Budget Well, Crush Debt, Save More, Spend Less

Get Your Financial House in Order with Dimitry Neyshtadt of 90DayMoneyPro

Dimitry Neyshtadt says he’s sick of the common rhetoric coming from the top of the personal finance industry.

“Not everybody wants to hear 60-year-old Dave Ramsey bark at them and tell them they have to count every latte in order to be financially successful because it’s not true,” says Dimitry, a Chartered Financial Consultant (ChFC) and founder of 90DayMoneyPro.com.DimitryNeyshtadt-400x400

“You can have your cake and eat it, too. That’s my language. There’s a way to find optimal balance where you don’t feel like you’re choking yourself. It’s quite the contrary. You feel proud because you’re able to juggle all of the stuff you want to handle.”

Dimitry aims to be Bill Nye the Science Guy of personal finance, breaking down complex topics into easy-to-digest pieces.

“The #DebtFreeCommunity is something that I’ve always known was there and I’ve been a resource for showing them how to optimize their entire finances and not just thinking that debt-free equals financial success. You’ve got no debt, but you’ve got no money and no protection. You’re kinda fucked! I’m being real.”

That’s why seeing debt on a spectrum instead of deeming all debt bad is crucial, he says.

“When an individual listens to Dave Ramsey, it feels so one-on-one, but Dave is speaking to millions. And that’s where the challenge comes in. His Baby Steps are outdated. The best comparison is that old wiggling machine that can jiggle the fat off of people.”

Getting on that fat-jiggling machine, Dave Ramsey’s 7 Baby Steps plan, is better than sitting down on the couch and eating potato chips, Dimitry says.

“But it’s so outdated and inefficient. And it needs to be replaced with the truth. And the truth will set you free. I show folks how to turn their finances into a well-oiled machine.”

Wise Woman Wallet Fat Jiggler Machine

Dave Ramsey’s 7 Baby Steps

  1. Baby Step 1: Save $1,000 to start an emergency fund.
  2. Baby Step 2: Pay off all debt using the debt snowball method.
  3. Baby Step 3: Save 3 to 6 months of expenses for emergencies.
  4. Baby Step 4: Invest 15% of your household income into Roth IRAs and pre-tax retirement funds.
  5. Baby Step 5: Save for your children’s college fund.
  6. Baby Step 6: Pay off your home early.
  7. Baby Step 7: Build wealth and give.

Wise Woman Wallet 90DayMoneyPro Financial House in Order

Humble Beginnings

Dimitry understands the financial struggle. His parents migrated from the former Soviet Union (current-day Belarus) to the greater Boston area in the late 1980s. Dimitry was 2 years old at the time; his brother, 9.

They lived in a 2-bedroom apartment with 4 other relatives. Some professional credits his dad, an engineer, and his mother, a physician, had didn’t transfer to the States. So his mother redid her medical residency in Boston.

“There was no financial plan,” Dimitry said. “The first 5 years in this country was about making enough in this country to survive, pay the bills.”

While his mother was finishing her residency in 1995, a friend suggested she talk to a financial advisor. That meeting changed their lives and their perspective on money.

Dimitry graduated high school at 16 and dropped out of college the next year. At 19, he said he was making $40,000 a year and wearing a suit to work at the bank each day.

One day, Dimitry had lunch with the same financial advisor his mom met 13 years prior and was encouraged to pursue that field.

“I get to pay it forward now and help other families the same way someone helped my family, so that was a big push to get licensed.”

He’s been advising since the age of 21. Over the past 10 years, Dimitry said he’s advised 1,000 families and can’t wait to help thousands—or millions—more. His 90 Day Money Pro online course aims to help clients understand how to reach financial independence.

“There’s no amount of income that makes me happy,” he says. “What makes me happy is helping the most amount of people that I can.”

A New Way to Think about Money

One way Dimitry helps others is by dispelling myths about money, how to treat it and how to handle debt.

“I feel like I’ve been a doctor who found a cure for the common cold and I look around and I see famous doctors all over the country are selling Robittusin. They’re selling Dimetapp. They’re selling cold medicine that actually doesn’t cure the issue. Dave Ramsey and everyone is telling you that debt freedom and budgeting are the key. It’s not. The cure for the common cold is PEMDAS. The cure for the common cold is building a plan where you go through these steps in your own world and you see where there are gaps and you see things that are going well.”

This PEMDAS isn’t for solving math equations or politely asking someone to excuse your Aunt Sally. Dimitry revised the mnemonic device to explain the order of operations for managing money well.

