Finances: Why We Are Refinancing and Leaving IBR Behind, For Good!

Before we head off to Portland, OR, we wanted to share with you guys some very exciting news! We are finally pulling the plug on student loan forgiveness, completely! We are in the process of refinancing our student loans, and leaving IBR behind, for good!

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Why haven’t we refinanced sooner, you ask? Well, there is a clause in the student loan forgiveness program IBR that states that once we refinance our loans, we will no longer be eligible for the student loan forgiveness program in the future. Meaning, if something happened, like one of us lost our jobs, we would still need to continue to make the $6,500/month payment from now until forever (or at least until we are free from the loans). If we stuck with IBR and one of us lost our jobs, we could revert back to paying the minimum payment under IBR (which is calculated as a small percentage of your income), until we could dig ourselves out of the rut. You can see why refinancing can be a tricky thing. A life event that changes our financial situation could immediately cause us to get in trouble with the IRS if we cannot maintain that $6,500/month payment. In other words, we were giant wussy pants and scared of what could happen. We were not quite ready to leave the safety of IBR when we decided to pay down our loans a year ago.

However, under the IBR program, my student loan with Great Lakes is charged an interest of a whopping 6.7%! By refinancing, we could lower that down to about 5.5%. It doesn’t seem like much, but on a loan this huge, it makes a big difference. To give readers an idea, for a 10 year refinance at 5.5%, our monthly payment would decrease from $6,500 to $5,300! Or, put another way, if we continued the course of paying $6,500/month, then we will be done with our loans in 7.5 years! I don’t know about you, but both perspectives are extremely exciting and extremely enticing.

I have spoken about us paying down $84,000 towards my student debt of $550k+ in the past year. Initially, we didn’t know at the start of our journey whether we would be able to make the large monthly payments. We wanted to try it out, but were afraid that we would not be able to support the lifestyle we want and still have enough for the loan amount. What we found was that we were able to alter our lifestyle in order to make our payments, and our lives have much improved from it. After one year, we are extremely confident that this is the path we want to take, and that we can do this! We are no longer afraid of the what-ifs and are ready to take a leap of faith (in ourselves) and just turn our backs on student loan forgiveness for good!

So what happens if some life event occurs that dramatically impacts our finances? We haven’t forgotten about the possibility of one of us losing a job, or a natural disaster happening, or a family emergency occurring, although cross our fingers, legs, toes and arms that none of these ever come to fruition. But we HAVE thought through a series of possibilities that could help us in such scenarios.

  1. Have an emergency fund. Over the past year, we have built up an emergency fund that could support us for 2.5 months if one of us loses a job, or for a little under 2 months if both of us lost our jobs. We will continue to add to this emergency fund and over time, it should be a very big safety net for us (or it could help us pay down loans faster towards the end!)
  2. Make use of the lower monthly payments. There are TWO ways we could make use of the lower monthly payments. The first is to pay the $5,300 per month minimum payment, and stash the difference ($1,200) in the emergency fund every month. Although a viable plan, that isn’t the path we are going to take. The other is to continue paying $6,500 a month since we can support that payment, and plan to be done in over 7 years. Because we would be paying extra $$ a month, we would be paid ahead. Meaning, if something were to happen, we would have accounted for future payments already, and would likely have a buffer of time before we are back to our originally determined schedule.
  3. Rely on the loan’s forbearance policy. Loan companies want to get paid. If someone really cannot make payments, then the loan’s forbearance policy will temporarily allow non-payment for a set number of months. The interest will still accrue, but it is a back-up!

Luckily for us, our jobs are very flexible and we don’t really see ourselves without work for long periods of time, but you never know what the future may hold, and sometimes life gets out of control. So, yes, it IS still wildly scary for us to be doing this! Too risky for some. But I believe in our abilities and focus and determination. And we want to inspire other people to feel like they could be freed too.

How about you? Feel like this is too crazy a venture, or would you be willing to try too?

The Value of Having a Certified Financial Planner (CFP)

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

Today, I wanted to pose the question, “Is having a CFP right for you?” When I first graduated from dental school, I was absolutely lost. Along with the feelings of excitement and pride with my recent accomplishments came a subtle (but over-powering) dread, and a very heavy, invisible weight. I knew I needed guidance, but did not know who to reach out to. I did not exactly have adults in my life who could act as good financial role models (my long historical relationship with money detailed here), and there are very few people I know (outside of my fellow graduates) who really had the problem of paying down half a million dollars in student debt at 26 years old. So I reached out to Andrew Davis, the CFP behind SeamlessFP, who happened to be the husband of a dental classmate, and whose work focused on guiding newly-graduated dental students, specifically. I think it was the best decision we ever made.

On the flip side, there are people who would argue that CFPs are a waste of money, and that money could be used elsewhere. Which is a fair argument. I myself am a big fan of avoiding outsourcing tasks as much as possible. It will take a bit of work, but handling your own finances is totally a doable thing! However, it requires time, which I have value over money. Delving into research isn’t such a scary thought for me, but spending all my free time learning the nuances of taxes, S corporations, estate planning, investments, and more is NOT an enticing thought. So what I want to discuss today is the value of having a CFP to us, and then I leave the decisions to you.

The value of having a CFP

The list of pros for having a CFP versus not having one is quite long, which is a good thing!

  • Pro: Outsource financial planning to free up time, in order to pursue interests, hobbies, work, etc.

As mentioned before, outsourcing financial planning frees up a lot of our time. Time is a resource scarcer than money in the modern world. People seem to always be running out of it, but are still quick to occupy it with tasks, necessary or otherwise. When you think about how much your time is worth, in dollars, can you really put a price to it? Time is the one thing you are constantly running out of, and will never be able to replenish, making it an extremely valuable resource. Being intentional with the tasks I choose to occupy my time is very important to me. Spiritual uplifting, emotional replenishing, mental healing, these are the things that matter and make it a life worth living. NOT constantly worrying, thinking, and dealing with money.

  • Pro: Peace of mind that we are hitting our financial goals in a very step-by-step (and legal) manner.

This is for the DIYers out there. I am a lover of DIY projects and take pride in my ability to be self-sufficient. However, no matter how much of my free time I put into studying the nuances of finances, I cannot possibly keep up to date with the ever-changing rules and regulations. Mike used to do his own taxes with TurboTax and that worked sufficiently well, but once we got married, added in an S-Corporation with its own separate payrolls, well things got too complicated. We started asking ourselves, “How do we know we are following all the rules? How do we know about the fine-print clauses that benefit us? Who will be flagging our attention with every change?” A financial planner gives us peace of mind, knowing that we are on track to hit our goals in a efficient (and legal) manner. There are many minute details that one could miss, but it makes us feel better knowing that we have someone else helping us with that.

  • Pro: Keep up to date with new changes.

The new Tax Bill that passed last year is a great example of this. Even now, nothing is quite set in stone as to how these changes will apply to us. By having a financial planner, we were alerted to the possible beneficial change for S Corporations in the upcoming year, something we would never have known, but definitely can impact our financial plan.

  • Pro: A resource for learning more.

This, by far, is the most beneficial to me. Andrew has been instrumental in educating us about our finances and different paths we can take to achieve financial freedom. He has recommended books, blogs, podcasts, and other resources. He was actually the one who introduced us to the FI community: a community dedicated to reaching financial independence by using life optimization “hacks”. We would not have gone so far on our financial road to freedom without life hacks such as co-housing, travel hacking, YNAB, and more!

