debt free story

YFP 376: From Student Debt to Financial Freedom: How Brandon Paid Off $160k

Posted on September 12, 2024September 9, 2024 by YFP Media

Brandon Gerleman, PharmD shares the strategy for how he paid off $160k of debt.

This episode is brought to you by APhA.

Episode Summary

Brandon Gerleman, a 2017 pharmacy graduate from the University of Iowa, shares his journey of paying off $160k of debt through not one, not two, but five refinances along the way. Brandon discusses his repayment strategy, why he decided for a more aggressive loan payoff, and what’s next for him and his family. He emphasizes the importance of living within your means, being aware of finances, and the impact of interest rates on repayment strategies. Brandon and his wife are now looking toward the future and he shares what other financial goals they are preparing for.

About Today’s Guest

Brandon Gerleman, PharmD is a 2017 graduate of the University of Iowa College of Pharmacy. He currently works as a Senior Product Manager on the Pharmacy Product Team at Outcomes, where he manages products to help pharmacists practice at the top of their training and provides tools to help drive pharmacy campaigns and increase efficiencies. After graduating in 2017 with $161,000 in student loan debt, he paid it off in May 2024. Brandon and his wife, Mariah, have 2 children and live in a rural community in Iowa. He enjoys spending time with his family, golfing, and watching Iowa Hawkeye football.

Key Points from the Episode

Brandon’s Passion for Personal Finance 1:36
Career Journey and Student Loan Debt 6:08
Refinancing Strategy and Financial Discipline 9:29
Balancing Financial Goals and Family Life 19:48
Future Financial Plans and Legacy 28:59

Episode Highlights

“Within that entire last seven years, though, I’ll say that we lived within our means, but we weren’t crunching pennies. We’re not in some fancy house. We’re within our means here. We still go on vacations with the kids. We still do fun things with the kids.” – Brandon Gerleman [20:59]

“For me and my wife, it was just like, how can we tackle the student debt and take that off our shoulders to then enable us to do more things? And it’s all about the family, and it was like trying to prepare for the future that way.” – Brandon Gerleman [21:38]

“At the end of the day, the math is the math, and we weren’t so aggressive, where we couldn’t do things. And we weren’t so passive, where the dollars kept loading on. So I think it was finding that right balance.” – Brandon Gerleman [22:34]

“We want to be able to live in the moment and celebrate and do things with our kids. I love the word intentional. Be very intentional about what we’re doing. We can still splurge on a Starbucks every now and then, right? You can still do things while living within your means and being intentional about how we’re how we’re approaching our student loan debt payoff.” – Brandon Gerleman [24:50]

“We’re always learning, I feel like the more aware we are around what’s happening. That’s why I was listening to all these Your Financial Pharmacist Podcasts back in pharmacy school, on fourth year rotations, and ever since, it’s just being aware. It’s always learning. It’s asking questions and trying to put ourselves in the best position for success.” -Brandon Gerleman [30:25]

Links Mentioned in Today’s Episode

Episode Transcript

Tim Ulbrich 00:00

Hey everybody. Tim Ulbrich here and thank you for listening to the YFP Podcast, where each week, we strive to inspire and encourage you on your path towards achieving financial freedom. This week, I welcome Brandon Gerleman onto the show, a 2017 pharmacy graduate from the University of Iowa and longtime listener of the YFP Podcast, to share his journey paying off $160,000 of debt through not one, not two, but five refinances along the way. We discuss his repayment strategy, why he decided for a more aggressive loan payoff, and what’s next for him and his family. Today’s episode of the YFP Podcast is brought to you by The American Pharmacists Association. APHA has partnered with YFP to deliver personalized financial education benefits for APHA members. Throughout the year, APHA will be hosting a number of exclusive webinars covering topics like student loan debt payoff strategies, home buying, investing, insurance needs and much more. Join APHA now to gain premier access to these educational resources and to receive discounts on YFP products and services. You can join APHA at a 25% discount by visiting pharmacist.com/join and using the coupon code YFP. Again, that’s coupon code YFP at pharmacist.com/join. All right, let’s jump into my debt free interview with Brandon Gerleman.

Tim Ulbrich 01:26

Brandon, welcome to the show.

Brandon Gerleman 01:28

Hey. What’s going on?

Tim Ulbrich 01:29

Super excited to have you on. It’s been a while since we’ve done a debt free story and celebration. So I’m certainly looking forward to that. And you and I connected back in 2023 although, as we discussed before the interview, we had some connections before that we weren’t necessarily aware of. And at the time, I saw a post that you shared on LinkedIn of a pharmacy personal finance talk that you were giving to Iowa pharmacy students. So let’s start there. Where does your passion for personal finance come from?

Brandon Gerleman 01:59

Yeah, no, I appreciate that. Definitely comes from being aware, and that, you know, just being aware of your situation, and it kind of spurs from my parents really having that instilled, instilled that at a young age, and just being aware, you know, living within your means, having the ability to kind of see everything that that has come in and coming out, and yet again, just just that awareness issue and a little bit of that pharmacist, hey, I need to control a little bit of something here.

Tim Ulbrich 02:31

I love that. And you shared with me, you know, 2017, year you graduated, you were on APPE rotations, and you ran across the YFP podcast, which helped, in part, light a spark that you certainly took and ran with, and you’ve done the hard work, but I love that you’re now giving that back as well as you’re sharing with other students, and as you and I both know this is such a topic of interest and need among pharmacists at large, but certainly students and new practitioners. So thank you for your commitment to this topic, and as you continue to share the good news with students and others as well. Before we get into the weeds on your student loans and your Debt Free Journey, how you paid them off, why you paid them off, tell us about your career path, what led you into the profession, and what’s the work that you’ve been doing since graduating 2017.

Brandon Gerleman 03:18

Yeah, for sure. For sure. Graduated in 2017. Prior to even getting into pharmacy school. I live here in a small town of 5,000 folks here in South Central Iowa, and really that independent community pharmacist and seeing the impact on what they did to the community. That sounds super cliche. You probably hear that a lot. I’m sure pharmacists talk about that a bunch. But the pharmacist at the independent community pharmacy uptown, like they were the, know it all for anything. It was, you know, drug related, it was, you know, any ailment related. It was, when’s the next bus come in? I mean, it was any question, you know, community events like they were just that go to resource. And I just, I just admired that and thought, gosh, I just, I like talking to people, love science. I think this could be a really good fit. Started working there as a pharmacist, you know, technician, tech and training prior when I was an undergrad and just ran, ran from there and never looked back. So graduated from the University of Iowa College of Pharmacy in 2017 and immediately ran back home, right. Came back to my hometown and was overseeing a lot of the clinical operations within the small pharmacy chain that we had here. And that was a really nice, fulfilling, you know, giving back to the community. Being involved in the community; was there for about two and a half years, and really had the mindset of wanting to impact more than just 5,000 in my community. So made the transition over to Outcomes MTM, where I could really help impact millions upon millions of patients. Patients, and help them with outcomes for about five years now, so been there ever since, worn a number of different hats within outcomes, been on the clinical team, been on the payer product team, and most recently, I’m on the pharmacy product team. So I’ve got a little bit of a non traditional pathway, A, B, current position, so I’m a senior product manager, and I oversee all the clinical pharmacy products for Outcomes, and so that that that involves or brings in anything from looking at our collaborative practice agreements and being on the clinical lens to review those, to writing pharmacy sponsored opportunities on the outcomes platform, to also writing clinical workflows that enable the pharmacist to, you know, to practice at the top of their license and submit as a medical bill. So really, anything clinical in the pharmacy, in pharmacy land from outcomes I oversee, and I absolutely love it. I sit with software engineers every single day, and they’re a tremendous group of folks and provide that clinical lens on a lot of what we’re doing. And it’s a very fulfilling position, a need position, and the ability to not only impact patients, but to increase efficiencies and provide more tools for pharmacists to impact even more patients and truly get that fulfilling, that point of patient care, that great, we’re in a state we can do test and treat. But what does that mean? Where do I start? What do I do? You know, how can I decrease my my risk of, you know, DIR fees, you know, how can I practice, you know, practice at the top of my license. So it’s a fun, fun position that I’m at. And been there, been been there, five years, five years now.

Tim Ulbrich 06:48

Outcomes holds a special place for me, and I didn’t share this with you in advance, and I’m dating myself a little bit. And our listeners may not know this about my career path, but I graduated back in 2008 and I spent a year residency in community practice, and then my first job out of community practice was a shared academic role with the university up in Northeast Ohio. And then I was practice component was with a local community regional chain. Giant Eagle is the name of the chain, and we were implementing medication management services across the region. That was my job to go to various stores and help them think about the clinical workflows and how to embed this into patient care models. And it was a really exciting time, right? This wasn’t too long after the passage of the Medicare Modernization Act, and this was for us in Ohio, there was a huge Medicaid contract that landed, and through outcomes was really the ability that we had to do many of these services at the time, so just really fun memories and and really being able to help expand practice at the time. So feels like it’s coming full circle as you’re talking here and sharing your career journey as well.

Brandon Gerleman 07:55

Yeah, definitely it’s that next, that next chapter, right? And now we’re just, we’re beyond just traditional MTM, and now we’re trying to help pharmacists just do more on that same platform.

Tim Ulbrich 08:05

So let’s get into the student loans. Give us the juicy details. How much debt did you have when you graduated in 2017 and what was the average interest rate on your debt at the time?

Brandon Gerleman 08:17

Yeah, did some math here, and kind of added things up. And I still have, when I first graduated, just kind of memory of seeing the number in my head there. But just shy $161,000 in student loan debt from both undergrad and grad and pharmacy school. So I’ve got twoundergrad degrees. I went the four and four route, and they averaged across all of them about 6.75% so remember, just graduated and be like, Oh, that’s a kind of a tough pill to swallow.

Tim Ulbrich 08:51

Yeah. And as you and I were talking about before we hit record, you know, the the interest rate matters a lot, and we’ll talk about how that played into your repayment journey. Unfortunately, we’re seeing those rates – I graduated again, 2008 6.8% a lot of my loans were fixed. You mentioned in the six, sevens. We’re actually seeing now rates on those unsubsidized graduate loans, you know, north of 8% so those are tough interest rates. We talk a lot about the number right, 161, 170, 180, 190. And actually the the average debt load is, we just got the latest data from the class of 2024, hovering around that hovering around that $170k mark still. So it has flattened off over the last several years. But we don’t give enough attention to the interest rate, and I think that’s going to come to life as we talk about your repayment strategy, because for you, as I understand it, it was refinancing your loans, not once, not twice, but five times, ultimately, getting your rate down to 2.24% now, before our listeners, you know, are just like, what in the world, those interest rates don’t exist today, right? So talk us through that decision to refinance. What was it primarily or only based? Based on that 2.24% because there are some considerations, right? When people take their loans from the federal system to a private lender, which is what you’re doing through a process of refinance, there are some things that you might be giving up. Oh, and by the way, when something like a global pandemic happens and there’s a freeze on interest and no payments are required, right, that was something we never could have seen coming as a potential negative impact and consequence of refinancing. So tell us about that decision to refinance and how you ultimately got to the point that that was the best plan for you.

Brandon Gerleman 10:33

Yeah, yeah. Definitely didn’t have global pandemic and halt on student loan payments in my in my Uno cards there. But yeah, for me, it was the aspect of I knew I was never going to, I shouldn’t say never, never say that you never know where the career is going to take you. But highly unlikely for me to go to a another career that kept me in that student loan forgiveness within the federal sector there. So knowing that it just came down to math, and at the end of the day, it wasn’t a jump from 6.75% directly to 2.24% it was refinancing. And I would just always got in the habit of, every three months checking, and I actually always go on on Your Financial Pharmacist and go over to see what deals were going on, right? You know what was the bonus for refinancing? What were the rates at playing around? And never, you know, never hurt your credit score by checking. And you don’t know what you don’t know. And so I would just continue to chip chip, chip away, and eventually got that down to that 2.24% with that auto pay, you know, the rate reduction there by a quarter percent. But it just came down to math. And at the end of the day, what we’re doing is, is math here. And I hate to pay in interest, oh my gosh, just to think that I’m like, giving, like, somebody giving money, and I’m paying them back, and the interest payments are, you know, what’s killing you. I just wanted to that was just a fire in the belly. Wanted to reduce that as much as possible.

Tim Ulbrich 12:05

Yeah, you know, I gave a presentation just a couple weeks ago to a group of student pharmacists, and I walked them through how interest accumulates, right? Because when we’re talking about unsubsidized loans, which you know for most pharmacy students, that’s going to be all of your federal student loans. When it comes to your pharmacy education, there’s the principal, which is the original amount that you’re borrowing, and then there’s the interest which accrues while you’re in school. I often say, Well, when I’m presenting, hey, not to scare you, but while we’re sitting here, the interest is accruing, right? That’s just a matter of fact. And then when you get an active repayment, that separate pot of interest gets added to your principal, and that grows interest. What I say is baby interest, which is referred to as capitalization. So the result of that, why that matters, is that most borrowers, myself, included my own journeys, you vastly underestimate how much you’re actually going to pay off when it’s all said and done, because you’re looking at as a pharmacy student saying, okay, you know, I’m borrowing 15, $20,000 a semester. I’ve got so many semesters, that’s the number, right? And what we’re leaving out there is the interest that accumulates in school, and then the interest that accumulates all the while in the repayment period as well. So such an important lesson, whether we’re talking about student loans, credit card debt, mortgage, car loans, anytime you’re borrowing, right? Interest is the cost of borrowing anytime a bank is lending someone money that that’s a risk they’re taking, and obviously you’re going to pay for that in the form of interest. We have to understand how that interest accumulates and how we feel as well, which is an important one that you mentioned in terms of your hate of that interest. I also want to highlight Brandon, you said something important, which I don’t want to overlook for our listeners that are thinking about their own situation. You said, Hey, I first determined that something like Public Service Loan Forgiveness wasn’t going to be my pathway. Once I made that decision, it really came down to a math, the math. And I want to highlight that, because that’s how I think about it, in terms of a decision tree, right? If there is a pathway to be considered, and it makes sense. And there’s some pros, cons, things that we gotta factor in before you ultimately make that decision. Let’s have that discussion first, if that is not a possibility, then we’re looking at, how do we maximize our repayment options and strategies? And for some people, that might be a refinance. Now, Brandon, I know our listeners are listening to say, is anybody refinancing anymore, right? Given where interest rates are at, and the answer is, actually there are, it’s certainly not anywhere to the point of what you did when you got this all the way down to the low twos. We saw that right before the pandemic. A lot of people, flurry of activity into refinancing below threes. You know, that has largely gone away for the most part, but there are many people out there who have existing private loans that may be at eight, 9, 10, 11, 12, plus percent, which is crazy to say out loud, that certainly should be considering whether or not they can move that private loan and get a better deal on that. So I just want to kind of pause for a moment and make sure we address that. So when you look at the math, clearly, you know, 6.7% down 2.24%. That looks good. What did that actually mean in terms of how much time that took off the repayment period?

Brandon Gerleman 15:11

Oh, I should have written this down! Every single time I would use the some of the calculators that that are on the Your Financial Pharmacist website and and every time I would, you know, crunch it. If I’m here, here’s where I’m at, bringing it down, here’s where I’m at. I have to dig in there. But I know it was of the 10s of 1000s of dollars, and then as far as a time, I think that’s where, that’s where I compounded and snowballed things. So like my wife and I were incredibly comfortable paying when I first graduated this, you know, unsightly amount that was more than our house payment and and thinking, Okay, well, if we’re comfortable paying that, we’re going to refinance from, you know, from A to B, and that reduced my interest rate. Well, I’m going to continue to pay that because out of sight, out of mind, but I’m going to add that extra because my payment went down. My monthly payment went down. I’m going to add that extra as principal only. And so by the time you did that five times you’re you’re knocking it down. It is dollars that you’re not even used to seeing because you haven’t seen it yet that are just snowballing toward that principle. And then every time I would refinance, I’d play around with the calculators as well. Can I, you know, decrease the duration, you know, of my student loan as well? And the last one that we did in 2021 that got me to that 2.24 I also cut it from at that point would have been seven years down to five years. And so that also helped me, you know, really snowball. And then I’ll say that anytime we had a, you know, a tax return, or any, you know, any type of dollars that we felt, hey, let’s, let’s start throwing, throwing additional dollars that way. We throw it as a lump sum, and we’d, we chase it, you know, chase a traditional payment with a principal only. Payments would only go toward that principal, and that was, you know, the combination of refinancing, reducing that, the length of that loan, continuing to pay what we were used to paying, and have it go to our principal, and then the lump sums, kind of, you know, along the way doesn’t have to be much. Can be 500 bucks. This one month can be, you know, $1,000 you know, this other month can just be adding on. Hey, let’s, you know, just add on a little bit. Add 20 bucks a month toward principal. Those small things added up where all of a sudden you became much more manageable. And every time I was very aware, I’ve said that a couple times, I’m very aware, I would always be checking, you know, you know, what’s the balance? Now, you wouldn’t check every single day. That would just drive about, you know, a person crazy. But you know, as you’re checking, then you’re noticing that your payments going more towards principal and less toward interest and and then you can start breathing a little bit, right? And then there, you know, there’s that light at the end of the tunnel and that snowball. And just continue to snowball and snowball and snowball.

Tim Ulbrich 17:58

Yeah, what I hear there is momentum and energy that is coming, which, which is really defined by that snowball approach. And we’ll talk a little bit more about that. But you know, often people will refinance to potentially save on a monthly payment, and then that frees up cash flow to do other things, no right or wrong there. That’s just an option that people choose. Others kind of take the approach you did, which is, hey, we’re going to refinance, get a lower rate, but since we’re used to this monthly payment, even though we only have to now pay 1100 bucks a month, but we’re used to paying 1500 or whatever the number is, let’s keep paying 1500 we’re going to make these principal only payments, and by doing that, we’re going to jump down the amortization table, right? And for those of you that haven’t geeked out on an amortization table, it’s important to understand these things. Again, it’s not just student loans, it’s house payments, car payments, any other type of debt. To really understand what percentage of your payment is going toward principal, what percentage of your payment is going towards interest, and after you make that payment, what’s the balance due? Oh, and by the way, if we make an extra payment, what does that mean, right, in terms of where we’re at, and so depending on your goals, what you’re trying to achieve, interest rates, all these factors are going to determine how aggressive you may or may not be in that debt repayment to that point. And you mentioned Brandon that you know, when you first started, you were paying this unsightly amount. I remember that feeling very well, and that for you, it’s Hey, I hate interest these need to be gone as quick as possible, as what I’m gathering from you, and that’s a decision point that people have to decide, right? We talked about the first branch of the decision tree, which was, Hey, are you going to pursue loan forgiveness or not? If not, then it’s a mathematical decision. Now, once you go to the next decision point, it is, how quickly do I want these gone? And what does that mean for our monthly cash flow and potentially being able to do X, Y or Z. That could be a myriad of things, right? It could be that, hey, we’re looking to save up for a home. We’re looking to buy a second investment property. We want to invest in more in our retirement. We want to have experiences. We got kids on the way. There’s a million other goals that could be coming. But ultimately, you decided that, sure. Or more cash flow would be nice, but we want these gone, you know, tomorrow. And so how did you and your wife get to that decision, that despite the rate arguably being pretty darn low when you get to that point, 2.24 and even before that pretty low, that even though those rates were coming down, you really wanted to go that aggressive repayment. What was the philosophy behind that for you guys?

