3 Ways You Can Start Investing Even When You Are In Debt

“Balancing your money is the key to having enough.” – Elizabeth Warren

 

Nowadays debt is no stranger. Student loans, mortgages, credit cards, many of us need to rely on credit or loans to get what we need. Yet, when you have loans to pay back, how can you start investing for the future? Especially if you want to pay down those loans at an increased speed? Many of us feel it’s almost impossible to starting investing for the future until we are debt free. For some who take this path, they won’t start investing until their mid 30’s to early 40’s; which won’t leave them much time to build a steady nest egg for their retirement. The million dollar question is how can you start investing when you are young, have debt, and just starting out in a career? Here are my three ways you can start to do all of the above today:

 

Pay Yourself First – Any Robert Kiyosaki fans in the house? If you haven’t read Rich Dad, Poor DadI would highly recommend it. In his financial thriller Kiyosaki introduces the concept of paying yourself first. What does this mean? It means setting up automatic deductions and contributing to your simple IRA or 401k through work. How does this help? The biggest reason this helps is many times employers offer a percentage match of your contributions which means you’re making more money on top of your contributions. There are also several tax advantages upon the withdrawl of your money depending on what type of retirement account you have.

 

The second reason is because your money is going to grow faster in an IRA or 401k than in your traditional bank savings account. Most simple IRA’s, Roth IRAs, and 401k retirement funds are invested in several long term growth mutual funds which offer a healthy asset allocation of both stocks and bonds, this offers a decent percentage of growth over time. Of course these funds vary but once again you’ll see a better return compared to the 1% return you might make in a traditional bank savings account. By giving as much money as you can to your retirement accounts through work, you’ll be able to stash away money and start investing while paying down any loans. If things are already tight financially look at ways you can cut back. For instance if you spend $100 a month eating out, you might be able to stay in and contribute that $100/mo to your retirement fund.

 

Save Your Pennies – In my opinion stashing money away in a savings account isn’t a bad thing, as long as you have intentions of investing it. As previously stated, the reason many financial advisors advise to not stash money away in your bank account to save for retirement is due to such low interest rates associated with savings and checking accounts. Yet, there are other financial vehicles you can use to grow your money. For me, that vehicle has primarily been real estate. I have been known to live extremely frugally, save up a bunch of money, and then drop it on an investment property which will make me money for years to come.

 

So what is the point of investing in real estate? The point is to not only create equity in your property but you can essentially live for free by house hacking. House hacking, a term coined by Biggerpockets, is when you buy a multifamily property, live in one of the units, and rent out the other units on the property. From my first house hack I lived for a little under $700/mo due to my tenants helping out with the mortgage, not bad for Northern New Jersey; now, with the entire house rented out I make about $700/mo in rental income after the monthly mortgage is paid. Once the mortgage on that house is paid off entirely in the next 20-30 years I’ll be making about 30k a year from that house alone. I’ll always be a big advocate for real estate as I feel it’s an amazing investment tool to build and accumulate wealth.

 

Now I know what you might be thinking A) I don’t have anything close to a down payment to put down on a house or B) isn’t a mortgage a massive amount of debt? Both thoughts are certainly valid. With my home, I used an FHA loan which allowed me to put down as little as 3.5% of the home’s sales price so I didn’t have to deplete my savings by purchasing a home. The only condition with an FHA loan is that you must live in the property for at least one year, as this is an owner occupant loan.

 

Additionally when it comes to debt I believe there is good debt and bad debt. I would classify bad debt as anything you specifically need to pay off: student loans, credit card debt, rent, and even a mortgage where you are the only resource paying it off. I would define good debt as a mortgage which is paid off by tenants or another resource such as Air BNB. This way it’s not really money out of your pocket AND with every mortgage payment from your tenants you create more equity in your property! Want to know more about real estate investing? Check out Biggerpockets and be sure to check out Scott Trench’s book – Set For Life, which covers how to house hack and building wealth through real estate investment.

 

Save Your Pennies Some More – A really good way to invest while having debt, which I feel is rarely covered, is to become a lender. How do you become a lender? Well you need to save, save, and save some more. When you save a generous amount of money, put yourself out there to people who might want to borrow your money and charge them interest on the borrowed money to make money on your money. Again this loan could be in the form of a down payment for a car, home, or even a small business that someone might need. There are now sites like Lending Club which offers peer to peer lending. You supply the money and then make interest (about 4-6%) on your money while the borrower pays you back. Not bad for just saving!

 

Conclusion – Having debt doesn’t limit you from saving. By being frugal and taking these steps you can be on your way to creating wealth while still paying back any loans or debt you may have. As all things, saving money and investing takes knowledge and discipline. It’s super important to read up and educate yourself before investing! For more information check out our Resourcespage which includes some good reads and blogs that cover different forms of investing. Have any questions, comments, or ideas about investing? Let us know in the comments below!

Three Reasons Why You Should Substitute Your Master’s Degree For A Real Estate License

“There is no more profitable investment than investing in yourself. It is the best investment you can make; you can never go wrong with it. It is the true way to improve yourself to be the best version of you and lets you be able to best serve those around you.”– Roy T. Bennett

 

Ah, Spring is here and as usual the creativity is running through The Thrive Vine. Today’s topic is near and dear to me; mostly because this is the approach I took with my educational journey. I racked my brain for years wondering if I should go for my Master’s Degree (who knows someday I still might) but in the short term I opted for the not so conventional substitute of getting my Real Estate License.

