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EPISODE 5 SHOW NOTES

In the first of this three part series, I’m talking about:

• Starting where you are
• Tracking your income, bills, debt, an savings
• Thinking about your magical life

Transcript:

Welcome to Money and Magic, the podcast that combines the mystical with the practical to help you navigate money in the Muggle world. I’m your host, Chey, remote bookkeeper and judgment free money coach. I hope this podcast helps you create a harmonious relationship with your finances that empowers you to lead your truly magical life. Let’s get started. Hey magical human. Welcome back to Money and magic. Today’s episode is the first in a three part series about creating an abundance agenda. Your abundance agenda is less of a budget and more of a spell or a roadmap.

We’re going to break this down into a three part series because it takes some time and some work and the first part can be super eye opening and heavy if you’re not prepared, I ask you now to release all judgment against yourself. I believe in a lot of crazy stuff, but time travel is not one of them yet. So we’re not going to focus on the past. We’re going to move forward with love and gratitude for where you have been. One of my best mottos is know better, do better. So that’s what we’re going to do. So in this first step of creating our abundance agenda, you’re not able to move forward until you understand where you are. So we are going to start with where you are right now.

Write everything out. There’s no judgment, but you need to know where you are beginning from in order to set goals and to move forward with where you want to be. So when you go to do this first step, I want you to grab your favorite drink, light a candle, get cozy, whatever makes it enjoyable for you. Maybe you like to go to a coffee shop or you want to go to a local brewery or pub or something like that. Whatever your happy place is, I want you to start this process there because we are going to dig in first. We’re going to start with your income. And if you are single, married, partnered, whatever the situation, you need to break down how much income you have each month. You can do this for just yourself, for the household, whatever works best for you.

But you need to know how much, how often, and if you’re getting paid by paycheck, like you’re not a business owner, then look at your paycheck, break it down into how much is going into retirement, how much goes to insurance, what other deductions do you have? A lot of people look at the income they’re making and say, oh, $600 gets deposited in my bank account every two weeks. But what’s being taken out of that? Because if you’re saving for retirement. That’s amazing. But track how much of that is being taken out. Maybe you have other garnishments or deductions on your paycheck that you’re like, did I really need that? I know when I used to work in corporate America, I did payroll, and a lot of people would come to me and they’d say, hey, what’s this $25 deduction for? And I’d say, oh, well, you ordered merch with, we called it logo wear with the logo of the company, and we allowed people to take that out of their paycheck over so long. So that’s what that’s for. And several people would be like, oh, I didn’t realize that was going to happen. Even though they signed the paper saying that it could happen, they forgot about it, or they didn’t understand.

So make sure you’re looking at those pay stubs and that you understand everything that’s happening on that pay stub. After you write all of your income, no matter how small, if you mow the neighbor’s lawn every two weeks for $20, write that down. If you have a rummage sale or a garage sale every so often, kind of estimate how often you bring that income in. Think about every piece of income, interest from savings accounts, anything like that. Then you’re going to write it out. Next, you’re going to write out all of your bills. So when I say bills, I break bills down into four different categories. And I go into this a lot deeper in my budgeting course, but I’m just going to give you a quick, brief overview.

So the very first and most important is what I call the four walls. The four walls that you live within. What bills do you have to keep that house going? Rent, mortgage, utilities, things like that. Next is going to be your necessities. Now, these are just as important as the four wall expenses, but these are the things outside of the four walls. Typically, this includes food and transportation, but it could include other things that you consider necessities. The third category is flex expenses. So these are not survival level, but they’re important to you.

These expenses are important enough to you that you would give up other things to keep. A common one here is subscriptions. I’ve seen a lot of talk lately. Netflix is raising their prices, Hulu’s raising their prices. And a lot of people are like, hey, you’re not giving me enough value to keep up with these price increases. And so they’re like, I’m going to cancel Netflix to them. That is not a flex expense because they’re giving it up to keep other things in their life. At one point, I gave up my Amazon prime membership because I didn’t feel that it was benefiting me and I’d rather spend that money on something else so that Amazon prime membership was not a flex expense.

