078 - Travis Hornsby

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0 - 37 Jonathan Mendonsa Welcome to the choose FI radio podcast. We view the concept of financial independence as a life optimization strategy that helps you crush the game using a mixture of conventional and unconventional methods. My name is Jonathan Mendonsa a pharmacist pursuing financial independence and my cohost name is Brad Barrett a CPA turned entrepreneur who reached financial independence through diligent savings and online business ventures. We host a twice a week show on Mondays and Fridays. It focuses on Living Below Your Means creating multiple income streams straightforward investment strategies tax optimization hacks and travel rewards. This Is What Winning Looks Like. Welcome to the show.
savings, tax, travelrewards
37 - 82 Speaker Your listening to ChooseFI radio the blueprint for financial independence lives here if you're looking to unlock the secrets to financial independence and early retirement your in the right place. Stay tuned and join a community of like minded people who are getting off and taking control of their lives in the pursuit of financial independence. ChooseFI you're home for financial independence online.
82 - 119 Jonathan Mendonsa Hey guys. Welcome to the show. You're speaking with Travis Hornsby from student loan planner dot com today. This is an episode that honestly if I had had this 10 years ago 13 years ago 14 years ago I would probably be several hundred thousand dollars richer at this point. That's how important this particular conversation is we're going to be talking about what does the individual do when they have two hundred three hundred five hundred thousand dollars of student loan debt. And we're going to dig even deeper into this idea of how to prevent going there in the first place. It's a fascinating conversation and to help me with this I have my cohost Brad here with me today. How are you doing buddy.
college-loans, debt
119 - 161 Brad Barrett I'm doing quite well. JONATHAN Yeah this should be a really solid episode I've been looking forward to this for a while. We had physician on fire actually recommended Travis to us and said he's a really smart guy. He's got an amazing story you need to get him on. So those are certainly big words from physician on fire. And we looked into Travis's story and it really is remarkable. He had a mini retirement. At 25 he worked for Vanguard. He helps people save hundreds of thousands of dollars on student loans. He just this story has it all. And I mean frankly Jonathan and I were trying to figure out how we put this into one episode this could be three episodes easily. So this should be jampacked with information. So good stuff all around. And with that Travis. Welcome to the show.
college-loans
161 - 162 Travis Hornsby Great to be here.
162 - 187 Jonathan Mendonsa Travis when I think of your story I think of someone that totally failed at retirement. You know as I was look learning more and more about you in kind of your past your history and what you documented. This is someone that definitively said hey I am 25 years old and I am retired. And as it turns out you busier than ever with multiple projects. I'd love to hear this the origin story of this and what happened.
187 - 283 Travis Hornsby Yeah well I wrote a book about it and I'm going to regret writing this book probably. But I called it twenty five is the new 65 with the idea being that I've found Mr. Money Mustache sitting in my cubicle in 2013 at Vanguard. And it was you know good job like definitely a good job for somebody that wanted to live a traditional lifestyle but man just a corporate environment was not for me. And I was sitting there feeling like you know maybe I made some big mistake or maybe there was something wrong with me. Why in the world was I not super excited to jump out of bed and go to work. And then I discovered those ideas around financial independence that decided I had to do something about this. So I decided to save about 65 percent of my income. I lived in unfinished basements. I lived in a house with five guys one bathroom. I drove a really old car never really bought my lunch except for one offs and everything and I just tried to maximize my savings rates and at the point where I was 25 during that 2012 2013 period the stock market had an incredible bull run. Right. So there was one year where I saved over a hundred percent of my salary because S&P 500 went up like 35 percent. And you know I'd say 65 or something. Something like that. And I remember having a percentage of what I needed to achieve F.I. And my thought was I don't feel fulfilled and I'm not really living life right now. Why would I waste 100 percent FI mr mustaches making all this money on his blog. And he's just having fun. So maybe something like that will happen to me. Maybe I should just take the risk.
savings, stocks
283 - 295 Jonathan Mendonsa And what stands out is that you are using the language that we talk about now in terms of lean FI you are incorporating that into your own life and just saying straight this is good enough. I'm just retired and I'll figure it out.
295 - 368 Travis Hornsby Yeah exactly. So I had the idea I just decided I was going to write a book about it. So I was having to wake up at like 5:00a.m. as I was living in downtown to kind of be where the action was. And I just wrote this whole I call it more like a pamphlet you know going back and forth the work. And it was it was. It was the anger. You know I was just kind of mad at the world and somebody said something recently like if you are not super happy before F.I. you're going to have that same attitude after FI and so you have to make sure that you know you have just a positive attitude about everything. But what was interesting is when I finally had a goal by what I was doing I felt so fulfilled and I was I started to so great at my job. It was kind of interesting. Like before I was just kind of wallowing in self-pity honestly. And I wasn't performing at the level I should have been. And then finally when I decide you know what I actually picked the date I was like I'm going to quit my job on this date. I just started blowing it out of the park. And then people started saying wow like you're doing so amazing and you know. And the funny thing is is like I wasn't even doing all the typical corporate things like showing up super early to work and working really long hours like I was just just crushing yet because I had a purpose behind the way I was working.
368 - 398 Jonathan Mendonsa Travis this is fascinating because you know many people that are hearing this are thinking this is the story you got your dream job at Vanguard. You know you hear about us rave over and over again that VTSAX right. And it's we sometimes get accused of being a little bit pigeonholed on particular idea but you've already got the job at Vanguard and you're finding yourself in your words just uninspired. I think that's remarkable. And it's also interesting to see that getting the perfect job isn't always the answer. Sometimes it's about finding fulfillment.
indexfunds
398 - 445 Travis Hornsby Exactly. And you know at the end of the day they're an outstanding company and I love the people that I worked with there. And there are some extremely talented people that are serving shareholders and making us all richer. But it's still a corporation. So regardless of you know if you're working at your dream job wherever you think it might be there are certain kinds of employers and a company that has to be very careful with what they let people do with their portfolios and what kind of corporate culture they allow so they don't have any people that are kind of like a London Whale kind of a person. You know what I mean. So the corporate culture is very you know it's very conservative in it and it's you know a big company. I think that I would have had the exact same experience if I'd worked for another great company that happened to be really large. So it wasn't at all a reflection on them. It was just a reflection on just me and my personality.
445 - 475 Brad Barrett Hey Travis I have a couple of questions based on some of the things you said in the last five minutes. I'm just fascinated by the story. So you said something to the effect of I decided to save 65 percent and I think that was basically as you found mr. Money Mustache. I'm curious what your financial life looked like immediately prior to that. What were you doing. What was your savings rate like was this that kind of an aha moment that you went from minimal savings rate up to 65. Or were you always a saver.
savings
475 - 603 Travis Hornsby Well I think that I have to take it back a little ways to make the story make sense. I grew up with my grandfather was kind of my idol and he grew up in the middle of the great depression and had his farm repossessed by the bank because his family established a principle and they got paid with IOUs. And so the banquet and accept it. So they foreclosed on the farm. So he was extremely frugal drove like 20 year old cars like went up in the attic to flush his own air conditioning just very very amazing man and he kind of instilled those values in me. And so I've always been extremely frugal because I had a very close relationship. with My granddad wanted to be just like him. Right. So my dad's a teacher and my mom as a nurse and when I was growing up my mom had some health complications and didn't work. And so when I was going to college I had to do it on my own. I kind of knew that because I had a couple of brothers too and if I wanted to go to college you know a good one then then I needed to go on scholarship. So what I did is I actually formed all of my college search around the idea. Can I go for free. That was basically the idea. I heard that Harvard at the time had some sort of program that if your family made less than a certain amount of money then you could go for free. And a lot of these other sort of schools have these top scholarship programs that you can get and they cover all everything. And so I applied to all these different ones and got in everywhere except got you know waitlisted at Harvard dagum it but I did end up getting the top scholarship at my state's flagship university and got some other scholarships to go to these other places. But it was kind of funny because I remember like one of them was Vanderbilt and they gave me this big fancy package and it was like eighty thousand dollars scholarship. I was like wow that's so much money you know. And then I looked at the financial aid package and I noticed it was like forty five thousand a year minus 20000 equals 25 and I was like it's still twenty five thousand a year, you know. So I just decided to go to this State University. And that really kind of is what set me up for being able to even try to retire at 25.