 

Overall, getting my license has paid off. In my best year so far I was able to make 32k in commissions while working part time as an agent (if anyone wants to know more about how I did this I can certainly write a blog on this). Being in real estate has been a really fun and exciting path, and I think both short term and long term it has been a better investment than going for my Masters would have been.

 

Usually when I talk about getting a real estate license most people out the gate protest “I don’t want to sell real estate” or “I’m not a good salesperson” well that’s perfect! Because in today’s blog I’m going to explain why getting your real estate license isn’t just for selling houses, it’s just down right a more practical decision than going for a Master’s Degree. Here are three reasons why you should substitute your Master’s Degree for a Real Estate License:

 

Practicality –  In the opening of this blog I mentioned that getting your Real Estate License is more practical than getting a Master’s Degree. Why do I feel this way? Because whether you are going to be a homeowner or renter I’m about 100% positive you’ll want to know what your contract/lease means. We have to look at buying a home as being one of the biggest financial decisions of our lives (aside from college) and just having the knowledge of different types of loans, the options you have, and how the process works is beyond beneficial. You’ll never have to worry if someone is looking out for your best interest; because you’ll have the tools necessary to do so.

 

Supplement Your B.A – When driving myself crazy about whether to go for my Master’s Degree or not I started to ask myself some introspective questions, such as: What will a Master’s Degree do for me? Is it worth going into more debt? (this was a big one for me) and possibly what is my goal in my career? The answers to these questions I still have with me today.

 

I believe for most, a Master’s Degree ultimately means a larger potential salary, faster career advancement, and makes you certainly more marketable to employers down the road. Yet when I thought about it; these same qualities are what a Bachelor’s Degree was supposed to accomplish 20 years ago. So 20 years after I receive my Master’s Degree, would it be obsolete? More importantly, would I be obsolete? Could I be dispensable by a younger generation coming out of school with PHds? All of these questions came in to play and aided my decision. Instead of spending the tens of thousands of dollars on a Master’s Degree I went towards my Real Estate License, which including books and a 2 week class, was a  total of a thousand dollars.

 

When thinking about pursuing a real estate license many people assume you need to sell real estate. Although that’s what it’s most commonly used for, you can also use the credential to supplement your Bachelor’s Degree. How you might ask? Well think about real estate development companies, commercial real estate investors, property management companies, real estate investment trusts, even healthcare such as senior living companies, etc… any company or non profit that wants to expand, has a targeted demographic, and wants the best success for their business will have a need for someone who knows real estate.

 

Personal ROI – I lastly wanted to talk a little bit about Personal ROI (return on investment) between a Masters Degree and a Real Estate License. Let’s look at some numbers: Say you spend 20k on a Master’s Degree and get a job for about 70k-80k, if you have industry experience, or possibly 50k-60k if you don’t have any industry experience and just your Master’s Degree. If you’re coming out of school with debt, you won’t see the full return on your investment until you pay off your debt completely. On the other hand, real estate offers different kinds of Personal ROI. Keep in mind your total investment of your license is about a thousand dollars; so even if you sell one home you’ve made your money back on your initial investment.

 

But say you don’t want to sell houses, or choose to not, use a real estate license to supplement your career. Then how does getting a real estate license make sense? The answer is investing. Simply put, if I didn’t have my real estate license I probably wouldn’t have gotten into real estate investing as fast as I did. It was because of my real estate license that I was able to see properties that hit the market first, meet mortgage lenders and get great rates on my personal mortgages, and additionally meet wonderful people and form relationships along the way. As I’m sure you can tell, I feel getting a real estate license has the potential to have tremendous Personal ROI.

 

Conclusion – This blog admittedly a tad biased in favor of substituting a Master’s Degree for a Real Estate License. My goal here is not to deter anyone from pursuing their Masters, but really bring awareness in making a conscious effort to explore what additional credentials will do for you, and most importantly is it worth the debt you’ll take on. Furthermore think about your personal ROI, and hopefully, the joy and personal fulfillment a Master’s Degree might bring to you.

 

I sincerely believe having a real estate license is such a useful tool, to not only build wealth; but make connections and form relationships as well. What do you think? What does a Master’s Degree mean to you? Would you ever consider getting a real estate license? Let us know in the comments below!

Three Ways You Can Leverage Your Debt To Build Wealth

“I learned that if you work hard and creatively, you can have just about anything you want, but not everything you want. Maturity is the ability to reject good alternatives in order to pursue even better ones.” – Ray Dalio

 

To most, debt is a serious type of animal, and for good reason. Likened to that of meeting a grizzly bear in the middle of the wilderness (#yikes) we’ve always been instructed that debt is bad and, like a grizzly bear in the wilderness, should be avoided at all costs. However what I’m currently learning in my own investment journey is how to leverage your debt to acquire assets that will further build you wealth. Here are my three ways you can leverage your debt to build wealth:

 

The HELOC – Are you a homeowner? Or even one day plan to inherit an estate? Well a HELOC  (home equity line of credit) might be just for you. With a HELOC the owner of a property is able to take out a line of credit on their primary residence based on the amount of equity they have in the property.

