Student Loan Forgiveness For Teachers

By Nate Matherson, Co-founder of LendEDU, a blog that helps consumers learn about personal finance. Nate graduated from college in ’16 with over $55k in student loan debt. In 2020, Nate is working to have repaid all of his student loan debt.

Working as a teacher is a rewarding, important job. You get to shape young minds and spend your days watching students discover new things.

Unfortunately, many teachers have to take out expensive student loans to get the qualifications necessary to excel in this selfless profession. And the salary that teachers make doesn’t always make repaying this educational debt easy.

The good news is, there are options for getting some of your student loans forgiven. In particular, here are four possible ways that teachers could be absolved of the responsibility to pay off at least some of their student loan balance.

>>Related Post: Can You Afford Not To Budget?

1) Public Service Loan Forgiveness

Public Service Loan Forgiveness allows teachers who meet certain qualifying requirements to have their federal student loans forgiven after they’ve made 120 qualifying monthly payments under an income-driven plan.

To be eligible for Public Service Loan Forgiveness, you must:

• Work for a government agency or eligible non-profit
• Work full-time, defined as the greater of working at least 30 hours per week or meeting your employer’s definition of full-time work.
• Have Direct Loans or consolidate other eligible federal loans into a Direct Consolidation Loan
• Make 120 qualifying payments on an income-driven plan.

The Department of Education advises submitting an Employment Certification Form each year, or whenever you change jobs, in order to make certain that you are on track to earn Public Service Loan Forgiveness.

2) Teacher-loan forgiveness

Full-time teachers who work for five complete, consecutive academic years for an educational service agency or for a qualifying low-income school could also become eligible for Teacher Loan Forgiveness. This program allows teachers to have up to $17,500 in Direct or FFEL loans forgiven. Eligibility requirements include:

• Not having an outstanding Direct Loan or Federal Family Education Loan as of October 1, 1998.
• Working as a full-time highly qualified teacher in a qualifying school or educational service agency for five years with at least one year of work occurring after the 1997 to 1998 school year.

The loans being forgiven must have been issued before you completed your five years of qualified teaching. You must also work for a complete academic year in order for that year to count as one of your five qualifying years – unless you fall within certain exceptions.

3) State-based forgiveness programs

Many states provide loan forgiveness programs for teachers who work in high-need areas. You can search the database created by the American Federation of Teachers in order to find out what loan forgiveness options your state offers.

Requirements differ by location. Generally, however, you must work in a low-income area for a minimum time period.

For example, the Illinois Teachers and Child Care Providers Loan Repayment Program offers grants to encourage qualified teachers to work providing early child care or to work in low income areas. Illinois residents with federal student loans are eligible if they work for two consecutive years in a qualifying position. Those who meet eligibility requirements can obtain up to a $5,000 grant to help repay federal loans.

4) Loan forgiveness through income-driven repayment

Teachers may also become eligible for loan forgiveness after making a certain number of payments on an income-driven payment plan. These include:

• Revised Pay As You Earn (REPAYE): This plan caps payments at 10% of discretionary income. Any remaining loan balance is forgiven after 20 years if all loans were obtained for undergraduate education or after 25 years if any loans were taken out to pay for a graduate or professional degree.
• Pay As You earn (PAYE): This plan also caps monthly payments at 10% of discretionary income, but with the maximum payment equal to what you’d owe under a Standard Repayment Plan. Any remaining balance will be forgiven after 20 years.
• Income-Based Repayment (IBR Plan): Payments under this plan are capped at 10% of discretionary income if you’re a new borrower after July 1, 2014 or 15% if you had loans before that date. Payments can’t ever exceed your monthly payment under the 10-year standard repayment plan. Any remaining balance is forgiven after 20 years if you first borrowed after July 1, 2014 or after 25 years if you had loans before that date.
• Income-Contingent Repayment (ICR): Payments are capped at 20% of discretionary income or the amount you’d pay on a 12-year repayment plan with fixed payments adjusted according to income. After 25 years, any balance remaining on your loans will be forgiven.

You can find out specific details about income-driven plans on the website of the Department of Education.

Finding a Loan Forgiveness Program for Teachers

You want to focus on the important work you do as a teacher without worrying about how to repay the loans you needed to become qualified. So make sure to look into all of your options for loan forgiveness as soon as you begin working and repaying your debt.

>> Related Post: Financial Independence On A Teacher’s Salary

You want to sign up for the right repayment plan immediately so any payments you make can count towards Public Service Loan Forgiveness or income-based forgiveness. Talk with your loan servicer if you aren’t certain which option is right for you.

Ahhh! My Paycheck Was Delayed….And I Have Bills!

[Editor’s Note: This is an independent post written by JJ. This post may contain affiliate links. Please read our disclosure for more info.]

