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Today’s post comes from Jason, professor and personal finance blogger over at Reaching Our Balance. Enjoy! -M$D
Dollars & Debts Interview Series – Introduction
I am Jason, 44 years old, college professor, who really started on the road to FI about 3 years ago. I am married with a dog named Spooner. My wife and I are a little unusual in that we are trying to have kids later in life (we are going through IVF now and may adopt in the future). I don’t know if this is a fun fact, but I am one of the few people that love politics. Part of that is what I do for a living. My specialty is the American presidency. I am a political junkie.
When did you start learning about money?
I think I really started to learn about investing and money when I was in my early 20s. I’ve always been interested in the stock market but didn’t really come to understand what some of it met until I got my undergraduate degree. I actually tried to open up an IRA while I was in grad school, but ended up using that money for debt (big mistake). I started to really invest, however, after I got my Ph.D. when I was 33 so only about 10 years have I been investing hard-core.
Related: Personal Finance: 101
What got you started on your financial independence journey?
I got started on this after I was married for about a year. We compiled all of the debts that my wife and I had and the number scared me. I don’t include my wife’s debts in what I talk about in the blog (her student loans) because that is her responsibility. However, I put everything else together and realized I had over $120,000 in debt (including student loans) and my investments were less than my debt. That number scared me and I wanted the debt gone.
How much debt did you have?
I had about $120,000 without a mortgage. I now have about $215,000 in debt. $140,000 of that is the mortgage. Also, 60k of that is student loans, but I am on the Public Service Loan Forgiveness program. So I am making payments, but about 1/2 of that will be forgiven when all is said in done. That means I have about 15k in consumer debt and that is on a car.
How much have you paid off? And what steps did you take to do it?
I have paid off about $55k in consumer debt. I got rid of all of my credit card debt. And the reality of me paying all of that off was just working a lot more. I started teaching other courses and doing all kinds of extra duties at my university for money, particularly during the summer. At first, that money went to pay off debt, then I use it to max out my retirement accounts. I also started tracking my spending more which I can’t say has led to a leaner budget, but I know where all of my money is going so I tried to make better decisions. I am not a good budgeter, but I am a good saver. My wife is the spender.
What are your money goals for the next year and long-term?
My goal for the next year is to pay off our car (our other one is paid for), continue to max out my retirement accounts, get my wife re-started on her retirement, and save for some expenses for having a kid (e.g. IVF and/or adoption). Luckily, we live in a state that covers a lot of the IVF expenses because of insurance, but we still have to pay some out pocket.
Long-term. I want to be FI within a decade. For me, that is $1.25-$1.5 million in investments. Pay off my house and not have to teach extra courses anymore. I want to get to the point to choose what I want to do and where I want to be.
What obstacles have you run into that you’ve had to overcome?
I think the biggest obstacle has been my own journey. Waffling between being intense and paying off all my debt, versus saving for retirement and paying off the house. I’d prefer to focus on one thing at a time, but the truth is, I always spread myself too thin in almost all aspects of my life. I need to focus more and for right now I think that is maxing out retirement accounts. Our interest rates are so low that it is smarter to invest as much as we can.
Additionally, we need to do a better job of controlling our spending. I would like to cut our expenses, but there always something that seems to come up. I am actually amazed that we have increased our net worth by as much as we have this year (almost $100,000).
Any words of advice for those that are afraid of starting their journey or are feeling like they aren’t making enough progress?
I am the king of playing monetary mental gymnastics with myself. I mean I check my Personal Capital account daily, even though I don’t need too. For paying off debt, what helped me is, particularly with large debts, is to divide them into chunks. So Dave Ramsey has the debt snowball, which says that you get big wins when you knock out the little debts first. That is true, but what happens when you have those big debts.
Related: Debt Payoff Methods
I think for me, to overcome that psychologically, is to do debt chunking. What you do is divide the large debts into smaller ones. If you have a car that is $20,000 and don’t want to sell it, maybe you divide the car into 4 smaller debts of $5000. Pay minimum payments on the car and then put all of your extra money into an account until you get to $5000. Keep doing that until you pay off the debt.
And the other piece of advice is some I got from my adviser and it is true of most things. She described this primarily in the context of academic work, particularly for scholarship. When you get a review back for an article or a chapter you don’t read the reviews right away, stick it in a drawer for two days. Then pull it out, read it and feel free to be sad for a couple of days, get angry for a couple of days, and then you just have to sit down, shut up, and do the work. I think that is true of most things. Ultimately, we can drive ourselves nuts with different types of thinking, but it really comes down to sitting down, shutting up, and doing the work.
I know that is easier said than done, but it has helped me. And it is words that you will see on my office door.