 

For example say your home is worth 100k and you owe 50k on it, you now have 50k in equity in your home! Now naturally, when applying for a HELOC most banks won’t lend up to 100% of the amount of equity you have in your home, however they will lend up to 80% to even 90% of the LTV (loan to value). Essentially if you have 50k equity in your home you can walk away with a 40k line of credit based on an 80% LTV. This alone isn’t too shabby, 40k can pay for home repairs, to pay down your mortgage, go towards student loans, or it can be a nice down payment on another asset such as an investment property. Yet, like all lines of credit keep in mind a HELOC still needs to be paid back. So what does an example of this look like:

 

Let’s use our previous example of before: Your home is worth 100k and you owe 50k on it. You know the bank will lend up to 80% LTV so you’ll walk away with your 40k line of credit. Instead of blowing your 40k at the casino, you decide to use your line of credit as a 20% downpayment on a 200k multifamily which is priced below market value.

 

After maxing out your line of credit you might use some money from savings to create a little equity in the home such as floors, paint, etc… After having the multifamily rented out you can then choose to refinance the mortgage (remember you already have 20% equity in the home from your downpayment, on top of buying the home below market value, and the forced appreciation of the new flooring, paint etc..)

 

After all that work say the home appraises for 260k and you owe 160k (200k, the price of the home – 40k your down payment). You now have 60k in equity in your brand new investment property! After doing a cash out refi of say 75% LTV you end up with 45k (60k x 75%) in cash! Enough to pay off your HELOC and have 5k left over. Not to mention a brand new cash flowing investment property.

 

The Auto Refi – Let’s get real here, cars are one of our top liabilities. Some of us pay absorbent amounts on loans, and leases for the vehicle to depreciate right off the lot. It’s tough to imagine this liability could ever fuel an asset. However, like a home, you can also refinance your car loan. Why would this make sense? Well say your car is worth more than what you owe on it? You could simply refinance your car, take cash out, and start with a new loan.

 

Now, if you take the proceeds from your cash out and put them towards an asset such as a home, vacation rental, etc… you can then not only create value for yourself but have someone else pay off your car loan (#tenants). For more information this article from lending tree was super helpful.

 

The Credit Card – Ummm… What’s in your wallet? For most of us, not a heck of alot. However with cash back rewards programs from credit card companies you can see a portion of your purchases back. What does this mean? Well if you have the intention to invest, it means you can see a portion of your hard earned money back via rewards programs. These cash back rewards can potentially be set aside for cash flowing investments, or another asset that will build you wealth. There are a tons of blogs written on this topic, including this one which I thought provided good insight.

Conclusion –  The key takeaway here is that intentionality is everything. It is very possible to take some of our most wealth depriving liabilities such as homes, cars, and credit cards and use them to create wealth and acquire assets. However, at the end of the day the intentionality and financial discipline needs to be up to the individual to take action. What do you think? How can you leverage up some of your liabilities to help you gain wealth?

Life Hacks: Baby Edition Part 1 (Saving for College)

 

“Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this.” – Dave Ramsey

A few weeks ago, I was going through my facebook feed and I came to the realization that I never really realized how many of my friends have children, or are expecting to have children! Since The Thrive Vine is a family blog I wanted to address kind of a misunderstanding about kids and finances. I think many people, to some degree or another, believe that kids are expensive; and that if you’re going to have children, your run at financial independence is just about over.

 

Sure you have the big ticket items like college, vacations, maybe even future medical expenses such as little Timmy breaking his ankle jumping from a jungle gym in elementary school (#sorrymomanddad) But what we forget are that children are just mini adults (and some adults are big kids) so if you can fiscally take care of yourself there is no reason why a child should break the bank for you and your family. Today in Life Hacks: Baby Edition Part 1, we are going to be addressing the all elusive college fund and how you can starting investing (not saving) for your baby’s future:

 

College Fund –  I remember any Birthday, Christmas, or Graduation money I got as a kid went into one fund: the college fund. In today’s world  things aren’t much different. In fact, many millennial parents are still paying off their own student loans while saving for their children’s education. I think what many people fail to realize is that college is no longer something that can be saved for; but something that needs to be invested towards.

 

Here’s what I mean: I remember my father telling me when he went to college back in the 70’s his tuition was $700 a semester (I believe this was including books!) I know personally, when I was in college, I spent more than my father’s total semester tuition in books alone almost every semester.

 

What I’m getting at here is that $700 is a very feasible goal to save towards. However what if your child’s tuition is 10k-20k a semester!? There’s a very little likelihood that you are going to save enough money for one semester never mind an entire college education in 17-18 years. However there are two main options that I’d like to share with you for investing towards your child’s college fund:

 

The Real Estate Method –  As you know I’m a real estate investor, and believe that real estate is probably the fastest way to grow your wealth. However what if just one rental property could pay for half if not all of your child’s college education? Here’s a scenario:

 

Say you purchase a rental property on your baby’s first or second birthday for 100k, you put down 20k, which leaves you with an 80k mortgage. Over the next 17-18 years you rent out the house and your tenants pay down another 20k of your mortgage which leaves your mortgage at 60k. Keep in mind the beautiful thing about real estate is appreciation; you purchased a house almost 20 years ago and as the market appreciates in value, so does your home. Lets fast forward to 17-18 years later and your home is now worth 210k due to appreciation and of course any work you put into the house.

