In this episode of "Beyond the Paycheck," host Paula interviews financial coach Linda Lingo about savings and money tips. Linda emphasizes the importance of starting with mindset and values when setting up a budget. By aligning financial goals with personal values, individuals are more likely to follow through and establish intentional money spending and saving plans. She also talks about not using the word "budget."
Linda also discusses the significance of tracking expenses to gain a clear understanding of where money is being spent. She advises clients to prioritize subscriptions and consider their budget before committing to additional services. Additionally, Linda shares tips for making informed purchasing decisions, such as using the 24-hour rule and the 7-day rule to avoid impulse buying. She also highlights the importance of maintaining a good credit score and provides strategies for increasing creditworthiness.
Connect with Linda and grab her money saving quiz, as well as 9 Savvy Wealth Building Steps: https://lindalingo.com/
Email: linda@lindalingo.com
Reach Paula at paula@paulachristine.com or through her website, paulachristine.com.
Paula Christine: Hi, and welcome to Beyond the Paycheck. I'm Paula Christine. Today I'm joined by Linda Lingo who is a financial coach and we're going to talk about some savings and money tips. Welcome, Linda.
Linda Lingo: Thank you. Glad to be here.
Paula: We're glad to have you. I know most people struggle with doing a budget. I know even as a coach myself, I struggle with a budget sometimes, but I know that once I got on the budget, stuck with it, revisit it often, that it really does help you get control of your money. What are your top tips for setting up a budget?
Linda: Let's get right into it. When I'm coaching my clients, I don't start with the money. I start with the mindset, the emotional side of it. My first tip is to know your values. Only when your values are you able to establish financial goals in alignment with those values. I have coached hundreds of women primarily, and it never fails. When they set up a financial goal, they think they should, and I don't like the word should, they don't follow through. It's only when we know what our values are first and establish goals in alignment with those values that I see people actually following through in establishing their what I call an intentional money spending and saving plan. I actually don't like the word budget.
Paula: I agree with that. When I talk to clients, I always say that you have to put not only the mindset, but also the emotions. What does that mean? When you achieve, saving for whatever it is, you got to have that feeling, that emotion behind it that gets you excited to continue going.
Linda: Absolutely. I totally agree with that. Once they've done that, and maybe at the same time, I would say another tip is you got to track your expenses. Now, I know this isn't fun, but it is necessary because only then will you really know where you're spending your money. I've had, so many people, I'm sure you have too, Paula, who say, yes, “I know where I'm spending my money” but when they actually track where every dollar is going for at least three months, I like to see it done for six, but at least three months, then they start going, “Oh, I didn't realize I was spending my money, on this many subscriptions” or “This many lattes” or fill in the blank.
Paula: A lot for most people is eating out. You don't realize how much, I'm just going to stop and grab lunch. If you do that 10 times in a month it's like-- I remember going back where you could buy lunch for $8. Now it's $15 to buy lunch.
Linda: Yes. At least, yes.
Paula: You do that 10 times a month that's $150. It all adds up over time.
Linda: Absolutely. It certainly does.
Paula: Let's talk about subscription services. It seems to be the way to get your entertainment today. Cable has become so expensive and I think they're going to eventually have to come into where they're doing some more subscription type of services, but they add up.
Linda: Totally.
Paula: How do you talk with your clients about those services?
Linda: I consider this a discretionary expense. It's not a necessary expense. It goes back to tracking their expenses. Where are they spending their money? A lot of them don't realize how much they are spending on subscriptions. When I'm working with clients, we talk about priorities, what's really important, which ones are you really watching? When you really get down to it, we might have four subscriptions and we really only watched two. It's a matter of prioritizing. Then, what are you budgeting for this? Are you budgeting $20 a month or $100 a month?
That sometimes will drive the decision. When it comes to things like that personally, I don't pay for cable or dish or whatever for your standard TV because a; I don't watch it, b; I get my news from YouTube and YouTube is free, at least right now. You can actually get every news channel on YouTube. Why not get it free instead of paying for a cable subscription?