On Tuesday, October 15, I started the day off confused as to why my paycheck didn’t get deposited into my checking account. I checked our school district employee software and saw that my paycheck was processed, but not deposited into my checking account.  Then I saw an email from our HR department saying that the federal holiday on Monday was delaying paychecks getting deposited into bank accounts.

I’m so thankful we found the Financial Independence (FI) community and have been financially responsible for over 3 years.

My very next thought after reading her email and not seeing my check get deposited was being thankful for finding the FI community over three years ago and being financially responsible for many years.  My wife and I have done a great job building an emergency fund and a cushion into our financial lives.

My wife and I have also done a great job positioning our finances so we only rely on one income to cover all of our expenses. 

Not being paid but still working can be frustrating, but it’s not at all the end of the world for us, financially.

Money, Money, Money

I thought that was the end of the story, but, wow, was I wrong.  I saw a post of ChooseFI Educators Facebook group page that many of the poster’s colleagues were upset and nervous that this delay would put them in financial ruin.

 

I can only imagine how many of my own colleagues were feeling after this delay. I heard some say that they’re glad they didn’t have auto-withdrawals scheduled for payday.  That’s great, but still a bit concerning that they may be living paycheck-to-paycheck (and not by choice).

How Can Districts Improve?

As educators, we specialize in coaching our students to learn and become masters of the content.  Why is it that so many school districts are not very good at educating teachers about many things, including personal finance?  Personal Finance is a graduation requirement for students in my district.  Maybe Personal Finance should be an annual requirement for teachers to become masters of the content.

How can districts do a better job in this area?  How can I do a better job of educating my colleagues in this area?

Do your districts excel in providing financial education to teachers? 

The Best Time To Start Was Yesterday. So….

[Editor’s Note: This is an independent post written by JJ. This post may contain affiliate links. Please read our disclosure for more info.]

One of my favorite quotes I use when talking with people about the best time to start investing is, “The best time to start was yesterday. The next best time to start is now.”

So, here we are. Seize the moment and start today! So what are you starting? Maybe you find yourself in one or more of the following:

• Today I will create a budget and begin tracking my expenses.
• Today I will start saving for a fully funded emergency fund.
• Today I will create a plan to payoff all of my debt.
• Today I will contribute to my retirement account offered through my employer.
• Today I will open an IRA (Individual Retirement Account) and begin contributing.
• Today I will open a HSA (Health Savings Account) and begin contributing.
• Today I will increase my contributions to save/invest in my future.
• Today I will open and begin contributing to a 529 account for my child.
• Today I will open and begin contributing to an IRA for my child.

Seize the moment and start today!

I find that if people make tasks easy for me, I’m more likely to get the done.  So let me try and give you some ideas to make the tasks above super easy for you to start investing.

Today I will create a budget and begin tracking my expenses.

Get some paper or a notebook and pen.  Every time you spend money, write it down.  Then at the end of each week, review your purchases.

Today I will start saving for a fully funded emergency fund.

Setup an automatic transfer from your bank account to a new savings account. This new savings account is your emergency fund. Don’t touch it unless it’s a true emergency.

Today I will create a plan to payoff all of my debt.

Once you’ve tracked your expenses, review them to see where you can save money and direct that money to your debt.  I like the Dave Ramsey method of starting with the lowest dollar amount. Once you payoff that debt, roll that payment into your next debt payment.  This is called the snowball method.

Today I will contribute to my retirement account offered through my employer.

Talk to your HR Department and setup and begin contributing to a retirement account.  Choose a low-fee total market index fund or a low-fee target date fund.  Begin piling money into this account.  You can save $19,000 per year into a 401k or 403b.

Today I will open an IRA (Individual Retirement Account) and begin contributing.

I’m a big fan of Vanguard which is the company I’ll typically talk most about, but feel free to check out Fidelity or Schwab or something similar.

Click here and then there’s a button ‘Open Your IRA Today.’ Click that button and get started today.  All Vanguard funds are lower in fees so you’ll just need to figure out what you want to invest in. I’m a fan of total market index funds and target-date funds.

Today I will open a HSA (Health Savings Account) and begin contributing.

Check out this article from nerdwallet to learn more about HSA accounts.

Today I will increase my contributions to save/invest in my future.

If you’re already saving and contributing, try to increase that amount.  Look at what you’re spending to see where you can save some money.

Today I will open and begin contributing to a 529 account for my child.

Savingforcollege.com has put together a nice list of 529 accounts for each state.

So, hopefully that helps you get started.  The second best time to start is now.  Don’t let the opportunity pass, start today!

You’ve Just Begun…Now, What’s Your Exit Strategy?

[Editor’s Note: This is an independent post written by JJ. This post may contain affiliate links. Please read our disclosure for more info.]

I started my career in education seven years ago so many of my students from my first few years of teaching are now entering the work world in their early twenties. Many of those students have reached back out to me to connect on LinkedIn and other social media sites. Those students are beginning to see my posts for this blog and realize that I have a strong passion for personal finance which in turn leads them to ask for advice.

