\n<\/p>\n
Student loan debt<\/a>\u2014the gift that keeps on giving with interest, stress, and the overwhelming feeling that you won\u2019t be able to pay them off. The larger the loan, the heavier the weight on your shoulders, but in today\u2019s episode, we go over how to start lightening your load. Focusing solely on your debt makes it seem like there\u2019s no way out, but\u00a0financial freedom<\/strong><\/a>\u00a0is always achievable.\u00a0<\/strong><\/p>\n Today\u2019s guests,\u00a0James and Bianca<\/strong>, have\u00a0$278,000 of student debt<\/strong>\u00a0between them. This debt has followed them for a while, and their\u00a0original payoff plan would last for another twenty-four years<\/strong>. Despite their debt, James and Bianca have a\u00a0strong financial portfolio\u00a0<\/strong>with ten cash-flowing rental units. They make over $17,000 a month with only $7,300 in expenses. Even with a\u00a0strong financial foundation<\/a>, these\u00a0student loans have loomed over them and kept them from true financial freedom.\u00a0<\/strong><\/p>\n Scott and Mindy introduce James and Bianca to ways they could pay off their debt in the next few years and completely shift their mindset on defeating six-figure debt. Instead of having a burden on their backs for another twenty-four years, they could get their time back and be\u00a0debt-free<\/a>\u00a0sooner. After listening to this episode, there\u2019s a good chance you could too!<\/p>\n Mindy: James: Mindy: Scott: Mindy: Scott: Mindy: Scott: Mindy: Bianca: James: Mindy: James: Mindy: James: Mindy: Bianca: James: Bianca: Scott: James: Scott: James: Scott: James: Scott: Bianca: Scott: Bianca: James: Bianca: Scott: James: Mindy: Scott: James: Bianca: James: Mindy: James: Mindy: Scott: James: Bianca: James: Mindy: Scott: James: Bianca: Scott: Bianca: James: Mindy: Scott: James: Scott: Mindy: James: Mindy: Bianca: Mindy: Scott: James: Scott: Mindy: Bianca: Mindy: Scott: James: Scott: James: Scott: James: Scott: Mindy: Bianca: Mindy: Scott: Mindy: Scott: Mindy: James: Mindy: James: Mindy: Scott: James: Bianca: James: Scott: James: Scott: James: Scott: Mindy: James: Mindy: Scott: James: Mindy: Scott: Mindy: James: Mindy: Scott: Mindy: Scott: Mindy: Scott: Bianca: James: Scott: James: Scott: James: Scott: James: Scott: James: Scott: Bianca: Scott: Bianca: Scott: James: Scott: James: Bianca: James: Bianca: Scott: James: Scott: Mindy: Scott: Mindy: Bianca: Mindy: Bianca: Mindy: Scott: Mindy: Scott: Mindy: \u00a0<\/p>\n<\/div>\n Help us reach new listeners on iTunes<\/a>\u00a0by leaving us a rating and review! It takes just 30 seconds.\u00a0Thanks! We really appreciate it!<\/p>\n Interested in learning more about today\u2019s sponsors or becoming a BiggerPockets partner yourself? Check out our\u00a0<\/i>sponsor page<\/a><\/i>!<\/i><\/p>\n Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n
Welcome to the BiggerPockets Money podcast, show number 338, finance Friday edition, where we interview James and Bianca and talk about large student loan debts, early retirement and real estate investing like always.<\/p>\n
One thing is, I\u2019m fearful of creating just a new job for us. Right now we\u2019re doing all the maintenance, we\u2019re doing all the property management, everything, it\u2019s all us. And so it feels like time is tight already. And so I always have this fear of growing and figuring out systems to make sure that we\u2019re not just creating a new job on top of our jobs we already have.<\/p>\n
Hello, hello, hello. My name is Mindy Jensen and with me as always is my thoughtful co-host Scott Trench.<\/p>\n
Thank you, Mindy. Great to be here.<\/p>\n
Scott and I are here to make financial independence less scary, less just for somebody else, to introduce you to every money story, because we truly believe financial freedom is attainable for everyone, no matter when or where you are starting.<\/p>\n
That\u2019s right. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, start your own business, or pay off hundreds of thousands of dollars in student loan debt, we\u2019ll help you reach your financial goals and get money out of the way. So you can launch yourself towards those dreams.<\/p>\n
Okay, Scott, this is actually one of my favorite episodes ever, and it didn\u2019t start off that way. We have a guest, we have two guests actually, who have quite a bit of student loan debt. When I was first reviewing their numbers, I thought this is a really big problem. As we started talking to them I realized that they have an income based repayment plan, but they make a lot of money. And at first I was like, this is interesting. And then we started talking to them and the whole situation changes, the direction we were going to go in actually gets changed quite a bit. I can hear people saying, I don\u2019t want to listen to income based repayment programs. This is an awesome episode. We went in a completely different direction than what our guests were expecting and really opened their eyes to different opportunities.<\/p>\n
I think the elephant in the room when it comes to James and Bianca\u2019s financial situation is Bianca\u2019s student loan debt. Now, because she took on so much student loan debt and has a relatively modest income, relative to the size of that debt burden, they actually separate their finances, they feel trapped in their current location and they\u2019re waiting 19 to 24 years for the repayment programs to come in. And they\u2019re worried about an income based problem from a forgiveness perspective after 19 years, some of those loans may be forgiven and because they\u2019re not federal programs, that repayment program may actually count as income for Bianca.
So major long term problems, I think we were able to avoid those entirely based on their financial situation. I hope that this is eye-opening for folks that are in similar situations or who may find themselves in similar situations in a few years.<\/p>\n
Scott, I just love this episode, because very soon in the beginning of this show, we change tunes. It\u2019s just a lot of fun. Now from my attorney, the contents of this podcast are informational in nature and are not legal or tax advice, and neither Scott nor I, nor bigger pockets is engaged in the provision of legal tax or any other advice. You should seek your own advice from professional advisors, including lawyers and accountants regarding the legal tax financial implications of any financial decision you contemplate. All right. Let\u2019s bring in Bianca and James. James and Bianca have a fairly good financial situation until you look at the debt.