college, families, relationships, scholarship, teacher
603 - 637 Brad Barrett Wow that's fascinating. So I want to hear about the scholarship that you received and you're at the flagship university in your state. That sounds fascinating to me. How as a 17 year old kid did you have the knowledge and the wherewithal to to make that decision to turn down these much more prestigious schools like I'm sure there's some type of societal pressure to make you go that right. Like that's just the way it works. Oh I got into Dartmouth or brown or wherever. Like it's hard to turn that down and go to the state school. Did that ever cross your mind.
scholarship
637 - 699 Travis Hornsby I just got extremely lucky honestly because I remember some of the admissions officers visited our school and they were making jokes with us and talking about the Superbad was like the hot new movie at the time. And they were just making jokes about that movie and shown us all these beautiful pictures of their campus and the scholarship that I got paid for four international trips abroad during school and room and board and tuition and so that was just a really cooler experience so we got to go to like South Africa and Mexico and the Middle East in different places. So luckily that scholarship was cool enough that as a starry eyed 17 year old kid that would totally be a sucker for cool that drew me in that way but I'm so grateful that I did because of making that decision I ended up getting paid to go to school because of scholarships basically stacked on top of each other. So I ended up graduating university instead of having a bunch of student loans I had maybe 40 to 50000 of net worth at that point at 22.
college-loans, networth, scholarship
699 - 768 Jonathan Mendonsa I'm convinced that if you are in my cohort of friends if you are one of the five people that I spent more time with at that same point in time as a starry eyed 17 year old that I could have been in a similar position yet in my senior class in high school. I literally found out what the word Google was. That was the first time I'd heard it was an English class senior year of high school and I honestly was not aware that there even was a list of the top 75 schools in the country. What the process would be to get into those schools. I think my options were Community College the expensive state school or the less expensive state school. That was pretty much that was my framework that I was working from. And I say that not with any sort of you know bitterness or anything else other than you clearly latched onto the fact that there was a second dimension to this. And if you knew how the game worked then you could you could win. And I'd love to slow down just a little bit and extract some actionable tips for our audience. That's listen to this saying yes that's me. I relate to what Jonathan just said what the heck am I doing. I have two kids that are going to be applying to college in the next couple of years. Where do I start.
college
768 - 835 Travis Hornsby I think you've got to instill a sense of ownership in them. That's one thing that my parents did really really well the best most productive points of my life have been when I've had a sense of desperation. That's when I've achieved the most. So when I was in high school I joke with people like my golden years class. I had no choice. Like if I wanted to go to a good school and not be a financial burden my parents so that my brothers could go to college. I had to succeed. And so I just worked like crazy. I took all these extra classes online to try to boost my GPA because each school got to nominate one person for the scholarship that I wanted. I knew that if I didn't have this list of credentials I wasn't going to get chosen for people out there who have kids they're like hey I really want them to apply for scholarships make sure that they know that you're not giving them a blank check and encourage them to find the college that they like and tell them that they're going to have to pay for it and then maybe take that promise back later. But scare them enough to make them think that they're going to be responsible for it because then they're going to look into all kinds of options that's going to give them ownership over their education and I think they'll value it more.
college, scholarship
835 - 861 Brad Barrett Travis I'm curious if you looked into scholarships at other universities who were subsequently in your life as the in the student loan world. Have you encountered other scholarships like this. Is this just like a one off thing at your particular state university or is this something that's fairly common across state universities and are there are there private universities that give full scholarships as well.
college-loans, scholarship
861 - 962 Travis Hornsby Oh yeah. This is very common. Now you they're very difficult to get in some cases but sometimes not so much. So for example when I was applying to different places I randomly found you know the University of Alabama right everybody knows that's a football school but they were really trying to boost their academic profile because they had a lot of wealthy donors that were trying to improve the economic side of the school and they were giving out room board and tuition to anybody who could claim that they were a National Merit semifinalist. You know so like one test, if you got a good enough score. Randomly gets you a full ride scholarship that a top 100 university in the country. Right. So there was other schools that I applied to. They happened to have these special scholarships that paid for everything I found like six or seven or eight. They're usually housed in the honors college. If the college has an Honors College and they're usually funded by the endowments but a lot of people just don't know these things exist. And you're a parent of like freshmen kids in high school. You have to have what you would expect you'd have to have to get one of these scholarships. you have to have good grades. You have to do well on this National Merit testing. There's kind of a bidding war. When I was around for students for certain academic credentials it's kind of like it they did it for law schools too for people that apply to law schools. They basically will give you full tuition or a partial tuition scholarship based off of how much your credentials help lift up the average scores in the class to make their college look better. So you know maybe you're not a straight-A student maybe or an A-B student while you can still go to probably a pretty decent college and get a really solid scholarship where you're one of those people that's pulling up the average rather than reducing it.
college, scholarship
962 - 975 Brad Barrett Travis Are there any websites or resources that pool this information or like you just literally have to hunt and peck as far as finding individual like the University of Alabama is offering scholarships this year. You know like where do you find that information.
scholarship
975 - 1035 Travis Hornsby Honestly I think that you want to have a frank conversation with your school's guidance counselor and just tell them pretend that I'm broke and have to pay my way through school. What should I do. What should I look for. A lot of times the typical conversation that they have is the parents drive their leased car to the high school office and they meet with the guidance counselor and they have this giant mortgage. They're like OK how are we going to finance our way through Junior's education. Right. That's the typical American experience versus mine was. So my parents have a little bit they contributed to a 529 or prepaid college plan but I mostly have to carry this on my own. What are my options. And so our conversation was here's ROTC programs that you could apply to. here Are some different major college scholarship programs that have been notified about. So I think the main thing is you have to ask. You have to make it known that that's what you want. You know if you are seeking to go to the most prestigious school that your grades can get you into you're not going to get a scholarship or you're probably going to be paying full freight if your family has a certain income level.
529, college, scholarship
1035 - 1138 Brad Barrett Yeah. Travis this is this is hitting home for me personally and that this is not something I talk about all that often. Certainly on the podcast when I was 17 I got into a couple of the top 10 or so schools in the country and I went to a very competitive high school and you know that was just it was the Ivy League. You know the elite elite schools. And I was just so blinded by that. And I think if I had this information from you if I had kind of the contrarian thinking that comes from being in the FI community I would have made a different choice. You know it sounds weird to say like oh I could have gotten a full merit scholarship but probably 90 plus percent of the universities in America. That's probably not that far off but I was just so blinded by this prestige and it's just such a missed opportunity even when your parents are paying for it. Right. Like and my parents didn't pay for all of my college but they they made a significant contribution and I didn't come out with a lot of loans and I thought that was just good enough but to think of all the money that I spent out-of-pocket nonetheless that could have all went to my net worth and I could have come out of college with a significant net worth like you did. And I just want to say it it's just such a brilliant brilliant way of thinking. And yeah I mean this is a huge missed opportunity in my own life and I hope there are people out there that are understanding Fi is about thinking differently. You don't need to go to the best school in the country like try to come out without student loans. It can just make a world of difference in your life. And then obviously student loans are something that that you wound up making a career out of. And we'll talk about that later certainly but it's just so interesting how you were thinking about this from the time you were 17 essentially.
career, college, college-loans, networth, scholarship
1138 - 1165 Travis Hornsby Yeah and. There's some great academic research that says that for the Ivy League schools if you apply to an Ivy League school they did the study where they found that people that had applied did exactly the same in life from a success perspective as people that actually went. So it wasn't that you went to these Ivy League schools is that you had the ambition and the drive to apply in the first place. So that was really fascinating that the results of people's success rates were very similar regardless of where they went.
