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 hard 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.

Freedom: Why I Choose to Stay Part Time

When I first graduated from dental school, I imagined myself working as many days as possible at multiple offices to lead a “successful” and rich lifestyle. The goals were like any other typical goals, pay down student debt, buy a huge house in Southern California, travel the world, buy nice things to fill the house, start a family and raise children, etc. I wasn’t quite as intentional back then with my lifestyle as I am now, as you can probably tell. But I was ready to enter the workforce and “getter done”. After so much schooling, I felt like I was behind everyone else and I needed some catching up to do.

So how did I end up here?

The first person who ever suggested I work part-time was my financial advisor. We had just met and we were delving into what our goals were for the future and what our ideal lifestyle model would be like. When I rushed headlong into my ideas of working 6 days a week at multiple offices, for the rest of my life until I retire at past 65, he stopped me then and there and asked me to consider an alternative. Burnout is a prevalent result in dentistry. Due to the high stresses of the job, a majority of dentists experience burnout at an earlier age than they would like, which causes them to either cut down significantly on the days they work or quit dentistry all-together. My financial advisor, who deals with mostly newly graduated dentists, have seen time and time again, young new grads quitting dentistry a few years out of school. Despite my whole-hearted belief that this could never happen to me, he highly recommended that I limit myself to only four or five days a week. Long-term, he says that that would be most conducive to the lifestyle that me and Mike were trying to live. Off course, with anything anyone says to me, I took it with a grain of salt, but was still slightly stubborn in my ways. I had barely started work at that time, and was really feeling professionally driven. To me, I have watched my parents before me, and my friends around me, work the usual 9-5, Monday to Friday every week, and I (arrogantly, pompously, and ignorantly) assumed that I was more capable than that. I felt like I could take on the whole world at that point in life. We all feel like superheroes when we are young and naive.

And maybe we could, but does it mean that we should? The second person who insisted I work part-time was my boss. A little back story on where I work and my relationship with my boss. I started working at an office five minutes from my house at the age of 19 years old. I was a volunteer at first, but the office manager (who happened to be the wife of the dentist who owned the practice), saw my drive and interest and decided to train me from scratch to be a dental assistant. She paid for my x-ray licensing exams, bought me scrubs, set up one-on-one training sessions with the dental assistants, etc., etc. She basically became my second mother and took me by the hand and showed me the ropes. She held a lot of belief in me and I grew confidence and independence under her wing. She saw my love for writing, and actually had me write the entire website for the office from scratch. Every single written word on that site was mine, and I became so proud of it. She was very trusting, patient, and just all-together generous with her time. Eventually, I started working as a dental assistant on the IV sedation team, which was being run by the owner of the practice. He, too, had the same generosity as his wife, and shared so much knowledge, tips, and advice. I knew I wanted to be a dentist since I was eight years old, but I did not come to love dentistry until I worked with them at this office. These two people became my second parents, and did as fantastic a job as my first (real) parents in raising me to find my self-worth, as well as instilling in me the core need to put others first when it comes to doing dental work. When I graduated dental school, I reached out to them and they made room for me in their two practices to start my journey. Again, they’ve trusted in my abilities, although I do not know what they ever see in me, but I hold a lot of respect and feel a lot of gratitude towards these two people. They are the type to hold the best interests of those around them to heart, and I trust them fully and hold their opinions quite highly.

So when I started working with my boss and he asked me how many days I hoped to work, again I said 6 days a week. He looked at me kind of funny, as if seeing his former, younger self with the same fire in my eyes, shook his head, and then said to me, “You don’t want to work six days a week. It’ll burn you out. You’ll feel too tired to think and then you will make mistakes, and then you will feel less and less confident. Plus it wouldn’t be giving your best standard of care to your patients. In fact, I don’t want you working six days a week.” I was kind of surprised, but at the same time, I recalled my financial advisor saying the same thing and I said, “Okay.”

Initially he gave me three days a week, and then he bumped it up to four days a week, and then five days every other week. But I think he saw that I was looking for more. When one of the doctors at one of the offices left to fulfill her own dental dreams, he had me cover for her until he hired a new doctor, which then had me working six days every other week, and five days every other week. I was so excited for the chance, I jumped at it and went to town. I worked so much, and though I loved my job and went to work every day with a smile on my face (and, more importantly, left work every day with a smile on my face), I started to see what he meant. Burn out is a real thing, and although you may not feel it, it IS reflected in one way or another. Perhaps it is in your work, or the way you treat others. I started to lose that time that I used to take with my patients, and I was practicing more of an in-and-out type dentistry. The Hi- Let’s get to work – Bye! It wasn’t just dentistry either. I started to bring that home with me, relishing the space that I needed for myself, and taking away from the time I should have given to Mike and my family and friends. It only lasted a month or two before we hired a new doctor that fit well with our practice. But I saw what I needed to see, which was this.