 

This means by owning just one rental home for almost 20 years and having your tenants pay down your mortgage you now have 150k in equity! (210k appraised value – 60k your mortgage). So you might be asking how is this going to help with my child’s college fund!?

 

Well you are going to tap into that equity to pay for your child’s college! There are many options for this scenario including Home Equity Loans and HELOC’s however for this scenario let’s use a cash out refinance. In this scenario using a cash out refi you can walk away with 97,500 by refinancing your house. Here’s how:

 

210k (Appraised Value of your home) x 75% LTV (loan to value typically what a bank will lend you) = 157,500k

 

157,500k – 60k (Mortgage) = $97,500.00

 

With any luck $97,500 will hopefully be more than enough to put a dent in any college debt your child might have. Additionally you still have a rental property where your tenant will continue to pay down your mortgage.

 

The Index Fund Method – Believe it or not the greatest asset a parent has when investing for their child’s future is time (if you start early) It just so happens that is what index fund investing is all about; accruing compound returns over a period of time. Here at The Thrive Vine we aren’t exactly financial advisors I can’t tell you which funds to invest in, however from my own experience and readings I can share with you some funds and resources worth exploring.

 

Being a real estate guy I truthfully didn’t know much about index fund investing until I read the Simple Path To Wealth by J.L Collins. In his book, Collins strongly suggests the fund VTSAX (Vanguard Total Stock Market Index) What index funds do is track the stock market. What does that mean? It means that while many investors will gamble on individual stocks to provide stellar performance, by investing in a U.S total stock market index you are betting on the United States Economy as a whole. VTSAX alone is made up of about 3,600 publicly traded companies including tech giants such as Apple, Microsoft, and Amazon.

 

One thing that I didn’t like about VTSAX is that Vanguard requires 10k to start investing, because of this I started investing in SWTSX (Schwab Total Stock Index). While the Schwab index is made up of fewer companies than Vanguard, it doesn’t require a minimum to start trading; additionally if you have a Schwab account you get free trades. Still like Vanguard? No Worries you can invest in VTSAX in EFT form using the ticker VTI.

 

So all of this information might be useful but how is this supposed to help you invest towards your child’s college fund? The great thing about index funds are that they grow! When the market increases your index fund goes up in value. If you continue to invest on a regular basis (whether the market is up or down) your earnings can grow quite a bit. In fact VTSAX has a average 5 year return of 12.83% which isn’t too shabby.

 

The scariest part about index fund investing is when the market goes down. Keep in mind all markets, whether real estate or the stock market go down. The whole mantra behind index fund investing is that you can’t time the market; and you’d be foolish to do so. By investing steadily in your fund and keeping to your game plan you will eventually see gains.

 

When investing for your child’s future the greatest asset you have is time. Although 17-18 years might not seem like alot of time to accumulate a massive amount of money for your child’s education; once your money starts compounding you will certainly be in good shape for your child’s educational future.

Conclusion – How do you plan to save for your child’s college fund? What tips or strategies are you using that you might be able to share? In Part Two we are going to dive a little more into life hacks on how newer parents can save money  (which in turn they can invest) and continue on their journey to financial independence while bringing their little one along for the ride!

How Debt Can Set You Up For Financial Success

 

 

 

“I like the night. Without the dark, we’d never see the stars.” – Stephenie Meyer

 

Usually the words debt and financial success are never used together, nevermind in the same blog title. Yet, I wanted to write a blog about what I learned from being in debt and the biggest lessons and habits that helped me. While being in debt is certainly something most financial professionals (and me) would never advise, there is always a light at the end of the tunnel; and there are some life changing lessons to be learned by being in debt and getting out of it. Without further adieu here is how debt can set you up for financial success:

 

The Background Story – Back in 2011 I was the ripe old age of 22 and fresh out of college. My total student loan debt was a mere 45k;  childsplay compared to what many college graduates face today. Yet, as they say, timing is everything and after graduating just 3 years post the Financial Meltdown, the unemployment rate was 9%; which really sucked. After getting off to a rough start in the job market I found myself with two bachelor degrees working for $12.00/hr; not exactly what I was envisioning. However, it didn’t really matter how much I was making, I had 45k to start paying off.

 

The Habits –  I’ve always been a pretty frugal person so having enough money to pay off the monthly statement on my student loans really wasn’t an issue. It wasn’t until I started understanding interest rates that I was able to step up my game and start aggressively paying down my debt. Soon every spare penny I had went towards those loans and I eventually paid off the 45k in about a year and a half, thanks to $12.00/hr and more overtime hours than anyone would need in a lifetime.

 

Although most would say paying down the loans was a great accomplishment; it wasn’t until the debt was satisfied that I realized the habits formed by repaying my debt were attributing to my financial journey and success. If you’ve made it this far, you might be asking “what the hell is this guy talking about!?” Stay with me..