1165 - 1189 Jonathan Mendonsa Yeah that is interesting I guess other than prestige and maybe connections right like you're not learning that much more at Brown than you are at the flagship state university especially if you're in an honors program or something like that or just just any program frankly it's what you get out of it. It's what you put into it is what you get out of it. So yeah that that lines up with my understanding of the world pretty significantly. So that's that's cool to hear.
1189 - 1248 Travis Hornsby Yeah there's some pretty cool opportunities that I have. When I was at this big state university like you know there's still 50000 people there and people want to important people want to visit all the time because of maybe political reasons or just geographic reasons or they want to get their message out to a big audience right. So I worked for as an assistant to a U.S. senator. I drove around like the head of the Harvard Kennedy School of Government because they needed like a student driver for him while he was on campus. I got to go to these private meetings with the different sort of institutes on campus like one of them was with Sandra Day O'Connor. They had Nicholas Kristoff around so I had all of this amazing face time and opportunities to talk with these world impacting people that I maybe wouldn't have even had if I was just another average person at an Ivy League campus. So I think that people are underestimating the value of an education where the school is massive. They have a lot of resources and they're always hosting all these interesting people. All you have to do is kind of raise your hand and say Hey how about me.
1248 - 1313 Jonathan Mendonsa It's fascinating. There's so many just actionable tips buried in that. And I love that we will take a few minutes and carve that out. I have a feeling that as we gets more sophisticated at this messaging we'll be able to take what you just talked about kind of in passing and dial into what part of this can be replicated for anybody or almost create a game plan for people in our community that are looking to crush this thing because there's so many different ways of doing it as long as you know what tools are available to you and I'm constantly astounded at my own personal at the time. inability to take control of the situation. I almost felt overwhelmed by the options or or in my mind my inability to have any sort of power on the outcome. And I just kind of took the path of least resistance in listening to you. It's the exact opposite of that it's very inspiring and I hope that more people will benefit just by being able to model some of the behaviors that you just described. Let's not stop here because there's so much more to cover. Let's talk about how the scholarships actually set you up to be able to definitively say I'm retired at 25 and then admit now that you failed at retirement.
scholarship
1313 - 1417 Travis Hornsby So I left school right with this 40 50000 net worth compared to the average college student. Maybe I was only close to 100 thousand dollars ahead. Right which is a significant head start. But it's not insurmountable. So living extremely frugally I was able to save a lot of money and then by age 25. You know I had hit the point where I was maybe like 60 percent F.I. on a 20000 dollar a year spending I'm out. So I was convinced after reading all these different blogs that 20 k was enough right for me. I guess I wasn't thinking about a wife and kids but I was convinced that 20 k was enough. And so I decided to just walk away at that point where I hit that level. And I think that more people in the community this idea of lean FI Like if you're not happy at your job but you've made significant financial progress then I think that you will make more money if you quit accidentally than you ever could imagine that might be a scary statement. The scary thing for people to think about but I'm living proof of that. So I quit my job as a bond trader which is a pretty lucrative job and basically I buy these tickets to Europe. Wow air was like 99 bucks. I just had a trigger and I was like I'm buying this ticket. I'm leaving and June 2015 and I'm done. I'm going to do it. And so I finally had a date because I had airline ticket. Right. Never mind that that's a pretty easy ticket to just eat if you change your mind. But for a mind that was it that was the date. And so then quit my job buy a one way plane ticket to Europe. And I just went and I've traveled all over Scandinavia and Central Europe and then I ended up in Poland.
networth, travel
1417 - 1418 Jonathan Mendonsa What did you do in Poland.
1418 - 1480 Travis Hornsby I took a. I took a four dollar bus trip with leather seats hostesses and they were giving us free drinks with the latest and electronic movie entertainment. It was obscene the idea of living on twenty thousand a year in theU.S. is a little little intimidating but going to say some of the places that I went my air travel you could easily live off of maybe eight thousand dollars a year and live probably like a middle class person. So I just traveled to Warsaw saw the museum of the Jewish people and went to Krakow saw the old city got to actually be very emotional moment and Auschwitz concentration camp and get to you know learn about that history. And then there were some salt mines there they're just amazing. And then in Ukraine I got to go there and everybody's like Oh my gosh you're in the Ukraine that's so dangerous. But I just stayed in the western half of the country away from where the fighting was. I literally lived on five dollars a day and I ate like a king. Beer was like ten cents. The hostel was like a few bucks and the Wi-Fi was better than back home.
1480 - 1501 Jonathan Mendonsa All right. So let's dive into your numbers if you don't mind. Pull this out because I'll be honest with you. This is yet again another example of how you were inspired in your early 20s and I had no idea that people were even doing this so you say basically I'm willing to live on 20 K a year. How much of you actually have saved when you decided to pull the trigger on just exiting the workforce entirely.
1501 - 1503 Travis Hornsby Probably about 230.
1503 - 1517 Jonathan Mendonsa So two hundred and thirty thousand dollars. And you say all right I can do this and it sounds like you're willing to do this for two reasons. One you're willing to be flexible. And two you can always go back to work. Was that your general idea.
1517 - 1560 Travis Hornsby Yeah I mean based off of the 20 k year I had at least 10 years absent a market crash where I could do anything in my mind. I passed all of the levels of the Chartered Financial Analyst exam. I was a bond trader. Somebody told me that I could go to Wall Street and get a six figure job tomorrow if I really wanted it. So I thought Well shoot you know if that's what I could do. If if that's the opportunity that I'm leaving behind that I could easily pick back up again you know and pick up a 60 70 80 k a year job in my sleep. Why should I take this risk. Like why shouldn't I see what I'm capable of and travel the world and do all these things people never do and always say that they wish they had and I didn't want to live with regret. So I said Let's let's just do it let's go for it.
travel
1560 - 1599 Brad Barrett So Travis was this a play to just go out and explore the world. Was there some type of business thought that you were going to do something entrepreneurial. I'm just trying to understand your thought process. You know you just said like hey I've got 230 K my life has 20000 hours a year at most probably half of that if I'm in Europe. Esmee 10 to 20 years. Were you planning on just drawing this down or were you taking like the principles of the financial independence community and looking at withdrawal rates and hey if I pull out 4 percent like it'll mean this was there that level of phoner just talk me through where you intended to go at 25 for like the next handful of years.
1599 - 1705 Travis Hornsby To be honest the experience of working in a job that I wasn't passionate about for three years sounds really stupid to say this but it was a traumatic one for me because I thought that this was my dream job I thought that I was tricked you know going to be CEO of the company one day. That was my path. That was my calling. And then I found out the exact opposite that I wasn't a good fit for a corporate environment that I maybe wasn't successful in the traditional sense of the word you know moving up the corporate ladder. The thought process of my mind was honestly just I just want to live and I can do this for a long period of time. FI bloggers talk a lot about how often times you'll make money accidentally. So let's see if I can make money accidentally. And I did have a personal finance blog called millenial mohla and I just kind of wrote on that just kind of whatever I was thinking just kind of chronicle my thought process and I didn't really treat it as a business. I just try to treat it as something for fun. And then I decided I'd write a couple of books because I had something to say so I thought why not. And the thing that I did try to do with withdrawal rates is I said OK 20 year you know I got 10 years. Let me try to live on 60 or 70 percent of that instead. So over in Europe over maybe about four months I spent about 3000 bucks. Because the WoW Air flight was dirt cheap and then I was living in five to ten dollar a night hostel's which were really really good quality in eastern and central Europe. I was going to the grocery store making my own meals and my withdrawal rate was like unbelievably low. And I was having the time of my life because you can do some amazing things for dirt cheap in parts of the world. And that's something that people that are thinking in terms of U.S. prices really should realize if they really can't stand it anymore and they just want to take a chance leave their jobs.
blogger
1705 - 1757 Brad Barrett Hey Travis I just have to jump in with one question has been on my mind since you mentioned before about the traumatic experience and then once you said this The how you were so free at work. People remarked on like how you were crushing it and you know you were a different person. Reminds me of the movie Office Space I don't know if she's seen it but the main character Peter. He just basically decides to change everything right. And they look at him as if he's a superstar like headed for upper management. Like I'm curious in a half joking but not so much. Are there takeaways for people in corporate America who might dislike their job can actually change in this way. I know it sounds silly to pattern it off a movie but but you do this in real life and you saw how people reacted differently to you and I'm curious if you've ever reflected on that and taken any kind of actionable tips out of it.
