005. Afford Everything You Want
Get a pen and paper ready for this quick and game-changing episode. ✍🏻
Today, Amber spills how she climbed out of debt while saving money. You'll hear about the temporary financial sacrifices she made to become debt-free. Plus, steal her framework on organizing some high yield savings accounts so you can spend intentionally (which means you can invest in the things you truly want!).
Talking about savings doesn't have to solely mean a boring emergency fund—opening high-yield savings accounts will allow you to grow old money effortlessly and invest in the things you want.
In today's episode, we cover the following:
Please send feedback on what you'd like to hear on this podcast! (0:59)
How to run your life like a business and the numbers you need to know (5:04)
Saving even while you're in debt (8:05)
A general rule of thumb of target percentages on where to allocate your income (8:46)
Turning your income into assets (12:56)
How to save for the holidays (14:56)
How Amber has organized her bank accounts (15:40)
Amber's hot tip: set up multiple savings accounts (19:44)
Transcript
Amber F. (00:02)
Welcome to Old Money, a show dedicated to helping you build the trust fund you wish you were born with. Ladies who lunch, listen up. Life is not about looking rich. I want you to build a life and a legacy that feels rich in every sense of the word. If you're ready to stack cash, talk shop, and trade insider secrets, you're in the right place. These are the new rules to Old Money, so let's get after it. Hello and welcome back to The Old Money Podcast. That little gingle was disgusting. I'm so sorry I did that, but I'm just excited because today is a quickie, a little amuse-bouche, a little taste of something sweet or a hot tip, something that has really changed my game in spending money. And it's how I afford everything I want. I'm making this an almost bouche because actually, fun fact, you guys tell me, if you want to know what's going on behind the scenes with the podcast. But it's August third. The podcast has been alive for two whole days. Interestingly, the numbers on the Birkin episode were just slightly lower than the other two episodes. I'm wondering, do people want to hear the style stuff?
Amber F. (01:18)
Do they want to hear the lifestyle? Do they just want money, brass, tax? I don't know. I'm literally creating all of this in a vacuum. By the way, the numbers have been so incredible, and I definitely have to thank for that for featuring me on their top trailers list. I'm so stoked about that. But I would love to know what you all want to know because the style one, we've been heavy on the style thing, right? And that was an evergreen episode. That means like evergreen, like a tree that's green all year round. So it's always good. It's not time-sensitive or tied to anything. And as we get into more rhythm, I'm going to be doing more news stories or things with a faster turnaround. Also, thinking about bringing on some co-hosts. I don't know about you guys. I'm not really going to do the whole guest interview thing unless it's Joe Regan. I'm tired of people going on podcasts and pitching their wares. But if I can bring on a friend, we can have a little KeKe and we have good chemistry, then I'm totally down. So as long as it feels natural and organic, we'll do that in the future.
Amber F. (02:20)
Anyway, my point is I freaking need your feedback. You need to tell me what you like. Do you like short form? Do you like long form? I'm just trying it all. So let me know what you want to hear. And today's topic is just based on the feedback I saw. You guys want to hear about money? We're going to talk about money. It's a little sweet treat for you about how I said earlier, I can afford everything I want. And that's the truth. It's not the whole truth, but it's some of the truth because I am very intentional about what I want. And you know this because I write down everything. I have my cooling off period. But the thing is that I was a girly in debt for a very long time. I've mentioned that when I started my business, I was very much in debt. And what is very much in debt? For me, it was five figures. It was very uncomfortable. And it's all relative because $500 might feel like a lot of debt to some people. And quite frankly, now it does for me as well. I decided my energetic standard was to never be in debt again.
Amber F. (03:21)
And since I climbed out of debt, I haven't been back, which is huge because I've had a credit card since I was 18, and I was always trying to make payments on it. I was never paying it off in full, and then I would scringe and save or whatever. I'd get a bonus. It would go towards paying off the credit card. It was a really big bummer. And it was honestly crushing me mentally and emotionally. So now that I'm not in debt, I've figured out how to stay out of debt. And this is the way that I do it. The thing for me was I was chronically in debt because I didn't have any savings. And certainly there was the time when I was like, Yes, I need to buy four dresses on Revolve tonight, or Yes, I must go on that solo trip and I will spend for the nicest hotel possible. But then there's also the time when your transmission blows and you need to replace it. And then you're like, Shit, I just spent all that money on that trip to Cellulita, and I don't have it in the bank to pay for my car.