 

You see, it hit me that when you are actively paying back debt you are always on a budget; afterall, you know that you have a loan payment coming up and will budget your finances appropriately to make that payment. However when you pay that loan or debt off, you still have the power to put away money as if you were still paying off your debt. For example, say after you pay off your debt you continue to allocate that loan payment in your savings account or a retirement account.

 

By formulating this habit, you learn the art of not only saving but paying yourself first. Paying yourself first is really one of the most important rules of personal finance. It’s important to not increase your expenses by spending your money on expensive lunches and nights out at the bar everyday; but take that extra money and invest in yourself and your future.

 

Credit – Another way that debt has the potential to increase your financial success is through your credit. I remember after paying back my student loans my credit score soared to over 800. What did this do for me? It was because of a good credit score that allowed me to lock in a stellar 3.3 percent interest rate on my first duplex; without question this wouldn’t have been possible if I wasn’t set up by the habits that were created by paying off my debt.

Conclusion – Not very often will you hear to appreciate debt. However, when the habits used to pay back debt are used towards savings and investing; financial success is almost inevitable. What do you think? Do you think the habits caused by debt can later help you on your financial journey? Let us know in the comments below!

3 Steps You Can Take To Advise Yourself Through College

“Adapt what is useful, reject what is useless, and add what is specifically your own.” -Bruce Lee

 

Ever wonder why peer advisement for college courses isn’t more of a thing? I do. I never really thought much of it until I went to go schedule my classes for my last semester of college. Me, being the ambitious guy I am, wanted to take 18 credits, stack my schedule, and pretty much hightail it out of college. The classes I needed to take however, needed to be approved by my advisor; a professor of mine. As I was sitting across from my professor I had all my courses and a checklist laid out: electives? Met. Gen Ed’s? Met. Credits needed to graduate? Shy by 18 credits. My advisor looked down at the classes I lined up that I wanted to take, looked up at me, looked back down at my list, sighed a little, and then said “why take so many credits? Why not take less credits and take some next semester? I mean what’s another semester, right?” The last sentence he said penetrated my scull, and immediately I made the connection. “What’s another semester!?” I thought to myself, “another five thousand dollars, is what another semester was.” Needless to say I went on to take my 18 credits (6 classes) and pulled a B or better in each of them. Here are my three steps you can take to advise yourself through college, without an advisor:

 

Pick Your Classes – I know typically when we think of educational institutions, business isn’t the first thought that comes to mind. Honestly the institution I attended was a non profit. Yet, I realized that college professors do not take into account the student’s financial situation. In my case there’s a reason I wanted to bust my butt to finish up with college; money. I didn’t want to pay for another semester of books and tuition. To this day I think that having college professors who are paid from the tuition you pay, and advise you for the classes you should take, is a bit of an inside job. So how do you get around this? I know in my situation my classes did need to be approved by my advisor, but I pretty much got to call the shots. If you have a decent GPA and know you can handle the work and courses you want to take. I say go for it.

 

Know Your Requirements- I had another really great experience with advisement that I’d love to share. Majoring in both economics and history my university would offer courses that could count towards both majors (#score) So when I saw a class that said Economic History and was advised to take it, I jumped on it! I mean what could go wrong. Well… essentially everything. So it turns out the course wouldn’t be accepted by the business college to go towards my economics degree, and would just count towards my history credits; not exactly what I was hoping for. Yet, after the smoke cleared there was a valuable lesson. Advise yourself. Especially if you are picking up majors in different areas of study, do not count on communication between different colleges within the university. So how do you advise yourself? Online you can find all of your course requirements for any majors and minors that you’d like to pick up. When scheduling or viewing available classes be sure to have a checklist on what requirements you need to take each class. After picking out your classes for the semester go to your advisor and get your selections approved (*I’m sure this process is different in all institutions, so double check what the process is for your college). By you taking on the responsibility you’re assuring yourself your advisement is done right, and at the same token taking the responsibility off the advisor who might not be as educated in the realm of advisement as you might think.

 

Peer Advisement – I know the university that I attended did not offer peer advisement, but I certainly hope this changes. One of the most useful tools I utilized while advising myself was asking my peers. The great thing about college courses is that there are tons of people who are in different levels of their college careers. You might have seniors and freshman in the same classes. I was quick to find a group of students who I had multiple classes with and asked them what their next moves were, and I remember even sitting down with some going over my own schedule. If colleges aren’t utilizing peer advisement I’m not sure what they are waiting for. It was an excellent way to network, and get better information on what professors and courses I should take.

 

Conclusion – “So what’s another semester?” You tell me. With a generation drowning in student debt I would make the assumption if another semester could be avoided it would be appreciated both personally and financially by the student. Remember while advising yourself to do your homework. Make sure you know and understand your requirements, prerequisites, and always be sure to put yourself out there to your peers. The work alone in college can be challenging enough, but sometimes you need to step up and make your own luck; something that in my life, proved to be immensely beneficial. What do you think? Do you think professors should advise students on what classes they should take? Do you attend an institution where peer to peer advisement is a thing? Let us know in the comments below! I’d love to hear your thoughts and opinions!