So, congratulations on beginning your new career.  Now, it’s time to plan your exit strategy.  You may be confused by that last sentence, but let me explain. If you’re anything like me you are so excited and finally feel like life is about to start.  Up to this point, you’ve spend most of your time in school and now it’s time to make your mark on the world. 

You now have the ability to design your life.  Many of the young folks I know who recently graduated college have landed jobs and moved back in with their parents to save some money. 

So, here’s my advice: Take this time to work hard, invest in yourself and plan your exit strategy!

Work Hard

Here’s the reality — you probably graduated with honors from a prestigious school and are ready to show your colleagues how brilliant you are.  Don’t.  You don’t know everything. You will not enter the work world making six figures, nor should you. 

Keep your head down and work hard.  Be the first one to the office and the last one to leave. Show your colleagues how hard of a worker you are through your actions. Learn how to ask questions in a way that will not offend others.  Learn to ask why things are done a certain way and if your answer is, “because that’s the way we’ve always done it,” then continue to ask why. 

Lastly, while you are working hard…ask questions. Don’t assume.  Just ask.  Maybe there’s someone who can be your mentor who you can talk to when you don’t know how to do something or why something is done the way it is.

Invest In Yourself

First things first — invest in yourself financially. On your first day of work (or today if you’ve already started your career) setup a retirement account and begin investing. You will want to talk to your Human Resources department about the options.  You will either start a 401k or a 403b depending on your place of employment.  Don’t worry too much right now about what funds to choose within your retirement account; the main thing is to start contributing.

If your employer offers a 401k, most likely they will match your contributions up to a certain dollar amount or percentage. Make sure you are, at the minimum, contributing enough to get that match which is FREE money!

You might be thinking right now, “Well, how much should I contribute every month.”  Great question, I’m glad you asked!  The maximum contribution in 2019 to a 401k/403b is $19,000. That works out to about $1,580/month.  Most likely you’ll get paid twice per month which means you can contribute about $790 per paycheck to your 401k or 403b. 

If you live at home and have very few expenses, put in the max…which brings us to my next point.

Know Thy Expenses

Stop what you’re doing right now, open up a Google Sheet and begin listing your monthly expenses. Did you forget any expenses? 

Hopefully your expenses are less than your income at your new job.  If not, then you need to reduce your expenses or get another job. 

If you’re living with your parents, your biggest expenses might be student loans, rent (if applicable) and food.  When I say food, don’t go out to eat every night. Learn how to cook and make your meals at home.

Don’t put off your student loans.  Did you know that your student loans will be with you forever until they are paid in full.  There are a couple different ways to get them paid in full, but the point is that you need to work to get them paid off.  Don’t wait, setup a payment plan and get those things paid off ASAP. 

Don’t wait, setup a payment plan and get those things paid off ASAP. 

As you’re listing your expenses and comparing it to your income, hopefully you have money leftover.  As you’re thinking about what to do with that extra money, please do not do what I did. Do not go out and buy a new car. A car is not an investment. A car is a depreciating asset meaning your car’s value will go down every day.  You want to invest in assets that the values increase.

So, what do you do with your extra money. Invest it!  Sounds super boring, right?  Yup, it should, but you will thank me in about ten years. Open an account at Vanguard or Ally Bank and start stashing money.

“Don’t buy things you don’t need with money you don’t have to impress people you don’t know.”

Plan Your Exit Strategy

But I just started my career, why should I plan my exit strategy.  I’m not talking about leaving your job.  Don’t leave your job, especially if this is your first real job after college.  If that’s you, you need to stay at that company and work hard before you even think about leaving for more money.

The exit strategy I am talking about is, first figuring out how to move out of your parent’s house and second, investing so you can have the freedom to choose when and how to work.

Here’s how you plan your exit strategy to move out of your parent’s house. This is going to blow your mind…Save Money! Now that we figured that out, let’s talk about the more important exit strategy of having the freedom to choose when and how to work.

Do you want to work for the next fifty years because you have to or do you want to work when and however you want because you choose to?

I have a friend who is nearing retirement age and he has lived his life impressing others.  Saving for retirement was an after-thought.  He wanted that boat, vacation house, ATV, new cars every year, and on and on and on.  Now that he’s a bit older, he wants to retire, but he can’t because he never created an exit strategy.

I have another friend who is in his late 30’s and has lived life executing his exit strategy that he created in his early 20’s. He always paid cash for older cars, never had a fancy house or vacation house nor did he own a boat.  He’s currently living in Thailand with his family because he wants to.  He chooses when he wants to work or not because he saved most of his income until he decided to retire in his 30’s.

Now, obviously there are many different paths that life will take you and it’s not always easy, but the point is that you choose how you spend your money and time. 