Bianca was a human chiropractor and took some additional coursework to become an animal chiropractor. She\u2019s sitting on about $278,000 in student loan debt, which has been in forbearance for the last few years, but will go back to about 6.8% interest once the repayment pause is lifted. But back to the good, they have 10 cash flowing rental units across four properties. They spend significantly less than they earn, and their only debt is mortgages and that pesky little student loan thing we talked about. Bianca and James, welcome to the BiggerPockets Money podcast.<\/p>\n
Thank you. Thank you for having us.<\/p>\n
Thank you for having us.<\/p>\n
I\u2019m super excited to talk to you today. Before we jump into that, let\u2019s look at your numbers. You make a whopping $17,310 a month, and this is across both salaries, bonuses, and rental property cash flow. That is a great.<\/p>\n
That\u2019s after deductions. Yes.<\/p>\n
That\u2019s net income. Their expenses are $7,300. So approximately saving $10,000 a month, which is fabulous. I do see some room for improvement on those expenses. We have a car at 765 a month. That includes gas, insurance, maintenance, registration, all of those things, but it\u2019s still 765 a month. And if we\u2019re going to round up, that\u2019s almost $1,000. Clothing at 250, dogs at $360. Entertainment at 825, gifts 500, groceries 845, healthcare 265, miscellaneous needs 300, personal care 570, travel 2415. I think I see a place we can cut. Utilities 260, for a grant total of $7,300, 7355. Again you\u2019re making $17,000 a month, not a year, a month. So spending $7,000 isn\u2019t such a big deal until we go back to the beginning where we have that $278,000 student loan. I\u2019m not done. I\u2019ve got more things to talk about.
We have that\u2019s 9,955 leftover, which is not really leftover. I think that number can be a bit misleading because you\u2019ve been using it lately to cash flow one of the rehabs on your properties. Investments, we have 401(k) for James at 120,000, HSA at 4,000 traditional IRA at 298,000 Roth IRA at 59,000 after tax brokerage at 368,000, cash savings at 105,000, which normally I would be like, wow, that\u2019s a lot of money in cash, but you do have 10 units over four rental properties. I think that that\u2019s maybe a smidge high instead of grossly high. Subtotal on that is $954,000, which I think is really great allocated, very, very diverse.
Four rental properties total 1.5 million. Hooray for you. Bianca has $7,000 in her Roth IRA, $14,000 in her brokerage account, $5,000 in cash, for a total of $26,000 in total investments. But you put those all together and you have $2.5 million. It seems like you\u2019re doing fairly well. We go back over to the debt side and we have $847,000 in debts, for a grand total of 1.6 million in net worth. So again, it seems like you\u2019re doing fairly well once we don\u2019t look at those student loans. Why is healthcare so expensive? We have a shortage of healthcare and then it\u2019s so expensive to become a healthcare provider. It seems like that\u2019s a self-fulfilling prophecy. Hey, it\u2019s so expensive. We\u2019re not going to allow you to get in there and learn this.
So of course the challenges that I see are the student loans. Clearly if you are allocating so much to that travel fund, you probably like to travel. Bianca and James, what can we help you with today?<\/p>\n
Well, I think there\u2019s a couple things and you hit the nail on the head. Obviously the student loans are a big part of what\u2019s out there and and has been weighing on us and how to handle it. We\u2019ve got some ideas based on the program that Bianca\u2019s on for repayment, but also I think that we\u2019re looking at three to four years to try to find a little more flexibility in what we\u2019re doing. I don\u2019t dislike my job, but it\u2019s not something that lights me up every day. It\u2019s not something that I go to work and I just can\u2019t wait to do. And I know that if we look to do something else, it\u2019s going to mean a big step back in salary, right?
Because I\u2019d be leaving the industry that I\u2019m in completely to look for something new, and to be able to do that I want to make sure that we\u2019re in a solid position. I don\u2019t think either of us has a dramatic urge to retire in the next couple years. I don\u2019t think that\u2019s what we\u2019re looking for, but understanding that our income could potentially dramatically decrease if I were to explore something else, we want to make sure we\u2019re in a good position going forward.<\/p>\n
Sure. Okay. Let\u2019s talk about this student loan repayment plan.<\/p>\n
I\u2019m on an income driven repayment plan. We spoke to some-<\/p>\n
Some consultants.<\/p>\n
Some consultants, to kind of figure out the best path forward with that. Because obviously it\u2019s quite a lot of debt. Currently on an income driven repayment plan. Started working with them during the pandemic. But basically my income driven repayment plan allows me to pay as little as possible. I\u2019m paying after forbearance ends here, I\u2019ll be paying close to $0 a month or very low. And then after 25 years my debt will be forgiven, but I\u2019ll have to pay income tax on the amount that was forgiven. I\u2019ve been saving for that, putting money away each month and just prepping for that giant tax bill at the end, but still there\u2019s a lot of fear and anxiety around, is that plan going to work? Is this the best plan forward? What should we be doing?<\/p>\n
How far away is the 25 year forgiveness event?<\/p>\n
The loans are split technically between two loans. The first one is about 19 years away and that\u2019s really going to be, I think that one\u2019s the bigger, the bulk of it, it\u2019s the most of it. It\u2019s over 200. There\u2019s about 70 with the interest left for the other one. And that one is additional five years. So looking at it like 24 years.<\/p>\n
Just to frame what I understand here, the goal here is for James to have flexibility with in a general sense specifically to pursue an entrepreneurial venture, it sounds like in the next couple of years. Is that really the high level goal here? And to deal with the student loans and the context of that?<\/p>\n
I think so. I think that that level of flexibility, while also hopefully not taking a huge hit to our lifestyle. We\u2019re looking for whatever that path is to be at least semi location independent too. Because we have family and friends across the country, wouldn\u2019t mind living by for bits of times. We\u2019re also trying to keep that in mind with whatever path we go forward with.<\/p>\n
Great. And let\u2019s call it some good here. If I were to frame your situation at a high level, let\u2019s pretend that the student loans are just part of your rental property portfolio for a second, right? If you include them in that you\u2019ve got 847 grand in debts against a 1.5 million rental portfolio, that\u2019s not so bad. And your blended interest rate on that is usually 3% for the mortgages and on the 6.8% on the student loans, is that right?<\/p>\n
That\u2019s right in exact terms, but there is some caveats to that percentage on the student loans. The program that she\u2019s on, the government offers forgiveness, the negative that occurs each year. So the fact that she\u2019s not paying really anything, and then we have the interest at the end of the year, they actually forgive 50% of that. So really it\u2019s a 3.4% equivalent interest rate, which changes the picture as to what do we do, because we get start getting that interest at low. Is it worth aggressively paying versus possibly saving for the end?<\/p>\n
Well, even better then in that situation. Bianca, what do you want to do over the next couple of years? Do you have any specific goals around flexibility or outcomes for you?<\/p>\n
I would also like some flexibility. I enjoy my work currently, but it is very location dependent and that\u2019s the thing I don\u2019t enjoy about it I guess, because James and I do like to travel a lot. My work does not allow me to just up and leave for extended periods of time unless I really want to impact my business.<\/p>\n
Awesome. And what happens if you do up and leave from that job, is there any impact on the student loan program?<\/p>\n
Yes and no, I guess, because it\u2019s income based. So my income would change drastically. It would drop to zero technically. I\u2019m not sure what would happen if I were just unemployed, what that would do to my income driven repayment plan. But I don\u2019t really want to be unemployed. I like working, even if I wasn\u2019t doing this, I\u2019m a busy body and would want to be doing something.<\/p>\n
I think it\u2019d be a lot harder for us to certify that she does not have access to my income or my saved money if she is completely unemployed as well.<\/p>\n
And that\u2019s part of what allows my income based repayments to be as low as they are. Is that we\u2019re keeping our finances so separate.<\/p>\n
That makes sense. I\u2019m calling this out because I think that when I look at your position at a very high level, the student loans are really, they probably feel like a big, the big, I think the story here, but I don\u2019t think are. The story is that you guys are worth 1.6 million, have a cash flowing rental portfolio and save $10,000 a month and have a very responsible debt to equity position across your overall portfolio in a general sense. I think what I\u2019d hope to do at a first point is to free you from this mindset that the student loans are really this crutch that are holding back your financial position.