5 Tips On How You Can Manage Your Student Debt Today

“Most people fail to realize that in life, it’s not how much money you make, it’s how much money you keep.” -Robert T. Kiyosaki

 

It’s time for us to have a heart to heart. One of my goals for this site is for it to become a complete resource for development. From career advice, to landing the job, to creating wealth. Today’s lesson: Debt. If you’re reading this I know you have some interest in getting out of debt but maybe aren’t sure how, or are so overcome with the balance of your debt that it might not even seem like it’s worth it. Just a little background, I was able to pay off all my student loans (about 45k) by 24 by just making $12.00/hr. I won’t lie, it was alot of hard work and strategy, but paying off student debt has put me in a really good position to accomplish my goal of financial freedom by 35. Today I’m going to share with you my top 5 tips on how you can manage your student debt today:

 

Start from the beginning – This might seem like an obvious place to start but it is oh so important. With student debt it’s really important to know and understand what you’re getting into. The issue is that you’re only 18 when you make one of the biggest financial decisions/investments of your life (#brokensystem). Student debt is incredibly interesting, many times what university or college you attend might not matter as much as you think it would when it comes time to start your career. If you are in the position where you are picking a college or thinking of going back to college, really weigh the return you might see from having a college degree with the debt you’ll be taking on. Furthermore think if you’d like to commute or dorm. I get the whole “college experience” thing and being away from home; but is it worth the extra 25k in tuition? Weigh your options carefully; you’ll be dealing with your decisions later in life.

 

Loan Consolidation – For many of us the “damage” is already done. I personally know I had a terrible return on my education first coming out of college. My debt was 45k and I came out making 12.00/hr or approximately 24k a year. For New Jersey, that really sucked. So how did I pay off those damn loans? First step, loan consolidation. After you graduate you might have 4-5 different loans floating around all with different interest rates. Take as many loans as you can and try to consolidate them under one interest rate. There are services such as So-Fi and Earnest that actually specialize in this; we have links to these sites on our resources page. By getting most of your loans under one interest rate you should save not only time, but a ton of money.

 

Get Aggressive – I have a really weird relationship with Money. I hate losing it, and spending it on stuff I won’t see a good return on; so college wasn’t exactly on my good side. I literally wanted to beat the proverbial snot out of my loans. How did I do this? Every month I’d get a statement, and every statement I’d give them a few hundred dollars more than what they asked for. Listen up, this is the big secret behind any debt: They get you with the interest rates. If you only make minimum payments you will be losing money every time you pay, even if your interest rate is low. The key is for you to feed that loan money until the interest rate no longer matters, and your payments are being applied solely to the principle of the loan. For example say your lender asks for $500/mo, give them $1,000.00 or $1500.00. Even if it’s $750 it’s still better than just paying the minimum balance.

 

Get Hustling – When I finally landed a fulltime job I remember being so relieved. I literally thought my work was done. I found a job, I spend 40 hours a week there, I then get to go home and play with my cat. I was crazy wrong. I’ve talked with so many graduates over the year whose salaries don’t justify their debt. (example 200k in debt vs 50k salary) Their full time jobs can’t support their debt never mind their lifestyle and cost of living. So what are they supposed to do? I honestly hate Math, but the one thing I like about it is that it’s very cut and dry. Sometimes there simply isn’t enough money, so you need to create money. How do you do that? You either pick up overtime at the current position you’re in, or you find a side hustle to make extra money to put towards your loans. In my instance I worked 50-60 hour weeks picking up any overtime I could for probably about a year and half to two full years; was it hard? Hell yea it was hard, but I was able to pay down my debt super fast and you learn to be grateful for the opportunity. So what are examples of some side hustles? You can pick up a part time job aside from your full time job, get your real estate license, give lessons on anything you are good at ex: guitar lessons, math tutoring, any bonuses you see from your full time job put towards your loans etc..,… If you get hustling you will be able to pay down your debt. no doubt about it

 

Saving Money Is The Same as Making Money – Often times when we feel there isn’t enough money in our lives we look for a higher paying job. We feel that if we only made more money than things would be so much easier. Sometimes that might be the case, but often times you can make lifestyle adjustments to accommodate your financial requests. If you ask me, it’s really important to track your finances and analyze what you are spending money on. When you have a loan payment coming up, did you really need to drop $300.00 on shoes? How about instead of going out to eat every day, try once a month? You see what I’m getting at. Luckily there are a plethora of tools out there to help track your spending and calculate your net worth. Probably the two best apps for calculating your networth is Mint, and Personal Capital. I personally use Mint. For me it gets the job done, it links to my accounts, tracks my spending, and calculates my networth. I can set personal goals for myself and make lifestyle adjustments around my goal. Both of these apps are incredible tools and I would certainly encourage anyone looking to advance their financial future to use them.

 

Conclusion – Student Debt can be an incredibly tough obstacle to tackle if you do not have a plan. I hope some of the above tips and strategies help you to eliminate your debt and start your journey to wealth accumulation! Remember that debt is completely controllable and might take some behavioral and lifestyle changes but can be managed. You got this! Do you have any tips, good sites, or apps that helped you with your student debt? Let us know in the comments below!

Loan Consolidation: A First Hand Account

“Life is a succession of lessons which must be lived to be understood.” – Ralph Waldo Emerson

 

This is going to be a quick one. Let’s be honest; there are already hundreds upon thousands of resources available to educate you on the best way to handle your student loan debt. Consolidation is always an option. Rather than telling you how I did it, or who I suggest you use, let me briefly explain why I did it and my story, as everyone’s situation is different. I owed a decent, not extraordinary amount of money upon graduating with my master’s degree- a cool 70k. While there are plenty of people who may owe 170k or even 270k, given my income level and my financial situation, it was still a burden for me to make the payments.

