Afterthoughts on: “10 Steps for Financial Success for New Grads”

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This past week, I had the pleasure of hopping on an InstaLive session with Dr. Unorthodoc once again. In this week’s Live, we talked about my recent post: 10 Steps for Financial Success for New Grads. She even threw in two bonus recommendations, which you can surely review on her Instagram @dr.unorthodoc. In typical fashion, I’ve spent the last few days conjuring up a few afterthoughts that I wanted to share in this post.

Regarding Financial Success:

Financial success” can mean different things to different people. The vision could include accumulated wealth, fancy things, or financial freedom. For me, it is certainly the latter. A quote that I recently read sums up my idea of success:

“A nice car and a big house are the old status symbols. The ultimate flex is freedom. Time freedom, location freedom, and financial freedom.”

Obviously what was success to my parents’ generation is not financial success to me. The same goes for a peer of mine who might hold different values, be in a different situation, or have a different upbringing. There is no judgement in that fact. It is simply an observation. When I talk about my own journey, I don’t want to exclude people and make them feel like the information is irrelevant to them. I want them to tailor my experiences to their own needs and versions of financial success. Because of this, not every tactic we discuss will apply to everyone and certainly the order in which you do things may change. We went into some of those details in the InstaLive so feel free to check it out!

Regarding Where to Spend Your First Paycheck:

Some of my classmates spent their first paycheck investing in the stock market or contributing to their 401k’s. Some saved up for their first home’s down-payment or upgraded their cars. I used my first paycheck to pay for a financial planner. (The two recommendations we mentioned in the podcast were Travis Hornsby from Student Loan Planner and Andrew Paulson from White Coat Investor.)

This is a prime example of how we can use our money to get closer to our ideas of financial success (wealth, stuff, and freedom). For me, I wanted to be free from debt or anything that would prevent me from living as I please in a day-to-day basis.

Regarding Financial Literacy:

What this also shows is differing levels of financial literacy. I think that’s what makes my financial journey so relatable is the fact that I started at the bottom with zero financial literacy. Meaning, I have been through every possible stage of wealth accumulation so many people can relate to the different phases of my financial journey.

I have classmates who have more money awareness than I did at graduation. Heck, I had friends who had more money period! One of my closest friends spent his mornings in dental school investing in the stock market. I was not even exposed to that world at that point in my life. I also did not have access to generational wealth being a zero generation immigrant.

I am not saying this in an accusatory way or anything like that. But, certainly, they were better versed and can invest in things right out of school because they were at a stage in their life where they were already set up for that. Just because I started at the bottom doesn’t mean every has to hire a financial planner. You might already know everything a financial planner has to tell you!

Remember: the path to financial success is mutli-factorial. The level of financial literacy, current phase of wealth accumulation and your personal definition of financial success all play a role towards your path post grad.

Regarding Student Loans

The best advice that I can give is to choose a path that works for you.

Not everyone should aggressively pay student loans back, and I don’t mind going on record saying that! Those whose definition of financial success falls under wealth accumulation or having nice things would be better off with the loan forgiveness program, granted that they invest their money in preparation for the tax bomb at the end of the 20-25 years. Those who yearn for freedom or value frugal living would benefit from paying it off aggressively.

The question new grads need to answer is, “What lifestyle do I want to live?”

Since my values are centered around gaining financial freedom, the reasons why I decided to pay my student loans off aggressively are as follows:

  • I don’t like having debt looming over my shoulder. It causes me stress and holding on to debt has a psychological and emotional toll on me. Even when it comes to a to-do list, I am the type of person that prefers to check off tasks as quickly as possible, in order to alleviate worry. If you asked my husband, my famous saying that would follow me to the grave would be, “Let’s get it over with!”. Regardless of whether the task at hand is enjoyable or not, the part that matters more to me is getting it done. At the end of the day, it gives me more peace to get rid of my debt.
  • I am not the type of person to only do one thing for the rest of my life. Right after graduation, I knew that I wasn’t going to be the type of dentist who would happily work a 9-5 shift Monday through Friday, running a practice until I was 65 years old. I am a creative person and I wanted to have the choice to quit dentistry all together, whenever I want. If anything, the last four years since graduating has been proof that the 25 year loan forgiveness is not for me. I’ve already quit once (here I wrote about How to Gain Enough Financial Independence to Quit Your Job) which happened to be a job that did not bring me joy at a time when I wanted to recreate myself (we can blame that on Saturn’s return.) I’m the type of person who wants to be a baker some days, a writer other days, a pet caregiver on my time off, and a world traveler not tied down by a consistent job. I want to work remotely in my pajamas at home sometimes, and interact with people other times. I want to think up of ideas as much as work with my hands. Because this is the person I am, I decided having no debt gave me more freedom to live wherever, work however, and be whomever. This required a deep understanding of the true me, which is where the real work lies.
  • Lastly, I am a numbers gal and while there is wealth growth potential to doing the loan forgiveness programs, it appealed to me that paying the loans off in ten years time is still cheaper than waiting 20-odd years – cheaper by more than $100,000! Of course that profit margin increases even more if you pay it back quicker than 10 years, which is what I am trying to do!

Regarding Emergency Funds:

I like emergency funds because it gives me that layer of added security and ease of mind. That being said, emergency funds don’t have to be that traditional idea of putting away a monetary amount in a savings account or in a safe under your home. I don’t like that idea anyway because that prevents you from growing your wealth. You should at least invest it as a hedge against inflation. I like to make every single dollar work for me and I love the idea of passive income. There are many ways to have an emergency fund without reducing the chances of wealth accumulation.

  • Open a brokerage account and invest your savings into something. Even a mutual index fund like SPY, VTI, or VTSX will be better than keeping it in a savings account, especially if you don’t know much about stocks. Your brokerage account can be you investing in stocks, but also a source of funds in cases of true emergency.
  • We travel hack a lot so that we never have to spend our hard-earned dollars on our travels. Which means we have multiple credit cards open at the same time that have maximum limits. Since we pay all our credit cards in full every month, we have those funds readily available for emergencies. Between my husband and I, we have over $100k in unused credit card spending (I alone have $83k) and that is a source that we can turn to in case of a true emergency.
  • Depending on your loan situation, you could use pivoting your plans to gain access to more money during tough times. For example, even though I am paying off my loans aggressively, I remained with REPAYE the first three year’s to benefit from the program’s promise to pay half of the interest fees. My minimum monthly payment was $900 per month, but I was paying $6,500 or more per month. When 2020 hit and my husband lost his job for 10 months, we paid only the minimum payments to my loans and used the left-over to cover his income loss. Luckily, the interest rate since the pandemic has been at a miraculous 0%. Regardless, this was a good example of using loan repayment pivoting in cases of emergency.
  • Just like you can gain access to money by selling stocks, you can do the same if you have equity in real estate. We own a commercial/residential property and can sell it if things go south, immediately gaining access to our equity.

Regarding Investments:

We briefly touched on investments here but I think the InstaLive had better content within the banter that Dr.Unorthodoc and I had. I just want to summarize with the following: Investments are GREAT but require a bit of heeding. Do your research, don’t let emotions carry you away, and use your head.

Regarding the big picture:

I am all about balance – as you can tell from my lifestyle. Paying loans off aggressively does not hinder us from

-maxing out our 401K

-buying a property

-growing our wealth and investing in stocks

-building businesses

Do a bit of everything! It makes life more fun and interesting. I view life as one big social experiment. Novelty is good for the soul and honestly, I know very few people who can do the grind and truly call themselves happy.

I am choosing happy.

XOXO

The True Cause of a Spending Problem

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Do you have a spending problem? Are you someone who just can’t make ends meet? Have you found that no matter how much you increase your income, you can’t break the paycheck-to-paycheck cycle? Do you find yourself shopping when you are stressed or tired or sad? Perhaps this post is for you.

It may not be what you want to hear, but the truth is this:

A spending problem is the result of not knowing who you want to be, or where you want your life to go.

Emotional spending occurs because a void needs filling. Unfortunately, more often than not, the spending itself fails at solving the problem. Rather, it extenuates it by creating a loop cycle that enlarges the void and brings us further from our true goals.