Financial planning VS Investment Planning – What’s the difference?

It is important to differentiate between financial planning and investment planning. We do financial planning, which requires a long-term life plan, created by the marriage between our financial past and our dream futures. Our first meeting with Andrew was not something we expected to have. It began with a meeting dedicated wholly to gaining a deep understanding of our personalities, goals, and dreams. It almost felt like a therapy session, with questions such as, “If you knew you were going to die tomorrow, what would you spend your time doing today?” Don’t let that deter you. I think that first meeting was essential to setting the foundation on which we created our entire plan. The process continues to be a constant reassessment of life. Initially, we listed our priorities as traveling, buying a house, yoga subscriptions, guitar lessons, sticking with loan repayment program, and working until we were 65 years old. Now our life still includes travel, but our goals have shifted to standard repayment, renting for the next few years, working less hours, being a blogger, opening a coffee shop, and early retirement from our lines of work, which would possibly lead us to newer lines of work. In this respect, Andrew acts as more than just a financial planner. He is a psychologist, therapist, educator, mediator between spouses, confidant, & friend. This is NOT to be confused with investment planning, where someone advises you where to invest your money. That is included with financial planning, but not the other way around.

The importance of being a fiduciary

A fiduciary requires that someone acts in the best interests of a client. It is important that your CFP is a fiduciary in all aspects. Conflicts arise when CFPs have affiliations with third parties that may sway their advice towards promoting something that benefits them. For example, a person can receive a profit for selling an affiliate insurance. The insurance may be great, however, that person has a motivating factor that would make him want to promote that particular insurance. Even though it can be beneficial for you to sign up with that insurance company, the decision was not completely unbiased. We did not even realize the importance of being a fiduciary until we learned the concept from Andrew himself. 

If you are not sure whether your CFP is a fiduciary, ask! Try to find a fiduciary in all aspects. You want to ensure that you are being treated fairly at all times. Do not be afraid to ask how they get compensated, so that you can truly see where they are getting their money. It may seem awkward to inquire about it, but it is your finances on the line.

What a CFP has done for us, so far

  • Budgeting Help: Our CFP introduced us to budgeting, setting up our YNAB budgeting tool, and helped us develop good budgeting habits. 
  • Analysis between two potential jobs: When Mike was considering making the move from one company to another, we needed help analyzing whether it was a reasonable financial move. It was not simply a comparison between the two different income, but also required factoring in 401k investment matching, health benefit options, life insurances, difference in commute, and level of interest in the line of work.
  • Investment Planning: He has given us advice on how to manage our 401k portfolios as well as given us other investment tips when we reach out for help. We retain full autonomy as to where we want to invest and how much, but having a third person to go over the pros and cons at each step has been helpful. 
  • Health Benefits: We needed help deciding on a health plan, and have chosen one that works well for us thanks to Andrew’s help. After an analysis of our options, an HSA option was also open to us, and we decided to take advantage of that privilege.
  • Renter’s Insurance: Prior to our new place, we did not have renter’s insurance. After seeing the benefits of having that extra coverage at a small monthly cost, we decided to sign up for one right away!
  • Connection to a CPA: Taxes for SCorps can be a bit tricky. A CPA is advised so as not to miss a thing. Initially, I was going to go with the same person my parents have used for years. But after an hour-long interview with him, it became clear to me that he did not know much about taxes as they applied to dentists specifically. He did not even know about the different student loan forgiveness programs, or how an SCorp can be used for tax deductions. It was useful to be referred to a CPA who frequently does taxes for dentists specifically.
  • Set up my SCORP: This was so beneficial to me! It is possible to create a corporation easily online, however, he walked me through the pros and cons of having an SCORP so that I could make an informed decision as to whether this is something I wanted to do. The application for the SCORP was easy but we did meet some humps along the way that he quickly helped me to resolve. 
  • Setting up Gusto and ways to automate my SCORP: Once the SCORP was set up, our CFP took care of creating an automated payroll for me. We use Gusto to manage my payroll, and once it was set up, he easily walked me through the different ways that we can keep track of the payroll via my SCORP. All I have to do is wait for my payments, the system takes care of the rest!
  • Introduction to financial life hacks: I learned tricks such as travel hacking from Andrew and it was he who introduced us to the FIRE and FI communities.
  • Analysis of student loan repayment options: This is the part about our finances that has most affected our lifestyle. He walked us through the different student loan forgiveness programs that we qualified for. After a thorough explanation of each, he created an extrapolation of our financial futures under each repayment option. By using physical numbers, we were able to predict the lifestyle changes associated with each student loan option. Once we had our budgeting in order, he brought to our attention that we were able to pay down student loans without the forgiveness program, thus saving us more than $100,000 in the long run, as well as buying our freedom 15 years earlier than planned. That decision itself was so life-altering for the better, and we would have never gotten to that point on our own. 

We personally benefit from SeamlessFP

Andrew Davis is the CFP behind SeamlessFP. He focuses on helping newly graduated dentists create a financial plan. He does work with non-dentists occasionally, or dentists who have been practicing for a long time. I only know this because we have referred people in those categories who now are working with him too.

There are multiple options one can choose when working with SeamlessFP. A person can do a one-time consultation in order to gain help on a particular goal or project, or they can choose the full life-planning package. We chose to do the latter option. I did not want help with simply setting up an SCORP. I wanted a more thorough analysis of all of our financial details. I was determined to tackle as many aspects as possible to optimize our financial situation. After every meeting, he will upload a list of tasks via an online portal to be completed. This is helpful for people who need someone to hold them accountable to ensure that they continue moving forward with their financial path. Together, we re-analyze continually to see what we can change to optimize even further. A yearly re-cap meeting is held as well, where we go over our dreams and goals for the future (5, 10, 25 years out) so that we aren’t dully following a pre-set path. Besides, a lot changes in a year!

What I like most is that he is eager to help clients learn more about their financial options and situations. It is clear that having his clients make their own decisions (given the facts) is important to him. I can ask him one question, and we will go over the entire topic in detail, prior to him answering my question just so that I know the reasoning behind his answer. It’s scarce to find that these days, and I wholly appreciate it.He may give suggestions but he really makes sure you know that ultimately, the choices are still completely yours to make. It’s easy to see that his goal is to help his clients find the happiness they seek, by eliminating financial stress from the equation. It also helps that he is very accessible via email or text. Typically, responses occur within one day. Additionally, if you choose the latter option, there is unlimited access. Anyone who knows me will easily tell you that I am the type to ask multiple questions, always in search of a deeper understanding of all things. So a CFP who embraces that is gold. Off course, you want to make sure that the CFP you choose is right for you, if it’s right at all. If you have any interest in learning more about our friend Andrew, you can easily set up a one-hour phone call to speak with him and see what services he can offer you and which package is best for what you are trying to achieve.

Overall, I just wanted to shed light on how a CFP has changed our life in this blog post. As always, you do you.

 

Finance: Why I Consider the Loan Forgiveness Program as a Risky Chance

When you graduate with a loan as large as I have ($550,000 in debt!), it is easy to view student loan forgiveness programs as the superheroes of our lives. There are many different loan forgiveness options that you must choose from, but once you’ve chosen one, you are given the choice of paying a sliver of your income every month, with the promise that at the end of your program, the remaining (accruing) balance will be wiped forever from your life! It’s an ultimate quick fix to a problematic giant standing in the way of your financial independence. The small monthly payments are on autopay and the looming terror is out of sight, out of mind, for the next twenty or twenty five years. So why the skepticism?