Here\u2019s several ways to frame it. One is, yes, there are advantages you currently have with this. But in the worst case scenario you have a 6.8% student loan debt that you need to pay off. You can crush that in about two years with your current cash flow situation. So you have a two year debt here from that, and you could also cash out, refinance your rental properties, probably at a similar debt at this point, that level at this point, to pay that off at any point as well. I just want to call those things out because the trade off there of spending 19 years with this as a boogeyman in your financial profile may be fairly steep. Yes, that\u2019s advantageous, but you may not need to do that and you may find that there\u2019s freedom from just being rid of this thing in an earlier time period.
Not to say that\u2019s what we\u2019re going to end up on, I just want to paint that perspective because it\u2019s really not that big of a deal in the context of your financial position. It would be a huge deal to someone else, but when we combine your finances for the purpose of this show, you got a really strong position. What\u2019s your reaction to just that observation?<\/p>\n
It comes back, I think for me, the math versus the personal finance side of it, right? Because it\u2019s a weight off your shoulders to think about having it paid off and having it gone, not having it sitting there and worrying about it for the next 19 years to see what happens. But then I sit down and do the math based on what the interest rate is and what we could do with that money and what the opportunity cost is, and I feel like, well, if I could just somehow ignore it and pretend it isn\u2019t there, we may end up in a much better position down the line.<\/p>\n
But down the line isn\u2019t five miles down the line, it\u2019s 19 years down the line. How much of your current job do you want to deal with so that you don\u2019t have to pay this off? I was looking at this and I saw $278,000, as a first glance I\u2019m like, that\u2019s a lot of money. And then I\u2019m like, wait a second, you have 10,000 extra dollars every month. And there\u2019s no such thing as extra dollars, but you have 10,000 currently unallocated dollars every month. What is 200,000 divided by 10,000? Because I think that\u2019s not that much. And I did the math on the calculator just to double check myself. That\u2019s 20 months. That\u2019s less than two years. Then you\u2019ve got 17 years to build up the biggest pile of cash you can and you still come out so far ahead without the stress.
You don\u2019t have to do it for 19 years if you don\u2019t want to. Whereas if you go with the income driven repayment plan, you have to do it for 19 years and 24 years for the additional $50,000, which you could then just knock out whatever. But I really would encourage you to sit down with the spreadsheets and talk about your goals. This isn\u2019t a decision you have to make in the next 27 minutes while we\u2019re recording this show. It\u2019s just something to think about. Why do you want to spend 19 years at a job very location dependent, and even though we\u2019re not sharing publicly where you live, I know where you live and sometimes it\u2019s not the most delightful to be outside where you live.
So you would have to be there for 19 years or take some time off, which will further, I think that\u2019s something that\u2019s really worth sitting down with a calculator and a spreadsheet and a lot of different scenarios and just look at it. How could we make this happen? Could we buy another house that solely pays off these loads? Could we buy another house that helps us figure this out a little bit more? I just think that that\u2019s really worth pursuing.<\/p>\n
Another way to think about this is, let\u2019s look it this way, you spend about 7,300 bucks a month, that\u2019s a little over 80 grand a year. I\u2019m probably doing that wrong. Someone will correct me. I\u2019m going to do it real quick. That\u2019s 87 grand a year. Right? You crush these student loans in the next two years and you just pay them off with your cash flow, you\u2019re at $2 million in net worth because you\u2019ve reduced your student loan balanced by that much. You\u2019re now FI at the 4% rule. Right? So boom, there it is. That\u2019s one way to think about it from a simplistic standpoint, to potentially reframe that. So yes, there\u2019s optimization in the student loan program and we can definitely go there and talk with that.
But my instinctive read on your situation, if just a few minutes in, is that this is the boogeyman that we need to tackle. And if you had knocked this thing out, then all of a sudden you can combine finances. You can think, okay, in three years I could be sitting on a beach for six months out of the year in this beautiful location and the other six months fixing animal backs, those types of things, doing what I love in this area. And we\u2019re done. That\u2019s a freeing thing and that\u2019s the power of personal finance and the privilege that you guys have built because of the incredibly strong financial situation that you have this item aside.
