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IFB144: Years of Budgeting Simplified with Andy Shuler

Announcer (00:00):

You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and Dave Ahern. To decode industry jargon, silence crippling confusion, and help you overcome emotions by looking at the number, your path to financial freedom starts now.

Dave (00:36):

All right folks, welcome to Investing for Beginners podcast. This is episode 140 tonight. Andrew and I have a little special guest. We have Andy Shuler with us tonight. Andy is a regular contributor to the blog that Andrew started einvesting for beginners podcast a while ago, and so we’re going to talk to Andy today about some of his ideas about personal finance. We thought we would go off topic a little bit and maybe move away from Coronavirus and all the death, doom, and despair that’s out there, and maybe guys give you guys some refreshing news and something good and fun that’s going on out in the world. So Andy, why don’t you tell us a little bit about yourself, where you’ve been, what you’re doing, kind of how you got started, all that kind of fun stuff.

Andy (01:16):

Yeah, sure thing. First of all, I want to say thanks for having me on. I’m happy to talk about this. As you said, I’ve been, I’ve, I’ve written quite a few blogs, so it’s, it’s kind of exciting to get back to the basics with all the coronavirus stuff going on. You know, you can kind of look at your personal finance, something you have a little bit more control over then than what you might have in the market at all times. But, so as you said, I’ve been doing this for a little while. Just a little background about myself. I’ve kind of, you know, been through all different, all different areas of life, especially when it comes to personal finance. I think I could probably write almost a book and all the mistakes you don’t want to make. I mean, I’ve opened credit cards in college and maxed them out, you know, with the sole purpose of not having to work a job. I was in school gone through times where, you know, I’ve cashed out a 401k or got a 401k loan, and you know, everyone talks about how those are probably one of them, the worst things that you want to do. But just really just gone through a lot of trials and tribulations. They’re all my time off, you know, learning mistakes or making mistakes, trying to learn from them. And my, my investing journey I’ll say didn’t fully kick off until,

Andy (02:31):

Oh, man. Probably 2017 or 2018. I’m trying to think. It was a few years ago, but it was, you know, listening to this podcast and a few other podcasts. So it feels full circle be able to come on and share some of my stories after, after posting on the blog for so long.

Andrew (02:47):

Andy, thanks. Thanks for giants. Like it’s been incredible to see the evolution of how you’ve contributed and how it’s taken off. And like your posts get a ton

Andrew (03:00):

Of traffic from people all around the world. That’s super cool to see. And I admire like the way you, you’re, you’re, you’re such a go-getter. The way that you started writing for me is you reached out to me and wanted to see if I needed any help with content and things of that nature. So I think hearing your mistakes is very illuminating. Coming from somebody who is kind of just go out there and just, you know, make things happen for yourself. I think a lot of us, whether consciously or not, you know, as we’re navigating through life and our personal finances need to at some point in our life, really take the reins and get those things under control when it comes to our personal finances. Cause they have huge implications. And I think there’s just a lot of things that we don’t think about when it comes to personal finance that really can have a huge, huge impact on the rest of our life.

Andrew (04:08):

And, and whether we can go through to financial freedom or not. So, you know, for you, you mentioned the credit cards, Maxine, those out, I can relate with that. And the 401k loan. You also mentioned how you got interested and started kind of taking the reigns yourself in 2017 2018, so what was it that kind of pushed you towards that, and were there any additional mistakes you made along the way that you think you wish you didn’t make? And maybe somebody could learn from it as they go through and try to take control of their finances?

Andy (04:51):

You know, I don’t want to say mainstream or simple, but it’s compound interest. And when you see that, if you, you know, put $1,000 in the stock market and you can earn, you know, a 10% into it just by investing, you know, into like an S and P index fund, you know, including your dividends, you know, your, after your first year, you’re going to have your, your first thousand dollars plus the 10% earned. So you’re going to have 1100 bucks the next year after that you’re going to end 10% on that whole 1100. So it’s this, it’s just continuing to build on top of the interest that you earn the previous year. So, you know, while the return is imperative, time is equally and almost more important. I mean, depending on how much time you have, you know, the further you pull out those various scenarios, and you look at the time, it’s like compound interest kind of just smacks you in the face.