Twenty five years is an extremely long time. I know, because I have barely passed my twenty five year mark. I also know that because after I add on twenty five years, I’d be over fifty. To be honest with you, I don’t want to keep this lifestyle up until I’m fifty. A lot can happen in twenty five years. The immediate assumption is that no matter what happens in the future, we will be grand-fathered in this loan forgiveness program.  But although it’s an immediate assumption, it doesn’t mean it’s logical or true. Because nowhere in the fine print does it say that. But our brains are wired to make up stuff that will put us at ease. And so, some like to reason that this must be true, and I know I can’t convince them otherwise. Because, what do I know?

Well, here is what I know.

  • I know that there are people out there who chose a ten year loan forgiveness program. Only to be told after their ten years that they do not or no longer qualify. Some haughty know-it-all will likely say, “Well, that’s THEIR fault for not knowing their own program!” But as we all know, they don’t make programs easy to know. The fine print just keeps getting smaller AND longer.
  • I know that my sister took a five year contract with a charter school in a city far away from her family and friends with the promise of getting $40,000 forgiven from her student debt after the five years. However, you cannot apply for the forgiveness until you’ve completed all five years. Last year, the amount forgiven changed. It went down to $17,000. Still a good amount, but not the promised $40,000. Her five years ends in June. So in June, she would have given up five years of her life living in this far away city to only get back less than half of what she thought she was going to get back. Which is depressing to think about, since she turned down multiple amazing opportunities with higher pay for this program.
  • I know that in the ONE year that I have been out of dental school, there has already been talk of the loan forgiveness program being extended to THIRTY years. An additional five years of minimum payments, a continually accruing debt, and a higher percentage of your loan that you have to pay in taxes at the end of it all. More, more, more.

Therefore, you are right in saying that I just don’t know. I don’t know the future one year from now, so I sure as heck don’t know the future twenty five years from now. I don’t know who will be in the government, who will be controlling our laws, how the program will change, if the program will still apply to me, and if the program will even exist. And with a loan this large, I will not leave this up to chance.

What I do know is that I CAN tackle this giant, so I WILL. I will not let him rule over me, stop me in my path, instill any fears or doubts.

Will you tackle him, too?

 

Finance: The First Year of Paying Down $550,000 in Student Loans, An Update

Hi guys! So it has been about a year since our search for a future home turned into a commitment to pay down my massive student debt instead. I figured I would give you an update as to what paying down $550,000 at 6.7% interest looks like.

We arrived at our decision to tackle the loans aggressively in April of 2017 (our decision tree, here). The most important thing to note with a loan this large is that committing to it means REALLY committing to it. It wouldn’t be advantageous to choose to pay down the debt, and then fall back to IBR midway. From a numbers perspective, you would just lose unnecessary money that way. If you choose the loan forgiveness route, then the goal is to pay AS LITTLE MONTHLY PAYMENTS AS POSSIBLE, so that a huge chunk gets written off. If you choose the standard repayment option, then the goal is to pay AS MUCH MONEY AS SOON AS POSSIBLE. So, with a steely grip on the reality that we did not want the debt to dictate and shape our lives for twenty five years, we went head first.

Here are the numbers.

To be completely honest with you, $550,000 is a ballpark estimate. The real number is a principle amount of $538,933.50 and an accrued interest of $35,101. Meaning the total was actually $574,034.50. YIKES!

So what did we do? We decided that we will essentially live off of one income, and use the other income towards loans. We figure, out parents raised us on a single person’s income, so this can’t be that difficult especially since we don’t even have kids yet. The verdict: We were right! It was surprisingly easy. Which makes me wonder, where were we spending all that money before hand?! I don’t even want to know….

With that being said, we have been successful at making our minimum payments of $6500 per month! YAY! We were even able to add a little extra every so often due to diligent saving habits (See The Ever Growing List of Things I’ve Given Up In The Name of Frugality!). But that does not take us as far on the path of financial freedom as we would like. It took us a few months to completely pay off the interest that had accrued, but it must be remembered that the loan is at 6.7% interest. So that means that interest continues to accrue over all this time. So what does that look like? Well, once the accrued interest was paid off, approximately half of the $6,500 was going towards the interest accruing per month. Which means that the loan is only getting paid down at a rate of about $3,000 per month. And that, my friends, is how lovely interest works! Womp, womp.

So, $55,367.22 was paid towards interest. Only $28,632.78 went towards paying down the principle amount. When my husband first looked at the little pie chart graph that I had on the corner of my computer screen summarizing our progress, he said, “Well, THAT’s depressing!” For someone who is only looking at that, it CAN seem pretty depressing. However, I know better. This. Is. Amazing.

The accrued interest is already out of the way, which tells me that next year is going to look a LOT better. I can already see a higher proportion of the monthly payments being applied to our principle. It started out as slightly less than half of our payment being applied to the principle. However, as of early this year, slightly more than half is being applied to principle. I know it’s hard to look at this as any way other than a linear projection, but it really, truly is an exponential one, albeit with a slow start.

The amazing part is that we have survived our first year and our lives have actually been much improved. Choosing this journey has nudged us to be proactive with our life, not only with our financial decisions, but also with our lifestyle choices. We are experiencing less stress than when we felt helpless and unable to address the student loans. We are experiencing more happiness than when we were trying to buy our way to a meaningful life. I work less than I did last year, and love myself more. We are healthier and have better relationships. And it all started with us learning how to get our finances in order and in our efforts to remove money from our life equation.

I am very happy with this decision and I am excited to see what the next year of payments will bring.

PS: I am excited that we will hit the $400,000’s during me and Mike’s birthday months in June/July!

Also, for the curious, I have never, not once, felt regret in funneling extra money towards my student loans. I have felt buyer’s remorse. I’ve regretted going out to eat. I have regretted going to events that required spending money. I have regretted buying gifts that I know will end up in a landfill some day. But I have never regretted letting go of money in exchange for a little slice of freedom. I’m just saying.

The First 5 Steps to Getting Our Finances in Order

Right after I graduated from dental school, I knew I wanted to get our finances in order. We were six months away from swearing eternity to each other, and I wanted to be clear about what our current financial status was and where we want to go from there. They say that finances are one of the biggest stressors in a relationship, and I knew I wanted to nip that one in the bud and move on to living happy eternal lives.

There were a few key steps that, on paper, seem super elementary, but I guarantee that the majority of the people do not have these five steps down. I am not saying these are the first five steps everyone should take, but they were the first that we took and it worked out really well for us! If you are looking to get your finances in order but aren’t sure where to start, hopefully one (or all!) of these will give you the boost you were looking for.