Paula: Linda, you don't watch any TV? You don't watch any sitcoms?
Linda: I don't watch TV. I have subscriptions and YouTube. I have two subscriptions. That's what I have budgeted for myself.
Paula: I'm curious, what are they? Which two?
Linda: Netflix and Prime Video. Prime Video is actually part of my Amazon Prime.
Paula: Yes. My philosophy, when I was thinking about how to handle this, you might get a service to watch a certain show, and then after that, you don't watch anything else on that channel, but you forget to cancel it. I don't have Netflix right now, but winter's coming. I like to watch a little bit more TV in the winter. I'm just waiting. My friend said to me the other day, “Did you watch such and such on Netflix?” I'm like, “Nope. I'm waiting until it gets snow here and then I'm going to watch whatever I need to catch up on Netflix, and then I'm going to cancel it again.” I'm sure Netflix doesn't like to hear that, but that's how I'm handling it.
Linda: Exactly. I also tell my clients, take advantage of those free trials that are always being offered. Like you said, if you want to watch a show, do it on a free trial. Then remember, of course.
Paula: To cancel it.
Linda: Yes.
Paula: That's another thing that I don't think a lot of people think and I got burned on that the other day. Usually if I purchase something on my iPhone, then I can go through and just cancel it. It reminds you to cancel. I forgot about the service and ended up having to pay for a year for something that I really don't want.
Linda: So annoying.
Paula: Yes. It just doesn't happen to me, I'm sure.
Linda: No, and that's why not put it on your calendar? Don't we calendar everything else? Well, I do. I put everything on my calendar. Things like that I actually, set a reminder, so to speak, or cancel it. I tried to do it a day or two ahead of time for that very reason. Can I go back for a second to budgeting?
Paula: Sure.
Linda: Which, like I said, I prefer to call it intentional money and spending saving plan. I think so many people get caught up in, at least I get asked this question a lot. How should I budget? What kind of a budget should I set up? There's many different methods, as you well know, but I actually recommend the backwards budget, which people always are like “The backwards budget?” I actually recommend that clients save first, pay their debts, pay their fixed or their non-discretionary bills, and then the rest is for fun. The fun money is what will help dictate how much do they have available for subscriptions? How much do they have available for things like convenience items? Whether it's home delivery or eating out or whatever that might entail, but that should come last, not first.
Paula: Linda, that doesn't sound like a lot of fun when you take the fun and put it at the bottom. Just kidding. I'm just kidding. I was just kidding.
Linda: It doesn't have to take all of the fun out of it. Once again, you get to prioritize.
Paula: Let's go back to, you talked about Prime, Amazon Prime. It's very tempting to just buy. It's so easy and it comes, sometimes the same day or the next day. I think that impulse shopping is contagious.
Linda: It's addictive.
Paula: Yes.
Linda: It's addictive for a couple of reasons. First of all, we are immediate gratification and we want it. We want it now. My gosh, like you said, you can order something and it can be on your doorstep, depending on where you live, 6, 8, 24 hours. This is what I do and this is what I recommend for my clients. I have a couple of different steps. First of all, I say, use the 24-hour rule. Leave your item in your shopping cart for 24 hours. During that 24 hours, whether it's a piece of clothing or it's a book or whatever it is, go and look in your budget and see, have I put money in there for this item? Number one.
Number two, do I need it? If people are serious about a; getting out of debt or b; saving for something in particular, it's do I need this item right now? Immediate gratification, or do I want to put this money towards this goal? Whatever goal it is, whether it's paying off a credit card or saving for a down payment on a car or a house.
Paula: Yes, it's understanding the difference between needs and wants.
