$4.2k/Mo + $25k in Debt - Save for Baby or Pay Off Debt? | Millennial Real Life Budget Review

TL;DR

Temporarily prioritize baby savings and the emergency fund while making only required minimum debt payments. The budget review identifies eating out and credit card overspending as key problems, recommends adding a realistic restaurant category, and suggests creating a baby sinking fund for necessities such as a car seat, stroller, crib or bassinet. Read on for practical ways to redirect spending and prepare for the baby.

Transcript

welcome to the next episode of millennial budget review where I am going into a real Millennials budget figuring out what's working what's not and giving you practical advice and tips to help you reach your financial goals this one is all about whether or not they should save for baby or pay off debt stick around hey what's up guys it's Justine wit... Read More

Key Insights

• 👶 Prioritize building an emergency fund and creating a baby sinking fund before aggressively paying off debt.
• 🚨 Incrementally increase emergency fund savings to reach two to three months of living expenses.
• 👣 Track spending on restaurants and adjust budget to accommodate necessary expenses.
• 😨 Reevaluate fixed expenses like car insurance and cell phone bills to reduce costs.
• 👶 Focus on redirecting funds towards savings for a baby before aggressively paying off debt.
• 🚗 Utilize tools like the Experian auto insurance comparison tool and Mint mobile to reduce expenses.
• 😫 Set realistic savings goals and timelines to ensure financial stability while preparing for a baby.

Questions & Answers

Q: Should this Millennial save for the baby or pay off debt?

Temporarily pause aggressive debt payoff and redirect the extra money toward baby savings. Continue making the required minimum payments on every debt while building a baby sinking fund.

Q: Why should baby savings take priority over aggressive debt repayment?

A baby is on the way, while the household has only thirteen hundred dollars in its emergency fund. Saving now can prepare the family for known baby purchases and provide a cushion for upcoming needs.

Q: What is a baby sinking fund used for?

It is money set aside for expected baby expenses. The review suggests planning for major necessities such as a car seat, stroller, crib or bassinet, even if family, friends, or a baby shower may help cover them.

Q: How much should be saved for the baby's ongoing needs?

The review suggests setting aside maybe fifty dollars a month or one hundred dollars a month for a stronger cushion. That money can then be used as baby-related needs arise.

Q: What baby expenses should be included in the budget?

Plan for major purchases such as a car seat, stroller, crib or bassinet. The ongoing budget may also need to cover diapers, food through breast milk or formula, and a few onesies.

Q: How should the budget address eating out?

Add a realistic restaurant category instead of budgeting nothing for an area where spending already occurs. The review notes that eating out is a stated struggle and that restaurant spending has already happened.

Q: Which fixed expense should be reviewed closely?

The cell phone cost should be examined because it appears high. The review asks whether it covers two lines and whether phone payment plans are included.

Q: What debt details need clarification before changing the plan?

Confirm what the BSU payment represents and what its lender-required minimum actually is. The spreadsheet lists a fourteen hundred dollar monthly minimum, but only eight hundred fifty dollars was paid, so the budget may be showing a personal payment goal rather than the true minimum.

Summary & Key Takeaways

• Analysis of a Millennial's budget, focusing on struggles with eating out and credit card overspending.

• Financial goals include being debt-free, saving for a baby, and going on vacation.

• Practical advice given to prioritize building an emergency fund and creating a baby sinking fund before paying off debt.