I have struggled with the idea of paying down our mortgage quickly or letting it be, to payoff slowly per the standard schedule instead. I see the mental benefits of ridding ourselves of all debt. But looking at the situation objectively, our mortgage size compared to our income is not debilitating. And having some debt is considered, by many, a good financial strategy, particularly when the debt is backed by something tangible like a property.
We are fortunate to keep our expenses lower than our income, so we have excess money leftover each month to use for saving, investing, and debt paydown. We refinanced our mortgage about 2 years ago as well with the lower rates (thanks to the pandemic), so the amount of interest charged on our mortgage is not too high as well. And if we remain disciplined (that is the big “if”) and invest the extra funds in the stock market (instead of throwing it at the mortgage), the average return may be higher. This is of course, not a given, as the market is hard to predict. But keeping money in the market over the long term generally yields higher returns than the amount of interest on our current mortgage.
This is thus the great debate I struggle with in my head as I approach our savings goals. I have long pondered this question in my own mind, and have looked for inspiration from others by reading blogs, discussion boards, and books. I have come to the conclusion that this is a personal decision, and both avenues can be correct.
I think one thing that guides me in my financial goals is how I feel when I make a decision to throw “X” amount at a goal. For example, I remember feeling much greater peace and less anxiety a few years ago when I committed to prioritizing every last penny I could at my student loan debt. And after paying off my student loans, I thought about how much to save toward college for each child. Thinking through amounts, I remember feeling a large amount of inner calm after committing to a certain amount for each child, to hopefully achieve a certain goal amount by the time they graduate high school.
I would love to see these two cuties smiling on their high school graduations. I would also love to help fund their college experiences so they can minimize the large student debt load that is all too common these days.
I think that the student loan debt I paid off aggressively was a different beast, and I am thankful I got inspired to pay it off quickly by The White Coat Investor. (I wish I could have paid it off even faster, but I did the best I could, paying it off in 6 years.) That student loan debt initially had much higher interest, and the end result (my own mind development/career development) is not something we can sell later on. A house, on the other hand, is a physical asset that can be sold, so I think it is a different kind of debt, that has more investment qualities to it.
And also, we are fortunate as a couple not to carry credit card debt. That also, I think is a totally different beast from mortgage debt, and something to pay off ASAP due to its much higher interest rate. Your loan balance can get insurmountable and can stick around forever if you are not careful, even if you are still paying the minimums. This I think is to the credit card company’s advantage, and what they obviously would prefer. They want our money.
Right now, we are paying the mortgage with a bit more each month, plus I have set up to make payments every 2 weeks. This way, once or twice a year there is an extra payment being made. I am toying with the idea of changing goals and putting more toward the mortgage, instead of my IRA, just for the psychological benefits. And with the backdoor Roth IRA potentially going away soon, this has made me think even more about throwing more of my money at the mortgage instead of my IRA. I still max out my 401k, and still invest in a brokerage account a bit extra, and save to my kids’ 529’s, and save some in a cash account for future expenses and to buildup a cash cushion. I wish I could “do it all,” but there are only so many funds available, so you need to pick and choose your priorities, and how much you want to throw at each goal.
My perspective and approach may change in the months or years to come. I think this is a healthy part of evolving interests and goals, not necessarily a sign that my current pathway is wrong. But I hope and plan to keep chipping away at this debt. Paying off more of our debt will be a rewarding experience. I am sure owning your home outright is a great feeling, a feeling I hope to know firsthand someday soon.
I have accomplished my longstanding financial goal this year: I have paid off my student loans! $230,000 of debt is gone. (Insert happy dance here!) I still have a hard time comprehending this achievement and still find myself subconsciously worrying how much debt I have left. I (happily) remind myself that my student loan balance is now $0. This, of course, is a tough time for many financially with the COVID-19 pandemic. I count myself very blessed and fortunate that my family is still financially stable and gainfully employed at least for the moment. I think this pandemic has us that anything can change at the drop of a hat, be it in our financial life, our health status, or our careers.
Goal of Defeating My Student Loans in 2020: Snailed It!
I think the greatest benefit from this goal has been a lightness in my soul. This is invaluable, and something hard to describe. I think it took me a good 8-10 weeks to reach full acceptance of this state, and fully embracing this new feeling. Having loans for 13 years (starting from onset of med school in 2007), i.e. 4 years as a medical student, 3 years as a medical resident, for 6 years as an attending (i.e. a physician receiving a full income) has reframed my outlook in life and my behaviors and financial habits. I feel this training in being careful and responsible with finances has been a great side benefit as well.