Amber F. (04:18)
So with that, I never really had a very solid, I don't know what you want to call it, nest egg, a savings account, an emergency fund, whatever you want to call it, I didn't have it. And I was always really struggling with how to simultaneously save money while I was paying off debt. I just couldn't catch up. I put money into a savings account, and then I would just use that savings account to pay off my credit card bill. So I was basically having two checking accounts that I was paying my credit card off with. So with that being said, the savings is everything we're talking about today. And I'm not talking about a boring old emergency fund, although I would be remiss if I didn't touch on it. So first of all, let's just talk some numbers. And then I promise this will get fun really, really quick. Because if you're going to run your life and not let it run you, think about it like you're running your life as a business. You have seen Shark Tank. You know when those entrepreneurs get up there on the carpet, they have to know their numbers or else Mr.
Amber F. (05:12)
Wonderful will eat their ass. And I am your Mr. Wonderful, and I want you to know your numbers. And there's not so many that you need to know, but the ones that are important are: What is your burn rate? How much money does it take you to keep the lights on every single month? What are your actual expenses, your fixed expenses? I also want you to really understand what your take-home pay is. This is after your retirement contributions, your 401(k), health insurance, et cetera. Just keep it really simple. And from that take-home pay, I want to understand what percentage of that take home pay goes to your needs, to your wants, to your saving, and to your investing. The reality is when you're in debt, that's a need. You need to pay your debt off, and your wants category is going to need to get thinner. And before you have a fully established savings fund, emergency fund, you're going to need to be light on your wants and your investing and as much as you can on your needs, right? So while you're creating this emergency fund, this slash fund or whatever, this is 4-6 months of money that's available to you if the worst happens.
Amber F. (06:22)
What it's going to take for you to keep the lights on if your car blows up, if you go to the hospital, if you lose your job? I know it's really not fun to think about, but that's the thing that you need to have in your back pocket so that when that credit card bill comes, you can pay it off and not be stuck under a mountain of debt. This money needs to be a liquid. Liquid means that you can get the money if you need it. And so your 401K is not a savings account. Your investment, your brokerage account, that is not a savings account. Because when you take money out of either of those areas, a 401K or an investment account or whatever, you're going to get penalties or taxes from it. So when you have money that's liquid, that means it's sitting somewhere where you can very easily transfer it out if you need cash or if you need to pay off your credit card. It's like a CD. You've heard of a CD. It's a certificate of deposit. You put your money in a CD for a predetermined amount of time in order to earn interest on it, and you cannot take it out early or you get penalized for doing so because just an FYI, when you put money in your bank, you're giving it to your bank to do something with it.
Amber F. (07:32)
And your bank is going to utilize your money to go make other investments so that they can grow. And what that means for you is that you get paid interest in return for them being able to do it. So when you're paying off your debt, you're deciding how much to pay it off. My school of thought is Oppenheimer it, just atomic bomb it all. Put everything you have towards it until it's completely obliterated. We can talk more about debt later, whether it's the Snowball method or the, I don't know what the other one's called, the drippy water method. That's not correct. But my point is, we'll talk about it later. When you have debt, you still need to be saving, but you need to be putting more attention towards your credit card debt because likely you have a 19 or 24 % interest rate. And if you're not paying it off aggressively, you're never going to get out from underneath it. Where best case scenario in your savings, you could be earning four %, five %. And we're going to get right back to that. I promise you this is getting fun very, very quickly.Amber F. (08:26)But targets and everybody targets different things because everybody's budget is different, people have different types of expenses. These are just rules of thumb. This is not financial advice. This is just rules of thumb and some ideas to explore. But typically you can expect to spend between 50-60 % of your take-home pay on the needs, the un-fun stuff, if you will: fixed cost, your mortgage, your rent, your HOA payments, debt, groceries, daycare, childcare, car payment, anything like that. And if you are in a place where you have an opportunity to lower your expenses, please do so knowing you have my full support to be a humble queen. I kept my expenses so low when I was working at a corporate level in my executive job, and I knew I needed to get a roommate. I got two roommates because I needed to save money so that I could leave that job and pursue something else. I didn't take vacations. I was very desperate about paying off my debt, so I kept my expenses as low as possible. I actually even put off getting a dog, for example. Thank God I did because and now I have the sole dog of my dreams.
Amber F. (09:32)
But I put off the things that I wanted to do or wanted to have because I knew I couldn't spend money or have other expenses that I couldn't maintain until that was all done. So 50 to 60 % on the un-fun stuff. 20 %, I would say, guilt-free spending because a girl's got to live. You've got to go out for coffee. You've got to get some new clothes when your shoes wear out. You've got to be going on a date, whatever, picking up the tab when it's appropriate. You need to be making sure that you do have some money in your budget to live your life. Because if you're just living like a popper, you're going to be super depressed and then you're going to binge and go get completely financially dysregulated and drop your dollars on shower curtains at Target like I used to do all the time. And then the last piece of the pie is 20-30 % of your take-home pay going towards investment savings and fund savings. And this is where things get really interesting, the fund savings. I didn't know what this term meant for so long. I used to hear it in the government that they would earmark funds.
