BiggerPockets Money Podcast - 22: How to Pay Off 6-Figure Student Loans While Pursuing Financial Independence with Travis Hornsby

Episode Date: May 28, 2018

Student loan debt is a HUGE problem facing millions of people - and it continues to grow every year. Today we are joined by Travis Hornsby from Student Loan Planner who shares several options for paying back your student loans, including loan... Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Bigger Pockets Money Podcasts show number 22. The takeaway message is that somebody who finds out about this financial independent stuff, like later in their life after they made all these decisions that they wished high heaven they could take back. Like you can still actually get out of that hole, which is so exciting. So it's just really fun to be able to deliver that message sometimes to people that feel like they're trapped. It's time for a new American dream, one that doesn't involve working in a cubicle for 40 years, barely scraping by. Whether you're looking to get your financial house in order, invest the money you already have, or discover new paths for wealth creation, you're in the right place. This show is for anyone who has money or wants more.

This is the Bigger Pockets Money Podcast. How's going, everybody? I'm Scott Trench, and I'm here with my co-host, Miss Mindy Jensen. How you doing today, Mindy? Scott, I am doing fantastic today. It's a beautiful day out. As you said earlier, suns out, guns out. I'm going to show you my guns here.

Okay, you win. Today's show is so fantastic. Yeah, we brought the big guns out with today's guests. So we have a long episode coming up, and we're going to briefly introduce this story for the first five or ten minutes, and we're going to launch into probably a 45-minute straight discussion of strategies that you can use to pay down student loan debt. One of my favorite episodes of this podcast of all time, a perspective-changing podcast from my point of view, because I've always viewed student loans as an obstacle to getting back to the starting point of financial freedom. You've got to pay off the student loan debt or find a way to work around

them in order to begin building wealth. But Travis kind of completely turned that theory on its head, I think, and has given a variety of options for how to go about it. And don't expect these options to be for you if you have like $50,000 in student loan debt, because this is for if you have significant student loan debt, student loan debt that's more than 1.5 or two times your annual income. You're going to hear some kind of mind-blowing strategies and options that exist for you, maybe that you might not have heard of before. Yeah. And, you know, today's show came about from several people emailing me, asking me, can you interview somebody who can cover student loan debt repayment? And that's something that I think that we both really want to present to our listeners

is what they want to hear. So if you have a question that you're struggling with, if you have a money topic that you'd like to see covered, please email me at Mindy at biggerpockets.com or email Scott at Scott at biggerpockets.com. And we would really like to present topics that you want to hear about because that's who we're making the show for is you personally. Absolutely. And I think that if you have student loan debt and it's a big part of your financial position right now and you're really struggling to get through it, this episode, we could not have found a more perfect guest that can kind of go right into how to attack that problem. and begin approaching financial freedom today, even with all that student loan debt.

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slash BP Money. Okay, so Travis Hornsby, welcome to the Bigger Pockets Money podcast. How you doing? Doing great. Yeah, we're very much looking forward to hearing your story today. So let's start from the beginning. Where do you believe that your kind of financial journey began? And when did you kind of discover financial independence?

Well, I think this is a little bit similar for you, too, Scott, but I found Mr. Money Mustache. was like the first formal launching point. I was sitting in my cubicle working for a very large company, investment company, and just was not feeling energized every morning, getting up out of bed, just feeling like what is my purpose? What is it's not being fulfilled? And then I found this idea of early retirement and financial dependence. I thought, heck yeah, this is what I need to be doing. And, you know, I was very lucky and that I had set myself up really well up to that point. So I graduated from college without any debt. I actually got paid to go to school. got a bunch of scholarships and had a positive net worth leaving college and then had always been

very frugal. So I was in a very fantastic position to work towards financial independence. Yeah, I want to know how you got paid to go to college. Let's talk about that just for a minute because my parents paid for my college and the subject of today's show is student debt in general. I didn't have any. How did you avoid it? So one thing that my parents did that was very smart is they bought prepaid tuition for our state University. So they did that. And then I knew that I had two brothers. My dad was a teacher. My mom didn't work because of some disability issues. And so we had a very limited budget. And I knew that if I wanted to go to college, like, I needed to be responsible for it. And I found out about a scholarship

program that the flagship state university in my state, University of Florida had that would pay you to go to school, would pay you for to travel around the world for like summers abroad. And it was really amazing. Yeah, I gave you living expenses, everything. And you had to be like number one of your class to get it, to apply for it. Well, so I had a lead time to know that I needed to work towards that goal. So I found out of the scholarship, maybe like sophomore junior year. So I just worked my tail off to make sure that I was the clear choice for the nomination because each school got to nominate one person and then, you know, got that scholarship. And then I had other options like at Vanderbilt was on the list. Scott, they gave me a half scholarship. It was still.

going to cost me like a Mercedes a year, I think. So comparing that, you know, to the offer of like, basically I was able to stack all these scholarships that weren't means tested and I was very fortunate for that. And so I, you know, maybe made about like similar to like a graduate assistantship type of income like while going to school. So like 10 to 15,000 and I worked part time. That was really fortunate for sure. Yeah, yeah. Very fortunate to decide to graduate that at the very top of your class and get a bunch of scholarships from great universities all over the country. Lucky you. Yeah, I know.

And that part, that part's maybe not relatable. But what is relatable, I think, is, you know, a lot of people have parents at help, at least. Well, what it is is you chose to do that from a hard work and ethics perspective. Like, that's not a luck thing. That's, hey, you made this decision early on to do it that way. Sorry, I to interrupt. Yes. No, I'm going to interrupt too and say, I had every opportunity to be the top of my class.

And I did not take advantage of any of those opportunities. But it's not barring, like, learning. disabilities, and even then, you have the opportunity to be tops in your class. It's you working hard. And even if you have a learning disability, you know, to a certain extent, you just work harder. And that's just what you have to do to become tops in your class. I mean, you didn't just magically like, I want to be tops in my class. Boom, there I am. Yeah. And maybe to make this more relatable, like for listeners, too, like let's say that you're maybe top 10% or top 20% in your class, right? So then, you know, you can basically do something where you,

go to the school that's like good, you know, you're not like barely getting in. You know what I mean? So that's another way that you can basically get some decent scholarship money or just get a better cost of education because I think a lot of these state universities, they have fantastic resources. If you actually want to have a good education, you can have an equivalent experience, I think, to a lot of elite institutions simply by trying to take advantage of what's available to you. So where did you end up going? And then what was your position graduating and where did you go to work? Yeah. So I probably graduated. college, maybe with about probably 40,000 in net worth. So that was a great position to be in.