Brandon Gerleman 20:20

Yeah, yeah. Great, great question. I would say it wasn’t hard to not even going to use the word convince. My wife is already on the same page. So just more of demonstrating, showing the math, and saying, you know, by doing this, you know, semi aggressive plan, instead of being done in 2027 we can be done in 2024 so that freed up, you know, three years of more than our house payment worth of student loans that then will allow us to do more things. And so I’ve got two young kids under the age of four. And, you know, now all of sudden we can, we can go out and we can maybe do something. And, you know, go on a vacation here, and within that entire last seven years, though, I’ll say that we lived within our means, but we weren’t crunching pennies. We’re not in some fancy, fancy house. We’re within our means here. We still go on vacations with the kids. We still do fun things with the kids. Went and saw Caitlin Clark play in Minnesota last week, right? So, yeah, you know, so we’re, it’s from, for me and my wife, it was just like, how can we tackle the student debt and take that and just, you know, a big relief off our shoulders to then enable us to do more things? And it’s all about the family, and it was like trying to prep for the for the future that way. Also say that the snowball doesn’t doesn’t just stop with with my student loans. We We’ve now taken what we’re used to paying for my student loans, and we’re snowballing into other things, a truck payment. My wife student loans are almost done, you know, yeah, so, like, by the end of 2024 you know, really being able to breathe. And then you know that that allows you, and I’m sure I’m leading on to the next question. You know that that allows a person to do a little bit more. And now I can start putting dollars for a 529, plan for, you know, for the kids. And I can start, you know, and add a little bit more in the 401K, which can then reduce my, you know, my taxable income. So there’s other things that that that we can consider while, you know, we have a, you know, freed up a little bit of monthly cash, you know, when it comes to looking at the cash in and out, but it’s really having that supportive spouse who, at the end of the day, the math is the math, and we weren’t so aggressive, where we couldn’t do things, we weren’t. So, you know, passive, where the, you know, the dollars kept, kept loading on. So I think it was finding that that right balance,

Tim Ulbrich 22:49

I suspect that balance was really important for the two of you to get on the same page. And it’s something I see often. It was true in our own journey as well, that, I think, where people run into some issues, especially if you have two different money belief systems. And I’m not suggesting that was the case here, but when that is the case, you know, when one person’s like, hey, we want to go all in and I want these gone tomorrow, and we’re not going to do anything. Like, obviously, there’s going to be friction there, right? And I think we often have this perception of, hey, I would love to be debt free, like Brandon’s debt free, but I’m not willing to sacrifice everything. And what I hear you saying is like, Hey, we’ve lived within our means. We’ve done hard work. I’m not going to minimize that. We’ve been intentional, but we haven’t been, you know, to the point where we’re not also enjoying things and living this rich life that we so often talk about on the show. And what I often see, and I’m confident I will see here as well, is that when someone is as intentional as you have been, and you and your wife have been for for as long as you’ve been, then when you go to the next decision point, when your wife’s loans are done, and you’re like, hey, we were putting x per month between our loans. Now what? That’s the question. Now, what? Right this money isn’t going to go off into the ether and you’re going to be like, what happened? We used to pay loans, and now we don’t know where that money went. Like, you’re going to be intentional about, hey, it’s the 529 account. Maybe it’s putting a little bit more towards investing for retirement. Maybe it’s being intentional if we’re going to take another vacation a year or, you know, do whatever it means for you guys to be living the rich life. So I love that, and I think we don’t talk often enough about that that there are benefits that come long term from how we approach our decision making and how we live today, that even when the debt’s gone, you’re gonna see the fruit of that well beyond that.

Brandon Gerleman 24:35

Definitely. And you know, I’ve seen other folks that have been on your podcast that have paid off way more in a shorter amount of time. And I think that is phenomenal. It’s kind of driving your own, you know, your own why? And for me, it was in my wife. It was like we want to be able to live in the moment and celebrate and do things with our kids. And as you know, before we had kids as a couple, but also be and I love the word intentional. Be very intentional about what we’re doing. You know, we can still splurge on a Starbucks every now and then, right? You know, you can still do things while living within your means and being intentional about how we’re how we’re approaching our student loan debt payoff.

Tim Ulbrich 25:15

As you and your wife look towards that finish line of her loans coming in the not so distant future, and obviously, as aggressive as you’ve been there, there’s going to be some cash flow available, which is exciting. And you’ve, in part, answered this. You mentioned the kids college savings of 529, accounts. I’ve heard kind of the family experience aspect of it as well. What else? What else is? Is a priority for you guys as you look towards, say, the next decade or so?

Brandon Gerleman 25:42

Man, hard to look past the next decade. When you’ve got two kids running around, doing everything every single week, there’s something new! I would say, you know, free enough to be able to start investing more, right? So because, I’m because we were so intentional about paying down debt, we weren’t as heavy on on investing. And so I would say, you know, investing personally, as well as investing in my children’s future with, you know, 529 plans. I’m that’s probably my biggest thing is, like paying it forward. I will say, here’s the nice little asterisk that I’ll throw with my 161,000 in student loan debt, my folks took care of my undergrad. So that includes, you know, around just shy or about $35,000 out of that $160k my mom and dad were very intentional to pay off for my twin sister and I, to allow us to then kind of pay it forward. So I’m really looking forward to being able to pay it, forward to my to my children. So I’d say, you know, between 529 some investing, some decreasing my taxable income, as well as saving for retirement. And then I, I think the biggest thing is, like taking a breath and just saying, Hey, we did it. Let’s just kind of, you know, relax, enjoy it for a little bit and and really enjoy the family and start doing more things and really getting those, those family experiences involved. We’re not anytime we’re doing presents for kids or anything we’re not big on, like a product or an item, like, for all those that are parents out there, Tim, yourself, included, like, man, like you, for you, the kid forgets about it maybe in two weeks, or plays with the box instead, right? Or and so those are replaceable, the the memories and the experiences are what we’re really trying to pass on, I think that’ll allow us to do a little bit more, you know, travel, and just be even more involved with our kids.

Tim Ulbrich 27:38

I love to hear that Brandon, and I’m intentionally asking the question, you know, to encourage our listeners to be thinking about this as well, and to encourage you and your wife to continue these conversations as well, because they’re so important, right? You’ve done incredible hard work with the student loan debt. You’re going to do great work with saving but, but there’s a bigger story here, right? And that’s what I’m asking about, because there will be a day. I call it the rocking chair exercise. There will be a day when I look back, when you look back and, you know, yeah, oh yeah. Remember, we paid off all that debt, yeah, we did that. You know, remember when we got to the point of financial independence because we saved for the future, and we don’t have our mortgage anymore, and our kids are taking care of, yeah, yeah, we did that. What do we remember, right? What’s the So, what? What’s the vision? What’s the engine behind all of this? And at the end of the day, money is a tool. Money has value because we all agree it has value, and as long as that’s true, it will have value, but it’s what we’re able to do with that money. And getting clear with that no right or wrong answer is really what this whole financial plan is about. So I hear a strong why of family experiences. You know, that’s something I often hear when I ask this question. You know, for other people, it might be a dream they have of starting a business, or it might be, you know, some type of giving aspect of time, reminding you’re having an option to work part time. Or it could be a myriad of things, and really getting clear on that, I think, for those that are listening, that are in the middle of the weeds of going through a journey like this. You know, it’s not a hey, I’ll think about that tomorrow. It’s, let’s think about this now, because that’s going to propel and give us some motivation while we’re in the midst of this journey. And we don’t want to wait till we get to the finish line, because this is something we constantly want to ignite the fire in the flame with. And for those that are doing this with a significant other, partner, spouse, so important, so important. We’re having these conversations because all the strategy is somewhat noise. If we aren’t clear on where are we going or why are we going there? And that really, I think, is where we see so much of the joy come and the opportunity. So I love what you shared there, Brandon, I’m so excited to see where you and your wife go into the future, and congratulations on the success that you’ve had so far.

Brandon Gerleman 29:43

Very much appreciate that. And I will say one more thing, and that is, you know, nobody pretends to be an expert in this area, right? We’re always learning. And so even myself, as I’m going through this last year, learned about, you know, a. 529 you know, Secure Act. And then I was able to, you know, throw some dollars toward that, a 529 plan over last year and this year, that even helped me from a tax benefit that I knew I was going to pay them off this year. So I might as well throw it in an account that I can kind of shelter a little bit through taxes. Had no clue about that. I was just kind of over a beer, discussing with with another colleague, and it’s like, Wait a minute. So I just just want to throw that out there that, you know, we’re always learning, I feel like the more aware we are around what’s happening. You know, that’s why I was listening to all these Your Financial Pharmacist Podcasts back in in pharmacy school, on fourth year rotations, and ever since, it’s, it’s just, it’s being aware. It’s always learning. It’s asking questions and just, you know, trying to, trying to put ourselves in the best position for success, for whatever that why is

Tim Ulbrich 30:50

What I hear there is a curiosity, a desire to learn and grow. I love that example, right? Because there’s a state tax deduction that you’re talking about from a 529 to be able to pay off your loans, and that was opened up, you know, others might be using it to pay for kids private education, you know, K through 12. That’s a relatively new thing as well. And some people might hear that and be like, Well, what actually is the dollar savings, right? And sure, you know, we could look at that and say, you know, are we talking 1000s and 1000s of dollars? No we’re not, but it’s, it’s an important example, because it’s an indication of the curiosity you have, the desire to learn, to grow. And as I often say, there is no arrive at the financial plan, as long as we are hungry to learn and grow and be open to different ideas and strategies and figure out what’s best for our plan, right? There is an infinite number of possibilities for where we could go. So that is such a cool example of what comes from from compounded learning over time. So Brandon, thanks so much for taking time, time to come on the show again. Congratulations to you and your wife. Look forward to following your journey as well into the future.

Brandon Gerleman 31:49

I appreciate it. Thanks for having me on.

Tim Ulbrich 31:51

Before we wrap up today’s episode of The Your Financial Pharmacist Podcast. I want to again thank our sponsor, the American Pharmacist Association. APHA, is every pharmacist ally advocating on your behalf for better working conditions, fair PBM practices and more opportunities for pharmacists to provide care. Make sure to join a bolder APHA to gain premier access to financial educational resources and to receive discounts on YFP products and services. You can join APHA at a 25% discount by visiting pharmacist.com/join and using the coupon code YFP. Again, that’s pharmacist.com/join using the coupon code YFP.

Tim Ulbrich 32:33

As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment. Furthermore, the information contained in our archived newsletters, blog posts and podcasts is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analyzes expressed herein are solely those of Your Financial Pharmacist, unless otherwise noted, and constitute judgments as of the dates published. Such information may contain forward looking statements which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer. Thank you again for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

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YFP 331: How One Couple Paid Off $208k of Student Loans

Posted on October 26, 2023October 24, 2023 by Tim U

On this episode, Jackie Boyle, PharmD, MBA and Paul Boyle share their journey paying off $208k of student loans.

Episode Summary

Debt can be an overwhelming weight on one’s shoulders, but imagine paying off an astounding $208,000 of it! This week on the podcast, we are joined by the inspirational duo, Jackie and Paul Boyle. They recount their journey from being neck-deep in student loans to paying them off entirely. This episode delves into their personal and collective strategies, their highs and lows, the financial compromises made, and how they kept the momentum to reach the finish line. From Paul’s decision to be a stay-at-home dad to Jackie’s reflections on missed opportunities with the PSLF program, their experiences provide invaluable insights for anyone navigating their own debt repayment process. We also dive into the emotional and financial challenges they encountered, especially when transitioning to a single-income household. Yet, their story isn’t just about the hurdles; it’s brimming with actionable takeaways and advice for those on similar paths. As Paul and Jackie demonstrate, with determination, strategic financial planning, and mutual support, even the heftiest of student loans can be overcome. So whether you’re struggling with student loans, seeking motivation, or just curious about the Boyles’ debt-free journey, this episode is a must-listen. Join us and discover how you too can rewrite your financial story!

About Today’s Guest

Jackie Boyle is a pharmacy educator by day and coaches pharmacists and pharmacies in a part-time capacity. She received her Doctor of Pharmacy from Northeast Ohio Medical University in 2012, MBA from University of Findlay in 2016, and Master and Bachelor degrees from THE Ohio State University (O-H!) She is highly involved in professional organizations including ASHP and AACP, and also loves spending time with her husband and two daughters, Gianna and Giulia. In her free time, she loves spinning, yoga, and enjoying a warm cup of coffee.

Paul Boyle is a Client Service Associate out of the Cleveland, Ohio area where he has had a diverse career of over 20 years, mostly taking care of customers and clients in various fields of service ranging from manufacturing to professional baseball. He received a Bachelor’s degree in Sport Management from The University of Akron in 2020, while taking time away from the workforce to raise his children. Paul spends most of his free time with his wife, Jackie, and two daughters, Gianna and Giulia. An avid Cleveland sports fan, musician and aspiring podcaster. When not supporting his local teams he likes to enjoy the occasional motorcycle ride, which is another longtime passion.

Key Points From the Episode

Get to know Jackie and Paul, and their student loan debt repayment journey.
The shared decision for Paul to be a stay-at-home dad and finish his degree.
A reminder that you can make mistakes and still achieve your debt repayment goals.
The extensive student loan debt that Paul inherited when he married Jackie.
Having a baby and becoming a single-income household.
How the emotional weight of student loans shifted throughout their debt journey.
Why Paul always maintained confidence in their plan and abilities.
Jackie’s income-based debt repayment strategy during her residency.
Her biggest regret: not using the PSLF program.
The challenge of staying motivated during an aggressive repayment journey.
How Jackie and Paul maintained momentum.
The value of budgeting and breaking repayment down into smaller goals.
Why everyone’s debt repayment journey is different.
Finding the right balance between debt repayment and investing in the future.
How to assess your priorities and allocate your finances.
Using your side hustle to pay for additional expenses.
Refinancing your student loans and taking advantage of lower interest rates.
Advice for new graduates as interest on student loans returns after the pandemic freeze.
What’s next for Jackie and Paul now that they have their student loans behind them.

Episode Highlights

“We ended up paying off earlier than I anticipated due to some choices we’ve made. So, yes, it’s very exciting to be on this journey. That said, I know we definitely made mistakes as well.” — Jackie Boyle [0:05:27]

“I never thought inheriting this much debt comes with the territory of a relationship. So that was all brand new.” — Paul Boyle [0:07:57]

“I was so engulfed in residency life that, honestly, [repaying my debt] took a back burner. I should have been doing things way differently during that time.” — Jackie Boyle [0:09:30]

“If you look at that big number, you could be paralyzed by it. But if you look at those smaller numbers, it’s like, ‘okay, over the course of the next three months, I can achieve this goal, and I know how I’m going to achieve it.’” — Jackie Boyle [0:12:49]

“We never felt strapped or that we had to eat ramen for the next couple [of] years to achieve this. That made things better, and that’s motivating in its own [right]. You could see, ‘Hey, we’re doing great.’ We could keep this up as we’re going.” — Paul Boyle [0:15:52]

“Educate yourself. Find a mentor or a financial planner to work with. Get a budget in line. Those basic tools can be really helpful in giving you the motivation to realize that you can do this with a better understanding of your own personal situation and what’s possible.” — Jackie Boyle [0:26:26]

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[00:00:00] TU: Hey, everybody. Tim Ulbrich here, and thank you for listening to the YFP Podcast, where each week we strive to inspire and encourage you on your path towards achieving financial freedom.

This week, I welcome Jackie and Paul Boyle as they share their journey of paying off $208,000 of student loans. We discussed the motivations behind their debt-free journey, how they balanced debt repayment with other financial goals, including investing and buying a home, lessons they learned along the way, strategies they employed to get on the same page, and advice that they have for those that are navigating loan repayment.

Okay, let’s hear a brief message from YFP team member, Justin Woods, and then we’ll hit play on Jackie and Paul Boyle’s debt-free story.

[00:00:40] JW: Hey, Your Financial Pharmacist community. This is Justin Woods here, Director of Business Development at YFP. You may be one of the 13,000 pharmacists that have already signed up for YFP Money Matters, which is our weekly newsletter. But if you’re not, what are you waiting for? I want to invite you to subscribe. We send financial tips, recommendations, the latest podcast episode and money resources, all specifically for pharmacists. It all comes straight to your inbox every Friday morning. So visit yourfinancialpharmacist.com/newsletter, or click the link in the show notes to subscribe today. Again, that’s yourfinancialpharmacist.com/newsletter. See you there.

[INTERVIEW]

[00:01:25] TU: Jackie and Paul, welcome to the show.

[00:01:27] JB: Hello.

[00:01:28] PB: Hey, Tim.

[00:01:29] TU: Well, this is a real treat for me. Many of your listeners may not know. Paul, you are a member of the YFP team, and so we’ve had the opportunity to work with one another here over the last several months. We’re incredibly grateful to have you as a part of the team.

Jackie, you and I have known each other. It’s got to be well over a decade, I think, at this point. I used to be on faculty at NEOMED way back when, and you started there as a student and then a resident. Then we were colleagues. You’re continuing to do great work there, and we’ll talk more about that here in a moment.

So this is a treat to be able to have both of you on as friends, as well as to share with our community your debt-free story. So congratulations to both of you and excited to dig into a little bit of what went behind that, how much debt you paid off, what were the motivations, what worked, what didn’t work, and what lies ahead for you guys now that you’ve got this big milestone achieved.

Paul, let’s start with you. Tell us a little bit more about your background, your career, and the work that you’re doing now.

[00:02:26] PB: Yes. So like you mentioned, I am part of the YFP team now as a client service associate. Love my job. Love the people I work with. It’s great to be a part of this community. But before that, my last paid job was with a company called Lincoln Electric, and I was a warranty service rep there in my last position. So still kind of helping customers out in that realm. But I chose to – well, we as a family made a decision when we had our first daughter that we wanted one of us to stay at home.

So me being the lesser income earner and with this topic, it’s student debt, we decided that my wife was going to continue to work and that I was going to be a stay-at-home dad. I used that time to go back to school, finish my degree in sports management and, yes, never looked back. Since then enjoyed the time with my kids. Being a stay-at-home dad was probably the best job that I’ve ever had so.

[00:03:23] TU: That’s awesome. Jackie, I just scratched the surface on my mention of your training at NEOMED and your residency and your faculty role. But tell us more about your pharmacy journey. What led you into the profession, including the work that you’re doing now?

[00:03:36] JB: Oh, thank you, Tim. This is such an exciting thing to be on your podcast, Tim. My relationship has gone on for so many years and so many different capacities. So I’m just so excited to be talking with you here today. My background is a bit of a mix of ambulatory care practice and education. So I started out my career in practice-based faculty roles and a few different settings in ambulatory care and then actually took a full-time position at the college at Northeast Ohio Medical University here in 2019. So I’ve been here for the past four years.

Around 2017, though, I started getting a little bit of an entrepreneurial itch. Of course, as Tim is one of my greatest mentors, I started talking with him about ideas for part-time work and actually got connected to an awesome entrepreneur, Alex Barker, who was starting a career coaching company at the time and have been career and business coaching pharmacists now for about six years, which plays into our story as well. It’s just been a ton of fun.

So, yes, a little bit of a few different things. I love being a jack of all trades and kind of exploring what’s out there in pharmacy. So, yes, this journey has been a long one, but I hope that we could share some of our mistakes, some of our wins, maybe inspire a few people along the way.

[00:04:59] TU: So, Jackie, let’s start with the juicy details around the student loans. How much did you end up paying off between the two of you when it was all said and done?