  1. Build up an emergency fund, and then never touching that money unless it’s a TRUE emergency. For my entire life, I knew in the back of my mind that I needed an emergency fund, but never have I had one. I assumed that there will be some money left in the bank in the case of a true emergency that I could rely on until the emergency is solved. Off course, I was underestimating the cost of my potential emergency. I assumed an emergency constitutes of a flat tire, or the need to buy something right away (this was before I became anti-consumption and was practically throwing my money out the window). In light of the recent fires in Ventura County, it is safe to say that a TRUE emergency can constitute of a fire affecting your city, so that your home burns down, along with the office that you work at, thus putting you out of a home, without belongings, and without a job. Recovery from such an emergency could take multiple months. Or an accident that could leave you with hospital bills and a disability that prevents you from going back to work. When put in that light, I never thought a true emergency could happen to me. Well, it can happen to me. Most certainly, it can happen to anybody. So one of the first things we did was build up our emergency fund. Our emergency fund is enough to last us through three months’ worth of living expenses. It sounds easy to do, but in order to find the correct number, you actually have to track your monthly living expenses. There is a tendency to underestimate the correct figure. Saying yes to dining out with friends and purchasing random items during a Target run can quickly increase that number significantly. So we started to track our finances (See item #2 below). Once we got our number, we saved up enough and then did not touch that money. It still sits in our bank accounts today, which is a great thing because that means we have been emergency free for the past year and a half! I’m not talking, “I am out of money in my bank account, let me just borrow from my emergency money.” Ideally, you don’t ever want to get to the point where you run out of money in your bank account, but we will get to that later.
  2. Track your money by budgeting. We started to track our finances with the budgeting tool called YNAB. You can use any budgeting tool alternative, such as Mint.com, or your own homemade spreadsheet. We decided to go with YNAB only because it was what our financial planner set up for us. I fell in love with budgeting! I was always interested in numbers, organizing, and planning, so this was just my cup of tea, luckily for Mike. The tool tracks money going in and money going out. By linking your bank accounts, the tracking is almost immediate. The only part you have to do is categorize your spending and income, so that you can see how much you spend on things such as rent, groceries, gas, dining out, and any other category you can think of. You can be as specific or as vague as you want. I prefer to be vague so that it makes the process a little bit easier. I was amazed at how much money we were hemorrhaging through, and that’s quite a realization since, compared to a majority of our friends, we were pretty frugal. This was the part of the process that pushed me towards minimalism and anti-consumerism. Thinking about my past habits with spending money is almost nauseating. To multiple that by the number of Americans who do the same or worse makes me want to cry and beg Mother Earth for forgiveness. To this day, we continue tracking our spending. It’s taken the guesswork out of finances, and we no longer have to think about whether we have money or not for a certain something. We always have the money, because it is already allocated for. We follow the simple envelope system, which long ago would consist of one taking their income and placing them into different envelopes based on spending categories. There would be an envelope for utilities and for auto-registration, etc. In order to pay for something, one would take the money out of the appropriate envelope. If a person tries to overspend on dining out, they can’t, because there are no physical dollar bills left in the dining out envelope. It would require for them to physically take money out of a different envelope to cover their spending, or force them not to dine out for that day. That’s the simplified version of the envelope system and it’s the categorization system that YNAB uses. Because of this, once we get our paychecks, every single dollar bill is allocated for a future expense. So that when the expense comes, the money is already there. What about in the cases of unexpected expenses? Well, that would be called an emergency, and that’s also already saved and built up from step 1. And no, there is no such thing as a shopping emergency. There is no such thing as an unexpected expense unless some drastic unforeseen natural disaster strikes in your neighborhood. The whole point of the budgeting process is to teach us that there is not one thing that we absolutely need, and those that we want, we have the time to plan ahead for and save up.
  3. Put everything on Auto Pay. Life gets hectic and busy, and sometimes we miss a payment and get charged a late fee. Ugh, those late fees kill me. It’s another way of throwing money straight down the drain. Stop that right now and put your worries to rest. Take the minimum payment for every credit card, utility bill and loan and place it on auto pay at a particular time of the month, every month. Just make sure it draws after your paycheck is deposited in your account, at a time when you know the money will be present in the bank account. The last thing you want is an overdraft fee.
  4. Start paying off your debts one by one. Since I opened my first credit card at age sixteen, I have never been debt free. The first thing I wanted to do was start our debt snowball. Credit card interest rates are insanely high, and it was crazy to think that I was throwing away so much of my money at the same time that I was spending money I did not have. So we tackled our credit cards one by one until we brought them down to zero. After we cleared all our credit cards, we kept them clear every month by paying off the total. By doing this, we were also reaffirming that we were spending well below our means. After all our credit card debt was paid off, we only had two debts left. My student loan, and Mike’s car loan. We decided to tackle the student loan first. The reason was because it had a much higher interest rate than the car loan, as well as a higher amount. The amount of money we would be gaining in interest by letting my student loan sit is way more than the amount of interest we would gain by letting the car loan sit a little longer. Don’t get us wrong, we are still paying down the car loan at the same time, at a speed fast enough so that it will be gone in three years. But we are funneling all our extra money towards paying down the student loans instead. Once you start paying things off, it becomes more addicting than spending your money. I get such a thrilling, spine-tingling joy when I pay off debt. The debt snowball is well on its way, and my goal is to make this snowball the biggest and fastest snowball possible!
  5. Hire  a financial planner. It’s the last on the list, but it was actually the first thing we did. It was how we began this journey. So why is it listed as number 5? I hesitate to put this on here because some people believe that hiring a financial planner is not a worthy way to spend money. Some may argue that paying for such a service could cause you to lose out on money that would be better served invested or paying down debt. I am not completely disagreeing by the way. If you are really good at this type of stuff and can do an equally great job on your own, I would back up your decision not to hire a financial planner. I would agree that your money is way better spent towards investing or achieving your dreams. So it isn’t for some people, which is why I hesitate to put it as number one, for fear that somebody will just shut down this post’s tab and move on with their lives. For us, this was the right choice, and I think it IS worth the money. One hundred percent! First off, notice that I did not write financial investor. That is a different type of service, one that focuses solely on investing money. A financial planner, when you’ve got the right one, does more than investment management, although that is part of their job description as well. A good planner will start by helping you discover your goals, and then trying to get you to your goals by tackling your financial life. It isn’t about the money, but about the end result. Where you want to be, and how you can shape your finances to get you there. Ours is particularly good at analyzing what we truly want and asking us the right questions to re-evaluate every few months if our dreams are still our dreams. We create the vision, and he helps to give us the path to make that a reality. The planner will keep you accountable, and is useful as a resource to guide you towards new and innovative ways to approach your goals. People can say it’s a mistake, we don’t care. Let’s just say, it’s a mistake we have to make. And if we had to choose all over again, we would do it just the same because frankly, I wouldn’t even be here, writing about all of this, if we had chosen differently.

So those are our first five steps, and now you know that the list is not in a particular order. Happy budgeting!

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.

About minimalism and letting go.

For the past few weeks, I have fallen into the trap (again) that everyone befalls at multiple points in their lives. The trap of putting living life on hold and falling into the endless cycle of worrying about money. Money is a tricky thing. It enters your mind and takes root, and it requires great force not to allow the roots to delve deeper and deeper into your body and eventually get under your skin. And while money was very easy for me to dismiss in terms of buying things and acquiring social status symbols, it nearly all together consumed me when it became the one thing holding me back from what I thought I wanted: Freedom. After all, I am human. So this blog post is a recap of what ensued the past few weeks, where-in I catapulted from practicing minimalism, to searching for financial independence, and then returning to minimalism and letting the rest go. One step forward, two steps back, and onward with the cycles of everyday life.