I actually got a job off of the Bogleheads Forum. So I posted that I wanted to work for Vanguard because I read all this stuff about how Vanguard was wonderful. And my granddad was investor, had it a high opinion of them. And so I just basically posted that and I got a private message from that and ended up getting position there. So I got my dream job. I thought that I wanted to work in a big company, be a manager, rise up the ranks, maybe manage a portfolio. or lead a division or something. That was the dream, right? And then I got there and decided, oh, wow, I'm like a round peg in a square hole here

trying to fit into a big company culture. And that was just something that I had never thought about or anticipated. And, you know, I think that some people fit in really well with big company life and some people fit in terribly. And I was one of those latter people. So how much were you earning at the time when you got this job? And where were you located? Yeah, so it was 50,000 a year with some bonuses, and I was in the suburbs of Philadelphia,

and I lived in a house my first year with four other guys. We had one bathroom for five guys, which I do not recommend, you know, probably splurge for the second bathroom at least. But we had somebody living in an attic, somebody living in the kitchen, like the extra room, not the kitchen itself, but like the add-on room to it. And we had our rent down to like $300 a month. And my first year, I think I saved like 80% of my take home. It was pretty proud.

Wow. What year was this, by the way? 2012. So I got super lucky there because I had a super high savings rate. And, you know, the S&P 500 was just on a tear, right? And so there was a couple years where I was saving like over 100% of my income just because, you know, the one, I think 2013, the market went up like 35% or something like that. And so, you know, talk about right place, right time. That had a lot to do with it.

What were you invested in? So index funds, but not as, like, simple as a lot of people, right? So I believe in, like, the small value thing. So I put some money in that. I have a little bit of fun money where I, like, buy individual stocks, like small percentage to the portfolio, basically that kind of stuff. I would say just index funds. I was trying to get you to say Vanguard, because you worked there.

Yeah. Yeah. Oh, yeah. There you go. Yeah. So, yeah, mostly Vanguard index funds. It was difficult. You had to get everything pretty clear for trade.

So I didn't do any wild stuff. But, yeah. But so I actually ended up getting to a point in my career where I felt like my skill sets weren't like being used to the fullest potential that they could be because, you know, a big company culture, things move slowly for good reason, right? Like nobody wants a very successful company that's doing a lot of things right to take big risks, right? Like that just doesn't make sense.

And so when you're young and, you know, want to work hard and have all these ideas, you know, a lot of times that can kind of be a frustrating experience having some of these ideas not be immediately accepted, right? Because I thought probably arrogantly like, oh my gosh, my ideas are so great. Why isn't everybody listening to it? You know? So I actually found an ad on Facebook for a wow airline ticket to Iceland for like 69 bucks. And so that combined with reading Mr. Money Mustache was the trigger point for me to realize like, well, wait a second, I'm not completely FI yet, but I have enough money to not work for pretty long time because I don't spend very much. And so what if I just straight up quit my job and just went to Iceland without a

plan? And so that's what I started to plan to do. So I saved up for that specific goal, went to Iceland, and kind of right before I left, like after I bought the ticket, I met the woman who's now my wife. And so that was really interesting. So we've kind of like started our relationship like, well, I was traveling around the world. And that, It's been kind of the launching point for like the second phase of my working life. So how long were you gone in Iceland and I don't want to dwell on this for too much time, but like what language do they speak in Iceland and do you speak that language or did you just like go because it was $69? I just went because it was $69.

I did something very stupid without a plan, you know, that's a lot of 20 something people too. So I went there and then like I bought the, you know, tickets to mainland Europe and then I just like went all around Europe. I saw like 30 countries in Europe. And then I came back to the U.S. to spend some time with my girlfriend. Then I went to Latin America for a little bit with one of my friends who is actually our roommate now. We were basically wanted to do a celebratory trip because he beat cancer. And he had a really terrible time with cancer. And he made it through and survived.

And we just wanted to celebrate. So we went to all these Latin American countries. And then after that point, you know, obviously if you're traveling around the world but you're in a relationship, that doesn't necessarily line up perfectly. So unless the person's with you, right? And so she's in a traditional career in medicine, and I had to choose between kind of this nomadic lifestyle of just traveling all the time

and actually being present with her. And I made that decision to be with her. And we got married, and I moved to St. Louis, Missouri, where she's working now. And that's how everything happened where I went from this very, you know, aggressive type of lifestyle to more one where I'm in one place for the most part. So can we back up and take a sec here and talk about the timeline and numbers here?

So how much did you save? So you got out of college, you got this job making around 50K a year at Vanguard. You save up, buddy, over this period. How much do you save up? And what at what point do you leave? How many years into your career do you leave? And how long are you traveling before you get back? I'm sorry, I'm asking like six questions in a row there.

Yeah, no, it's okay. I mean, so the one thing that I was, frustrated by with reading the Mr. Money Mustach stuff, right, is that he was always talking about the 4% rule, how you have to have 25 times your annual spending to be FI, and that's what you needed. And so, you know, I was thinking in my head, like, do I really want to work in a place where I'm not completely happy every day until I hit this magical 25x number? And I didn't. And so to answer the question that you had, I had maybe about a little bit over 200k in total assets when I left. So based off of about a $18,000 a year spending total at the time, I, you know, was maybe maybe like 50%

FI. So I was not at that point where I was 100% and I didn't have a plan. I didn't have anything that I was like going to, you know, to get those extra amounts of dollars that I needed to be fully FI. So in terms of the number of years was three years. So that's how long I spent to build that up. And that was, you know, a combination of starting with money, saving a lot and having like this massive bull market that propelled me to having that amount of money. And so I had that plus like a big cash position so I could feel psychologically secure with the travels. And, you know, when you're a single guy traveling around Europe, traveling these different countries, like some of the countries are super expensive, like Sweden and Norway. So I just like went really fast through those.

And then other countries in Europe like Ukraine, like I could live pretty good and $10 a day. So I like spent 10 days there, you know. And so kind of doing that like geographic arbitrage with my travel. I was there for about four months in total in Europe. Maybe I spent about four or five thousand bucks, including the airfare. So I think it's, you know, if you're willing to be extreme, you can hit that lifestyle that you're kind of hoping for sooner. And I didn't really have a plan. Like, I guess I was thinking, well, maybe I will go back to work at some point or maybe I'll do something to make some money.

But for now, I'm just mentally in a place where I need this time to reset my life to be transparent about what my path was. like I was actually trying to become a PhD economics professor while I was in college. And then had some things that happened that made me realize, wow, I really, this isn't what I need to do. And so that's what pushed me to get a job in corporate America. And then I thought, okay, my job and my life ambition is to stay at this company for 20 or 30 years and be, you know, CEO vanguard and help all these people invest in index funds and I'm going to save the world. And then I realized that that wasn't the thing that I was meant to do. And so rather than just reach for the easy path, which would have been to, to go to like a Wall Street firm, I just decided to take some time. And that ended up being

incredibly fortuitous development. So how long were you traveling total? You said four months in Europe. You quit your job. You were gone for four months and you came back to America and then you went to Latin America and then you came back again. How long were you unemployed? So I was unemployed for about a year and a half or so, something along those lines in the sense that I didn't have any formal thing that I was trying to do and make money. And I was in Latin America for like two or three months. And then I came back, spent time with, you know, the girlfriend, right? And then I went back to Europe with my little brother to kind of show him around.

And then I came back. So I was kind of like back and forth between, you know, all these different places for that year and a half. And mostly just took advantage of the fact that you can get super good deals in international airlines if you're willing to fly on a Tuesday. So I just did that for a year and a half and, you know, had that frank conversation with my significant other. Like, she's basically like, look, I completely respect that you like to travel. You enjoy doing this kind of alternative lifestyle.