So think about I have a client who said she gets her hair done every four weeks on the dot and she will give up other things to continue to get her hair done. And so for her, that is a flex expense. She would put that under bills in this category, because if it came down to it, she would be able to give up some other expenses to keep that hairstyle, that hair appointment going. So then the last set of expenses is what I call your cushion expenses. So when the abundance in your life is overflowing, you are living your truly magical life. What are some of the expenses that you would pay for every month out of convenience or enjoyment? And this is usually things like vacations or maybe a monthly shopping trip. Maybe you like going to fancy restaurants, or this could even be vices like smoking or vaping or things like that. To me, all of those vices are cushion expenses.

Even if you have the addiction, they’re still cushion expenses. You would pay or should pay your mortgage and your utilities before you go buy cigarettes or beer or whatever your vices are. To each their own, no judgment whatsoever. But that is where I would put that category of things. So now that you have those four categories, the four walls, necessities, flex expenses, and cushion expenses, now comes the fun part. You’re going to look at your last three to six months or more of expenses, and every dollar that came out of your bank account or put on your credit card or was spent by you some way or another needs to fit into one of these four categories. And this is where I say it can get a little tough, especially when it comes to things like food. And people start looking at that and they realize how much they spend on eating out or different things like that.

And for them they were like, oh yeah, I eat out a couple of times a week. And then you look at it and it’s $600 over the entire month and you’re like, wow, I could really cut back on that. Or maybe that’s not much to you. And you’re like, no, I want to keep that exactly how it is. But this is where things get a little tough is because you’re going to have your eyes open to some things that you might not be aware of. Another thing this does is I had a client, we started this process together. And she said I was getting charged for this and this and this. Subscriptions that she had started years ago and just kind of forgot about, didn’t really pay attention to.

And it added up to over $50 that was coming out of her bank account every month for things she was not using. And so that just saved her $50 by looking through the last three to six months of bank statements. Now, if you’re a cash kind of person and you don’t really have anything to look back on, that’s okay. You’re going to look forward. You’re going to start today. You’re going to start tracking every dollar you spend. You are going to either use a notebook or a spreadsheet or an app or something like that, and you’re going to start tracking for the next three months. Just because you don’t have A bank statement to rely on doesn’t matter.

You can look forward. So, once you get all of your expenses fit into those four categories, then we are going to talk about debt. So you’ll notice when you’re going through your bank statements, you probably have some debt payments. If your credit card bill is on there. When you go through your credit card statement, each of the expenses on there will fit into one of those four categories. So then the payment, what category does that go in? And that goes in debt. The reason we don’t put your mortgage included in this debt and we include it in the four walls is because if you don’t pay your mortgage, you could lose your house. So that’s why that’s included up there.

But when it comes to debt, we have a few different types of debt, just like we have a few different types of expenses. The first thing I want you to do when it comes to your debt is to unshame your debt. I want you to take any shame, any guilt, any judgment that you have surrounding however much debt you have and toss it out the window. There is no shame or judgment here. Debt is debt. It’s not good, it’s not bad. It is morally neutral. And there are a lot of finance gurus out there that will tell you debt is bad.

Do not step foot in a restaurant if you’re in debt. And I think all of that is a bunch of bullshit. I have had debt since I was in college because I didn’t know better. My dad always told me not to get credit cards, but he never explained why. And then I went off to college and I got the credit cards and I paid the credit cards off, and then I racked them up again, and I went through that vicious cycle for years. And when I finally released all of the judgment around paying that debt off that I incurred in my 20s, my life got so much freer because I wasn’t carrying around that guilt of having this number owed to someone else. So get rid of that completely before you even start looking at all of your debt, and then understand that once you get all of your debt wrote out and all of the information is there, it’s just a number. That is your starting point, and you can only go up from here.

So you’re going to write the provider, the balance, the interest rate, the monthly minimum payment, and the due date. Get that wrote out for all of your debt. For student loans, credit cards, car loans, any debt that you have. And as you’re going through that debt, they should fit into these four categories. The first debt is going to be your fixed debt. This payment is the same each month, and it usually has collateral with it. With your fixed debt, you’re looking at usually mortgages, vehicle loans, things like that. And then you have your variable debt.

Your variable debt is going to be the unsecured loans, where the payments fluctuate each month. In my case, we have a line of credit at our local credit union, and depending on how much we have taken out of that line of credit, it depends on how much we owe. So that payment fluctuates each month. It also fluctuates with the interest rates, which we all know right now are ridiculously high. So our payment is much higher now than it would have been for the same balance three years ago. But that falls under variable debt. The other thing under variable debt is credit cards. Because your balance goes up and down, your payments change based on the balance.