[00:05:09] JB: Yes. I think it was about $208,000. As the CFO of our family, I was keenly keeping an eye on our balances as they went down over time. It’s awesome to think back now how much we started with and where we ended up. We ended up paying off earlier than I anticipated due to some choices we’ve made. So, yes, it’s very exciting to be on this journey. That said, I know we definitely made mistakes as well, and I wish – for example, like PSLF. I probably could have taken advantage of that, but I didn’t even know that was a thing. So I’m here to say that you can make mistakes and still achieve the goal eventually as well.

[00:05:53] TU: Yes. That’s such a good reminder, Jackie. I think there’s so much pressure around this decision. We have the opportunity to talk with pharmacy students, new grads on a regular basis. We talk about the importance of really understanding these loan repayment options and getting that decision that’s best for your personal situation. I think that can feel weighty at times, right? Because it can have big implications, whether it’s a PSLF strategy or another strategy.

But, also, what you shared, I think, is such an important reminder is that mistakes are inevitable part of the financial plan. It’s going to happen. They happen on the regular and giving ourselves some grace and learning from those mistakes. We’re not always going to get it according to the textbook, and that’s okay, right? That’s part of this journey is to learn as well.

Paul, I want to start with you but really a question for both of you. As you think about your journey and the student loans, did your feelings around the student loans change over time? Some people we talk with, when I say give me the 0 to 10 student loan pain scale, where zero is the – no. They are what they are. They’re going to take care of themselves. Ten is the house is on fire, right? No right or wrong answer, but everyone is different on that journey. I’m just curious. Like for you, did that change at all along your journey, right? As you guys grew in terms of a family and your careers, tell us more about the emotions and feelings around the student loan debt.

[00:07:21] PB: Yes, absolutely. It’s intimidating for me at the beginning because when Jackie and I met, she had just graduated. So she went into residency. As everybody knows out there, residency pay is not quite the same as full pharmacist pay. But I was working full-time at the time, too. But just realizing like the massive amount of that compared to mine, I think what Jackie – I don’t know how much mine was at the time. I only had a couple thousand left to pay off on mine, and we paid it off first.

But kind of we got engaged, and I was like okay. I never thought like inheriting this much debt like comes with the territory of a relationship. So that was all kind of brand new.

[00:08:04] JB: I came with a lot of baggage.

[00:08:06] PB: Yes. It’s not bad baggage, but it’s just something that you never thought you had to plan for, right? So before even like our wedding and taking on a mortgage and stuff like that, here’s this amount of debt that amounts to a house. I think I took it pretty seriously, but I don’t think I felt like it was a pain point quite yet because, again, we were both working full-time. We figured, okay, we could come up with a plan to handle this.

But as it progressed and as I left work and we became a single-income household, it kind of went up there to like a seven or an eight maybe, just because of that weight like of all that debt, and like will we get there, and then we started a family and added expenses and stuff. So I wouldn’t say I lost sleep over it because I had kind of confidence in especially Jackie as our CFO and her earning potential that we could kind of navigate it.

[00:09:03] JB: Yes. I think, for me, I was in denial for the first two years. So during residency, I did income-based repayment, which meant that my monthly payments were zero. But the interest was accumulating rapidly, as you all know. So those first two years, I should have been at a seven or eight. But I was at like a zero to one because I’m like, “Oh, this is not – it’s not a problem right now. I don’t need to be paying attention to it.” I was so engulfed in residency life that, honestly, it took a back burner. I should have been doing things way differently during that time.

Like Paul said, during like the year of our engagement and then leading up to marriage and our first child, that’s when it became more of like a house on fire seven or eight-plus for me. I was so determined to start attacking this thing. Once I realized that I should have been doing things way differently, and I had already made a few big mistakes with not going to the PSLF program. So, yes, definitely changed for me over time and perhaps that denial factor didn’t help us for the first two years.

[00:10:07] PB: It was kind of out of sight, out of mind type of thing. We had, like I said, paid off mine, and we’re like, “Oh, hey. That’s a great feeling.” So we kind of did in our minds know, hey, with us, with the DINK lifestyle, right? Like we can kind of tackle some of these other debts that we had, and I knew Jackie wasn’t a fan of debt to begin with. So we had a couple small wins there. But still, like I wasn’t thinking about the big one quite yet.

[00:10:37] TU: Jackie, remind me. Year of residency completed was what?

[00:10:42] JB: So two years and it was done in 2014.

[00:10:45] TU: 2014. Okay. So when we think about that journey, 2014, obviously, you mentioned the income-based repayment. Paul, you mentioned your loan. But 2014 to 2023, that’s a period of time where you’re waiting through this. You’ve got a young family. Other expenses are creeping up. Many of our listeners can relate to this feeling. Momentum can be very hard to sustain for a long period of time, right? We had a pharmacist on recently that paid off a little over $345,000 of debt in five years. Very, very aggressive repayment journey. I asked her the same question I’m going to ask you, which is when you think about paying off over $200,000 of debt over a sustained period of time, it’s hard to keep the motivation and the momentum going.

For you, Jackie, let’s start with you. For the two of you, for your family, like how were you able to keep that momentum and motivation going? What was the why that was fueling you guys as you were trying to really make sure you persisted through this over that period of time?

[00:11:47] JB: Well, before starting to dive into financial topics, our one session about this topic, student loans, was the last day of our P4 year. We had an hour-and-a-half session about what our debt was, our repayment options. Again, it was just so overwhelming at that time that it got shoved back away. Once we got oriented towards like what our life goals were and that we wanted to not only gain financial freedom but set up our kids for success, be able to do things like giving, pay off things as quickly as possible, then I think breaking it down into smaller goals was the only way that it felt achievable.

I actually started writing down small goals every morning in the increments of like $5,000 to say, okay, if I can get the loan balance under this, like I’ve achieved another goal. As achievement-oriented person, like that felt really good to do. It might sound silly, but it also made the overall goal feel manageable because if you look at that big number, you could be paralyzed by it. But if you look at those smaller numbers, it’s like, okay, over the course of the next three months, I can achieve this goal, and I know how I’m going to achieve it.

I think the other helpful thing we started doing once we got married was to start budgeting and just to even have a handle around what are our finances, what our expenses, how much money do we have left over at the end of the month that’s not left with a purpose, and starting to really allocate like, okay, where are all of our dollars going. Where does this extra money contribute to the financial plan or not?

Thankfully, with all the resources that your team has developed, Tim, and all the education you were providing, we were able to start learning about different options, different ideas, how we can start tackling it.

[00:13:37] TU: A couple things I heard there which are really good. You mentioned, obviously, the budget being an important part for the two of you. I suggest if you are like most couples, right? Budgeting is a process that takes time to make sure that you’re in alignment with the bigger vision and the goals. But such an important part of, hey, this is the shared vision that we have for our financial plan. I think that was really key.

The other thing you mentioned which I thought is really important is breaking it down into smaller goals, right? So $208,000, that’s big. It’s scary. It’s overwhelming. We talk about the same thing when it comes to saving for retirement 20, 30, 40 years in the future. If you punch numbers in the calculator that show you’re going to have to save two, three, four, five million dollars, whoa, like what do I need to do? What does that actually mean today, right?

So that $5,000 milestone, these goals that are along the way can really help with making it not only realistic but also providing some of the momentum along the way of, hey, we accomplish that. Let’s take a moment to pause, stop, celebrate. Maybe there’s even something that’s planned in there. Maybe there’s not. But just to realize that, yes, this is going to take some time. But we are making progress towards this journey.

Paul, what about for you? Anything else here to add as it relates to the motivation and the momentum?

[00:14:51] PB: Yes. Everything that Jackie said was great. The small wins. I was not the one who was looking at the number quite a lot because she is the bill payer for us. So I would check in every once in a while and be like, “Where are we at,” and kind of provide emotional support throughout that part of the journey because I never wanted her to feel like – and, again, as the person who kind of inherited this debt with her, like, well, it’s not her fault or anything like that. That I want to feel like it was hers. It was ours together. Yes. But seeing those numbers kind of go down.

It was nice throughout the whole process, at least for me, to realize, okay, we have a budget. It’s not a very serious budget. We’re not always letting that hang over our heads like, “Oh, we’re out somewhere doing this. Is this in the budget or not?” We never really had that pop up for us. So throughout this whole time, reaching many milestones, while also kind of living the life that we wanted to at that time, we never felt strapped or that we had to eat ramen for the next couple years to achieve this. That made things better, and that’s motivating in its own. Well, you could see, hey, we’re doing great. We could kind of keep this up as we’re going, right?

[00:16:07] TU: Yes. I’m really glad you mention that, Paul, because I think that’s a good segue into everyone’s journey is different, right? So there’s a spectrum of how you can tackle these loans. You could be very aggressive. It could even be more aggressive, right? Someone could pay off $208,000 of debt in three, four, five years. Maybe in that case they say, “Hey, debt is the only thing I’m focused on. I’m not buying a home. I’m not investing. I’m not saving. I’m not doing other things.” We could debate like what are the pros, what are the cons of that approach.

There’s the other end of the spectrum. You can take federal loans out 25 years, right? It could be a longer period of time. For some people, that is the pathway they choose, whether it’s a forgiveness pathway or not, so that their monthly payment is as low as possible, and they’re able to allocate dollars towards other parts of the financial plan. It sounds like for the two of you, it was somewhat in the middle, right? It was a fairly short timeline. That’s a large chunk of money in a 9, 10-year period.

But, Paul, to your point, it sounds like, hey, there was also still the life that you were living, and there was some sacrifice, obviously. Otherwise, you wouldn’t have gotten to this point in time. But you were able to do some other things that you wanted to do, whether that be buy a home, whether that be investing, saving for the future, going on vacation, investing in experiences as a family. If I heard you right, Paul, it really felt like you were able to do both of those at once. Is that fair?

[00:17:30] PB: Yes, absolutely. I think it never reached the point at any moment for me like where we would have to make any kind of major lifestyle change or change up what we were doing throughout the whole process.

[00:17:42] TU: Jackie, and this is one of the most common questions I get from new grads is should I pay off the debt or should I invest in the future. Then you add on top of that a home purchase is often a common thing, very challenging right now with what’s happening with home prices and interest rates. I think there’s this or mentality. Should I do this? Or should I do that? Or should I do this? Typically, as is the case in your journey, it’s more of an and often. So tell us about your feelings surrounding the aggressiveness or the length of time for the debt repayment.

[00:18:15] JB: Yes. I think to your point, Tim, like the and and trying to make some financial compromises could help you set up your situation to be what you want it to be. So for example, like we got approved for a home loan of like $445,000 when we were looking at houses. Paul and I were like, “Wow, that’s a lot of money.” Then looking at homes at that time in 2014, the market was a bit different for houses. The houses that were at that value, we’re like, “We don’t need a home that’s $445,000. We can look for homes maybe around half that level and still get a really nice place to live and grow our family and everything.”

So we ended up finding our house. Our purchase price was 225. So that alone was huge savings, compromising with we wanted discretionary funds to be able to go out and do things. Just we love like going out to eat, and hanging out with friends and family, and spending a little bit of money on things for vacation. That’s really important for us to have experiences with our family as well. So I think it’s talking with your partner. Or if you don’t have a partner, like thinking for yourself and your priorities in your life and where you want to allocate your finances.

I think, for me, because I was so interested in like still getting this paid off quickly on a single income for most of the time, honestly, was to think of other outside-of-the-box ways to be able to make those extra payments happen. So picking up that side hustle of coaching, which, honestly, doesn’t feel like a job to me. It’s really fun. But all of the extra income we earn from that went towards typically our student loans.

There are things we could have done differently with that as well with contract work and taxes and tax planning. There’s still so much that I have to learn that, thankfully, again, the YFP team is going to be helping us with. But thinking of how can you increase that income dollar for yourself and your family to work more aggressively if you want to or if you’re motivated by that as well.

[00:20:32] TU: Yes I’m. glad you mentioned the extra income, right? We see that often where people are going through a debt repayment journey, and it will be a side hustle, extra shifts, extra income maybe for a long period of time, maybe for a short period of time. But that can really be a boost to, wow, we feel like we’re making some more progress, and maybe this is now a 9 or 8 or 7-year instead of a 10, 11, 12-year. Sometimes, the extra 100 or 200 bucks or 300 bucks, whatever the dollar amount is, may not seem significant. But we tend to forget the momentum that that can provide behaviorally, as well as a part of the plan.

I just love what you guys shared about for you, for the two of you, for your family, you decided on that this was best, right? This approach of, hey, we’re going to pay off the debt. It’s pretty big payments. But we’re also going to find this balance of living our life. There’s no right or wrong answer here, and I think it’s so easy to fall into the trap of, hey, what’s the right way to do this.

There’s a mathematical quote right answer, but we don’t live our lives according to just mathematically correct answers, right? So we’ve got to run the math, true. But we also have to think about what does it mean to live a rich life, and how do we find the balance between these two things? That’s true not only for debt repayment, but that’s true for all parts of the financial plan.

[00:21:46] PB: If I could add to that, for me, kind of the extra money, the side hustle type of thing, we’ve always kind of thought of our income kind of separating those things. So before I left work, in my job, we had a bonus structure that we had a pretty hefty bonus that came at the end of the year. So what I found a lot of people running into trouble is that they relied on that bonus to pay for their regular everyday every year budget. For me, you take that mentality. Okay, here’s my salary. That’s my salary for the year. Let’s pretend that the bonus doesn’t exist, right?

The same thing with side hustle money, then when that becomes extra like, okay, that’s all of our goal money, right? It’s stuff to – like we paid for our wedding from my bonus. So any of those extra things that we know they’re going to cost a little bit extra more, that’s where kind of that side hustle, the extra income goes straight to that stuff.

[00:22:41] JB: One other thing I wanted to mention here was that we refinanced our loan twice throughout the journey. So that savings on interest rate declined, which I know that interest rates are not great right now. But when we refinanced, well, I basically just kept checking every two years or so to see, okay, are there better interest rates available. Can we decrease that if possible? Because over time, that interest just adds up. Oh, there’s nothing that could make you more fired up than extra interest on your student loan. That was something that was also a great change to the process.

[00:23:19] PB: Yes. Her last refinance. Sorry, Tim. Her last refinance was a big motivator, at least for me, because when she said, “Hey, look how much we knocked off,” and we looked at like the saving that we got through there, and I’m like, “Holy cow.” It was a significant amount. We’ve always kind of –

[00:23:35] JB: I think it was $33,000.

[00:23:37] PB: Yes. It was crazy. So that was a big, big win, again, extra motivation to say, “Hey, we’re on the way. We’re going to do this.” Yes. Because I’m a big fan of paying off higher interest stuff first and kind of – she hates debt no matter what, so I always try to have that conversation like, “Well, if it’s a low, like we got 0.9 on our car right now. It’s like, hey, being ultra-aggressive may not be the best way, but we like to kick it out. But, yes, I mean, seeing lower interest rates is huge.

[00:24:08] TU: Yes. Hopefully, we see those interest rates come back down. Right now, it’s – especially for those that only have federal loans, that’s probably the best place to be for most people, just because of some of the benefits that come with federal loans. But I’m guessing your first refinance was way before the pandemic. Is that correct?

[00:24:24] JB: Oh, yes. Yes.

[00:24:25] TU: Okay. So you already kind of had pulled yourself out of that where you weren’t negatively impacted in any significant way through the freeze because that decision was already made. Then at that point, it was really about, hey, how can we get the best interest rate that we can. It sounds like that led to some significant savings.

At the time of this recording, we’re at the time period where student loan interest is turning back on. Payments are going to start back up after three and a half years, right? Dating back to March of 2020. I do really feel for the graduates [inaudible 00:24:59] classes that really haven’t yet had to make student loan payments, and this is going to be a somewhat of an abrupt transition. I’m hearing a lot of things like, “Tim, I’m overwhelmed. I’m confused. I’m frustrated. I’m anxious.” Not just about the student loans but also because of things we’ve already talked about. “I want to buy a home. I’ve got other goals I want to achieve. The six-figure income just isn’t really going to go as far as I thought it had.”

I’m just curious to hear from both of you. Jackie, let’s start with you. As you look back on your own journey and things that you’ve either said, “Hey, we did this really well, or maybe these are some things that we’ve done differently,” what advice would you have for these new graduates coming out?

[00:25:40] JB: Oh, so many things. I wish I would have done differently. Just get your budget in line first. I think knowing where you are spending and where you can cut back on expenses and even getting a wrap around that is really helpful and can maybe dismantle some of the doubts that you have about the fact that you can do this, I think. No, I didn’t get – I have no in incentive to say this. But like working with a financial planner like the team at YFP and like the resources that you all have, just even on your website, to check out.

I remember looking at the student loan calculator and the change in interest rate and just playing around with the tools that are on there on your website. Just educate yourself. Find a mentor or a financial planner to work with. Get a budget in line. Those basic tools can be really helpful in giving you the motivation to realize that you can do this with a better understanding of your own personal situation and what’s possible.

[00:26:43] TU: Paul, how about for you?

[00:26:45] PB: Yes. I would add, for anybody who graduated kind of during the pause, you haven’t had to experience like any of your payments kicking in yet. Having a – just budgeted in there, whether you’re paying it or not, right? Kind of figure out what method is best for you. Obviously, tons of research and I have an inside look at this stuff now as far as all the repayment plans. I mean, we’re kind of on fire with it right now. There are so many different ways.

I love seeing how we can save people money because, again, we talk about our experience with, hey, we probably could have done student loan forgiveness. Find every option that’s available to you. Then don’t let it cripple you. Like I said, we lived a comfortable life on a single income; starting new family, buying a new house, getting married, getting married through residency. Just the busyness through that part of your life, there’s ways to do it. Yes. I just – stay motivated. Don’t be intimidated by that big number is kind of the best advice that I could give.

[00:27:48] TU: Yes. I think it goes back to full circle. When you were talking earlier about the budget and breaking it down to smaller goals, making this number mean something today is such an important part and until you work the budget to know what capacity is or isn’t there and how this big rock is going to influence everything else you’re doing. We tend to live in that mental state of frustration. I’m confused. I’m overwhelmed.

I often say, hey, when we put it all on paper, and, Paul, you’ve seen some of the behind the scenes of this, and you look at all the analyses, and we nerd out in the spreadsheet, we may not like the numbers. Nor will they change from this month to the next month. But the peace of mind that comes from knowing we’ve looked at these numbers, knowing what our options are, and knowing what the monthly payment will be. All right. Now, we can work on a plan, right? That is so important to understand. Otherwise, it’s a hope. It’s a wish. It’s a dream. It’s a guess, and that leads to frustration, right? We’re talking here about student loans, but that’s true with all parts of the financial plan.

Let me ask you guys this. This is a huge milestone, a huge milestone. But it is one of many milestones that you’re going to accomplish on your financial journey. I think that for the pharmacists that are listening that are earlier in their career that are feeling some of the stress and the weight of their own student loans, they’re like, “Man, I just can’t wait until I get to that finish line, right?” That finish line where Jackie and Paul are. It’s a great accomplishment, but it’s not the finish line. You guys are just getting warmed up.

So my question here is what’s next for you. Now that we’ve got the student loans behind us, when you fast forward and say, “Hey, five years from now, September 2028, like what does success look like for the Boyle family? Now that we’ve moved this big rock out of the way, we can start looking towards other parts of the plan.” Paul, let’s start with you.

[00:29:34] PB: Yes. I’d say getting our retirement on track, that’s kind of top of mind. We still have our mortgage as far as debt, and we still have one car payment. But we’re going to knock out our car here pretty soon, and that’s going to be another win that gives us like, “Hey, we only have a mortgage.” That we don’t necessarily – you don’t need to pay that off as quick as you would think so. Just with that freedom, it’s like, “Holy cow, what are we going to do with this extra income?” I’m working again. That’s extra income.