But hey, you know, I'm working medicine. Like, I'm a surgeon. I have all of these patients that I have to operate on. Like, I'm not allowed to go work virtually from, you know, Germany or something. Well, my patient's, you know, bleeding it. I need to stitch everything like, you know. So she basically said, hey, you know, I want to. be with you if we have a future together and so I thought that's that's really important that's more

important than doing this what I want to do right now and so that's kind of what led me to move to St. Louis and what was interesting is I decided this is the woman that I want to marry and so she is Asian American and her parents are immigrants from from Hong Kong and I had that conversation that you always kind of think about especially as like a little boy raised in the south like you know you go ask permission to the girl's father for permission to marry her. And he looks at me, he's like, no. And I'm like, whoa, this went way different in that lifetime movie that mom made you watch. And so I said, well, what do you mean?

No. And he said, you have no job. You have no traditional source of income. You have no way of supporting my daughter in case something happens to her. And she has to take time away from the workforce. So if you want my blessing, you have to prove that you have a reliable source of income. And I protested. I said, well, wait a second.

I said, your daughter has six figures of student debt. And I have six figures of assets. Like, that should be enough. And he said, no, no, assets is not the same thing as income. You know, if you love her, you'll prove it. And so my choices were I had to either get a traditional job for, I would say, kind of a weird reason trying to pressure in-law to get his blessing, or I had to start my own thing and make that successful. So I had this very intense desire to be successful for that reason because the alternative

was going back to this cubicle lifestyle that I hated. And we had the money talk. She mentioned that she had a lot of student debt. I built a spreadsheet with my skills from being a bond trader at Vanguard. And the spreadsheet was pretty good because of all the different options that you can use to pay back your student loans. And I shared it online. and it kind of went viral and all these people started asking me about it because so many people have a student debt problem and so my now wife christine was like well you should just like charge people to like tell them what to do with their student loans and i was like okay that's kind of sounds interesting so i started doing that kind of one-off basis for friends and then when he told me i had to get a

reliable source of income or else that's when i decided to start my now company's student loan planner because I needed to do something that could get an income that I could do on my own terms. And now we've advised like over a quarter billion dollars of student debt. So that was probably a good decision. So one of Mindy's favorite questions that she likes to ask is, did you talk about money before you got married? So we'll skip that one for now, but that's incredible. So you start this business. And at what point were you successful enough to go to your in-law, your father-in-law, and say that, hey, I'm ready to go here. Like, I mean, it's such a unique reason to start a business.

Yeah, yeah. So, so I think that my initial thought process was, well, if I can make more money that I'm spending on the business, then that's success. So, you know, because I have a very low spending need because I had the assets saved up. So I didn't have a bullet near or gun to my head saying, you know, you better meet rent this month or it's going on the credit card, right? So I was able to have like that breathing room. And so that's, that was the mindset that allowed me to say, well, if as long as I'm profitable, that's all that matters.

And so the first few months I did it, maybe I made like three or four thousand, you know, in those months. And then I took the business results back to the father-in-law, probably when I passed like the 10,000 revenue mark in a monthly basis. And I said, hey, you know, this is pretty decent. This is a lot more than I would maybe make as just a traditional corporate type employee. And, you know, especially since the job market in St. Louis for investment folks is not fantastic. And so he kind of agreed. So he gave his blessing. And it's, I joke that like, you know, every time my quarterly profit statements go up, my in-laws love me even more, you know. So how long did it take you to get to $10,000 a month in income?

It happened pretty quick. Maybe like four to six months. I'd have to go back and look. But it was pretty rapid because I just hit a nerve. This business, I was just uniquely situated to help it because I love talking to people. I love helping fix problems. And I love doing it with math and numbers. And the student loan space is so volatile and it changes so much. And there's so much going on that a lot of people like your traditional financial planners or big banks and all these different companies, like they're not interested in investing money into the space because it's probably not a billion.

industry. Maybe it's not even a hundred million dollar industry. So with the upside being limited, like the big players, we're not interested in competing. And I just kind of stumbled into this as being this huge need where people have, you know, 100, 200,000, or even a million dollars of student loan debt, and they have no idea what to do. And they're paralyzed. And nobody has any answers for them because of just figuring it out for my wife and I, I was able to develop a system that helps give them answers. Wow. So one of the reasons I wanted to have you on is because so many people have student loan debt.

As we talk to people on the show and even outside of the show, we get a lot of people who say, well, I have no debt except for student loans and mortgage. Or I have, you know, a little bit of credit card debt. Or when I was in debt, I had student loans and credit card debt that you were able to ramp up to $10,000 a month so quickly kind of confirms that just this is a really big problem. What is the biggest problem that you see in the whole student loan industry today? I personally think that there is a massive fraud going on. I mean, just to be frank, like, I think that a lot of times, if you think about somebody

who doesn't know what to do in their life's next step, right? So like, it was the thing about me, right? I had no idea what I was going to do my life's next step. And the only reason that I had this awesome experience is because I had saved a bunch money. But if that hadn't been the case, so I hadn't been blessed with like having these natural interest in financial topics and matters, then maybe I would have gone to grad school. Maybe I would have actually gone to try to get some sort of career where people will tell me it's super stable, it's high income, it's going to meet all my needs. And a lot of people

do that. And the problem is, is the price of graduate school has skyrocketed in the past 10 to 15 years, but the incomes that people are making have not. And so you have this situation where people can graduate and become a veterinarian and they're making 70,000 a year. Oh, but, oh, by the way, they have 300,000 in student loan debt. Or somebody can be a physician and be a primary care family doctor, but they'll have like 450,000 of debt. And they're making, you know, resident salary, and then they make, you know, $150,000 to $200,000 a year. And so that's a really big issue, you know. So as your typical, is it a person that you kind of, like the strategy that you put together and the way that you approach student loan debt. That's typically more for the folks that have six figures

plus student loan debt or student loan debt that is a significant multiple of their annual income. Is that fair to say? Yeah. So, I mean, if you've got less than 50,000 of a student debt, I mean, it's actually pretty straightforward what you need to do, right? You need to house hack. You need to live with roommates. You need to, you know, not take on a car alone. You need to have extremely frugal habits. When you go out to eat, eat at Chipotle, don't go out and eat it fancy restaurants and just throw all your money at the loans and pay them off as fast as possible, you know, if it's less than 50,000 bucks. And for a lot of people who just graduating undergrad with that amount of debt, that's possible. Now, you can do things like refinance that debt and get

a lower interest rate to pay it back a little faster, but it's fairly straightforward. And people don't really need expert advice on how to do that, right? But when somebody is facing a gargantuan amount of debt, they have a lot of options. They can pay it back. They can go for a loan forgiveness type path, and there's tax implications to that when you go for loan forgiveness. And so if somebody's going to make that decision, do I go for loan forgiveness on 300 grand, or do I pay it all back and pay 50% of my take-home pay on the debt? That's a massive decision. And what's amazing to me is, you know, all these like flat fee financial planners, even, which are the most kind of ethical people out there, like they're even kind of in the dark a lot of

times with how to advise people because these rules are so new and they change so much. So basically, it's just trying to figure out for that person, like, do I pay the massive debt off or do I go for loan forgiveness strategy and then answering the second question, which is like, what's the most optimal way to do that? Can you give us maybe a case study of both of those options real quick, like maybe a minute or two on what's an example of where I'd want to go for loan forgiveness and what's an example where I want to just pay off my massive debt? Yeah, sure. So let's say we have a dentist, we'll say John's a dentist, and he's got 550,000 of student death from graduating from NYU. And, yeah. That seems soul crushing. Did John go with the loan forgiveness program?

