Financial Audit - $100,000+ Private Student Loans, Yet Borrows For A Stupid Tesla

Episode Date: August 13, 2023

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My name's John. I'm 24. I'm from Massachusetts, and this is financial audit. Well, thanks for coming down from Massachusetts. What do you do for a living there? I'm a site reliability engineer. I work remotely from my house. Okay, cool. So I assume that comes with a pretty delicious income, right? It's pretty good. What is it? I think I, into my account, I get about 8,100 a month. Wow. Okay. That is a delicious. You come. Massachusetts is pretty expensive, though. We're in Massachusetts?

Yeah, I'm on the South Coast near like Cape Cod. Okay, it sounds expensive. Is it expensive? What's your rent? Off the bat. What's your rent? I live with my parents, actually. Really?

Yeah. So $97,200 net a year. We're living with parents, which means you better have an amazing retirement account and no debt. But whoops, you have debt. Yeah, yeah, a little bit. an account is okay. Hmm.

Interesting. So what's your financial situation? What are we looking at today? Yeah. I mean, overall, I'd say it's pretty good, much better than it was like last year. What was up with last year? You know, so I started this, or I started doing engineering like jobs right out of college. Got a pretty decent like internship.

And from there, I was actually really good with my money because I was a broke college student, got a decent job. got a decent job and I was not spending any of it. But then, you know, kind of lifestyle creep just hit me hard. You know, you still love the parents. Right. Yeah. I did end up moving out for like a couple months, but I had a really bad issue with a, with a neighbor in my apartment building. So that's why I moved back. Kind of issue. Did they try to shoot you? No, she was just, the, the walls were very thin and, and she was like, um, just always, uh, like, yelling through the walls to like keep it down. Even though, like, I'm a pretty quiet person. and to the point where like there was a there was a time where I called the cops in her

because she was she was threatening to call the cops on me for just talking in my apartment and then break the lease uh they were pretty understanding because they've actually had quite a few people leave because of that I'm surprised they don't kick her out yeah literally within the week that I left another tenant had already left because of her um so yeah it was a pretty pretty rough situation okay so then you're you went back home so lifestyle inflation or you just spending a lot of money on just fun food and stuff. Yeah, yeah, basically. I mean, I was looking at my bank account, but it kind of just felt like, you know, I was getting the steady income and I could buy whatever I wanted. And, you know, like, as long as, as long as I paid off my credit card at the end of the

month, I was good to go. So, which, I mean, in general, okay, sure. And if we're, you know, if we're not in bad debts or anything, we can certainly spend like 30% of our money, especially in your age, on, you know, net money on fun. There's nothing wrong with that. But, like, I guess it depends the overall situation. So we need to get an entire picture of what your situation looks like. What would you give yourself right now in terms of your financial situation? In general, not for your age, but your financial situation where you should be in life is zero out of ten.

Yeah, I'd probably give myself like a four. Okay. Yeah, mainly because of the debts that I have. But, yeah. Okay. Well, we're going to hit the deaths first. So, 24 years old, $79,623 a payoff amount for something. What is this something? That is a private student loan.

Private student loan? Yeah. Well, it's on forbearance. So they did give you a, oh, dang, and then it's a 7%. Yeah. So does this startup when the federal one start up? Yeah. Oh, okay.

Well, nice enough for them to do it. because sometimes like Sally Mae, that will, you know, be a d'n make you pay all the way through. Yeah. Yeah, I'm surprised that they forbeared it until, like, kind of, you know, with the federal. Yeah.

So I haven't paid a dollar of my student loans, and that's why I've been trying to, like, kind of situate myself. Yeah. I wouldn't have, okay. So my logic on this, in terms of student loans and the forbearance, it's like, okay, since there's 0% on right now,

it makes no mathematical sense to pay it, even if it is higher interest later in the 7% we certainly want to pay off. But that's as long as the money we would put towards it to pay it off earlier. Well, it's on forbearance, is going towards investing. Was all the money you would normally put towards it

going towards investing every single cent? Absolutely not. You did it wrong. Yeah, completely agree. Okay. So what was the logic behind not paying this off then because clearly we've decided you did it in the wrong way. What was the logic? There was absolutely no logic. 100%. Like I said last year, like I think my take home for the year

was like 89.4K and I spent 89K. Where did you get to school in the first place? Why did you have to borrow so much private student loan debt? I went to a private university freshman year and And I ended up losing my scholarship because I had like a 2.99 GPA and needed to maintain a three or higher. But because of that, I switched to a state school, but I ended up, I lived on campus there. What private school did you go to? I want to take a brief moment to thank today's episode sponsor, SoFi. Student loans are crazy. We know that.