1757 - 1844 Travis Hornsby I think it makes a lot of sense. I think that the whole point of being F.I. is to be able to have that F you money right. I mean most people in America are chained to their jobs. They've got big mortgages they maybe have the student loan payments they've got a car payment they've got a little bit of credit card debt they barely have one or two thousand dollars in the bank. And when you're that financially vulnerable the employer doesn't have to please you. You have to please the employer if you're instead dealing from a position of strength where your job is optional you could completely transform your life by making your job the way you want it to be. So that was the mindset that I had. It was a total shift of mindset where I didn't have to be there anymore. I had a date where I wasn't going to be at the office anymore. And it was just a different mindset. I could work the way I wanted to and not have to worry about impressing somebody by showing up to work at 7a.m. when we had to be in our seats by 730. I mean I didn't have to worry about doing those ridiculous projects that everybody wants us to do because I needed to impress somebody two or three levels above me. I didn't have to care about that because I wasn't intending on having a long term career or anything. So weirdly people respected me for that. They're like wow. You don't do this stuff that we think is kind of ridiculous. That's really impressive. You know it's almost like people want you to fit into that corporate role but that way you don't and you're actually still contributing to the team and doing great work obviously then they respect that and they want a piece of that. It's just a visceral human desire.
Jonathan_Catchphrases, career, debt, mindset
1844 - 1868 Brad Barrett That's amazing. I love that. I'm curious was it setting the date that really was this this paradigm shift for you. Or did it occur like as with you we affectionately call it a F you money as you were saving money and you had been saving significantly even during the time where you weren't terribly happy. Did any power accrue to you there or was it really like everything shifted. Once I set the date.
Jonathan_Catchphrases, savings
1868 - 1969 Travis Hornsby That was the date before that before I bought the plane ticket. Everything was theoretical when I made that commitment to myself that I was going to quit my job. It was terrifying. I was on an easy path to a really stable solid six figure job without having gone to grad school or anything like that. And that's not something that everybody in the world can say or right. So a lot of people thought I was nuts. A lot of people respected me. There was very much mixed emotions. Some of the people when I quit came over to me and they're like you know hey how do I how do we get your job. You know you must have you know something you're not telling us about you know how much you're getting paid or something like that. And it was just amazing to see that everybody that was so you know caught up in the rat race they were just so interested in that they were so excited by the idea of potentially doing it themselves. But for whatever reason personal choices life circumstances they didn't feel comfortable taking that step. So I think that for a lot of your community. I bet there's a lot of people out there right now in choose FI that are working towards financial independence that are part of the way they are. They're really in a job it's not fulfilling to them. Maybe they've jumped jobs a couple times and they still haven't found that fulfilling job. I would encourage you to believe in yourself and come up with a service or a product that you can sell and give yourself a year or two buffer where you're not responsible for achieving that level of success. That was key in my journey as I did not have a plan where I immediately had to start making money doing something else because I had this financial buffer and because I gave myself that freedom I was able to do something organically not have to take VC money or anything like that and then now I'm actually making more money than when I was a bond trader which I never planned on doing.
1969 - 2072 Jonathan Mendonsa This is really remarkable. I want to highlight the contrast here I think it's important that it'll help us as we transition. You graduated school with no debt and even more than that. Because my understanding is because your scholarship paid in excess of what you needed to live you actually graduated with a positive net worth and then you did not have a six figure income but you had a good maybe above the median average you saved a significant period and with the tailwind of the market behind you you were able to get your net worth all the way up to two hundred thirty thousand dollars so at the age of 25 you basically have a two hundred thirty thousand dollar net worth and you make this lifestyle design choice which is incredible. And what's really fascinating about this is in contrast the people that you're serving which is frankly it's me you know I graduated school and I came out with negative six figures of student loan debt. I have a massive massive uphill battle to just get back to broke and the population that you're serving is in total contrast to the lifestyle choice that you made. What's fascinating about that is that influencers that are putting out information writing good content coming up with different podcasts. A lot of it tends to be inherently selfish. It tends to be information that serves you where you are. It's why up to this point we haven't seen a lot of information about second generation fire because a lot of the early adopters of these concepts that were writing did not have kids that were needing that information at that point in time. But you have made the opposite choice. My question is what we're about to dive into all of the ideas involving how to help someone that six figures in student loan debt. None of the information that we've covered up to this point helps that person. What made you decide to dedicate your life to helping this particular segment of the population.
2ndgenfi, college-loans, debt, networth, scholarship
2072 - 2202 Travis Hornsby It was my wife. She came to me when we were starting to date more seriously and we had a conversation and she's like by the way I have six figures in med school debt. And I said debt what's that. She showed me her login and she showed me the balance and my jaw dropped a little bit and I was just thinking oh my gosh you know this doesn't change how I feel about you but I want to try to come up with a plan of how we pay this back. So because I was a bond trader I was really good with Excel and I decided I was going to build a model for her to help her figure out all the different routes that she had to pay back. I was thinking it was pretty straightforward you know just refinance pay back as quickly as possible. But then I discovered there was all these different payment programs that you could pay based on your income and you could go for loan forgiveness and you had all these choices and it just seemed so complicated. And we finally settled on. For us we felt like the right path was just go ahead and pay it back as fast as possible with a five year repayment plan. But I remember it was just very challenging. And then she had a friend who is a veterinarian who had 380000 of student loan debt and she was going to have a job starting off making about 80000 thousand a year and she just didn't know what to do. She was just paralyzed. She got her statement. She's just so scared. My wife Christine shoes she told me hey Travis you know you should talk to our friend and see if she'll pay you for making a plan to pay off her 380000 of student loan debt. And I said pay me like you know I don't do side hustles like that. That's kind of odd but I'll try it I'll ask her see what she thinks and she was more than happy to do that. So then I had to take that spreadsheet that I had built for just my then girlfriend now wife and I had to adapt it so that it kind of fit all these different circumstances. And so I did this a few times for friends and then I shared the spreadsheet. Got it shared on business insider and then it just randomly took off and got over 300000 views. I had all these strangers that were just emailing me that wanted me to use the spreadsheet to explain to them what it meant for their student debt and eventually that turned into a business where now we've consulted on over 230 million of student loans which is more than anybody else in the country I think.
college-loans, debt
2202 - 2236 Brad Barrett Travis how much research do you have to do to create that excel sheet at the beginning like how did you I guess get enough information on on every different type of loan repayment option to to feel comfortable selling it as a service and I know you didn't intend to do at the beginning certainly but maybe this was like the way my my own mind works. I would need to be pretty darn sure that like I was giving the right advice and this wasn't something that was a career for you. Like how much research did you do into it. Do you have other resources that you lean on that you recommend people look into. Talk us through how that works.