As emergency medicine physician and personal finance writer Dr. Jim Dahle urges his readers, it is crucial to live like a resident to accomplish this elimination of debt, the sooner the better. The longer you wait and keep this debt on, the less you will appreciate the pricey medical school education you received. Out of sight, out of mind. The shiny fancy diploma does “lose its luster” unfortunately with time.
Now, I get to figure out my next financial goals, and to allow for more enjoyment of my wealth. And I must next work on the process of reducing and eliminating the guilt or fear I would feel with spending money. It is a strange and new feeling to let go of an invisible and insistent push to put as many funds toward student loans each and every month.
My daughter insightfully declared a few weeks ago…”I wish you didn’t have to work.” That simple, innocent statement stuck with me since. I think this occurred after I explained I was too tired to do something with her that she wanted to do. Kids really pick up on associations quickly, huh? Work steals away some of my time and energy, and thus takes away some of the time and energy I have to devote to my family. I replied honestly that I wish I didn’t have to work either. Wouldn’t that be wonderful, having financial security to thus regain time back with those you love?
Hoping for more carefree times like this with my little gal.
As I explained in my post about financial independence, I think I have found a really neat life tool to get to my desire to make work optional. I am one that always needs things to do. I like to make “To Do” lists on my phone or in my journal, and I like to keep planning ahead for the future. So I don’t think I will ever sit still too long. However, as my daughter alluded to, work prevents me often from doing what I would rather be doing. One huge value and priority in my life is family and nurturing my relationships with my family members. And often my 8 hour work day takes away from that. It would be nice to have more flexibility to instead work say part time, and set my schedule myself for when I would want to work.
I read a great book on this very topic, that is financial independence and making work optional, a few months ago: Work Optional: Retire Early the Non-Penny-Pinching Way, by Tanja Hester. I would recommend this read to anyone wanting to learn more about financial independence. I really liked how the author spelled out a pathway to learning your values and priorities and life, and then extrapolating how financial independence can give you the power to then create the type of life you want. She also spells out some math on how to achieve this, including the calculators for determining your needed “Financial independence” number (i.e. 25x your annual spending) that I have described in my financial independence post, and other authors in the financial independence community have also described.
I like her different take on buckets of money for those pursuing early retirement as well, with some funds preserved to be used true older retirement (i.e. after age 59 1/2 or 60) and other funds you plan to use in early retirement (i.e. in your 30s, 40s, and/or 50s). There are ways to tap into your retirement savings earlier with the Roth IRA conversion ladder technique (see an explanation of this topic here), but I appreciated the author’s idea of keeping your funds separate. After all, one great fear of any retiree is if you will run out of money. It would not be pretty or pleasant to have to return to work in your 50s or 60s, after being out of the workforce for several years. Indeed, it would be challenging, and you could not re-enter the workforce at the same place you left. Given your gap in working, several employers would likely question your motives or your competence. And you would probably need to either take a paycut and start lower down in your chosen career path, or pick a different line of work with less pay.
By separating out your funds that way, you can better control for future ups and downs in your spending needs and the market. Things taking a turn for the worse in your investments? Having different buckets would mean your age 60+ funds are still left alone to grow and regain things (hopefully) in the future when the market rebounds. But to compensate, you can use your early retirement funds more wisely and more frugally, e.g. taking out a smaller percentage e.g. 3-3.5%, and perhaps taking on a side gig to compensate.
I have also read some other books on the topic, including Financial Freedom: A Proven Path to All the Money You Will Ever Need, by Grant Sabatier, and Quit Like a Millionaire: No Gimmicks, Luck, or Trust Fund Required, by Kristy Shen and Bryce Leung. All of these authors have different ways they approached their journeys to financial independence and achieved it, and offer their own advice to readers who want to follow the pathway, too. I think all of these different perspectives show there are multiple pathways to get to where you want to go with the financial independence journey. In fact, this shows there are multiple answers sometimes to one problem.