I’ve written endlessly about my transition from being a typical compulsive consumer representative of middle class America to being a loosely defined minimalist. A common misconception people have about minimalism is that it requires you to get rid of all your stuff and live with very little. I like to embrace the concept of getting rid of the excess stuff, and keeping the things that hold meaning or things that you love. Our home is far from bare, but I think we’ve done a pretty good job stripping it of its excesses. If it doesn’t pull at our heart strings, it is donated for someone else who could love it more. What you learn from minimalism is that it is a constant reassessment of your life, and as you rid yourself more and more of the excesses, it becomes easier and easier to realize that there are far greater and important things in life than just stuff.

So I entered a stage where I was reassessing other aspects of my life, and I became interested in a community practicing financial independence. As I dug deeper into the specs of the FI community, I was enamored by this idea of financial freedom, and the one thing holding me back from said freedom, is an already previously mentioned and endlessly bemoaned massive student loan debt hovering above our heads. Now we’ve done a great job controlling this student loan debt, decreasing it from our original 25 year plan, to 10 years, and currently, we are on track for 8 years of pay back. Not bad for something double the amount of a mortgage for a five bedroom mansion in other parts of the United States. But I digress. In the past few weeks, this student loan debt had the upper hand and did an equally great job controlling me.

I came upon the realization that we could save a year and a half of freedom by downsizing our current home. When Mike and I first talked about moving in together, we dreamed about living in a loft. When we started to look after I graduated from dental school, we miraculously found a space immediately, located in Orange County approximately equidistant from our two jobs. (“Approximately” because he will adamantly insist that his is a few miles farther than mine. Fair enough.) We fell in love with it immediately, and there was no going back. I don’t even think I thought through the pros and cons. The heart knows what it wants, I guess, and there were no doubts in our minds that we could be happy here. We happened to be the first people to respond to the advertisement and even though there were other applicants, we were given the first opportunity to snag the space. Snag we did.

We’ve been living in this loft for almost a year and a half, and it has been our dream space. 1600 square feet of space and 3 floors for a couple seem excessive, but it’s what we love. We are introverted and usually spend our time on different floors of the house, chasing our own interests and hobbies. We come together on the second floor to watch football or play board games, and we love to host parties and dinners for close friends and family. We often joke that we are so lucky to come home to a vacation home every night. So we’ve been practicing minimalism, a perfect example to show that even though a massive loft is a thing, and it may seem excessive for two, there is forgiveness in the practice because it allows you to keep those that you love. It’s not about getting rid of as much stuff as humanly possible, because it is inhumane and impossible to lead a happy life with deprivation from the actual components that make you happy.

But a life of deprivation is what I started to consider. I found that we could save about $1000/month if we downsized our home, which multiplied by twelve months per year, then extrapolated out to five years, and we are free at age thirty-four instead of thirty-six. I became obsessed about searching for a space that would fit our needs and cut the costs. I would wake up every morning and refresh the Zillow page that was left open on my computer screen from the night before. I was prowling the internet for deals, and killing myself slowly with the stress. I eventually found two contenders that I liked, given the circumstances. One was a vaulted ceiling loft with a deck situated right on a lake. You walk out of a sliding door that spans one wall of the space onto a wooden deck where you can hang your feet into the lake filled with minnows and ducks. All it required was cutting the size of our space by more than half, demoting Mike’s Lotus from a garage to a covered parking spot, and moving farther away from both our jobs to a neighborhood that is old and less ideally situated and more un-kept. But the space itself was nice (so long as you didn’t step outside), and I could live in the smaller square footage. The appliances were all new and the internal was completely renovated and we would be the first people to live in it after the renovations. The second consideration was a beautiful studio apartment, albeit quite small, less than one third the size of our current home (I think it was listed at 478 square feet), and steps away from the beach. In fact, the only thing separating our apartment from the sand was PCH, and a row of homes. Like the other, it was beautiful on the inside, but also stripped the Lotus of a garage and now stripped my Scion of any parking spot at all. It increased my commute to both offices, while keeping Mike’s the same, and we had no laundry unit, nor did we have much closet space. There was also the tiny problem that our furniture did not fit in this studio, and we would have to hang our guitars on the walls to save enough floor space for the couch. I think our bed literally has to sit next to half of our dining table (because the other half of it won’t fit either). Part of me was actually looking forward to sizing down this much, since I have been talking to Mike about tiny homes for a while, and I wanted the challenge of really practicing resourcefulness and mindful living. I don’t know what it is about tiny apartment living that seems so glamorous to me, perhaps because Reading My Tea Leaves makes it looks so easy and fun. We went so far as to look at both places and submitting our applications.

It wasn’t until we got the offer for the first space (the beach apartment), and then the second space (the loft), that I started to get cold feet. Maybe I was already over-stressed to the point that I could not make a decision. The poor real estate agents, we gave them a run around with our “yes, no, yes, no” answers to their offers. I must have seemed like a crazy lady, not making up my mind like that, and poor Mike had to be dragged down with me. Mike was my saving grace throughout this whole process. His only requirement was a garage for his car and motorcycles, and I got him two places without garages and hardly space for both vehicles. But he was on board with trying either space, if it meant making me happy, or otherwise, stopping me from my stressful constant obsessive search for the ideal house. All he wanted for me was inner peace. But when it came to decision time, the stress got worse. He coaxed me into trying to figure out what I liked about each space, and what I did not like. I had a lot of fear that once I moved into the tiny apartment, I would learn that space is more valuable to us than I thought, and it would put a strain on our relationship (introverts unite!). Or that moving into a (possibly) less safe neighborhood could put his other love-of-his-life, Elise (car), in danger. He helped me realize that my fear of regretting the move is an indication that the move is just not right. Compromise was needed if we moved into either home. A hundred percent happiness could be achieved by staying. My mind was continually telling me to move, but something deep down in my chest (my heart perhaps?) was pounding on the walls and screaming no. On the inside, I felt like a two year old toddler throwing a fit, wanting one thing but resisting. Like I said, Mike was my saving grace. He said, “I will move for you, if it means you will have internal peace.” It was then that I realized that Mike did not want to move, and perhaps, neither did I. Maybe it was life’s way of reminding me that sometimes, you just have to let it go. Control freak as I am, I get carried away trying to shape my life course towards one direction, instead of just letting it tread its course the way it was meant to. So, we decided to stay. Giving up happiness was not worth gaining a year and a half of financial freedom. And back I go towards practicing minimalism. And practicing letting go.

The problem with financial independence is that money is at the forefront of the conversation. And as I started to state at the beginning of this post, money is a tricky thing. But minimalism, I can do. Instead of money, it puts happiness at the forefront of the conversation. It focuses on what brings your life meaning and joy. It may not give you financial freedom as early as you would like, but it frees you from being tied to money, even if you are still tied to money. And that type of freedom, money just can’t buy. Call me a failure at being financially independent. Mister Money Mustache will laugh at my face if he ever gets the chance to. Call me fearful of trying tiny living, though I may accept the challenge one day, for it still has a little glamour in my eyes. Call me a faux minimalist, call me whatever label you want, including happy and content to live here another six months more.

So here we are, one step forward and two steps back. Letting go of financial freedom for a few more years, and letting go of trying to control life. Trying to pursue love and happiness. Onwards.