I hope you spend your money by investing in yourself and saving most of your income and I hope you spend your time by helping others and becoming a lifelong learner.

I’ve shared this article before, but it is so critical to your exit strategy.  Money gives you freedom and flexibility, so save it and protect it. Check out The Shockingly Simple Math Behind Early Retirement.

 

Final Thoughts

Oh, before I forget, if you’re reading this and you’re in the middle or nearing the end of your career, much of this article also applies to you.  As Mr. Money Mustache illustrates in the article I linked above, if you can save 64% of your income, you can retire in a little over 10 years.

You can be less than 10 years from retirement and begin planning your exit strategy.  It’s never too late!

Let’s hear from you in the comments below. Where are you at in your career — just starting, in the middle or nearing the end? Do you have an exit strategy?

Top 3 Podcasts

[Editor’s Note: This is an independent post written by JJ. This post may contain affiliate links. Please read our disclosure for more info.]

I listen to a lot of podcasts.  Rather than listen to songs on the radio, I would rather spend that time learning via podcasts.  I’d like to share my favorite podcasts with you along with a short summary for each podcast.  Maybe you’ll find one or two of them interesting and want to check them out. Here’s a list of my top 3 podcasts:

1. Revisionist History

Now, I know what you might be thinking, “This is a site about financial independence and you absolutely love the journey of FI, why is your number one podcast not at all about finances?”  You’re right, Revisionist History is not at all about finances and it’s still my favorite podcast. 

This podcast is by Malcolm Gladwell.  Every week they re-examine something from the past that has been either forgotten or misunderstood.  He goes deep within his topic and asks great questions along the way.  Also, he is a wonderful storyteller that gets me thinking more about a topic. 

My favorite episode is “Carlos Doesn’t Remember.”  It’s season 1, episode 4. “Carlos Doesn’t Remember” is the first in a three-part Revisionist History miniseries taking a critical look at the idea of capitalization—the measure of how well America is making use of its human potential.

2. ChooseFI

ChooseFI is a very close second. I’ve been listening to this podcast since the beginning a few years ago and have listened to every episode.  If you’re interested in Financial Independence or any aspects of it, this is the podcast you need to check out!

If you’ve never listened to ChooseFI, start with episode 100 — “Welcome to the FI community.” This is a great podcast and worth your time to listen.

3. Side Hustle Nation

Side Hustle Nation has helped me think about ways to earn a little extra money using my skill set.  In fact, one of the things that my wife and I are really, really good at is money management.  We love having those monthly expenditure review meetings. We love talking about our big hairy audacious goals (BHAG). We just love talking about managing our finances.

So, a couple nights ago we were talking about side hustles, our love for helping people and our love for financial management, and we looked at each other and thought how cool it would be if we could help others to manage their finances.  Not an investment advisor or planner, but more of a coach to help people get on track towards their BHAG. My wife and I are planning on starting a side hustle of being financial coaches.  Much more to come on this in the near future, but we’ve heard for close friends and family that this is a needed service.  So, we’re pumped!!

So, there you have it; my top 3 podcasts for this summer.  What are your favorite podcasts? Let me know in the comments below.

Quarterly Newsletter (Q2 2019)

[Editor’s Note: This is an independent post written by Jack. This post discusses our savings rate and expenditures for Quarter 2 (April – June) of 2019. This post may contain affiliate links. Please read our disclosure for more info.]

One of our major goals for 2019 (discussed in our Written Financial Plan) is to save at least 40% of our gross income for the year. We barely hit that goal during Quarter 1, but we are really excited to have met our savings goal this quarter (46.37%)! We find tracking our spending/savings to be very useful and would encourage anyone to do the same! We use Mint, but Personal Capital is another popular (free) online tool that can track and categorize your spending if you don’t feel like tracking it all yourself. 

Remember that are a number of ways to calculate your savings rate (%). Regardless of the method you choose, it is important that you remain consistent and also understand how others calculate their savings rate so you can compare apples to apples. We calculate ours by dividing our savings by our gross income (+ employer retirement contributions). Our savings calculation:

• Includes:
  • EmployER Retirement Contributions
  • EmployEE Retirement Contributions
  • Money NOT spent (labeled as “Other Savings”).
• Does NOT Include:
  • Mandatory Deductions (federal/state tax witholdings)
  • Optional Deductions (insurance)
  • Expenditures

Click HERE to view a copy of the spreadsheet we use to calculate our savings rate. Feel free to make a copy of it and use/edit it to meet your needs.

Major Expenditures:

• House = $2400
  • Washer/Dryer – $2080
• Rent (for previous apartment) = $2318
• Food/Dining = $2382
  • Groceries – $1409
  • Restaurants/Bars – $863
• Travel – $2367
• Health & Fitness – $1179
  • Annual Family Indoor Climbing Membership – $1000
• Auto = $897
  • Auto Insurance (6 Months x 2 cars) – $530
  • Fuel – $367
• Business Expenses (not related to website) – $2864
  • Most of these are actually related to my wife’s military/physician stuff and will actually be reimbursed (which would technically decrease our expenditures and increase our savings rate), but we haven’t received the reimbursement yet, so it didn’t right feel ignoring these for the time being.