So, yes, I think saving for retirement, making sure that that is lined up and then maybe some home projects. I don’t know. Maybe I get something recreational or fun for me as a short-term goal if Jackie lets me. But we really don’t splurge on a lot of things and we haven’t for the past 10 years. So maybe it’s discussing do we have any kind of bigger fun things that we want to do within the next five years, and then look at the time beyond that, and make sure that us and our children kind of are set up for a comfortable life, our vision of what a comfortable life is.

[00:30:42] JB: Oh, yes. I think to add, figuring out – I have so many questions about like investing in 529s or educational funds. We don’t really know what to do with that piece yet. We know we want to set up our kids for success for the future and whatever that looks like for them. I’ve always had dreams of like having a vacation home and somewhere we can go or rent out or like collaborate with friends or family on to have a place to make memories.

Then I think the last piece is like giving back and determining where we can contribute to our community and just pay it forward in that direction as well. So, yes, we’re really excited. We just started working with the planning team at YFP. Yes. It’s been so enlightening so far. We’ve only had one meeting and I’ve just – I’m like in awe of how much we’ve learned in one short hour. So I’m sure it’s just the beginning of an awesome journey and lots of great things on the horizon.

[00:31:41] TU: Well, this has been fantastic. Again, congratulations to the two of you. I am super excited to follow your journey and see where things are going. As I mentioned, I think you’re just getting warmed up. This is a huge, huge accomplishment, one that is certainly worth celebrating but lots of exciting times to come ahead. So, Jackie, Paul, thank you so much for taking time to join the podcast. I appreciate it.

[00:32:01] JB: Thank you.

[00:32:02] PB: Thank you so much, Tim.

[END OF INTERVIEW]

[00:32:04] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archived newsletters, blog posts, and podcasts is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analyses expressed herein are solely those of Your Financial Pharmacist, unless otherwise noted, and constitute judgments as of the dates published. Such information may contain forward-looking statements that are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.

Thank you, again, for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 321: Navigating Financial Conversations with Aging Parents

Posted on August 17, 2023August 15, 2023 by Tim U

Award-winning journalist and author Cameron Huddleston joins the YFP Podcast to talk about navigating financial conversations with aging parents.

About Today’s Guest

Cameron Huddleston is an author, speaker and award-winning journalist with 20 years of experience writing about personal finance. Her work has appeared in Forbes, Kiplinger’s Personal Finance, Chicago Tribune, MSN, Yahoo and many more print and online publications. She is a mom of three awesome kids and was a caregiver for her own mom, who had Alzheimer’s disease. SHe is the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances.

Episode Summary

Money talk isn’t always easy to initiate, but in some cases it’s essential. Today, we are joined by award-winning journalist and author of Mom and Dad, We Need to Talk, Cameron Huddleston, to discuss the often-overlooked topic of navigating financial conversations and decisions with aging parents. Cameron shares key insights into why these discussions are crucial, how to approach them with love and respect, and practical strategies to initiate meaningful dialogues. We discover the importance of estate planning documents, ways to involve siblings harmoniously, and the significance of long-term care planning to ensure a secure future for both parents and their adult children. Tune in to gain valuable advice and actionable steps to foster open, productive conversations that empower families to address financial matters and caregiving needs with confidence and compassion.

Key Points From the Episode

Introducing award-winning journalist and author, Cameron Huddleston.
Insight into her book Mom and Dad, We Need to Talk.
The importance of talking to aging parents about their finances and long-term care planning.
Key fears preventing people from having these conversations.
Strategies to initiate conversations with parents about their finances.
Why it’s important to involve siblings in these discussions.
The basics you need to cover in these conversations.
Cameron offers listeners a free In Case of Emergency (ICE) Organizer.
What to discuss with regard to long-term care planning.
The emotional toll of being an unpaid family caregiver.

Episode Highlights

“The benefit of having these conversations sooner rather than later is that you can avoid some of the emotional reactions that can crop up.” — @CHLebedinsky [0:08:34]

“If you wait until [your aging parents] are no longer mentally able to make decisions on their own, then they’re not going to be able to sign the document and you have to go through the court process of becoming their conservator.” — @CHLebedinsky [0:15:18]

“It’s a good idea, when talking to your siblings, to talk a little bit about what roles each of you is willing to play in your parents’ financial lives as they age.” — @CHLebedinsky [0:21:00]

“More than half of adults 65 and older will need long-term care at some point.” — @CHLebedinsky [0:25:46]

“If you make a plan, you have more options available to you. If you wait until that emergency — you can’t get long-term care insurance once you already need it.” — @CHLebedinsky [0:28:37]

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[0:00:00.8] TU: Hey everybody, Tim Ulbrich here, and thank you for listening to The YFP Podcast, where each week, we strive to inspire and encourage you on your path towards achieving financial freedom.

This week, I welcome back onto the show, Cameron Huddleston. Cameron is an experienced award-winning journalist and author of Mom and Dad, We Need to Talk: How to Have Essential Conversations with Your Parents about Their Finances. We talk through why it is important to have these conversations with your parents, how to start the conversations, and what to do if your parents are reluctant to talk.

Before we jump into my interview with Cameron, let’s hear a brief message from YFP team member, Justin Woods.

[YFP MESSAGE]

[0:00:37.5] JW: Hey, Your Financial Pharmacist community, it’s Justin Woods, director of business development at YFP. I’m curious, have you taken a pulse on your financial health lately? It’s so easy to get swept away by the day-to-day of careers, family, and life in general but now is a great time to hit the brakes and check in to see how financially fit you are. Are you heading in the right direction to meet your financial goals?

Is your retirement planning on track? Do you have adequate insurance in place? We created a five-minute financial fitness test so that you can learn about the areas of your financial plan that you may need to work on, maybe where you’re crushing it, and resources that could help you along the way. So head on over to yourfinancialpharmacist.com/fitness, to see how your financial health is tracking.

Again, that’s yourfinancialpharmacist.com/fitness or click the link in the show notes below.

[INTERVIEW]

[0:01:31.3] TU: Cameron, welcome back to the show.

[0:01:33.0] CH: Thanks so much for having me.

[0:01:35.1] TU: I’m so glad to have you back and today, we’re going to be doing a deep dive into a difficult, yet very important topic and that is navigating financial conversations and decisions with aging parents, and Cameron, for our listeners that didn’t previously catch you on the YFP Podcast several years back, tell us why this topic is so important to you, such as it has led to you to speak and write extensively on this topic, including the work that you did in your book, Mom and Dad, We Need to Talk.

[0:02:05.5] CH: You know, it’s funny, I never set out to be an expert on having family money conversations, yet, I have found myself in this position largely because of personal experience. I have been a personal finance journalist for more than 20 years and when I was 35 and my mom was 65, she was diagnosed with Alzheimer’s disease and I found myself having to get involved with her care and get involved with her finances.

But we had never had any detailed conversations about her finances and you know, looking back, I think, “Oh gosh, I should have known better, I was a financial journalist, I should have had these conversations with my mom” but it never crossed my mind that I needed to talk to my mom about her finances and so then, I found myself having to play detective to get the details I needed about her finances as she was forgetting those details herself.

So that experience prompted me to write a book, to help people realize the importance of having these conversations before there’s an emergency. You know also, my dad’s story played a role on this too. He died at 61 without a will and he was in a second marriage and he was an attorney. He should have known better. He should have had estate planning documents and it came as a huge shock to me that he didn’t.

You know a lot of times, we think our parents are on top of things or they might tell us that they are but are they really? And then you start to ask questions and you find out that they’re not as prepared as you think they are and so I just really want people to realize that these conversations are so important because there will come a point when you have to get involved with your parent’s finances, either if they need care or help as they get older or when they pass away and you have to manage what is left behind.

[0:04:04.1] TU: Yeah, Cameron, your story really resonates with me and I suspect that our audience as well. One of the things I shared with you before we hit record is that we’re seeing more and more folks in our community that are challenged, you know, with being stuck in terms of having, obviously, their own financial situation, perhaps young or growing family that is presenting financial needs and now there’s this component with aging and elderly parents that you know, may not only be difficult conversations but also there may be really real financial impact on their own situation as well.

And so I think you know, your story and what you mentioned about you know, your father being an attorney, somebody that knows the importance of these documents and not having them in place really speaks to just how emotional and challenging this topic can be and that’s really where I want to start, right? Because I think that for those that have aging adult parents, very common situation where the fears that surface when we consider talking about money with our parents.

I know it’s something that I have felt myself and so much so that in the book that you wrote, Mom and Dad, We Need to Talk, you referenced a study from a care.com survey, showing that more than half of parents would rather have the sex talk with their kids than talk to their parents about money and aging issues. What are some of the fears that are holding people back from having these crucial conversations, right? After all, we know that they’re essential ones to have.

[0:05:32.1] CH: One of the big ones is that we are afraid if we have these conversations, our parents might think we’re being greedy, especially if you want to ask about those estate planning documents. We’re afraid if I ask Mom and Dad if they have a will or a trust, they’re going to think that I’m just trying to find out what I’m going to get when they die and so it’s a logical fear for sure.

You know, we might be afraid that our parents are thinking we’re being nosey because most people are pretty tight-lipped about their finances. We might be afraid that our parents are going to get angry with us and it’s going to create a rift in our relationship. I think though if you approach these conversations out of love and respect.

[0:06:18.0] TU: Yes.

[0:06:19.7] CH: Then you’re not going to make your parents angry, they might be a little surprised initially that you want to address this topic but if you let them know that you are looking out for their best interest, that you want to know what their wishes are so that you can honor those wishes, they hopefully will recognize the value in having this conversation and they’re not going to think that you’re just trying to figure out how much money you’re going to get when they die, especially as long as you don’t start the conversation that way.

You know, you don’t want to say, “Hey, do you have a will? I want to know what I’m getting.” Of course, they’re going to think you’re being greedy at that point but if you let them know, “Hey, I want to know what your wishes are so I can honor them” then you’re opening the door to having a productive conversation.

[0:07:16.5] TU: Yeah. You know, what really stands out to me there, Cameron, is honor, love, and respect, three words that you use there and I think if that’s the backdrop and the intention of a conversation, it doesn’t mean it’s going to be an easy conversation, right? We still may stumble through it and it’s challenging but I think the outcome of that is likely to be much more fruitful, fit in the spirit of that.

And as I shared with you previously, that is something I have struggled with personally, is that fear and sometimes it’s a story I tell myself but that fear that out of initiating these conversations, there could be a perception of greed, and while I know my heart is not in that place, you know, that is a concern, and I think some of the strategies that you talk about in the book to initiating these conversations.

I think, really, coming at it from a perspective of honoring their wishes as you said, and to be fair, there’s also a personal responsibility that I feel to my family and our financial plan, why I think both of our parents have done a phenomenal job in planning, you know, depending on long-term care, a topic we’ll talk about here in a little bit, and the expenses that may or may not come that could be a financial burden and implication on our family, on our personal finances and so I think there is a responsibility to lean into this conversation from that end as well.

[0:08:32.0] CH: I was going to point out that the benefit of having these conversations sooner rather than later is that you can avoid some of the emotional reactions that can crop up if you wait until an emergency. If you were talking to your parents about their estate planning, their retirement planning, their long-term care planning while they’re still relatively young and healthy, you’re talking about “what if” scenarios.

“What if this were to happen, what do you want?” As supposed to waiting until there has been that diagnosis of dementia or a cancer diagnosis or whatever. At that point, you are in a crisis, and trying to sort out the financial side of things is going to be a lot more difficult because you’re not talking about a “what if” scenario. You’re talking about, “Hey, you probably need my help now we don’t have a plan, I need to get involved” and that makes it a lot more challenging to have constructive conversations at that point.

[0:09:41.1] TU: Yeah, that’s such a great point that you bring up because one of the traps, and you talk about this in the book, is assuming that a conversation can wait, right? And I think that’s another reason where, you know, having the conversation as early as possible before those situations are live and real and you’re in the moment, I think can really help with managing that conversation in a much more effective and productive way.

Cameron, one of the things I was thinking about is I find this cycle very interesting, right? When I think about the generational patterns that you often see with how we handle our money, right? So I talk with many pharmacists that grew up in a household where money is a taboo topic, right? So there is from the parent to the child relationship where maybe they’re not given the financial vocabulary or it’s a common place to have an open conversation about money and then you see this pattern repeat in reverse, child to parent, later in life or maybe they’re not comfortable initiating that conversation.

And so I think for our listeners, I share that as hopefully some encouragement to break some of these cycles, right? That might be running generationally as it relates to how we handle our money but it’s so important. One of the implications we see often when we’re working through the financial plan is, it’s not just the exes and O’s, it’s not just the objectives. So much of this topic is emotional.

So much of this topic comes back to how were we raised, what are the money scripts and stories that we grew up with and what are the implications of that on our financial plan.

[0:11:06.0] CH: I agree 100% and I think it’s a really good idea before you start having these conversations to spend a little time thinking about why your parents might be reluctant to have the conversation if you think that they will be reluctant. If money has been a topic that your family has addressed, you know since you were little, then you have a lot less story about and I don’t mean to say that you have a lot to worry about if it wasn’t a topic of conversation in your family but I do think it’s a good idea to think, “Why might my parents be reluctant?”

“Are they embarrassed about their financial situation, do they simply believe that money is a taboo topic? Do they not like the idea of talking about aging in death?” If you can pinpoint the reason they might be reluctant, then you avoid approaching the conversation from that angle. So let’s say, Mom and Dad don’t like to think about death, they never talk about it. So you don’t start by asking them about what sort of estate planning they’ve done.

You choose a different approach, you know, “How’s retirement going for you or what are your plans for retirement?” Something along those lines so that you don’t start the conversation off on the wrong foot because you don’t want them to shut down immediately.

[0:12:24.2] TU: Yeah, such a good point and that’s one of the things that I love about the book is I feel like you give very tangible, practical strategies such as conversation starters, right? Because I think that in theory, a lot of people hear this topic and they’re like, “Yes, I know I need to have these difficult financial conversations with my parents and I can understand why but how do I actually engage?” right?

“How do I begin some of these conversations?” and you give very tangible examples all throughout the book. So I highly encourage our listeners to check out that resource, if they haven’t already done so. One of the things Cameron, you mentioned in the book, is when talking with reluctant parents, how important it is to start with the basics, the must-haves, and then to work from there and then to build upon that.

What do you mean by the basics? What are you referencing there?

[0:13:14.7] CH: I think it is so important to find out if your parents have estate planning documents and I know some people think, “Oh, an estate plan, that’s something only wealthy people do. My parents don’t have a lot of money, I’m sure they haven’t bothered to draft a will or a trust” but all adults, all adults need estate planning documents. Of course, a will or a trust is important to spell out who gets what when you die because, without one, state law is going to determine who gets what and I don’t think a lot of people realize this.

So many adults think, “Well, my family can just sort it out” and that is the worst, the absolute worst approach you can take because you might think everyone gets along but as soon as money comes into play, the dynamics change so quickly. I mean, I’ve heard this from estate planning attorneys, I’ve learned this from personal experience and so, you need to make sure your parents have a will or a trust that spells out who gets what when they die and you need to know where that document is.

Again, you know, say, “Look, we just need to know what your wishes are so that we can honor them and honestly, so we can avoid any fighting down the road.” I think, more important though than that will is a financial power of attorney. The best type to get is a general durable power of attorney, this lets you name someone to make financial decisions and transactions for you if you can’t. General means you’re giving someone broad powers.

Durable means that that power remains in effect once you are no longer mentally competent and so this allows you to plan for dementia and capacity. If it’s not durable, it’s really not going to do you any good and so your parents need to have named someone as their agent under power of attorney. This has to be in place while they are still mentally competent because if you wait until there is a stroke if you wait until they are no longer mentally able to make decisions on their own, then they’re not going to be able to sign the document and you have to go through the core process of becoming their conservator.

It can be very lengthy, it can be very expensive, you know, and I was lucky with my mother because she had some estate planning documents but when she was showing signs of memory loss, I was like, “Let’s go in and get them updated” and fortunately, she was still competent enough to sign those documents. So don’t assume if your parents are starting to show some signs of memory loss that it’s too late.

Meet with an attorney, don’t, please don’t use those inexpensive or no-cost forms that you can get online. If there’s any document that you meet with an attorney to draft, it is that power of attorney document because if you run into issues down the road, you can always get that attorney on the phone with the financial institution to say, “Yes, this document is legitimate, the person was competent when he or she signed it” and so meet with an attorney or make sure your parents meet with an attorney.

But they also need to have a medical power of attorney to name someone to make medical decisions for them if they can’t and they need an advanced directive. It’s also called a living will to spell out what sort of end-of-life medical care they do or do not want. These documents are so important, parents need to have them and you need to know where they are because it’s not going to do you or your parents any good if you can’t find them. Start there, then get more information.

You know, how do they pay their bills, this is part of the emergency planning. If Mom and Dad end up in the hospital and you want to make sure the bills are getting paid while they were in the hospital, you need to know how they’re paid. Are they set up to be paid automatically or are they writing checks? If they’re writing checks, someone else is going to have to be able to sign those checks for them, at least temporarily while they’re in the hospital.

You know and then keep digging, what are their sources of income? You don’t have to know exactly how much money they have but you need to know, are there retirement savings, are they relying solely on social security benefits, is there a pension, you know, is there debt? Again, you don’t need to know down to the last penny how much debt they owe but are they still paying for a mortgage?

Are they still paying for student loans that they took out for you or for themselves or for the grandkids? Whatever, just you know, a general idea is a good start. Of course, the more information you can gather the better because if you end up in a situation like I did where you have to manage your parents’ finances, then you’re going to have to know everything.

[0:17:57.2] TU: So much there to take away and as you talk about in the book, those more advanced types of things, right? You talked about how you’re paying your bills, sources of income, bank accounts, outstanding debts, you know what I think about as like the day-to-day execution, right? You put yourself in the shoes of your parents and you’re responsible for managing that as you mentioned in your own situation, what are the things that you would need to know.

But the importance of starting with the basics and when they are ready to share and when the time is right to be able to come back to those topics. So I think the progression here is a really important thing to highlight and I would just encourage our listeners, you know, Cameron, as you were talking through the estate planning documents, a reminder not only to our listeners for their aging parents but also for them.

Many in our community have a young family, they may not have taken this important step and I think because there often could be fear and emotions around this as we see with many of our financial planning clients this isn’t the most exciting part of the financial plan to be thinking about but it’s so important to consider and it’s something that we’re also not just going to set once and forget but we need to come back throughout time and make sure that those documents are updated.

We talked about the estate planning part of financial planning in great detail in episode 222, we’ll link to that episode in the show notes. I do want to ask you about the sibling component, right? One of the things you just shared is how money can become challenging when you think about the family dynamics, right? That we often hear those horror stories and so that got me thinking as you’re sharing, “Wow, how can even my brother and I prevent some of that?”

How can we get on the same page? And for us, it’s only him and I and I would expect this becomes more challenging with more siblings, more personalities, you know, more brothers and sisters-in-law and so forth, they’re involved. What advice would you have to our listeners that are trying to think about, “How can I best navigate this relationship with my siblings so we are collectively on the same page in these conversations with our parents?

[0:19:54.2] CH: I’m so glad you brought this up because sometimes the sibling dynamic can be more complicated than having the conversations with your parents and so I encourage people to actually talk to their siblings before talking to mom and dad so that they can get on the same page. If you have siblings and you decided to go to mom and dad and have these conversations and you don’t include them, then that can create resentment.