Linda: Exactly. If it's something that you budgeted for, something that you need, then after 24 hours, go ahead and buy it. You've done the research or you've thought through the process of, yes, this is worth it. The other thing is if it's a large ticket item and large is a relative term, it could be $50 for somebody, it could be $100, could be $1,000. If it's a large ticket item, then I say leave it in your cart for seven days and really do the soul searching. Then really take a look to see, is it something I need? Is it something I budgeted? Did I budget it for this month or next month? Is it something that is worthwhile getting now? Do I want to put that money towards one of my other goals?
Paula: For a lot of people, and I know for myself, if I put it in my cart and I think about it, because I use the 24-hour rule, if I put it there, lots of times I get busy doing something else and I'll forget to go back. The next time I go into Amazon or something, it's there and I'm like, “Oh, I really must not have needed it because now it's gone,” because I didn't buy it when I needed it now, I just delete it and move forward. It works for me.
Linda: I do the same thing. Absolutely. It has saved me more than once.
Paula: Yes, I think the big
thing, and one of the hardest things to do when you were starting talking about it earlier is tracking. When you really sit down and track, like I download my credit card statement every couple of weeks and just see where I'm at to what I have in line for entertainment and where I'm at for that, because I track my entertainment, my food, gas. I allocate so much a month for that. Then, some months I'm like, ooh, I can't do anything for the next week and a half because I'm pretty close to that and I still need to buy groceries.
Linda: Right. With some of my clients, I actually have them go weekly, look at their credit card weekly and pay it. It's like, I've charged $50 for groceries. My budget's $100. I'm paying that $50. It's coming out of my grocery allowance. A, you know what you're charging on your credit card because credit cards are so easy to forget what we charged. You get the statement, it's like, “Crap, I forgot,” or “I didn't realize.” When you look at it every week, when you pay it every week, then it's not a surprise to your cashflow. It's not a surprise to your budget. It's a way to really stay on top of where your money's going.
Paula: That's a great idea. I do it once a month, but I could see that working for a lot, especially if you get paid weekly.
Linda: Yes or every two weeks.
Paula: The key is just knowing what's going on and not get blindsided by the fact that you overspent whenever you pay that bill, that you've overspent and you don't have the money. That's how you end up in debt.
Linda: Yes, exactly. Being responsible, which we have to adult every now and then, whether we enjoy it or not.
Paula: Really? God, Linda, you've taken away my fun, and now you told me I had to be an adult?
Linda: I know. It sounds like crap, doesn't it?
Paula: Yes.
Linda: When you reach your goals, then you thank me, whether it's paying off the credit cards. Let's talk about that. Just for a second. I know we're limited on time.
Paula: No, go ahead.
Linda: Credit score is critical. Women ask me, “Can I get my latte?” I'm like, “I don't give a crap about your latte, honestly. Let's look at your credit score. Let's talk about money that really matters. Let's make sure you can get the lowest interest rate possible. Let's save thousands of dollars on that mortgage instead of a couple hundred dollars on a latte. Let's talk about stuff that really counts.”
Paula: Your credit score affects a lot of things. Your car insurance.
Linda: Absolutely.
Paula: What you're going to be charged. I have no idea why that has to do anything with that but it affects a lot of things that people don't even realize.
Linda: It impacts your utilities.
Paula: What?
Linda: Yes, whether you have to pay a deposit on your utilities initially, it impacts how much you pay for rent. It impacts how much you have to pay for your mortgage, your interest rate on your mortgage. It impacts how much you pay for literally everything. That's where you save money. That's where you make the thousands of dollars and positive impact, not a couple hundred dollars. Let's talk about the meaningful stuff. That's really where to start. That's why it's so important not to run up your credit cards. That's why it's important to understand what your credit score is and to pull those free credit scores that you get from all of the reporting agencies. You get a free one every year. I recommend that you space them out every quarter. Run your free credit report from a different agency so that you're constantly staying on top of that and trying to increase it.
Paula: What are some key tips to increasing your credit score besides paying your bills on time? Those are the obvious, but are there anything that isn't obvious?