So with that, would you like to talk about that angle or do you want to talk about how to optimize this student loan debt paid off or both, next step here?<\/p>\n
I don\u2019t know. You\u2019ve thrown a little bit of a wrench in things in terms of, I guess I was coming the mindset of how are we going to do this most efficiently, but there\u2019s something that I can\u2019t quantify in the idea of it being gone.<\/p>\n
Right. I agree.<\/p>\n
You can\u2019t see it in a spreadsheet. You tell me to look at the spreadsheets, but I can\u2019t see that in a spreadsheet, the feeling of just not having it there.<\/p>\n
I wonder if there\u2019s a way to set up some sort of, some spreadsheet genius that\u2019ll do this in a minute. It\u2019s not me. But you have your 250 and your interest payment. And I think it would be a lot like a mortgage calculator where it shows you, I\u2019m paying 10,000 a month or 8,000, give yourself some buffer. I\u2019m paying 8,000 or 5,000 a month towards this debt. Watch this debt just go away. It\u2019s not 200,000 for a super long time. It\u2019s 200,000 and then all of a sudden it\u2019s only 185. And that is like, wow, I paid off a lot. And then it\u2019s 175 and then it\u2019s 150 and then it\u2019s 100. And you\u2019re like, holy cow, I just paid off so much debt. And my time horizon now isn\u2019t 19 years, it\u2019s another year and I can be debt free.<\/p>\n
You mentioned in the intro that maybe we\u2019re sitting at a little more cash than is necessary or that maybe we div. Part of the question comes to, is it worthwhile dipping into that a bit and running a little thinner on cash? Because that would make a big dent. We could make a pretty big dent right away if that\u2019s the route we went.<\/p>\n
Yeah, like a 50% dent. Look, now you\u2019re one year away from combining finances and quitting your job and living on a beach. To go from 105 cash to zero cash might give you a little bit of heebie-jeebies, although you make $17,000 a month and you spend $7,000 a month, you actually only spend $5,000 a month unless you\u2019re traveling all over the place. Look at what you could knock out. Gosh, I know that this is not where you were thinking this was going to go, but I like that a whole lot more. Is it awesome to pay $200,000 when you could just spend 19 short years of your prime life working in a place that isn\u2019t always awesome weather-wise, when you could just have it for free? But no. What kind of stress is going to go through? What kind of life changes have happened in the last 19 years that you didn\u2019t account for, that you didn\u2019t plan for, that just kind of happened?
You can\u2019t predict what\u2019s going to happen in the next 19 years. Get it over with, pay it off and then go nuts. You look at your position.<\/p>\n
I\u2019m becoming more and more convinced that this is the way I view the situation here, because it\u2019s just like, this is your boss. This is your bad boss that you have to deal with on a regular basis, that\u2019s just always there with this. I said, two and a half years earlier, we have $110,000 in cash. So 100%, that\u2019s a great option right there. You also have 401(k)s and those types of things you can borrow against to do that, if you want to arbitrage the interest rates a little bit with that. That could free up a lot of this. And then all of a sudden now you\u2019re combining. I think that a good exercise here for this would be, where do you like to travel? What\u2019s your favorite place to travel to?<\/p>\n
I don\u2019t know that we have favorites.<\/p>\n
We haven\u2019t picked a favorite yet.<\/p>\n
We try to do different things all the time.<\/p>\n
How would you like to go to so many different places that you could finally pick a favorite?<\/p>\n
What\u2019s one of your favorites, the beach, mountains, what\u2019s your go to?<\/p>\n
I\u2019m beach, she\u2019s mountains.<\/p>\n
I like the beach too though. We can say beach.<\/p>\n
Okay, great. I\u2019ve now done this a few times, so I probably sound like a broken record on a couple of the recent shows. But go to the beach. When\u2019s your next beach trip?<\/p>\n
I guess we have to plan one because-<\/p>\n
We don\u2019t have one planned right now.<\/p>\n
Permission to plan one.<\/p>\n
Go plan a beach trip and spend a few grand, and go there and sit there and have your coffee in the morning or whatever. 10 o\u2019clock you\u2019re on the beach, someone\u2019s bringing you a coffee, maybe your first drink of the day or whatever. And then write down where do I want to be in two years, three years from now? Right? Put three years. This is where we want to be. And just write a half page. If you want to use a planner, you can bring a draft, call it draft on there and encourage the other one to manage that and say, what do I want to be in three years? I think that that exercise will be really powerful here, because you\u2019re thinking, where do I want to be in 19 years? Right? 19 years, life\u2019s going to be a whole lot different. There\u2019s going to be a whole different capability set that you\u2019re going to have physically going to all these places.
I think if you think about it in a three year picture, a lot of this will become crystal clear and I\u2019ll be pretty surprised if you don\u2019t find a way to it. I don\u2019t know if you pay off this student loan, but to free yourself from it as a constraint in your situation, it could be paying it off as the easiest way. But I think combined finances where we don\u2019t have to do this, Bianca doesn\u2019t have to work all year round for or most of the year in order to keep qualifying for that to be a factor in constraint. I think that without that without the student loan debt, you\u2019ll have a position that\u2019s two million and or two and a half million in equities between real estate and stocks and in cash and 500,000 in mortgage debt, super conservative position.
That\u2019s a position that\u2019s really strong from which to start a business for example, without student loans over hanging. One income is probably going to come pretty darn close to covering all of your expenses, from Bianca. And I think your rental properties will easily cover the remainder with that. I think that will be a really helpful exercise to come through and say three years from now, this is where I want to be. Maybe those are some starter thoughts, but only you guys can decide that. But I would not do it from where I want to be in 20 years. That\u2019s way too far out. You\u2019re going to be way wrong on that. No one knows what they want 20 years from now, right? Mindy\u2019s laughing at me because I went too far again.<\/p>\n
One question I have though as we look at that, if that was a route we were to try to aggressively tackle these and pay them off, is then it comes back to allocating where the money is going right now. Right now I max out my 401(k) every year. There\u2019s slight details on mine. I have a 3% dollar for dollar match. And then at the end of the year if I\u2019m still employed, my company adds an additional 3%, regardless of my contribution. Given what our cashflow is, is it worth backing off on those contributions, if we were to go this route or do I still want to take those tax advantages to put that money away?<\/p>\n
I think math is math, but I don\u2019t think we have a math problem here. I think we have a boogeyman problem with the student loan. Sorry I\u2019m using that word, I think it\u2019s funny. But I think that\u2019s the real issue here, is that this student loan has too much power in your life from that. But I think that that\u2019s a balancing act. Right? There\u2019s an art to that. One school of thought is if you chose to pay off the student loan debt to just go all in and stop everything else and crush that, and that\u2019s effective. For a lot of people that\u2019s better than a math approach. For you guys it may be I like my match, I\u2019m going to take the match. There\u2019s a couple other things here.
