One Income Stream is Risky Business

There’s a recent happening at the Debtists’ residence that we have not yet spoken of. It’s one that I hope you consider heavily, and it emphasizes the risky business of relying on a single income stream. After revealing the going-on’s at our home, I sure hope it convinces you to re-think the way you look at yourself and your job, and to possibly start on this path towards adding side hustles to your resume in 2019. 


Real talk: A year and a half ago, Mr. Debtist pursued his dream job at a start up company working on electric vehicles. As with any start-up, there is risk involved, and one never quite knows if anything will come of it. Last year, we went through some difficult times with the company, and for a month or so, we didn’t know if there was any more growing left to be done. Luckily, they pulled through and at the beginning of this year, there was hope of moving forward.

Unfortunately, mid-October, we (and the rest of Mr. Debtist’s company) were blind-sighted by a turn of events that resulted in a laying off of 20% of the company, followed by a mandatory furloughing until further notice of anyone who joined in the last six months. A 50% cut on everyone’s salary was implemented, which is hardly the worst part. Last week, another wave of mandatory furloughs was issued, getting rid of all of Mr. Debtist’s friends at work, but one. All that’s left of Mr. Debtist’s team is him and two other mates. Now I am not ungrateful for the fact that he was kept on and still has a job, despite the 50% cut that he’s been working under the past two months. But it is a depressing thing, to see your company degrade, your co-workers leave, and your paycheck smaller than when you first graduated from college 8 years ago. I share this with you all to prove one thing: Having one income stream is risky business.


Sometimes, “what you do in your 9-5 is not as important as what you do in your 5-9”, my favorite quote from Side Hustle Nation’s Nick Loper. We need to stop thinking of ourselves as someone employed by a company who works in the 9-5. Rather, we need to start thinking of ourselves as entrepreneurs, who may be doing particular work from 9-5, but who are our own employers from the 5-9. Because we are our own employers, we are responsible for creating other income streams for ourselves outside of our 9-5. By doing so, we no longer remain dependent on a single job, or on an employer for that matter. Even if you own your own company and you work for yourself, you cannot assume that your single source of income will be there a year from now. You cannot assume that you’ll still be satisfied with the same work after a year. And who likes sticking to a job that they hate? We only have a limited number of days, and our lives have to reflect that. With other sources of income comes more freedom from any potentially unfavorable turn of events, and more power to call the shots as to what takes up your precious time. The minute you become an entrepreneur, you become your own person.

Even as a child, I knew deep down that I did not want to depend on anyone. In fact, I hated it when people told me what I could and couldn’t do. That’s just who I was. No one else but me gets to say how my life is going to be. I mean, should anyone else be given that right?! Here in this space, I write about ways in which we can live intentionally. Part of that requires ensuring that we are living for us. That our actions are shaped by neither our histories, nor our relationships. That we leave our own legacy behind, and not an empty shell of a life made busy with what other people thought defined our success, or worse, defined us.


For Mr. Debtist and I, we are absolutely lucky in the fact that we do not rely on one income stream. And I am not referring to the fact that we are a dual-income household. I would say that we are a hexi-income household, because we employ a number of different side-hustles to increase our income. And while we cannot necessarily replace our 9-5 jobs with the other income streams, we can stay afloat. We prove to ourselves that we can come up with something to replace it. We (hope to) inspire others to have the courage to make it work. If all of this jives with you, here are five income streams for myself that have helped offset the dramatic pay-cut. 

