Student Loan is Gone!

03/18/19 • 28 min

Chain of Wealth - Debt, Investing, Entrepreneurship, Wealth & More

Today’s episode is a bit different because we have a special occasion to celebrate. Katie’s student loan has been paid off! Yes, you heard it right! Listen about her journey and on what she’s really been trying to achieve.

Welcome!

[1:25] Let’s get to know Katie and her story
● She is 30 years old now, teaches elementary and has always taught public school until she moved to Virginia
● She was a typical college student in her 20’s, took a student loan and thought she’d be paying it for the rest of her life
● Moved to Virginia in June 2017, has known Denis for over a year at that time

[6:35] How much did Katie have and owe back then?
● Denis calculated everything and figured that Katie owed almost $200K
● Katie was in so much debt not because of spending much on anything, but on not-so-great decisions with her car and student loans
● Denis created a plan for Katie which started with selling her house, and was sold at 20% more
● She got a Honda which costed more than a high-end BMW, and monthly repayment was $663 for 7 years

[12:30] How did you tackle your student loan?
● Katie was teaching at a Title 1 school, where loan forgiveness was offered
● Loan forgiveness application took 6 months; was eligible for $5K
● Started freelancing and their podcast channel was mainly born out of this debt journey

[17:30] What exactly did you do?
● Denis gave one condition for Katie to prioritize paying off her debts
● All her salary was spent on paying her debt, and avoided shopping
● Kept re-adjusting her goals, instead of quitting when not hitting them
● She was earning $2400, but was short for $700-$800 on her monthly repayments
● Did some side hustles like private tutoring, freelance editing, etc.

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Welcome!

Previous Episode

Paying Down Mortgage vs. Investing

A lot of you have been interested to know more this topic and it's important for all of you to hear some pros and cons when making your decision between paying down your mortgage or investing the money.

Welcome!
[:] There is a decision to be made
● Cost-benefit analysis is a must
● Check how much interest you will be paying on your mortgage in the long term
● Additional payments toward loans will knock a lot of time off on the repayment term; use mortgage calculator to make side-by-side comparison on different terms

[:] Why you should invest instead of paying down mortgage
● You can try using Robinhood app to start in the stock market and can even start with $20
● The market is doing pretty well recently

[:] What's the total interest like for a $100K on a 30-year repayment term
● Total interest paid would be around $93K
● If double payments are made, the loan will be paid off in less than 10 years and the total interest paid would have just been $26K
● If you can, you should be paying double payments

[:] What if I grow the money instead of paying double on mortgage
● Your $536 monthly repayment for 118 months, would have only paid $45K worth of interest
● Your $536 monthly repayment for 118 months, if invested, would have grown to $95K
● With a return rate of at least 8%, the amount earned from investment over the same period of time would be enough to payoff your mortgage in cash

Next Episode

Whats Next

Katie has successfully paid off her student loan! Like other people's success story about being debt-free, it does not stop there. You need to continue your plan and making that plan means figuring out how much money you have to work with and deciding how to spend it.

Welcome!

[4:45] After being debt-free, what's next for me?
● You can celebrate but no need to spend a lot!
● Shopping-spree after completely paying off your loan is not a good idea.
[8:42] Katie's plan after the wedding is paid
● Maxing out IRAs
● Making sure to have enough money on emergency fund
● Maxing out savings
● Keep expenses cheap
[10:16] What are dividends?
● Payout for companies shareholders
● Returns from stock investments