It can create suspicion, “Oh, you talked to Mom and Dad about their finances, what were you trying to do? Get and go with them so that you get all their money when they die?” You don’t want that to happen and so call a family meeting with your siblings, whether it’s in person, whether it’s on Facetime, you know, better to talk but if you have to send a series of emails back and forth that’s certainly better than nothing.

But you want to let your siblings know that you think it would be a good idea to talk to your parents. You want to figure out who is going to initiate the conversation. Is it one of you, is it all of you, when is going to be the best time to have this conversation? And I also think it’s a good idea when talking to your siblings to talk a little bit about what roles each of you is willing to play in your parents’ financial lives as they age.

Now, at the end of the day, it’s going to be up to your parents to make those decisions who is going to be the executor of their estate or their trustee, who is going to be the financial power of attorney, the medical power of attorney but if you have had these conversations beforehand with your siblings and then you sit down with your parents and they can see that you’re on the same page, it can make it easier for the parents to open up.

Because often times, parents are reluctant to have these conversations because they don’t want their kids to fight. I would caution though, if you have a sibling who is likely to sabotage the conversation for whatever reason, maybe the sibling doesn’t get along with you, doesn’t get along with your parents, there are mental health issues, you know, financial, legal problems, then you might not want to include that sibling in the conversation.

You know, if you have siblings who simply don’t want to participate, it’s okay, don’t force them but I would encourage you to just keep them in the loop because you never know down the road if you do get involved with your parent’s finances, they might want to start getting involved and if you’ve kept them onto the loop all along, then you’re going to run into some issues there and so try to keep an open dialogue as much as possible with your siblings.

[0:22:29.5] TU: Cameron, in the book one of the things you reference is the “in case of emergency” organizer and I think some of what you previously covered probably falls in here as well but tell us more about what is the purpose of this organizer, what should be in this, and how our listeners could get started with this for their own family or with their parents.

[0:22:47.2] CH: So I actually created this downloadable file, you can find it on my website at cameronhuddleston.com, it’s free. You can use that or you can create your own. It’s essentially a way to get organized, to help your parents get organized. You can print it out and give it to them because sometimes parents are more willing to write down information rather than tell you directly. This allows them to maintain control over the information.

So if they don’t want to talk, just say, “Hey look, I get it. This is a sensitive subject. Do me a favor though, here is this “in case of emergency” organizer, fill it out. Fill it out as best as you can, put it in some place safe, and tell me when and how to access it.” I mean, it asks for all sorts of information, social security number, Medicare number, health insurance number, military ID if you served in the military.

All of your financial accounts, your usernames, your passwords, locations of lockbox keys and deeds, and marriage certificates. I mean, I try to cover everything and so it is a great way to get organized. It is a great way to get your parents organized. You know, if you are in a relationship yourself, I mean, this is information that your spouse or partner is going to need if something happens to you.

So you know, like I said, if your parents don’t want to tell you information, you might have some luck getting them to write it down.

[0:24:17.1] TU: Yeah, I really like that strategy and approach and I think also you know, to having a third-party resource can be really helpful. So you know if I, for example, I’m talking to my mom and dad. If I send them a checklist of, “Hey, these are the things I’m asking for, these are the questions that I have” you know, to your point about being intentional and strategic and how we have this conversation in an honoring and loving and respectful way.

I think sometimes the third-party resource expert such as yourself, having that come from them can be certainly a powerful approach and strategy to consider as well. Cameron, I want to wrap up our time by talking about long-term care planning. In a recent version of your newsletter that you sent out, you talk about the financial and emotional toll that can come from being an unpaid family caregiver, something I’ve seen in my own family.

With my parents caring for their parents and I suspect this is a conversation that many avoid but has massive implications. So talk us through why this conversation is so important and the strategies that folks can use to open up the dialogue around long-term care planning.

[0:25:25.0] CH: It is so important to talk to your parents about what sort of long-term care planning they have done because I can tell you most likely they haven’t done any planning. Only 11% of adults have long-term care insurance, which will help pay for the cost of long-term care services but the thing is, more than half of adults, 65 and older will need long-term care at some point, you know?

This is assistance with what are called the activities of daily living, bathing, getting dressed, eating, getting in and out of bed, long-term care can be provided in your home obviously by family members or paid help you bring in. It can be provided in an assisted living facility, adult daycare centers, memory care facilities, and skilled nursing and so it doesn’t necessarily mean a nursing home, which is a lot of people assume, you know?

Their parents might say, “Don’t ever put me in a home, don’t put me in a nursing home” and I encourage people if your parents say that to you to not make that promise, to not say, “I promise.” I think the better strategy is to say, “You know, I understand that the idea of going into a nursing home seems really scary. Let’s talk about what sort of care you would want if you need care. Where do you want to receive care?”

Most likely, they’re going to say in their home because that’s where most people want to receive care and then you say, “Okay, well, if you want to stay in your home, let’s think about whether your home is set up for you to age and place. You know, Mom and Dad, you got a two-story house. Your bedroom is on the second floor. You have a bathtub that you have to step into to take a shower.”

“Maybe it would be a good idea to start thinking about downsizing to a smaller home with a bedroom on the first floor and an accessible shower with a smaller yard or no yard, a house that requires less maintenance. If we can start putting these plans in place now, then you can stay in your home” and you know, “Do you have a way to pay for someone to come in and provide care? I want to be able to help you in any way possible, however, I have a job.”

“I have kids, I might not be able to take time off my job or to quit my job to provide care for you. You know, I’m going to do whatever I can to help you but let’s make sure there’s a way to pay for professional care” and maybe Dad says, “Well, you know mom is going to take care of me.” “Dad, can Mom take care of you if you’re both in your 80s? Can she get you up and down the stairs? Can she get you in and out of bed?”

“Can mom really do this? Does she have the physical and emotional strength to do it?” People don’t think about these things because honestly, it’s depressing. It is but if you make a plan, you have more options available to you. If you wait until that emergency again, you know, you can’t get long-term care insurance once you already need it. That has to be in place, you have to buy long-term care insurance.

You can get it in your 50s, your early 60s as long as you’re still healthy. You know maybe, they don’t like the idea of paying for long-term care insurance because they might never need it. There are now these hybrid life insurance products that include a long-term care benefit, maybe they have whole life insurance that has accrued cash value and so they can tap into that cash value of their life insurance.

Maybe it’s a reverse mortgage, maybe they have enough retirement savings to cover the cost of care but you want to talk to your parents about what sort of resources they have and it is really important to discuss who is going to provide that care and to gently make them aware that they might not be able to rely solely on family to provide that care.

[0:29:44.5] TU: Yeah and as you articulate it so well, I mean, there’s all of these financial considerations but there’s the emotional consideration inside of this as well and I think that’s the piece that often gets overlooked, especially with family caregivers. You know, I’ve seen this right now of my grandmother where certainly, the family’s involved but it’s gotten to a point where she needs daily around-the-clock professional help with the home.

And while that’s been very beneficial and in fact, if it’s very, very expensive and it also provides a different dynamic, you know? In terms of obviously, you got different people coming into a home, it’s not the family that’s taking care of her at certain times, and so there’s just so much to consider here and I think more and more reason to have these open conversations as soon as possible, right?

Before the event comes to be and this becomes even more challenging and more emotional and I think as with many things in life, right? The path to peace of mind and the path to feeling good about the outcome and solution is through the difficult conversations and so I think just huge credit to you Cameron and the work that you’re doing, not only through your book but through your newsletter, your blog, and the impact that you’re having on such an important topic.

I’m so grateful for your time and the contributions that you have made to our community, which I know is going to be inspiring in their own journeys to make sure that they’re taking action on this topic. As we wrap up, Cameron, what is the best place in addition to folks getting a copy of the book, Mom and Dad, We Need to Talk, what’s the best place for our listeners to go to connect with you and to follow your work?

[0:31:13.1] CH: My website is cameronhuddleston.com and so as I mentioned, I’ve got that free downloadable “in case of emergency” organizer. I’ve got a couple of other resources there. Another good place is to follow me on Instagram. If you’re on Instagram, it’s Cameron K. Huddleston. I share a lot of tips on financial caregiving, having these family money conversations.

[0:31:38.5] TU: Great, we will link to both of those in the show notes and thank you again so much for taking time to come on the show.

[0:31:44.9] CH: Of course, thanks for having me.

[DISCLAIMER]

[0:31:46.7] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and it is not intended to provide and should not be relied on for investment or any other advice. Information on the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archived newsletters, blog post, and podcast is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analyses expressed herein are solely those of Your Financial Pharmacist unless otherwise noted and constitute judgments as of the dates published. Such information may contain forward-looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.

Thank you again for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 320: How One Pharmacist Paid Off $345,000 in 5 Years

Posted on August 10, 2023August 9, 2023 by Tim U

Stacie Moltzan Loescher, PharmD paid off $345 000 of student loan debt in just five years and she joins us today to share her incredible journey to becoming debt free!

About Today’s Guest

Dr. Stacie Moltzan Loescher is a Pharmacist currently working in central processing for Albertsons Companies and is currently appointed as the Assistant Grand Vice President for Collegiate Affairs of the Phi Delta Chi Professional Pharmacy Fraternity. She attended Rosalind Franklin University of Medicine and Science where she received her Doctor of Pharmacy degree in 2017. During her career as a pharmacist, she has worked as Staff Pharmacist and Pharmacy Manager at multiple retailers throughout Wisconsin, Indiana, and Illinois. She has also served in multiple regional and national positions at Phi Delta Chi. She enjoys traveling, fishing, and fitness.

Episode Summary

Stacie Moltzan Loescher, PharmD paid off $345 000 of student loan debt in just five years and she joins us today to share her incredible journey to becoming debt-free! Tuning in, you’ll hear about the hard work and clear vision that led Stacie to the financial freedom she enjoys today. We unpack her process to aggressively repaying her loans, from working throughout pharmacy school and undergrad to paying off a car alongside her student debt. Stacie touches on how her childhood experiences impacted her approach to financial management as an adult, and reveals how she could sustain the momentum necessary to pay off the debt, before sharing powerful advice for graduates as they choose how to approach their own student debt. In closing, Stacie offers a glimpse into her future plans which are focused on building a net worth through side hustles and real estate investment.

Key Points From the Episode

An introduction to Stacie Moltzan Loescher and her story of becoming debt-free.
Her introduction to pharmacy growing up with two sisters with intensive medical needs.
Stacie’s career in pharmacy starting at CVS in Wisconsin.
A summary of her process to becoming 100% debt-free.
How Stacie celebrated her achievement by traveling!
Working throughout pharmacy school and undergrad.
What motivated her to choose an aggressive repayment strategy.
The desire for financial freedom behind her efforts to clear all debt.
How Stacie’s childhood experiences impacted her approach to paying off debt as an adult.
The car note she paid off in two years while erasing her student debt.
Sustaining the momentum in the midst of an aggressive payment plan.
Advice for graduates as they choose how to approach their student debt: start planning now!
What’s next for Stacie: building a net worth, considering real estate, investing, and picking up a PRN position to earn extra income.

Episode Highlights

“I’m just not a fan of paying interest. I’d rather be earning interest.” — Stacie Moltzan Loescher [0:11:48]

“I wanted to be able to have financial freedom sooner in my life. I feel like if I was paying off for ten years, I would have been strapped down to those loans for ten years, living paycheck to paycheck to try to pay them off.” — Stacie Moltzan Loescher [0:13:14]

“I didn’t like seeing debt behind my name because it’s not something that I heard growing up or in my family. My parents didn’t have debt.” — Stacie Moltzan Loescher [0:15:49]

“Don’t wait to approach your student debt. Start planning now, if you haven’t already.” — Stacie Moltzan Loescher [0:23:06]

“Start looking at what’s going to be the best loan repayment strategy for you, because there are different options that are better for different people.” — Stacie Moltzan Loescher [0:23:12]

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[0:00:00] TU: Hey everybody, Tim Ulbrich here. Thank you for listening to the YFP Podcast where each week, we strive to inspire and encourage you on your path towards achieving financial freedom. This week I welcome Stacie Moltzan Loescher onto the show to talk about her debt-free journey, both how and why she paid off $345,000 of student loans in just five years. We discussed her motivations behind aggressively paying off the student loans, how she was able to do it, strategies she employed to keep her momentum and motivation and lessons that she learned along the way. Before we jump into this inspiring interview, let’s hear a brief message from YFP team member Justin Woods.

[MESSAGE]

[0:00:38] JW: Hey, Your Financial Pharmacist community. This is Justin Woods here, Director of Business Development at YFP. You may be one of the 13,000 pharmacists that have already signed up for YFP Money Matters, which is our weekly newsletter. But if you’re not, what are you waiting for? I want to invite you to subscribe. We send financial tips, recommendations, the latest podcast episode, and money resources, all specifically for pharmacists. It all comes straight to your inbox every Friday morning, so visit yourfinancialpharmacist.com/newsletter or click the link in the show notes to subscribe today. Again, that’s yourfinancialpharmacist.com/newsletter. See you there.

[EPISODE]

[0:01:23] TU: Stacie, welcome to the show.

[0:01:26] SML: Thanks for having me.

[0:01:28] TU: Before we jump into your incredible debt-free story and your journey, let’s start with your career journey into the professional pharmacy. Where did you go to school? What led you into the profession, and tell us about the work that you’re doing right now?

[0:01:41] SML: Sure, so I’ll start with what led me into the profession. I grew up with two disabled sisters, one older, one younger. They were both born with cleft palates. My older sister growing up, she couldn’t swallow pills. She still can’t swallow them to this day. That meant that we would often find ourselves at the pharmacy. They would have capsules ready and she couldn’t take them. We had to work with the pharmacist to get it changed to like a liquid form or sometimes the pharmacist might say like, “Oh, it can be open, and put into apple sauce.” Or what have you. But we often found ourselves working closely with the pharmacist to get it resolved.

Sometimes there would be insurance issues with that, because they don’t like to cover suspensions for 14-year-olds. We’ve had to work together with the pharmacist to get that resolved, whether it was a PA changing it, or taking it and crushing it up. Then putting it in liquid or apple sauce. Then my little sister, she was born when I was eight years old and she was born with what you call an esophageal atresia, which for those that don’t know what that is, that is where your stomach and esophagus isn’t fully connected.

After she was born, she was life-lighted to children’s hospitals. We had to undergo a surgery and that meant that she would be fed through a G-tube for the next 10 to 12 years of her life. She had to have everything liquid form and a lot of times with like amoxicillin, that’s like a different viscosity than a PediaSure is. We would have to dilute that before we could give it to her through the tube or else it would, the amoxicillin would like get stuck and clogged in the tubing.

If we gave her too much volume, she would like get sick, have side effects. We often found ourselves crushing medicine, too. Then suspending it in water to give it through the tube. Then she also had asthma. We were doing nebulizer treatments several times a day. Those experiences growing up really sparked my interest in pharmacy. Then I went to North Dakota State to study pre-pharmacy after I graduated high school. Then from there, I found myself in North Chicago, Illinois, at Rosalind Franklin University and after I graduated pharmacy school, I took a job at CVS as a pharmacist in Wisconsin.

[0:04:32] TU: Okay.

[0:04:33] SML: From there, I worked at different retailers, grocery chain retailers, big box retailers throughout Illinois, Indiana, Wisconsin. Up until recently, I took a job with a grocery chain pharmacy as a central processing pharmacist. I’ve been there about four months now. In that role, we check prescriptions for their grocery stores in about 30 different states.

[0:05:02] TU: Oh, wow.

[0:05:03] SML: That’s where I’m at today.

[0:05:04] TU: Awesome. Well, thank you for sharing your career journey and the motivation behind getting into the profession. I’m going to read to kick off you sharing your debt-free story and for us to dive into this a layer deeper. I’m going to read a post that you shared on LinkedIn that really caught my attention and let me to reach out to you where you said.

“Last month, I made my last student loan payment, and my loan balance hit zero. After five years of working as many hours as my body would allow and living like a resident, I paid off $345,000, $235,000 of that was principal. My goal was aggressive as a first-generation and a single-income household to have it paid off in five years. I paid it off in five years, three months. I could have paid it off by the end of 2022 to meet my goal, but it actually made more sense to just pay the minimum payment over the past year since high yield savings account was currently earning more interest than I was paying an interest on my student loans. Cheers to being 100% debt-free now.”

Wow, just incredible Stacie. When I think about that dollar amount, we’ll talk here in a moment about some of the motivation and the why behind this journey. My first question for you is, what have you done to celebrate this accomplishment? Have you done anything yet to celebrate this accomplishment?

[0:06:20] SML: Not really. I believe I was like went out with like friends, Friday night. They were just like, “Congrats.” But I did a lot of travel over the last year since I wasn’t as aggressive as paying off in my last year. I did a lot of travel that last year, so I was celebrating that the end was near.

[0:06:43] TU: Yeah. Yeah. I asked that Stacie, because I think for myself included many pharmacists, we can be so focused on getting to the goal that really taking the time to celebrate. I’m glad to hear you did that with friends and also through some travel. It’s such an important part of the financial journey, right? This is a huge accomplishment, but you are just getting warmed up, right, with achieving many financial goals throughout your career. I think especially if you’re a goal-oriented, achievement-focused person, really taking time to slow down and treasure these moments along the way is really, really important.

My first question for you, Stacie. If we look at the median debt load today of pharmacy graduates, it’s hovering around 160 to $170,000. 345 is a big number, right? 235 in principle, so we can see the balance there that’s an interest, but even that 235 is substantially above the median debt load of a graduate. Why the higher balance? What do you attribute to that?

[0:07:40] SML: Yeah. Before I went to school, I was always looking into going to schools with lower tuition, and almost all that is from grad school. I only took out 5,500 in undergrad. I didn’t even need that, that was just because it was subsidized.

[0:07:58] TU: Yeah.

[0:07:58] SML: So, I wasn’t going to get any interest while I was in school. It’s a very low interest rate, so I took that undergrad loan, just off the advice that my aunt had given me that, “You need to take that, because it’s going to be the lowest interest rate you will ever get in your life.” She’s like, “Just put it in a savings account.” That’s what I did. That’s part of my emergency fund today, actually.

Then, so I didn’t get into those – my like preferred school with the lower tuition rates. What I ended up getting into was a school that I was very interested in, and that’s why I had applied, but it was a private school, Rosalind Franklin University. They do have a little bit higher tuition expense since they’re private, but pharmacy was my dream. I always knew that’s what I wanted to do. I went with it. I figured that I will figure out the student loans and pay them off as quickly as I can when I’m done.

[0:08:59] TU: Was the 235 all federal or was some of that private?

[0:09:03] SML: Everything was federal. I took out like the max amount that they would let you do, which was like $35,000 for tuition and then plus like another $20,000 on top of that for living expense, which really isn’t a whole lot to live off of. I did work like throughout all of pharmacy school and undergrad. Then, so that was all federal that was like just about the maximum amount they would let you take out. I did return some while I was in school, because they would let you borrow and then if I didn’t use it, if I worked and I made the money, I would actually return it. I could have borrowed. I think about 20,000 more would have been the max. Then that all capitalized, of course, after I graduated. I believe that capitalized to be $267,000.

[0:09:53] TU: Here. Here. New grads. Yes. Yes, super important to understand that. Yeah. When I look at that number, Stacie, 345, rough math. You paid off 345 over five years. It’s just shy of $70,000 a year. I think of a typical pharmacist income after taxes, maybe taking home 7-ish thousand dollars per month. Obviously, depends on tax situation. A whole host of other factors in terms of where their paycheck may be going.