If I have a great rental property deal, I\u2019m going to pounce on it in the meantime, maybe one or whatever, because that\u2019s our portfolio. We\u2019re obviously very proficient at generating income and building wealth through real estate. Maybe there\u2019s a balance there. That comes down to this exercise of just figuring out, where do I want to be in three years? Do I want that so badly that I\u2019m willing to just accelerate it and forget math? Or am I willing to take a more balanced approach to get there, that\u2019s right for us? I don\u2019t think there\u2019s a right answer to that, there will be a mathematically right answer to that. But again, I don\u2019t think you have a math problem here.<\/p>\n
James, how old are you?<\/p>\n
I\u2019m 41.<\/p>\n
And Bianca, how old are you?<\/p>\n
35.<\/p>\n
Okay. At that age you still have several years before traditional retirement. I would absolutely contribute as much to get the full match as possible. I think you\u2019re in such a great position. Let\u2019s look at, you\u2019ve got the 110K, you throw that at your debt and now you\u2019ve cut your debt essentially in half, I\u2019m just looking at the 200. I should also consider the 50. So 250. Now you\u2019ve got 140 left over. That is now 14 months of your super crazy payments. I\u2019m sure that Bianca might be able to work more hours. Maybe you could pick up, only if it\u2019s worth it, don\u2019t do side hustles that are going to pay you an extra $5, that\u2019s not worth it. But if you can find ways to generate more income to get this paid off, I think you could do it in 14 months. Now we\u2019re talking one year of not making 401(k) contributions.
The market\u2019s been all crazy. I don\u2019t know how frequently you can change your contributions if you see that the market has just been going down, down, down, maybe you do want to jump in and buy when it\u2019s on sale, maybe you want to stick with it and say, you know what, for this next year I\u2019m just doing my 3% to get my total match from them. And that\u2019s all I\u2019m going to do. And every single dollar\u2019s going to go to the debt. And then now in one year, at the end of 2023, you are debt free and you can do whatever you want. Instead of 19 years and 24 years for the 50,000, you now have to reevaluate what you\u2019re going to do in one year. And that is just, I know that\u2019s not the way you thought the show was going to go. It\u2019s not the way I thought it was going to go either, but I\u2019m so excited for the possibility of you being from $278,000 in debt to $0 in debt, because I don\u2019t count mortgages, in one year.<\/p>\n
I think if you came in and you said we\u2019re making $80,000 a year combined, and we\u2019re saving $400 a month on that, we\u2019d be like, okay, we need to cut the spending a little bit and move things forward there. And then we\u2019re going to figure out how to optimize around this student loan situation. It\u2019s not your reality. Your reality is that this is not 10 times multiple times your income, this is one and a half times your income, maybe two times your after tax.<\/p>\n
Framing it in terms of one year changes a lot in my mentality, in terms of every time we\u2019ve talked about it, and every time we\u2019ve looked at it, even the thought of aggressively paying it down, it\u2019s always been, boy, it\u2019s going to be five years. It\u2019s going to be eight years. We\u2019re going to have to skimp by and completely back off in any lifestyle inflation we\u2019ve allowed to happen. That\u2019s been something that\u2019s been really difficult to swallow for me. Framing in terms of well in 12 to 16 months starts to change that picture.<\/p>\n
Great. That\u2019s our job, right? Hopefully that\u2019s helpful. I think that\u2019s honestly how I feel here. Again, it\u2019s probably going to cost you money in the sense that you could optimize your finances more by doing the plan you came in with, around how we\u2019re going to keep our finances separate. But I think you\u2019re going to miss out on the point of personal finance, which is flexibility with this hanging over you. Life is going to be much better without it.<\/p>\n
You said it\u2019s going to cost them money, it\u2019s going to cost them so much less time. They\u2019re going to get so much time back. Here, let\u2019s place some more financial monkey business, just throwing it out there. Scott suggested you have a 401(k) you can take a loan from, I believe you can borrow up to $50,000. So now you have 110 plus 50, that\u2019s $160,000. So now you\u2019re left with, what? $120,000 in debt, 160,000. You pay off right now. And now you are, what is it? 220, 250, 160, now you\u2019re $90,000. Now you are paying off your loan in nine months.<\/p>\n
That\u2019s wild.<\/p>\n
What if you could do it before next June? What if you were debt free before next June? And is that something that you\u2019re comfortable with? Maybe, maybe not. That\u2019s a conversation that you guys have to have outside of this phone call. How huge is that? Next June you have no more student loan debt. And then of course you would have to replenish your cash reserve. There may be some things that come up, and like Scott said, if you made $80,000 a year, I wouldn\u2019t be telling you all of this, but you make a lot more. Let\u2019s say, let\u2019s go nuclear and say, okay, all four properties, the HVAC system all blew and the roof\u2019s all blew off and now you need to put stuff back on there. You have places you can go to borrow.
Maybe you don\u2019t borrow from your 401(k), and now you\u2019re back up to the end of 2023 and all of that happens, and now you can borrow from your 401(k) to cover that expense. Or you take 75 of this, 105, 110 that you have and put it towards that, and you keep a little bit more of a buffer.<\/p>\n
Is the reverse true here? Are there sources of income that could be bonuses, like an annual bonus, or these things that could come in above plan or is the cash flow in your rental properties conservatively calculated and could be better in the next year?<\/p>\n
The bonus is accounted for in those numbers that we provided. It\u2019s paid pretty well the last couple years and maybe a little less next year based on how we\u2019re trending, but it turns out it\u2019s not going to be as significant less as I thought it was going to be. That\u2019s already accounted for. I think that the properties it\u2019s reasonably conservative on that cash flow. I think we have a little room for rank growth that we haven\u2019t completely taken advantage of. We\u2019ve jumped up because we\u2019ve taken on some new properties in the last two years and we\u2019ve been working on getting rents fully to market. I think we were a little too conservative on this rehab and where we came in on rents. It turns out we have one unit left and when that\u2019s done, I think we\u2019ll get more for it than we expected. There\u2019s some opportunity there as well.<\/p>\n
I\u2019m not surprised with that. When your financial position looks like this, it seems very likely that you\u2019re conservatively estimating general things when you\u2019ve built this much cash and have this much monthly cash flow and this much wealth. James, what do you for work?<\/p>\n
I am in an administrative role for healthcare. Operations role where I have a P&L responsibility for several locations that roll up to me. It\u2019s healthcare as well as it\u2019s been stressed for the last couple years, which is part of the reason where again, thinking about, is there something else that maybe is fun that I could do instead of dealing with healthcare? I don\u2019t know, it\u2019s tough to think about rotating out of that because it\u2019s what I\u2019ve done for so many years, but I think I\u2019ve done my best here.<\/p>\n
What would you do instead? What\u2019s your inkling?<\/p>\n