Finances: My money egg

I was not always debt averse. Like so many millions of Americans, I used to embrace the idea of debt as a given, a necessary evil. Only recently did I realize that only half of that term “necessary evil” was true. I graduated dental school about a year ago, with a staggering debt of over $550,000. Many of my classmates graduated with a similar debt and the common concensus was, “God this sucks, but this had to have happened for us to be here today.” While part of that may be true, because none of us had half a million dollars lying around at age 22, or whenever it was that we started dental school, it did not have to be such an overwhelming total sum. There was a voice in my head telling me that this was just not right. I must have messed up somewhere (and I did) but I did not know where. This unsettling feeling in my stomach prompted me to get my financial story straight. I hired a financial planner even before I started work to start understanding why being in so much debt was bothering me.

Some people can have financial debt up the wazoo and not bat an eyelid. Apparently, I am of a different breed. In the past five years, I experienced an ever-growing discomfort with my ever-increasing debt. They came hand in hand. In order to tackle the debt, I had to first see where it all started and what led me to this moment. One of the first things our financial advisor did when he met us, even before he hatched a plan or gave us any insight on how to regain control of our finances, was give us an assignment. He had us draw our money eggs. The money egg was supposed to include every experience we have had regarding finances from birth until now. We could also only draw pictures of those experiences, with our non-dominant hands. At this point, Mike was rolling his eyes to the back of his head. I had convinced him that a financial planner was what we needed but this was turning into a sort of psych therapy situation for him. I, on the other hand, practically jumped up and down with excitement and worked on the assignment as soon as I could. It ended up being a very smart way to begin approaching our finances.

My money egg totally explained my progression toward debt aversion and ironically, my progression towards a minimalist lifestyle. This is my money egg. Warning: it’s basically my financial life story and then some, and I’ve been alive twenty seven years, so yeah, it’s long.

I was born in the Philippines, a third world country, to parents who came from opposite social classes. My mom was from what was considered to be a well-off family, had seven brothers and sisters, all of whom got what they wanted and more growing up. My dad came from a small province near Manila which my mom called the ghetto and from my dad’s childhood stories, I can believe that it was true. By the time I was born, my parents were what you would consider successful folk in Manila. My dad and mom were both engineers and when I was born, they were both working. We were well–off enough that my mom was able to quit her job, and they were still able to provide a personal nanny (or yaya) for me, my sister, and my brother. We had three yayas living with us in our home. I remember having two dogs, pet fish, two doves. My sister and I went to private schools and enjoyed privileges that our neighbors could not. But it was still a third world country. Definition of privilege there was like, as cute as a little girl wearing her mother’s heels.

When I was eight, my dad was offered a job in the States. In hopes to provide his children with better access to, well, everything, my dad accepted and we moved to California. We went from having three nannies to living in a single bedroom of a home of one of my dad’s friends (coworkers?), who I didn’t even know. I remember the single bed my parents shared with my two year old brother, and my sister and I were squished sleeping on the floor in the space between the bed and the desk. I vaguely remember having to step over each other to move around in that space. It was summer, all the kids were out of school, so we were stuck in that one bedroom all day long. We were rarely allowed out because my parents did not want us to bother the owner, but the few moments we were allowed to sit on the couch in the living room were the best. We were growing kids and we had to stretch our legs. I remember it always being hot, hot, hot. That’s what I remember most. The terrible heat.

Eventually, my parents moved us to a townhouse in Milpitas, CA. I know that my parents were determined to give us kids a wonderful life, and they worked hard to do that. We started to get our bearings and move up the social ladder. My dad moved jobs frequently, always in search for a better life for his kids. I really appreciated his hard work, motivation, and pretty much, for just biting the bullet and doing what he had to in order to do what he thought was right. My mom was doing the same thing at home. One of the things that I really appreciated about my parents was that they worked. They worked their butts off.

After a few more years, my parents bought a beautiful four bedroom home in Pleasanton, CA. Each of us had our own rooms again! My dad also at this time was working three jobs. I hardly saw my dad during this time period. I remember begging my mom to wake me up at 6am so that I could go with her to the train station so I could drop him off and wave goodbye as the train took him off to work, not to return until midnight. Sometimes I’d try to hide silent tears rolling down my cheeks as he zoomed by. He worked a 9-5 job as an engineer, and then worked afterwards as a janitor for Blockbuster when it still existed (or was it Hollywood Video?), and later on as a janitor at Staples. At one point, he also was a retail salesperson at Robinsons-May (also when it still existed). He was in the lingerie department, and he hated it. But he did it anyway because he did what had to be done. It was also at this time that my brother started kindergarten and my mom started volunteering at school. Eventually, she started to work part-time for the school district. They were climbing up that social ladder real fast. We hosted parties nearly every weekend. We were the kids that always got the newest gaming console the night it was released. What I didn’t realize was that while I was getting every Disney sweater I wanted, my parents were working harder and we were eating mac and cheese and spam once a week. It was the most interesting paradox. We got every console that was released for Christmas, but I ate more beans from a can with rice and Vienna sausages on toast than my classmates. After two years, my parents decided to move yet again to Irvine in SoCal. They sold the house and my dad took an “even better job” in Orange County. All for the sake of searching for a better, more improved life.

This is where I stop and say, as kids, we hated the moves. I moved 10 times before I got into high school, including moves from house to apartment to apartment to motel to house etc. We lost a lot of friends along the way, and growing up, that was a pretty big deal. I was thirteen when we moved to SoCal, which in my head, the most “CRUCIAL” time in my life, aka the most dramatic time in my life. I think my sister took it harder than I did. I have never seen anyone resist my parents as much as she did. She fought until she got out. But I couldn’t blame my parents for trying to give us what they thought was a better life. In retrospect, I think if we just grew up in the same spot and established roots somewhere, (anywhere!), we would have probably had an improved life at home during our teen years. Less rebellion, less discontent, and more stability in general.

But on with the story about the continual search for more. We moved to Irvine and my dad started his new job and my mom started working at Irvine Unified School District. It only lasted one year before we moved into an extended stay motel, preparing to move yet again to Ladera Ranch. My parents bought another four bedroom home because my mom couldn’t stand living in a tiny apartment any more. My parents were ecstatic at finally owning a house again. A house located in a very affluent neighborhood, with well-paved streets and maintained parks, doggie bags included. 8 pools within a 3 mile radius, it was glorious. And off course, with each move, the accumulation of more stuff.

My dad continued to work for Robinsons-May even after it turned into Macy’s until he set his foot down in December when he said he did not want to work on Christmas Eve because he was going to put his family and kids first over money. I really admired him for making that move. He never went back to retail after that point. It was a wonderful Christmas, except I think my sister rebelled on the night of Christmas Eve and it actually turned into a tear-stained Christmas. Nothing short of usual family drama. Not shortly after, my mom took a second job in the afternoons at a tutoring company, Mathnasium. It is from here that she will eventually launch her own tutoring side business a few years down the road.

Up until this point, my parents have been trying to achieve an improved life for us. I would argue that they already achieved that in Pleasanton. We had what we needed and much more, and we kids were very happy kids. There’s a line between need and want. And then there is want-for-no-reason-at-all-just-because-you-can. The page turns, and that is where life took us. This is where I (slowly) started to learn that money cannot buy happiness. It can, but only up to a certain extent. Once you cover your basic needs, as well as ensure a stable income to the point where you don’t have to constantly worry if you will be supported next week or next month, money does not buy more happiness. Sometimes, I think the opposite could be true. It was the constant moving that got to my sister and I. Most of our arguments with our parents stemmed from that. Most of the blame and the resentment. My sister was never the same after our final move to Ladera Ranch. Granted, those were also the teen years and maybe it would have happened anyway, her turning rogue on us like that. But then again, maybe not.