  • Work for 2 dental offices (and stay open-minded to help out fellow dentists in need at their offices). I work for two different dental offices in two cities about twenty five miles apart. One is three blocks from my home, the other is a five minute drive from my parents. Working for two offices gives me flexibility, but also, safety. Imagine one city suffering from a fire, or an office suffering from a sudden loss of staff. Dispersing my dependency between two offices that serves two different communities gives me a stronger sense of stability. Additionally, I have colleague dentists who occasionally message me and ask me to help out with their own private offices once in a while. If I have a day off, I am more than happy to work for them for that day, to help alleviate the work load or to give them time to take a vacation.
  • Act as landlord and rent out a room. We started this idea of co-housing in January of 2018. After having an emotional break-down over the stagnancy of our finances given the large student debt that we had to overcome (referring to myself, not the Mr. Debtist, regarding the debt AND the breakdown), we decided to co-house to alleviate some of the financial load, and more importantly, allllll of the stress. Another way of thinking of co-housing is as an additional income stream. Renting out a room in our home gives us an additional $700 a month! It’s actually the biggest thing that got us out of our stagnant stages (along with YNAB which helped us get our budget in order), and it was the best decision we ever made!  
  • Dog sit via Rover: This is a recent side hustle that I started to do and I think it has great potential. We do not have kids of our own, and while we love our toothless cat, we also enjoy the additional company of other pets, too (even though Theo may not). Dog sitting is a great side hustle because it does not add much to your plate. It is flexible in that you can create the timeline that works for your already existing schedule to feed and walk the dogs. For us, it is a great opportunity to play and love dogs who would otherwise be sitting in a kennel overnight. The dogs are welcome to sidle up by us on the couch during the day or on the bed at night. It gets us to go out on a walk three times a day, forcing us to exercise, but also giving us the opportunity to connect. With this side-hustle, I charge $30/night to dog sit, giving us the earning potential of an additional $900 per month. Via Rover, you can also choose to day sit, take dogs on a walk, check-in on someone’s pet, and more! You control your own calendar, making it easy to do without sacrificing your current obligations. For example, if you have a vacation planned, then you may block that day off from your availability. If you love pets as much as I do, then this is a great hustle to look into.
  • Use affiliate linking to generate income from the blog. This is fairly easy to do when you have an existing blog or social media platform. You can become an affiliate for a number of companies and help others by linking them to that company’s programs or services. Off course, I do not link to every company out there willy-nilly. I only choose companies that are in line with my lifestyle and my values. Most of the time, I have tried the product myself to verify that they make a good fit. For example, in an effort to help others who are attempting to wrangle their student debt, I have partnered with the following refinance companies (Laurel RoadELFICommon BondSofiSplash FinancialEarnestLendkey) to help people get lower interest rates on their loans. It’s a win-win situation, because I make financial independence, zero waste-living, and sustainable products easily accessible to my followers, and at the same time, I receive a small percentage commission from the companies I work with.
  • Take bread orders and sell bread loaves and croissants. Baking bread is like a science. If I am being honest, it took me quite a few experimental bakes before I even got to what I would consider edible bread. Eventually, I got to bread that was soft enough to digest, let alone bite into, but I still wasn’t satisfied. When I got into a bread baking habit, I wanted to improve my skills without wasting so much bread. A gal can only eat so many loaves in one sitting! So what I started to do was sell my bread to friends, family, and co-workers, which gave me the ability to practice honing in my skills without wasting resources. In return, they received fresh loaves of organic bread, without any preservatives of any kind, at a hugely discounted price. Even though I have stopped baking bread loaves every week once I developed a recipe that I was happy with, I occasionally still do get orders and requests. This isn’t to say that bread baking will replace our real 9-5 income. Rather, it’s to show you that you have hobbies and talents that people are willing to pay for. At absolutely no expense to you. Let’s say you love to read. Offer your services as an editor. Let’s say you like to cook. Sell your most popular meals to friends and family. Or better yet, start a blog and share your recipes with the world. If you like calligraphy, use the holidays or weddings as opportunities to make some income. If you own a camera, become a free-lance photographer on the side, starting with close friends and families to build a portfolio. Trust that you hold value , and share your interests and skills with others in a way only you know how.

We took over a $55,000 pay cut two months ago. But we aren’t going to quit. We will keep up the student loan payments and dig our way out of hyperdebt. We will flex those frugal muscles (a year of working out those frugal muscles has prepped us for this!). And we will not jump desperately to the next corporate job offer. We will stay afloat this crazy ocean ride. Why?? Because it is important (to us) to build a lifestyle by design. Part of that means that it is important to do meaningful work, however that’s defined by you. We knew the risk of a start-up company, but electric vehicles is what he wanted to do. He loves cars, and he believes strongly in a future of autonomous driving. Despite the unexpected turn of events, you don’t ever regret a decision like that. If you find yourself in a similar situation, I implore you to seriously think before you jump into the next job life throws your way. If it doesn’t align with your lifestyle or your values, why chain yourself up? 


We only have a limited number of days, and our lives have to reflect that (see paragraph 4).

Frugal Challenge: Don’t Buy Snacks

I am going to be the first to say that I am the least opposed to having a mid-afternoon treat. A firm believer that chocolate fixes all things, you won’t see me denying a cupcake when it’s sitting on the kitchen counter for the taking. My family knows that once you set out the dessert at a holiday gathering, I’m going to be first in line holding an empty plate.

That’s just the problem. It’s difficult to say no to something when it’s taunting you from right underneath your nose. However, it is very easy to pass up on something that you never knew was there. So here is my next, and long-awaited, frugal challenge for the month of October. Stop buying snacks!

Related Posts:

This challenge is not a practice that just recently came about in our household. In fact, it is a habit that we are quite accustomed to. The origin story goes way back to the moment I was diagnosed at age 22 as pre-diabetic, despite the fact that I weighed 100 pounds. You’ve oft heard the saying, “Never judge a book by its cover”? Well, it’s true. A skinny, young girl can be diabetic. At 22, my body was doing a great job at metabolizing all the sugars that I was consuming, but it was also already starting to fail. Without getting too extremely technical, having a normal blood sugar level does not mean that your body is not suffering. Your body can be fighting to keep itself healthy by pumping out a TON of insulin to get rid of those sugars, but eventually, your handy dandy pancreas will not be able to keep up with the work load, and it will start to fail. By the time you notice a high blood sugar level, it is already too late. Your body has had enough.