Andy (05:43):

And it, that’s, that’s really what, what got me focused on investing. It’s like I was in, I was living in Chicago trying to save for an engagement ring for my wife. You know, we were trying to plan to pay for, you know, a good part of we knew in the next couple of years we’re going to have to move for my job and that would we want to buy a house. So we knew that was going to require a significant down payment. All, like I said, living in the city in Chicago, we weren’t exactly saving a lot of money. We were, you know, kind of trying to make the most of it. So I was trying to find ways to be more efficient with my money. And it seemed like the market was, it, not necessarily for the short term, but I felt like if I could do, you know, invest well it would set me up for the longterm, which then would ideally be able to set me up, you know, indirectly for the short term as well.

Andy (06:32):

And it was, I’ll be honest, it was incredibly terrifying getting started. You know, I had no idea what I was doing, didn’t even know what to do. I, I vividly remember the first company I ever bought, I just Googled what the best cheap stocks to buy now are? And it was like a list of like five companies, and I ended up buying one, and you know, identity, you know, it didn’t matter. It was like 100 bucks, but it was just, you know, how, how an analytical that was compared to everything you guys teach on your podcast. So the more I was able to listen to the podcast and do my research and understand stocks and utilize the value trap indicator that you created, Andrew, it’s, I felt like it’s really kind of helped take away the fear of making mistakes. And I like hearing the story about how I initially reached out to you, cause the article I wrote, I don’t know if you remember this, but this is truly what kickstarted my investing journey was there’s an article about how if you bought an into the S and P 500 at the highest point and then you sold at the lowest 0.5 and 10 years out.

Andy (07:37):

So basically buy high and sell low, the exact opposite of what they tell us to do. You’re still making some pretty significant returns. I mean, you know, I’m, I honestly think that your five-year returns like in the 40 to 50% range and I think your ten-year returns from the 80th percent range. If I remember offhand, so I’m, you’re making significant returns. Doing the worst thing you can do as long as you hold onto it. And that’s really what, what, you know, kind of kicked my button gear and said okay, it’s time to time get going.

Andrew (08:05):

Yeah. The power of compound interest. Right?

Andy (08:07):

Yeah, that’s exactly right.

Andrew (08:09):

I like you had a PO, a part of a post you did about compound interest on the blog. You named the section convincing the wife about compound interest. Can you talk about that for a second? Funny cause. I see this Heather, and I’m like, you go half a page down, and I see like this intense formula. So go, go ahead, and please share.

Andy (08:36):

It’s, it was like, so she’s, I mean I think, I think we’re, we’re probably a perfect pair when it comes financially. I’m very much like push the envelope, let’s get as risky as I can. Like PR probably a little bit too much. And she, and she is very much the part of, you know, let’s, you know, let’s make sure we have cash. Let’s make sure the emergency fund is, you know, not three months but six months, you know, let’s make sure we can access it tomorrow if we need to. And the first conversation we even got into about this was it was talking about opening up a high yield savings account with ally and the article that you’re; you’re talking about the interest rate was like 2.3% at the time versus my fifth third savings account. And I don’t normally, you know, I don’t normally want to, you know, call someone in a bad way, but if I’m earning 0.01% interest, I don’t mind saying that it was fifth third.

Andy (09:37):

When even when I just compared at 2.3% interest compared to 0.01%. If you would just put $10,000 into a, you know, those two accounts over 30 years, you’re at almost 20 grand in my ally account, and I’m at, I’ve earned a total of 30 bucks a dollar a year in my fifth third account. So again, I know that’s, you know, pretty small, but that was what, what the big debate was where, you know, the whole thing with Ally for her is just, it’s not instantaneous, you know, it’s a few days removed if you truly ever did, you know, need it for an emergency fund type situation. So it was kind of going through some of the math of that is, you know, how, how often does something like that happen and is it, is it worth the potential gains? And it almost like laid the groundwork for some of our, some of our investing discussions as well.

Andy (10:32):

Like can you give an example of investing discussion that kind of led from that? Yeah, I mean, just like, like in general, I’m like, you know, if, you know, if we’re at the end of the month and you know, we have an extra 200 bucks in the budget, what do we do with it? You know and do we do, we hold onto it, and we throw it in the savings account, you know, do we, you know, try to put it back into a Roth or a brokerage account. Kind of just, just what’s our mindset again, where I’m like, Hey, every single penny saved, let’s throw it in the market and what our money goes to work. And you know, she might be a little bit more willing to hold on to that money for a sure thing or, you know, pay down the interest. Or I’m sorry. Yeah, but paid on like debt that has, you know, a higher interest.