 

Yet, I had a plan. My total monthly payments before refinancing were going to be about $900 a month. Of that, $700 was for federal loans and $200 for private loans. While I could just afford this, I wasn’t comfortable having to be accountable for so much each month. I also have a mortgage and other expenses to pay. I looked into consolidating my loans and realized I could do it directly with the Federal Government rather than a private lender since most of my loans were government loans. I applied to a few private institutions but kept getting interest rates over 6%. Sticking with the Government I received a rate of 5.5%. The best I received by far. I then consolidated all of my government loans, which brought my total refinancing amount to about $59k. The remaining $10k was 4 small private loans which I kept under that lender. What I did, which has really helped me, was taking the longest repayment term I could with the government – a whopping 25 years !

 

Now, before you start yelling and shaking your head at me, listen to this. At 25 years, I was still going to pay the same interest rate as the 5 year loan. The only difference; they would take less for principal each month. We’re talking approximately $1k a month for a 5 year loan vs $360 for a 25 year loan. In turn, this alleviates the pressure to have to pay a high amount each month, especially if you don’t have the money. But I could always give them more.

My plan was to roll in more money each month as I paid down my other 4 loans. If I paid off a private loan which was about $50 a month, I would now give that additional $50 to the federal loan. Now that I owe less than $2k with my private lender, I can give my federal lender an extra $150 a month towards the principle. Therefore, I benefit from the same low interest rate as anyone else who refinances with the government (they set the rate), but I get to make the payments on terms that are more comfortable to me.

 

This alone means I will pay off my loan in less than 15 years now. As I make more money (hopefully) and pay off any other debts, I am hoping to eventually pay 700 a month. The additional 350 month would pay off the loan in less than 10 years. If I have some extra money from tax returns or bonuses, I can apply that to my loans as well. The beauty of the long term loan is not necessarily because you will take that long to pay off your loans, but because if you can’t afford the high payment for a period of time, you won’t be ruined financially. Therefore, the most important thing when refinancing is the interest rate and the payoff terms. Choose the longest amount of time you can at the best rate. You’ll be thankful you did! Do you have questions about the loan consolidation process? Let us know in the comments below!

How You Can Save On Your Three Biggest Expenses

“The obstacle in the path becomes the path. Never forget, within every obstacle is an opportunity to improve our condition.”– Ryan Holiday

 

For some of us, it’s really hard to financially get to the next phase in our lives. We might have aspirations of one day starting a family, buying a house in a great community, and not to mention being extremely successful in our careers. Although some of these things might seem like a dream now, they can and will one day become reality. In today’s blog I’m going to address three things that people spend the most money on, and how you can save on these expenses. My hope is that by analyzing your financial situation you will realize all of your dreams are more than possible, you just need to go down the right path. Without further adieu let’s analyze your three biggest expenses:

Housing – Housing is probably the biggest expense Americans endure. Rents specifically have skyrocketed and have created a bit of a vicious cycle within the millennial generation. For this reason many millennials are staying with their parents for longer periods of time; they simply cannot afford to move out. Luckily I’m a landlord, and will share a bit of insider information. What we find as landlords is that there are plenty of people who make good salaries, but might have less than stellar credit usually due to outstanding loans. So the question is what can you do about high rents in your area? And how can you save money? I have a few answers for these questions.

1)The most obvious answer is to get a roommate to absorb some of the rent costs. This allows everyone to save a little more money and can really cut down on your living expenses.

2)My next suggestion, which might seem unconventional, is to get pre-approved for a mortgage and try to buy a house (wait a second hear me out). There is little dispute that in parts of the U.S (specifically New Jersey) rents are comparable to what you can buy a house for, so why not go for it? My best suggestion would be to purchase a small multifamily home and live in one unit while renting out the other; this alone can dramatically diminish if not completely wipe out your housing expense.

3)But wait a minute; say you don’t want to be a landlord or manage tenants, then what? Another way that you can come close to eliminating your housing expenses is to actually buy a 3-4 bed single family home; and then get roommates or Airbnb the spare rooms. This again will allow you to dramatically decrease you living expenses, give you the potential to live for free, and you won’t need to manage tenants as you just need to find roommates.

Health Insurance – For the past few years health insurance has been a bit of a topic of discussion. If you are paying out of pocket for Health Insurance, it is probably one of your biggest expenses. Luckily again, I have some experience in the health insurance industry and can certainly shine some light on how you might be able to save on your monthly premium.

First, I should disclose that like all insurance Health Insurance is a game of risk. No one plans on getting sick or injured. The plan you choose is based on calculated risk. With that said when choosing a health insurance plan, be extremely conscience and honest with yourself about your medical history. If you do have a medical history a plan with a high premium and low deductible might actually be worth it to you. Why? Because typically plans with higher premiums and lower deductibles offer better coverage. If you are in the Dr’s office or hospital frequently your insurance would absorb the cost you would have to pay out of pocket if you didn’t have that plan.