Dimitry Neyshtadt’s Order of Operations of Money 

  1. P – Protection
  2. E – Emergency Fund
  3. M – Monthly Cash Flow Assessment
  4. D – Debt Paydown
  5. A – Asset Optimization
  6. S – Succession Planning

Dave Ramsey and Suze Orman’s advice to pay down debt immediately is better than no advice, but it’s not the optimal advice, Dimitry says.

“People have a visceral reaction to their debt, correct? Almost stronger than the balance of their savings account or the balance of their 401K or the balance of their investment or the fact that they own real estate. What they’re more viscerally connected to is this loan, the debt, this feeling of owing other people money.”

“And by appealing to that, Dave has found the fact that not only does everyone resonate with it emotionally, but debt is something that is very easy to track. Those debt worksheets, for example, that people color code and start coloring in as their paying off their loans. Those are great … in a vacuum with blinders on.”

A hardcore Ramsey enthusiast might decide to pay down debt aggressively, for example, at a rate of $2,000 a month when her minimum payments are $500. Instead of paying down $2,000 a month for a whole year, what if she saved that $2,400?

If she wanted to, she could only pay $500 a month and put $1,500 in a savings account. She could take that savings and pay down the loan in one turn at the end of the year.

“You’re in the position of power to make that lump sum payment when the heck you want to,” he says. “But let me ask you this: Once you make those overpayments to the student loan company, can you ever call them and ask for the money back? Say ‘Hey, Sallie Mae, Navient, I’ve been overpaying you guys really aggressively and I just got laid off or my mom just got sick or life threw me a curveball and I need the money back, can you give me that money?’ What are they gonna say?”

Debt is a spectrum, Dimitry says. He doesn’t subscribe to the notion that all debt is bad. A credit card balance of $10,000 at 20% interest rate is different than a $10,000 car loan that charges 3%. Some debts are more toxic than others.

So really think long and hard before deciding to forgo retirement contributions while paying off debt, as Dave Ramsey advises. Or think long and hard before aggressively paying off debt with only $1,000 in savings, as Dave Ramsey advises.

“You can make sure you’re juggling everything without getting into the emotional components of debt,” Dimitry says. “I talk a lot about the order of operations. You have to do things in a certain order to make sure that things are gonna be OK.”

Get Your Financial House in Order

There are 4 parts to a financial plan, Dimitry says. Everybody gets that we’re supposed to save up money and build wealth. They understand that they should 1. Build assets and 2. Decrease liabilities. However, the statistics terrify him.

“It’s kind of like how everybody knows they’re supposed to eat healthier and work out. Well, what are the missing pieces? There’s part no. 3 and no. 4.”

No. 3 is to manage your cash flow. No. 4 is to have protection.

The 4-part Financial House requires you to:

  • protect what you have with proper insurances (protection)
  • save for the future and for emergencies (assets)
  • pay down debt, especially debts with high interest rates (liabilities)
  • spend within reason so you can save or invest 20% or more of your income (cash flow management)

The foundation of your Financial House is cash flow management, Dimitry says. Ensure your money is organized in a way to help you accumulate assets and crush debt. The roof is protection through insurances and legal documents. Make sure you protect what you have to avoid getting kicked backward and negatively affecting your ability to accumulate assets and reduce liabilities.

Wise Woman Wallet 90DayMoneyPro Financial House in Order and Order of Operations of Money_02

The order in which you do all execute your financial plan is critical to success, which is where PEMDAS comes into play.

Dimitry says a lot of people come to him stressed about 401K and student loans. They have no disability insurance or a full emergency fund. They’re also spending like crazy and are not organized.

“You think their student loans are their biggest concerns? You think the fund selection of mutual funds in their 401K is their first concern?”

He offers clients PEMDAS to give them perspective and clarity around what to do first.

The Order of Operations of Money

  1. Protection

“It’s the non-sexy stuff: insurances and legal documents. Topics that no one likes thinking about.”

Dimitry imagines a recent college graduate and Dave Ramsey enthusiast who is eating rice and beans and paying off his debts. But there’s a big problem? He’s not insured. Neither is his apartment or car.

“Everybody is graduating and renting apartments,” Dimitry says. “Dave and Suze (Orman) are telling them the biggest thing they have to do is to overpay their student loans and their credit cards. I’m telling them the first thing they gotta do is go get renter’s insurance.”

That could cost as little as $8.

“What’s the point of having financial progress if life can throw one curveball at you and you’re knocked back worse than where you started?”

Consider getting renters’, auto, disability and basic, term life insurance.