Andy (11:21):

And those are always the types of discussions that we’ll have is, you know, if you had a three and a half or 4% loan, does it make more sense to invest in the market or, or, you know, pay off that loan? I think that’s, I mean that’s an ongoing discussion that, that we have and I think it changes, especially like in today’s market, but it’s, it’s more, more or less just, I think she’s helped show me that you can’t always chase return. Sometimes. Sure. Things are good. It’s nice just to have a shirt thing. And then I think I’ve opened her up a little bit too to show her the,

Andrew (11:54):

But as I was saying, a burden, the hands worth more than two in the Bush.

Andy (11:59):

Yeah, exactly right. I mean, exactly right.

Andrew (12:01):

I mean, I, I love how you mentioned having the data helps to frame that discussion. And so whether that’s a discussion you’re having with a spouse or even like an internal discussion where you’re trying to conceptualize what the options are because I think that’s, that can be one of the hardest parts of either investing or figuring out what you’re going to do with your money. Cause there are so many opinions. There are so many people with very strong debates on almost any topic that you could find. And then you get somebody who’s an absolute beginner, and they feel like it’s like, well, where do I go from here? And so without any sort of path or something to give you structure and, and help you conceptualize what the difference in those options are. You feel just kind of lost out there.

Andrew (12:59):

And so I think one reason why a lot of your blog posts have done so well is you always have that analytical approach that you talked about that we like to pound on the podcast. And so I know a lot of people listening also appreciate that type of approach and something fascinating about

[inaudible]

. You’ve made a lot of Excel spreadsheets that you’ve shared on the blog, and I think those have been cool. The big one that you’ve done recently with your budget talk a little bit about that. You have a category called CA H I think it was, which I thought was something easy to remember. And then you have, what I think is nice about what you did with your spreadsheet is you listed out a lot of expenses that a lot of people maybe won’t account for. And so there’s a lot less chance that your budget goes overboard because of something that you forgot to put in there. So talk about that budget, that spreadsheet that you use personally and some of the things that you’ve put on there that people can kind of think like, Oh, maybe I should be thinking about that and planning for that too. Yeah, yeah,

Andy (14:15):

Absolutely. This, this budget tool, it’s been something that’s like, it’s been used by myself. I just create it randomly in Excel back when I graduated college, and then I’ve like refined it over the years and made it more complex, less complex. Just trying to find the sweet spot. I’ve gone through times where it’s like; it’s so in the weeds and in-depth that I wouldn’t even, I wouldn’t even use it. And then sometimes it was too simple, or I’d get to the end of the month, and I felt like I didn’t really, I still didn’t fully understand my expenses and really where my money was going. So I feel like I’ve, I’ve now after multiple years of refining this, and it’s really at a good point where it’s, it’s very simple to use, and it’s very very eyeopening. So the acronym you’re thinking of, it’s G, a, C. H. okay. Sorry. Yeah, it was answer groceries, animals, and then cleaning the house. And I pronounce it gash because it just gushes my budget and it’s all stuff I hate mine.

Andy (15:18):

Just spending money on all of those things, but it’s almost always the highest category. So it’s, it’s like a mental, it’s, it’s typically the second thing I’ll put on my budget right off their mortgage. Just to keep it top of mind for me. But yeah, so I mean those are some of the things that I think of, but it’s you know, some, some of the other things you might not think of is I have like, you know what, I trash, you know, if your trash is getting picked up books. I, I very specifically outlined like alcohol at a store, and then I have like bars eating out at dinner. And a lot of that originated from, I mean, that was my time, like back when I graduated college. Like those were those were major expenses. And the reason I like to break those out is that it, I mean it sounded ridiculous, but it’s like when you’re when you graduate college, and then you get a job in your college hometown and a lot of your friends still live in the hometown; you’re still kind of hanging out with those friends.

Andy (16:21):

So it’s like, you know, almost the more that you spend at the store, the less that you’re spending at the bars and eating out. So it was just a way to break it out for me to understand and better have like home improvement projects.

Andrew (16:38):

Cause people, people like when they’re buying a home, for example, they’ll think about, okay, what are my payments? And then, you know, not thinking of, Oh, how much am I going to pay to furnish this thing, right? Like, yeah, I’m going to have to get all new furniture. And then, as you said, home improvements too, it’s a never-ending cycle. And so if you don’t admit that, that has to be a part of your budget, that you’re kind of lying to yourself.