We talk about them all the time on this show. And there needs to be a way to get a better grasp on them. We know that many private student loans that people take out well they're in college can have insane predatory interest rates. And when you're stuck in a situation like that, you feel like you just cannot get out of it. You feel like you can't even picture what the future looks like, whether or not you can get a house or retire. But that's where SOFI can be a helpful resource.

With SOFI, refinancing your student loans can be a step forward in making your financial goals a reality. They're a mobile first personal finance company that's helping their members bank, borrow, and invest all in one app. Their mission is to help their members achieve financial and financial. independence and realize their ambitions. They've helped nearly half a million people refinance their student loans by offering competitive rates and no fees.

The process is fast, easy, and available seven days a week with live customer support. Plus, student loans are eligible for unemployment protection, providing the loans are in good standing. So if you want to see if their rates are competitive for you, just take 60 seconds and go to SoFi.com forward slash Caleb or use the link at the top of the description below. It was a Wentworth Institute of Technology in Boston. Yeah, it doesn't mean anything. Why didn't you just get certified or something?

Well, dude, I swear, in tech right now, man, I know tech is having, you know, a little bit of a post hiring everyone layoffs type thing. But even still for the people that are getting hired, man, experience first. Even LinkedIn just came out with a thing today saying, so dating the episode recording, saying that they think the future, based on the applicants and what hires are looking for, are going to be based on job experience. Starting a business can seem like a daunting task, unless you have a partner like Shopify. They have the tools you need to start and grow your business.

From designing a website to marketing, to selling and beyond, Shopify can help with everything you need. There's a reason millions of companies like Mattel, Heinz, and all birds continue to trust and use them. With Shopify on your side, turn your business. big business idea into sign up for your $1 per month trial at Shopify.com slash special offer. And not degrees. Man, we could have got you certified. Imagine if you went through something like the partners, we have course careers or any other certification program and got certified in something and you made the same amount of money each year and you didn't have 80,000 dollars of privacy on loan debt. Obviously, okay, I'm not going to bully you for something you've done in the past.

So I don't want you to think of that. That's just an exam. for those out there, especially those who want to get into tech or are graduating high school and they're trying to decide what to do next man. A lot do require a college degree. I highly doubt what you did does. Yeah, I mean, actually,

for my current career, I don't even think they have majors for it. It's kind of like software engineering adjacent. So yeah, completely agree. And I'm not saying the degree is bad either. Because you can get a good return on your investment, but I'd rather like two years at community college than two years at a state school after that. Yeah, yeah, for sure. Yeah, no, when I was in high school, basically,

it was just like, oh, everyone goes to college. I'm a decent student. You go to college. You know, that was kind of the thought process. And I basically just went to Wentworth without even touring other schools, like seeing what else was out there or, yeah. So I partner with course careers for a reason, man, for other people to check them out because avoid this crap. Oh, Jesus, crazy. Oh, I will say, though, I was lucky to, you know, come out. Basically, I graduated in March 2020, like when COVID, like, went crazy. I got my internship, like, before my senior year was over. And from there, I've had a pretty good, I've had, like, stable income since.

Let's calculate what this minimum monthly payment's going to be. So would you say this was a mistake? I wouldn't say for, I can't take it back. And I have a really good career. Would you say it was a mistake? I wouldn't say it was a mistake for me, no. Okay. Well, if you don't want to make a mistake,

today, you should hit the subscribe button because that'll be the best decision you've made of the day. Terrible segue. But you should subscribe. I'm trying to get the 750,000 subscribers. I'm very thankful for everyone who has subscribed so far. Thank you. So at 79,623, 7% interest, it's probably the traditional 10-year repayment, I assume. Yeah, I mean, they have like a 30-year repayment, but I'm not doing that.