Amber F. (10:35)
For example, we pay a bunch of taxes and they're going to earmark funds to build a new school, or we're going to pay a bunch of taxes and they're going to earmark funds to fix that bridge. I literally just learned what that meant, but I've actually been doing it naturally for so many years. Let me tell you, it is the thing that has kept me out of debt and it has kept me getting everything that I want. Because I have set myself up with high yield savings accounts that are all earmarked for different things. A HYSA, high yield savings account, is a savings account that's going to give you a better rate of return than your average. I think I have a Wells Fargo savings account that pays me 0.015 % of interest, and that's hot garbage. Versus there are so many high yield savings accounts out there that are paying four and a half, five %, you can go to nerdWallet and it'll give you a ton of options so you can pick the one that's right for you. But if you park your savings in a high yield savings account, you could be earning, let's say you put $10,000 in there, you would be earning $450 a year in interest.
Amber F. (11:47)
You're not doing anything for that money. It's just sitting there and growing on its own. Old money is effortless. Old money grows. And we love the magic of compounding interest. It's always what we're looking for. And this right now is such a big opportunity because you've heard the news. You've been hearing everybody say, Oh, my gosh, we can't buy a house. The housing prices are out of control because interest rates are so high. And yeah, interest rates are so high. And that is so good if you want to put your money in a savings account. There are so many opportunities out there. In fact, Apple, who is taking over the world, they have set up a high yield savings account. It's offered by Goldman Sachs, but it's an Apple product. And it just launched in April of this year, and they already have $10 billion dollars in deposits. They offer an annual percentage yield, so APY of 4.15 %. And that is so huge because you need your money to work for you. This is a very easy way to start thinking about how your money can work for you because you need to learn how to shift your income from the money that you get from your job and into income-producing assets or income-producing opportunities like a high-yield savings account.
Amber F. (12:59)
And I know it sounds like, okay, 450 bucks a year. Great, I can get one bottle of champagne at a club. Maybe. I've never bought a bottle of champagne at a club. It's just not my scene. I don't know why that came out of me, but you could probably get a bottle of chandon for 350 at a club. My point is that you're going to get taxed a little bit on the interest, but it's essentially money that's coming to you without you having to do a whole lot other than set it up right in the first place. So obviously, Apple becoming a bank, that's dope. But the thing that I'm using, and again, this is what I'm doing and what I've always done because I need things separated and compartmentalized. I don't wash my YTS with my darks. I need to have a night for Real Houseways of New York and a night for Below Dec. It depends on my mood. I need things separated. And the way that I've set up my separate savings account is in capital one. And it's been an absolute game-changer because it's kept me out of debt because it's let me see how much money I can spend on different categories of things that I want.
Amber F. (14:02)
And it's also allowed me to earmark funds so that I have money in the bank for expenses that come up that are not regular. My best example of this is Christmas gifts. I love giving gifts. It's one of my love languages of showing love. I'm a very good gift giver, by the way. The way that I just shock Justin every single time, he can never win on giving gifts. I'm a very good gift giver, and I always go over budget because I get so excited and I love to make people happy with gifts. But I always go over budget and I used to always then be in debt. I remember being 18 years old and spending so much money on everybody for Christmas, and then you get money from your grandparents, your parents, and all the money that I got for Christmas, it just would go right back to paying off my credit card bill for everything that I bought for people for Christmas. So now what I do is I set aside, every single month, a little bit of money to go into a very special account in my Capital One savings account. There's a separate account that's called Christmas gifts.
Amber F. (15:05)
And I put a couple hundred bucks in it every single month. It automatically gets withdrawn. I get paid once a month on the seventh, and on the seventh, that money comes right out because I pay myself first. So that money comes out and it goes right back to me. It goes into a savings account that I can spend on gifts. But this is not about other people. This is about me, because I also have all of these different accounts set up in this bank. And again, you can nickname them for whatever it is that you want or what's important to you. So I have, and I'm going to actually read you all of my different accounts, okay? So number one, I have my emergency fund. That's my six months of living expenses. It's in that high yield savings account and I earn interest on it. Great. I then have my Christmas gifts hedge fund. So again, I fund that every single month. I also have my poppy fund because my dog means the world to me and I will never say no to anything for her if the worst happens. I have thousands of dollars in the bank saved for her in case I need to pay for a surgery, an emergency, God forbid.