You cannot take care of other people if you do not take care of yourself first. My job is built around helping others, whether that’s helping them out of pain, helping them feel confident with their smile, helping them learn about hygiene techniques that will prevent future disease, or just helping them understand more about teeth. I entered dentistry for this aspect of it, and to detract from my ability to help others to a high level of standard is selfish and wrong, especially when the driving force is money. Luckily, I also found a shift in my “needs and wants” in life, and I realized that I don’t need the money as bad as I thought. Sure, I still have bills to pay and loans to be free from. But I also used to spend on things that were simply wasteful. I cut that out and found that I do have the time, and space, to give to myself, before I give unto others.

My brother once asked me why I did not work more if I was so concerned about paying off my student loans really quickly. Fair question, since that’s all I seemingly preach. My answer is this. The reason why I want to pay off student debt quickly is not so I can be rich quicker. It’s so I can be free. If working more days now is required to get rid of the debt quicker, then all I am doing is trading freedom now for freedom later. The result of that trade would be a worn down, energetically deprived me, who would get less out of life in my earlier years than if I were to continue at a more moderate pace. The truth is, I just don’t think the trade is worth it. If freedom is what you seek, then there is no need to get more freedom in exchange for freedom. I think it all comes down to the question, “What do you value?” To be able to answer that question requires a lot of deep soul searching that I am not completely sure is even complete yet. But so far, I’ve come to the conclusion that things I value include aspects of life that cannot be found in the workplace. I value space – for a reset, to be mindful, to be open and to think clearly. I value health, which is prolonged by the avoidance of stressors and physical ailments via static postures. Speaking of stasis, I value trying to avoid stasis in all aspects, by always learning something new. I find that if I was at work all the time, I would not have the space or time to learn new things, which would be a shame, since I also value creativity and self-expression. Lastly, I value taking care of people, and it’s easy to forget that we are people too.

In 2017, I worked an average of 3 days a week. It’s almost laughable, that a young, arguably driven dentist, would work less than half of the year. Even though I worked alternating 4 and 5 day weeks, and a few months of 5 and 6 day weeks, I took multiple long vacations, some as long as 2-3 weeks. I no longer seek to fill my time solely with work. I am more mindful about drawing boundaries and really saying no in order to have the space to increase my own self-worth. I aim to learn new things about the world, and where my place lies in it. The time off has given me a better understanding as to why I do things the way I do and how I could live life in a way that is better for the planet and for the people. More importantly, I am able to implement that change. It’s not just all talk, but I actually get to experiment with different lifestyles and really DO. I spend a majority of my weekends solely with family members and friends, because I have my own weekdays off where I can spend it on myself. I like that I don’t have to detract from other people’s time. Time is like any other resource we have. Like money, if you have an excess amount of time, you are more likely to be liberal in giving it away to others. If you have little time, then you will be more stingy with it, wanting to keep it for yourself. Now I know that time is a better thing to earn than money. Off course, I could go out there and find other offices to work at on my days off, but honestly, I have come to realize the value of working part time. What started as a recommendation by my financial planner and a command by my boss has become an autonomous choice to choose freedom above all else. I wouldn’t trade the peace and happiness that I’ve found for a house, or a new car. Would you?

Finance: When NOT to consolidate student loans

There was a day last year when Mike, two co-workers, and I all took the day off of work, just because. I remember it vividly. It was a Tuesday and the weather was sunny, and somewhere in the low eighties. Mike and his co-workers came over to our place to work one of his motorcycles. The goal was to change the engine, but I think the boys really just wanted to take it apart and put it back together like a box of legos. Such are the interests of engineers who design electric cars all day. I did my own thing, cooking and writing, and biking, etc. The usual. Once in a while, I popped my head in the garage to watch them tinker, to observe the progress. There were times where they struggled, muscling their way into making pieces fit. Other times, they laughed, at some overlooked rookie mistake of theirs. Most of the time they were either marveling at the mechanics of it all, or otherwise criticizing some faulty housing of electric wires. I guess inefficiencies of mechanical parts are laughable, to some. Overall, they did good. The bike ran, after twelve hours of work, sweat, and metaphorical tears.