Andy (17:04):

Yeah, exactly. And like, I mean, a perfect example is if you, if you know you have a repair coming up say in the next, you know, six months and you think it’s going to cost, you know, 1000 bucks, but put $200 in your budget, like almost amortize it, put $200 in your budget for the next five or six months, and if it doesn’t come that month, take that $200 that you had planned to put it there and throw it in your savings account and just, you know, earmark it for when that expense does come. And I mean, that’s something I’ve tried to do, or I mean, home improvement, it’s like almost a steady, you know, a couple of hundred dollars a month because I know at some point, just like last year, you know, our air conditioning unit died. So it’s like that was, you know, 4,500 bucks were, yeah.

Andy (17:50):

$200 a month doesn’t cover it, but it, you know, it takes that $4,500 expense down to 2,500. Because I’ve just spent been planning. So it’s just the best thing that I could recommend for anyone to do is to go, it’s super simple. If you buy most of yours, like if most of your expenses are online, whether it’s a checking account or a credit card, you can go just to that, that banking institution, download your expenses, and you can even just sort them by name, and then you can see where your money’s going. I mean, if it’s a restaurant, like just simply code at real quick. Is it restaurants? Is it, you know, is it, is a gas, is that the, you’re, you’re buying lunch at, at your, your work every day. That’s $8, you know, $8 a day for lunch and you’re spending 40 bucks a week. When is that? He can pack your lunch to spend $3. Is it are you, you know, every, every Friday and Saturday are you, are you renting a movie or are you going to the movies? So you’re spending, you know, what, 20 bucks a weekend going to the movies, so 80 bucks a month. It’s just stuff like that that people might not think about, and you don’t know until you dive into the numbers.

Andrew (19:04):

So where does debt fall into all of this because obviously for a lot of people they have different debt payments to deal with and those are going to be various expenses. How does that factor in, and how does some of the get aggressive with paying debt down? You had another girl on the call talking about the difference between the snowball method and the avalanche method. And that can be kind of a controversial thing. So what did you find from your research there, and how can people think about debt in their budget?

Andy (19:38):

Yeah, yeah, for sure. That’s, that’s honestly one of the something that kind of still really, I don’t want to say it gets to me, but I, I love talking about it with people, and I’ve, I’ve changed my opinion. Like it almost goes back to the conversations with myself, my life, because she was always a debt snowball person, and I was a debt avalanche person. So the debt snowball method is defined by Dave Ramsey, where essentially you start with your lowest payment first. So just whatever that lowest whatever your lowest outstanding balances and put all extra money you can towards that payment. And once you get that paid off, that essentially you can shift all of that money that you’re putting towards that payment and put it on the next lowest. So basically, the concept is you’re, you’re starting small, and as that snowball rolls down the Hill, it’ll kind of pick up speed and momentum.

Andy (20:32):

And by the end of it, you know, you might’ve had five payments for him overpaid off. So now you have all, all this extra money that’s going towards your last payment. So the, you know, the red flag in my eyes, as I said, I’m a very analytical person with that is that chances are your lowest debt is also not your lowest interest. It might be. But mathematically speaking, you should always pay off your lowest interest first regardless of what your balances. So I, I went through an article and kind of showed, showed how that might work if you’re going to pay off, you know, some, you know, the two different methods and the one I showed with the snowball method, and in turn, you would pay off you know, you did not pan like an extra like $1,200 on your $22,000 of debt, and it just is an extra month over if you paid the avalanche method.

Andy (21:30):

Now, you know, the only thing I’ll say with that is I recognize that not every person is analytical, and I think people do get motivated by different things. So if you’re the type of person that if you’re just going to stick with the highest interest loan and you’re not going to get motivated and be able to stick to the plan, then maybe the debt snowball method is actually for you. It’s, it kind of goes back to, I had a personal trainer when I was in college, and they always said the best diet plan is the one you’ll stick to. I kind of feel it’s the same way with paying off your

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Andrew (22:11):

Exactly. It goes to what you’re saying, whether you’re analytical or you want to be fine with not optimizing your interest rates. So the say, you know, cause if that’s overwhelming to you, then maybe it’s simpler than just take a snowball method and kind of run with it.