Now on the other hand say you’re generally healthy, then you might be able to go for a plan with a higher deductible and lower monthly premium. The logic behind this choice that if you go to the gym, and eat healthy the likelihood of you dropping dead from cardiac arrest shouldn’t be all that high. Taking a plan with a higher deductible and lower premium would allow you to really just have basic coverage and allow you to save on your monthly health insurance premium. Again it’s all based on risk and how you feel about the condition of your health.

*One last item to mention with health insurance plans are in and out of network plans. It’s important to realize not all procedures and Dr’s will be in your medical plans network. So before you do go in for a surgery or any type of procedure make sure the Dr. (specifically any anesthesiologists) are in your network. If not, you could be balanced billed for the cost of the procedure which could be tens or hundreds of thousands of dollars based on the procedure. Make sure to really do your homework when dealing with doctors and insurance plans, as it could take a huge toll on your financial health if something is overlooked.

 

Loans/Debt – The last biggest expense that most people have are loans and debt. Whether these are student loans, car loans, or credit card debt. The really great things about loans and debt is that they are extremely controllable and manageable. If you are in massive credit card debt; hide the credit card and continue to pay off your balance with you credit card company. The same goes for loans. If you are facing student loans continue to work on them and pay them down as long as the payment is manageable. Now, in the event you are having trouble making payments on either loans or credit card debt, these items are negotiable with your lender. Here is my story of how I negotiated the terms on my credit card, along with another blog on how you can consolidate and save on your student loans. By both negotiating and consolidating loans your monthly debt can drastically decrease and making for a much healthier financial future.

 

Conclusion – Housing, Healthcare, and Debt can be a brutal vicious cycle with no end in sight. These three expenses are what prohibit many people from moving on to the next stages of their lives, but if approached with a different mindset can really have a massive effect on your financial well being. Let us know what you think in the comments below! Are these your three biggest expenses? What are some other expenses you could do without?

Three Money Mindsets And What They Mean To Your Financial Future

“There is something about you. Something you carry, something made of gold… but far more PRECIOUS…” – Smaug (J.R.R Tolkien)

In case you haven’t guessed, I think… alot. I don’t always have the time on my hands but that doesn’t prevent me from always wondering “why.” Recently as I was making a rather large purchase, I thought to myself “ugh I don’t want to see my savings account drop like that.” This mere thought got me thinking: our money psychology defines so much of our financial future. Yet how we view money, spend it, and rationalize our purchases mostly come from the environment we live in. In today’s blog I’m going to discuss three types of money mindsets and what they mean to your financial future:

 

The Hoarder – If there’s one thing I’m really good at it’s money hoarding. Depositing paycheck after paycheck and watching my balance accrue makes me well… happy! But about a year ago I found this actually isn’t the best psychology to have. I remember I wanted to get into real estate investing, the problem being, houses cost money. So when it came time to fork over the money for the down payment on my first house, I was feeling financially stressed. What I didn’t realize is that hoarding money without investing won’t get you as far as you might think. Think about it, even if you spent years upon years saving up money, if the money isn’t growing it won’t last. The game is passive income or the notion of making money while you sleep. Whether it’s investments such as Index Funds, or even buying a piece of cash flowing real estate; it’s really important to invest your money. The growth and dividends is what will keep you going even when you might not be able to work anymore.

 

The Risk Taker – On the opposite end of the spectrum of Hoarding is the Risk Taker. The Risk Taker likes to take their chance on those risky investments and see if they win; as the payoff will be huge! In my investment career I’ve been in this mindset as well. When I first started investing in the stock market I was really into penny stocks and other high risk investments; you could even argue my first investment property was risky due to the amount of repairs it needed. So what defines this psychology? I’ve come to the conclusion that the amount of risk you are willing to hold relates back to mostly your age and where you are in life. It honestly makes sense for younger people to lean towards riskier investments, because if the investment goes south they still have time to recoup their losses and move on. A stock portfolio of a 25 and 60 year old will just not look even close to the same. The 60 year old, hopefully getting ready for retirement, will have much more conservative investments such as bonds, CD’s, etc… Remember it’s ok to take risks on investments, but really weigh your risks carefully; if it flops do you have enough time to come back from it?

 

The Over Extender – When it comes to money I believe most people fall into the Over Extender mindset. In this specific mindset our upbringing defines how we view money and what we spend it on. There are many people who view a car or even a single family home that you live in as an investment. To me, an investment is something that makes you money. A car payment or mortgage that you physically pay with your hard earned money isn’t something that I would consider an investment but rather a liability. Do homes appreciate in value? Of course they do; but is the money you get back from appreciation going to be the same amount of money that you spent paying off the mortgage for 30 years? Maybe, maybe not! It depends on the investment. When in the Over Extender mindset it’s important to realize your specific goals. If you want to break this mindset or cycle, it’s important to adopt the Hoarder Mindset. Start saving and then any money that would have gone towards debt or liabilities pour into cash producing investments. By taking this path it will be extremely hard to not become wealthy.

 

Conclusion – What mindset do you have when it comes to money? What kind of assets do you hope to invest in? It’s important to mention no matter what psychology you have towards money always strive towards your financial goals as they are more than attainable! Let us know what you think in the comments below!