Personal Finance – the Thrive Vine

Practicality Or Passions

“Be practical as well as generous in your ideals. Keep your eyes on the stars, but remember to keep your feet on the ground.” – Theodore Roosevelt

It’s often said if we do what we love, we’ll never have to work another day in our life. Yet, is that completely true? While we may love what we do, will we love who we do it for? Where we do it? How we are doing it? How much we get paid to do it? Will we love it forever? How do we know what we love today, will be something we are so passionate about in five, ten, fifteen or twenty five years? Do you truly believe that if you got a job doing what you love at 25, you’ll be in the same career when you retire (hopefully) at 65? The fact is we most likely have no idea what we will love to do the rest of our lives. Yet, as children, we are given the impression that we should follow our dreams and pursue something that we love. Unfortunately, this viewpoint can cost us a lot of wasted time, opportunity and debt. Is it worth taking on $100,000 worth of debt in student loans for something you think you love only to find out you can’t get a job doing it or discover that it isn’t something you liked as much as you expected?

Quite frankly, while we are told by educators and our schools that all degrees are valuable and you can get a multitude of jobs with any degree, the “real world” doesn’t work that way. In fact, I would argue, there are very specific paths most of us should follow in order to reduce our debt, maximize our time, and give us ample opportunities to succeed. Let’s discuss college first, as that is what a majority of high school graduates do afterwards. STEMM is science, technology, engineering, math and medicine. These career paths will bring you a plethora of opportunities at the cost of plenty of hard work up front, and potentially a lot of debt without scholarships and or grants etc. Also, just deciding to major in one of these paths won’t automatically result in a job. Certain degrees in science are in higher demand than others and not everyone who majors in engineering may be guaranteed work. If you live in Rhode Island and don’t plan on moving away, would there be a point in majoring in Petroleum Engineering?

Let us jump over to the liberal arts side of things. I would argue, that unless you have a specific desire to pursue a liberal arts career, do not focus on these degrees. In other words, if you want to study Anthropology, then know in advance where your opportunities may lie, such as field work studying primates, working in a museum or teaching. Don’t study anthropology with the notion that you can always get a job as a Business Analyst. If that’s your plan, then just pick a business concentration and study that. If a hiring manager for a Business Analyst position has to choose between two similar resumes but one candidate has a degree in Anthropology and the other in Business Process Management, who do you think they will go with?

Likewise, unless you want to be a historian, a history teacher, or a historical author and have a plan to make these things a reality, maybe consider a different major than just history. Philosophy is another possible example. Unless you want to become a Doctor of Philosophy and work in a university, this major might not be for you. If you choose philosophy and figure you can always get a job as a some sort of business relations manager- think again. Just study business management and save yourself the time from the start ensuring that the debt you may accrue will have greater potential value.

Again, there is nothing wrong with choosing a liberal arts degree, but don’t choose one just because it’s something you love to do, with the false belief you can always “get a job in business.” College is an expensive investment and with high expenses comes practicality. This is the biggest financial decision of your life being made before you are even 20 years old. By putting practicality ahead of your passions you may see greater potential in your career along with less stress, job security and favorable financial health.

Remember, you can always keep your passions while going through school. Just because you love playing an instrument, doesn’t mean you have to stop. If you love to write, there is no reason why you can’t keep writing (maybe start a blog??). If you enjoy being active then keep staying active. It’s good to dream big and see into the future, but don’t forget about what’s happening right in front of you. Remember, college is not for everyone. Plenty of jobs are available by learning a trade or even joining the military. A high skilled tradesman can live just as well as any college graduate while being in just as much if not more demand for their skills. This spans everything from plumbing, electrical, carpentry, mechanics, HVAC, iron workers and so forth. The military has hundreds of career paths you can follow to learn a myriad of important skills both technically and socially. Even better, they will usually pay for your schooling!

The explosion of college, doesn’t make hands on work any less important. Only more important! If you are going to college, my ultimate advice to you is simple; Remember to choose a degree that will afford you as much opportunity as you can get. In the end, you will be able to buy your time to do the things you truly love to do. What are your thoughts on this topic? Do you think practicality needs to be set ahead of passion? Or do you think there is a healthy combination of how both can be achieved? Let us know your thoughts in the comments below!