career
2236 - 2521 Travis Hornsby To make the initial beta version. I spent weeks trying to make something that I felt comfortable sharing and I had to learn everything to make sure the formulas and the math made sense because I can handle the programming aspect but I had to actually understand how the rules interacted and you know oftentimes I would make a mistake. I did go on the spreadsheet and correct it. And initially I built this the very beginning version of the spreadsheet about when I quit my job. So I didn't actually have any intention of making this a real legit full time business. And so I was just helping close friends and they were in deep trouble anyway so they were just grateful for any help at all. And so it wasn't super super formal. Basically over the year I was traveling. I did a lot of blogging you know was it really making any money off of that it was doing it for fun. And then I had to make a decision with my relationship. So my wife was moving to a new job in a new city and she wanted me to come with her. And I said Well you know what I got a I got to do this because I love her so I moved to this new city. And then I didn't have anything to do because I wasn't traveling to go to a new city on the road every three or four days. So then I thought Huh you know what am I going to do with my time. So I spent some time writing a book and doing more blogging. Eventually when things got even more serious and I decided to have a sit down with my wife's father to ask for his permission to marry her. I got an answer. I was not expecting no. I thought oh crap this was different than the whole Martnez and you know that you're retired at 25. Yeah and that's that's kind of what I brought up too. I was like well I understand your concerns but your daughter has negative six figure net worth. I have a positive six figure net worth and I know it went over well. Yeah I mean I put in I think a little bit more diplomatically but I don't remember add to it I tried to say oh hey like I've got all these projects that I'm working on and you know one of them is probably eventually going to make money and doing some side hustles making a little bit of money from this like part time still on the angle. That's decent. Right. And they're like Yeah but we have no confidence right now that you could sacrifice if something happened to her. She couldn't work and she needed to take a break or have kids or something that you could support the family financially and we want to see that before we give our blessing. Then my thought was Oh crap I got to be successful. So going back to that theme about desperation is where I've been the most successful my life. That's definitely true. At that point I decided this sort on thing is helping people enough and there's not enough good resources out there. I'm going to go ahead commit full time to working on this and if I'm not successful then I have to go get a dreaded corporate job. And so when you're thinking about like entrepreneurial success. This is why I think that lean Fi is something that really can make sense for a lot of people. My choices were you know in the local area that I was at inSt. Louis I could be successful running my own business or I could put on a suit and tie and go work get like Ebere Jones or Monsanto every day. I was just like shoot me in the head now. And so I had to be successful. Then I just decided well this is what worked. That first time I wrote an article about veterinarian's and I got a lot of clients out of it. So let me try to write an article like that. Write it for dentists and then I wrote another article about pharmacists and I just kind of kept writing articles like that and then I found out about Facebook ads because I accidentally spent 100 dollars on a Facebook ad and it just went viral. I just got super lucky. So then I said OK well let me spend some more money on Facebook ads because that seems to be getting me more people that want to pay me for my service and then gradually as my service got better and better I felt comfortable raising the price at the point where we're at. Now I can point and say that we say people on average projected 60000 dollars on their student loans because they make so many mistakes paying it back. And for those kinds of savings if you are really really good and you're the best. I think it's OK to raise your price as long as it's reasonable and transparent fair and everything. So I went through a couple of price increases now it's kind of cool because we've sort of created a lifestyle design where I can work as much or as little as I want so if I wanted to take on more work you know I could lower my price and open up my calendar some more. But what I decided to do instead was bring people on and train them and my process and have them have a lower price point and then I'll have a higher price point. So that's what was really neat about a business is if you create something that's really good then you can hire other people to run it for you and you can make profits while you're hanging out with your family or going out to the movies which is just the most insane thing that I never in my wildest dreams would have thought that I would be doing when I was working for a corporation trying to get my you know 4 percent retirement match and then go quit with an uncertain future.
blogger, college-loans, families, hustle, networth, relationships, savings, travel
2521 - 2592 Jonathan Mendonsa You know I think people have over time given us permission to do longer episodes because they realize that there is so much to cover and to try to cut something short is robbing it's robbing you. It's robbing us and it's robbing them and that's why we're going to take the time to explore further what you actually discovered and I'm incredibly excited about where this conversation goes. And let's set the stage that I wish that I had seen your document on pharmacists in fact as we go through how to pay off your student loans and the most advantage ways of doing it. I'm actually a little bit nervous about what you're going to say because I know what my balance was when I graduated and I know what I had paid by the time it was all said and done. I don't say this from a place of regret. Very happy with my decision. Looking back but I probably did not do it in the most optimized way. And there are people that honestly are looking. In fact it's like standing on a scale after Thanksgiving right. You're actually afraid to see what your balance is doing. He's been paying on it for five years but you've just been paying the minimum because it was affordable and it's a little bit scary to see where your balance is now. So I think this is like the perfect place for us to actually talk a little bit about some of the tools that are in your toolbag. Maybe you could just open it up where do we start.
college-loans
2592 - 2615 Travis Hornsby Yeah. So I mean the first thing I'd say for your audience is if you have less than 100000 of student debt it actually is probably pretty straightforward. You probably can go ahead and just refinance the student debt to try to cut the interest rate and just try to pay back as fast as you possibly can. If you have more than 100000 of student loan debt that's where it gets really really interesting. So I'll give you a case study. It's actually a pharmacist Jonathan so you'll appreciate this.
college-loans, debt
2615 - 2616 Jonathan Mendonsa Thank you I appreciate it.
2616 - 2816 Travis Hornsby Yeah he was he was a friend of mine from from college and he just randomly reached out because he saw my article on pharmacists and he's like Hey dude you know I've got a lot of student data Pam like 2000 a month for it. So I'd love for you to just review what I'm doing and I can pay you and all that stuff. I was like cool. I analyzed the situation. So he was working at a community pharmacy and he was on something called the standard 10 year repayment plan. So he was on a path where he was going to pay off his whole about 200000 of student loans in 10 years. You know his balance is a little bit less because he was about three years into that and I told him well to hold up you know your pharmacy. Buy 501C3 which is a not for profit hospital. Do you know about the Public Service Loan Forgiveness program and he said the what. I said that will if you pay based off your income then you can have the balance of your loans forgiven tax free at the end of 10 years of service. He said No I haven't heard about that. So he ran some math and I looked at the pay as you earn in their revised pay as you earn programs for him and he dropped his payment from about 2000 a month to about six hundred a month. So for seven more years he only had to pay six hundred dollars a month. And under this program the balance was projected to be forgiven tax free. And also the program that he happened to be on those three years a standard tenure payments happened to count towards that program as well. So he was already three years into a 10 year loan forgiveness program. And he was paying 1400 dollars a month too much on his loans. And so the projected savings for him was six figures. Now you might say well that's not guaranteed savings if he didn't get the loans forgiven today. I get that. But the point is is that there was a loan forgiveness program that exists that probably will happen that he was eligible for. He didn't know it and he was paying over a thousand dollars a month too much that could have been going into retirement savings or building assets or going for F.I. And I see people like this all the time there's people that are paying two or 3000 a month in a four hundred thousand dollars to the loan balance and they're going to be paying their loans back for 20 or 25 years. That's like what you're going to pay that thing back over 20 or 25 years anyway you might as well see if you can do one of these private sector loan forgiveness strategies where you're paying a big tax bomb on the forgiven amount instead. To see if that saves you more money. So there's all kinds of strategies. Basically if you owe less than double your salary and you're not working at a not for profit or the government you should probably refinance. So that's pretty straightforward. On student loan planner there's a bunch of places you can click and get a cashback bonus cut your interest rate. That's that's a pretty straightforward path if you have what's called a debt to income ratio. Above 2 to 1 you owe more than double your salary. That's where it gets a little that more dicey. And if the math suggests it you can either go for a private sector loan forgiveness strategy which is 20 to 25 years at the end of that period. You have to pay a tax on the forgiven amount, or if you work at a for profit or public sector employer you only have to pay back your loans for 10 years and then the forgiven balance in that case is tax free. So people make all kinds of mistakes with those three different paths and because it's so complicated because the federal government does such a bad job at educating people on their options. That's how we're able to save people so much money if they over six figures.