Andy (22:31):

Yeah, yeah, exactly. So I think it just depends on how that person is wired and what’s going to make you motivated to pay it off. I mean the, you know, I, I, I can sit here and look at the numbers all I want, but you know, something that’s not taken into account is if someone that’s a debt, a snowball minded person and tries to avalanche method and they end up falling off halfway through and that debt, you know, inflates right back to where it was. So it’s just about knowing yourself and how you can motivate yourself to get there.

Andrew (23:02):

Yeah, it makes sense. I, I feel like you presented them fairly, you broke out like a good example of some loans that people could have and how that would play out mathematically. Let’s zoom out a little bit and talk about maybe the end goal and what that could look like. I think when we talk about personal finances, we talk about investing. You want to eventually get to a place where if you have this sort of financial freedom, the ideal spot of that is to be in a place where your money, you can withdraw some money but still have enough money left over to continue. And so you’re essentially supporting yourself indefinitely with the money you’ve saved and invested over the years. And so there’s a lot of opinions on how much money needs to be. And I felt that it was nice to obviously when you project something out, even if it’s more than a couple of days in the future the actual accuracy of any sort of projection like that will probably be skewed quite a bit. But in my mind, it was nice to conceptualize what a good goal number would be and realize it’s, you don’t have to have $3 million or $10 million to retire. You can have a sustainable financial state with not that much money. So there are different percentages and, and one that’s quoted quite often in the personal finance world is the 4% rule. So talk about what you found on your research with the 4% rule and how that can apply to the average investor.

Andy (24:55):

Sure. Yeah. That. So the 4% rule is you know, if if you were to withdraw 4% of whatever you had invested in the market every year, that you would never run out of money. In essence, that’s, that’s kind of how the rules functioned. I then there’s, there are so many conflicting opinions on that. And whether it’s right or wrong, whether you should, you know, be more conservative, or you know, is what, you know, w what sort of investment mix do you have? Is that just putting it into like an S and P 500 fund? Is that all in bonds? Is it a mix? So I just wanted to dive in a little bit. And so I ran in two diverse scenarios. I went back to 1928, which is the furthest back. I get information just on the S and P 500.

Andy (25:46):

And the first scenario is just using a hundred percent stock. So if you only invested in the S and P 500, if you were to use the 4% rule, basically pulling out 4% of your income every year. If you started in 1928, you would have run out of money pretty quickly. 1944, but if you would’ve started at any time after that, so if you started in 1940, you would still currently have not run out of money at this point. So it seems like the, at a hundred percent stock role or 100% stock portfolio, that the 4% rule actually could be pretty valid. Now I say that

Andrew (26:28):

19 four, when you say the 19 for these, that’s when you start taking the money out. Is that as you started in 1928, right? So you’re saying?

Andy (26:39):

Yep. Yeah. So, I ran, so I started in 1920 if you would, you know, pull it 4% every year you had run out in 1944. Okay. If you would’ve started in 1940, you would not have run out at this point. Huh? So, I broke it down, so I have different categories. So I have like 19, 28 we’ll show you when you’d run out. And then I do pretty much every ten years after if you had started investing on January 1st of 1940, January 1st of 1950, 1960, and so forth. Just to kind of show you how, how things have trended. I mean, it just takes into account, so like if you would invest in 1928, the reason you had run out so quickly is, you know, the great depression. So could that happen again? Of course.

Andy (27:28):

It absolutely could happen. I mean, especially now, if you look at the times we’re in right now in the coronavirus, it’s, it’s certainly scary time. So, you know, you might go back and look at the 4% rule and go, yeah, it probably would have worked, but with 100% stock allocation. But there’s a little bit of cause for concern. So then I did the same thing, but instead of doing it with a hundred percent an S and P 500 portfolio, I did 60% S and P 540% bonds. And if you would have invested that in 1928, you would never have run out of money. You would still be sitting there with money right now, today, you know, nearly a hundred years later. So I think all in all through the great depression, through the great worst-case-scenario kind of thing. Yep. Yeah. And it’s, you know, there are some scary times in there.