That\u2019s the problem, is I feel like I invest so much of my time into this job that I haven\u2019t even explored the possibilities or the hobbies to really know what that looks like, which is why we talk about the position I want to be in, and I want to be in a position where we have a lot of flexibility, knowing that likely there\u2019ll be almost no income for me for a little while, till I figure out what that looks like.<\/p>\n
That sounds like a good exercise for your vacation that you\u2019re going to schedule after this call. It\u2019s to figure out what that looks like and start noodling on that. I think it\u2019s a hard problem, right? Because your head is down, it sounds like you\u2019re fairly successful at that role and it\u2019s got a lot of responsibility and it\u2019s heads down and that\u2019s where your mind share goes. But you\u2019re like, I don\u2019t know if I want to do that for long term. Again, I think that coming back to beating a dead horse here and painting the picture, in two, three years, this debt is paid is off, you\u2019ve rebuilt your cash position to 50 to $100,000. That\u2019s super reasonable with a $2 million net worth. The greenfield from there is going to look pretty open to you at that point in time.<\/p>\n
I have a comment, it\u2019s more of a homework assignment for you, James. I was at Camp Moustache and somebody was giving a presentation and she said she was talking to a counselor and she wasn\u2019t sure what she wanted to do. And they said, okay, write down the list of 100 ways to make money. I want to say that this came from the Sheryl Sandberg book, but I think I spaced out when she said that particular part. I don\u2019t want to not give credit, but I don\u2019t know where it came from. But anyway, so I want to give you the same assignment, 100 things that you want to do. And you\u2019re not going to put down 100 things because you\u2019ll put it down like five and you\u2019re like, I can\u2019t write fast enough. And then you get to number 14 and you\u2019re like, I can\u2019t think of anything else, but just what are things you like? Do you want to go teach horseback riding or you\u2019re allergic to horses or do you want to go be an animal chiropractor with your wife? Or do you want to-<\/p>\n
Don\u2019t do it. You\u2019ll be in a lot of debt.<\/p>\n
Yeah. Don\u2019t go to school.<\/p>\n
If you want to take off another 300 grand to do that. Yeah.<\/p>\n
I\u2019m definitely not recommending that, but you could go work for her. Maybe that would help generate a lot of income that you\u2019re not paying somebody else. Maybe you want to learn how to knit or go skydiving, there\u2019s all sorts of ways that you can generate income when you can think about it. Take a huge vacation, take a whole week. Not a huge vacation a whole week. But really think about this. What are some ways I can generate income or what are some ways that I want to spend my time when I no longer have this job? I don\u2019t think you\u2019ve even given yourself permission to think about that yet, because you\u2019ve got 19 years to pay off this debt. But now we\u2019re paying off your debt in nine months, now you can think about it a little bit more. I do think that nine months is super aggressive.
I don\u2019t know that nine months is actually the right choice for you. Now you\u2019ve got two things to start with. Here\u2019s nine months and here\u2019s 19 years. Now you can figure out where your comfortable repayment plan fits, because I like two years, three years, way more than 19 years. I love this so much. I\u2019m so excited. I\u2019m sending notes to our producer. I\u2019m like, this is going to be the best show ever.<\/p>\n
We had the Lifeonaire guys on recently and that might be a good read for you as well. That\u2019s a good book. It\u2019s a short, quick read and it has a short little quick perspective changing of get rid of the math problem and start introduced to life problem with that. Go ahead. Mindy.<\/p>\n
Do you own one property free and clear?<\/p>\n
Yes. Yes. We own one property free and clear.<\/p>\n
Oh my goodness. Could you get a mortgage on that property?<\/p>\n
Yes. This has been part of the conversation where I thought we were going. Would\u2019ve been something like that or realizing, we\u2019re really conservative as far as our loan to value position in general, overall with real estate. I think we\u2019d actually like to do is dump that property and leverage into something larger. But I understand where you\u2019re going. We could leverage that and just use that to pay off and then have our tenants pay off that loan.<\/p>\n
Have your tenants pay off your student loan debt. That\u2019s another thing, what are the crazy things we can do to pay off this student loan debt? Because then your freedom is so tangible. It\u2019s right there. We\u2019re not celebrating enough the fact that you have a fantastic financial position, the fact that you are so conservative in your numbers, I really get the heebie-jeebies when people come on the show and they\u2019re like, I\u2019m going to make $1,000 a month in this property, even though everybody else is only renting theirs for 750. I\u2019m like, you\u2019re not going to make $1,000 a month on that property. I love that you\u2019re conservative.<\/p>\n
Do you have any properties that you don\u2019t like?<\/p>\n
I wouldn\u2019t say that I don\u2019t like, but the property that is fully paid off would be the property that we like the least.<\/p>\n
It\u2019s a nice property. It\u2019s just [inaudible 00:40:48].<\/p>\n
Out of all the four properties, it\u2019s probably in the least favorable area. Not that it\u2019s in battery, it\u2019s just in the least favorable area and we probably would dump that one before any of the others.<\/p>\n
That\u2019s another angle, is you dump that one, buy another property that you\u2019d like a lot and then use some of the proceeds for that down payment. Some of the proceeds for the student loan debt as well. Just repositioning some of your assets. It\u2019s the same, is no different than the other things that we just discussed around using your cash flow for the next couple of years. Although it\u2019s a lot harder to be comfortable with that concept intellectually or in practice with that, but that would be yet another angle here to be potentially arrive at that outcome soon.<\/p>\n
I think our original plan, not for student loans debt actually, but original plan was to refinance the units we\u2019re currently working on once they are finished, but that was going to also be part of my questions to you. Is it worthwhile at this point, given where mortgage rates currently sit and knowing that one is, I forgot what it\u2019s like, four foreign change right now, would it be worth pulling that equity out at the end?<\/p>\n
What do you think the mortgage rate would be when you pull it out?<\/p>\n
Probably mid to upper fives, 5.5, 7.5, somewhere in there.<\/p>\n
And so the interest rate and the student loan debt is 6.8, but effectively 3%, with the way you have that. So you\u2019re arbitraging 200 basis points.<\/p>\n
It\u2019s only effectively 3% if you do the student loan repayment, right?<\/p>\n
Yes. As long as we stay on that program.<\/p>\n
The student plan, the income based repayment plan.<\/p>\n
What would be the cash flow of the property after you do that?<\/p>\n
I have to do the math on that. I haven\u2019t done that yet.<\/p>\n
Homework assignment.<\/p>\n
I think it\u2019s really hard because you technically have a 3% interest rate, but you really have a 6.8% interest rate just with the game that you\u2019re playing around the finances there. I think from your life freedom perspective, I\u2019m already mentally bucketing it as a 6.8% interest rate. So that\u2019s positive arbitrage in my opinion, because you then immediately after doing that can merge your finances and do whatever the heck you want. Almost whatever the heck you want. You\u2019re like almostfy once that\u2019s completed. You still have probably another two to three years to finish the play with your current run rate on things. But I think that there\u2019s advantages in that. I don\u2019t know, I think you have a two or three year play to fully finish the game here with your current situation. I don\u2019t know. That\u2019s interesting.<\/p>\n