But you're on the 10? Yeah, yeah. Okay. I basically want to pay it off as fast as possible. And since, like, the start of this year, I've, like, started budgeting and everything. So I have, my spending is very low. Sure. And it better because this is about to be, this is going to be $924 a month.

Repayment. Death. Death. Absolute stupidity death. Oh, my goodness. Just to get a degree. And I'm glad you're making good money with it, but again, I'm not going to bully you on it too But yeah, I'm hoping to pay it off a lot.

I'm hoping to put more than... Sorry, go ahead and continue. And then I'll go into my... Yeah, no, this... Yeah, okay. I was just going to say that I'm hoping to pay that off a lot faster to save on some of the interest costs. Oh, we're going to. You were paying it off.

Yeah, you're damn right. Yeah, absolutely. And then we immediately go to the next one and we decided, oh, we're 24. We better get a brand new, awesome car. Yeah. Got to get a Tesla. Where you owe 51,628, kill me now. $98.

Death. Stupid. 6%. So it's not the worst. But if you consider a depreciation in cars in a standard car market, which we're getting closer and closer and closer to actually entering. Oh, again. Yeah.

And a $900. $931 minimum monthly payment. So now with the minimum monthly payments, we're like close to $2,000 a month. Yeah. Starting in August. The car gets worse, too. because, so that, that Model 3 was 51 or 56,000 when I bought it because it has the full self-driving

and the auto and the auto acceleration boost. Because of the full self-driving, I've actually been trying to sell this car. I can't find anyone to buy it because no one wants to pay the $17,000 for the software option. So I'm basically like negative 20K on it. I've been trying to sell it for. I mean, I just want to get as close to even on it. You know, but like I'm more than happy selling it. Like I've accepted that that I may want to do that to like kind of better my situation.

I work from home, like I said. I literally don't need the car. I'd be happy with literally anything. And my fiance and I are looking to move in together soon. She has a car. Oh, congratulations. Thank you. Appreciate it.

So what, oh, what's like the lowest you'll sell it for? Let's get it on the books. Yeah, so I just recently updated this loan to like auto pay the max that I can to try and like, you know, break down some of that debt on it so I can sell it and, you know, not have to pay like the whatever it is out of pocket. I'm not really sure. That's kind of what I'm worried about is with all that negative equity. Like if I were to sell it privately, like, like, you know, if they bought it for.

What is the lowest? Have you determined? I mean, I'd be willing to sell it for like 35, 30. It's just I need to. It might be the play. Yeah. Because even still, like. Like, I'll save, like, I think it was like 11K in interest if I do that.

Like, right there alone, it kind of helps with that negative equity. It does. Man, because of Tesla, it's like my dream car. No. And yet, I'm just investing everything right now, which is what you should be doing. We got to take advantage of our age. I'm almost in those in that big, scary three, zero. But even still, the compound growth that we get to take advantage of us in our age, dude,

it should not $900, should more than $900, should not be. be going to a vehicle at where you are. Make a good income. Let's get an okay car. Sure. Absolutely fantastic. $30,000 car. I don't give it.

But are we doing this now? And when we talk about car debt in general, and this is just, again, with everything I say, this is based on my own past, getting out of really bad debt and getting in a good point. And then, you know, at a good point now in helping people, wanting to help people get out of the situations that I was in, And there are certain debts that I'm okay with if we go about it a smart way because math always wins.

Math always wins. Where I think about depreciation with a standard car, like if we use 3% leverage on a car, which is very difficult to get today, that's where I'm okay with it. If everything we would normally put at it, I'm going to use an example. I'll use again. So what was this? What was the car? It's a Tesla Model 3. No, no, no.

What was the price of the car? Oh, 56,000. Okay. Let's call it a 60,000 car for the example. Okay, you have $60,000 saved up to go get a $60,000 car. You can buy it in cash. Or you can put $10,000 down and then borrow $50,000 at a 3% interest in this dream scenario. Then if you invest the other $50,000 in the S&P 500 and it goes, and that's not an investment advice.