Andy (28:26):

I mean, there’s, when, when I go through year by year, I mean, you can see some of those balances can get pretty dang low, and I might start making you nervous. It’s, it’s a scary time. So I think a lot of that, you know, too, comes again on knowing yourself. Like, if you’re going to implement a rule like this, you need to understand the numbers when you go into it and trust the process and not be willing to sell low. I mean, if you would have implemented the 4% role three years ago, you probably would have been really happy until January or early February. So if you’re going to, you’re, you’re kind of putting a whole bunch of trust in that. But I think, you know, from looking at my data, it’s like the 4% rule truly does work as long as you can utilize it properly. And I feel like the 60 40 allocation is the appropriate allocation there to have those kinds of findings and really to where, where else are you going to get a situation where you can take money out but yet still also have your money not only stay there but like continue to grow too. And then now it’s like this well-oiled machine, and it’s like this big

Andrew (29:42):

Closed system feeding back on itself and you know, some leaves and you spend it, and some get reinvested, and then it continues growing over time. I think we’d all like to live a very long time. Maybe a lot of us won’t live as long as we hope, but just to have a really good shot with something like the 4% rule, I think that’s motivating, at least to me, to hear that if you get to a certain point with your finances, you have a good chunk of money saved and you’re continuing to invest, that you can start to take out some of the fruits of that labor while everything’s still running in the background and still sustaining you and giving you that income that where you don’t have to depend on any other income.

Dave (30:32):

And I, I think to tag on what Andrew was saying too, as somebody older that gives me comfort too because one of the things that I’m afraid of is what happens to me as a, you know, with longer, you know, because I’m closer to retirement than the both of you are. And so I have a chance of living till I’m 90 95 years old. And you know, my parents didn’t, you know, my mom’s still alive, but my dad died a few years ago or last year. I’m sorry. And so that’s one of the concerns I have is what, what if I run out of money? You know, because when you’re 75 80 years old, you don’t want to be bagging groceries, a Walmart. So I no, I sure don’t. So you know that those kinds of numbers make me feel better about what my plan is and what I’m trying to do.

Andy (31:21):

Yeah, sorry, go ahead. As you say, I agree, and I think like it has a ton of use really no matter where you are in life. You know, Dave, like you’re saying, it’s, it’s truly like you can start putting math to it and start planning out your life. And I think for the new investor that might just be getting going is you can kind of almost backtracking into that and figure out, okay, what, what’s, what’s the end goal? What do I need to get to? Well, what am I doing all this for? And I mean, it’s as simple as taking what you envision when, when you’re ready to retire and stop and money in, you know, what, what do you think your annual expenses are going to be? And if you multiply that by 25, then you’re able to get to that essentially. That needs to be your retirement number based on this 4% goal. So I think it, regardless of where you are, there’s such a great use for it. As long as you’re using the 4% rule properly. And you know, it’s nothing more than a rule of thumb. But like you said, I do think it can provide some peace and comfort. I’m trying to play in your life and investing strategy

Andrew (32:27):

And that’s just setting the standard too. Like, if you look at the posts you did people could do 5% and 6% withdrawal rates and depend on what period do you happen to fall in though even at that high of a withdrawal rate, those, you know, those test case situations still ended up in the same place where the money was able to continue indefinitely. And so when you have, instead of 4% or 5%, 5% or 6%, when you play with the percentages, it’s going to play. It’s going to change how much you have to save to get there. And so I think that can be encouraging too, that it’s like, Hey, you know, you don’t have to a, you don’t have to get to this perfect ideal self-sustaining machine forever. Or, you know, you could get close and still do well and have nice benefits from all of that just because you, you put your money to work and you put yourself in the place that’s so much better than you were before. So now, going back to your tool that you use Andy, and hopefully, it doesn’t gas you as much as it makes you feel good. Where do you put investing in that you make a line for that? Do you kind of take whatever the excess is after you’ve done the budget? What what does that look like? What does that process look like? How often are you going to this budget, and how are you putting stuff in, and how does that help you with your investing goals?

Andy (34:01):

Yeah, yeah. So, you know, it’s all kind of you know, backtrack to when I had a lot of debt at first, and I was just starting to try to look at investing. It was, I would, my, my first strategy going in was, you know, let’s, let’s take care of, you know, all these bills and all these expenses I have and whatever’s leftover at the end you know, let’s try to put that money to work in the market, whether it’s an IRA now or anything else. And what I noticed is that I didn’t usually have a lot of money leftover. Usually, I was blowing it on something stupid. I never really had anything left that would do a whole lot when I, when I put it in the market. So I almost tried to flip it on its head and treat it exactly like it’s a line item expense where it just comes, you know, straight out of my paycheck goes right into my fidelity account and I don’t have a line item in there, but I feel like you know, as an, as an investor, someone who was using the doctor budget tool, they certainly could put that as a line item in there because honestly, when, when you are looking at your expenses for the month that that would classify as an expense, but it feels good.