Would that be an owner occupied?<\/p>\n
No, no. We are owner occupying one of the properties. That\u2019s the one that\u2019s sitting at the lowest rate that you see there.<\/p>\n
Okay. I would say, I\u2019m not sure that you can get a 5, 7.5 rate on a non-owner occupied property unless you\u2019ve gotten a quote really recently, the quotes that I\u2019m getting are high 6s, low 7s. I\u2019m not in the same state, but they are preventing me from getting a loan on my property.<\/p>\n
I think that\u2019s really hard right now. I think you\u2019re going to get a better interest rate as a source of debt from your IRA. And I think you might have a better one from your personal residence.<\/p>\n
Could he borrow from his IRA? He has a 401(k) and an IRA. But can he borrow from his IRA as well? Because then you\u2019ve got your 110 now, 50 from your 401(k), 50 from your IRA, that\u2019s 210. You\u2019re practically debt free by September.<\/p>\n
Well, you still have the debt against the IRA.<\/p>\n
But you\u2019re paying that back to yourself. That\u2019s a way different debt than paying student loan debt for 19 years or working for 19 years. Just more options to think about.<\/p>\n
What are your thoughts here? What\u2019s are some other things that we can help you out with today?<\/p>\n
I know before we went this direction, we were also talking a little bit about looking into bigger investment properties at some point. We don\u2019t really have experience with anything larger than a four unit, but we would like to, and just any thoughts that you might have on that.<\/p>\n
One thing is I\u2019m fearful of creating just a new job for us. Right now we\u2019re doing all the maintenance, we\u2019re doing all the property management, everything, it\u2019s all us. And so it feels like time is tight already. And so I always have this fear of growing and figuring out systems to make sure that we\u2019re not just creating a new job on top of our jobs we already have.<\/p>\n
Well, I think that property management is a great one to start. One of the issues here is, what was your financial position like when you bought your first property?<\/p>\n
I was not far out of school at that time, so it wasn\u2019t great. It wasn\u2019t bad by any means. I was fortunate enough to pretty much have no student loan debts myself. When I saved up the down payment, I bought the duplex that we currently live in. That was the first property, the only property that I owned for probably 15 years. And then we just happened in the other ones really in recent history.<\/p>\n
Here\u2019s going on right now, you earn, I would imagine 25K a month before taxes.<\/p>\n
Might be a little aggressive, but close.<\/p>\n
Okay. Let\u2019s call it 250.<\/p>\n
Little less, but yeah, close to that. Yeah. We can call it 250.<\/p>\n
Okay. Then we have another 100K at least in wealth accumulation from your portfolio on average, that\u2019s going to completely depend on the market conditions and other things. But on average we can at least expect 100K. The value of your time, if you were emerging as an individual, that\u2019s $350,000 per year in wealth accumulation, and you divide that by 2000 hours, what is that? That\u2019s going to be $175 an hour. When you started your journey, you were not earning $175 an hour. You were earning substantially less than that, probably 20 or $25 an hour. And so it made perfect sense to do all of these things yourself, right? Property management, managing contractors, those types of things. But you have at some point in the last five, 10 years, clearly crossed a hurdle where you\u2019re probably doing too much of the work yourself and negatively arbitraging the value of your time, at least as it\u2019s currently valued for some of these activities.
And so I think that would be a really good exercise to say, what am I doing right now? Let\u2019s cut you in half because you\u2019re two people. But what are you doing right now that\u2019s less than $100 an hour in terms of value of time? And how do you make sure that that gets outsourced? You start hiring that out. You can maybe take a tax discount and say it\u2019s 80 bucks an hour. Okay, I\u2019m going to hire all those items out. And when I have items that are above $100 an hour, I\u2019m going to make sure I\u2019m doing those personally. I think that will be a good mental model for you on that. And you should start underwriting your properties to that. Putting that management cost, for example, into the property analysis, especially when you underwrite the next larger property.
Otherwise, you\u2019re right, you\u2019re going to continue compounding this problem of more and more income and less and less time. Which again, I think is a solution that you can solve for with your nice vacation, coming up and saying, here\u2019s exactly what I would like my life to look like on a day-to-day basis in two or three years. I think that framework will be helpful.<\/p>\n
I think so. I think that she has opportunity with her business too, on a dollar per hour average, we should probably be looking at that too.<\/p>\n
That\u2019s true as well. Bianca, do you own this business or do you have control over the income generation?<\/p>\n
Yeah, I own the business.<\/p>\n
Awesome. That\u2019s perfect. Right? That\u2019s a great framework for that, to think about how to do exactly that same activity set. I think it\u2019s a common problem that entrepreneurs have, Bianca, where folks are continuing to do work that is not very high value when they could be outsourcing that and doing the things that are high value. Constant struggle that everybody faces when they go into business for themselves.<\/p>\n
I struggle to give up that control too, which is, I think part of why you want to be an entrepreneur, but then it\u2019s hard to give up control when the time comes to take advantage of that.<\/p>\n
And the first time you do it, or the first couple of times, you\u2019re taking a big risk and you may very well have it be more expensive than if you\u2019re doing it yourself, but over the long run it\u2019ll be cheaper. What else can we help you with? Did that answer your question about real estate?<\/p>\n
I think so. I think that part of what we were struggling with is time management and trying to understand when is it appropriate for us to start allowing somebody else to do some of this, right? I think that we have an exercise look through and try to figure out when we could start, or maybe now we start hiring some of that out instead of doing it all ourselves.<\/p>\n
You\u2019re in an interesting sweet spot. You\u2019re not in an area where you can outsource everything, you\u2019re in an area where you should outsource some things and do other things yourself. Still that hurdle where it\u2019s obvious you should outsource everything, you\u2019ve have not crossed that yet, but you\u2019re not too far away.<\/p>\n
I realize this might not make the podcast, but can I take a minute to celebrate my wife and what she\u2019s contributed? Because if you look at just the numbers, you\u2019re looking at, she\u2019s only got $20,000 at about $278,000 of debt that she\u2019s brought into the relationship. I want to be very clear about how she\u2019s also contributed in other ways. In two aspects really. For me personally, my job, I was at crossroads probably about three or four years ago, and I could have either stayed with the company I was at and advanced or jumped to a different company. And for me, level of comfort, I\u2019m like I\u2019m just going to stay at med, even though I know that that company was not long for this world. She encouraged me to leave, which led to multiple relationships and changes that led me to where I\u2019m at now.