So when I was diagnosed with pre-diabetes, I knew something had to change. Having been trained to eat ice cream for breakfast, lunch, and dinner (yes, I have done that all in the same day… quite frequently), and growing up in a household where snacks can be found in the pantry every single day, I knew that it was my diet that was causing my body to suffer. I was taught that soda was exchangeable with water, and that juice was “healthy”. Every day after school, my mom would require us to eat merienda, which translates to a snack in Tagalog. Unfortunately, the snack list included chips, cookies, cereal, ramen, mac-and-cheese, and more thoroughly processed goods.

I was in my first year of dental school when I cut out sugar from the grocery bill. In doing so, I nixed mostly every snack possible. I not only said goodbye to my beloved cartons of ice cream, but also the chocolate bars and the cookies and the juice. I even cut out most cereals, with the exception of Cheerios (and not the Honey Nut kind). It was here that I first learned that the most efficient way to cut down the grocery bill is to get rid of junk food. I was grocery shopping for Mike and I, swimming in student debt, and I proposed that we limit our combined grocery bill to $50 a week, a rule which we still stick to to this day. $50 covered at least six days worth of breakfast, lunch, AND dinner for two. That’s how I got through dental school. But that means our limitations couldn’t stop at sugar. We also cut out chips, frozen fries, pizza pockets … even cheese and crackers.

Once we did that, we realized that $50 a week was completely doable. And I am not talking about eating spam or peanut butter sandwiches every day. I am referring to decent, home-cooked meals that taste better than going out to eat! Off course, there are many more perks to cutting out snacks than simply hitting a grocery budget. Here are the top 5 reasons why you should cut out snacks, in general.

TOP 5 REASONS TO CUT OUT SNACKS

  1. Decrease spending. Have you noticed that snacks cost so much for what you get? A protein bar for a few dollars?! A box of fruit roll ups for $5?! You’re practically paying top dollar for useless carbs that will shorten your life span or increase the chances of you needing to pay for medical bills to treat underlying conditions because of unhealthy food choices during your hay day. When you put it that way, all of this pointless eating costs more than the food itself. You may want to cut out snacks to decrease overall spending, for now and for the future.
  2. Cut down on sugar. In case you haven’t heard, all processed foods contain tons of added sugar. It doesn’t matter if they sell it in the form of “agave sugar“, it is still processed sugar that is unnecessary. Cutting down sugar was my number one reason to cut down on snacks. But there may be other reasons as well..
  3. Cut down on cholesterol. My extended family has a history of high cholesterol. When I think about how much salt lies in my once most favorite snacks (ie: Cheetos, Ruffles, French Fries, Ramen, etc), I can feel my arteries clogging up. Decreasing snacks can really do a body good.
  4. Become more productive. Let’s face it. A majority of us use snacks as a means to distract us from work. I remember the days when I needed to study for a test, and suddenly, my mind focuses on food when it should be focusing on the textbooks in front of me. How often do people at work take “snack-breaks”? Work-at-home-bloggers, you know what I am talking about. When I cut out snacks, I find that I eat more regularly. Three meals a day at approximately the same time. I stop “craving” a lot of things, which allow me to focus on my work, whether that’s dentistry or blogging.
  5. Help planet Earth. A majority of snacks are packaged in plastic. When we cut out plastic from our grocery list, we were already primed for success, because we have been cutting out snacks for a few years. Think about it. Individually packaged candies, bags of chips and cookies, even popcorn is in a paper bag wrapped in a plastic bag! We cut out frozen foods completely, as well as jugs of orange juice and bottles of soda. We aren’t only helping our bodies, but we are also helping the planet too.

Off course, there are many more reasons not to eat snacks. But these, for me, are my top five. So try it out for the month of October! Extend it past your grocery list and avoid buying snacks at all times. Do you need that mid-day coffee from Starbucks, or that extra bag of chips from the gas station to satisfy you during the commute home? If you do go out for dinner, is it necessary to get the appetizer and the dessert? Or a cup of soda, even though it’s unlimited re-fill? I know that at first, habits like these are hard to ditch. But try it for a month, and see how much you actually save. You may be extremely surprised, in a good way.

 

How to Decide if Property Ownership is a Good Financial Decision for You

This post may contain affiliate links. Please see my disclosure to learn more.

Well, we are doing it! We are in the throes of purchasing our first property! Currently, we just started the escrow process, so it’s all new enough to accurately relay our experience on zee blog. I have been MIA on the finances front for a while, but I’ve decided to start a new series on Property Ownership (I say property ownership because, as you will see, we did not go with a traditional home, therefore I think home ownership is too selective of a title), in which I hope to cover a collection of thoughts and well-meaning advice.