At age sixteen, I started to work at Jamba Juice. My parents raised me to be a hard-worker too, and I liked the money I was making. I remember my mom telling me that, now that I was making money, I could start buying my own clothes, with the implication that I needed more clothes. When I started work, I opened my first debit card and my first credit card. My mom had her name assigned to my debit card so she could “help me monitor it”. What that also allowed her to do was to withdraw money from the account whenever she needed to borrow extra. By 18 years old, she had convinced me to open up 2 more general credit cards, which she later used to buy groceries and to buy other things that she “needed”. She also convinced me to open a credit card at Banana Republic, which I was working at during that time, so that I could “make use of the discounts”. I bought into it and spent paycheck after paycheck on clothes, saving very little for myself. It was a reward, she justified. I also bought clothes for her when sales were happening, and she paid me back, albeit a few days or weeks later. And I was okay with it.

When I was 18, my mom insisted on throwing me a traditional debutant ball. I told her that was not necessary. A debutant is kind of like a Quincenera, but for Filipinos. I dreaded the thought of going up in front of everyone and perform dances and speeches and whatever else. But she insisted and like a good daughter I went along with it. It was a $10,000 birthday party. With photographers, videographers, two gowns, everything. It wasn’t for me, and I don’t even want to say it was for her. It was for our friends and relatives, to show them how well-off we were. So well-off that she could flippantly throw a $10k birthday party for an 18 year old. The following year, my mom insisted my sister had one too, and despite my sister’s much stronger resistance to the thing, she got one whether she wanted to or not. After my sister’s debutante ball, my credit cards were maxed out because my mom had used her account holder abilities to pay both parties with my cards, and they would stay maxed out until I was 25. One was maxed at $2500 and the other $8500. Where was all the money going? I did not know it then, but I know now that all that money went to buy social status symbols. Symbols such as debutante balls and Banana Republic clothes and gaming consoles, random dinners and social events, everything a regular American typically spends money on. Well, minus the debutant parties. But that’s where a lot of the money was going to. In fact, I started receiving letters in the mail addressed to me saying that the payments on my credit cards were not being made. They were overdue, consistently, month after month. There were threatening emails saying the cards would be suspended if minimum balances weren’t met. I kept asking my mom about it and she kept brushing it off and saying, “Don’t worry about it.” But I WAS worrying about it. Eventually, at age 20, I got the cards back and closed both accounts. I forced my mom to open her own Banana Republic credit card. And I removed her from my debit card account. Today, only the $2500 credit card is paid off. The other one still has money unpaid. But I give them props, because they are at least working on paying that down now, after repeated, heavy arguing over the last five years.

Let me pause here (again) and say that I am not an ungrateful child. My parents were doing what they were taught to be the right thing to do and I don’t hate them for that. They are good people. But they were misled by an American Dream. I am very appreciative of their efforts. They bought my sister and I brand new cars for our first car, which I am so grateful for! Even though compared to other kids I went to school with, these weren’t crazy expensive cars like theirs were, but these were still brand new. That’s amazing and sweet and generous and kind. But as I look back on it now, I can’t help but think that that was also soooooo unnecessary.

Maybe in the back of my mind, I always knew we were short on money. I worried about money all the time. I worried about it enough that I felt the need to get a job at 16 years old. I even knew it enough that I chose my college based on how much money I would save living at home. I got into UCLA, which is where my boyfriend at the time decided to go, and which was viewed as a higher ranking college than UCI, but I chose UCI because I knew that I was the one who had to pay for my college education and I needed to save every bit that I could. My high school teachers and friends all thought I was crazy and tried to convince me to go to UCLA. But some part of me knew that I shouldn’t. I was slowly starting to become debt averse. However, even though I was smart enough to realize all of that, I was wrongly convinced that I could reward myself every time I got a paycheck with clothes and dinners and events and stuff in general. My parents sure supported that kind of lifestyle. “You can never have too many shoes. And you need more professional clothes, even at 18!” But I always had this feeling…

I graduated undergrad in three years and an extra quarter. I worked hard to pull that off so that I wouldn’t have to pay more money for the last two quarters. People asked why I did not just stay in school and take fun classes, and my answer what that I honestly did not want to spend more money. By this time, at age 20, I was working three jobs, just like my ole man. I was working as a dental assistant every day the dental office was open, averaging 33 hours a week. It was an emotionally taxing job, serving a community of people who had very high expectations and demands in an environment that caused a lot of fear in patients. On the days the dental office was closed, I was working at Banana Republic (still!) on Tuesday and Thursday mornings before the stores would open. I lifted mannequins above my head and climbed ladders twice my height, nearly breaking my back every day to set up the shop windows before the customers came in. If it was a Sunday, I would work the floor, following consumers as they dropped piles of clothes on the floor and I folded it back for them into perfectly neat stacks. I saw customers throw clothes at sales people when they were displeased, complaining of the heat in the store when there were too many other customers walking around, and slamming dressing room doors because they waited so long in the lines. Retail was a place where I learned how NOT to treat people. And it was where I saw the first glimpse of how “things” could turn people into such monsters. After a long physical day at BR, I would have a few hours to myself before I would drive to Irvine to tutor high school kids from Corona Del Mar. Not exactly mentally draining, these sessions did provide me further insight into lives of very very rich people. Back then, I wanted that lifestyle. These kids were driving Mercedes and Maseratis like it was nothing. Their parents owned boats and they went on international vacations by themselves every holiday. Who didn’t want money when they saw that? What I didn’t internalize was that many of these kids were taking anti-anxiety pills. ADD pills. Disliked their parents, or never even saw them. They were stressed more than I was, because of the high expectations that were set upon them by their parents and their peers. They know of more people their age who committed suicide than I did from watching television. I mean, these kids were paying $80/hour to talk to me about their problems at school and at home. All I could see was the prestige, their beautiful clothes, their lavish vacations, their lack of concern for money. And I was blinded to believe that that was what I was working towards.

In between graduating undergrad and getting into dental school, I made a lot of dumb mistakes. I was making good money working three jobs, but I didn’t tackle my student loans. Instead, I went out frequently. Spent money on clothes, food, alcohol and more alcohol. I even did a celebratory trip to Hawaii with Mike to celebrate getting into dental school. My loans sat there and I paid the bare minimum which didn’t even cover interest. And so my loans grew. I was working my butt off, but my debt continued to grow. I was working so damn hard that I was sick for months at a time, because my body could not keep up with the stress. I couldn’t wait until I got into dental school so that the payments could be delayed another four years.

I didn’t apply to many dental schools, but I did get into two schools right away, as early as December the year before. Ohio State University and University of Southern California. I wanted to stay in California to be with Mike and be close to home, so I decided to choose USC, which happens to be voted THE most expensive dental school in the United States. I swear I wasn’t getting any smarter with the finances thing. I mean, I KNEW it was the most expensive. I got an apartment to myself across the street from campus, which also meant I was spending A LOT of money on housing alone. Two weeks after dental school started at USC, I got an offer to go to dental school at UCLA, which started a week later. I denied it! You want to know why? It wasn’t because I liked USC better. It was because of sheer laziness! I was already set up in my apartment, moved in, and I already met a few people at school. I did not want to start all over or commute across the city. That’s it! That is the reason I said no. It was probably the worst financial move in the entirety of my life. And I hope never to make a mistake like that ever again.