For example, have you ever tried to treat your stress by shopping online? At first, it felt good, but after a while, regret starts to sink in and your newfound purchase falls short of delivering lasting happiness, not to mention instantly decreases in value. Does it sound familiar to you? Because it sure does to me.

Not knowing who we want to be or what we want our life to look like makes it difficult to know what is worthy of our time and money. If we do not have a clear purpose, goal, or ambition, then it becomes easy to fall into the cycle of spending our resources on what people around us promote, rather than what we need. Because what we gain was never truly for us, it doesn’t fill the void at all, resulting in spending again, and again, and again.

If you want to treat a spending problem, my financial advice is to start with you. Define who you want to be and where you want your life to go. At least, that’s what we did and it worked for us. Because I used to be like you, too. I had $30,000 in credit card debt. I had more than half a million dollars in student loans. I went shopping every weekend in my early twenties and bought avocado toast while I was in dental school. I had a serious spending problem, until I realized who I was and what I wanted.

I am a simple person. I enjoy reading books and baking bread. I find joy in quiet time and yoga. My mind is healthiest when I am outdoors collecting rocks on a beach. I wanted a life of financial freedom. I wanted to be able to choose a job to my liking. I wanted the autonomy to work in a way that is aligned to my values. I want the freedom to call my own hours, to choose days of rest, to pursue other passions, and I understood that I couldn’t do that if I chose material stuff, trends, and status symbols. That’s how this all started.

I was lucky enough to find a financial advisor in my early years who delved deeply into what I wanted for my future. It was only then, when I saw the big picture, did I have the motivation to get rid of my spending problem. And if I am being honest, without a clear picture of where I wanted my life to be, I would just as likely have reverted back to my previous ways. It was the clarity that kept me going.

The true cause of a spending problem is not being intentionally clear enough about your life.

Here are good places to start:

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Monthly Goals: November 2020

This month’s goals come at a very interesting time for me personally.

The reason being, I have decided to quit my dentistry job.

I have decided to quit dentistry for many reasons.

  • I have lost meaning in my daily work.
  • I felt under-appreciated by a changing health-care system that prioritizes customer service over health itself.
  • I felt that I could not balance the expectations of my patients, the expectations of my workplace, and my own personal expectations.
  • My values are not aligned with where I am currently working.
  • I wanted to spend the holiday season with family and focus on the people that matter to me.
  • I was feeling burnt out and knew that if I did not give myself a break, I would grow to resent what I do for a living.
  • I want to live an intentional life, which means curating out the things that do not bring me joy.
  • We have made the lifestyle choices (invest money, spend less, own less, avoid having kids, avoid a large mortgage) necessary to avoid job dependency.
  • We have created the boundaries necessary to ignore social expectations and pressures, thus giving us freedom to live how we want.

Despite this freedom, I still have goals. But without the job identity, the goals have shifted slightly.

I think that quitting was very cathartic for me. I admit feeling stressed the last few months, mostly because I was holding on desperately to something I should have let go many months ago. I was fighting an internal battle, one between the past self and future possibility. Finally turning in an official resignation letter did just the trick.

It wasn’t very easy. I felt depressed for a few days, afraid of what I had done, anxious about the future. It’s like any ole break-up. It feels easier to run back to what is familiar and feels safe, even after you’ve outgrown the past. It takes a lot of reserve to not turn back. Luckily, the sadness and fear did not last long. After I sat through my emotions, I started to really notice a shift in my personality.

  • I sang songs randomly, after years of refusing to listen to music in case it over-whelmed my mind.
  • I smiled more frequently, and was more open to socializing. I connected with a high school friend, decided to make time for my grandma’s birthday party, and even drove to East LA on a Friday evening after work to grab tacos with my mother-in-law at a stand that she used to eat tacos at when she was my age.
  • I picked up old habits, like learning about photography, doing art, and playing guitar.
  • I connected with my husband more, rekindling our dumb banter from the college days.

For November’s monthly goals, I am sharing with you a TIME OFF BUCKET LIST. Even though my time off doesn’t start until November 19, I have decided not to wait until my last day of work to start living life to the fullest. This bucket list contains a number of goals I have always wanted to accomplish but have put on pause in order to partake in an American Dream.