The first of which is this: You’ve got to know what you are doing when buying a home. Unless you want to get your money swept from underneath you or risk ending up with a home that you absolutely hate, I highly suggest getting informed before even considering any of this. May I suggest starting with the Home Buying Kit for Dummies? Not saying you’re a dummy, just saying I read this from front to back and felt confident in the home buying process, which went quite smoothly for us. In fact, today’s topic of deciding whether to buy is outlined in their first chapter. Sans my own personal stories and interjections. You’re welcome!

Deciding Whether to Buy

We all make consumption choices in our lives. Whether that’s a cup of coffee, a sustainable product, or an eco-friendly gadget. Sometimes, purchases can lead to buyer’s remorse, especially when they fall short of our expectations. When it doesn’t cost much, you can get over it quickly by either choosing to return the product or deciding you will not make the same mistake twice.

As a very mindful consumer, you likely already know that I weigh the pros and cons of every purchase I make. This is especially important with large purchases, such as a car or home. Sloppy shopping can lead to financial and emotional disaster. And I love the analogy that consumer debt is the equivalent of financial cancer. So, buying a home should not be taken lightly. It should not be an entirely emotional decision. And it is not right for everybody. If that is something you did not want to hear, then I am very sorry.

The goal of this series is to go through the process that Mike and I went through in order to help ensure that we have a home we are happy with, we get a good deal on the property, and most importantly, that owning a home helps us accomplish our financial and life goals.

But before we could have even decided whether owning or renting was best for us, we had to learn the advantages and disadvantages of both!

The Pros of Ownership

Not everyone should buy homes, and not at every point in their lives. That’s a statement I believe in. That being said, there are many pros to owning your own property.

  • Owning should be less expensive than renting!

This is the first guideline that Mike and I wanted to follow. We have thrown away so much money in rent. How much, you ask? Our first 18 months, we paid $2,800 a month for our beautiful 1,599 sq. ft., 2bed, 2ba live/work loft in Orange County, California. For those of you thinking we are financially crazy, I just want to point out that an 800 sq. ft. 1bed, 1ba apartment in an apartment complex runs around $2000-$2200 in our area. I agree, it is crazy expensive to live here. I also agree that we weren’t exactly financially savvy when we started out. The next 8 months, we received a huge rent reduction to our space. We made a bargain with our landlord which stated that we ourselves will fix any problems (that totaled to no more than $200 per month) that came up, and she reduced our monthly rent from $2,800 per month to $2,600 per month. Additionally, we took on co-housing and we further reduced our rent to $1,900 per month, while giving our roomie her own bedroom, bathroom, and access to the entire house for $700 a month. She was happy because she avoided having to hemorrhage $1,500 for an old, run-down studio space, and we were happy because our rent went down almost $1,000 with those two simple changes. The savings of $900 over the course of 8 months was $7,200! YAY US!

All of this to say, that over the course of the last 26 months, we have spent $65,600 in rent. If we didn’t have our roomie, then we would have spent $71,200 towards rent, with nothing to show for it. Now if it seems like your monthly rent looks way smaller than the price of a home, which is likely to be hundreds of thousands of dollars, think again.

A very simple calculation of the home you can buy that would have approximately the same monthly cost as your rent can be completed using the following equation.

$______________ per month x 200 = $ _____________________

Example: $2, 800 per month x 200 = $ 560,000. The property we decided to put an offer on? $499,900.

Another consideration between the cost of buying and renting is the cost of doing so today versus the cost in the future. As a renter, you are fully exposed to inflation rates. A reasonable annual increase in rent is 4% per year. Remember that if you pay $1,000 in rent per month, that is the equivalent of buying a $200,000 home. Well, in 40 years, with 4% inflation per year, your rent will balloon to $4,800 per month, which is like buying a $960,000 home! On the flip side, after buying a home, your housing costs are not exposed to inflation if you use a fixed-rate mortgage to finance the purchase. So only the comparatively smaller property taxes, insurance, and maintenance expenses will increase over time with inflation.

This isn’t to say that you must buy because of inflation. But, if you are going to continue renting, you must definitely plan your finances accordingly.

  • You can make your house your own

This is a great pro to all the creatives out there. However, a word of caution:

Don’t make the place too unique. I understand that you may have a distinct taste or style. And while that may lead you to a happy life in your home, it could make it very difficult to sell in the future. If you do make improvements, focus on those that add value, such as adding skylights, energy-efficient  upgrades, and updated  kitchens and bathrooms.

Avoid completely running yourself into financial ruin. It’s easy to get carried away in the emotions associated with owning a new home. There is this urge or pressure to make it look picture perfect straight away! There is nothing wrong with making your home a dream one the slow way. When you feel the urge to throw all your money straight into renovations, think of the things you already have. Say, a roof over your head?