Linda: It is obvious, but so many people don't do it. Yes, pay your bills on time, keep a low balance. When you're paying that credit card off every week, that's awesome. For young people this is what I recommend is establishing you getting your first credit card, putting, say your phone bill, you're putting that on your credit card so that you've got a monthly charge, but then you pay it off the following week so you're not going to be having an outstanding balance. They see usage and payment, usage and payment, and that's what they want to do to start building your credit.
Pay your credit card off in full every month so that you're not building an outstanding balance. That's really the top way to do it. Then of course, longevity. The longer you have a credit card open, that is also a plus, whether you use it or not.
Paula: I always talk to people about not getting those, every time you walk into Macy's or Kohl's or wherever, they're like, “Can I sign you up for a credit card so you save 20%?” No. just get your Chase or Citibank or whatever it is.
Linda: One or two credit cards, that's all you should be using. You're right, don't sign up because the more you sign up for it, then that impacts your score. Every time you sign up for another credit card or every time you apply for a car loan, those all are little dings against your credit score.
Paula: Yes, I do this myself and everybody that I can get to do it, I have them freeze their credit so that people can't ding it. Then when you're in the store and they're like, “Paula, why don't you sign up for that credit card and I'll save 20%.” I'm like, “Oh no, it's such a hassle because I got to call and unfreeze it and it's not worth it.”
Linda: Absolutely.
Paula: I'm really not going to do it anyway, but it's a good excuse just to tell them that.
Linda: It totally is.
Paula: So, they stop harassing it but freezing your credit, I know, because they'll ding it. Then once I froze my credit too, I noticed that I don't get those credit card applications in the mail all the time like one a day. Yes. I don't get that anymore, which is really nice.
Linda: Yes. I froze mine because I was traveling and I just didn't want to give anyone the opportunity to play around with my financial information.
Paula: Yes, because that's a nightmare if you got to clean that up. One last thing I want to talk about, and I know it's becoming a new norm for most people is ordering and having it delivered. It's super expensive. It adds a ton onto the bill when you use Uber Eats or DoorDash. I had ordered something the other day and I couldn't believe they wanted me to pay $8 just to have that delivered to my house. I was like, “Well, by the time you add all that in, it costs more than the food.”
Linda: Right. I think we have to take a look at why are we doing it?
Paula: Because we're lazy?
Linda: COVID got us into the habit. We can blame everything on COVID now, right? It's just like anything else, it's a habit. Is it a habit that's worthwhile? Is the convenience worth the cost? It's a cost benefit analysis. You can tell I'm a CPA. It's taking a look. Once again, when you track your expenses, and that's under the eating out category, and it's like is this worth the cost? Is that additional $8 for the delivery? Is that giving me an opportunity to generate additional income that is worth the convenience? To me, that's the trade-off you have to think about. Is it just because I don't feel like going out and getting food? Maybe we should do a little meal prep, maybe we should do a little grocery shopping evenings or weekends.
Really, is it giving me an opportunity to generate additional income so that I don't have to take a break and go make a meal or go out and get it? I think that's really where we're at. Once again, when we track our expenses, that's one of those things that comes to light.
Paula: You've shared some great information with us. If anybody would like to work with you or talk with you, how would they get ahold of you?
Linda: Yes, it's really easy, lindalingo.com. You can email me at linda@lindalingo.com. I have a couple of freebies, one's a money-saving quiz, and the other one is a PDF 9 Savvy Wealth Building Steps. Both of those are on my website, lindalingo.com.
Paula: Actually, I'll ask Jon to put those in the show notes, a link to those resources.
Linda: Perfect. Thank you.
Paula: If anybody wants to get ahold of me, they can reach me at paula@paulachristine.com or you can check out my website at paulachristine.com. I have some resources also that you can check out too. Thanks very much, Linda. Some great information.
Linda: Thank you, Paula. Appreciate it. It's been great talking with you.