Nonetheless, that is a massive percentage of ones take on pay, right? $70,000 a year on average. So, my question is I certainly have talked with a handful of pharmacists that have gone through an aggressive repayment period. Many others may look at this and say, “Hey, I want to take this over a longer time period, less restrictive on the monthly budget.” Allowing additional funds to achieve other goals, other financial goals or other life goals, right, that people have. You mentioned travel as one example. Why did you decide on an aggressive repayment strategy versus a longer, slower payoff that perhaps would have been less restrictive? What was the motivation for you?

[0:11:04] SML: I did not want to have those loans sit there for that long. If the longer you have them, the more you’re paying an interest, which I saw that like right away with my first student loan payment. My first student loan payment was almost entirely interest with no principal amount taken off, except for maybe $70 a principal. When I saw that, I was like, “This is going to take me forever. I need to put money towards the principal.” Any extra money I can to bring that principal balance down. I’m paying less interest, because the longer it takes to pay it off, the more interest you’re going to pay. I’m just not a fan of paying interest. I’d rather be earning interest.

[0:11:54] TU: Let me dig a layer deeper there. That’s what I’m getting to. Right? No right or wrong answer here. I always, I talk to pharmacist about student loans. One of the questions I like to ask them is, “Hey, where are you at on the student loan debt pain scale?” Right? Ten is the house is on fire. I want these gone yesterday. I would say you’re probably closer to that end of the spectrum, based on what I know thus far. Zero is like, ah, they are what they are. They’ll, they’ll take care of themselves eventually. That’s what I’m really trying to understand. No right or wrong answer, but when you say I hate interest, I want what money working for me. Take us a layer deeper, like what is behind that? Is it simply the stress and the weight of that over your shoulders and having the mental clarity to see forward without it? Tell us more.

[0:12:38] SML: I just, I like for my money to do stuff in the most, like the way where I save the most money, like I don’t want to spend an extra $20,000 towards interest, because I have to do an extra five years of payoff. I’d rather be done early, have that $20,000 and then be able to invest that or travel with that or do what I want with that. I wanted to be able to have financial freedom sooner in my life. I feel like if I was paying off for 10 years, I would have been strapped down to those loans for 10 years, living paycheck to paycheck to try to pay them off. Whereas if I figured if I worked really hard and I paid this off soon, then that 3000 plus a month that I’m putting towards student loans that I can then use that money how I want. If I want to invest it, if I want to travel.

[0:13:41] TU: Yeah.

[0:13:41] SML: I don’t have – I don’t need to be paying student loans. I can just use it how I want.

[0:13:47] TU: Yeah. That makes sense. I see the passion coming out there for you as you share that as well. One of the things I’m curious about Stacie, so often when we look at the financial decisions we make as adults, we can see trends that tie back to childhood experiences. It may not be that we are raised in the same way that motivates a decision to make today. It could in fact be the opposite or we’re trying to move in a different direction. Sometimes it’s affirming the decisions that were made for us or the household that we grew up in around money.

As you think about this strategy of, hey, I want to get to financial freedom. I want to pay down this debt aggressively. I want this money working for me, right? I don’t want to have to worry about interests, and so in the future. I can enjoy that on other things. Is there anything you attribute looking back from how you were raised, money approach in the household that impacts here, the approach that you took with your student loans?

[0:14:41] SML: Yeah, definitely. I grew up, my parents divorced at a young age, but my mom very low income, and that’s what I lived with. I lived with my mom. She was really, really good at like budgeting. I saw that like growing up, because she had a small income to live off of and raised three kids off of, so she budgeted very well with buying groceries to making sure she was getting the right coupons, so we could have food on the table and still live and have money for everything that we needed.

My dad was very frugal with his money. He bought a house when he was like 30 years old for $16,000 cash. Never had a mortgage, bought a fixer-upper. Still lives in that house to this day. It’s like a 125-year-old home, I think now. I think him never having any debt. He never had a credit card. He never had debt. He always paid everything cash. Bought his car’s cash. Bought his home cash. I think that’s why I didn’t like seeing debt behind my name, because it’s not something that I heard growing up or in my family. My parents didn’t have debt. It was like a newer thing for me to hear that and have so much. I just wanted to get rid of it. Throughout this process, I did pay off a car note to a $20,000 car note in two years, because I just didn’t want it gone.

[0:16:13] TU: Yeah. I can certainly see the threads, as you described to those experiences back to childhood. I think that’s something I’m always encouraging my own financial plan. I encourage others to look back as well, so much. Again, as I mentioned of how we approach our financial decisions. Good, bad or indifferent, right? Often ties back to some of the childhood experiences that we had.

Stacie, I’m curious. One of the challenges with an aggressive debt repayment plan, right? Five years, averaging about $70,000 a year, is being able to sustain the momentum and the motivation, right? We can start with good intents. Hey, I want to go aggressive repayment. That’s something I hear from many pharmacy graduates, but actually being able to sustain that momentum can be very challenging. What kept you motivated? What kept you going throughout that five-year period?

[0:17:01] SML: Yeah. I guess like my career itself kept me going. With that, it helped me earn more income. I spent three years, the last three years, like as a manager. I was picking up extra shifts, working extra hours and anything that I earned over my base salary, this over the course of my repayment, I always put the extra money towards my loans. When I floated, I was actually when I like started with my last company. I was brought on as a 48-hour pharmacist. That was like a lower salary, like 72,000 a year.

Anything, and I made my budget based off of that $72,000 which included a, I put 3,000 of that toward my student loan itself, which I was required to pay 2,300. I always did put 3000 towards it. That’s what my budget was based off of. Then anything I worked over that, 48 hours in a two-week pay period, I put towards a student loan. A lot of times I was working a hundred or 120 hours a pay period. All of that, I put to the student loan.

One of the jobs I had, I was getting reimbursed for gas and for tolls. All that gas reimbursement, toll reimbursement. I put all that to student loans. As I was just picking up extra hours and helping people, which is my passion. It’s just the money was coming in where I was able to just keep putting that towards my loans. Then as a manager, I was really, really driven to meet our store goals and such. I was at a store that was challenging, that needed a lot of work. I was able to just use that as my driving force to bring my store, to help my store achieve. Then with that, I was just working extra hours and that would help with my financial.

[0:19:11] TU: Yeah. What I hear there, Stacie, is you had a very clear goal and vision for your financial plan that really fueled the hard work. The hard work, which produced the payments and the additional income was directly going towards your loans, which that momentum would then build upon itself. You said something really important there that I want to make sure we don’t overlook, which was, that’s what my budget could afford, right?

You made extra payments, but you mentioned with the $3,000, that’s a really key, important piece for those that are getting started with their student loan repayment journey, when you have so many different options to consider, especially for those that might work in a nonprofit sector, or have a loan forgiveness option, or choose an aggressive repayment and are looking at these two ends of the spectrum. How much your budget can afford is a critical number to understand to determine which loan repayment option may be best for your situation. Great wisdom there, Stacie, that you shared. I want to make sure we didn’t overlook that.

One of the most common questions I get when I present to new graduates or I talk about student loans is, should I pay down my debt or should I in invest? How do I balance these two? My stock answer is, it depends, right? It depends on a lot of factors. How do you feel about the debt? What’s your repayment plan? What is your budget afford? What’s your timeline towards retirement? How conservative or aggressive are you? There’s just so many components. I’m curious to hear from you, no right or wrong answer again. How did you reconcile this decision towards more debt payment and perhaps delaying that investing for a period of time?

[0:20:45] SML: Yeah. I was fortunate that when I did start my debt repayment, I already had an emergency fund built up when I started working when I was 14. When I was 14, I was putting half of every paycheck away into a savings account to save for college. I never, actually, used that money for any expense. It is my emergency fund today. I already had that set-in stone. Then I did actually work on the other goals while paying this off. I was always taking the employer match from my 401k.

I was always like I always have done a high deductible health insurance plan. I always put the 3,500 is like what it is today, towards my HAS. Then investing within that after I had a thousand dollars in there. I’ve also done just my own investments, just a smaller amount each month. I’ve done Acorns, like Robinhood, but I don’t do as much, because there’s more risk. At one of the jobs that I had actually, I was not eligible for an employer match until one year in. I only worked there for five months, but –

[0:22:03] TU: Okay.

[0:22:04] SML: That job, I actually did not contribute to a 401k, because I was not going to get a match. I decided to put that money towards the student loans at that time, which my plan was to do that until I hit one year with the company and then I was going to start taking the match. So that job, I didn’t contribute to a 401k, anything that would have went to a 401k went to student loans instead.

[0:22:28] TU: It makes sense, especially without having the match component there. Stacie, I’m curious to hear your advice for new grads, right? We have now three graduating classes that have yet to pay on or required to pay on their federal student loans, because of the pause dating back to the beginning of the pandemic. I’m sensing as those repayments are going to start back up, many graduates from last few years are feeling overwhelmed, they’re stressed or discouraged. There’s a lot of uncertainty. What advice would you have for graduates coming out as they look to approach their student loan debt?

[0:23:04] SML: My advice would be, don’t wait. Start planning now. If you haven’t already.

[0:23:09] TU: Amen.

[0:23:12] SML: Start looking at what’s going to be the best loan repayment strategy for you, because there is different options that are better for different people. For some people, it’s going to be doing the public service loan forgiveness. Some people that might have a house and kids and have like those extra payments that they need to make, they might have to do more of an income based, but start having that strategy and that plan now and make a budget if you don’t have one already. Have a budget, so that way you can and start like using that budget now. So that way when those student loans, you have to start repaying them, it’s not a shock and you’re like, “What am I going to do?” So, start planning now.

[0:23:55] TU: That’s great. Great advice. I think that that’s a message I’ve been trying to get out, but because we’ve had several extensions of the pause. I think there’s been – some of this feeling of, hey, when exactly are these going to come back online or will they, might there be another extension. Now that we have some clarity of when these will start back up, to your point, this is the time period, right? This is the time period to make sure that we’re understanding our options.

We’ve got clarity on the best repayment plan for one situation. To your point we begin to weave that and work that into the budget, right? Even if we’re just putting that in a savings account for now, we’re building those reps and those behaviors, so when that turns back on, we’ve accounted for it and we can move forward with the confidence knowing that we’ve already planned for that. Whether we like it or not. There’s a lot of repayment options, and strategies, and nuances.

Fortunately, the system is maybe more complicated than it needs to be, but that’s the hand that we’ve been dealt in. Really, it’s upon the shoulders of the borrower to make sure that they’re understanding those options. We’ve got lots of resources on the YFP website. If you need some help navigating that forward. Stacie, what’s next for you? Right? This is an important milestone, but you’re just at the beginning of your journey. What does success look like for you going forward?

[0:25:12] SML: At this point, I’m looking at like building a net worth, how that looks. I have like several different things in mind. I am interested in real estate. I thought about maybe like a duplex or something, living in one half, like renting out the other, investing, just different things I’ve thought about. I also am potentially looking at picking up a PRN position to earn some extra income, because the central processing job did come with a little bit of a pay cut. I’m looking to see if there’s a way, I can bring more income in different side hustles.

I definitely, want to do a side hustle, because I have a better work-life balance now, where I have the time to do more, because I can’t pick up extra shifts like I was able to do before. This is just a straight 40-hours a week. I really want to use my time to see how I can earn more income. Then decide how we’re going to use it.

[0:26:22] TU: Yeah. This is I often give the analogy of a marathon when my wife and I went through the journey of paying off our student loan debt, which wasn’t quite as large, but it was a big amount. I often had in my mind this visual where, “Hey, once we get to the end of the student loans.” Like, we’ve arrived, right? We’re at the finish line. I often say, it’s like running a marathon where when you get to the point of in this situation, an important milestone of student loan debt paid off or running a marathon. We might be at mile marker three, right? We’ve started the race. We’ve got a long way to go.

I love the vision you’re articulating, whether it’s around real estate, whether it’s around other side hustles. I can sense an intentionality that as you start to evolve other parts of your financial plan, you’ve got clarity on why you’re going to be doing that and where those funds are going to be going towards. Stacie, I greatly appreciate you taking the time to come onto the show to welcome our community into your story and your willingness to share it. I’m really looking forward to following your journey ahead.

[0:27:20] SML: My pleasure. Thanks for having me.

[OUTRO]

[0:27:23] TU: As we conclude this week’s podcast, an important reminder that the content on this show has provided you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding material should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archive, newsletters, blog posts and podcasts is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analyses expressed herein are solely those of your financial pharmacists and less otherwise noted and constitute judgments as of the dates published. Such information may contain forward-looking statements which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer. Thank you again for your support of the Your Financial Pharmacist podcast. Have a great rest of your week.

[END]

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YFP 303: How This Pharmacist Paid Off $115k in Two Years

Posted on April 13, 2023April 7, 2023 by Caitlin Boyle

Dr. Donisha Lewis talks about her debt-free journey, why and how she got involved in real estate investing, and how she and her husband got on the same page to achieve their financial goals.

About Today’s Guest

Dr. Donisha Lewis is a clinical pharmacist at an ambulatory care facility where she collaborates with providers of the Hematology/Oncology and Internal Medicine departments to create treatment plans for patients. She attended the University of Louisiana at Monroe College of Pharmacy where she received her Doctor of Pharmacy degree in 2011. During her career as a pharmacist, she has served patients in the community, inpatient, specialty, and ambulatory care settings. She is also a real estate investor alongside her husband. She enjoys traveling, spending time with family, and volunteering.

Episode Summary

This week on the YFP Podcast, YFP Co-Founder & CEO, Tim Ulbrich, PharmD, welcomes Dr. Donisha Lewis to the show to discuss her debt-free journey. During this episode, listeners will hear the how and why of Donisha’s path toward financial freedom, how she got her start in real estate investing, and how she and her husband got on the same page to tackle $115,000 in debt in just two years. Donisha shares her pharmacy story, what drew her to the pharmacy profession, and her financial picture upon graduation from pharmacy school. With plans to tackle her $99,000 in student loan debt as soon as possible, her mindset and approach to debt payoff were critical in achieving this goal. She shares practical tips and tricks from her experience in paying off a combined $115,000 between herself and her husband, and advice for recent graduates who may not have started making payments on their loans due to the student loan pause. Making sacrifices while remaining realistic, Donisha built a budget that allowed her and her husband to combine the snowball and avalanche strategies. Using her budget, she identified wasted spending and analyzed her savings to determine the amount she was comfortable contributing to the debt payment. Tim and Donisha talk about the importance of having a shared financial vision with your partner and the benefit of having varied strengths in personal finance.

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[00:00:00] TU: Hey, everybody. Tim Ulbrich here, and thank you for listening to the YFP Podcast, where each week, we strive to inspire and encourage you on your path towards achieving financial freedom.

This week, I welcome Donisha Lewis onto the show to talk about her debt-free journey, why and how she got started in real estate investing, and how she and her husband have been able to get on the same page to achieve their financial goals. If you’re interested in learning more about working one-on-one with a certified financial planner may help you achieve your financial goals. You can book a free discovery call at yfpplanning.com. The team at yfpplanning includes five certified financial planners that are serving more than 280 households in 40-plus states. YFP Planning offers fee-only, high-touch financial planning that is customized for the pharmacy professional. Whether or YFP Planning’s financial planning services are a good fit for you, know that we appreciate your support of this podcast and our mission to help pharmacists achieve financial freedom. Okay. Let’s jump in our interview with Donisha Lewis. Donisha, welcome to the show.

[0:01:02] DL: Thank you for having me.

[0:01:04] TU: Well, I am really excited for this conversation. You and I connected via LinkedIn through a mutual colleague, Dr. Jerrica Dodd. After we connected, and I learned a little bit more about your journey as eager to share your story with our listeners. So we’re going to dig into your debt-free journey, paying off the student loans. We’ll talk about some real estate investing as well. But before we get into all of that, let’s start with your career journey. Where did you go to pharmacy school and what led you into the profession?

[0:01:34] DL: Absolutely. I completed my pharmacy degree at the University of Louisiana at Monroe, back in 2011. As a child, I wanted to be a pediatrician, actually. My mom actually put me into a program, at the time, you could kind of shadow physicians. We didn’t shadow them seeing patients, but just the day in the life when they were doing their office hours. We went up to the operating room, and I saw all the tools and I just said, “You know, I have to find something else to do, because this is pretty intimidating.” I didn’t really want to perform any surgeries. I really didn’t think that I wanted to do anything that had that much patient contact as it related to doing surgery, stitches, anything like that. That really made me reconsider being a physician. So I started researching other medical professions that weren’t as hands-on, if you will. That’s when I came across pharmacy.

I actually have an uncle who’s a pharmacist too. That led me to the profession. I was still able to interact with patients, but not necessarily be as hands-on as I would have been as a physician. That’s what led me into the space.

[0:02:44] TU: I can relate to that. I went into pharmacy right out of high school and I was interested in medical professions at large. But the whole blood thing, you know, kind of scared me away. You hear that story often with pharmacists. One of the many reasons. I’m not sure that’s a great reason not to go into other ones, but it was an important one for me at that time. Tell us more.

So you graduated 2011. Coming up on your 12 years out into the profession, what have you been working on this point since graduation? I understand you’ve had experience in community practice, ambulatory care, a little bit in management as well. Give us that career journey over the last decade or so.

[0:03:22] DL: Sure. I began my career with one of the large retail pharmacies. I stayed with them for a little while. Then, during my time with them, I was able to get a PR, inpatient clinical pharmacist position, so I was doing both. From there, I was able to transition into a specialty pharmacy role, which was within a hospital practice. I like to say it was a combination of outpatient community pharmacy, as well as some inpatient clinical pharmacy. I really enjoyed that role. Now, I’m with an academic-based practice, and I’m helping them expand pharmacy services there. I am in a clinical role there, and we are expanding our services throughout the practice. We have some collaborative practice agreements in place. I’ve also started an ambulatory care clinic with the Department of Internal Medicine, and we’re launching specialty pharmacy there as well.

[0:04:16] TU: Wow. I love it. I love it. Some of our listeners, especially those that have graduated here in the last five or so years. I graduated in 2008, so we’re pretty close in that timeframe. When you and I graduated, student loans were – they were a thing, but they weren’t as big of a thing as they are today. We see lots of graduates coming out with you know, $200,000, $250,000 of student loan debt. Average right now is about 160,000. I think sometimes, when we talk about our own journeys, 10, 12, 13 years ago, people were like, “Oh, well. That was only $100,000.” It’s like context, context of what pharmacists were making at the time, as well as – that’s still a substantial amount to pay off. I think we’ve become a little bit numb to the indebtedness and the debt loads that are out there.

Let’s talk about your student loan journey. Give us the juicy details. How much did you have upon graduation, and what was your mindset at the point of graduation about how you wanted to approach the student loan debt?

[0:05:20] DL: Sure. When I graduated, I came out with right under $100,000 in student loan debt. Like 99,000 and some change is what I owed. For me, when I came out of school, we were at the end of the shortage, approaching really a saturation of pharmacist. One thing that I wanted to do was definitely be conservative in my spending because of that, but also not being comfortable with that type of debt that really led me to make decisions. Basically, like I was still a college student, related to my finances. I’m sort of grateful for that time coming out of school. It was an interesting time, because I saw a pharmacist when I started pharmacy school being offered all these incentives, and bonuses, and that stopped.