  • Avoiding Landlords You Can’t Get Along With. Mike and I have never personally had an issue. However, we have heard stories of landlords who neglect their tenants needs or continually refuse to fix rental units that are falling apart.

The Pros of Renting

  • Simplicity. Signing up for a place to rent is definitely easier than going through the process of securing a home. You don’t have to deal with financing, inspections, and other possible issues like you would if you were buying a home.
  • No upkeep. When you have a rental property, your landlord will be responsible for property maintenance and upkeep!
  • You have flexibility! This was actually one of our initial reasons to continue renting. Renting allowed us to not feel tied down. In the last few years since we got this place, we were going through so many changes. We got married, Mike got a new job, we started tackling our student debt, and we wanted to travel the world. I just started work and Mike and I did not know if we would like our new jobs and if this is the area we wanted to stay. Luckily, since then, we have fallen in love with our city and our jobs. We have proven to ourselves that tackling the student debt is doable, and we are comfortable enough to now tackle on housing. But if you are at a stage in your life where you need any sort of flexibility at all, then maybe renting is better for you right now. If you plan on not keeping your property for more than five years or plan to move soon, buying and then selling a property is not the way to go.
  • Increased liquidity. Many people buy their first home and wipe their finances clean with the down payment and the closing costs. Plus they have to make their monthly payments. Renting will help prevent you from being financially stretched.
  • Better diversification. Buying a property could mean that your wealth is tied up in the house. As a renter, you can invest money in a variety of investments, not just one.

Do NOT Fall for the Following Pitfalls

  • Renting because it seems cheaper than buying. You must consider the monthly cost as well as the future cost. See discussion above.
  • Buying when you expect to move soon. Additional costs that come with buying and selling a home are pretty large. Unless you plan on keeping the home for a while after you’ve moved, it may be better to wait until you are more sure of where you will be one year from now.
  • Allowing salespeople to sell you something you don’t want. Many people in the biz have a vested interest in getting you to buy, because they work off of commissions. But remember that when you buy a property, you will be the one coming home to it every day. You will be the one paying for it. So make sure that you do you!
  • Ignoring logistics. You should probably think through how every aspect of your life is affected by your home purchase. Imagine buying a home that has everything you are looking for and is within your price range, but which adds an hour commute to work. How much would you resent that home? Or imagine having a home that happens to be located in a loud neighborhood, and you are a light sleeper. These are important things to consider!
  • Don’t become house poor! Either you own a home, or it owns you. Nuff said.
  • Being peer pressured. This is a toughie. Typical me, I had to really dig deep and figure out why I wanted to buy a home. Was it entirely socially ingrained? Was it purely from a financial perspective? Was it part fantasy? I had to rationalize and confirm (and re-confirm) that I was not being peer pressured into this. That this is something Mike and I decide to do, for reasons of our own. Just because siblings, friends, and co-workers are buying homes, it does not mean you should too. Maybe they own a home, but have no finances left over to travel. Maybe their house is keeping them from quitting their work and pursuing a passion. Don’t assume their life is better than yours. And as always, never compare your beginning to someone’s middle.
  • Misunderstanding what you can afford. To be honest, if you haven’t gotten a feel for your financial situation and life goals, you are just guessing how much you should be spending on a home. So having a good grasp on your financial stance is the place to start. Also, unless you are a high-income earner, if you do not have a back up plan for unexpected life occurrences, you may find yourself in a tight situation. A job loss, family emergency, or natural disaster can make you house broke in an instant. Understanding all of this and having a back-up plan is very wise!

Given all of these pointers, only you can ultimately decide if buying a home is right for you. Not me, not your peers, not your real estate agent, and, no offense, but not even your parents. More importantly, you must analyze whether NOW is the right time for you. It may be that waiting until you have a bigger down payment, a more stable job, or a better financial back up plan is the best option. Something we as humans tend to avoid thinking about is the worst case scenario. But think about it you must.

Also, learning about the property buying process is quite necessary. If you are feeling a bit overwhelmed after reading this post and need a place to start, start with this book! I highly recommend it. Do you have other recommended reading for first-time home buyers?  Feel free to share with the community in the comments below!

Frugal Challenge: Co-housing

There seems to be this taboo in the United States about having roommates after you are married. The general concensus is that once you are married, you two should symbolize your ability to provide for yourselves by living in your own home. When you continue to live with your parents or family, people almost look down on you and judge you, saying things like, “They aren’t capable of living on their own. Why did they get married then?” Couples who live with family members or friends are almost embarrassed to reveal this to others. People who are serious about each other or who are married feel this pressure to hunker down and find their own home. An even greater pressure exists for people to BUY their own home right after they get married, because that’s the next thing to do before having kids, right?