Notice ~38% of that is AUTOMATICALLY directed to retirement accounts every paycheck (TSP, 401a, 401k, 457b), which is not only convenient, but also keeps us moving forward towards our goal fairly passively. We had two large personal expenditures included a washer/dryer for our new home and an annual indoor climbing gym membership (one time fee for the whole year). Our traveling included a week in Charlotte, NC where we stayed at a Marriott for 5 nights completely free using credit card points. We spent more on food this quarter than last, so that is an area we should be more conscientious of. 

In Other News:

My wife and I recently bought a home! We followed our Written Financial Plan by using a 15-year mortgage for less than 2x our gross income and will be making extra principal payments monthly.

We also decided to make some adjustments to risk/asset allocation:

OLD (80/20):

• 55% US Stocks (40% Large-Caps & 15% Small-Caps)
• 20% INTL Stocks
• 5% REITs
• 20% bonds/cash

NEW (85/15):

• 55% US Stocks (40% Large-Caps & 15% Small-Caps)
• 20% INTL Stocks
• 10% REITs
• 15% bonds/cash

So we are still using a 5-fund portfolio, but since our investment horizon is pretty long (10+ years), we felt comfortable going slightly more aggressive. We decided to increase our REITs by 5% (Real-Estate Investment Trusts) allocation since they have a lower correlation with US Stocks.

I’m excited to see what our savings rate looks

What is your savings rate looking like so far this year? What are your major expenditures? Do you find true value in them? If not, what steps can you take to reduce your spending in those categories? Comment below!

The Real Reason For TeachFI.com

[Editor’s Note: This is an independent post written by JJ. This post may contain affiliate links. Please read our disclosure for more info.]

I haven’t been completely upfront in our motivations for Jack and I starting this blog. 

Yes, we want this blog to serve as a motivator to continue on our journey during the difficult times that surely are ahead.  

Yes, we hope that our site traffic hits a high level so we know our story is helping people.  

And, yes, we want you to see that living this journey to Financial Independence (FI) can work for anyone.

My wife and I don’t make a lot of money, we have a child, and we still have debt — trust me, anyone can join us on this journey. The most important part of this journey is starting; and we want to help you start and continue on this journey.

The real reason we started this blog is to help people understand their finances and plan for retirement.  For years, I considered becoming a financial advisor to help people with financial management and planning, but like most things in my life I don’t want to charge people money to help them.  

When I’ve talked with friends and family about the idea of FI, I get some common questions or push-back. 

“I don’t make a lot of money so it’s probably not possible for me.”  Well, we don’t make a lot of money either. I’m a teacher and my wife works for a law firm (not as an attorney).  Trust me, those two jobs are not in the high-pay category. 

“I have a child or children and they cost a lot.”  I agree, they do cost a lot, but we also have a child so I’m right there with you.

Oh, but look how cute he is!

“I live in a city where housing costs are high.”  When we started this journey, we lived in a very expensive area.  Our rent was the majority of our monthly expenses. We now live in a lower cost of living area, but our salaries are also lower.

“I have no idea where I would even start.”  Welcome to our blog, let’s get started! Jack and I are both educators who love to learn and love to help others learn. We want to help you.  Message us anytime with any question and we will do our best to help!

The journey to FI is not dependent on having a high income.  The journey to FI is dependent on being honest about spending habits, tracking every dollar that leaves your hand (or is charged on your credit card), and minimizing your non-essential spending to boost your savings rate.  It’s a lifestyle change.  

Check out this awesome article by Mr. Money Mustache’s (MMM) called The Shockingly Simple Math Behind Early Retirement.  This is where it all started for me.  The day I read this article is the day we started our journey to FI. 

Mr. Money Mustache’s annual spending is $25,000.  MMM says that if you save 25x your annual spending and save up to that number using low cost index funds, then you can use the 4% rule to become financially independent, and possibly retire early.  

For example, If your annual expenses are $25,000, you need to save up $625,000 to retire. If your annual expenses are closer to mine at $35,000 then you need to save $875,000.  For the record, there are additional calculations that can be done if you’re a teacher who will receive a pension. But, I’ll discuss that and our strategies in a future post. For now, to keep things simple, multiply your annual expenses times 25 and according to MMM, that’s the amount you need to save to retire.

If you’re interested in starting this journey then begin educating yourself…or subscribe to this blog and we’ll educate you.  Remember, please reach out to us with any questions. We want to help. 