As some people already know from my Instagram, we are taking a few long trips over the course of three weeks from November to December. I have lived in California since 1998 and I have yet to actually see it. I find that a shame.

It’s got me thinking, how much of our life are we actually wasting away doing things that don’t really matter in exchange for stuff that don’t really make us happy?

Not that I have the answers.

Just that I am trying to figure it out.

TheDebtist’s TIME OFF BUCKET LIST

  • Create Spotify playlists for different occasions and moods
  • Improve Photography Skills
  • Learn French
  • Improve Guitar Skills
  • Explore California National Parks
  • Visit old friends
  • Write a book – and self-publish it
  • Create more courses
  • Get into artwork again
  • Visit a Japanese spa (because we can’t go to Japan)
  • Go to a butterfly sanctuary
  • Go birdwatching in the San Joaquin Wildlife Sanctuary
  • Explore tide pools for hours
  • “Live” on a farm – milk a cow or extract honey from a beehive
  • Learn recipes of my homeland from my mom
  • Hug a Redwood tree
  • Tour a lighthouse
  • Learn to make alfajores
  • Bake someone’s wedding cake
  • Do a cold bath dunk
  • Bake the following from the Tartine Book: Gingerbread Cookies, Spiked Cocktail Nuts, Brownies, Chocolate Pots de Crème, Devil’s Food Layer Cake, Lemon Meringue Cake, Pastel de Tres Leches
  • Eat Pho for the first time (yes!)
  • Learn how to make ramen from Mike
  • Master a few advanced level yoga poses
  • Learn how to sit on my hands

I add the last one, because just like anything, I always dive headfirst into something new, including this “mini-retirement”. Supposedly it’s a chance for me to figure myself out. Somehow I have to balance that with living life to the fullest. Like I said before, I’m still figuring it out. But honestly, thank you for joining me on this wild ride.

If you have any other bucket list ideas, do share! Who knows when my next mini-retirement will be.

The Real Reason Doctors Can’t Pay Down Their Student Debt

I was sitting at work once (and many times after), talking to colleagues of mine who were all in their early thirties – fairly young by doctor standards. We were talking about student loans (what else?) and how steep the price has become to get an education (in this case dental, but it applies to education in general). We were going through our numbers and they were going through their excuses as to why it was impossible in their situation to pay down debt. Of course, me being me, I gently stated the obvious which was that the real reason doctors “can’t” pay down their student debt was because they thought they deserve more than everyone else.

This statement may hurt many doctors’ feelings, but actually, it’s true.

For example. I had one person complaining about drowning in student debt. He blamed it on the kids and the fact that he is a single income household. Fine. But he also just bought a brand new Tesla SUV. He gets a nanny to watch his kids so that it’s easier on his stay-at-home wife. He gets help (did he say $100k a year??) from his in-laws that is budgeted for the kids. His dining out bill is $800 a month. But he can’t afford his student debt.

Another person also bought a brand new car after graduation, enrolled his 6-month old in Montessori private school, took wild vacations (without travel hacking!), and bought a grand house for their family of three.

Yet another person owns two medical-grade massage chairs in his home, bought his girlfriend a Tesla, and drops $10k on trips around the world.

What if I told you that this story is repeated many times over? I have spoken with my fair share of indebted graduates, especially after releasing my own personal story with ChooseFI.

They all wish to banish their student debt. They also don’t wish to do the work.

Here’s the thing I see most often with doctors. They work very diligently to get through school. They do anything to get to their dream career, including taking out a huge sum of moolah (hell, I did too).  They sacrifice the best of their young years. They put off buying a home, earning money, and settling down. Then graduation hits and they think, “I’ve made it.” For a brief second, they breathe a sigh of relief thinking it’s all going to be worth it.

So they buy a new car to celebrate. Then they buy a home or a practice. They go out every weekend for food. Sometimes they dine out a few times a week! They want to live in affluent communities. They want to go on vacation. They throw themselves a dream wedding. They buy nice clothes and expensive Figs scrubs. But more than all this are the little purchases. They want the daily coffee, the trinkets from the $5 section in Target, the happy hour events, the spin class – you know, the harmless stuff.

