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District representative: My budget and planning for the future

Video transcript

My name is Fernando Morales. I'm a District Representative at State Senator Ben Allen's office, and I make $43,000. Do I feel financially secure? I don't I don't know that I could say that I am financially secure right now. However, I still don't know if I'm ready to trade some of the experiences that I have that I choose to spend that money that if I saved would actually make me financially secure at this time. Just because I hadn't had those options before. As I've started making a little bit more money, I realized I started to love my city a lot more. As I got to explore. And I think that at this point, being 27, the smart thing is to start planning for that future. But I also want to get some perspective, because what am I saving for and what do I want my retirement to look like, and where do I want to go? And what do I want my life after my career at some point to look like? I think I want to start finding that out too. So I hope to start saving soon and I'm not financially secure now. But I'm doing some exploratory work. And I think it's important as well. My finances have changed in a positive way, but that margin that I had for myself kind of spendable cash in a certain way has just been taken up by other things. When I first arrived in Los Angeles, I didn't have a car. As I mentioned, I moved with just $400. But I also had no reoccurring expenses. So now that I have a job that requires that I have a car, it's really hard to do my job with just public transportation, even though I'm a big fan of it. I had to pay for my car, I have to pay for insurance, there are other bills maybe need my internet to be a little bit faster. Things like that, things just start piling on. So I'd say I have about the same amount of money at the end of the month as I did when I first started working. My student loans are a whole other deal, so currently I have about $33,000 in student loans. I haven't always been the best with my student loans. After you graduate, you usually have a period of about six months to a year in which you don't, you're not required to make payments. And, at first when I was unemployed, you can also waive off paying during that time. When I first graduated from college and I started working, I really didn't have a lot of a margin of money leftover to pay my loans at that time so I chose to forbear which is pushing forward that responsibility. Interest doesn't stop. A lot of times just because you're pushing that forward. And it will it will grow, and the more that the amount that you owe grows, the more that that interest will affect that. Just like with your savings on the positive side, it can also snow ball on the negative side, so I think I'm just right back to where I was when I graduated. Debt wise from school. It does help though that before I started paying all the different loans for $5,000 here $6,000 here, and I couldn't see it all as one solid figure. It was a lot easier for me to say, I can't find them all, I'll take care of it later. I'll deal with it tomorrow, or the next day or the next month. So I decided about a year ago to consolidate them all into one amount [Text on screen: Debt consolidation is a great way to simplify debt and possibly negotiate a lower interest rate] in one place, I can pay it all and FedLoans, .org or .gov so that's definitely been helpful as well as starting an income base program, income base repayment, and public service loan forgiveness. So once I pay for 10 years in public service, the entirety of my loans will be forgiven. I have about $6,000 that I still owe for my car. I bought it for 13,000 I think total with the fees that come on top of just buying a car and license and all of that. So I'm, basically to the point in which I can sell it, and pay it completely off if i wanted to. I have about $3,000 total in credit card. With my credit card expenditures, they mostly come from travel. I want to make sure that once a year if not more, I take some time to see a different part of the world now that I can. It's a lot of what I was mentioning earlier about figuring out where I want to go or what I want my retirement down the line to look like. So what I do is if I have a 0% credit card, I'll pay for my trip on that and then throughout the year, before I leave said 0%, which is an introductory rate, I try to pay it all. And then hopefully keep it at zero. Sometimes life happens, like when your car breaks down. But I try to keep it at zero after that. So the housing market in Los Angeles, to me is so bad that my ex-girlfriend and I have been living together with for a year after we broke up. [laughs] Because I mean, it's just such a great deal. This is such a great deal. We have good communication. Things are good but, that's usually not the situation that a lot of people think whenever you think about your ex-girlfriend. You don't think roommate as well. So I think that sheds a little light as to how tough the housing situation is out there. Annually, my income is roughly $43,000. If you divide that by 12 you get my monthly theoretical income, and that's $3,330. From there, my taxes are taken out. And that is $800 roughly. But I'm happy to pay them because I understand that's where my salary comes from as well. Every month, I get in my bank about $2,700 and then I start taking out for rent which is $675, my utilities of gas and water $75, my TV and internet, just internet $40, my cell phone is actually still under my mom's family plan, so I'm very happy to not have to pay that, my car is $200 to pay the loan that I took out plus 120 to insure it, 150 for gas just from driving around, and then I have reoccurring payments from applications such as Spotify or Apple storage on my phone that's $25, and then I get into the funner spending. So the discretionary spending. And that's clothes, which I allocate $200, travel which I allocate $200 for and then, the biggest chunk of money that I end up spending per month is actually on food, restaurants and drinks with friends. And that's about $850. Which leaves me at the end of the month with just about zero. I spend everything that I make, which is not exactly the smartest planning for now, but it's something that I've come to enjoy. And I think that I will make a plan to transition some of that money that I'm spending on drinks with friends and eating out, maybe to put into savings in the near future. Since I started working, I realized that you make what you spend to a certain degree unless you set, hard boundaries. If you're not great at saving, like I am, and you're committed to it, and you don't want to spend that currently, like if you're really set on doing that. It could be the right thing for you, or it could not be the right thing for you. Right now, I'd rather travel than save some of that. But, you have to make sure that you set yourself for success by enrolling in one of those programs that takes out the money from your account automatically whenever it's deposited, and it goes directly to savings. And then that way, when you get to then end of the month, you're gonna think you're at zero, and you're not even gonna think about it at one point. Or you might be able to do that yourself. But, I found out that I'm not very good at doing that. So at some point, when I'm really set on doing that, and really saving and making that plan to whether to invest or just keep it in savings, I will start doing that as well.
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