, you can, too.

[00:27:44] Outro: Thanks for listening. If you like what we do here, please hit that subscribe button. Leave us a rating and review. And share the content with somebody who would benefit from the message. You can follow us on Instagram, Facebook, and Twitter, all @fiscallysavage. And head over to fiscallysavage.com to get our free tools, suggested reading, and everything else you need to take control of your financial life and live free.