He's probably going to. But when you're looking at that situation, so he's got the 550,000, he graduates. He makes $130,000 working for a corporate dental group. So $130,000 is a great salary. That's almost more than double the median income in America. But the problem is he's got the $550,000 of student debt. And so to pay that $550 grand off, he'd have to pay $6,000 a month to pay it down within 10 years. And is that practical? Is that a reasonable thing to do to neglect retirement savings, you know, emergency fund, preparing for other financial goals, like saving for kids college, so they don't end up like that?

Like, is that a practical thing to do to put $6,000 a month towards his debt? And the answer is it's not really practical. And so is there ever a situation where he'll eventually make enough money to pay off his debt? Well, even if he makes double what he's making now, $260,000, that still represents a massive percentage of his take-home pay. And so what probably makes sense instead is to use something called pay as you earn. In John's case, he'd pay 10% of his income towards pay as you earn. So that'd be maybe roughly about $800 or $900 a month. And he would pay that for 20 years and it would adjust upwards with his income.

At the end, that balance is going to be even higher than $550,000 because it's grown, because his payments aren't covering the interest. So now let's say he owes a million dollars at the end of the 20 years when the loans are forgiven. Now he's got to pay taxes on that million dollars as if it was a bonus to his income on a W2 in the year of forgiveness. So all it wants in 20 years, he's got to pay taxes on a million bucks. And so that's probably $400,000. And so what the math is behind this is that you would figure out, does it make sense to pay the debt off aggressively like this? Or do the cash flows make sense to pay that 10% of your income over time and then have that big tax bomb that happens in 20 years? And if you do like a present value calculation, you just figure out what the cost is in today's dollars and you can answer that.

And so for John's case, you know, he'd have to make a massive amount of money to pay that. off and so it's very, very unlikely. And I'll give you a flip side case study to see the alternative approach. So let's say that Susie is a pharmacist. She makes $110,000 a year. She's not going to have much of a deviation for that. It's going to go up by inflation for her career. And she has $130,000 of student loans. And she works for CVS. So that $130,000 of student loans, she could pay that off with like, you know, a $12 or $1,300 a month payment and a 10-year time frame. And she can pay it off in five years if she pays maybe like 2000 something. So the loan forgiveness math is going to result in her paying that balance off and full before she receives any loan forgiveness at all.

So that doesn't make any sense to pay that loan balance over a long period of time and have a really high interest rate. So she needs to refinance her loans and move them with a private lender that's going to give her a lower interest rate based off of her credit profile and her debt profile being an attractive thing for a private lender to lend for. So we would probably say, save her a couple thousand dollars by moving that debt from public debt to private student loans and just having her paid off as fast as she could. So that's an example of two of the kind of opposing cases. So you just laid out two cases, one where you basically pay a percentage of your income and then get debt forgiveness and then you have a tax penalty as a result of that. And the other

where you just basically pay off your debt as fast as possible at the lowest interest rate. Are there any other major cases or does that cover most the typical choice that these folks have to make? Unfortunately, there's more. So another case, another big case is this thing called public service loan forgiveness. And you can work for 10 years for a not-for-profit or government employer and make these income-driven payments based on your income. And then at the end of those 10 years, your loan balance can be forgiven in full without any tax consequences. So that's a very generous program. And who qualifies for that?

A common example is a government lawyer would qualify for that. Most physicians qualify for this. So if you're a physician, you're probably working full-time at a not-for-profit hospital during residency, and many people go on to work at academic hospitals or, you know, hospital systems that are not-for-profit when they're attending physicians as well. So there's these kind of crazy loopholes where physicians can actually, you know, pay like $80,000 over 10 years and have the balance forgiven in full. And then, you know, maybe a veterinarian who doesn't have that same opportunity to work

in a not-for-profit actually has to pay the loans for 20 years and then have all these tax consequences. So I think this is a program that my sister-in-law is on. She has some hefty student loan bills because she has a master's in speech therapy. And she's now working in a school. How does she best use this repayment program? Like, is there a minimum payment you have to make? And it sounds like it doesn't make sense to make a higher payment on these loans when they're totally forgiven at the end and you don't have to pay taxes on it. Like, what's the best way to pay that back? And I'm assuming there are loopholes. and eyes to dot and T's to cross. Yeah, there's a bunch. So the very straightforward thing to say is that she needs to be on a income-driven plan, so paying based on her income. So that's, you know, you want to pay as little as possible. So you pick the income-based plan that has the 10% of your pay instead of 15,

because there's one that does 15% of your pay instead of 10. So that's one thing to do. The other thing would be to minimize her taxable income. So a lot of people, you know, are not, aware that there's these thing is called retirement accounts that they can put money into and not have taxes on their contributions with a pre-tax retirement account, right? Like, you know, we hang out with financial nerds all the time, so it seems like, well, why wouldn't somebody understand that? But, you know, 18,500 is what you can put into that.

So if you can put that money into the retirement account, then that comes off of the calculation for that 10% of your income. And so it's like adding an additional 10% and marginal tax savings to someone's retirement account contributions. So that's... Yeah, so it's kind of like an indirect match for people that are going for that program. So making people aware of that often makes them able to save on a really high tax rate, you know, on their retirement contributions. And then HSAs are also eligible for that. And so then it becomes a game of like, we'll minimize the payments using every available loophole and trick you can. Make sure that you're on the right income-based your payment plan.

Make sure all your loans are in qualifying status. So making sure they're all like set up right, like they're all direct loans. Like you don't have any old loans in an old program that don't qualify or like a Perkins loan that doesn't qualify. Like make sure it's all in the right status. And then just make the payments for the 10 years. And at the end of it, it's all forgiven tax free. So if you wanted to protect yourself, take that money that you would have been paying towards

the loans and put it in a side investment account or savings account just to have a fund available for a backup plan. But it's crazy to see people that are depending on this program because I'm a member of some of these Facebook groups and people are so anxious about this program. I mean, people are just, like, they're just losing it. And people are just so worried that this is going to go away and that, you know, the Congress is going to eliminate it or President Trump's going to eliminate it. And so a lot of it is just doing therapy with people and helping them walk through all of like the plan A, plan B, plan C kind of stuff. You know, this is brand new information to me.