They become obsessed with the high-life and quite quickly, they refuse to give it up. 

And if you think I’m being extreme, I’m not.

Because when I graduated, I wanted all these things, too!

The most excruciating part about facing my student debt, the part that nearly killed me, was realizing that after every sacrifice and sleepless night, after giving up the best of my youth, after working three jobs during school, after wracking my brain on ways to extend $40 for another week, after being a model student, the good daughter, the most loyal employee, the most valuable I could be to the community – the work was still not done.

And when I tell new grads coming to me for advice on making loans disappear that they have to use their beat-up high-school ride, possibly move-in with their parents or take on a roommate, cook dinner every night, manage a budget every week, wear their same scrubs from dental school for five more years, and try their darndest to travel for FREE – well, their faces fall and I can see the disappointment plain as day scrawled on their furrowed brows.

Only thing is, I can’t tell if the disappointment lies in the fact that they have to continue living like a college kid for ten more years or if the disappointment lies in me – because I wasn’t the magic genie they wanted that would grant them their wish.

I can tell you how to repay your loans. You just might not like it.

99% of graduates with more than $350k of debt choose to stay with loan forgiveness. Probably because it hurts the human psyche too much to know that everything you’ve done thus far is not enough.

Becoming a doctor does not end the day you graduate. Not for me. It ends the day everything you need to become a doctor is behind you. Loans included.

Not everyone thinks this way, though. Many people truly believe that the hardship stops the day you get the degree. Ahhh, time to sit back and enjoy the benefits of all our hard work. But how can that be when you don’t even know what a hard-earned dollar looks like?! What makes you better than the rest of ’em?

I know I’m making enemies here but I must pose the question. If not I, who will?

I don’t blame the docs. They were merely children when they signed their lives away for a chance at the American Dream. I blame our upbringing for creating the expectation that a doctor’s life is a rich and easy one. I blame the institutions that are set in place that allow universities to charge this much money to get educated. I also blame lending companies who are handing out loans this large. Child robbery, that’s what I call it.

I implore to all the existing doctors that make it seem like being a doctor is easy. How will we ever change the trajectory if we keep implying to young ‘uns that pursuing this career path will mean they won’t have to work hard for the rest of their life. How will they realize and make an informed decision when the time comes?

I know the real truth.

That behind the facade of wealth is an increasingly long list of medical professionals patiently waiting 25 years for loan forgiveness to hit. Behind every confident thrust of the credit card is an avoidance technique that makes life a bit easier to live. Behind all our heroics and saving lives lies a coward afraid to face our social responsibility to pay back debt that we chose to take out. And behind every accomplishment lies a lifestyle creep that is avalanching too fast out of our reach, propelling doctors further forward towards an unsustainable way of living.

The real reason doctors “can’t” pay back student debt is because they won’t.

They choose not to work hard anymore. It isn’t burn-out, although that stuff is real too. It’s the social expectation that a doctor’s life is breezy. The mindset to pay back debt just isn’t there. Many cannot accept that graduation is not the end-game. They think they already won.

There will be excuses. I don’t buy any of it.

There will come a day when I will finish my loan repayment journey, and people will think it’s a miracle. They’ll think I was one of the lucky ones, rather than a penny-pinching maniac. Perhaps the stars aligned and the pandemic gave me this “unique” ability to pay back loans faster because I was not being charged interest for six months. My parents must have helped me out. An investment strategy probably worked out for me but not them. I can’t wait to see the excuses they make. But none of that will be true.

My current car is a high-school ride that I’ve had for 13 years. The passenger’s rear-view mirror doesn’t match, because when someone broke it (probably to re-sell it), I didn’t want to pay an extra $60 to get one that was white when the stock color was black. Mike even helped me put it on the car myself because I didn’t want to pay a service fee at the auto shop. My neighbor came out of his garage this past week and looked at me funny when he saw me physically hand-washing my car. He said, “That’s … nice…” and walked away slowly.