My current finances do not allow me to stop working just yet, or go part time (which is a less scary path I am considering in the near future). However, I think hearing my daughter’s wish the other day, “I wish you didn’t have to work,” rekindled my commitment in my path to achieving financial independence. Getting to a point where work is optional would be a huge weight lifted off my shoulders. If something were to happen where I did need to quit, or the market were to change and my job security were to be lost, having that power of financial independence would be so freeing and empowering. I could foresee in the future that the challenge of balancing it all as a busy doctor mom and working mom could get to be too much. Right now, I feel that I am happy in my current roles and in my current busy life, but this may not always be the case.
I love this happy kid! I hope to prioritize my life and time to spend more time with those I love most, namely my husband and kids.
I think I’ll remind myself of my daughter’s innocent statement (“I wish you didn’t have to work!”) each time I analyze my finances and my path to financial independence. It is important to look at where you are, but it is important also to see where you are going, and to live this life intentionally and with purpose. My pursuit of financial independence, I feel, is my tool to regaining control over my life and my time.
I’ve been learning about financial independence (“FI”) over the last couple of years. I was introduced to this terminology via the podcast “Choose FI“. (I heard about them via another great financial author and podcaster, the “White Coat Investor“, Dr. Jim Dahle. This FI movement, I think, is in line with how my husband and I naturally and intuitively live – living frugally, spending wisely, and trying to save as much as possible. This movement, though, highlights the fact that this choice of lifestyle isn’t typical. Indeed, perhaps, we should all be saving more than we do and it should be the natural life path for all of us. Gone are the days of pensions and company loyalty, and your company of 40 years “taking care of you” upon retirement. Now, there are 401K’s, and independent savings accounts, and the onus is placed on the employee to save properly and to be financially responsible. But how many of us are really well versed or trained in this idea of saving for the future?
The average savings rate for the United States is indeed a bit paltry, at about 6-9 % from the research I have seen on statistics websites (here and here are some resources tracking savings rates that I came across). To truly retire “on time” at age 65 (which is an arbitrary number, by the way, picked when Social Security was created and chosen since that was close to the average life expectancy at the time), a savings rate probably double this average (12-20%) is likely more in order. As Americans are living longer as well, thanks to better healthcare and technology, we likely need even more money in our nest egg to live off of in our “golden years,” and the odds of living past 65 is indeed more likely than 50+ years ago (I’m sure that is something to be thankful for). And if you are a “late starter” like me, with a delay in starting full time employment after over a decade of training and schooling to become a physician, the savings rate should be even higher to “catch up”, i.e. 20-30% or higher.
As I teach my kids about money in the coming years, I hope to teach them about the power of savings and compound interest. If you can harness the power of time and save early, and embrace delayed gratification, you can really ensure future retirement and future freedom in life, freedom away from employment. You can’t dwell too long on your past mistakes, but I sure wish I had saved more when I was younger.
I saw the documentary and read the book, “Playing with FIRE” by Scott Rieckens a couple of months ago, and I think this documentary and book both can be a good introduction to the FIRE (Financially Independent, Retire Early) movement for those without prior knowledge. For me, a lot was review, but it was nice to see this with my husband who I’ve been discussing this concept with, and highlighting the tenets of Financial Independence, primarily analyzing and controlling spending to be more in line with your values, and to increase your savings rate. Spend less, save more. For the early retirees highlighted, I believe their savings rates were 50% or often higher. I thought the documentary was a good introduction into how we should save more to buy back our independence. I don’t necessarily plan to “Retire Early” but I do embrace the concept of Financial Independence as a tool for freedom. I would like to make work optional, perhaps work part time and set my own hours to allow more time for my family. In that way, I could continue to work simply for the mental benefit and emotional benefit of helping others, instead of the stress and strain of earning money to payoff debt or pay bills.
As the “Playing With FIRE” documentary highlights, the idea of financial independence is simply math, and this can drive your retirement if you so choose, be that early retirement or standard “65 and older” retirement. You want to ensure you have enough money in your accounts, or enough income via passive means (e.g. real estate rental income, etc) to ensure you have enough money to live off of. For the early retiree, to ensure you live off of the returns of your investments, you would calculate your needed portfolio (or your “FI number”) as 25x your yearly spending needs. (I won’t get too technical here and dig too far into the weeds (you can read other fine blog posts or books out there about how this math works). But the value of 4% withdrawal rate stemmed from a well known Trinity Study from 1998, which analyzed several retirement portfolios and their success rate. It turned out via their analysis that a 4% withdrawal rate succeeded 95% of the time. That is, there would be a 95% chance your money would last your entire needed retirement. And the 25x multiplier is due to the fact you would divide your annual spending by 4%, so the math is you are taking 1 divided by 4%, which is 25.)