I had no idea literally 20 minutes ago that any of this existed. I should probably have done more research. But is that what you find that a lot of these graduate students kind of come in with? Do people that have these loans, like someone who has $550,000 in debt just has no idea how to begin approaching the problem at all? Is that at all typical? Or are they generally aware of these types of things coming into the conversation? It's a mixed bag. I mean, people that don't have a high level of financial literacy in general don't tend to have a good idea of these loan options.

But I would say that the majority of people actually have a pretty good idea of the programs, at least they think they do. and it's just an extremely complicated system. And so a lot of times, you know, it's interesting, a lot, especially with a lot of the physician clients, you know, physicians are super intelligent people. And so they like to think that they like, you know, they know they should know it well enough to do it on their own. And a lot of times, like I'll point out things like they didn't even think about like,

oh, by the way, you know, you have a 457 plan that you can put an additional 18,500 into, you know, and reduce your marginal tax rate even more, right? Or did you know that maybe you should be filing separately for taxes and excluding your spouse's income to lower your PSLF public service payments even more and save even more money. Like, you know, and so a lot of times people will be making all these mistakes that even think that they're doing the right thing. And this is just because you have a student loan system that Congress has created that instead of taking old programs and like eliminating them and coming out with a new program that everybody has to follow, they just like added on as a layer. Like think of it

like soil, right? There's like all these like different layers of soil like from different eras and stuff. Like, that's basically our student loan system where they started off with oldest rule set and they just keep adding on like more options. And so if somebody's got like 12 different options to pay their student loans, oh, and by the way, they could go answer this like mail thing that they get from all these private banks that want them to refinance. That's extremely confusing to most people. Yeah, I can't imagine navigating this.

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bigger pockets.com slash money show 22 and then maybe kind of moving on to like these are options for people that already have a lot of student loan debt already are set to graduate with this and kind of go in this career path. That's when they need to go and figure out these resources and what their correct path they're paying them is. What would you kind of recommend as someone who's considering going to medical school, dental school, grad school, and knows that they're going to have to take on some level of debt other than maybe like try to minimize that debt? What are some strategies or ways they should be thinking through this problem ahead of time to set themselves up for better options than than a 10 years of getting 10% of your income,

siphoned away. Yeah, I love that question, Scott. So the first thing that I would say is that think about who's giving you advice, you know, at the schools and the programs you're trying to go to. And is that advice in your best interest or in the school's best interest? So a lot of places I've heard have said outright lies to their students

about how fast their students pay their loans off, you know, how successful their graduates are, what the graduates' incomes are after graduate. And so a lot of times people will just like take it for face value that like the person in the financial aid office is telling them the truth. And the answer in a lot of cases is especially if it's like a private or for profit school where the tuition is super high, you know, they may be at least not giving the whole story, even if they're not lying or anything. Maybe they're not giving you the information that, you know, well, actually we had a quarter of our students that couldn't get great jobs or incomes were way less than we expected, you know. So I think having just a healthy dose of skepticism would be the first thing.

And then the other parts would be if you're sure that you want to go into this field and become, you know, a veterinarian or a doctor or whatever you want to do, like just make sure that that is the only thing that would make you happy professionally that you can think of, right? And maybe even see if you can defer your acceptance for a year just to take some time off, like the thinking time that I was so blessed to have, like take some time away. and just make totally sure that is actually what you want to do. Like go to Europe and travel for a year like I did. And if you find yourself reading medical journals and still being interested in like medical stuff and reading all the latest like health news and stuff, that yeah, that's probably a great indication that you should be a doctor, right? And so I think a lot of times too, people think that the only thing I can do with this,

you know, two or $300,000 of student loans is just invest in myself and get a degree. Well, what if you took that same amount of money and you invested in real estate, right? like the bigger pockets community, right? That's what it's about. And so what if you took that two or 300,000 and invested in a business and started a business with it? Or, you know, you paid off your mortgage or something like that. I mean, is that the best use of capital that you can be making? And so if you can get over those hurdle questions, like, is this the best use of my money? Is this career the only thing that can make me happy? Like, am I just looking for something that's going to be like that next step in my life? And I feel like I'm going to miss out if I don't

do this. If that's like the answer, then you really got to take some time away. and also don't think that like, you know, you're not a successful person if you don't end up becoming, you know, the pinnacle of all these different careers. Like I have a lot of super financially successful people that are like veterinary technicians or like dental hygienists that like realized that like they didn't want to take out 600,000 of student loans or something to become a dentist or a veterinarian. And so now instead of having all that debt and being stressed out, maybe they have, you know, 100,000 in net worth and they have no debt and they have flexibility over their lifestyles and they have options. So I just want to have people take a step back, pause, and ask themselves, this is this the right decision for my life? Yeah, it seems like, it seems like you are trapped if you come out of college or a grad school with the student loan debt to the level that you were kind of mentioning right here, like 500, 300 plus thousand dollars, several multiples of your annual income that you're going to earn pre-tax. And your advice is like, I think is fantastic, is like, hey, no, if you're going to do that beforehand, that that is exactly what you want to do. because you're going to be doing it, even though there are ways to kind of have that forgiven and stuff.

I mean, this is just kind of like very overwhelming of a problem to kind of tackle. But one thing I just wanted to say real quick is that just about the financial independence is actually possible even if you have that massive amount of student debt. So that's part of what I'd help people figure out too, is how do you get from that point of feeling trapped and feeling overwhelmed and having no options and transforming it where you have all the options in the world. And that's mainly possible because of these complex government programs that you can take advantage of. Yeah, I have a comment going back to the advice you gave. Are you sure this is the only field that would make you happy? Make sure this is what you want to do for the rest of your life.

I am significantly older than Scott and probably significantly older than you as well. So I have, you know, you guys have been out of college for what, five or six years. And so a lot of the people that you went to school with are still working in the same field that they went to school for. I would say at least 60% of the people that are my age are not working in the field they studied. I surely am not working in the field of fashion design, which was my brilliant career choice. And I think it's really unfair to force these 18-year-olds to decide what they want to do for the rest of their lives. Oh, I like dogs. So I'm going to go to be a veterinarian.

And then you discover, hey, I really don't like dealing with animals all the time. Or, you know, I don't like being bit by cats or, you know, whatever the reason is for not wanting to be a veterinarian anymore. they do feel really stuck. I think that's such great advice to, you know, take a step back for a minute. Is this really the field that would make you happy? And so many people that I know are not working in the field that they studied for. And having being saddled with $100,000 worth of student loan debt, I think would not allow you to leave the field that is making you this high income. Oh, I can't just go be a vet tech because they don't make enough money. I have to stay as a veterinarian. That's a really, really, really important point that I just want to hammer home. And actually, the veterinarians have one of the highest suicide rates of any professions in the country.

