Deep in Debt in New Orleans | Millennial Real Life Budget Review Ep. 37

A physical therapy assistant in New Orleans is struggling with significant debt, primarily due to unemployment and increased credit card usage. The individual's budget is analyzed, revealing high expenses related to mortgage, car loan, and cell phone, and the podcast provides guidance on improving their financial situation through debt reduction, emergency fund building, and increased income from a side hustle.

Financial Goals

• 00:01:07 The individual's top three financial goals are paying down debt and eliminating credit cards, building an emergency fund, and living comfortably on their current salary. They have $64,827 in debt and no emergency fund due to unemployment and increased credit card usage during the summer. The presenter suggests focusing on these goals to improve their financial well-being.

High Housing Costs

• 00:03:41 The individual's mortgage payment of $1,500 consumes nearly 43% of their take-home pay, which is considered excessively high. The presenter suggests that a more manageable percentage in New Orleans would be 35-37%, and they suggest finding a roommate to alleviate this burden. This high housing cost severely impacts the individual's ability to manage their budget effectively.

High Car Payment

• 00:04:40 The individual's car loan payment is $515 monthly with a low interest rate of 2.9%. Despite the low interest, the presenter suggests that the car may be too expensive for their income and advises considering a less expensive vehicle to reduce this cost. They recommend using Consumer Reports to research more affordable and reliable options.

Credit Card Debt

• 00:10:01 The individual's credit card usage is a primary concern, particularly a $2,500 cash advance with a $125 fee and high interest rate. The presenter strongly advises against using credit cards as an emergency fund and advocates for building a robust emergency fund first. They also point out unnecessary purchases made on the card during periods of unemployment, illustrating how spending habits contribute to the debt.

Debt Reduction Plan

• 00:18:24 The presenter creates a debt reduction plan for the individual based on their current income and expenses. It outlines the minimum payments, suggests strategies for accelerating debt repayment, and estimates that they could be debt-free in 4 years if they follow the recommendations. The plan emphasizes building an emergency fund, making on-time minimum payments on all debts, and prioritizing reducing high-cost items like the mortgage and car loan.