As soon as I graduated, those bonuses, and all of those incentives, they stopped. That’s a very big difference. I heard of people getting these extremely, just extreme amounts of bonuses, cars, all these things. For all of that to stop, I really wanted to be very cautious in my decision-making financially, because I really wasn’t sure what the future of pharmacy was at the time. One of the things to do with obviously, live below my means, but also reduce this debt. That was very important to me. With that large number, though, it’s intimidating.

Like you said, nowadays, 99,000 is not that much, unfortunately, for a lot of pharmacy grads. But to me, that was a lot. That was the framework, the mindset. I really did not want to have that debt looming over me like that for an extended amount of time.

[0:07:07] TU: It’s interesting to hear you share the timeframe you were in. I graduated in 2008, which was still at the time sign-on bonuses. We’re happy. I remember I made the decision to go do residency. I was going to make a whopping $31,000 salary all the while. Cars and sign-on bonuses we’re having. I remember one specific offer that was out there. It was one of the big chains that was offering a million dollars to go work in Alaska for a three-year deal.

[0:07:31] DL: Wow.

[0:07:33] TU: I remember, I mean, times changed significantly. You saw that happen, you graduate in 2011. We’re actually swinging back into some of that right now, which is an interesting discussion for another day. But you said something that I want to dig into a little bit deeper, which is, I’m not comfortable with that amount of debt, right? Whether the number was 99, or 150, or 50, I get a sense that just overall, you wanted this debt off of your shoulders. Tell us more about that, because I will talk with some people, Donisha that will say, “Hey, I’ve got $250,000 of debt.” And you’ll see a range of emotions to that debt. The number can be the same. In one instance, the house is on fire, it’s causing anxiety, it’s causing a lot of stress, and worry.

Then the other end, it might be, “Nah, it is what it is. It will kind of take care of itself over time.” Where was your motivation, your mindset around, “I want that off my shoulders”? Tell us more about why you felt that way.

[0:08:31] DL: Sure. For me, I, as a pharmacist, we have the actions to work part-time jobs, or pick up extra shifts and all of these things. Initially, I was thinking, “Oh, I can do that when I want to do extra things.” But I realized that that wasn’t very fun working all the time, so that was extra motivation to really have that time back and not feel like I had to work so hard in so much because I had this amount of debt. I felt like I couldn’t really do much else, because I owe someone else all this money. For me, personally, that’s just my belief with that, I really wasn’t comfortable making more decisions and making big purchases, and really moving my life forward the way that I wanted to, because I owe this large amount of money. It was really uncomfortable for me, but I do know, you know, like you said, other people, they’re totally comfortable with it. They’re like, “Well, hey, I’ll pay it off eventually.” But I just wasn’t okay with that, and I initially scheduled my student loans for a 10-year pay off. But even with that, I was like, “This isn’t going to work. Let’s speed this up.” So that’s what happened.

[0:09:37] TU: Yes. I would really encourage the listeners, especially those that are listening, that our students are just getting started. When it comes to the financial plan, I think what you’re highlighting so well here is there’s the objective numbers part of it, how much debt, what’s the strategy, what’s the plan. But then there’s the emotional side of it as well, which is really important. Folks often talk about how much a personal finance is behavioral. As each year goes on, I’m believing that more, and more, and more. There’s so much to be said about acknowledging the emotional side, the behavioral side of financial planning. There is no right or wrong answer. That’s I think it’s so important to communicate that, whether you are someone that looks at debt, and you have a lot of aversion to it, and it’s causing you stress, and it’s causing anxiety, like honor that. Honor that and develop a plan around that.

For folks that feel differently, making sure you’re finding a way to mitigate the risk, but just understanding having the self-awareness of where you are, emotionally in terms of viewing different parts of the plan.

[0:10:35] DL: Absolutely.

[0:10:37] TU: Donisha, I’m curious to hear your perspective. We are now approaching three years since the beginning of the pause on any payments being due for federal student loans because of the pandemic. So March 2020 was the beginning of the passage of the CARES Act, it’s been extended several times. We’ve had a freeze on payments, a freeze on interest rates. We now are coming up on class of 2023. We’ll be the fourth graduating class, and depending on what happens here, with the Supreme Court decision, and when the when the payments begin, potentially the fourth class that has not had to make payments on their student loans. I think that is a blessing, and it also presents some challenges. I’d love your perspective as someone who has gone through this journey, what would you have to say to those that are coming out, and those that are recent graduates about, “Hey, be thinking about this when these payments begin, because they will begin at some point.”

[0:11:32] DL: Absolutely. I think if you’re in the position where you are making the money that the average pharmacist makes. I would strongly consider starting to plan now, or starting to make those payments, and loan forgiveness and all of that. Those things are still in legislation. I really don’t recommend waiting for that to happen. It may very well happen. But I feel like if you’re in the six-figure zone, I don’t think the full amount will be forgiven. Even just now, thinking about your strategy, thinking about how you want to approach it, and especially if you’re someone who’s not comfortable with it, you definitely don’t want to just ignore it. There are different strategies that you can take to make sure that you aren’t – it’s completely ignoring it, but you’re still comfortable in your lifestyle. I would really do my research there and begin to plan and have a decision to take some action on that.

[0:12:30] TU: Yes. Such a good time to game plan, right? That timeline to game plan has been extended. We were saying back in 2020, use this window, come up with the plan. I think that’s had a – it’s lost its effect right over time, because it’s been extended so many times. But I love what you’re sharing there, because if payments start back up, and you’ve got a plan, great, you hit the ground running. If payments don’t start back up, but you have a plan, and you’ve just had expenses. That’s great, too, We can allocate that to different parts of the plan. I think my fear is that, especially with rising housing costs, often we have student loan borrowers, that are also first-time homebuyers, like pharmacists making a great income. But at the end of the day, there’s only so much income to go around.

When you’re looking at $200,000 of student loan debt, rising home costs, and obviously inflation. There’s been other competing expenses, I’m sure for many people as well. You start to get pinched in all different directions, and we’ve got a reset. What is that payment going to be when we come out of the pause? Look at the options. Are we doing a 10-year standard repayment? Are we doing an income-driven repayment? Are we doing a loan-forgiveness pathway? What is that monthly amount going to be based on the strategy, and then how do we work that into the budget to make sure that we’re ready?

I do think, though, that for folks that have really optimized this time period, the we have heard of situations of pharmacists that hey, I had a big student loan payment. But because that’s been on pause, I’ve been able to pay off credit card debt or I’ve been able to build up my emergency fund, or focus on another debt that was getting paid off as well. Hopefully, there’s been a lot of wins and opportunities that have come from this

[0:14:05] DL: Yes, I hope so too.

[0:14:07] TU: Let’s talk about how you were able to accomplish this. We can debate whether or not $100,000 is a lot. I think it’s a lot.

[0:14:14] DL: I do too.

[0:14:16] TU: It wasn’t just the amount, but it was the time period and the intensity. Couple years that you paid this off. I’m curious, you know, what sacrifices did you have to make to be able to allocate as much as possible towards the student loans, and then how did you keep up that momentum and the intensity of it knowing that two years, yes, it’s a short period. But when you’re in that type of intense debt repay off, that can feel like a long time. What were the sacrifices and then how did you keep the momentum?

[0:14:47] DL: Sure. I did this with my husband. Total, it was $115,000 together, between the two of us and that did include a car loan. We just included all the debt. We didn’t have credit card debt, but we did have the student loan debt and the car loan. I will be honest, in the beginning, we really didn’t know how long it was going to take us. We just knew we wanted to get more aggressive with our payoff. We use the snowball strategy. Some people don’t know what that is. You just put all your loans in order, you start with the lowest amount, and put them down in order, and you pay the first one off, and then you just roll that payment into the next payment, and you keep going.

The first thing we did, Tim, was we just looked at our budget. If you don’t have a budget, you can create one. I would say, look at the last few months of your banking statements, credit card, all that stuff, put it together, create a budget based off that. Now, the first thing you would do is, you want to see, “Am I spending more than I’m making?” If that’s the case, then you really need to, again, create some type of strategy. That’s what we did. We looked at our budget, we looked at our spending. Even though we did live below our means, I think everybody can identify areas of waste in their budget. For us, that was food.

We would go to the store, buy groceries for the week or so, get tired, go buy food out, because we didn’t want to cook. Meanwhile, those groceries, they’re no longer, you know, you can no longer eat them. They’ve gone bad. So now, we’re throwing away food and buying more food. We really identified that, and that was a big area for us that we could cut down on. So really, looking at your budget, identifying areas of waste. That’s another thing that we did. Then, we just looked at our savings to see what we were comfortable with going at the debt.

I know a popular snowball or the author of Snowball, they recommend the $1,000 for your emergency fund. That wasn’t realistic for us. I live in DC, my husband and I are both from Louisiana. If something happened, $1,000, we couldn’t even get home. We had to make that a larger number, but whatever is comfortable for you.

We did take some of our savings, and we just did the Avalanche Method, which is where you put a large amount of money towards the debt. We use that. During that time, we had just purchased our first home, which was a fixer-upper, pre-foreclosure. In that, the next year, we got a lot of tax benefits, because we did a lot of improvements. When we received that tax return, threw it at the debt, like that’s what we did. So, sometimes things like that happen. Anytime that happens, just throw it at the debt. I recommend being realistic. When I say create your budget, identify areas of waste, going back to the food example. If you’re someone that’s eating out five or six times a week, don’t just say, “Oh, I’m going cold turkey.” It’s not realistic, and you’ll probably be miserable. That’s not the goal, because then you really, probably will quit before you get to the finish line.

What I would recommend is, being realistic with your goals. If you’re eating out five times a week, maybe cut it down to one to two times a week, and also reduce the level of the restaurant. Maybe not the most expensive place, maybe like a mid-range place. You definitely don’t want to deprive yourself. For us, we also like to travel. We decided, okay, instead of maybe taking three to four trips a year, you just do one. That’s what we decided to do, so that reduced a lot of money going out as well.

Setting up some realistic expectations once you do your budget, identifying that waste. Another thing with a budget, some people don’t realize, if you get paid bi-weekly, two times out of the year, you get a third check. For us, that was a mini bonus. What we would do was really strategize with that check. Do I want to spend a portion of that to do something that I’ve kind of cut back on to pay off the debt? To pay off the debt, do I want to put the entire mini bonus toward the debt? Really like looking at different areas that you can strategize in. Another area of waste is subscriptions to the gym, to subscription services, with television or all those things. Just looking at your finances, there may be things coming out every month, $7 here, $10 there. Those things add up.

If you’re not using those things, you can cancel those subscriptions. That’s what I advise, looking at those bank accounts. That’s what we did. Identify as much waste as possible within reason. Then any type of extra money that we received via from tax return, a bonus from your job, or just that extra third check, being strategic about that, and putting it toward the debt. By doing that, we really started to change the way we viewed money during that timeframe, and we got excited about it, and we just really wanted to keep it moving, keep rolling, put more and more money toward it.

During that time, “Tim,” life was still happening. We had unexpected things come up, where we had to pivot, we had to make adjustments. But we never touch the emergency fund, we just adjusted how much we were paying on the debt. We still did it. In two years, we were not expecting that at all. So if you really are serious about it, and you set the foundation, and really make realistic goals, I think you can be successful and also run your own race. Don’t compare too much. It took us two years, but we were only responsible for ourselves financially at the time. That was another thing we knew, “Hey, we’re only responsible for ourselves right now. Let’s take this opportunity, because we don’t know what may change in the future to get this done now.” When your own race, if it takes you longer, that’s fine as long as you’re trying and you’re taking some action on that.

[0:20:48] TU: I love that. So much to unpack there. I think the theme I heard was really a mindset around the intentionality with the financial plan, and several things that you outlined, right? Making sure that you’ve got a budget that is realistic, that one is going to be able to keep the momentum so important. I think we often try to go from 0 to 60 budget. We get frustrated. It further disenfranchises us from the process overall, and it’s something as important as track back 90 days. You said a few months of looking at expenses, before we set these goals that may or may not be realistic. Let’s look at what we have been spending. Sure, we might pivot. You gave the example of eating out. But we want to pivot in a way that, yes, it’s going to free up some cash flow that allows us to achieve the goal. Whether that’s paying down student loan debt, whether it’s paying down other debt, maybe it’s saving for a home, saving for investment property. Whatever the goal is, we got to have cash flow. But just as important, if not maybe more important is the momentum to keep going.

We don’t want a system and a process that’s going to bog us down, it’s going to leave us frustrated. I think making sure that we’re finding that balance of enjoying things along the way, but also, whatever system we’re building, we feel that it’s built in a way that we’re going to be able to sustain it.

[0:22:04] DL: Absolutely.

[0:22:05] TU: I know. I’ve fallen victim too, and I think we see this a lot with people that are getting started, is they develop a beautiful system because they’re really motivated and excited. Then two months later, we’re kind of falling back into the patterns we were, because it’s so much to manage and so much to keep up with. We have a free template for folks that want to get started with the budgeting process, you can go to yourfinancialpharmacist.com/budget. We’ll link to that in the show notes, you can download that.

Then from there, you could use Excel. If you’d like to stay in Excel, you can use a bank tool, you can use mint, you can use – [inaudible 0:22:39] lots of different budgeting tools and options that are out there. Donisha, I want to dig into the we factor more, I heard you say we multiple times throughout the journey. We as in the debt, we as in the plan that we’re developing, we as in making the decisions on what was most important and what goals we’re going to achieve. There’s a lot to get on the same page with and I don’t want to take for granted how hard it can be to have a shared vision where two people are rowing in the same direction. I often have the opportunity to talk with folks, but that may not be the case. You may have one person who’s really engaged, one person who’s not engaged, or one person that grew up in a very different money household than someone else. For different reasons, they’re grown in two different directions.

It’s so hard for them to achieve the goals without first sharing the vision of being on the same page. I sense a very united we front as you were talking. Tell us more about what that looks like, give us the sneak peek into the kitchen table. How have you been able to get on the same page and keep that momentum together?

[0:23:45] DL: Absolutely. I appreciate you for acknowledging that. One thing about us, we’re blessed to go to a church that has a budget class. We took a budget class before we even got married together. That really put us on the same footing. We had the same vision and the same goals of what we wanted to achieve, but the pathways were a little different. In taking that class, we took it together, and we’ve really kind of established that foundation. The budget to me is the first step for everything. Now, once we got married and our finances were together, we really had to look at each other’s strengths. My husband is the big-picture person, I’m the day-to-day person.

When we were doing our debt payoff, I was the one looking at the budget every day and saying, “Okay, we need to slow down in this area because we’re only two weeks into the month and we’re not going to reach our budget goal if we don’t slow down.” That was my job. That’s okay. Then, what we would do is we would have meetings together where I would discuss certain things with him. He’s looking at the bigger picture, and also projecting what’s the next stage after that. That’s kind of his role. I’m the person that goes back, kind of works on the strategy, and looks at the day-to-day and the little details that he really does not want to do at all. We really show one another grace in that and really appreciate our differences, and use those differences for the benefit of the team. That’s how we do it.

[0:25:21] TU: I love that. I think just the awareness to acknowledge the different strengths to articulate that to one another, to embrace the strengths that come with those roles naturally, and then to align those so you can move forward. I love what you’re saying about the budget. I often encourage folks, “Hey, start with the vision and the dream.” Then as you work into the budget, the budget is really the roadmap for how you’re executing your goals. It’s a direct representation of what you are saying collectively is the priority or is not the priority. I think for folks that are listening, and maybe don’t feel like you’re on the same page with a vision, I would really encourage you to start there. Because I think when two people get excited about the vision, before you maybe get bogged down in the weeds of the numbers, like if we can get on the same page about the vision, awesome.

This is what financial success looks like for us as a couple or for us as our family. All right. Now, let’s develop the budget in the system that is the roadmap to achieve those goals. We said these things are most important. Are they represented? If not, why not? What can we change? What should we do differently? I think that that really helps folks get aligned. I think we often think of budgeting as restrictive.

[0:26:35] DL: Absolutely.

[0:26:36] TU: But if we reframe as, “Hey, this is the mechanism in which we’re achieving our goals. I’ll never say it’s exciting, but I think it’s a path in that direction of – and especially if we layer automation on top of that.” Okay. We’re now identifying the goals and automating the goals that we collectively said are most important. Then watch out, right? Because if you have come together on the same page to define the vision, and you’re starting to achieve that, and you both see that happening, things start to move from that forward of what else is possible.

[0:27:08] DL: Absolutely. You hit the nail on the head, especially for us, because the next move was real estate investing for us. That was something that my husband was much more on board with than I was. I’m a pharmacist. We like things to be in a nice little package. It all has to make sense. That was risky to me. I was interested, but I just really didn’t want to dive in. But once we work together to pay that debt off, and I saw the power of the teamwork for us, I just felt like, “Hey, we can do this.” Even if things go beyond what we expected, or things change, and we have to pivot, we have already done that with the loan payoff. So it really strengthened that teamwork, and I was able to get on board with the real estate investing afterward.

[0:28:01] TU: Yes, right. We’ve accomplished this as a team. Obviously, at that point, you’re working from a position of financial strength. We’ve got no debt. We’ve got a fully-funded emergency fund. We’re able to take on a little bit of risk, such that, if things go differently than as planned, it’s not going to create additional stressors. Let’s talk about the real estate. There’s lots of different types of real estate, from passive to active. The guys on the real estate investing podcast that we launched, every Saturday, David and Nate do a great job of talking about the spectrum of real estate, featuring different pharmacists that are investing in all different types.

I think that, at least for me, when I first heard about real estate investing, and really started to dig into learning more. I had a very active image in my mind of, you know, you buy a property, you hold it for the long term, you manage it, you’re fixing things, and a lot of people do that. But there are also more passive strategies, there’s fix and flips, short-term rentals, being in the bank, there’s a lot of different ways to go at it. Knowing the variety of pathways that are out there, tell us more about the pathway that you and your husband decided to go, and how you got to the decision to go down that path.

[0:29:06] DL: The first property that we purchased, it was a pre-foreclosure. It was a situation where it was in the budget that we wanted and the location was good. But the location is really what was most important to us. That’s why I got on board with something that needed renovation, because I realized if you want something that’s turnkey in this neighborhood, it’s far past your budget. I said, “Okay. We’re going to do this, and so we did.” We renovated the home, we didn’t do any structural renovations, but we did – basically got the house. We did that, that went off really well. We stayed in the home for a little while and then we sold it. When we sold it, we sold it before the pandemic when the prices just went crazy. It was before that.

But to see the amount of appreciation in that home, a light bulb went off in my head like, “This is what they’re talking about when they say, real estate can really propel you into financial independence.” From there, the plan was to continue to buy homes, renovate, and then maybe hold them for a little while, depending on what the market was looking like, and then to sell them. That was the plan. But we ended up moving into another home that was a newer build. From there, we have the home that we’re in now, we just renovated this one. We’re kind of still working out the strategy, but the other home is – we’re using it as a long-term rental.

Ideally, we would like to be able to do a flipping business, because we like to do it. But as we’ve done more research, we realize that being able to hold on to some of these properties, and leverage the equity in them, we can propel a lot faster. Our strategy really is to buy, renovate, hold. Then, you know, use that leverage to buy again, which is called the birth strategy. That’s really what we’ve chosen to do. We are open though, toshort-termm rentals. We are exploring other markets for that as well, and really just trying to have a somewhat diversified real estate portfolio. Not to diversify, because I do feel like if you focus on one or two things, you do a lot better. But that’s really our strategy.

We’re okay with doing construction, we’re okay with doing renovation, we’ve done it, and we’re okay. At this point, we’re doing long-distance investing. That’s really our next step.