And a lot of these heavily indebted occupations have significantly above average suicide rates. And one of the big reasons is because of that psychology of having all this debt, feeling like they gave so much of their life of their best years, studying to do this one very specific thing. And then they feel like they have no options. They feel trapped. they are dealing with all of the stress, the incomes as more and more people go into these professions that a lot of the fields are becoming more saturated. And the stories of, you know, working four days a week making great money are not really

the economic reality for a lot of people anymore in a lot of these professions. And so the goal I guess I have too is now I feel like maybe in a couple cases, maybe I've even contributed in a small way like to saving someone's life, which is really exciting. Like at, you know, when I was working at Vanguard, I was part of a mission. Like, I felt like I was contributing to the goal of like lowering investment expenses for people and enabling them to use their own money for better things. But at the same time, like, I wasn't actually getting to touch any of the problems, like specifically. You know, I was just kind of helping in a very small way at a high level. And like, now it's like actually able to talk to that person who's,

maybe their marriage is falling apart because of this. Maybe they're thinking about not having kids. Like, maybe they're thinking about, you know, how do I just even get up out of bed every day and go into work and make them realize, well, okay, first off, like, if you, if your things are so bad that you have to go for the loan forgiveness, at least they only take 10% of your income. You know, that means, like, after taxes, maybe you still have, like, 70% to do whatever you want with, right? And so if you live this frugal lifestyle that a lot of, like, us like to preach, then, you know, you can take that and maximize your retirement accounts. So now you're going to have a really solid retirement one day. And then also you can put a little bit of money away every month, this big tax bomb. in the future that's way off because we can invest that, you know, an index funds at Vanguard, and you're going to have $100,000 one day if you put, you know, $300 a month in that account. And so now all of your student loans are actually totally covered, you know, based off of doing those two things. So now we still have money to play with. You know, you still have 20, 30 percent of your income to do something with. So instead of buying this big fancy house and this nice new car

that was advertised to you on TV, what if you put that money away for your financial independence one day. And then actually it's the same calculation, somebody that has 500,000 of student loans. It's the same calculation to become financially independent as somebody that has no student loans except that you just have to say, I have to have enough money to pay the tax penalty one day. Once you get enough money where you're going to have that tax penalty covered, like with projected future investment earnings growth, then you can say, okay, I've got that set up. How much do I need in my portfolio or cash flow every month to meet my expenses? And then it's the same calculation because 10% of zero is zero, right? So you could actually be paying $0 a month

and getting credit towards loan forgiveness. And I have some clients doing exactly that that are living in like Australia and New Zealand and taking advantage of the foreign earned income exclusion. So, I mean, I've seen all kinds of stuff. And I guess the takeaway message is that somebody who finds out about this financial independence stuff like later in their life after they made all these decisions that they wish to high heaven they could take back, like you can still actually get out of that hole, which is so exciting. So it's just really fun to be able to deliver that message sometimes to people that feel like they're trapped. I just want to throw out how I love what you've just done for our listeners. Just the people listening to the show, like there's going to

be people that have a lot of student loan debt, right? And there's a path to repaying that. They understand now there's a couple of different options and there's a way to repay that that's going to make the most financial sense. It's going to be complex calculation that you can have to go through and know the nuances of these government programs and all of your options available. But there's going to be a choice that makes sense or several that makes sense, given the set of assumptions you have about your future. And you can achieve financial independence, same as anybody else. 10% of your income is not very much, right?

Especially when you're earning a huge amount of money, you have that ability to potentially save for retirement. So I love that. Like not only is there a way to pay them off, but there's also a way to begin moving toward financial independence, which can seem impossible to people as set to graduate and maybe go into residency where they're not even going to make money for the high salary they were expecting for another couple of years. So we have this, at the very beginning of the show, you gave us this raid or you gave us this like, you know, offhand remark that, hey, $50,000 and below, we're good,

it's pretty straightforward. Refinance at the lowest rate, pay it off, right? Do you have a rule of thumb or a sliding scale based on potentially income of where it begins to make, like, what are some rules of thumb where I just know, hey, these options aren't really a good bet for me and I really just need to focus on paying down the debt? And then where do I begin to cross that? maybe grayish line of I need to begin assessing these options. Yeah, that's a great question. So I say 1.5 times your income and below while working at a private sector job, just refinance your debt and pay it off.

You know, so 1.5 times. So if I have $100,000 of income and I have less than $150,000 of student loans, I should pay them off, right? I should refinance them and get rid of them if I'm working in a for-profit kind of sector where I'm not eligible for like the special PSLF program. So when you refinance, I would just, highly suggests that you get a cashback bonus too, like most of the companies will give you like $300 to $500 to $500 if you, you know, find one of those links to refinance and shop around in a couple

different places. So that's the rule of thumb for that. And then if you have less than two times, your debt to income ratio is less than two, then you can think about it. Like if, okay, so if, oh, less than $200,000 and I'm making $100,000 of income, then I could, I could have the conversation and I could, you know, decide, well, I really hate debt. I'm really not interested in loan forgiveness type programs, you know, so that would be okay. So that'd be kind of like the discussion between 1.5 and 2 debt to income ratio and then above 2 to 1 debt to income ratio. So if you're owning more than 200 grand on that 100k income, then it's a discussion of, well, are you eventually going to have a bunch of income relative to your debt? In which case you'd want to figure out

like how to set your stuff up for, you know, eventually paying it off. Or is it very unlikely that, you know, you're ever going to cross that two to one, you know, debt to income ratio within, you know, the next few years. And if that answer is still no, if it's, if, you know, you're probably not going to cross that, that ratio, then you probably need to go for one of these loan forgiveness programs. See, you've mentioned a couple of anecdotes about a dentist and a veterinarian. And also, you mentioned doctors a few times. Are those the typical professions that you see kind of in this two times or one point five times their income in terms in total debt? Are those typically the professions or do you see it in other professions as well?

Yeah, any profession that requires more than a year of postgraduate study is going to have this problem in some level. So some of the universities that are low cost, maybe they're going to have a pretty easy debt income ratio to handle it. So like the low cost in state public universities providing these professional school programs are going to be in decent shape. But I would name a couple more. So chiropractors, pharmacists, attorneys, air traffic controllers, nurse practitioners, physicians assistants, teachers to lesser extent, there's a massive number. Basically, any program that you can think of that has a college of at a major university has the problem because politically undergraduate tuition is a lot more difficult to change

and increase than graduate school tuition. And the programs allow for unlimited borrowing for graduate school, but they cap it for undergrad programs. So the schools figured this out and they want to make profits. They want to make big revenues so they can build that beautiful research hospital, right, or hire a bunch of new faculty and rise up the U.S. news rankings. So the graduate schools have become the profit centers for most universities. So any grad program, you just have to be super cautious and just make sure that it's what you want to do.

You've mentioned refinance your debt a couple of times. How do you refinance a student loan and at what point do you refinance? I know that there's different interest rates and are they locked in like a mortgage is locked in? Or does your rate vary? Talk to us a little bit about how you can refinance your debt. Sure. Well, so you can do variable or fixed. In today's interest rate environment, I would recommend fixed.

And you can do anywhere from five, seven, ten, or 15 year terms. And sometimes you can do 20. You know, I typically do not suggest 20 because if you're going to do 20, you might as well just go for the one forgiveness program to see what happens if you're going to take that long to pay your debt off. So the way to do it is you basically just, it's a pretty fast application at all these different places. And there's a lot of different companies that you could check out. My site has like a refinance page. You can look at a bunch of different cashback bonuses to check it out. There's other sites that, you know, might have other ones.

