Sorry Fellas, You Can't Fix Her | Financial Audit
Financial Audit
Deep Dive
What is Alex's monthly income and how does she manage her finances?
Alex earns approximately $6,420 per month. She manages her finances through a complicated system of multiple accounts, with one account receiving $1,500 for mortgage and bills, another for kids' expenses, and a third for transferring money with her kids' father. She admits to not budgeting and not knowing her exact income, which has led to significant financial mismanagement.
Why does Alex have a high credit card balance, and what are the contributing factors?
Alex has a high credit card balance of $26,000 due to overspending on non-essential items, including a $2,000 couch, flights for her kids and mom to Korea, and frequent Amazon purchases. She also admits to not budgeting and spending more than she earns, which has exacerbated her debt situation.
What is the interest rate on Alex's credit card, and how does it affect her debt?
Alex's credit card has an interest rate of 27.49%. This high interest rate results in her accruing $629 in interest monthly, making it difficult to pay down the principal balance. Over a year, she has paid $5,000 in interest alone, further deepening her debt.
How does Alex's spending on Amazon impact her financial situation?
Alex spends $1,262 monthly on Amazon, which is a significant portion of her income. This spending, often on non-essential items like toys and electronics, contributes to her inability to pay down her debt and build savings. Cutting back on Amazon purchases could free up substantial funds for debt repayment.
What is the plan to help Alex get out of debt and improve her financial situation?
The plan involves paying off her smallest debts first, starting with the Blue Cash card, then addressing her property taxes, and finally tackling the Navy Federal card. After that, she will focus on paying off her $26,000 Platinum card and her $39,000 car loan. The goal is to be debt-free in about three years, while also building an emergency fund and contributing 25% of her income to retirement.
What is Alex's Hammer Financial Score, and why is it so low?
Alex's Hammer Financial Score is 2 out of 10. This low score is due to her high credit card debt, lack of budgeting, insufficient emergency fund, and being behind on retirement savings. Her negative equity in her house and her inability to manage her finances effectively also contribute to the low score.
How does Alex's mother contribute to her financial problems?
Alex's mother uses a Navy Federal credit card in Alex's name for work-related expenses, but instead of reimbursing the card, she pockets the reimbursement money. This has led to a $7,472 balance on the card, which Alex is responsible for paying. Alex has been unable to have a frank conversation with her mother about this issue, further complicating her financial situation.
What is the impact of Alex's 84-month car loan on her finances?
Alex's 84-month car loan for a $39,735 Kia Sportage results in a $638.70 monthly payment. The long loan term means she will pay significantly more in interest over time, and she is already $8,000 underwater on the loan. This car payment is a major financial burden, especially given her other debts and lack of savings.
Shownotes Transcript