[0:31:32] TU: I love it. I think it’s a great example of you, take that initial step and kind of get over that initial fear. Then, some things goes plan, some don’t. It opens up some different doors or opportunities. I think for everyone, their journey may be different of what they’re comfortable with in terms of risk tolerance, how active they do or don’t want to be in the process as well.

For folks that are listening to this and hearing some of the strategies that you’re talking about with the birth strategy and leveraging the equity in long-term rentals versus short-term rentals. The Real Estate Podcast, they’ve covered much of that and a future pharmacist stories as well. So we’ll link to that in the show notes. I would encourage folks to check out that podcast as well. I’m curious to know, it sounds like you’re fairly active, right? When you’re talking about the flipping, the construction, is that you and your husband? Is that you managing the project? Are you passive? It sounds like you’re very active. Am I reading that right?

[0:32:23] DL: We are very active. He’s more of the project manager. I’m the money person. I actually analyze the deals, I research areas, and research deals. Then I bring them to him, and we kind of analyze those together. He is the negotiator as well. When the negotiations happen, I walk away, Tim. I’m a lot more polite when it comes to that. I just walk away and let him do his thing. That’s him. He’s definitely the project manager. Working with the contractors and all of that, and I’m more so the person managing the budget, finding the deals, and then we work together on design.

[0:33:02] TU: Okay. Just like your personal finances, it sounds like you have identified strengths, and roles, and areas of responsibility. It’s your own business, within the family unit, which is really cool. I’m curious to know, deal finding. I think that’s one of the biggest barriers for people getting started is where do I look? It feels like people that are in this are just a huge disadvantage of somebody getting started. Are you looking off-market? Are you looking on the MLS? Do you have referral sources? How are you sourcing those opportunities?

[0:33:32] DL: Right now, as you know, these interest rates are very expensive. This market is very unique. But when we started out, we did a lot of driving, just driving ourselves around, and really looking for opportunities where a home may look vacant, or a home looks like it’s not being properly taken care of. Then from there, we will try to see if it was on the MLS. In the case of our first home, it was a pre-foreclosure. It was actually on the MLS as a pre-foreclosure. Then we use a realtor to help us with that.

Now, there are so many just groups of wholesalers and all of this that are out there. If you are trying to get started, there are ways to get in contact with other folks doing that. If you feel like, “Hey, I don’t really want to invest that much money into it” and you want to kind of get that experience and exposure, you can always ask people if you can just link up with them, and ask them what you can add to their system where their pain points are. That’s a great way for you to learn and a great opportunity for you if you’re not really at the point where you really want to invest a lot of money into it.

Right now, we’re currently working with realtors, especially since we’re looking in other markets. So we are working with realtors to try to find some of those properties. We don’t focus too heavily on off-market deals at this point in time. But I do know people do that, and they do that well. There are a lot of systems out there that can help you with that as well.

[0:35:06] TU: When done well, I think real estate can really add to, you mentioned, a pathway to financial independence that could potentially create wealth, lots of reasons to accelerate the financial plan, different tax advantages, et cetera. When not done well, it can be a hindrance on the financial plan, and there is a risk side of it. There’s obviously folks that have built systems and processes that have done this well. There’s individuals that maybe haven’t done as well, or analyzing deals properly, and not looking at the full breadth of what the numbers really are.

I sense that you guys really do have a system, a process. You’re looking at growing and scaling, which tells me the numbers are working. My question is, how do you view real estate investing, impacting and accelerating your personal financial planet. Is it a long-term strategy of building wealth, it’s part of the retirement plan, it’s a tax strategy? Is it short-term that the income from real estate you’re using towards other financial goals? How do you view the intersection of real estate with your financial plan?

[0:36:09] DL: Sure. That’s a good question. We like to kind of be right in the middle with that. What I mean by the middle, is by us holding those properties. They are a part of our long-term plan. But we also like to choose properties where we will cash flow pretty well, also. That’s a good balance there, because we know there are markets where you can really cash flow. But if you go to sell the home and 10 years, it’s going to be the same price you paid for it. You don’t really have a lot of appreciation on that front. That long-term game isn’t necessarily there. We try to find a good balance, and that’s one of the reasons we’re leaning towards short-term or midterm rentals. Because right now, in this market, especially, that’s really going to give us that that cash flow, but we can also have that appreciation.

We do have a long-term rental, and thankfully, it’s in a location where we’re doing very well on both fronts. But trying to get there right now in this market can be challenging. We’re looking towards that short-term, midterm. But we really like to have a balance, because we do want to use the real estate. Right now, we’re just using the money to purchase other real estate, not for our personal use. But we do want to get to a point where, “Hey, we could if we wanted to.” It depends heavily on our real estate income, and maybe transition into a lower workload on our W-2s or something to that effect. But we are in this for the long run, so we’re not trying to accumulate all of these rentals and get rich quick. That’s not really our strategy.

[0:37:45] TU: Yes. You’re not having to replace your W-2 income. I think that’s an interesting point, because for many individuals, there’s the initial strategy of, “How do I do this well, and then how do I scale the system, so I can invest more into other properties, more opportunities?” But then, there becomes a point of the portfolio where, depending on what else is going on, your retirement plan, et cetera, you might want to draw from that asset. There’s a strategy involved in that, and the tax optimization and so forth there as well.\

As we wrap up, I’m curious to hear your perspective. You’re on the other side of paying off your student loans, you’ve been out for over 10 years, you’ve got a good base in real estate investing. For all intents and purposes, you built a really strong financial foundation that you and your husband are going to grow upon for the next several decades and beyond. For individuals that were – just for you and I were a little over a decade ago, I think there’s both excitement and feelings of maybe some level of overwhelmed. Hearing a story of, you’ve been through that, you’re beginning to build wealth, you’re investing in real estate. What advice would you have for those individuals that are on the front end of this journey may be feeling overwhelmed, frustrated, confused with where they’re at with their finances?

[0:38:58] DL: Absolutely. That’s a great question. I would say, write down what’s important to you and your why. So really, write down what’s important to me, my values, and you can even project that out over the next 10 years, what do I want my life to look like? I think if you start with that, then you work backwards, and you look at what you’re facing right now. Then, you leverage the tools and all these podcasts like this one that are out there, and all the different strategies that you can take to reach your goals. If you do have a lot of student loan debt, and that debt is going to impede you from getting to those goals, then maybe that’s where you start. If you don’t have student loan debt, or it’s not a significant amount of student loan debt, but you do know in 10 years, you do want to have the option of working a W-2.

Then you may want to start with looking at different ways that you can invest your money, so you can make it work for you and make it accumulate even faster. That’s what I would do. I would kind of project out maybe 10 years. Because let’s be honest, a lot of new pharmacists are in roles, and they’re thinking, I don’t want to do this for 10 years, and that’s fair. Trust me, we understand. If that’s where you are, then definitely, think about where do you want to be, and what your goals are, and then work backwards. Look at what’s in front of you, and decide what the, what the priority is, and then start to educate yourself on different methods and strategies that you can use and get help. Get help, there’s no problem asking questions, meeting with a financial planner that understands your goals, and is willing to work with you to achieve your goal. That’s what I would recommend to someone who’s at the front end of this journey.

[0:40:49] TU: I love that. Great words of wisdom, and I’m so grateful for you coming on the show to share your journey. Congratulations on the debt-free journey. I have a sense you’re just getting warmed up here into the future. I appreciate you sharing that with our listeners, and I look forward to following your journey as well.

[0:41:05] DL: Thank you. Thank you so much for having me. I’ve enjoyed it and we will definitely keep you posted on the journey. I appreciate you and this platform.

[0:41:12] TU: Thank you so much.

[0:41:13] DL: Thank you.

[END OF INTERVIEW]

[0:41:14] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding material should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archive, newsletters, blog post, and podcast is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analyses expressed herein are solely those of your financial pharmacist unless otherwise noted and constitute judgments as of the dates publish. Such information may contain forward-looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements.

For more information, please visit yourfinancialpharmacist.com/disclaimer. Thank you again for your support of the Your Financial Pharmacist podcast. Have a great rest of your week.

[END]

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Debt Free Story Q&A with Jeff and Alex Keimer

Posted on May 6, 2019 by yfpadmin

Debt Free Story Q&A

Jeff and Alex Keimer share their debt free story in this special Q&A format.

Jeff received his PharmD from Albany College of Pharmacy in 2011 and moved to Vermont to pursue a career in retail pharmacy. There, he met Alex, his future wife, who graduated from Cornell with a Master’s in Food Science in 2012. Jeff racked up about $150,000 in student loans and also purchased many items after graduating on his credit card, including the down payment for a brand new Subaru WRX. Alex managed to pay for grad school and accumulated only $50,000 in debt. The couple shares their journey of paying off their student loans, car loan and credit card balance while working toward financial independence.

Jeff, tell us a bit about your background and education and how much you accumulated in debt upon graduating with your PharmD.

I’m originally from the town of Guilderland, NY (a suburb of Albany) and got my PharmD from Albany College of Pharmacy and Health Sciences in 2011. In terms of career, my path has always centered around retail pharmacy. I’ve worked in a retail pharmacy ever since I was in high school and love it. No joke.

During school, I didn’t think about my loans. I knew they were there, but like many of my classmates at the time, I never thought they’d cause a problem since I was “guaranteed” to make the big bucks after graduation. Understand that this was a time where P3’s were getting 5 figure sign on bonuses, so most pharmacy students weren’t worrying about their loans.

All in all, I came out of school with a little over $150,000, which I believe it or not, thought was low. I distinctly remember someone in my class said they were in the $300k club, so I felt like I got out cheap.

Alex, what about you? What type of education do you have and how much debt did you accumulate while in school?

I have a Bachelor’s in Food Science from the University of Delaware and Master’s in Food Science from Cornell. A small portion of my undergrad was paid for by a scholarship and the majority of it was paid for by my parents. I paid for grad school myself and accumulated around $50,000 of debt from it.

Jeff, what was your parents’ or family influence on your money habits?

Growing up, both of my parents started their own businesses and worked from home so they could be there for my sister and I when we got home from school. We were taught a respect for how money was earned but not much was said about how it was managed. When money was tight, I remember my dad saying that we were going on the “austerity budget” and when money was good, we bought things and went on vacation. But, that’s really about it.

Alex, what about you?

I remember both of my parents working a lot. My mother was an accountant and my father was an administrator for a community college in Long Island City. We were always buying things on sale and using coupons. When I would ask my mom why we couldn’t have fancy clothes or why we couldn’t buy a boat like my best friend’s parents, she would say that we save our money so that we can go on vacation. She always stressed the value of experiences over material things. To be fair, we did travel a lot. While most of my friends were having Sweet 16s, my family and I were going to Hawaii. We travelled to California, Europe, and the Dominican Republic, just to name a few.

My mother would always talk about how important it was to save money. She would tell me that you never know what is going to happen in life, so it is important to have a healthy savings. When we were younger, she helped us set up CD’s and savings accounts and we would watch our money grow. This rubbed off on my because when I was in college, I remember her sending me money in the mail with a note saying “use this for something FUN, do not put this in the bank.” She knew that all of the extra cash I had was going in the bank and I was sacrificing time out with my friends.

Jeff, you mentioned to us before that you spent your money on a lot of nonsense as a new practitioner.

Where to start? Well, first I had to deck out my new apartment so I spent several thousand on new furniture. OK, that sounds mildly sensible. How about another grand on a new 3D TV? Another couple thousand on some new firearms? Or, my personal favorite, >$5,000 in a year spent on craft beer? All of it on a credit card that had been carrying a balance since I graduated. Just for good measure, I also bought a brand new Subaru WRX in 2013 that cost around $32k which I financed for the next 5 years. Oh, and lest I forget, I also put the $2,500 down payment for that car on that same credit card since I didn’t actually have any money.

I may not have been great at saving money, but I was a savant when it came to building negative net worth.

With all this debt getting piled on, you would’ve hoped I had a plan to get rid of it. But I didn’t. Even though I was starting to feel the pinch from my student loans, I didn’t have much motivation to get rid of them. I just assumed that they were there and I would have them kicking around for the full 15 years of my payment plan. The credit card was more egregious anyway. But, I managed to give myself a false sense of security about that. I figured that if I was paying more than the minimum on it every month, I was good. Never mind the fact that the balance was growing.

Alex, when you and Jeff started to get into a more serious relationship and talked deeper about your financial burdens, what were your feelings about his indebtedness?

I have never held a balance on my credit card and I have never paid a cent of credit card interest. When Jeff told me what kind of balance he was carrying on his credit card, I think the look on my face made it clear that we would not be combining our finances until he got serious about getting rid of that enormous debt. At this point I wasn’t really interested in helping Jeff out. I was pretty much like, “You get your house in order and let me know when you’re good.” It definitely didn’t take him as long as I thought it was going to. Turns out when you have a 6-figure salary and aren’t buying a ton of crap, it’s pretty easy to pay down your debts.

When did you start getting serious about paying this debt off?

I can’t remember the exact time I decided it was time to clean up my act, but I do remember it was as Alex and I were starting to take our relationship to the next level. We were starting to plan a life together and I while I knew she loved me despite my faults, I didn’t want her to have to live with all of them. And, like Alex said before, she really wanted me to get my house in order.

My debts at the time were three-fold: credit card, car loan, and student loans. Since we both knew the credit card represented both the highest interest rate and a monument to my stupidity, I decided that needed to go first. And, I needed to do that on my own.

Jeff, how did you decide that creating a budget was what was needed to pay down your debt?

Just like it’s common sense that getting on a diet and exercise plan is what you need to do to lose weight, I’ve always known that I needed a budget to control my finances. But like many people with wanting to diet or exercise, I chose not to do it since I thought it would be hard. The idea of having to plan out all my spending ahead of time and restricting myself to what I’d planned for just never sounded appealing.

But, I had to do it. At first, I decided to make a traditional type of budget. I made categories and used the Mint app to help me track my spending. This worked to a degree, but I still couldn’t see myself adhering to this type of budget long term. It just felt so foreign to me.

What I was used to was living paycheck to paycheck. So I decided one day to try and make a budget that took that lifestyle and would make it work for me instead of against me. Like all great ideas, I think it came to me in the bathroom. Instead of figuring out how much I have leftover at the end of every month to throw at the debt, why don’t I just send money there first and give myself a smaller paycheck to live off? In the end, I created a budget that’s sometimes referred to as a “reverse” or “pay yourself first” style of budget.

In the months that followed, I was able to get rid of the credit card debt and use the same budget to start saving money for an engagement ring. With Alex’s help (she started packing me lunches) and forgoing the things that I knew were nonsense, adhering to my new budget was relatively painless.

You mentioned to us before that in the marriage process, you and Alex read The 5 Love Languages by Gary Chapman.

Yes, before we got married, the priest we worked with had us read it as part of a premarital course. We ended up reading it to each other rather than on our own which I think was a great way to do it. What we learned was that we shared a lot of common ground when it came to what our love languages are. Quality time, for one, topped both of our lists, and gift-giving was at the bottom. Looking back, I think this realization was what set the stage for the next chapter in our financial journey.

You mentioned that you are pursuing financial independence (FI).

Yes! Shortly after we got married in late 2016, I stumbled on the blog Mr. Money Mustache while doing some internet research on investing. The name sounded ridiculous so I had to check it out. What I found there was pure gold. In that blog, Pete Adeney (aka Mr. Money Mustache), describes how a combination of frugality, hard work, and unconventional retirement planning allowed him to “retire” at the ripe old age of 30 and that early retirement is something anyone living in this country has a shot at. This was my introduction to the financial independence/retire early (FIRE) movement.

While I love being a pharmacist, I love being able to spend more time with Alex. What I read in his blog and others was that making more of that time was entirely possible through financial independence. So for me, I was sold. If this was a way for us to get more out of the finite amount of time we have on this planet, then that’s what I wanted to do.

I plugged our numbers into some of the calculators online and found that if we were able to start maxing out our retirement accounts and tweak our budget a bit, we had a decent shot at financial independence in the next 15 years. Needless to say, Alex was skeptical at first. I clearly remember her saying in a thick Long Island accent, “You don’t know this man on the internet,” and that this all sounded a little far-fetched. But, to her credit, she said that if I wanted to give it a try she would support me.

So I got to work adjusting our budget and adapting it to a higher retirement contribution rate. Thanks to the tax deduction, it wasn’t that hard. Once that was in place, I set our debts in the cross-hairs.

How did you pay off the rest of your non-mortgage debt? What was the total you paid off and how long did it take you to pay it off?

When we decided to get out of debt, we had 3 different debts: my car, the student loans, and a loan we took out to finance a solar array we put on the house. In order to tackle them, I thought it best to go after the highest interest debts first. But before that, let me tell you what went down on November 28th, 2016.

I had been reading Mr. Money Mustache now for a few months and had been coming around to his way of thinking, particularly around cars. The dude hates them but realizes they have a place. That said, the supercharged rally car I was using as a daily driver on paved roads didn’t fit with the overall FIRE mindset I was getting into. It had to go.

So, the morning of November 28th, I got up and started looking online at replacements that were more sensible, but still had a stick shift (not giving that up). I texted Alex that morning telling her that I found a Toyota Corolla for sale across the state that looked like a good deal and wanted to check it out. She said OK and I drove over to the dealership. While there, I did a test drive, negotiated a trade, and signed over my WRX for the Corolla. I got rid of the car debt in a day and felt awesome. Did I forget to talk to Alex before getting a new car? Absolutely. I learned some things about marriage that day.

So with the car debt gone, we decided to go after the student loans. Alex’s loans at this point were a little under $7,000 total, so we used the money saved from our budget over the past year to kill those in one shot. Now, it was time to fight the good fight and get rid of my loans. Using our budget we put money toward the debt with every paycheck.

Over the next 19 months, we got rid of the student debt totaling $105,560.86. Most of it came from those incremental payments with every paycheck. Also, a little over $10k came from cashing out a variable universal life insurance policy that I took out in 2012. Finally, since our budget has us saving money simultaneously, I was able to take money that we had been saving for a new car for Alex to finish them off in June 2018. We bought the car though, so there’s more debt.

After the student loans, our other debts didn’t seem so big. The solar loan only had around $11k and the car loan started out at around $20k. Whatever, they needed to go. So for the rest of the year, we focused on those two debts, clearing them out finally on 12/22/18.

Overall, from the day I sold the car our payoff looked like this:

In the end, with interest payments (not reflected above), the total amount paid toward debt was $138,017.37 from November 28, 2016, to December 22, 2018.

Amazingly, we didn’t really feel deprived throughout the whole process. We still went out to eat and still went on vacations. Even though we were putting a huge amount toward debt, we didn’t feel it much since we did everything we could to optimize our expenses. Not having my car payment and replacing the life insurance policy were huge (~$800/month), but so were little things like getting rid of cable (~$75/month), sharing streaming services with family, and preparing meals ahead of time. We also tried our hand out at travel hacking which has been quite lucrative.

Now that you are debt-free, how do you feel?

When people say that getting rid of debt is like having a giant weight lifted, they’re not kidding. Getting rid of our debts, particularly the student loans, has been incredible. It’s even me more joy at work knowing that I’m not chained to my paycheck and has given us the ability to be more flexible in our career paths.

As far as near-future financial goals are concerned, we would like to get rid of the PMI on our mortgage this year, continue to maximize contributions to our retirement accounts, and possibly buy a rental property. In the end, we’re going for financial independence, so keeping our savings rate high is what we plan to do for the long haul.

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Debt Free Story Q&A with Jeff and Alex Keimer

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