The interest rates kind of fluctuate. So those are going to be your variable debt. Those are the two most common. But sometimes we have things that fall into the flex debt category, and these are things where you’re supposed to make the same monthly payment, but if you can’t, it’s not as big of a deal. The big thing that normally falls under flex debt is medical bills, because if you’re used to paying $50 a month on your medical bill, you fall on hard times. You can call them up and say, hey, I can’t make a payment this month, and there’s not a whole lot that’s going to happen. There’s not a whole lot that’s going to happen when it comes to medical bills. So that’s under flex debt.

And then the last category is any other kind of debt you have, it all falls into miscellaneous. And this could be things like maybe you took a loan from your friend or family or cell phone payment plans. Many people don’t look at that as debt. You go to the cell phone place, you say, hey, I want to get a new phone. They say, great, that’ll be $25 a month for the next 36 months. Awesome. Sold. Add it to my bill.

But really, you’re paying a loan to that company for that phone. You do not own that phone until it’s paid off. So that’s why I tell you to write that out. Because if you paid that off sooner or bought it outright, then your monthly expenses would be lower. And that’s the goal here. So think about things like that. Other types of debt are the lovely pay in for options that are out there. These are like Afterpay and Klarna and whatever the other ones are.

You go to a website, you’re going to place an order and it says, oh, you can break this up into four payments of $25. Instead of paying $100 today, we’ll take $25 out of your bank account over the next eight weeks, every other week. That is debt. That purchase has not been paid in full. You are still responsible to keep up with those payments to remember that those payments are going to come out a month from now. So those are all things that would fall under miscellaneous debt and some things that people don’t really think about all the time. I know this is a lot of information to take in. And remember, you can listen to this podcast multiple times.

You can break it down into individual pieces. Work on this at your own pace as you can handle. Don’t forget I also have a budgeting course that will help walk you through a lot of this more in depth and has some hands on worksheets as well. And before we move on to the next set of your abundance agenda here that you’re going to want to track, I just want you to remember that there is no judgment. I know I keep saying that, but there is so much judgment and guilt around money, and I really want to try to take that away because that weighs so heavy on people. And the stress and judgment and guilt surrounding debt or lack of savings can really weigh people down. So please, as we move into the next section, remember that you are where you are and all you can do is move forward. So the next thing you’re going to want to write out is your Savings and your investments and you’re going to want to write out any account that you have money in that is considered a savings or an investment that you’re gaining interest on each month.

So there’s a few different types of savings accounts, just like we have in the expenses and things like that. So the first savings account you should have, and if you do not have, you should open immediately, is your emergency fund. This is the most important piece of savings. I personally say $1,000 minimum is what you need, and I call that my CYA fund. And that just means cover your ass. $1,000 can normally get you a new set of tires or pay for a sick pet or something that just kind of pops up overnight. And then the next step in your emergency fund is to have three to six months worth of expenses. So in the last example, I had you write out all of those monthly expenses.

So you should be able to take that amount, multiply it by three or six or however many months you want, and that should be your next goal for your emergency fund. Your emergency fund should be sitting in a high yield savings account. If you are not earning money on that savings account, move it. I personally use ally. I’m not sponsored. That’s just who I use. Capital One is great. A lot of other people recommend Marcus.

They’re all going to have about those same interest rates, but get that money into a high yield savings account. The next type of savings that you’re going to have is your sinking funds. And sinking funds are savings account that you have for expenses that, you know, happen on an annual or semiannual basis. You know they’re coming up. One of the biggest ones is holiday funds. The holidays are the same time each year. Christmas, Thanksgiving, Halloween, those are where people spend the most money, and those are the same time of year. So if you’re saving for those all year long, when the time comes, you’re less likely to be pushed into an emergency.

You are less likely to be putting things on credit cards so you can afford Christmas for your family. The next thing is birthdays, your family and friends birthdays are the same day every year. They do not change. So if you know March, you have four birthdays that you get gifts and throw parties for. If you save for that March birthday fund all year long, you’re going to have an easier time pulling the money out rather than possibly putting on a credit card and going through that cycle again. Annual taxes or annual insurances are also really good examples of sinking funds. The last category is similar to sinking funds, but these are things that are not necessary, but you still want to save for them. Think about those expenses that we talked about when we were talking about your magical life, your cushion expenses.