Andy (35:16):

It feels good to put in there that you’re going to invest 150 bucks and that you did put $150 in there. And that will show, like I said, as a charge. But I mean you’re, you’re, you’re going to be happy to put that in and that’s not something you, you want to cut out of your budget. So I think it’s very important for us to pay ourselves first and, and take a look at our investing. And I guarantee that if you if you’re not if you feel like you can invest, I know for a fact that I could probably find a way to cut your budget down to be able to generate that extra income or, you know, a side hustle. Maybe it’s driving Uber for a couple of hours or, I mean, there’s, there are so many, so many different things you can bike into work and save you on gas money and there are so many different options.

Andy (35:59):

Pretty much every Sunday I’ll, I’ll even look up stuff, or I’m like, you know, what’s, what are some $2 meals? I’ll challenge myself to make lunch for myself for the whole week. For ten bucks. You know, if I normally spend 30 or 40, okay, there’s another $25 I just saved in a week, do that four times at $100. You can invest. So I think the important thing is to not save the leftover for investing, but make it a priority right up there with any of your other fixed expenses, like your mortgages and any other debts that you might have that don’t change from month to month.

Andrew (36:34):

So the way you use the doctor budget tool personally, you have your regular expenses, and then let’s say you go all the way down to the bottom, and then you had like a 200 surplus. So you’re taking that surplus and then like you say, you’re transferring it over rather than putting them on the line item kind of thing.

Andy (36:55):

Yeah. Yep. Yeah, that’s exactly right. I w I would, I would take that extra money and transfer it over. You could put a line on if you want just to make your, your budget round out. But you know, it’s something I’ve been, I’ve been toying with, and I intend to, to add multiple more iterations to the doctor budget spreadsheet tools, creating a, like a variable spending tracker. So you, you might have your fixed expenses, but it’d be a way for you to compare just month to month what your, your variable expenses are. So I think by doing that it can motivate you to spend less on this stuff that changes day to day and therefore creates that surplus at the end to be able to, to transfer into your account.

Andrew (37:39):

Yeah. And sorry, I might’ve missed what you said. How often are you, you’re going through and like, so what, what’s nice about the tool, the doctor budget tool that you made? A lot of the things are listed out for you. So things that you wouldn’t even think of. You have the line item there, and people can just fill in what that personal expense is. So how often are you updating that and then is that at the end of the month you just take whatever’s left and then transfer that? How does that work?

Andy (38:11):

Yeah. So I want data at a weekly. And the reason that I’ll do it that often is because a lot of my expenses are kind of broken out like week to week. So whether it’s like eating out or groceries, I w we pretty much buy groceries once a week. So if I’m planning, you know, $400 and there are four weekends as all update that. Cause if I, I want to know if I spent over, I want to know, Hey, I got to make it, make it up one of the next three weeks and spent under, and if, if you wait until the end of the month, I mean, you’re, if you’re over, you’re over, you don’t have any time to make it up. You don’t have anything else you can cut. You just kind of gotta hope you can do something different in the next month when I’m much more of you know, plan, re-adjust, check and you know, update give yourself a chance to fix the mistake.

Andy (39:04):

It almost is like playing a football game, and you don’t get the scoreboard until the, you know, the game’s over. Like, I’d like to be able to make a halftime adjustment or something if things aren’t shaping up. So I want data weekly, but I will never transfer money over until the end of the month and that month is set in stone because you know, just like I could have spent over the first month if I spent under that, I transfer that money out and then for whatever reason I had to spend over, cause something might’ve come up that I don’t want to be in a, be in a bind at the last minute. So that’s, that’s in general math per process.

Andrew (39:42):

Yeah, it makes a lot of sense. And I, I checked it out myself. I liked how simple everything was to use. You don’t have to be an Excel wizard to use it. Everything is just really nicely laid out there. So if you’re somebody who kind of feels out of control with your finances, you feel like you just never know how even to get started when it comes to organizing all that stuff. Your tool is just a great, great, really investment tool to use. And if you can make it a part of your routine regularly can be a great way to either write, two things are going to come out from this, right? Either you’re going to figure out where you’re blowing all your money, at least you’ll know. And then the second thing is you could, you know, make those halftime adjustments like you’re saying, and now you start to make progress that you weren’t able to do before. Now that you’ve gotten the handle on your money.