But you just apply. I have, Vib, actually, I've got a refinancing quiz to try to help. people figured out because it's kind of complicated to figure out like do I need to check all of these well I always suggest yes because it's like five minutes so you might as well right and it doesn't hurt your credit to do that to just do a soft credit inquiry and see if you're even getting any offers and if you are that you can actually submit for like all of your income information and all that to actually get some finalized offers and as long as you do that within 30 days it only counts against you one time like you know applying for a credit card so it's a very easy process and I just want to make sure

that when people do it, that it's definitely the right decision because once you do it, you cannot undo it. And so you lose all that loan forgiveness, you lose access to this PSLF program, you lose access to extended forbearance periods. So, you know, refinancing is a great thing. It can save you thousands of dollars in interest that are instead going to paying down your principal. So I would just suggest that anybody that's interested, shop around at least two places, preferably three, and try to shoot for a 10-year or less repayment period. And you can refinance a to you don't have to refinance once and then you're done. Like you can refinance as many times as you can get a better rate. So I know a lot of people from like redirectivity on my site,

I know I know that they like will refinance and get a bonus and then they'll like refinance again and get another bonus. It's kind of like the credit card hacking game. And so the really smart way to do that is like do a 10 year to start and then pay down some of your debt and then refinance it again to a seven year. Right. And then pay down some more of your debt and then refinance it to a five year. And each time you do that, you might be knocking down your interest rate. It's probably going to be somewhere between like three to five percent or most of the refinancing interest rates these days. Okay. Do you notice that a lot of people have bad credit going into this process because they're struggling with the payments or anything like that? One of the things that struck me as a comment was

should you be preparing yourself credit-wise for a little bit of time before applying for these refinancings? So most of the people that I'm working with actually have pretty good credit, especially the ones that are refinancing. Like if you don't have good credit, then that's usually an indication of, you know, maybe some other things going on that push you to use forgiveness. But most of the, credit score is actually mostly just based off of your capacity to pay, not necessarily like how much debt you have or how scary it looks relative to your income. I mean, I've had some people that have had $400,000 debts with $70,000 incomes and still have really good credit scores, but they shouldn't refinance, right? So, I mean, I think that most of the people that will be

successful refinancing have something above a $650 credit score. But it's really nothing to worry about too much. The only exception to that is if you're trying to buy a house or you're trying to buy a business with business debt, that you lock that in first before doing the student loan refinance. Because once you do that, the banks are going to look at your cash flow that's required out of your pocket every month. And they're going to penalize you more if you go for a really aggressive refinancing. You're trying to buy a house right for that debt to income like mortgage calculation. So, you know, they're going to want to see like an income-based payment.

that's required of like $500 a month. So their mortgage underwriting can feel super confident, given you the mortgage for the house of your dreams. And then once you get the mortgage, the student loan refinance companies only care about your monthly mortgage payment. And so then they'll give you a good refi deal. You know so much about this topic.

Yeah, it's like, so I've advised close to 1,000 people with an average debt of about 280,000 each. and I've seen, you know, anywhere from 20,000 in debt to a million in debt. And so when you do something a thousand times, like some, you learn a couple things along the way. Yeah, I mean, it's cool. Like, you know, I'm super passionate about this and just, I just want people to get the right plan because the consequences of not having a plan are really, really bad because the average person, you know, I like to track this. So 10% of the people that I've worked with haven't really saved any money. Like we've just kind of confirmed like, yeah, this is the right path and you're doing all

with right things. And 90% of people do save money. And the average savings is around $70,000 projected over like 20 or 25 years from correcting the mistakes. So, you know, 70,000, that's like a whole year of you having to work that you could have back in your life and to do something else with. So, you know, whether kind of do this on your own, do this by yourself and read all the free content out there that exists or hire somebody to do it. I think it's just really, really important to have a clear plan exactly what you're going to do with your student loan debt and not put your head in the sand to pretend that it doesn't exist. Well, awesome.

Do you have anything else to add on this topic of student loan debt or destroy anything like that before we transition to the famous four? I think I've covered it. Get a plan. Get a plan. That's a really good bit of advice. because, yeah, I think that kids just go into this, not, oh, I want to be a veterinarian. Well, what else? Like, is there anything else you could do? That's just such a great piece of advice.

People don't think, people don't think about that. Like, if you're smart enough to get into dental school or medical school, there's a ton of other things you could do. But you just maybe haven't thought about it yet. Like, you know, I've worked at people that manage, like, social media accounts. Like, that's their job. Like, who would have thought that that would have been a thing back even like, Scott? you and our pretty young guys. Back when we were in undergrad,

who would have thought that people would literally make money posting things on Facebook and getting all these things, optimized for Pinterest and stuff. Just be creative and have a lot of cash and reserves to weather downturns. Maybe you could do something that you haven't even thought about. I mean,

I still want people that are passionate about being a veterinarian or dentist doctor or whatever lawyer to do that stuff. But don't do it just because you think it's a pass to an easy life. life or you're going to have an easy income and it's going to be stable. Like the economy is just moving, I think, very far away from all these formal, you know, highly trained kind of feels to more of a, you know, gig economy type of world. And so just have skills and be flexible with your finances so that you can be a part of it. Oh, that's great.

Okay. Scott, shall we move to the famous four? Let's do it. Travis, these are the same four questions that we ask everybody. there's actually five, but we don't know how to count, so we call it the famous four. What is your favorite finance book? I'm going to take a different approach to this question and go with Grant by Ron Chernow, the guy who wrote the Hamilton book that the musical is based on. And it's not explicitly a finance book, but it's a biography of Ulysses Grant, you know,

the guy who won the Civil War for the Union. And why I think it's like interesting from a financial perspective is this guy was fantastically brilliant in warfare, but he was a complete idiot when it came to money. And they talked so much in the book about all of the things that he would do with his money. Like he was one of the first victims of a massive Ponzi scheme that left him bankrupt as a former U.S. president at the end of his life. And he was relying on money from strangers to live. He had no sense for business.

And when somebody told him to go buy a horse and to offer the guy $10. and then, you know, if you won't accept any less, then give him 20. And Grant goes up to the guy and says, well, you know, my dad gave me 20 bucks to go buy a horse with. And he said, I'm supposed to offer you 10 first, but if you won't take it, I'm supposed to pay you 20. And so this guy was just so fascinating that he achieved this massive level of success in life while also having this, you know, huge lack of financial knowledge. So I guess I like it just because I think anybody can be successful coming from any level of financial, you know, gifts or intuition and you know you just have to i guess kind of realize where your blind spots are

right so i don't know i just i just got so many like funny anecdotes out of that that i keep you know pasturing my wife with because i think they're so funny um you know i read all the typical ones like millionaire next door and you know all of the like enough by john bogel you know where he talks about how he had 50 million of assets instead of 50 billion if he had kept vanguard a private company and so you know but i just thought that would mention that one just be a little a little bit That's a great answer to that book question. Can I modify that book question with a second follow-up here, what is your favorite student loan-related resource beyond your own site

that people can go and check out and learn more about how to come up with these strategies? Sure. There's a guy named Ben White, who's a physician. I think his site is like Benwhite.com, but he's a physician that's super brilliant that just took an extreme interest in student loans, and he wrote a book about them. it's pretty cheap, it's online, like you can buy it, and it's got a lot of the tricks and the tools that I use to help people in it. So if somebody is like, hey, I don't like the idea of paying somebody for help, like they should just go read that.