This is not common in other parts of the world. Couples live with families to create communities that act as support for their growing families. Some would argue that most families do this out of need, maybe in third world countries, because they do not have the resources to care for themselves. But this isn’t true. In Denmark, which is known as the happiest country on Earth, there are co-housing communities where there are 20 or so homes in the same area for non-related families. These housing communities were featured on the documentary “Happy”. They work together to cook, and clean, and care for the children. Each family member has a day of the month where they have to cook for everyone, say 40 people in the case of the documentary below. Even though it takes 3-4 hours to cook that one day, the rest of the month, they don’t have to worry about coming home to cook. We deal with stresses all the time about buying groceries, figuring out what to make, cooking every day, doing the dishes every day, etc. Imagine doing that only once a month, and then the rest of the month, you come home, shower, and you have 3-4 hours to relax and be with your kids. There is also a sense of community and support that your family receives. The kids have friends at home that they can grow with, and they have plenty of adults who they know will care for them. This is one of the things that sets Denmark apart, but it is being embraced more and more by other countries such as Canada. What people have started to realize is that the community is really enriching and plays a huge role in one’s happiness. Compare that to the United States, where most families with young children experience a lot of stress and feelings of isolation, countries with communal living tend to report higher satisfaction with life among their citizens.

 

Mike has spent his whole life with roommates, and for the most part, so have I. Rather than “live together” the way most couples do, we spent my last two years of dental school “living together” in a house with 2 of his college friends, and we both had separate rooms. We enjoyed this version of communal living. Each of the four roommates had their own bedroom and we came out and hung out with each other in the common living areas. I lived at home throughout my whole undergrad and I was used to always having people over, eating dinner together as a group, and sharing chores. When I started dental school, I lived by myself for the first year, but I was honestly hardly ever home. Talk about your biggest financial mistake. My second year I lived with one roommate and I realized that I thoroughly enjoyed living with other people. When I lived with Mike and the boys, I realized even more that there was a lot of value with communal living. Whenever I was stressed, there was always some way to relieve it, whether it be hanging out with our friends or talking with them and asking them for advice.

When we decided to get married, we did what any other couple would do, which was find our dream home and move into it, just he and I. We’ve loved every minute of it, but there is just too much space for the two of us. There has been a lot of talk about potentially moving the last few weeks. We have been considering downsizing, looking for smaller apartments to rent in order to save money but also simply for the sake of downsizing. And then I did what I usually do and started re-assessing.

Two of our closest friends just got married last month to each other. They have been renting a house with a third roommate for the past year or so. When asked if they were going to move into their own space, my friend said, “Why would I do that?! My dream is to buy a house and have all my friends live in it in the separate rooms and help me with the mortgage.” Absolute genius, I tell you. They liked living with their friend, and it was a smart financial move to keep living with each other. The three of them wouldn’t have to hassle with finding a new place and physically moving all of their stuff. Nothing changed after they got married, and why did people make it feel like it had to? And just like that the stars aligned.

The day after Mike and I decided not to commit to a potential rental and to continue living at our loft, we learned that my brother’s recently graduated girlfriend found a job in Irvine and is looking for studios in Fullerton or Orange. She was looking at rentals at the price of $1300. We offered her the entire first floor of our three story loft, with her own bedroom and full bathroom for half the price. We are very excited to say that we now have a new roommate joining us around me and Mike’s one year anniversary. We cannot be more excited to welcome someone else into our home! Frankly, I’ve been missing my roommates dearly. I’ve spent hours and hours trying to find a cheaper rental without sacrificing the coolness of our space. And I highly enjoy spending time with our new found roommate. This couldn’t have been a better opportunity. She will have a significantly decreased rent, without the need to buy the usual household items new-grads have to buy when they start living on their own. Mike and I save on rent and can put the extra money towards my student loans. And we will all have additional company and people to hang out with and help around the house. Rather than moving to a new place, we took a step back and moved towards the right direction.

Yet another way we are challenging social norms with the intent of getting closer to living the life that’s right for us. And hey, who knows! Maybe over time, the United States could start to embrace the co-housing community concept too.

This post is dedicated to our friend Chad, who made us see an alternative to the housing strategy. Thank you.

 

Paying down student debt: Where to start

For the past few months, I have written about my debilitating student debt (We started with $538,000 with $36,000 already accrued interest at 6.7% interest rate) and the reasons I have for tackling it mercilessly and quickly. What I have learned (by the sheer number of people who have approached me and asked me how I was doing the impossible), is that there is a huge interest in the community of recently graduated students (or even people who have graduated 5-10 years ago who still have student debt) to do the exact same thing. It’s crazy to me that no one ever tells us just how. I remember taking an exit course in dental school and meeting with “financial counselors” about how I can pay back the debt fastest, and they told me that it will be best if I just leave the debt, pay the minimum payment under a loan forgiveness program, let the interest (and overall total) accrue for 25 years, and then have the loan forgiven and pay the taxes on your now-over-a-million-dollars debt. It’s alright if you end up prolonging the debt longer and paying more in the long run, because by then, you’d have saved up money and be super rich. Yeah, super rich in debt. I’m a numbers kind of gal, and their approach towards paying down student loans would probably appeal to a more emotionally inclined person. The numbers just didn’t add up for me. So I kept pursuing and pursuing, until I found a way. Current update: still pursuing a faster way. Never giving up.