This is an example of, okay, the S&P 500 with dividends reinvested. It's going to do over 10% a year annually with all the up years and down years combined based on historical performance. That's obviously going to beat the 3%. And the 3% we're also taking into account depreciation. So maybe the interest rate mathematically, if we really stretch it out, it looks like more 4 or 5%. Maybe even close to 6%. But still, you're beating it in the S&P 500.

6% with depreciation, certainly not going to be beating that. Now, where I'm against it is if people go ahead and put the $10,000 down. And instead of investing the $50,000, they just go below the $50,000 or even a part of the $50,000. Then it's no longer mathematically making sense. Also, when people go and take out debt on a car, okay, you have $60,000, you're going to get a $60,000 car. Oh, maybe we'll put $10,000 down. But maybe since we're putting $10,000 down, maybe we get a $65,000 car.

Maybe we get a $70,000 car. No, you were going to get a $60,000 car because that's the cash you have. It only works in specific instances. You did not do it right. Oh, yeah, absolutely not. And I've actually had three cars before this. So like I said, my spending was like unhinged last year in the past couple of years. cars are one thing that I've really been into my whole life so I just ended up just going like

through car after car yeah so like a lot of money was lost just like paying down payments and on like selling the cars afterwards and yeah this car was like the last one before I like got my act together I bought this car at the end of last year and realizing now like how bad it is yeah yeah yeah because if you get out of this car even if you sell it for like $30,000 then you're still have to come up with the other 20. Yeah, yeah. So do you need a car or do you and your fiancé live together? We don't live together yet.

Okay. But we will be starting at the end of the summer. End of the summer. So pretty soon. Yep. And I live with my parents and they have cars as well. Oh, that you can borrow. And then your fiance, she has a car?

Yep. Okay. Cool. Cool. Cool. Okay. Sorry, I assume she. She?

Yeah. Okay. She, yeah. Yeah, I would borrow her car when necessary if you're working from home and then we just get rid of this car, dude. No. At that point. I got all the pictures.

taken for the for the posting. Oh, you're ready. You're ready to go. What are you going to list it at? I was thinking of listing it at like 40. Going down to 30 when that's right. Yeah. Yeah. Okay.

With those options like basically a Tesla Model 3 without those options are selling for like 28, 30 like the same year. With those options technically it should be worth like a bit over 40, but just like going to a dealership, they just don't want to pay for these software options. No. So I'm hoping someone out there wants full self-driving. It's pretty cool. Sure.

So we also have federal student loans. Yeah, yep. Jeez, it just keeps going. Yeah, the student loans are rough. You just want to debt, debt, debt, debt, debt for this. So we're over $100,000 in student loans. Yeah, I think it's about $105,000. That's insanity.

So here we have 26,700, 276. I'm guessing that's going to be about a $250,000. dollar minimum multi-payment on the traditional 10-year. Now, typically when you see these, again, it doesn't show the interest right now because they're under ferment. I don't know why they do that because it's stupid, but it's probably going to range anywhere from 4 to 6. Yeah, I think it was 4.15. I couldn't get it to short there. Yeah, yeah, I believe so.

Well, usually they're different per. Yeah, I don't know. I'm going to say 4 to 6%. I saw it on a page like a couple weeks ago and I couldn't find it again. But yeah, it's somewhere around there. Maybe that's the average across all of them. could be. Now what is this?

It's just a... You spent money on a card and then you paid it off? Yeah, I think that's a Best Buy card. I wanted to bring that up the Best Buy card. Because, you know, more awful spending.

So this is no longer the case. The balance on the best card does not exist. That's why I sent that the other picture. Gotcha. So we've paid off the Best Buy card. Yeah, it would have been 30% but I'm glad we paid that off.

What was that? What were you doing on the Best Buy card? You must have bought something. Just idiotic purchases. I bought like a $2,500 graphics card. and then a new MacBook. What is that, a 4090?

It was a 3090 TI at the time. 39. Yeah. To play, like, CounterStrike. To play CounterStrike. Just, yeah. Stupid. Maybe for the new Counterstrike.

Oh, yeah. You never know. With all the smoke. Yeah, with all that. I'm sh** that game. I'm desperately stupid. Sorry, I am too. I have way too much time on it.

My friend tries to coach me. He's very good. He's in, like, the top 01% of, of them. He's crazy. But we have an American Express. I don't, so new charges, no, new charges, $6.508 and they're pretty much all bull.