college, college-loans, debt, savings, tax
2816 - 2863 Brad Barrett So Travis that makes sense to me. So if you have a 2 to 1 debt to income ratio like that that's when you should be starting to think about these these forgiveness programs so I guess my first question is are these programs you apply for now through the government like are they all government programs or are they guaranteed are you going to wake up 24 years from now and the law changed and all of a sudden you don't get your forgiveness. Are these considerations that people need to worry about and who can qualify like you're describing both the 523 and those types of organizations. But then you're also describing like regular traditional jobs when there are these forgiveness options as well which I wasn't aware of before now. Honestly is everyone eligible for programs or are there certain eligibility requirements so I know that was a ton of questions but hopefully that all made sense.
debt
2863 - 2927 Travis Hornsby They did. Yeah I mean basically there's two kinds of loan forgiveness think just a high level for a moment. The best kind which is this PSLF Public Service Loan Forgiveness program. And then there's every other kind. The best kind let's just focus on that for a second. You have to have direct federal loans to qualify for this. So your loans do have to be federal. They do have to be on the direct loan program for most people that means you took it out after 2010. So all you have to do is pay based off of your income for 10 years. So you pay about 10 percent of your discretionary income for 10 years. on one of these loan forgiveness income driven repayment programs. And then at the end of it the balance is projected to be forgiven. That's the best kind. Now there's been a lot of news and scary headlines out there about the elimination of this program. Maybe some people might have seen something like that. Every proposal that I've seen grandfathers everyone in that already has student loans because these programs are written into their promissory notes. So when you borrow for school right Jonathan you probably had to sign some sort of document that agreed to the loans terms and conditions. Remember that.
college-loans
2927 - 2928 Jonathan Mendonsa I do.
2928 - 3127 Travis Hornsby Yeah. So in that document if you go through it there's actually parts of it that include all these different repayment programs and these different forgiveness programs in that document. So discussing this with lawyers this is why they think that every proposal for repealing and replacing these different income driven and loan forgiveness programs that we've seen have all grandfathered in people who already have the debt outstanding because you agreed to this promissory note with specific terms and conditions. Now people who don't already have the debt haven't agreed to anything. And that's why the proposals to repeal a lot of these programs or change them affect people that are entering a graduate program starting in July 1st 2019. So if somebody is already in school they should be safe to use all these different strategies if somebody has already graduated. They should be safe to use all these strategies. But if you're thinking about going to grad school in the next couple of years you need to be very careful. So that's the answer I give in terms of the. Could you wake up in these loan forgiveness programs get appealed one thing another. Another point way to look at this is student loans are one point five trillion and if you compare that to mortgage debt it's about eight trillion in mortgage debt. So 1.5 trillion of student loans is a massive massive problem. If they made the student loan system for current borrowers signigicantly less friendly that would potentially create a financial crisis. So in some regard it might not be possible to make the loan programs that much worse for people who already have debt because of what you could do to the economy. So the best program that PSL program just to recap that's a 10 year Forgivenes program that the balance at the end of it is wiped away tax free. That's the best program right. That's the one that people qualify for. Only if they work full time at a government or not for profit employer. Now the programs that are available to literally everybody that has a job. That's just the standard loan forgiveness programs on the pay as you earn the revised pay as you earn and the income based repayment programs. that's available to anyone whether you're working at a Wall Street bank or you're unemployed and the way that works is you pay again 10 or 15 percent of your discretionary income. But you have to do it for 20 to 25 years instead of 10. And at the end of that period if you have a low income your balance is going to be pretty high. And then you have to pay taxes on that forgiven balance. So what I help people do is figure out how do you prepare for that tax bomb. How much do you have to save each month to be able to pay this tax bomb. And does doing that make more sense from a math perspective than paying the loans back. And if somebody has got that two to one debt to income ratio we're talking about like that veterinarian that had 80 thousand of income and 380000 of student debt that veterinarian can actually reach a point where they're going to be F.I. one day by maximizing their retirement accounts contributing a lot to their brokerage accounts and preparing for this tax bomb by going for a more of a 20 to 25 year loan forgiveness strategy even though they're not employed at a not for profit or public sector place. So very complex all kinds of strategies. The take home messages is that there's hope for people like you have members of your community that felt like hey this FI stuff sounds so exciting. Like I'd love to be able to save a lot of my income but I would be literally paying 70 percent of my income to my state loans for the next 10 years. That person can achieve F.I. and they maybe didn't think they could before.
brokeragechoice, college-loans, debt, tax
3127 - 3154 Jonathan Mendonsa So I would imagine that you have seen people that have five hundred thousand dollars plus in student loan debt. I mean that those sorts of numbers are out there especially when you start talking about veterinarians dentists and doctors. And I'm curious do you ever see people doing a consult with you and after they finish the consult they say well I just need to find a job at a different at a different facility. Does that do you see that. Does that ever end up being the end of the consulate.
college-loans, debt
3154 - 3234 Travis Hornsby I've had four clients with a million in student loans. Over a million. So yeah I've seen some pretty big balances. And yeah I had a client there that day that wanted to do a follow up consultations like oh that's interesting I wonder what she's going to say. It was pretty intense. She was a dentist and she was planning on buying into the practice that she was at wasn't very happy and kind of felt like she was in a rut in life. She had her mindset changed based off of what I suggested about potentially looking for the Indian tribal program has this really good dental repayment program. And so I suggested maybe she look into that. And so she told the person that she'd planned on buying into the practice with that she was having second thoughts. And the person blew up at her and she was so shocked and this is somebody that she trusted. And the relationship apparently was based off of her making the person money instead of a sort of a genuine friendship and then she wanted to tell me that she had quit her job. She had moved to the border of like northern like like right on the border of Canada. And her and her husband were building a cabin in the woods and she was doing dental medicine for this random Native American tribe and she is like I've never been happier. I never would've thought about this if I haven't talked to you. My life trajectory completely changed because of our conversation and I was like. Oh I hope this works out for you because I feel responsible.
college-loans, mindset, relationships
3234 - 3254 Jonathan Mendonsa One other question as you expand this out and it's not so much that I believe you're going to have an answer for this but let's say you have the teacher they got the Master's in Education at the expensive school there come out they have ninety thousand dollars in student loan debt and they're making forty thousand dollars a year. And unfortunately some of that is private loans. What does the consolate look like for that person.
college-loans, debt, teacher
3254 - 3353 Travis Hornsby That's a great question. So I've had people like that. I've also had someone kind of oddly like pilots and air traffic controllers and have a lot of debt and a lot of times they don't. Their programs don't qualify them for the standard like federal debts. So sometimes have a lot of private loan debt. That's kind of a an occupation a lot of people now. So what often happens is the ratio for that two to one and all depends on the ratio of federal debt to the income. So if somebody has got 200000 of loans and 100000 of it's federal in 100000 is private and they make 80000 thousand a year you have to take that hundred thousand of Federal on debt and divide that by the 80000 and then their their debt income ratio is below two to one. So even though that maybe if it had all been federal they would have been a good forgiveness candidate because they have you know a split in their debt. They're not good forgiveness candidate and maybe they need to actually refinance instead. So oftentimes for somebody who's got a big split like a very extreme split the conversation can often be more budget related. Like how do you want to approach this. Do you want to take 15 years to pay back the debt so you can maximize your 401k. Do you want to pay this back as fast as possible. If so this is how you're going to sell your vehicle by putting it up on Craigslist because I bought a whole lot of vehicles. Craigslist I know you can get rid of an underwater car and then maybe you need to move out of your house and downgrade your lifestyle there. So I actually have a CFP on staff who's an expert with you know budgeting and helping couples negotiate cutting back their spending. So if it's an extreme case then we can have them like work with the CFP who is just basically a financial coach and helps them goes through their line items and cuts back their spending so they can achieve their goals.