I sometimes have to wipe graffiti off my windows, because I chose to live in a lower income neighborhood so that I could buy a business storefront AND a dwelling at a very low price. Last Friday night, it was getting ratchet at the club next door since they moved the party outdoors due to COVID restrictions. I’ve had to run away from my own home before when the riots first started and they fired fireworks at the cops.

I spent a third of last year working midnight shifts. I still wear my USC scrubs that I was forced to buy upon entering dental school in 2012. I run with the Nike’s that my husband bought me as a gift when I was attending dental school so that I could “be cool”. They used to be orange but now they’re mostly black. I sell my de-cluttered stuff on Poshmark. I research heavily in order to travel the world for FREE. I come home from work to work. I still actively budget every week. I aim to spend only $200 a month in groceries for the two of us and $150 a month in dining out. I created a lifestyle where my job is three blocks away, to reduce the gas I have to buy. TO REDUCE THE GAS I HAVE TO BUY. I spent my last birthday repainting our bathroom. We spent Mike’s birthday picking up birthday freebies. Heck, even our cat was free.

Do you know the real reason THIS doctor can pay off student debt?

Hard work and a willingness to.

It’s not rocket science.

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Frugal Challenge: Practice Minimalism

In my life (as it is now), minimalism came first. By practicing minimalism, everything good in my life fell into place, financial clarity being one of them. Every time I choose a life of less stuff, I enforce a habit of not relying on external stimuli to make me feel whole. I am also deconstructing a fallacy that we were taught from birth, one that says we can buy our way to happiness. Minimalism is, after-all, a modern by-product of Zen teachings on how happiness resides within ourselves and the worlds our minds create. Any external stimuli only prevents us from tapping into our inner state of calm or peace by acting as a distraction from true happiness. Without the material things to distract me, I am able to focus on the more important (non-material things) in my life, such as paying down $575k in student debt! I can confidently say that I would not have been as successful with finding frugality and working towards financial independence without first practicing the art of saying Goodbye, Things.

My frugal challenge for the month of October is to start practicing minimalism. After all, it goes hand-in-hand with frugality. Practicing minimalism can cut down costs in many ways. Here are a few!

  • LESS SHOPPING, ERGO LESS SPENDING: After you’ve de-cluttered a lot of your items, you will naturally develop a hesitancy with buying something again (unless it’s something you realized you really need or want). The de-cluttering process, when done right, is a tedious process for the average American because of how much stuff we tend to accumulate. I guarantee that once you’ve really pared down, buying things is not as attractive as it once was, which means you will spend less money on shopping.
  • LESS STUFF MEANS LESS LIVING SPACE: Having less things allow for a smaller home, which usually leads to cheaper rent! Many minimalists find that once they are freed from the burden of material objects, they are suddenly free to live alternative lifestyles, such as pursuing the small space movement! Housing is one of the largest expenses in most people’s budget, so reducing the cost of housing will greatly catapult your path towards financial freedom.
  • LESS UNNECESSARY SPENDING FOR REPAIRS AND REPLACEMENT. Minimalism is a lesson in being grateful for the things we already have. Because minimalists surround themselves with only their most beloved things, they are more likely to preserve, mend, and fix a broken thing than they are to throw it away and replace it. They aren’t going to buy things for convenience sake and they are more invested in maintenance. Because of this, they save more money.
  • LESS KEEPING UP WITH THE JONES’S: Minimalists do not participate in keeping up with the Jones’s. In fact, they think the Jones’s are making a dying, rather than making a living. And minimalists prefer to live life rather than work themselves to death in order to buy material goods. And since minimalists do not participate in upward social comparisons, they are not as easily influenced or frequently bombarded by and with advertisements. They aren’t called upon to be consumers. And if they are, the calling is easily ignored. Overall, they don’t spend money in order to keep an appearance. Minimalists save their dollars, preferring to build wealth rather than build social status.
  • LESS STRESS RELIEF BINGES. When we are stressed, we tend to spend in order to make ourselves feel better. We want to take a vacation to run away from stressful work. We go out to drink during happy hour after a difficult 8-5. We binge on food and eat our misery away. We even have retail therapy. A practice in minimalism leads to more space physically, emotionally, and mentally. Minimalism reduces stress by reducing the external stimuli in our environments. With all this Zen, there is less cost dedicated to stress relief practices.
  • NO EXPENSIVE FRIVOLOUS EVENTS. Minimalists do not want to celebrate big life events with lavish parties, nor do they want to receive a tower of gifts. What will they do with all of this stuff? I may be speaking for myself, but my ideal celebration involves people and homemade food in a warm setting. I like gatherings in small spaces because you can feel the presence of others and there’s no nooks and crannies to hide in and stare lovingly into your phone. A good example of this was our wedding. We got married in an empty warehouse and the decor was handmade. My father tied gold streamers onto a string, and I made a backdrop for the photobooth area. My aunt collected wild flowers and put them in vases, and Mike’s grandmother made cookies and her famous magic bars. Our friends provided local beer for the reception as their wedding gift. We hired a taco truck and had donuts for desert. I’d imagine the same would go for children’s parties, funerals, graduation, & c. No frivolous events means no expensive events!