So like $658 a bull, mostly. There's a few things like, okay, ring monthly. I'm okay with that because it's good to keep that stuff backed up. And there's some things that are like services. I'm thinking maybe some utilities. I'm not 100% sure. And then obviously

super charging on the Tesla, you know, that replaces gas. I'm not going to beat you down for that. But then New York bagel and Speedwell coffee and Shaw's, Empel.com, and Bertrick's, and Ben and Jerry's, and Blue Kangaroo, and stop and shop for $15 and wellies and super stop. So I will say like Shaw's stop and shop, Speedwell, that's all groceries. Speedwell is like my coffee subscription. Oh.

Well, you don't need that. Well, no, like whole bean. I do espresso at home. Oh, cool, but that's an expensive way to do coffee still. And Taco Bell, and I'm a coffee, dude. I get it. Like, I get fancy beans. I brew them and I do espresso at home as well.

I was just drinking a espresso right before this. But still, when we're in bad debt, do we need that? I don't think so. And Taco Bell and parking in T.J. Max and Hulu. Ricardis and Hulu, Bova, Bakery, Dragon Bowl, M. Mack and Bolo, Boloos, and Panera bread, and Ichigo. Uber eats, Red Robin. Don't think we need to be doing that.

Sure. I will say I have a pretty reasonable budget for like food spending, like going out to eat. You shouldn't have a going out to eat spending thing. If you have a 7% student loan thing that's starting in two months, if you have a Tesla at 6% with depreciation included in that, no. That's fair. That's fair. And then $7 purchase, which was on Amazon for another card.

So you pay off all the credit cards. We don't have a credit card debt, which is good. We just have disgusting private student loans and some federal student loans that some of them won't be great. And then a Tesla that you're underwater in. Yeah. Lovely. Lovely, lovely. Okay.

Is this a checking account? I think this is a checking account. Yeah, it looks like my checking. So you have $8,000 in there, $9,000 in there? Roughly, yeah. Okay. So $9,000 in checking. $9,000 in checking.

There wasn't really much in here that was crazy. Paying for rocket money, which I'm a rocket money proponent. Rocket money is great. That's what I use now. And just paying off bills and cars. But this, this is interesting, Verizon Wireless for $237, and that happens twice. That's my phone bill, yeah. What the fuck?

Is it just your phone? No, no. So I live with my parents, and I don't pay, I give them some money for rent, but we don't have, like, any, like, super hard, like, lines. But I basically just take over the phone bill and the Internet. Okay, well, what happens when you move out in three months? Then we're going to split it, yeah. Okay. Yeah.

So right now you take care of that, though. Yeah. What was that again? How much was that? It was, it's going to be 2.11 because I just got rid of, I was paying for, like, protection and it included, like, tech support, which is like an extra $30 a month, and they didn't tell me. So I called them up and I got that sorted.

Okay. Then this is another online banking, but money was in, money was out. I don't know. It's the four, it's only $100. That's the savings that's tied to that checking. Well, you're clearly. Why is it $100? We've had $12,000 in there.

How did you go from $12 to zero? I open up a high yield and that one has like a, that one is like a .06 or something. That's what the Marcus is from. Yeah, exactly. You know, honestly, even better this. Not to keep plugging, but I only partner with companies because it's even better. You get 4.15.

It's only 0.15 better, but you can get 4.3 by using the high yield that I use, which I linked below. Yeah. Plus a bonus. You'd probably get a $250 bonus. as well if you transferred it over there might be worth it for extra cents a year fixed a dollars depending but you have 24,417 in there which i'm very happy to see yeah and i will say though and one of the reasons why i was pretty happy to chat with you is um that 24 000 right there is uh was my savings

for down payment on a house so it isn't savings but i was very close to to i actually hadn't accepted offer on a house the whole thing went through and then it basically got bought at foreclosure as well. So then I ended up pulling out of that because it was like some crazy situation and I didn't want to. How much was the house? It was like 350. Okay.

Yeah. Housing's cheap up there. It needed some work. It was a small ranch. It needed some work. In Boston, 350 would be a shed. Yeah.