I think it's pretty good. Awesome. What was your biggest money mistake? So I was in college and I wanted to try to impress people. So I was trying to get a new car and I wanted a car that was going to be really sleek and cool. and like it had to be something that I could actually pay for. And so at least I knew don't take out a car payment. At least I had that much sense at the time.

But I decided I was going to buy an $11,000 used Chevy Equinox. And I don't know if listeners that own Chevys can relate, but mine had a ton of problems. And so the issue with it really was that I got all the bells and whistles, like a sunroof, like this nice grill in the front. I was thinking, oh, I look so cool. You know, I'm a college kid that's got his own car. and it's a nice big car and then the sunroof started to leak and i had massive repair bills and it

was just a total money sink and i you know wish i had just had some sense and bought like a two or three thousand dollar used car you know on cranks list from the beginning but uh you know luckily that wasn't too terrible of a mistake do you still have that car no i sold it i actually this is a true story i I sold it to a one-eyed wrapper off of Craigslist for about half of what I paid for it before I left from my Europe trip. The guys on the bond trading desk had a bet that there would be no way that I could sell the car for any less at a certain price. And so I took the bet.

And this guy, he actually was a really nice guy. And he paid me in cash. And we did the transaction at like the title office. And I actually looked up a story about him. And the reason why he had one eye was because somebody like shot him. it was a home invasion. They invaded his home and, like, shot him. And he, like, I don't know, I felt like, wow, like, this is a pretty good guy.

Like, that's crazy. It just kind of shows you shouldn't judge a book by its cover, right? That was a funny story because it's true. You know, he is, that's his full-time job as he's trying to make it in the music industry. And he wanted a car that was like kind of bigger, but affordable. And, you know, and his dad helped him pay for it, I think. But weird story, right? What is your best piece of advice for people who are just starting

out. Get $10,000 in the bank as rapidly as possible and live like a broke homeless person until you have that. If you get $10,000 in the bank, you're always going to be operating from a position of financial strength, be it needing to buy a new car because your car collapses or car repairs or I need to put down a big payment for a rental contract or I need to take a couple months off from work because I'm about to lose my mind and I can't take this anymore. So, I think that the $10,000 in the bank is a great starting point for a lot of people that are new grads. That's an excellent tip. I've never heard anybody say that.

Yeah, I love that advice. I mean, that's like just the concept of getting to wherever a position of financial strength means to you. And that's as good as anything because if you have $10,000 in the bank, you're not going to be facing an immediate problem in the near future, unless you have some sort of truly once in a lifetime disaster come in and wipe you out. So I love it. All right. The most difficult question here of the famous four, what is your favorite joke to tell at parties? Oh, boy. So my wife accuses me of being long-winded, but I'll try this one.

So the Pope flies in to New York for a meeting at the United Nations buildings. Yeah. And so he's laid. He really needs to get there in a hurry. And so, you know, he takes his taxi. And this joke is from before Uber and Lyft. So maybe it's old dated. I need to update my jokes.

But he takes the tax. And he's driving through traffic and the taxi guy is like not not super aggressive. And so the Pope's like, you know, this is ridiculous. Like you're not going fast enough. I'm late to this meeting. Get in the back seat. I'm going to go up in the front driver's seat and I'm going to drive us here in traffic because I'm, you know, I'm a better driver than you.

And so the Pope's driving and he's going really fast. We've been in and out of traffic. And, you know, one of the NYPD guys sees this taxi cab being really aggressive. And so he pulls him over and the guy goes up to the window and he backs away and freaks out. He gets on the radio and says, you know, I need backup. I need backup. This is a big deal. Like, we've got a big, you know, VIP celebrity in New York.

And we really need to need a, I need you to come down and see this. And then all the buddies in the radio are like, well, who is he? Like the governor? And he's like, bigger. You know, the president, bigger. And he's like, well, who the heck is he if he's bigger than president? And the guy goes, I don't know who he is. But he's got the Pope driving him around.

Love it. So my wife would slap me if she heard. me tell that joke, but that's perfect. I like that joke. It's way better than Scott's crappy jokes. Yeah. Scott likes the dad jokes. Yeah.

I can't top that one. That one's pretty fantastic. Okay. Where can people find out more about you, Travis? Well, they can go to my site, student loan planer.com, and then I'm also happy to have anybody that wants to send me an email. So my email is Travis at student loanplanter.com. They can reach out with whatever they want to.

Awesome. I think you'll get some people reaching out. This has been a fantastic episode full of information. We went very long. We'll make sure everyone knows that we went very long in the intro. But this is going to really help, I think, a lot of people that are struggling with this problem. So thank you very, very much for coming on today. Thanks for having me on, Scott and Mindy. So, Travis, again, thank you so much for sharing all of your information with us. I know that I learned a lot. I know that Scott learned a lot because we didn't know much before you got on. And this was amazing. This was. was super fantastic and I just really appreciate you coming on the show. Thanks for having me. So with that, we will say goodbye and we'll see you around. All right, that was Travis Hornsby with Student Loanplanter.com. Mindy, that was one of my favorite episodes I have ever recorded with you on our podcast. What a mind-blowing wealth of information.

Yes, this was amazing. I didn't know about the student loan repayment or debt forgiveness. or like I thought the debt forgiveness program was just for government workers. And specifically teachers, I didn't realize that there was a whole host of professions that you could use with the student loan forgiveness program. And it seems like you could do this with any student loan, you know, just depending on how long you want to pay it off and the taxes involved in all of that. And, you know, I think that we really just scratched the surface of student loans and student

loan repayment in this show. But I really like how it gives people options. and it gives people a path to follow or, you know, places to go for more information. We have all of the links that Travis mentioned, and I have sent him a note and asked him for, you know, what are the most important links on your site that we are going to put in the show notes? You can find those at biggerpockets.com slash money show 22. Awesome. Yeah.

I love how he has all of these great options for people with the student loan debt. Yet his biggest piece of advice in the show are one of the things that was really powerful to me at least, was that he was like really reflect before you go out and take out those debts and get that degree that's going to cost you all that money because you better be darn sure that you're going to love doing that profession for the next couple of years. Because, you know, while there's ways to work around them with these income rules, the back of the matter is that if you want to earn a good living, that you're going to have some consequences from these loans in the first place. But if you do have them or if you're on your path, there are ways to work around them and

still build an awesome financial position. Yep. Then at the nail in your FI. Dreams coffin or they don't have to be. Love it. All right. Scott, shall we get out of here? We've been asking a lot of our listeners to stick around with us for so long today. Really appreciate you listening. So for the Bigger Pockets Money episode 22, this is Mindy Jensen over and out.