One criticism I have for the documentary is that it seems to make frugal living seem like a chore, and at times highlights a big savings rate as sacrifice, or being deprived. But I don’t necessarily see living frugally as deprivation. I instead try to see my choices in life, money or otherwise, as ways to live my values and to live life intentionally. If I want to spend on trips, or books, or electronics, in the long run, this can be okay. But on the flip side, I won’t have money for other things I may not value as much, such as having coffee out every day, or clothing, or designer purses. And I am okay with that. You can’t have everything. I believe that instead of striving to hoard money or wealth, you should instead focus your efforts choosing what you want in life. And money can be your tool to get that life you want. Spend wisely in the areas of life that light you up, and make choices NOT to spend in other categories that don’t matter to you.
A budget is a way to ensure you are spending within your means. In my opinion, it is meant to be a tool for living well, not a tool for suffering and deprivation or highlighting all you have done wrong the month before with your spending habits. The way I see it, you get so much money to work with in your paycheck. Some of that money can go to what you need to spend on (fixed monthly expenses, such as rent or mortgage, utilities, etc), some can go toward what you want to spend on (what you value, ideally, but are highly variable from person to person, such as hobbies or entertainment), and some should go to savings, either for cash flow (e.g. emergency fund, or for short term funds needed in the next few months to years for planned purchases, or for long term savings, such as investing for retirement). The set expenses need to be covered, such as mortgage and utilities, and these are not very negotiable for the most part. (You can of course analyze these fixed expenses from time to time and shop around, for example, on rates for your insurance. But for the most part, there is going to be a need to pay something for these needs each month.) What is more exciting for me in terms of spending plans and budgeting is the variable part of your spending. The variable spending category NOT have to follow a cookie cutter formula placed on a website. I.e. you do NOT have to spend X% on entertainment, and/or Y% on food. You can adjust these spending amounts as you see fit, and this can be a moving target as well. Each month does NOT need to follow the same pattern. You could push to be more frugal in one area to free up funds to go nuts in another area you really want to spend in. If one month you want to spend more on travel or vacation or going to restaurants, go for it. But realize that you won’t have extra leftover to spend on clothing, or electronics, or whatever other variable/luxury item you desire. (Aren’t a lot of the things we buy these days luxuries?)
As I strive each day to follow the pathway to financial independence, I hope to gain more fun times like this in the future, with my three favorite people.
I see financial independence as a gateway or tool toward my own time independence. I would love to have more control over my day to day life. I want to have autonomy and power over how my day is set up. If every night could be like a Friday night, or every day like a Saturday in terms of my mood, that would be awesome! No dread, nothing to fear, just fun and activities that I can pick. If I want to work, I will do so. If I want time for a prolonged vacation, or an impromptu trip to a park with my family, I can do so. Time is unfortunately a limited resource. We are essentially trading our time at work for money, and in the end, when it comes to retirement (either traditional or early), we are trading that money back for time.
My plan for the near future is to first pay off my student loan debt. After this, I will then refocus these funds toward aggressive savings toward my goal of financial independence. I will work on enjoying my journey toward financial independence. You need to enjoy the ride, and not be too focused on the end destination. After all, if you fixate too much on the goal, you will miss some of the fun along the way. I also see this financial independence journey as a way for me to combat burnout. With this tool, I can start to see my life and my actions as more meaningful. In my daily work life, sometimes my job can feel like drudgery. But for me, financial independence has allowed me to better see future freedom, a way I can control my life in the near future. Financial independence will enable me to create a life I want, one where I have control over how my time is spent. This is truly liberating, exciting, and fills me with incredible hope.
I took on the exercise of dutifully tracking my expenses about a year ago. Before, I would utilize technology, like Mint, to automatically track where my money was going. But, I think I heard a suggestion in several podcasts that it really helps to keep a diary of your spending. And this was definitely true for me, an eye opening experience to say the least.
I decided to do this tracking with an Excel spreadsheet, and gave myself the goal of doing this for 3 months, to get a better handle on my average spending per month in common categories. I actually found the exercise so helpful and insightful that I still do this, about a year later, and plan to continue doing this as I think it really enlightens me and improves my behavior. It is not easy, but I think it helps keep me in line with how I use my money. I have become more mindful now of what I spend on each month, and it makes me pause and think about future purchases now too. Do I really want to add this on my spreadsheet of spending? Will this purchase truly make me happy, or bring me joy, or bring utility into my life? Or can this impulse item wait? Or do I even need to buy this item at all?
