Christina recently slayed her debt and put herself on track for financial success. But now she’s bored. How can auto-investing be more exciting?
Speaking of debt, Christina shares a creative HACK to SAVE $60,000 in student loan interest payments.
Mary is struggling to compare two job offers: one from a large corporation and another from a tiny business. How should she decide?
An anonymous caller wants to buy a different home, and convert his current home into a rental. How should he finance this move?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
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Here are the details:
Christina asks (at 01:46 minutes): Many people on your podcast sound like superstars: high earners and high or growing net worth.
I’m mid-journey and I’m starting to feel like I’m in my groove. But the groove is so boring.
I made large leaps in paying off debt early, which was exhilarating.
But now I’m just auto-investing and saving up for a down payment on a rental property.
What’s your advice on staying the course during the less exciting parts of this journey?
Christina also comments (at 14:59 minutes): I graduated in 2007 with $60,000 in student loan debt with 7 percent interest. Yikes. I felt like I was drowning.
I had a solid starting salary as an engineer, but I was afraid I’d have to get a second job.
During college, I worked in the financial aid office and learned that I could defer my loans by becoming a student again.
I calculated the cost of carrying the loan versus the cost of enrolling in community college part-time. It turned out that school tuition was cheaper than the interest on my loans.
So I declared a general studies major at a local community college. I enrolled in a gym class and a stress management class.
I also consolidated the private money for the lower interest rate for as long as possible. This gave me extra cash to really hit the deferred loans first.
I kept the consolidated loans separate and used the snowball method to pay them off quickly. Not all loans have to be consolidated together, and I think people don’t always realize that.
I paid heavily toward the principal while the loans were deferred. To be clear, this only worked on the federally subsidized portion where the interest doesn’t accrue.
This strategy was especially beneficial in the spring term because deferment carried through the summer. Effectively, the cost of two courses paid for eight months of deferred interest.
I did this until the math no longer made sense, then made regular payments and extra toward the principal.
The result: I paid my debt off in under five years and saved over $60,000 in interest.
Mary asks (at 25:41 minutes): My husband and I are struggling to compare two very different job opportunities.
The first is a corporate position at a well-known company with full benefits, a matching 401k, et cetera. The commute is a 35 to 45-minute train ride to the city three days a week.
The second is a full-time position at a small but successful company that sells equipment to towns along the East Coast and the Midwest. The benefits are less but the commute is a 20-minute drive, five days a week.
For years, my husband has talked about running a small business so he’s more interested in it versus the corporate offer.
However, he’s only worked in corporate jobs before so he feels conditioned to stay the course.
Aside from salary, what other important differences should we be thinking about? For instance, the small company wouldn’t offer a matching 401k.
We’re in our mid-to-late thirties with no kids, but we’re trying. We have no debt besides our mortgage and we have healthy 401k and investment accounts.
From the expenses point of view, I’ve calculated the amount he would need to make so we can live comfortably and meet our savings goal.
What else should we ask for from the small business so that the two jobs are more comparable?
Anonymous asks (at 41:21 minutes): What’re some financing strategies for buying a second home?
My wife, toddler daughter, and I will be moving in a year. We own the house that we currently live in, but we’d like to turn it into a rental when we move.
It has $180,000 in equity and will generate $2,400 in annual revenue above paying the mortgage.
My wife and I are 35. Our combined income when we move will be $150,000. It’ll increase yearly to $190,000, then $220,000, and remain pretty steady after that.
We have $350,000 in retirement accounts, $300,000 in mutual funds and savings, and one long-term rental property with $275,000 in equity. It also generates $2,400 in annual revenue above paying its mortgage.
We’d like our next move to be our last move for a long time. Our next house will cost about $600,000.
To generate the down payment for that home loan, should we sell one or both homes? Or sell some investments?
How much would you recommend using for the down payment? And are there other options we haven’t thought of?
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