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 2

“We must consult our means rather than our wishes.” – George Washington

Hi Everyone, and welcome back to Life Hacks Baby Edition: Part 2. In case you missed Life Hacks Baby Edition: Part 1, we discussed some investment strategies on how to pay for the big ticket items in your child’s life such as college, their first car, etc… using investment methods such as index fund investing and real estate investing. Today in Part 2 we’re going to discuss how to save on some expenses during the day to day journey of raising a child. We’ll provide some helpful links and hopefully some out of the box ideas of how you can reuse some of your resources to see some steady savings while raising your little one:

The Cell Phone Baby Monitor – Just doing a quick search on Amazon I found baby monitors ranging from $20.00 to over $300.00! Each monitor has different bells and whistles for your young padawan; but for something that will likely only be used for a few years, is $300.00 worth the expense? One creative idea I saw to alleviate the expense of a baby monitor (or security camera) is reusing old smartphones. Essentially through baby monitor apps, or video teleconferencing apps such as Skype, you can download, mount, and run real time footage of the area that you want to monitor. For more information or how to learn how to set up your own baby monitor using an old smartphone or tablet be sure to check out resources like this article or the video below!

What To Wear – When I was growing up, cheap clothes definitely meant hand-me-downs, the Goodwill Store, and Salvation Army; all of which are still viable options today for any family on a budget. Yet, one trend that is catching my eye is the ever growing rental business of clothing. I see it for adults all the time and now there are multiple businesses that offer affordable clothing for children. Here are the top three companies I’ve come across:

Kidbox – Kidbox offers clothing for the day to day. Whether its back to school shopping or even the essentials like undergarments and socks, this company seems to offer wide range of styles and clothing for your children. What is really great about this company is that you only pay for what you keep; which is a huge bonus.

The Borrowed Boutique and Rainy’s Closet – What I liked about both of these companies is that they are perfect for those “special occasions” such as baptisms or weddings. Both companies offer a simply business model and the clothing they offer seems very elegant and well made. For your children you simply pick out a nice outfit, got to the event, and then return the outfit. This can certainly be much more cost efficient than buying a dress or suit and only having your child wear it once or twice for a special occasion.

What To Eat – I think at one time or another every parent has probably wondered “will this kid stop eating already!?” Growing kids are hungry, and… well… food costs money (you can put two and two together) No, I’m not proposing to starve the little meatballs, but instead map out some healthy and affordable meal planning. I’ve personally found the best way to feed a group of people in general is to make one big dish during the week and have leftovers for lunch or dinner for the rest of the week. It saves not only the most money, but time as well. Here are some recipes and resources you might find helpful when it comes to preparing dinner or cooking a dish up for the week that everyone in the family can enjoy:

Kidspot Recipes – This link will bring you to 12 quick and easy recipes anyone can accomplish while on a budget or strapped for time.

98 Cheap and Easy Foods to Make – In this article you will find, well…. 98 cheap and easy foods to make.., above all in this article the author lays out alot of quick and healthy dishes to make while on a budget.

Adult Hack – I found this article actually pretty interesting and wanted to include it in this blog. It’s actually for how adults can watch their calories by ordering from the kids menu at many chain restaurants. Some of the restaurants mentioned aren’t the healthiest choice; however if you’re on the go this is an option worth exploring to save a little bit of money.

Conclusion – There are ways of saving money all around us, sometimes we just need to get a little creative. What I’ve found the most helpful during my time writing these blogs is doing honest research. There are so many businesses and services out there to take advantage of, that you would never even know existed if you haven’t looked for them! How do you save money on the day to day expenses for your kids? Do you have any good recipes or tips on how to save money? Let us know in the comments below!

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!

How Quitting Your Job Can Save You Money

“There are many things money can buy, but the most valuable of all is freedom. Freedom to do what you want and to work for whom you respect.” – J.L Collins

Reading the title of this blog you might be thinking “this guy is way off his rocker.” I mean you don’t need to be a financial guru to know that you need money in order to live. But you see, that’s exactly it! You need money to sustain a lifestyle of your choice, not necessarily a job. Whether your idea of comfort is a 6 bedroom house with a courtyard, or a 2 bedroom home nestled away in the woods; that part is up to you. When most of us think about how to get money we think, we need a job. However in today’s blog I’m going to propose that in some instances we can actually save money by quitting a job/profession we dislike and replace it with something that is much more flexible and purposeful that we do like. Here is how quitting your job can actually save you money:

Commute – Let’s face it gas prices aren’t going down, in fact according to the U.S Energy Information Administration “the United States consumed 143.85 BILLION gallons of gas in 2017 that’s a daily average of about 391.40 million gallons of gas.” With a demand like that, oil companies have the upper hand with fuel prices, plain and simple. So what can we do about this? And what on earth does this have to do with our jobs? Well.. since you asked… one of the first things I ask people when they say they do not make enough money is: what does your commute look like? Are you driving an hour, or two hours to work everyday? After bringing awareness to this it’s extremely easy to see where our paychecks are going.