These are just a few ways that minimalism can help build a frugal lifestyle. The truth is, minimalism goes a step further than frugality. When I became a minimalist, I reduced the distractions in my life. I honed in on who I was and what made me happy. Because of this recently tapped in energy, I performed better at work and increased my income. I then found a few interests that became side hustles (writing being one of them). This further allowed me to make more money. And as I became happier, I also became less dependent on buying my way to happiness. My work made me happy, and I funneled even more time into my passions. And so the cycle snowballed, and slowly, our debt repayment changed from 25 years to 10 years to 9 year, to 7 years, to hopefully less than 6 years! All because I got rid of my things.

As all minimalists argue, if minimalism involves shedding physical burdens in the form of material possessions in order to be liberated to live the life that really matters, why isn’t is called maximalism? Frugal maximalism.

Feature: How to Manage and Pay Off Multiple Credit Cards with Andrew Rombach

I LOVE credit cards. I think that credit cards are really useful when their perks are used efficiently, in things such as travel hacking for example. We use them frequently to fly to places around the world for free. However, my relationship with credit cards wasn’t always good. In fact, I used to hate them. My money egg story here explains how my perception of money was greatly shaped by my parents’ influence. At sixteen years old, they had me open a few credit cards under my name, and then maxed out those credit cards. By the time I was a freshman in college, I was getting letters in the mail saying that the credit card minimums are not being met and that my credit score was being affected. When I confronted my parents, their answers were “Don’t worry about it. We have it under control.” Since 2007, they had maxed out my cards at $20,000. Eventually, when I was 21 years old, I became brave enough to say “No more” and shut down all credit cards that they had access to so that they couldn’t keep using them. To this day, they still owe $8,000 towards that debt. This relationship with money is what made me fear my student loans, and it is eventually what propelled me to knock ’em down! Because this means that all this time, my parents were paying massive amounts of interest on credit card debt, and they still have not been able to pay it back. Credit cards have some of the highest interest rates and unless they are paid back in full at the end of every month, they only work to hurt your financial journey. Therefore, while I advocate the use of credit cards in order to propel you forward in reaching your finance goals, I also warn that you must have the wherewithal to be able to handle credit cards well. If you are starting from a place with existing credit card debt, my advice would be to work with all you’ve got to pay it down … OR COMMIT FINANCIAL SUICIDE! We don’t take credit card debt very lightly around here. So when Andrew Rombach from LENDEDU asked if he could share some tips with my readers, I was all on board. If you are struggling with paying off your credit cards, I hope you find some useful info in this post. 

Do you find yourself in the vicious cycle of trying to pay off your credit card debt? Do you have multiple cards and aren’t sure where to start? You’re not alone in that struggle. Credit card debt is a common problem for consumers. It’s all too easy to fall into. Just take a look at a few nationwide statistics.

According to the Federal Reserve, households in the United States owed a collective $999 billion in credit card or revolving debt by mid-2018. Some sources put average credit card debt at over $6,000 per consumer, and cardholders typically have 4 credit cards. That’s quite a hefty sum to deal with for any household, and if you find yourself in this situation, then you may find yourself stuck paying the minimum endlessly on several cards.