Firstly, I would like to say that I tend to avoid writing how-to blogs, mostly because I don’t like telling people what to do, which is mostly because I don’t like people telling me what to do. Treat others the way you want to be treated, they say. But I’ve been getting enough questions that I think it would be more efficient to just write about it.

Second, there is not one way to go about paying down student debt, just as there is not one right way to deal with finances. You must take into account your ideal lifestyle, your life mission, your personality, and your current life situation as well. I am not writing this how-to in any definitive sort of way. I am just walking you through to how I got here, with some actionable tips that have been helpful to me, and may be helpful to you.

  1. Find a purpose. There has to be a reason why you want to pay down the student debt, but you need much more than the purpose behind paying down the loans. Obviously, that would be easy to determine. Reasons such as, to get rid of debt, to owe no money, to be financially free, to be rich, are all easily identifiable purposes behind paying down a debt. As an extremist, I had to go a hundred times deeper than that. I identified my life purpose, or what some people would call their mission statement. I realized that I wanted to have freedom from everything (hence the dislike for people telling me what to do, ever). In order to get the freedom to do whatever it is that I wanted, I had to not be tied down by material goods, jobs, or anything related to money, including student loans. I want to be creative, to have the ability to drop whatever I am doing to pursue a passion. Whether that is ridding myself of all my belongings and traveling the world with just a backpack, to creating art or side projects, or opening something as mundane as a coffee shop with my husband, or the ultimate dream, which is to be a temp and to do all these things and more, I needed to be free. Finding a purpose such as this is way more powerful that any of the reasons I listed to pay down student debt. It will provide you with the long-term motivation and inspiration that you need to tackle something as massive as half a million dollars, or in my case, more. When money is the reason for your actions, it is very easy for money to take over your life. I needed something much more substantial than money, much more positive than money, much more inspiring and uplifting. And it’s been working so far. We have been on track for 6 months (we started in May 2017), and things are looking up. We went from 25 years to 10 years to 9 years, and my goal is to get that even further down to 7 years. How awesome would that be?! $574,000 with 6.7% interest paid down in 7 years.
  2. Overcome emotional intelligence, and think long-term. With regards to student loans, it is very easy for people to opt for loan forgiveness. Many “financial advisors” will actually promote this option, and they successfully convince you to do so by appealing to your emotional intelligence. They tell you that with student loan forgiveness, you end up paying less than you would for the ten year plan, and then you just have to pay taxes on the forgiven amount at the end of 25 years. When you point out that adding the taxes at the end of the 25 years causes it to be way more than the ten year plan, they say one of the following things: “Yes, but by then you’ve earned so much money that it wouldn’t be a problem” or “Then you wouldn’t have to deal with the stress of making your payments for ten years” or my absolute favorite, “Yes, but for most people, it isn’t possible to pay it off in ten years”. Translation: Putting it off to deal with later is way easier than dealing with the problem now. Hence they are only trying to convince you that emotionally, this is the best way. It’s this idea of instant gratification versus delayed gratification. Off course this appeals to a lot of people because it gives them instant gratification. They can spend their 20’s, 30’s, and 40’s applying only a small percent of their income towards their loans and using a majority of it for themselves, to buy homes, to travel, to acquire all the social status symbols of wealth that tell the world, “Hey! Look at me! I am a successful and rich person capable of acquiring all of these But let’s just ignore that growing pile of debt that I owe. Keep looking at all the things I’m spending to show you how rich I am.” Which, hey, works for some people. Like I said in step number one, you need to figure out your life mission and if that’s your life mission, then keep doing what you’re doing. No judgments passed here. Just a different perspective. Also, it makes me think back to the published Marshmallow test, where they put a bunch of kindergarteners in a room with a marshmallow. You are either given the choice of instant gratification (eating the marshmallow right away), or delayed gratification (waiting for one hour, which in the case of a five year old is eternity, and receiving a second marshmallow if you survive). Those who choose delayed gratification end up with 2 marshmallows, and I think they measured future success as well, but you’d have to go and read it for yourself. This isn’t to say that delayed gratificators WILL be guaranteed more success in the long run. We don’t talk in absolutes here, and success is defined in so many different ways that the area starts to turn gray. But don’t let emotional intelligence be your deciding factor as to which path to choose. Run the numbers. Run the numbers in all sorts of possible future scenarios, and then find the excel sheet that most closely matches the life you want to lead. After all, you got a college education. You’re smart enough to do that, I know it. It’s just a matter of grit, and a little bit of common sense. And if you do find that waiting out on the loan repayment in exchange for heavy savings now is a good trade off, then all the more power to you! But I’m fighting for my freedom, not for the riches.