Well, I'm definitely not in the city like near Boston is is often. Well, I figured by the coast it'd be expensive. But I don't really know the area. Yeah. It was, it seemed like a good deal. which is why we kind of pulled the trigger on it.

But I'm glad that I got out of that deal because it was a pretty sketchy. Gotcha. And then we have a Schwab, which is 401K. 401K. You don't have a Roth IRA? No, I don't. Okay, we've got to get you a Roth IRA here pretty soon. And it's $30,000 in a $2065, so index retirement fund, which I love those.

They're more aggressive at first, then they get more conservative as we get close to that retirement age. the 2065. So that's cool. That's it, right? No more debt? Uh, yeah, yeah, yeah, that's it. Yep. Scared me. So now it's going to come down to what do we do about all this stuff? Yeah, I had like a couple month plan. Um, so basically like, what was your plan? Me, me and my, my fiance were like going to reattack trying to get a house at the start of next year. No. No. No. No. Go ahead. Can you Continue. Okay. So my plan was to, like right now, my monthly spending with the car, like, insurance and everything is around like 2,200, something like that. So I was planning on using basically every other dollar to put towards first to pay down the car to get it like even, like not underwater anymore so I can sell it. Once I sell the car, I was going to like start paying off the student loans like basically all that probably like around five grand a month towards student loans for a couple months.

just to pay that down as much as I can. And then when we get the house, I would probably bring it down more closer to like the minimum payments or double the minimum payments, something like that. Well, in most cities right now, you can rent for kind of under the value of homes and a lot of the major cities

that especially exploded during the pandemic. So I know in Austin you can rent for a more affordable price than owning right now compared to the values of the homes. So I might rent for a little longer until interest rates start doing the thing, you know, inflation, also dating inflation 4% today, year over year. So, you know, we'll see how long they hold if they go up maybe again, just a little.

And then at some point, you know, they'll probably come down, you know, maybe in a couple years. That might be the good time for you to get a house. But no, right now we're focused on paying off a 7% private student loans at $80,000 of stupidity. We're not getting in a house right now. Thank you. No mortgage. So $211 is going to your phone. Debt, we're getting rid of the Tesla immediately,

so I'm not going to put your minimum monthly payment of that in there. The $924 of the private student loans and the $250 of the public student, federal student loans, will be $1,174 a month. Cool. Use credit cards. So you're an okay credit card person. so I'm going to allow you to do that. But one thing you could consider,

we'll use rocket money as well. So rock of money is good. So you're good there. I'm just trying to think of other things to recommend you. But I think you have good programs right now. You have good programs right now. So $1,174 is minimum debt payments. Do you know what your rent is going to be in a few months?

If I were to get an apartment. Oh, it's not decided? Oh, so I live with my parents right now. Yeah, but she said you're moving in with your fiance. She's moving in with us. Oh, that's completely different. Okay. Yeah, yeah.

What's your internet that you have to pay? The internet is 100. That's a cheap internet. Okay. Yeah, that's gigabit, but it doesn't work too well. Not fiber? No, not fiber. That sounds about right.

Okay. Now you don't pay for gas because it's Tesla, and we're getting rid of the Tesla anyway, so we're not even going to do the charging. Do you pay for any other utilities, like electricity at the home, or is that on the parents? I give my parents 150 a month for just the utilities, whatnot. Now, how does the food situation work in the house with groceries and all that? I just buy all my groceries.

And if my parents, I cook a meal, like I'll, you know, I'll eat with them sometimes. But I handle my own food. Then I think you can do kind of cheaper than most people, right? Like, how often do you eat what they prepare? Not too often, like maybe once or twice a week. once a time a week. Yeah. I'm going to give you $250 for groceries.

Yeah, I will say like I've been kind of being a rat at the house and I've been like living off of like maybe 100 to 150 a month on groceries. Like my budget I set to like 400 but I haven't really hit even close to that. I'm going to give you 250 and then for like toothpaste, face care, all that stuff. I'm giving you 75. Any other minimum fee payments that you can think of that you have, not including the test. not including what we've gone over.