Amber F. (16:10)
She also has insurance. But I have my poppy fund and that's fully funded in there so that if the answer comes down to... And I've been at the vet when people are making decisions on their pets based on what they can afford, and I can't live that way. That to me, is so heartbreaking. So Poppy has a Poppy fund. I also have a designer splurges fund where I'm saving up for a bag, a new outfit, a cardigan from Gucci, whatever it might be. My designer splurges fund gets automatically funded every single month on the seventh when I get paid and money goes into that account so that when I want to buy something, I have the money to get what I want. I also have a Botox laser and filler fund. That's right. My Botox is very important to me. And I'm not going to say no, and I'm not going to suffer with wrinkles if I don't want to have wrinkles. I will save my money so that I have money to spend when it's my time. And what's so nice about this is that everything's compartmentalized, so I can see exactly how much I have to spend on each of these things or what my saving goals for each of these items needs to be.Amber F. (17:14)And because for me, these are things that are important to me, the other thing on here is a travel fund. Travel is so important for me and Justin. We really prioritize it. I'm putting a ton of money in my travel fund. And then when it comes time to book at a vacation, I can very easily say, Okay, I have X numbers, dollars in here right now. If we're going on vacation in six months, I'll have six months times, let's say, $600 that I put in the account every single month. So I'll have a total of this much. That's my budget for this vacation, this next one or whatever it might be. And it's really helpful for me to have guidelines and parameters around what I can spend. But these buckets help me never be in debt. And the whole other level of this is credit card usage. If you are still using a debit card to pay for things, girl, we need to have a conversation. My point is that the credit card thing, the whole game changes when you're actually paying off your credit card and we're going to talk about... There's the points guy.
Amber F. (18:13)
I might be the points gal. I'm so obsessed with credit cards and points and playing the game and transferring points and buying partners, I don't know, whatever it might be. My point is that this system of setting up individual high yield savings accounts with all of the things that are important to me and then automatically every single month they're funded, for me, it's been the number one thing that's kept me out of debt because I have this emergency fund, I have a car fund. I have a poppy fund. All the things that could go wrong, I'm prepared to pay for them and not go in debt for them. And if worse comes to worse, then I can pull from my travel fund if I need to, and I'll reevaluate my priorities at that time. But this ensures that I'm getting what I want, that I'm paying myself first, and I'm getting the things that are the most important to me. Because if you just leave all of this money in one big account, it's very easy to co-mingle funds to not know how much you have for which item you want, and then it's hard to keep track if you've overspent.
Amber F. (19:18)
And also, if you're leaving this in your checking account, not only will you spend the money, and you'll probably spend it on broccoli or something terrible at the grocery store, then also it's just not leveraging the power of interest and you're just leaving money on the table. My hot tip for you on this Amu's bush, which is much longer than I intended, but I get really excited about savings accounts because that's just the type of person that I am, is setting up individual savings account. I use Capital One. They're not a sponsor of the show, but I am manifesting that they will be. I would love to know what your individual savings account buckets would look like, what they would be called, what are the things that are important to you? Let me know on social. I'm going to talk about this there as well. Thank you for spending time with me on this episode. Let me know what you want to talk about. Email me at oldmoneypodcast@gmail. Com. By the time this episode is released, our website should be up, oldmoneypodcast. Com. You can send me a note. You can be anonymous if you have a question about money or there's something that you want to contribute, give feedback on.
Amber F. (20:27)
I will read your letters on the podcast. I will answer your questions. I will find you the resources that you need. So reach out. I'll be here on the other side and I will talk to you on the next episode. Ciao. Feeling rich? I hope so. Thank you for joining me on this episode of Old Money. If you have questions you want answered, email me at oldmoneypodcast@gmail. Com or hit us up on social. We are at Old Money Podcast and I am at your service. If this episode spoke to you, inspired you, helped you, if you took a single note, it would mean the world to me if you could please just take a minute to write and review the podcast. And if you're not doing so already, subscribe. And if you have friends who like getting rich, please share this episode with them, even if it's just on your Instagram story. And I'd love you more than Jeff Bezos loves Amazon Prime. Thank you so much and I will talk to you on the next episode. Remember, I'm not your lawyer, I'm not your tax professional, and I'm not your financial advisor. The content presented in this podcast is intended to entertain, educate, inspire, support listeners and their personal and professional development and does not constitute business, financial, or legal advice. In addition to that, this episode may contain paid endorsements and advertisements for products and services.
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The content presented in this podcast is intended to entertain, educate, inspire and support listeners in their personal and professional development and does not constitute business, financial, or legal advice. Please note that this episode may contain paid endorsements and advertisements for products and services for which individuals on the show may have a direct or indirect financial interest in products or services related to the episode.
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