At the end of the day, we ate a much deserved dinner of Mediterranean food. As we were talking about who knows what, the topic of student loans came up. It was actually brought up by one of Mike’s co-workers who happened to be dating a pharmacist. He was the one who inspired me to write the previous blog post, and it is because of stories like these that I am determined to share whatever little knowledge I have of finances with the rest of the world.

His girlfriend was pursuing an alternative loan forgiveness program to pay her student loans from pharmacy school. As part of the Public Service Loan Forgiveness Program, she has been working for the past two years at a VA hospital in LA county. The program states that after ten years of service at a government or not-for-profit organization, the loans will be wiped, TAX FREE (compared to the IBR, PAYE and REPAYE options which considers forgiven amounts as part of your income and is therefore taxed). She has been working here for a few years and was warned against consolidating her loans by her co-workers. Why?

She had some co-workers who have been working at the hospital for a few years. The hospital started to convince them to consolidate their loans. They said consolidating multiple loans into one will be more convenient and easier to track. Some of them went ahead and did just that, after listening to the hospital’s advice. Unfortunately, there is a clause that states that after consolidation of student loans, previous payments do not count towards the loan repayment program. In other words, despite having worked for 2 out of the required 10 years, after consolidation of the loans, the previous 2 years no longer counted towards the 10 year loan repayment. The consolidated loan is now considered a completely different loan, and in order to have that loan forgiven, they will have to work for an additional ten years. It was a story enough to make one cry. Imagine working your way towards freedom, only to have that freedom taken away and prolonged. The past two years of hard work went towards nothing. The worst part? They were advised to do this! Off course, it is not the hospital’s responsibility to be aware of the clauses associated with every loan program, so we can’t entirely blame the hospital. I just wish there was a positive end result from the decision to consolidate, which there wasn’t. All for “convenience” of having one lump sum, instead of keeping track of a few different loans.

Moral of the story: Do not consolidate your loans if you have already started a Public Service Loan Forgiveness program. If you would like to consolidate your loans, please do this right out of school, prior to working for your not-for-profit or government organization. My heart seriously goes out to those who have discovered this clause the difficult way. I am just glad that our friend’s girlfriend learned of it before she herself was convinced to do the same.

In line with all other aspects of this blog, freedom supersedes convenience in my book, always. Freedom to call your own schedule. Freedom to take the day off with your friends whenever you want. Freedom to enjoy hobbies, learn new things, and work on motorcycles. Even if it means avoiding the conveniences. 

New Norms: Co-housing

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

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

 

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

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

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

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

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

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

 

Paying down student debt: Where to start

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

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

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

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

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.

Freedom: Re-thinking Early Retirement

For my generation and the coming generations, I would like to pose an alternative to the “wonderful” idea of early retirement. This alternative is not new, and it was not discovered by me, but it is embraced by many communities, including minimalists, money mustachians, and financial independents. Whenever I ask people my age where they see themselves in twenty, thirty or forty years, many of them respond with a goal of retiring early. That means that between ages 40 through 60, depending on their current financial situation, or their belief in their ability to get out of financial dependence on their job, or their optimism (you pick), they plan to quit their jobs and have a house already purchased, and plan to spend the rest of their days vacationing on a yacht they may have bought or raising their grandkids. This is what our parents did and our grandparents did, and it sounds like a lovely life, albeit too late to make the most of your prime years. But it isn’t for me, and maybe some of you are scratching your heads and wondering if there is another way.

There’s a theory, which I’d call my life mission or goal. Theoretically, this life mission may work out for me, and possibly for you. When I was first asked the question of where I want to see myself in 30-40 years, it was my financial planner asking. Being a financial meeting, my first answer was that I saw myself out of financial debt, and with financial stability. I also said I saw myself working (still) a few days a week, and pursuing all my hobbies and interests on the days I have off. I saw myself physically fit enough to enjoy life, and continuing to travel the world. I would like to have the time to see my family and friends frequently, and never feel dependent on someone else financially or physically. That sounds a lot like retirement, minus the working part, right?