While getting out of excessive credit card debt is hard, it’s certainly not impossible. There are a few ways to manage your credit cards or transfer the debt that can save money, make your life simpler, or both. Check out a few of these tips if you want to find a different approach to your credit card debt.

Try Debt Consolidation Loans

A debt consolidation loan is basically a personal loan used to pay off various forms of debt, or credit cards in this case. To put it simply, you apply for and take out a loan from a bank or lender, which is usually unsecured. That loan pays off your credit card balances. Now you must make monthly installment payments on just one loan instead of various credit cards.

Consolidation loans provide the benefit of simplifying monthly payments to just one payment; plus, it adds certainty to repayment because you can stick to one repayment schedule with an end goal in sight. Furthermore, clearing your credit cards may lower your credit utilization ratio. Finally, a possible interest rate reduction on your debt could save money. This new debt consolidation loan comes with a new rate, so it could be lower than your credit cards depending on your credit.

A drawback is the eligibility requirements for a new personal loan. Lenders prefer applicants with a great credit profile and high income; in fact, those applicants are more likely to get lower interest rates. Also, remember to use newly-cleared credit cards wisely moving forward. You don’t want to be left with a loan balance and mounting credit card debt again.

Time Your Payments Accordingly

Some credit card debtors consider timing multiple monthly payments to save on interest. Interest cuts into your principle payments and extends the repayment process, but timing additional payments can help reduce your principal balance before interest accrues.

After making your monthly interest and principal payment, your interest balance should be lower moving forward. Before it accrues again, it may be worth making an extra payment on your cards. This will cut into the principal balance more significantly, and it also reduces the amount of interest paid on the next scheduled monthly payment.

On the negative side, not everyone has the extra cash to make a second payment each month. If you don’t have the money, then you may need to settle for another way to save money and expedite repayment. 

Try Either the Debt Avalanche or Snowball Method

The debt avalanche and snowball methods are two different ways to handle multiple credit cards over time, and neither requires taking out a loan or new credit card.

The avalanche method requires you to make large credit card payments on the account with the highest interest rate, while paying the minimum on all other accounts. After you pay off the high-interest credit card, you repeat the process with the next high-interest card.

It’s counterpart, the debt snowball method, works in a similar way, except you must prioritize low-balance credit cards. You would make larger payments on the credit card with the least debt and maintain the rest. When paid off, start paying more on the next low-balance card.

A major benefit of these methods is simply organization. They help you get on track with a plan of action. By prioritizing high-interest debt with debt avalanche, you’re paying off multiple debts more efficiently which should save money (eliminating high-interest debt reduce interest costs). With the snowball method, you can simplify repayment by cutting out low-balance cards from the equation. It’s generally accepted that avalanche saves more money than snowball, but that is still up for debate.

These methods are ideal because they require budgeting with your own cash (no loans involved), but this may also be a drawback because it’s very hard to pull off without the extra money for larger payments.

Balance Transfer Credit Card

If you opt for this method, you will take out a new credit card that comes with a lower interest rate, preferably a super-low or 0% rate during an introductory period. You then must transfer your credit card balance to this new card and begin repayment. It’s similar to debt consolidation, but the debt is transferred to another revolving account instead.

The point here is to get a lower interest rate on your credit card debt in order to save money. Ideally, you can get a zero-rate offer for up to a year or more which would save the most money. The goal is to pay your debt before that intro period is over.

Like with debt consolidation, you may be tempted to rack up more charges on a freed-up credit card. Remember that the debt doesn’t go away; you still need to pay it off. Also, balance transfer cards may be less suited for transferring multiple balances depending on your new credit limit.

Find the Method That Works Best for You

Each method offers its own set of benefits and drawbacks. One method could suit your budget perfectly, but another may not be the best fit. If you have the cash and organization skills, then maybe debt avalanche/snowball would work best. If your credit is stellar and you’re used to loans, a debt consolidation loan could be the solution.

Finding the method that works best for you is what matters most. Be honest with yourself and look at which style will best suit you – and then starting acting on it.

Andrew is a Content Associate for LendEDU – a website that helps consumers with their finances. He got his start in content and finance by writing all about credit cards. When he’s not working, you can find Andrew hiking or hanging with his cats Colby and Tobi.