So there are a few options here: Either you can get a more fuel efficient vehicle, find a job that is closer to you, or limit your commute all together. Now you might ask, how do I limit my commute altogether!? I’m glad you asked! We are witnessing a revolution when it comes to positions and employers that allow employees to work from home/ or freelance. Sitting at home blogging and writing content is amazing! The best part about it is that you can get paid to do it and you don’t need to sacrifice your hard earned money to your gas tank! This ties into our next point:

Working From Home – Does your employer offer the option from home? If your employer is like mine, they probably don’t! (#didn’tseethatcoming) so how can you work around this. Well take a look at your position and figure out how maybe you can work from home. Think about it; even if you could swing working from home two days a week, that still saves money on items like gas, vehicle maintenance, and even items like possibly child care. But most importantly it saves you time. How does it save you time? Well every 30minute, 45minute, or hour commute add up! What could you be doing in that time aside from driving or sitting in traffic?

I know what you’re thinking – How the heck am I going to convince my boss to allow me to work from home, even for a few days a week? The best advice I can give is that you have to establish yourself as an absolute linchpin and incredible asset in your company first. What I’m saying is after 3 months on the job to not ask your employer if you can work from home; but maybe after 3-5 years when you’ve proven yourself and your employer knows what an asset you are to the company. People have much more leverage than they realize and this could be a wonderful option to keep your same pay and cut down on your expenses.

Time – Only you know the best use of your time. But like I discussed in the previous point, I know it can be used better than sitting in traffic. The thing about time is that it’s the only resource that we can’t get more of. If you might be thinking about leaving your job or thinking about “what’s next” think about how you can make things easier on yourself. From all the time that you spent sitting in traffic what could have you been doing to make yourself profitable or happy? What’s the opportunity cost? What is your time worth and can you use it better to create results that can yield income that you’re missing out on by commuting?

Conclusion – So what do you think? Is it possible to actually save money by quitting your job and exploring a career like blogging/freelancing or working from home? What if you didn’t have to pay for as much fuel, possibly save on child care, drop to a one car household, and didn’t have to sit in traffic for an hour? Most importantly what would you to do with the time or money that you could potentially save? Tell us what you think 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!

3 Reasons Why Credit Means Nothing

“Inside of every problem lies an opportunity.” Robert Kiyosaki

Everywhere you look nowadays credit is required for you to make purchases. Whether it’s a car, a house, or even furniture; credit seems to dictate what we can and cannot have in our lives. Yet, what are people with bad credit supposed to do? I guess they just can’t have stuff and need to live in a box… Of course not! With a little strategy and a game plan you can literally have anything your heart desires. Here are my three reasons why Credit means nothing:

What is it – Credit to most people means how well they pay their bills on time. They make sure they pay everything timely and at least give a little something towards their debt. I look at credit a little differently. At face value having good credit means you are really good at borrowing other people’s money. Now I’m not saying stop paying your bills! But what I am saying is certainly be conscience of your purchases. Instead of maxing out a credit card and believe that you are “building credit” look at it as a charge card; only put a dollar amount that you can afford on it so you can pay your bill off in full when the time comes. What does this do? It lets you avoid the interest that is charged, saving you a ton of money!

Doesn’t Stop You From Making Money – When people ruin their credit by either foreclosing on a home, or going through a financial hardship they assume they’ll never be able to own anything ever again. That is simply not true. Having bad credit doesn’t stop you from making money. Will it take work and discipline to save to buy a home in cash? You bet your sweet cheeks it will. Yet, if you’re dedicated to it, why not? Many times student debt is another big issue when going to buy a home. Millennials have the highest student loan debt the nation has ever seen; many are putting big purchases like home ownership to the side because they simply can’t build up their credit fast enough to get approved for a loan. So what gives?

The Strategy – Huddle in, here’s the game plan if you have bad credit or if you haven’t had a chance to build your credit yet. If you’re credit is already on the downside there is still hope. If you do want to make a home purchase there are still a ton of lenders who deal with people with judgments or collections actions on their credit (If you live in NJ just send me an email, I’ll get a list to you). Say your credit is really in the gutter; then the answer is to produce income. Again Credit doesn’t stop you from making money. Creating good spending and saving habits can be life changing and you’ll never have to ask anyone for money again. Now say you are trying to build your credit what do you do? In the event you want to make a big purchase like a home and don’t have the credit to do so you can always get a co-signer for the loan with good credit (such as a parent) and then eventually drop their name from the loan. Say you don’t want to go that route what is the next best way? I would really start hammering down on your student loans (or the loan that is causing you the most debt) as much as you can. This way if you pay a good chunk of the loan down in just a few months your credit will improve and you’ll also show creditors that you’re serious about paying back debt.

Conclusion – If you have bad credit or haven’t had time to build up your credit yet; don’t sweat it! There are multiple ways to get around borrowing money. Remember that generating more income might be harder than just taking out a credit card, but owing nothing to anyone is really priceless. I’d love to get some thoughts on this blog. Has anyone had bad credit and turned it around? If so how did you do it and what were your steps? Let us know in the comments below!