So he clarified and said, “Do you see yourself retiring early?” I had an answer that flew off my tongue before I could even think. “I do not want to retire until I can no longer physically work.” I think that is a very good answer (and not because I was the one who came up with it). Time itself is not the decision-maker, and neither is age. It is our ability to continue pursuing a passion. Now, we all know that dentistry has a short life span for many, because of physical ailments that result from the profession, usually involving back aches and side aches and neck pain and carpel tunnel, and the list goes on. But notice that I did not say I saw myself practicing dentistry, but rather, I said I saw myself working. I believe that working into our 60’s and 70’s will keep us mentally active, physically fit, and spiritually alive, at a time in our lives when we need it most. But if we are financially stable, or hopefully more than stable by that age, then money will never dictate what we do. And once money does not dictate what you do, work can become whatever passion you want to pursue. I mean, ideally work should be your passion now. Who knows if I will still be passionate about dentistry in 30 years?! Quite possibly, I will be doing part-time dentistry for a very long time. I mean, working one day a week as a dentist is not a bad gig. But hey, I could dream big and think, maybe I will be working as a barista at that time. Or making clay pots to sell at a store. Who knows where life will lead me, or you.

But how is working into the wee years of your elderly life sustainable? Burn- out is something a lot of dentists experience. A few years out of dental school, and many of them already hate their jobs. And they’re going to do this for the rest of their career??! It’s sustainable if you never experience burn out (duh!). This can be accomplished in many ways. For example, you could work less hours than the grueling 5-day work week now. Or if you still very much love your job, invest in delving deeper into the practice. The more you pursue a passion, the less it feels like a weight that you are dragging around. Avoid doing something just to go through the motions. Really love your job in its entirety and it won’t bring you down. Most people experience burn out because their job is physically exhausting, without the mental, emotional, or spiritual reward. In other words, they no longer feel passionate towards what they do. When you do experience burn out, switch to doing the next thing you love. Motivation and inspiration are key to fueling your drive to continue working late into your life time.

You may be asking, “Okay, so when do we get to enjoy our lives?” My answer is simple. How about now? What if, instead of early retirement, you do partial retirement, starting now? You get to enjoy life for the entirety of your life, not just for the last little bit when you’re tired and want to sit on a rocking chair on the porch and stare out all day. Think of all the pros of starting to live now. You’re young enough to invest in your future physical fitness by working out now rather than sitting in a desk all day, which will prolong your healthy for more years down the road. You get to balance work and play. It can’t be all play like in the other model of retirement, but even playing all the time gets boring for me. I have to feel like there is some direction in my life, like I am getting somewhere. It’s the only way I feel alive. I think retirement could possibly turn me into a sack of flour (metaphorically) and bore me to death. So, you gain balance in your life. You get to travel the world, while you can still hike, or at least walk five miles in the city center. You get to spend real quality time with your family, instead of squeezing in time in the morning, before work, and at night, when you’ve exhausted all your energy into your passion. So many parents miss out on their child’s life, because they have to work in order to provide for that child. Maybe we need to start re-thinking of the word provide. Provide food and shelter, sure, but after that what? Time and love. Seriously. Now some of you may give me the money argument. The “you’re-so-lucky-you’re-a-dentist-and-you-make-bank” argument. I started my dental career later than my peers because of the additional schooling with a debt of over half a million dollars, equivalent to a mortgage loan that many of my friends have already spent four years paying off. If anything, right now, I am at the same place as you, or worse, in terms of net worth. But it’s the way you think about money that will really save you. At the end of the day, money is just money, and things are just things, right? Another blog post to come on re-thinking how we view money. Maybe we should start re-thinking everything.

Now I know we are all different, and yes, some may continue to dream about the glorious days of relaxing for years on end. But I tried that already, when I had the gap after dental school waiting for my license. And it drove me nearly insane. Even travelling for three weeks in a gorgeous country with a lot of planned activities every day made me long for something more. I don’t think I can do the early retirement thing. More importantly, I don’t want to miss out on my life. The present moment is the most valuable to me. And hey, I do all the things my working friends do. I am close with my co-workers, and hang out with them outside of work. I practice my skills and learn something new every day at work. I still have set hours that I clock in and clock out for. I work out before or after work. But I also do everything my retired aunts, uncles, and grandparents do. I travel frequently. I dedicate time to pursue additional hobbies. I can schedule coffee mornings and mid-day lunch dates with my family and friends. This weekend, I plan to sit on lake front property and enjoy fall weather on a boat surrounded by family, which is what you dream of too, except I’m not sacrificing my body to get to that point and I am going to do it now, thirty years before you. Then again, perhaps you’ll decide to do it too. Wouldn’t that be nice?

I must admit. There has to be a sense of simplicity to this lifestyle. You can’t go on imagining that you will become a multi-millionaire this way and swim in pools of cash. That kind of lifestyle probably will require you to work tirelessly during your prime years. But give me the simpler one, and I’ll be a happier person. It’s just an alternative, it’s not the way. There is no ideal way to live life. Just an ideal life for you.