  1. Emergency Fund

“$1,000 is not an emergency fund!” Dimitry says. “Geez! What year is this, Dave?!”

Dimitry says $1,000 barely covers a new set of tires or a vet visit for his French bulldog.

So how much should you have in an emergency fund?

“It’s gotta be at least 2-3 months of expenses, at least,” Dimitry says. “If you get laid off tomorrow, you gotta cover your bills until you get another paycheck without liquidating your 401K or your investments or using your credit card.”

If you’re under the age of 40, Dimitry suggests putting aside 15-25% of gross income. So if you’re making $50,000, save $10,000.

If you’re not saving or investing 20%, then you need to focus on that before student loans.

  1. Monthly Cash Flow Management

“Cash flow is how money moves in your world,” Dimitry says. “And what I show folks is how to make sure they don’t have dollars slip through their fingers, whether they make 30 grand a year, 300 or 3 million.”

Cash flow management requires you to think about how you allocate and spread around money that comes into your life. Dimitry puts money into 3 categories: save, bills and spend. Savings are for investing and building assets. The bills account is for monthly obligations.

“The golden rule of cash flow: each bank account can only have one purpose. It needs a nickname. So if you have a checking account that’s paying your rent and your cell phone bill and your electric bill and your cable and it’s also the amount that you use when you and your girlfriends go out to have a drink, what do you think the balance is gonna be in that checking account?”

Here’s how one of Dimitry’s clients manages cash flow:

  • 2-3 months’ worth of bills sit in the Bills account at all times.
  • In a separate account, he gets $700 of spending money each week.
  • In an online account, he saves money for traveling and a down payment on a home.

“All of his savings, everything is nicknamed,” Dimitry says. “Everything has a purpose. He doesn’t call anything, ‘Oh, that’s my checking or that’s my savings.’ He says, ‘Oh, that’s my spending account. That’s my emergency fund. That’s my down payment money.’ And with cash flow, he’s able to automate transfers. He knows how much he’s making. He knows he can go spend $700 a week guilt-free and still be saving 25% of his gross income. We’re looking at Mexico City trips for him next year,”

Knowing that he helps people fulfill their dreams through the PEMDAS system keeps Dimitry going.

“My favorite thing in my entire career, 10 years, is all the cards that I’ve gotten of people traveling and Christmas cards with babies, families growing. I have a shoebox full of them and it’s one of my prized possessions.”

  1. Debt Paydown

Pay down toxic debt first, Dimitry suggests. Toxic debt includes credit card balances with high interest rates. Consider using balance transfer cards, he says, to reduce the interest rate for a certain amount of time to pay off the credit card balance faster and save money over time. Consider paying off low-interest rate debts like student loans after building an emergency fund.

  1. Asset Optimization

Dimitry champions tax-deferred retirement accounts like Roth IRAs, “unlike Suze and Dave, who tell you to max out pre-tax savings,” Dimitry says.

“Those old farts don’t know what they’re talking about. Put money into something in a Roth and never have to pay taxes in the future.”

  1. Succession Planning

“This is where we talk about really optimizing someone’s legacy,” Dimitry says. “Does having a foundation in your honor with a certain purpose mean something to you? This is where you convert from term insurance to permanent cash-building insurance—the kind that never expires, the kind that guarantees your grandkids’ grandkids will have money.”

The First Thing to Do to Improve Your Finances

“So most people would answer that question, ‘What should be the first thing people do?’ with ‘Sit down and make a list of all your bills.’ That’s not my answer,” Dimitry says. “Instead it’s: Take a mental inventory. And realize the path ahead of you is one of doing things in an uncommon way and a little bit more like the goat rather than the sheep.”

Was this post helpful? How did it change your perspective on managing money in the new year? Please give a comment below.

4 thoughts on “Get Your Financial House in Order with Dimitry Neyshtadt of 90DayMoneyPro”

  1. I really enjoyed it. It was very informative and opened my eyes to a few things I never even thought of. Like legacy planning. I’m not doing exactly what was prescribed but I am on the path of looking at my money more seriously. I am paying down debt, I’m setting financial goals and meeting them. I’m planning on saving for and buying a house in the next 2-3 yrs. I’m also going to work on my savings plan as well. Slow but steady. Thanks for all the tips..

    Liked by 1 person

    1. Hey, JAZ. Thanks so much for reading this blog post and sharing your thoughts. I’m glad you found some helpful tips in the interview. It seems like you’re in the right frame of mind. Best wishes on your journey!

      Like

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