I think the problem for me with the automatic tracking before with Mint was that I didn’t feel full ownership for what I was doing. The app or website would categorize things I was spending on. This was helpful to categorize my expenses and see trends. But it didn’t hurt as much as when I had to put the item onto my spreadsheet. I saw that, wow, I spent THAT much on an item on Amazon that I am now not really using much. Ouch.
Other ways to do this besides Excel are to use the apps and automatic tracking websites out there. Or use old fashioned pen and paper, or a pen and a small notebook, for example. For me, I enjoy having my data in a spreadsheet so then I can extrapolate, compare, and analyze the data. (The engineer in me lives on, in spite of my years of medical training.)
And I think what liberated me with using Excel was that I didn’t feel limited. I could see how much I spent on groceries for the month, for example, and I did not get an alert that I was close to my “limit.” In truth, the entire limit is your income for the month, or the cash in your bank account, not some predestined number you picked 2 months ago. It is okay for the spending amounts to move and shift with time and needs. For example, some months with extra entertaining or a shift in our dietary needs will demand higher grocery spending. But then, the next month, the spending can be much less. On AVERAGE, then, the spending category and “budget” actually works out. This, again, I found liberating, and much more useful for me.
Also, after analyzing my spending at the end of the month, I could see what was leftover, and then plan where to put that money. Rather than just leaving it in a checking account, I could then move that cash around for future needs. I could invest it, save it in my emergency account, save it for future travel, or plan to use it in my Fun Account which I’ve nicknamed “I Don’t Know What it Is But I want It”…for those random unforeseen items that come up on your Amazon browsing that just speak to you.
Spend your money wisely, or else this little guy may use the Force to get you in line!
It is also interesting over time to compare my spending this year to spending last year. I hope to keep this exercise going in the years ahead to compile more data, and hopefully see my spending become more in line with what I value. I would want to see spending in some categories go down, while spending in other categories I really enjoy (like hobbies) should hopefully increase.
As I mentioned before, this is not necessarily something you need to do forever. I do enjoy the data, though, and I think it influences my behavior positively, so I plan to keep the exercise going at least for now. But I think the true value in doing this expense tracking is in getting a deeper dive into your finances at least for a short period of time (e.g. 3-6 months) to truly feel out where you are spending. The exercise often surprises you, and sometimes disappoints you. You may not want to admit you spend as much as you do on restaurants, or clothing, or random online purchases. But the numbers don’t lie. And tangibly writing the expenses down, or in my case, typing them into Excel, really helps to gain ownership of how you are spending your money, and can give you insight into your buying habits. And hopefully, with that knowledge, you can change your behavior and spend more wisely in the future.
I think of life as having some set resources (Time, Energy, Money), and with these resources, you can get products that you want (Stuff, Experiences/Memories, Emotions).
Perhaps mathematically, it could be proposed it is an equation of sorts (the exact steps in this equation, though are of course are too complicated and are beyond my grasp to eloquently express at the moment):
I wish I had an unlimited supply of the things on the left (Time, Energy, Money), but I realize they are finite. And I think we are often trading our time and/or energy to get money. (Again the equation is a lot more complicated than what I am crudely trying to show here.) But, a combination or some or all of these resources (that is, time, energy, and money) can give us the products on the right. What is it that you want to get with your time, energy, or money? Sometimes, it is complicated, and it is a unique combination of things. Sometimes it is stuff. Sometimes it is an experience e.g. a honeymoon or a once-in-a-lifetime trip in Europe. Sometimes it is to gain positive emotions, e.g. contentment, tranquility, pride, joy, self-satisfaction.
Hop aboard the “Fun Bus” of life! Full of bumps and stops, but if you use your resources (Time, Energy, Money) wisely, I think you will enjoy the ride!
I think that the journey to learning what you truly want in life is easier once you know your values. This is not an easy thing to boil down in one sitting, and it is highly individual. But, I think this exercise of learning what you truly value is immensely important. And once you know what you truly value, you can then budget out your finite resources of Time, Energy, and Money to then lining up your actions in life to be in tune with your values.
Personally, I value the following:
Family
Health
Creativity
Freedom
Fun
These are broad categories, but I truly hope to budget my Time, Energy, and Money toward nurturing these 5 things in my life going forward.