These are called your flex savings. So when you’re living that magical life, what are some things you want to save for? Maybe you want to save for a brand new shiny car or you want to go on an exotic vacation. Maybe you want to build an in ground pool or put in a hot tub or whatever it is that you would do if you were living your magical life and money was not a concern, those would all be in the flex savings. So now that you have wrote out all of your accounts, your expenses, your income, your debt, your savings, everything, you want to make sure that you write out all of your accounts and your account info. This is going to be the name of the bank, your username, your password, routing number, accounting number. I personally like to handwrite all of this out because later it’s going to go into something else that we talk about in a later podcast. But if you don’t want to write it out, you can type it in excel sheet. It’s just a lot of information that is kind of private.

So just be very careful wherever you are putting this information. So now that you’ve worked on getting all of this data, you have completed this, you feel like you’re ready to move forward. You’re going to look back through this data and you’re going to question it. You’re going to look back and see is there a pattern to any unnecessary spending? Do you notice you spend more on the weekends but less throughout the week? Have you noticed you spend more online in certain months than you do in other months? Maybe you went through a heavy time in your life and your spending increased drastically. Look at those and see if there’s any patterns. Once again, don’t judge these patterns, but just see if you can find any patterns. What expenses do you not recognize? We talked about that. Where’s the potential for more income? One thing you’re going to learn about me is I’m not going to tell you to drastically cut your expenses.

I’m not going to tell you to stay out of coffee shops and restaurants and don’t travel. I’m going to tell you to create more income to afford those things. One thing we’re going to talk about a few episodes from now is understanding and living your magical life. And that is the end goal is to get to your magical life. So I’m not going to tell you to start cutting things out of your life. I’m going to say, how can we add to your life? How can we increase that income in order to afford those things you want for your magical life? And then when you look through all this and you’re questioning things and you’re thinking it through, what is one thing you would change first when you’re looking at your numbers? Maybe it’s canceling a few subscriptions that you no longer use. Maybe you decide that you want to eat at home more to see if you can cut back on those eating out expenses. Maybe you want to hire a cleaning person for your house.

You notice you have a little extra income sitting there. So if you could do that, that would take some stress off your plate. What is one thing that you would change first? So, as we’ve talked about, this was a very heavy episode and I want you to take your time, use whatever you need. Get cozy, be in your happy place. No judgment, no shame. Unshame your debt, please. If you learn nothing else, unshame your debt. My friends write out everything.

Question everything. If you need a little further information, I do have a budgeting course that helps walk you through this a little more in depth. The link will be in the show notes. Our next episode is going to be part two in creating your abundance agenda and so I really want you to focus over the next couple of weeks on digging into this part one. And I have set this up. So if you’re listening live right now, you will be coming into the new year with new money habits and ready to hit the ground running. So if you have any questions, as always, please shoot me an email. You can reach out to me on Instagram.

Let me know what you’re struggling with. Let me know how this is going for you. What questions do you have? Because I’m here to help and I cannot wait for the next episode about creating the second part of your abundance agenda. And that’s a wrap for another spellbinding episode of Money and Magic. I hope you learned something that can help you navigate money in the Muggle world. If you have any questions, topics, or even your own money and magic story that you’d like to share, reach out to me on social media. I’d love to hear from you. And if you have found the show insightful, I’d truly appreciate it.

If you could take a moment to subscribe, leave me a review and share money and magic with your friends and family. Think of it like casting a spell to help others on their financial journeys. As always, stand tall, shine bright, and stay grounded. I’ll see you next time.

Resources and links mentioned in this episode:

• Connect with me on Instagram and TikTok
• Learn more about how we can work together by visiting my website 
• Check out my Creating a Budget course HERE

More about Money & Magic:

Welcome to Money & Magic, the podcast that combines the mystical with the practical to help you navigate money in the muggle world. Hosted by Chey, the Witchy Bookkeeper, we explore the emotional and spiritual dimensions of money, as well as provide actionable advice on budgeting, investing, and helping you create a harmonious relationship with your finances that empowers you to lead a truly magical life. 

Whether you’re seeking financial freedom, looking to overcome money blocks, or simply want to learn how to make your financial dreams a reality, Money & Magic is here to inspire, educate, and empower you on your journey. Join us every other Wednesday and discover that, with the right mindset and a touch of magic, you can turn your financial dreams into reality.

Subscribe now, and let’s embark on this extraordinary journey of “Money & Magic” together. Stand Tall, Shine Bright, Stay Grounded!

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