401k, debt
3353 - 3379 Jonathan Mendonsa So it sounds like the actionable tip here really depending on what side of this you're on because you have to work with where you are but when you're looking back going back to the earlier conversation all the flexibility is with the federal loans. I know there's that incentive for people to look at the privates because they're just easy it's low hanging fruit. It requires less paperwork you're going to get it. But from this perspective from the flexibility that all these tools allow for you all the flexibility is baked into the federal loans.
3379 - 3500 Travis Hornsby It absolutely is. And I would tell somebody to be really really sure before you refinance your loans there's a lot of companies out there that that's how they make their money. So they're kind of prone to giving refinancing suggestions when maybe that's not the right path for you. And you have to be very careful because once you refinance all those other options are off the table. And people oftentimes don't understand this. So I have had several clients who their parents have this mindset that they have to pay back their debt that's the only path that they have available. But in reality this person may be paying you know 35 or 40 percent of their income towards their student loans for a decade or more when in fact they could be paying maybe like seven or eight percent if you optimize their income by maxing retirement savings and things like that. So it's just a total mindset shift. The one thing I'd say to on the other end is I've also seen people that are very high income earning professionals that maybe they have 150 or 200000 or 250000 in student loans due to loans but maybe they have the nice problem of also making 250 or 300 thousand dollars. And I've seen people that want the flexibility of the federal government programs almost a little bit too much. And I've seen people pay back their loans at a 7 or even 8 percent interest rate because they like the idea of having these government protections. And I think that's a little bit too cautious. So there's definitely this point where here's a good rule of thumb look at the standard 10 year repayment amount for your loans. So you can actually log in and find this house. Like what would be the payment if had to pay these things back on on this ten year standard path. If you're not working for a not for profit or a government employer you know so that PSl programs off the table. So if you look at that number and that number would not be that big of a deal for you. That's a great indication that private refinancing is something that you need to look into. If you look at that number and you're like oh that's really hard. I do not think that I'd be able to comfortably pay that every month. And that's a great indication that you need to be very very cautious before you refinance because you can't take it back.
debt, mindset, savings
3500 - 3544 Brad Barrett So Travis it sounds like you really need this plan first. That's the most important takeaway. I'm coming away with which is you need to understand your options where you are and where you might be going. Right. So if you make that decision to refinance that's irrevocable. Basically like those are now private loans you lose all that flexibility. So I get that for people looking at the forgiveness programs. It sounds like the incentive would be to not pay off additional principal because they're going to the remaining amount is going to be forgiven at some point down the line. Is there any interplay there where sometimes people do pay off additional principal. Is there ever an instance where that would make sense or is that just you pay the minimum. You can and that's just that.
3544 - 3660 Travis Hornsby Yeah I mean that's a great question because that's one of the biggest mistakes that I see is there's two ways to pay student loans that make sense either as aggressively as possible like Jonathan did and get out of debt in a ridiculous amount of time and just throw a ton of money at it to just be debt free or be extremely strategic and pay as little as possible trying to have the biggest forgiven balance possible because that results in the greatest present value savings on the loans. And what most people do is they take this in-between path. So they say OK my income based payment is eight hundred a month. I'm going to pay twelve hundred a month because that makes me feel better. Right. What that does is that just sets you up an offer oftentimes to have a forgiven balance anyway which makes no sense because that is costing you money. Because if you're going to pay 40 percent of some number eventually because you're that's 40 percent as the tax bomb amount that you'd have to pay on the forgiven balance. Why would you pay a dollar now and receive 40 cents in the future. That makes no sense. That's irrational. Yet so many people do that. But on the flip side as you know if you're going to get out of debt Freaking get out of debt don't mess around like this is a big thing hanging over your head and preventing you from doing the stuff that you guys talk about on this choose fi podcast. So it's like why would you mess around with big student loans and just pay just enough to cover the interest. That's that's a big mistake that I see happen all the time. So for the listeners here you really want to decide you know do you want to be on this aggressive paying back as fast as possible plan or this passive plan. And if you're going to be on the passive plan I think we would really be able to help you because there's a lot of things that people don't know about how to optimize this and minimize your gross income to minimize the student loan payments and maximize the forgiveness. And if it's you know the aggressive plan like a lot of your listeners were probably like I just want to refinance like people can just send me an email and I'll just try to point you out to where you could get a good deal for free on that if you're sure you want to refinance.
college-loans, debt, hotseat-mistake, savings, tax
3660 - 3695 Jonathan Mendonsa All right Travis man you brought your A game today and this was fantastic. You know you've put together concepts and ideas that I've been grappling with how to explain to people you know those questions that I asked you those aren't made up for me. There are faces attached to each one of those questions that I asked. And this is information that benefits them directly. So if I have people in my life with those questions our audience feels the same. So this is an incredibly relevant conversation. People are going to have follow up questions. They're going to want to get more information about what you're doing and they're probably going to want to get your input on their particular unique situation. What's the best way for people to reach you.
3695 - 3708 Travis Hornsby I just sent me an email just my name Travis Travis at student loan planner dot com and I doesn't have to just be about massive student loans it can be anything about any of the story. I'd love to hear from people and just kind of hear where they're at on the journey.
college-loans
3708 - 3746 Jonathan Mendonsa And guys for the record if it hasn't come through already I just want to reiterate that Brad and myself are blown away by what Travis has put together. We think that if you're relating to this or are in a position where you have the six figure of student loan debt you have this two to one debt to income ratio. We think he's the guy and you should go check him out. So we do try to make that as easy as possible we've set up a short link just go to choose FI dot com slash Travis that will take you directly to his page where you can get his personalized advice. And I think it would be worth your time to consider doing so. Travis now normally that would be the end of the episode but on this show we would love to give you the chance to tackle the hot seat. Are you ready for this.
college-loans, debt
3746 - 3749 Travis Hornsby Yeah. Let's Do it.
3749 - 3777 Speaker In a world drawling in-depth and rapid consumption trapped by the chains of lifestyle inflation. These questions highlight the secrets of those who are broken free welcome to the Choose F.I. hotseat.
3777 - 3781 Brad Barrett All right Travis. Question number one your favorite blog. That's not your own.
hotseat-blog
3781 - 3783 Travis Hornsby Physician on fire. Dotcom.
3783 - 3790 Brad Barrett Nice. He is a big favorite of ours and a good friend of the community. So wonderful blog indeed.
3790 - 3799 Jonathan Mendonsa And actually I was talking to him recently bragged about getting him to come back on the show to talk about donor advised funds because that's something that he has just crushed over the last couple of years.
3799 - 3815 Brad Barrett Yeah actually I used his article to set up my donor advice fund at the end of 2017. So yeah I'd love to do that he also mentioned something about Social Security Ben points so I think yeah I think we can definitely have have PoF on the podcast and then very very near future.
socialsecurity
3815 - 3821 Jonathan Mendonsa Travis question number two your favorite article of all time. Now this can be one that you wrote or somebody else's.
hotseat-post
3821 - 3832 Travis Hornsby I think the zero to hero and one post on the Mr. Money Mustache site just transformational. Take somebody that had no idea whatF.I. is and shows them a totally new path for their life.
3832 - 3837 Jonathan Mendonsa It's a tried and true favorite. Question number three your favorite life hack.
hotseat-lifehack
3837 - 3844 Travis Hornsby Ordering only one entree at restaurants because they give you too much anyway. And then you save money and you split it with your significant other.