And probably in the last three years I\u2019ve seen a 35% increase in my income based on those changes. That was a huge contribution alone. But also then somehow with real estate, she convinced me to buy duplex a couple years ago, that was well beyond my comfort level.<\/p>\n
It was a real dump. It was a real dump.<\/p>\n
Well beyond my level of expertise to fix it up. And somehow she convinced me to buy it and with her help and with some very generous family members we did fix that one up. We ended up selling it last year, 1031 into the 40 unit that we just bought, which she also identified that property through a client. Through both of those things, I just want to make sure I give her props for everything she\u2019s brought financially. Honestly we\u2019ve probably turned about 200,000 in equity to about 400,000 in equity in those two moves of real estate.<\/p>\n
Trying to make up for all the money that cost you. Thank you.<\/p>\n
I love it. And for what it\u2019s worth, I don\u2019t think Mindy or I, hopefully no one listening to this has had any doubt about the fact that this is a partnership that has contributed to the wonderful situation that you have right now and you are a great couple and great team on this journey. The only reason we\u2019re looking at the finances separate is for the-<\/p>\n
Absolutely.<\/p>\n
\u2026 because of the boogeyman that we\u2019ve identified, that we\u2019re going to try to conquer soon, hopefully.<\/p>\n
I knew the only reason you were successful is because of Bianca That\u2019s absolutely going into the show. That\u2019s awesome. That\u2019s lovely. But yes, I think that it can sometimes seem a little impersonal with the show where, hey, we\u2019re really only looking at the numbers. I could make this a 19 hour show and talk about lots of different things. I love that you celebrated her and I love that you shared this, that\u2019s very, very important, and that says a lot about your relationship. It\u2019s not just, wow, I think of her as this burden. She\u2019s so great, here\u2019s all the things she\u2019s doing. I don\u2019t think of this as a financial issue at all. So, yay. I love this. I am making notes all over the place. I love this show. I am so excited for this show.
It definitely went in a different direction and I\u2019m so happy for the opportunities that you have. I think that it would be a lot of fun to just sit down. I am very visual, so I would want to sit down with the big opportunities, that, okay, we can pull 50,000 from this account and 100 from this account and 20 from this account, and we can mix and match and be out of debt tomorrow. Or we can do it a little bit slower and be out of debt in two years. All these different ways we can do it and just think, how would that free up all this time? How would that free up all this mental head space? I really think it would be fairly easy to be out of debt conservatively in two years without making a ton of changes, but you could be out of debt like tomorrow if you really wanted to pull the nuclear option, without really changing a whole lot of your future trajectory.
Because you\u2019ve got $4,000 in monthly income from your rentals and you\u2019ve got the almost, and that\u2019s, let\u2019s see, that\u2019s more than half of what you would need for your spending. And then you\u2019ve got the other half in your brokerage accounts.<\/p>\n
I completely agree with Mindy. And I would just say that the three year picture is probably the easiest one to start with, because it\u2019s so believable to have it all paid off and have a strong cash position and have your 4,000 in rental income. And if Bianca wants to keep running her business, between the 4,000 in rental income and the income from her business, and easily a 50 to $100,000 cash position if you choose to maintain that or rebuild that. You have complete freedom from there to consider doing something entrepreneurial with an infinite runway and a nice cash reserve. And that could be in real estate, it could be whatever else your exploration of your passions takes you over the next couple of years.
I think that\u2019s a really realistic position. And then you can just say, how do I accelerate that bit by bit? Is there acceleration that I\u2019m comfortable with that I would be willing to make that happen faster? Because you just let the current run rate happen, and that will happen to you if you just allocate it towards those outcomes.<\/p>\n
This was so much fun. I\u2019m so excited for all of the options you have. Thank you so much for your time today. I really appreciate you taking the time to chat with us because this is a really, really fun show.<\/p>\n
Thank you for having us. This was really eye opening and helpful, and it gave us both a lot of peace of mind I think, to look at it that way.<\/p>\n
Awesome. Well, send us a postcard from your beach vacation, where you\u2019re going to talk about all of these things.<\/p>\n
We\u2019ll do.<\/p>\n
Okay. Well, talk to you soon. Scott, that was such an awesome episode. I loved how we started down one path and then we\u2019re like, wait a second, you could just pay this off now, in the next couple of years, and then you get 17 years of your life back to do whatever you want. And yes, you only can spend a dollar once, so you are going to pay off the student loan instead of buying a house, but you\u2019re only, they have potentially the ability to repay all of these loans in one year with all the financial monkey business that I suggested. And yes, that would put them in a slightly less than super, super secure position by using up all their current cash savings. But they make so much income, I don\u2019t really have a problem with that.
There are other options I would\u2019ve given people in different situations if they had three years left on their repayment plan, if they were making $80,000 a year or $50,000 a year, if they were in all sorts of other debt, but they\u2019re not. For this particular situation I think aggressively paying off these loans is the best choice for them, so that they can get this huge amount of time back in their lives.<\/p>\n
I think that the ultimate goal here, and it probably comes after around two million plus in net worth. Mr. Money Mustache has a great analogy. He says, the way you feel about money should be like how you feel about tap water, right? You\u2019re not going to turn on the faucet and waste it and all that kind of stuff, but it\u2019s just the utility that you\u2019re going to access here. And these guys, James and Bianca are so close or should be, they\u2019re just on the cusp of being able to view money through that lens. They just need a little bit more work. They\u2019re almost there with their current spending. In a couple more years they\u2019re going to easily crest that threshold just by paying down the student loan, for example.
You get to that point, and instead coming into today\u2019s show, they were thinking I\u2019ve got this monkey on my back for 19 more years or 24 more years for the second part of the student loan debt. It\u2019s like, no, we can so easily just zoom out, take your whole portfolio. Say, where do I want to get to? What\u2019s holding me back? And reallocate, right? And think through, reallocate both your existing portfolio or reallocate where you\u2019re sending the cash that you accumulate on a monthly basis.<\/p>\n
Okay, Scott, that is great. I can\u2019t argue with that at all. Should we get out of here?<\/p>\n
Let\u2019s do it.<\/p>\n
From episode 338 of the BiggerPockets Money podcast, he is Scott Trench and I am Mindy Jensen saying, take the money and run.<\/p>\n