The next step should be to understand how much you’re spending each month.  Sit down and look at your spending from last month, do you know where every dollar went and how many of your dollars went out the door?  The goal is to analyze and track your spending on a regular basis to reduce your monthly expenses. Is it possible to cut all of your non-essential spending?  

Then determine your current savings rate.  If you were in my class, I’d tell you that your homework for this week is to:

1. Analyze your spending over the past few months to determine where every dollar is being spent.
2. Calculate your current savings rate.
3. Determine which non-essential expenses can be cut from your spending, and actually cancel those items.
4. Calculate your new savings rate and use MMM’s chart to determine how many years you need to work before you reach FIRE (Financial Independence Retire Early). If you can get your savings rate to 65%, congratulations you’ll become financially independent in 10.5 years!

You may be overwhelmed and not sure where to start.  If that’s the case and you need some help getting started, just let us know.  Please also know that we’re on this journey together.  You’re not alone in your quest to become financially independent.  

We hope this blog serves as an outlet for us to help you begin or continue on your journey to FI.  All of the content we publish on this blog is FREE! We do not charge you anything to read the strategies and recommendations we provide on teachfi.com.  We do not charge you anything to reach out to us either. Remember, we’re teachers and we love to help people learn. There are ways that you can support us and we would really appreciate your support.  

Let us know in the comments where you’re at in your financial journey.

Also, let us know if you have any questions. We want to help.

Un-FI-Friendly, But Totally Necessary Purchase

[Editor’s Note: This is an independent post written by JJ. This post may contain affiliate links. Please read our disclosure for more info.]

I’ve been all-in for the FI (Financial Independence) movement for two years.  We have achieved a lot in that time including paying off $50,000 in student loans in 1 year, which I hope to post our strategies this summer for you to read. We have moved our lifestyle towards minimalism and will be doing so even more in the near future (another post I hope to publish this summer). We have achieved a lot in these last two years and have even bigger goals and plans moving forward.

In addition, we fight hard for our lives to be simple even though we stretch ourselves too thin by saying yes to too many things at once.  In fact, my wife just started reading The Best Yes: Making Wise Decisions in the Midst of Endless Demands. She has taken away so much great information, and she just started the book.

But here’s the thing, even though we track our expenses, aim for a high savings rate every month and live on one income, there are things that we really like to splurge on.  One of those items is tattoos!

Tattoos are expensive, but we absolutely love tattoos.  In March, my wife and I both got new tattoos and even though it is completely not FI-friendly because we could have used that money towards debt or investments, it’s completely necessary for our emotional happiness.

All of the tattoos I have are meaningful to me is some way. I never get a tattoo just to get a tattoo.  In fact, it often takes me months if not years to decide on a design idea. This tattoo happened that same way.  I’ve always wanted a sleeve, but I’ve never found the design I like enough to have it tattooed on my arm. I also have never felt like the timing was right for a sleeve.  While tattoos are becoming more and more popular, and accepted, there are still many people who do not want to see tattoos. The main place for that is employment and often I think people are judged based on their tattoo and for having a tattoo.  Oftentimes people are told to cover up their tattoos at work.

I feel like I’m at a place in my life and career where I am comfortable showing my tattoos; plus my current place of employment isn’t against tattoos which is helpful. In addition, it’s a great conversation starter with students.  Many students want tattoos and then they see my tattoo and ask about it. I’m able to talk with them about getting a tattoo and the things to consider. So, let’s discuss those considerations before I reveal my new sleeve, well phase 1 anyways (I have plans to add to this sleeve in the future!).  

If you’ve ever considered getting a tattoo, here are some things to consider based on my experience:

1. Find a tattoo artist you trust.  You are making a decision that will be with you, literally, for the rest of your life.  It’s kind of important to get it right the first time. We found our forever tattoo artist and he has done all of our work.  My wife and I will go to him with our idea and he will take it to the next level, every time. Huge shoutout to Smooth! You’re the best!
   1. In addition to finding a tattoo artist you’re comfortable with, make sure the artist is qualified, studio is clean, and needles are new and sterile.  Smooth has a great guide for finding the right studio and artist on his site.
2. Find a design that you will love for life.  Take your design to your tattoo artist and get their thoughts.  Smooth always takes our design ideas to the next level. He never forces his design on us, but it’s always better than what we come up with so we always go with his design.  Some studios will not allow you to customize or design your own tattoos which is another reason to find the right artist and studio.
3. Are there any medical reasons that you cannot get a tattoo?  Each person’s body handles a tattoo a bit different so make sure you do your due diligence.
4. Where on your body do you want your tattoo?  Some places hurt more than others. Related to this, how do you handle pain?  While everyone reacts differently to getting a tattoo, to me, it hurts! I literally almost cried getting my sleeve…and that’s after I almost passed out.   
5. If you’re getting your tattoo in a place on your body that’s difficult to cover, is that ok?  What situations would you have to cover it. For example, you think your employer would be ok with you having a sleeve so you get one, but then find out that it’s against company policy. Are you ok wearing long sleeve shirts everyday at work?