  3. Find a team of supporters. When I was about to graduate, I reached out to the aforementioned financial advisors and had one-on-one meetings with them. When I wasn’t satisfied with their answer, I brought Mike with me to some of those meetings to see if he could see any way to pay it off in ten years. He came to the same conclusion as the counselors, which is to pay off the debt in 25 years. I still wasn’t happy with that so I sought out a financial advisor. Who also initially looked at our current savings and income (this was right when I started working) and said it wasn’t possible. I sought and sought and sought, and I think I convinced myself so much that I started to convince others around me too. In April of 2017, less than one year after I graduated, my financial counselor said, “Oh my god. I think you guys can do this.” And then Mikey started saying, “Oh my god. I think we can do this.” And I started saying, “Off course we can. I knew we can do this!” Okay, so the honest truth is, it wasn’t just my convincing that did the trick. I owe a lot of our successes to our financial advisor and to Mikey. I must stop and say that yes, a financial advisor is the way I chose to go with, but it is NOT the only way. This is still perfectly doable without hiring a financial advisor. Likewise, hiring a financial advisor does not guarantee you will get it done either. It will require a lot of hard work on your part, because at the end of the day, you are responsible for your own finances. Lastly, there are many types of financial advisors out there. Some of them are affiliated with third parties and have a hidden agenda or interest. Beware of those ones. Others just tell you what to do, without going through the whys, and even others do not even bother to follow up. Beware of those too. I honestly got lucky in finding one who has no third party affiliations and who is more interested in the whys of finances rather than the whats. He helps educate us about finances and he has been very accessible and thorough in teaching us how to better manage money. I’ve recommended him to so many people and even those who have had financial planners before or are skeptical about paying someone to help handle their money (I know, counter-intuitive on paper, but really it isn’t), have reached out to him, and have found that there is a way. He and Mike are my two strongest support systems for paying off the student debt. I think everyone needs a support system. 10 years of loan repayment is equivalent to 120 recurring monthly payments of large sums of your hard-earned income. There is a point where you will wonder if you chose the right path. Once you choose paying your loans down, it wouldn’t make financial sense to turn around and go back to loan forgiveness. You just end up losing money that way, especially if you turn around near the beginning, where most people give up. Which is why having a purpose will really help you to push through. And when it feels hopeless and the purpose isn’t enough, then you will need your support. So make sure to pick a good one.
  4. Run numbers again and again. This commitment will take a lot of hard work. You can’t just put in a number on your auto-pay and leave it there for 10 years. Things change. Opportunities arise, and life happens. I am constantly re-assessing my situation. I run numbers day in and day out, multiple times a day if possible. I track all of our spending on YNAB, which is an online budgeting tool that our advisor set up for us at the beginning to get a feel for how money comes and goes in our household. You can use any budgeting tool you want, or just create an excel sheet and track transactions. I find that an online budgeting tool cuts the work in half by automatically downloading all transactions. What you find by tracking all of this and by constantly re-assessing is that you continually improve on being in control of your assets. I ask for spreadsheets and spreadsheets of extrapolations of our future earnings and spending and loan payments when any change in our current situation comes up. Mike got a new job, how does this affect us? I just got a raise, how does this affect us? We want to leave the country for two weeks, how does this affect us? Everything is budgeted, calculated, and accounted for. And what I’ve found is that the more you do it, the more it becomes second nature. The thought-process is almost intuitive and you start to apply it to every life decision you make. And the decisions get easier and easier. You no longer think, “Okay, should I be spending money on this?” but rather, “If I spend money on this, this will be what happens, and if I don’t, that will be what happens.” And then you just choose the outcome you want, and there is your answer. The decisions become very technical rather than emotional, which makes them easier to make. I’ve always loved numbers. I think it comes down to the math, and if the math says there is a way, then there is a way. And I will find that way, no matter what.
  5. Accountability. This is my last and final point. I share a lot of my life decisions and my biggest goals via Instagram or my blog, or by just sharing it with everyone I know in my daily interactions. It is not because I want attention or I want to boast. I am actually a very introverted and shy person. When I was younger, I had difficulty sharing anything, because I was afraid of being judged. Now I share everything because I want to be judged if I don’t follow through. It holds me accountable for my crazy ideas and statements. And because I still fear judgment to some extent, once I tell somebody I am doing something, I try my absolute best to get it done. To prove to the world that I can do what I set out to do. If I fail, well, I am no longer embarrassed of judgments due to failure as long as I tried my damndest. I’m more embarrassed of not trying hard enough, and not following through. So yes, I share it all. And I think something as big as this, you’ll want to share too. Hopefully it will garner you a whole community of supporters, people rooting for you to reach the end. You’ve got at least one standing right here. But if anything, share it in order to solidify your reserve to do what everyone says is impossible. Because I can tell you right now, it is not as impossible as they want you to believe.