3844 - 3862 Jonathan Mendonsa I love the frugal hacks man. I think that my appetite overrules my brain sometimes but I totally get it. I'm thinking about as I was doing research on your story I got so many cool little tidbits of some of the other little frugality hacks that you implemented in your time in Europe and I'd love to hear just a few of those as an add on onto this question.
frugality
3862 - 3880 Travis Hornsby Well one thing that I found is certain kinds of produce like cucumbers and carrots and rice cakes are the same price everywhere even if you're in Sweden and a hotdog costs ten dollars. So if you're into a really expensive city or place or country just know you can always go to the grocery store and get cucumbers.
3880 - 3882 Brad Barrett Nice. So that's a meal. Just a couple of cucumbers.
3882 - 3902 Travis Hornsby Well you know maybe the peanut butter put it on the rice cakes balanced diet you know get some other things maybe some multivitamins. But you know what your choice is a 15 dollar Big Mac or something cheaper. My very cost conscious version of myself what I was watching my withdrawal rate said go to the grocery store and get something cheaper.
3902 - 3912 Brad Barrett I think grocery store is probably just a good hack nonetheless. Don't go to expensive tourist places right. And go to a local grocery store especially not right in the middle of a city center.
3912 - 3937 Travis Hornsby Yeah like I when I was in Switzerland that's where I was joking about the 15 dollar Big Mac. That's literally how much it costs. And so you can do that or you can go to the grocery store where carrots are still like two euros and then you just saved a massive amount of money. And the only decision you made was not buying a freakin hamburger. So it's really amazing no matter what kind of city rent even if it's one of the most expensive cities in the world. There's always ways that you can save money on food.
3937 - 3973 Jonathan Mendonsa You know highlighting your story Travis is really the story of the early retiree I think. I think it's I'm going to tease you a little bit but it's like the stereotypical story of the twenty five year old fire individual and people from the outside looking in saying what the heck are you guys doing living on twenty thousand dollars a year. How is that sustainable and they're looking at the single individual and saying I've got a wife I've got kids I've got all these other things and they think watching your story evolve and I'd love to bring you back on at some point to talk about it further. You know now you're married and maybe there's kids on the horizon and your lifestyle does adjust with this to some degree.
3973 - 3984 Travis Hornsby I was joking with my wife that I need to write a sequel to The Book 30 is the new 25 and talk about how my safe withdrawal rate now. And I had to spend sixty thousand a year instead of 20. So my my portfolio is to be based off of that withdrawal amount.
3984 - 4004 Jonathan Mendonsa Now it is interesting how the messaging does kind of change as you get older and have additional life circumstances. But I think it actually adds dimension and it doesn't invalidate anything that you said earlier. It just adds an interesting complexity to it and that's what I love about it. So Brad you want to go and lead off with the next question.
4004 - 4008 Brad Barrett Sure. question number four your biggest financial mistake.
hotseat-mistake
4008 - 4044 Travis Hornsby I bought a car that was eleven thousand dollars in college that I never should have bought. I should've just drove a 2000 dollar Honda Civic which we drove when we moved toSt. Louis for the first time. But instead I had to have a really cool looking Chevy. It was so beautiful I thought I'd be such a bad ass. Drive around town with these really nice wheels and the sunroof started leaking. I couldn't get it replaced. The transmission had all these problems I had all these expenses and it's paid way too much for the vehicle and so I ended up just having to put a bunch of duct tape on the car to prevent it from leaking. So I basically had a car that was worse than like a two or 3000 a car but I paid like five times for it.
college
4044 - 4070 Jonathan Mendonsa It just symbolizes all of your financial failures and this one particular vehicle. It actually is the perfect example of consumerism gone wrong because you say Oh I've made it. I'm going to buy this and then this exact thing that you've sacrificed. I mean I guess you've probably done the math as an optimizer what that money would be worth now. All right. It's symbolized by a leaky roof a problematic transmission and a slowly dying Rust bucket.
4070 - 4077 Travis Hornsby One of the happiest days of my life was when I sold it to somebody I met on Craigslist for like five thousand bucks and I said never again.
4077 - 4081 Jonathan Mendonsa Brad in the meantime is still driving his 2003 Honda Civic.
4081 - 4086 Brad Barrett Yeah I am. It's green. We're going on 15 years now. Incredible.
4086 - 4094 Jonathan Mendonsa All right. Question number five. The advice you would give your younger self. Relax a little bit and know that things always get better.
hotseat-advice
4094 - 4099 Brad Barrett Wow Travis. That's succinct but deep wisdom. I like that a lot I'm going to I'm going to think on that for sure.
4099 - 4123 Jonathan Mendonsa And we do have a bonus question for you. Let me set the stage with this. We spent a lot of time talking about what we're not spending money on. In fact in your case you have a book highlighting how you spent less than twenty thousand dollars a year. But at the end of the day all of us do end up making purchases of value to us. Sometimes it's a win. Sometimes it's a loss but we all have examples of this. And the question is your favorite purchase that you made over the last year. Let us know what it was.
4123 - 4168 Travis Hornsby The engagement ring from my wife. Very nice and dare I ask is there any sort of extra additional story that is tied to that. Oh yeah. I had her input and helped me select it. We ended up probably only spending about 600 bucks on it but it was just gorgeous ring that we got custom designed and Etsy. I presented it to her and the stage is perfect. I was in front of this gorgeous art museum with this beautiful reflecting pool. And I got down at the wrong knee and I opened the box and I opened the box upside down. She couldn't see the ring so she looked back at me with the face of confusion and then looked down in the reflecting pool and said Oh my gosh Travis there's a dead fish floating there. So that was my engagement story. Luckily she said yes and luckily we're still together.
4168 - 4182 Jonathan Mendonsa So let's circle back and highlight the fact that I'm assuming that implies that her dad said yes he did. And now they're one of my biggest fans and I joke that as my business revenue goes up and up they love me even more.
4182 - 4185 Jonathan Mendonsa Travis thank you so much for coming on the show man. This has been a total blast.
4185 - 4188 Travis Hornsby Yeah. Thanks for having me. This is so much fun.
4188 - 4202 Jonathan Mendonsa Brad this is the episode I have been waiting for. This is the conversation that I've tried to have with people but Travis brought it all together I mean that's what it is you find people they can speak to a very specific point. And Travis has figured out how it works.
4202 - 4224 Brad Barrett Student loans are a big deal for so many millions of people and to have Travis speak to it from within the FI community as kind of a cool new perspective for us. So I think he's extraordinarily knowledgeable that came through. He's a nice guy. He's a member of the FI community so yeah. He's going to be a resource for us going forward for sure. So very very excited about this.
college-loans
4224 - 4295 Jonathan Mendonsa To our audience I hope this was an episode that will save you or somebody you know tens of thousands of dollars. How cool would that be one single podcast change the trajectory of your debt repayment life and huge thank you again to Travis for coming on the show. If you want to support us and what we're doing here at Choose F.I. here four easy ways 1 leave us an itunes review if you want to do that just go to choose FI dot com slash iTunes two use our page to sign up for travel credit cards. If you want to travel the world with miles and points instead of your hard earned dollars then just go to chooseF.I. dot com slash cards and get started today. 3 If you're working on the milestones of FI set up a personal capital account to track your progress and use our affiliate link. It's completely free and just go to chooseF.I. dot com slash PC P as in Paul and C as in cat and four and most importantly find your friends co-workers and family members who might be open to this message and tell them about the podcast. Have them start with episode 38 the Why of Fi and right behind that have them go Listen to Episode 21 the pillars of. It is a fantastic starting place. Are my friends the fire spreading. We'll see you next time as we continue to go down the road less traveled. You've been listening to choose from radio where we help middle class America build wealth one life hack at a time.
Jonathan_Catchphrases, debt

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