Andy (40:45):

Yeah, I, I, I cannot agree more. And I, I think there’s, like, there’s, there are two things that I think make the budget tool so beneficial. It’s like one; it is very simple, and if, if you’re going just based on the pure simplicity, you know, I’ll listen. Or am I sit there and I know I would at least think, well, why don’t I just use mint or you know, some other budgeting app and you certainly can. But you know, I would say that it’s easier. But I think the most important thing if you ever want any sort of like number based result is tracking. And this tool, while it’s very easy when you download your transactions, it’ll force you to go in there and be like, okay, look, $8 a McDonald’s code that as eating out $15 at you know, sheets I bought gas or you know, $4 at sheets.

Andy (41:39):

I bought a Mountain Dew, and you know, a bag of Skittles or like it forces you to go in and code each item physically. So you are seeing where your money’s going, and then at the end of the month, you can see it all report. So when you’re filling out what all those expenses are, you probably know about what your budget is going to look like before you even see that, you know, the final shape up at the very end. But I mean, if you think about it like how hard it is to lose weight unless you’re tracking, you know, what you’re eating, tracking your workouts, you’re getting on the scale and seeing how you’re performing. It’s, I kind of have a lot of, I guess working on analogies now, I think about it, but I don’t, I don’t think there’s any better way to be able to make precise adjustments in your lifestyle regardless of what it is unless you’re tracking that information.

Andrew (42:27):

Well, 100%. I mean, that mindset sounds very familiar to another spreadsheet. I know it’s just something about having to go through and do it yourself rather than having some AI computer do it all for you. Something about that process. Kind of like the old days where you used to balance a checkbook. You internalize that as you go through, and that forces you to understand what’s going on and make those adjustments. So I like this tool a lot. I think a lot of people, especially listeners on this podcast who have this, a lot of the same mindsets we do can find it useful. It’s a $29 tool. It could be something that saves you many, many multiples of dollars over your life as you use it. So how do people find it? You know, what else? What other parting words do you have for people?

Andy (43:30):

Yeah, the, so, so they can find it. If you go to the the doctor budget.com and it’ll take your eight there, and you’ll be able to fill out your information and download the actual spreadsheet. As you said, I truly think this can save you, save you tons of time and, and money throughout your life. I mean, I’ve, I’ve gone through times where I was generally too scared on weekends to open up my bank account. So I’ve, you know, to be in a place where I feel like I could pretty much budget without really even looking at it. And I do truly attributed it to this spreadsheet. It’s the only thing that stuck with me throughout this transformation and my mindset and my personal finance lifestyle. And like I said, I do intend, I think I’ve quite a few different ideas of some iterations we can add.

Andy (44:22):

You know, I’ve been thinking about like the variable spending tracker almost been thinking about trying to create a like a savings rate type tracker. You know, I think if you’re in the fire community, the financial independence retire early, a lot of people will talk about what’s your savings rate. So I think that that could be something that might be coming down the pike, but of course, you’ll, you know, everyone would be able to get any of those upgrades. But I highly recommend you check it out. It’s, I can, I can honestly say that it has changed my life.

Andrew (44:55):

Yeah. I completely recommend it as well. I like it how it is, and I think it can be a very, very valuable tool. Just remember to put the in front of doctor budget cause if you go to doctorbudget.com, that’s not going to work. So thedoctorbudget.com and you’ll be able to see it on there. You’ll see that it’s a product that I sponsor and something I believe can help a lot with a lot of people.

Dave (45:22):

All right, folks, we’ll that is going to wrap up our discussion for this evening. I want to thank Andy for taking the time out of his busy schedule to come and talk to us today, and his tools sound fantastic. I’ve been using it myself, so I give it a big thumbs up, and I agree with him. If you do not plan to assess things and monitor things and track things, you will not get success. That is one of the big keys to success in just about anything and particularly in budgeting. So without any further ado, I’m going to go and sign this out. As you guys are enjoying the show, please give us a nice five-star review. It helps us go up in the rankings, and we can help more people. So without any further ado, I’m going to go ahead and sign us up. You guys have a great week, and we’ll talk to you all next week.

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