So….the moment you’ve all been waiting for, let’s check out these beauties.

My newest tattoo which is phase 1 of my sleeve:

My wife’s newest tattoo:

What un-FI-friendly purchases have you made?  

What splurges do you consider to be absolutely necessary to your happiness?

Book Review – The Only Investment Guide You’ll Ever Need

The Only Investment Guide You’ll Ever Need

• Tobias, A. P. (2010). The only investment guide you’ll ever need. Boston: Mariner Books/Houghton Mifflin Harcourt.
• Category: Investing & Financial Planning
• Recommended Financial Literacy Level: [Novice]+
• Recommended Audience:
  • Those interested in increasing their financial literacy (not limited to strictly investing as suggested in the title of the book).

Tobias’s comprehensive guide to investing is filled with insightful anecdotes and actionable tips throughout each chapter. His book really might be the only investment guide you ever need, and I do not make that claim lightly… I am a big fan of other introductory investing books, such as the The Bogleheads’ Guide to Investing. Tobias’s book, though, has made its way higher on my recommendation list because of the sheer number of life “hacks” it provides. Here are just a few I wrote down for myself:

• Photocopying your wallet in case it gets stolen.
• Buying two one way tickets instead of a round trip for savings.
• Full freezers insulate better, so fill empty space with containers of ice to use at later dates.
• Placing “riskiest” investment holdings in a taxable account to take advantage of tax-loss harvesting (for losses) or charitable contribution deductions (for gains).

The Only Investment Guide You’ll Ever Need is broken up into three parts composed of 11 chapters and an appendices. See below for descriptions of each:

Part One – Minimal Risk

• Ch. 1 – If I’m So Smart, How Come This Book Won’t Make You Rich?
  • Describes what his book is and what his book is not.
• Ch. 2 – A Penny Saved Is Two Pennies Earned
  • Literally hundreds of tips/websites you can use to save money.
• Ch. 3 – You CAN Get By on $165,000 a Year
  • Discusses budgeting, saving, and setting realistic goals.
• Ch. 4 – Trust No One
  • Examples why you should not blindly trust when invetsing.
• Ch. 5 – The Case for Cowardice
  • Describes all types of bonds, notes, and other “safe invetsments”.
• Ch. 6 – Tax Strategies
  • Introduction into income taxes and ways to reduce your tax burden.

Part Two – The Stock Market

• Ch. 7 – Meanwhile, Down at the Track
  • 13 tips/suggestions about stock investing.
• Ch. 8 – Choosing (to Ignore) Your Broker
  • Makes his case for why you should [passively] manage your own money and investments.
• Ch. 9 – Hot Tips, Inside Information — and Other Fine Points
  • Discusses several types of investment vehicles and reasons why you should or should not consider each one.

Part Three – Family Planning

• Ch. 10 – Kids, Spouse, Heirs, Folks
  • Estate planning, caring for aging parents, and examples of how to instill financial literacy in your children, 
• Ch. 11 – What to Do If You Inherit a Million Dollars; What to do Otherwise
  • A step-wise plan about what to do when inheriting money and tips on how to save/spend without it.

Appendixes

• Earning 177% on Bordeaux
  • Contains a great wine recommendation.
• How Much Life Insurance Do You Need?
  • A formula you can use  to determine if, and how much, life insurance you “need”.
• How Much Social Security Will You Get?
• A Few Words About Taxes and Our National Debt
• Cocktail Party Financial Quips to Help You Feel Smug
• Selected Discount Brokers
• Selected Mutual Funds
• Fun with Compound Interest
• Still not Sure What to Do?

Biggest Takeways:

I particularly enjoyed Tobias’s method on calculating the amount of life insurance needed. His “formula” considers your heirs/dependents, social security, the time horizin of funds you would like to provide for, funeral expenses, and assets considerations. Since I currently have no kids and my wife is not dependent on my income, I really only need enough life insurance to cover funeral expenses, which the life insurance provided by my employer more than covers already.

SCENARIO: Let’s say we did have a newborn kid, though, and wanted to replace my income (~50k/year) for the next 25 years (through kid college) in the event of my untimely death:

• STEP 1: Tobias recommends aiming for 75-85% of your income, so let’s say $37,500 in my case for 25 years, to provide through college ($937,500).
• STEP 2: My current social security survivor benefit for the newborn would be $1,377 a month until they turn 18 ($297,432).
• STEP 3: The difference between what is “needed and what my S.S. benefits would provide is $640,086 (or $25,603/year on average). So, for 25 years, we would mulitply by 18 ($460,862)
• STEP 4: My employer policy already covers a full year of my salary which would cover funeral expenses and several months of time off for the spouse.
• STEP 5: Subtract our assets, which we will say is $100,000 for this scenario ($360,862).
• STEP 6: Round up to the nearest $50,000 ($400,000).
• So, I should take out a $400,000 policy to meet our needs in this scenario.