So no car insurance, we're not thinking about that either right now because Tesla's gone. Yeah. That being the case, no, I don't think so. Okay. Cool. Then your minimum monthly expenses in order to survive are actually incredible, meaning that you should be able to get out of the situation and we can get you into owning a home with your future wife. In order for you to survive, you need $1,960 a month compared to your,

8,100, I mean, come on. You know, 24%. Your needs are 24%. That's incredible. But obviously, we just don't like the math around the debt. So what we're going to try to do is take advantage of your income and that gap there. And you living at home now to pay off aggressively, the aggressively stupid private student loan. Tesla, we sell it for 30. You owe 20.

You know, cool. That's great. I have to pay that, like, immediately, though. when I sell it, right? You do, because what you're going to do is take $20,000 from new savings, and it's done. Oh, that hurts. That hurts, but it's there for a reason. It's okay.

I mean, at most of, you know, where you are, 4.05 or the savings account, I use 4.3. That's not beating 7%. So there's no point of it even being there, you know, when we can just pay it off. Like math, it's just full math. It makes no sense. Yeah. So we're pulling out $20,000. You have $4,4,417 left in there.

And then you're paying off the Tesla's done today. No more car insurance. Will, fantastic. It saves you some money. Because we'd have about $2,000 less in how much money you have left over on a monthly basis. In fact, your needs would be 50% if we still hit the Tesla. Yeah. So because that thing's ridiculous for you.

You do not need that yet. At some point, sure. No, honestly, not at some point. It's just a ridiculous car to own. It is. But I mean, at some point, you can have it. But it doesn't make sense now. Yeah.

So from there, what do we have? Tesla's gone, $8,100,'s coming in on a minimum monthly basis. Minus that by your 1,960. Okay, cool. So you're... Okay. There's $4,000 left in your savings. 4,400.

Guess what? You're taking out $2,400. Sorry. What's that for? Okay. So you're taking out 6,000. No, you're taking out, yeah, 6,000 from your checking and 2,400 from your savings into 8,400. And you're putting that immediately towards your private student loans.

Okay? Because you, with where you are in your age, in your career field, and leaving it in at home, just with a one-month emergency fund, which is what you're going to have on the side, that's perfect. That's okay. That's an acceptable risk level for your situation. Because if worst comes to worse,

I don't think your parents are going to allow you to starve on the street. Something tells me. Yeah, they're pretty good people. So we minus that by $8,400. Okay, so private student loans is now $7,71,223. We're going to divide that by the $6,140. you're going to put towards it a month. You know, actually because you live at home, because there is money to work with, I want to

be a little more flexible. I want to start being a little more flexible. I will allow $150 a month in going out to eat money. Cool. Yeah, that's what my budget is right now for that. That, of course, brings it down to $5,990 of what's loved over because that's still a good number. That's why I'm allowing you to have more flexibility.

If people are cutting it close, then I have no flexibility, but that seems reasonable. Just so if $150 a month on enjoying a little bit of life gives you a higher success rate of completing this, even if it's a few months longer, I would rather that happen than a higher chance of it just falling apart and you not completing it. So if that's what it takes, it's a little better. So I want to be a little more flexible on that going forward. But it off, again, it's situation to situation. So this is your situation and that does not apply. to everyone's situation.

Now we have 71,223 left to pay off on the private student loans and we have an additional $5,990 on a minimum monthly basis. So divide that by that. What are we looking at? With you following that exact budget strictly a year, a year. So a year from now,

the private student loans are gone, which is actually incredible. For an $80,000 student loan balance is 7%. I mean, a year from now, they're gone. That's incredible. Imagine what your life looks like going forward.

It is. And when I was like, crazy, using the calculator for, like, the student loan repayment calculator, you know, if I were to do like one of those like 1530 or whatever, like flex income loan repayment things, I think the interest that I would pay total was like over $200,000. Yeah. So that's horrendous. Now you have an additional $6,921 a month left, 12 years from now. Because Tesla no longer exists.

One year from now, private student. Yeah, one year from now. private student loans no longer exists. I'm going to say about half of those federal student loans are about 5% or higher. So those are the ones we're going to try to pay off as quick as possible. So

of the $26,276, we're going to say about $13,138 of them are slightly higher interest. So we're also going to pay those off as soon as possible. And of course, with $6,921 left, I mean, that's incredible. You're going to be able to do that in two months.