For Family, I hope to nurture my relationships with my husband and 2 kids, and also my extended family. For Health, I hope to continue to use my time and energy to developing my running hobby, and taking care of myself with nutrition and rest each day and week to keep my body running healthily and for (hopefully) a long time. For creativity, I hope to nurture things such as running, reading, music, and other outlets that allow me to make something that reflects my thoughts, feelings, and emotions, and in the process, that may inspire others. For freedom, I hope to have more control over my day to day schedule. At this point, I do not have this 100%, but I hope to in the years to come. To achieve this, I must be very diligent with my savings goals, to hopefully in time have enough to support my needs and wants in life so work can someday be optional. And for fun, I hope to never take life too seriously. I hope my kids, husband, extended family and friends continue to inspire me to play. In this category, I consider experiences such as travel a prime way I hope to have fun with those I love. Again, to achieve this, I plan to be conscientious with my savings goals (once my debt is paid off) to have funds saved to take trips with those I love, to create the memories and experiences of a lifetime.
Drive (or in this case, drive-fly) your way through life with a roadmap in mind. Use your resources wisely on this drive to get what you truly want out of life.
As you can see, these things are all interconnected, but I think my equation helps to summarize things and put things in perspective:
On the arrow above, I have added the thought that your own unique “Life Values” play a key part in determining your pathway, and they greatly influence the choices you make to getting the products you want in life. It is crucial also to revisit these values in your life, and see if your actions in life are truly lining up with what you want. Are you using your time wisely, focusing on the things you want to achieve? Or are you wasting it to a degree, on things that don’t matter? How about your energy? Are you investing waking hours and physical and mental energy into endeavors that bring you joy and fulfillment? And how about your money? Is it being invested, saved, and spent in a way that is in line with what you truly value? This is not an easy exercise, and something that I think we all struggle with as we go through life. But I think this is a good thing to revisit regularly, e.g. every month, to ensure you are truly getting what you want in life.
Student loan debt has been weighing on my financial mind for over the past decade, since the first day of medical school. It is hard to believe it has been 12 years since I started medical school and my debt balance began accruing. The largeness of my student loans has (fortunately) dwindled to a degree through hard work, discipline, and continued extra payments to them. But believe me: I will be incredibly elated when this debt monster is finally slayed. As things stand right now with my calculations and estimates, this should be in a little more than a year (October 2020 to be exact… I will need to celebrate grandly when that date hits).
Currently I am at around a 55k balance on my loans. It is hard to believe my debt balance was sitting over 200k at one point years ago. The “magic” of compound interest can really work against you when you borrow money and are working hard to payoff debt. And of course, on the flip side, its magic works wonders on your investments and retirement savings accounts, particularly if you take on the risk and invest in the stock market.
Will this battle with my student loan “debt monster” make me more risk averse in taking on new debt in the future? I am sure it will. I am already conservative with credit, and payoff my credit card bills monthly, live reasonably frugally, and try to spend mindfully. (This of course is getting better as I am getting older, and live and learn through past “silly purchases” here or there that never get used.) Also, as I get older, I am seeing that relationships, experiences, memories, time, and energy are incredibly more valuable than stuff and money. I suspect we all need to learn this lesson with time and trial and error in life.
If I could do things over again, would I do things differently? Most definitely. (Hindsight is always 20/20, right?) One key thing I would do differently is borrow the absolute minimum I could, continue to live as frugally as I could on borrowed money, and strive for side hustles while in medical school and residency. One other key thing I would do differently is analyze more job options after residency to maximize loan payoff packages and higher salary in a different location of living. I chose to stay in the Pittsburgh area where I am from, as this is comfortable, and my family is here, and I wanted to have family close by as I raised my family. I sacrificed a higher salary doing this, and was not offered any student loan help due to my priority of staying near home. But even a short 3-5 year hiatus in a different area with a greater need for medical care (and thus higher salary) would have helped me crush my debt, I think, a lot sooner. It would have been a sacrifice, but I think in the long run, this could have been well worth it.
Work hard now, payoff debt aggressively, but enjoy the journey. Fresh corn on the cob is always a good choice, and obviously a tasty choice in my kids’ minds.