So, his formula is quite useful for removing the guesswork and potential anxiety associated with determining how much life insurance to buy.
Speaking of, you should totally log into https://www.ssa.gov/ to view your social security benefits if you haven’t yet! You can view your earnings records and your estimated benefits based on retirement, disability, death, etc.

Final Thoughts:

This book is jam-packed with HUNDREDS of ways you can improve your financial life. Trying just one of his recommendations will, in most cases, easily pay for for the cost of the book and much more.

“By and large you should manage your own money (via no-load mutual funds). No one is going to care about it as much as you. And no one but you is going to manage it for free.“

Andrew Tobias

If you’d like to support our mission and are interested in purchasing The Only Investment Guide You’ll Ever Need, please click here for your purchase! 

Have you read The Only Investment Guide You’ll Ever Need? What are your thoughts, likes/dislikes, and biggest takeaways? Comment below!

How To Pay Off Your Debt…FAST!

[Editor’s Note: This is an independent post written by JJ. This post may contain affiliate links. Please read our disclosure for more info.]

When I was in my 20’s, I didn’t mind debt.  I liked stuff more than I disliked debt. Want to buy a house? Get a mortgage. Want to buy a beautiful, but way too big (and expensive) diamond ring for the further wife? Finance it. Want to buy a car or two? Get a car loan (or two). Want to get new furniture? Finance it. Want to go on the vacation of a lifetime? Refinance your mortgage or get a second mortgage. It didn’t matter what it was, I was willing to finance it.

Here’s a secret that we don’t tell too many people and I’m actually embarrassed as I type it…we liked new cars so much that we had a new car every six months for seven years.  Yes, you read that right. We had 14 cars in 7 years.

That was our foolish 20’s. We wasted so much time and money on depreciating assets.

In my much wiser 30’s, I can tell you that I hate debt; my wife and I both hate debt.  Like, hate it with a passion. Here’s the problem, I was stuck with all of this debt from my foolish 20’s so as much as I hated it, I still had to deal with it; we still had to deal with it.

When we were finally going to get rid of our debt, we had a car loan, furniture loan, personal loan, student loans, furnace loan, and a mortgage.  The total amount of our debt was over $285,000.  

We needed a plan! Below are the 5 things that we did to begin to pay off our debt at a lightning fast pace. If you want to pay off your debt fast, you need to implement these steps into your life immediately. You don’t have time to wait.

1. Get Educated. We heard about Dave Ramsey and began to dive into his teachings.  We formed a group and began following his book called Total Money Makeover (Click here to buy his book).  You can definitely buy this book and transform your financial life alone, but we knew that we needed accountability which is why we met with a small group and completed the book together.  Educating yourself is so important which is why we are passionate about lifelong learning.
2. Track every expense. How many drinks and snacks do you buy at work or at the gas station?  How often do you fill your car up with gas, but pay inside so you can get a coffee and a donut as well? Every time you make a purchase with cash or a credit card, write down that amount and what it was for. At the end of the week or month, you should be able to see exactly what you spent your hard-earned money on and how much money you spent.
3. Lock up your credit cards. No using credit cards until you have your spending under strict control. Strict control means only spending money on necessities. Cash only. Dave Ramsey has an excellent envelope system which we still use today.
4. Make a budget. If you don’t have a written budget, create one. If you have a written budget, update it and use it. Be sure to review and adjust your budget at the end of each month.  Reviewing and adjusting is an important step to be successful.
5. Pay off the smallest loan first. I really like Dave Ramsey’s philosophy here.  He says to not worry about interest rates rather look at which debt is smallest and start there. Put as much money to the smallest debt as possible.  Make only the minimum payments on your other debts. Once your smallest debt is paid off, take that monthly amount and add it to your payment on your second smallest debt.  That’s called the debt snowball.
6. BONUS! Here’s a bonus step so you’re extra successful! Do you have any loans that can be paid off by selling and purchasing a less expensive replacement?  Here’s what I mean…one of our car loans was a brand new vehicle. We were able to trade in that vehicle and purchase a much cheaper car. We weren’t able to purchase the car in cash, but we did get rid of about $20,000 in debt by getting a smaller, cheaper car.

Follow those steps and you’ll be on your way to paying off your debt fast. We followed those exact steps and when our debt snowball was aiming towards our student loans (actually, they were my student loans), we were able to pay off all $50,000 in my student loans in 12 months.  That’s the power of the debt snowball!

Fast forward six years and we’re down to $145,000 in debt which consists of a mortgage and one small car loan.  We were able to eliminate over $140,000 of debt in six years. Our next goal is to be completely debt free in ten years.

How about you?  What would you add to this list?  Are you debt free or just beginning your journey towards debt freedom?