Debt is never a good thing. More debt in exchange for a supposedly more prestigious school does not make the debt valuable. It’s not worth it. End of story. Yes, in order for me to achieve my dream of becoming a dentist, I had to go into debt. But I had a choice to take less debt, and I was a moron.

It was also around this time that my parents lost their house to the bank. This was the same year they had to take money out of their retirement fund to pay for something or other and were slashed with a big tax fee at the end of the year. But who was I to judge them? I stayed at USC. That single decision put me more in debt than my parents. So I cannot judge them for their financial decisions. I should be focused on working on my own spending habits rather than over-analyzing theirs. Plus, it turns out, I was growing up to be just like them.

Since I was living by myself in an apartment across the street from USC, I was dwindling down the few extra bucks I saved working three jobs during my one and a half years off. I was taking out the maximum loans possible (over $100k a year!) and still, by the end of my first year, I had no extra money in my bank account. I decided to move in with a roommate a little further away from school, but still in downtown LA. It made rent $100 cheaper per month. But it still wasn’t enough. In my second year of dental school, to the shock of my dental classmates, I took on a job as a librarian on campus and worked 20 hours a week, on top of being at the dental campus over 40 hours a week. I was exhausted, sickly, hardly spoke to my roommate and released all of my stress on Mike at the end of the day. After all the money financial aid was handing me, and the extra hours I was working, I was still going into further debt. Mikey had to lend me $1000-3000 at the end of every trimester to make ends meet. I would pay him back the minute I got my funds for the following trimester, which meant that at the end of the next trimester, I would need to borrow even more from him. How was this possible?!

It’s all those little things that you don’t even think about when you buy them. It’s that one shopping spree that you went on just because you were feeling down. It’s the new picture frame your apartment needed. It’s the chips and ice cream that you had to add to your grocery bill. It’s the second pair of Nikes you have because the last one has a mark on it. It’s the wedding dress you had to buy to attend your friend’s wedding, because she has seen you wear all the other dresses you owned. It’s the fifty books you have yet to read but buy impulsively because the cover calls to you. It’s that one time you were too lazy to cook so you went out to dinner with your friends. It’s when you got hammered at your friend’s party and offered to buy everyone a round of drinks. I mean, the list goes on and on and on. One bad financial decision after another. And these were just the little things. The big things were worse. The choice of housing for the sake of convenience. The choice of school due to laziness. The choice to borrow money from someone else for lack of discipline. It’s not consumption that’s the problem. We are human, and we need things. But it’s compulsive consumption that is the issue. The failure to see the difference between need and want.

By the summer after my second year of dental school, I was drowning in debt and I couldn’t take it anymore. I told my roommate I was moving out by the end of the week. A bitch move, and I can’t believe we are still close friends after that. I moved to Torrance to live with my boyfriend and his two guy friends, where my rent changed from $1200/month to $345/month. I quit my librarian job and paid Mike back every single penny. I committed to cooking meals at home with Mike as much as possible, and started budgeting our grocery bill to $50/week. I still follow this budget until today. I was taking a step towards debt aversion. But I continued to be a bad spender, or rather, a spender period. After all the money I saved, I spent any excess loan amount I had to travel or to dine out! Oy vey. I was so excited that I had “extra money” that I could not wait until the end of the trimesters to see how much I had left in order to live the good life. The truth that we all know is that, I have never had any extra money. As long as you are in debt, you don’t have money. I have been in debt since the day I opened my first credit card. But I spent the “extra money” anyway instead of paying back my loans. I continued this toxic cycle up until the day I graduated.

I wish I could say all of this ended after graduating dental school. After the loans stopped coming in and I was left with whatever debt’s version of a black hole is. Unfortunately, it didn’t end there. The summer after I graduated, I had to borrow money from Mikey. I was out of loans. In our entire relationship, I was very adamant about splitting everything in half. Down to the last penny. So any money I borrowed from Mikey, I kept tabs on. Until I graduated from dental school, Mikey and I were Even Stevens. I owed him over $16,000 by the time I started work. $16,000! That’s a lot of money I didn’t have. That summer, I was even more obsessed with spending. I had to have a nice loft apartment and I had to buy new furniture for it. I spent his money to take classes and workshops. I was in denial that I had to face a burdensome monstrous debt. I knew I had a problem, then.

Here is my issue with money. You might not have this issue but I did. And it all started with things.

The more things I wanted to buy, the less money I had.

The less money I had, the harder I had to work.

The harder I had to work,

The more stressed I was.

The less time I had with my friends.

The more sick I became.

The faster I tired.

The less personal growth I had.

And if I wasn’t growing,

Then I was dying.

And that had to change. ASAP.

I was just like my parents. Just like so many other Americans. We have too many choices and that was a problem for me. I thought I needed to have every choice offered to me. When I had to present my money egg, I knew all of this. I was aware of the entire story as it was unfolding, as I was living it day to day. In fact, I was hyper-aware, and that’s what made me worry so often since I was a young teenager. I knew this because I watched my parents go through it.  But I was also in denial. I deserve this. I worked hard for this. This is my reward. If they can have it, so can I. I am in less debt than they are. This is worth the money. All of these are excuses and lies that I fed myself. When I finished presenting my money egg, I couldn’t help but think to myself, that for once in my life, I made the right financial move. I hired myself a financial planner who did not tell me what to do with my money, but had me change my whole perspective of life in general. After presenting my money egg, he had me and Mike discuss our priorities, our future goals, and our dreams. He asked us questions like, what brought us happiness, what projects we wanted to start, when we saw ourselves retiring, what retirement looked like for us. He asked us what we wish we could had done in life if we were told that we had an incurable disease and we were to die by the end of the year. Then he asked us what we wish we could have done if we were told we were going to die tomorrow. If you were to die and had a million dollars in assets, how would you divvy that up? By asking us these questions, and writing down all our answers, he came back at us and said, look. From all the answers that were provided, there were a few things that mattered to Mike and I. Family seems to be the most important thing. Next came travel, hobbies, and self-improvement. After that was contributing beyond ourselves. There was no mention of a house or stuff. So we had to approach our financial situation in a way that allowed us those things not only in the future, but more importantly in the present. It was like a switch flipped in me. I radically altered my lifestyle. It was around this time that I started to embrace what I would consider the simple life and the concept of minimalism.

Minimalism is the thing that gets us past the things so we can focus on life’s more important things, which aren’t really things, at all.

-The Minimalists

In the last year throughout this process of gaining more and more control over my financial life, this is what I learned.

The less stuff I bought, the more money I had.

The more money I had, the more focused I was on paying down my debt.

The smaller the debt got, the less I worried about my finances.

The less I worried about finances, the less time I had to work.

The less time I had to work, the more time I had to learn about myself.

The more I learned about myself, the more focused I was.

The more focused I was, the more clear my priorities became.

The more clear my priorities became, the better my relationships got.

The better my relationships got, the more meaningful my life got.

As I discovered what was meaningful to me,

I realized that it never had anything to do with stuff after all.