Also, I think this student loan journey I have taken will change the way I view things as my children grow older and I offer them parenting advice as they advance through high school and future career options. Is an expensive school really worth it? Is the name of a school on a diploma really that valuable? I am learning that the school name on a degree and the fancy letters after my name don’t matter as much as I thought it would when I was a young adult. I hope I can impart some of my financial wisdom to my children as they chose their life paths. There may be a less expensive option that gives just as much joy, fulfillment, and happiness in life. And in the long run, avoiding debt will avoid the stress and heartache that come with being in the “red.” And more importantly, avoiding debt will get you started on building wealth a lot sooner, giving you the freedom to use your time and money on things truly bring you happiness and fulfillment.
I think it is easy to get fixated on the final end goal. However, I think I have learned in my running training, and in life in general, that it is so motivating to break down a big goal into smaller mini-goals. For example, with running, when I am feeling exhausted and over a tough hill, I push myself to a small goal in front of me, for example a mailbox, or a crack in the side walk. That way, instead of being overwhelmed with how much farther the top of the hill is, I am able to make it to the next goal post. And then, once a reach that, I feel motivated and move on to the next goal post. This has helped me during my training runs and on my race days.
Celebrate the moment. Smile.
My student loan payoff is a huge goal in my life. It is taking many years but as I get closer to the finish line, I am feeling more motivation. The huge balance at graduation was daunting and depressing. But I am now below the 75K mark! I am at the 71K to be exact. My next mini goal I will celebrate will be when I get below the 50K mark. This has been a long time goal, now at 8 years out from graduating from medical school, and just under 5 years from graduating from residency. But the end is in sight. I think again setting these short mini goals is helping keep me motivated.
A nice generous pint. Celebrate your wins, no matter the size.
I am trying to teach this idea of breaking down a big goal to smaller goals to my daughter. I told her about my mailbox method the other day when I took her for a mini run with me. I also try to teach her to celebrate small wins along her journey, when she is demotivated by how long something is taking to accomplish. It is easy to look forward all the time. But I see value in enjoying the present, living in the moment. It is also valuable to learn from the past – looking back on the past is a good exercise, teaching me to evaluate the progress I have made.
Enjoy your wins in life. Pamper yourself to a princess (or prince) day every now and then.
Money is a loaded topic. It carries a lot of emotional baggage for many. It is useful, but can also be destructive if utilized in harmful ways. It can be kept, spent, or given away. There are so many choices with what to do with it. I think one thing that has shifted within me in terms of my mindset on money is thinking of money as a tool to get what I want from life. Instead of seeing it as a roadblock, or as something to accumulate and collect, I see it now as something to earn, use, and trade for things I truly value.
Thinking about money can be exhausting. Let’s lay down a bit, relax, and enjoy the sunshine.
Something that has helped me is learning to spend my money on what brings me utility and enjoyment in life. I am starting to more systemically strategize my own financial plan. Before, I would have a nebulous, and often frustrating goal of earn more, save more, spend less. Now, I am breaking this down and making it more concrete via online calculators and the old nerdy standby of Excel spreadsheets.
Seeing things laid out before me in my financial plan has helped me shift how I see my weekly and monthly expenditures. I am eager to create some breathing room between my necessary expenses and what I have accumulated in the bank. I get satisfaction from my job, but at the same point, I do not want to be forced into a working position where I have to work to pay the bills. I think this shift in mindset has helped me start to spend my money more meaningfully, and use money again as a tool to reach my life goals and my financial goals.
The book, Your Money or Your Life, by Vicki Robin and Joe Dominguez, highlights this in the idea of analyzing what you have spent. After you tally what you are spending in each category in your life (e.g. housing, groceries, restaurants, hobbies), you can then analyze each spending category by giving it a grade – whether it is right where you think it should be, whether you should be spending more in that category, or whether you should be spending less. I found this idea really helped me start to spend my money strategically, and feel less guilt in spending on what I think is important to me.
Life is short. Money is useful but never the be all end all. As Maddie displays here: never take yourself too seriously…and never be afraid to pose for the perfect shot.
I hope to also teach good money habits to my children, via how I spend my own money and how I speak about money. As my children get older, I hope to show my children how money and wealth are a tool to be used, and also how this fits into the bigger picture of the economy of our neighborhood, our city, our nation, and our world. The book Silver Spoon Kids, by Eileen Gallo and Jon Gallo, had a very interesting chapter in it describing how a huge chunk of the nation’s wealth is concentrated in a very small percentage of the country. It offers the idea to do an exercise with your children dividing up 10 cookies among your children, to illustrate the distribution of wealth in the country. As described below in terms of the breakdown in wealth, what happens is one child gets several cookies, another few children get also a fair distribution of the cookies, and the majority of children are forced to break up and share a tiny portion of one cookie. This is astounding, heartbreaking, and eye opening. This book was published in 2000, so I suspect the statistics on the distribution of wealth in the United States have probably gotten even more lopsided.
But according to Silver Spoon Kids, around the time the book was published (2000), 40% of the wealth is in the upper 1% of the population, 30% of the wealth is owned by 2-10 percentiles, 29.8% is owned by the 11-60 percentiles. And the bottom 40 percentile of the population owned only 0.2% of the nation’s wealth. This is crazy to think about. And I am sure this trend may continue. I think that part of the book really gave me pause and think very differently about money, wealth, and how it is utilized as a society and an economy.
Money is valuable, but I see that it is simply a tool in life. As described in the book Your Money or Your Life, you are trading some of your time or life energy for your paycheck. You can then use this money from your paycheck to go to the stores and get other things you want in life (e.g. groceries, a roof over your head, a new set of headphones, a tank of gas). By using it more deliberately and carefully, I hope to be trading my time during my work for something I truly want. This is a work in progress, of course, but I hope to continue to get better at spending my money wisely. And I also hope that by leading by example, I can teach my children how to use money wisely, too.
Over the last year or two, I have begun breaking down my long term goals into more doable chunks and shorter term goals. This has really helped me overcome a tendency to build mountains out of mole hills and procrastinate. Instead of staying vague, I have forced myself to take my goal and really break it down into doable, shorter term steps.
A useful book that I recommend that describes this idea is Stick with It: The Science of Lasting Changes, by Sean Young. I like how this book logically breaks goal setting down into 3 levels: Steps (small tasks, taking 2 days or less to complete); Goals (short term goals, which take about a week to complete; and long term goals, which are comprised of the short term goals, and take up to about a month to complete); and Dreams (goals that take 3 months+ to complete).
Maddie’s alter ego exhibiting her power pose – Set goals, perform, and win!
One example is my current financial goal to payoff my student loans. This has seemed like a very challenging and sometimes insurmountable dream for the last 4+ years. One helpful tactic for me has been to break down this vague and huge goal (“I want to payoff my student loans as soon as possible”) into something more concrete and specific. For example, I set goals to reach certain number milestones each month, each 6 month period, and each 12 month period. I focus on the present (e.g. the present week or present month), estimating my budget of spending and income, and then calculate the extra money I can send toward my student loan. And then, I analyze my progress at the end of each month and the end of each year.
Another example is setting my goal to run a marathon. Rather than getting too overwhelmed and giving up due to inexperience, I read several blogs and books to help me. I chose a marathon training plan, and wrote down the workouts each week on my calendar (doing this really helps me – I hate to leave something on my calendar undone). And then, rather than continuously seeing the 26.2 miles and getting too overwhelmed, I tried to focus my attention on what was before me: each month, each week, each day, each workout, and each step/stride.
By breaking down a huge 26.2 mile distance into doable chunks (e.g. each workout with a set distance and time goal), I was able to minimize the overwhelm, and instead slowly chip away at my goal. I was most importantly able to feel a sense of accomplishment with each of my small goals – that is, completing each of my daily workouts. Then, on my race day, I was able to smoothly and confidently meet my long term goal of finishing the long race. I had plenty of practice in hitting my daily and weekly goals, and thus, race day, though challenging, did not seem so foreign and daunting. In other words, I felt read and prepared.
Take Luca’s example – slide through life smoothly, with small, doable goals in mind.
Even in planning out my week each week, I attempt to set 2-3 big overarching goals, both in my work/career and in my personal life. Then, I strategize how to really, concretely, make this happen, e.g. carving out 30 minutes of time on Monday for my goal of reading, or setting aside 20 minutes of time on Friday to exercise. Instead of rolling through life, letting my life’s responsibilities control me, I feel a sense of focus, having been able to set small doable goals for the week, day by day. There are 168 hours in each week, 24 hours in each day. And unfortunately, time is a precious finite resource. It cannot be brought back once it is gone. I think goal setting in this logical, step-wise way, i.e. breaking big things down into smaller doable goals, has helped me better manage my time and actually finish more of the tasks I set out to do.