So a year and two months and your bad debts are gone, then your minimum monthly payment, those lower interest, you know, four or five percent or less student loans until they're paid off. Yeah, yeah. Teller which is gone. And that'll take about 10 years, but that's fine because it doesn't matter.

Math wins. At that point, it's going to be about $125 a month going towards minimum monthly payments. At that point, what I'm okay with is 50, 30, 20. 50% our needs, 40% on wants, or 30% on wants, 20% on savings. So we can go into the world of thinking about a home at that point in a year and two months. Actually, I lied. So the $6,921 left, you don't need much for an emergency fund yet.

We're going to do a basic starting $10,000 one. So in two months, save up. So a year in four months, all the bad. debts are gone and you have $10,000 for an emergency fund. We'll want that to be higher once you have a mortgage and everything like that, but that's going to be your starter. From there, I want, what's the percentage you're contributing right now to your 401K? I knocked it down to like the minimum match or like the maximum match.

I think it's like three or four percent. Okay. Yeah, always take the match because that's 100% return on the investment. So it makes, again, no mathematical sense not to. So we're taking the match. From there, I want you to bump up. that to about 10%, let's say, and then max out your Roth IRA after that. So at $6,500 a month, that's going to be $541.66 on a monthly basis that you're

contributing to it. And then after that, whatever is left mathematically to get to that 20% of your income, it's probably going to be about 15 to 16% percent. is what you're going to be putting into your 401k, and then you're maxing out your Roth IRA. So I think that's what it's going to be to hit that 20% mark that we're trying to do. So that should be good.

That should be fantastic. So as long as we're maxing out the Roth IRA and then putting whatever is mathematically left into the 401K and then try to make it a Roth option if you can because that's even better. I don't know if they offer that. Companies are starting to offer that more and more. Yeah, I have no idea what they offer for Roth. Yeah, take a look into that.

If you can change it to Roth, I definitely would because the benefits far outweigh. any benefits you'd get with traditional. So from there, what I would personally do, are we still living at home at that point in a year and four months? Yeah. We are? Okay.

So I would actually keep my needs at 25%. And they'll actually be a little less at that time. But you can up the groceries and stuff like that if you want. But needs at 25%. I would have my wants at about 20%. And 20% are going to invest. So that's 65% is allocated. So from there, I'd have the rest going towards stuffing up as much money as possible in a high yield savings account for down payment on a home.

Yeah. So I'm thinking $835 a month you can stuff away to home. And what will be the home price range you'll be looking for at the time for you and your fiancé? Yeah, I mean, we've been looking, trying to keep it around like 400,000. Okay. Yeah. This is just, it shows the strength of your income. And only 28 months, you know, or 2.3 years, two years and a quarter, you have your 20% down payment.

That's incredible. Are you going to live a home that entire time? So that's three and a half years from now. Yeah, yeah. Okay. I don't, I don't plan on. Yonsei's okay with that? I think so.

Okay. That's a conversation with that. Yeah. But with that, you know, how I think you allocate like 20% for wants, you know, that's something that totally comfortable, like knocking that down to get the down payment. Cut it down to 10. Yeah. Cut this to a two year or, you know, one year three quarter type thing.

Like as much as you want to, that's incredible. And you're going to retire a multi-millionaire and you're going to have a nice house, you know. And then at the end, who knows where the interest is it will be at that point, but maybe you'll be able to refinance it at like 3% at a later date, which would be incredible. If it's not, then maybe we start paying a little bit towards it to start painting it down. But it just depends.

Depends on the situation. Who knows where we're going to be out in two, three years. What matters most now? Let's get rid of that Tesla. This is stupid for your age. It makes no sense that you don't even use it. We're paying off like crazy by keeping our budget pretty darn strict,

these private student loans aggressively hard now. Then we're paying off anything. everything that's above 5% on your federal student loans and then maybe anything that's above 4% to 5% as well. Then minimum monthly payments until those are paid off. And then we need to start. And I want this, let's do a little investing math real quick. So if we're doing 20%, this is, of course,

with your income not even going up at all over the years, 24, but at the time, we've got to wait a year before we can do it. So you'll have 35 years left of investing if you want to retire. 60, which is great. Live the golden years. $30,000 in there. Additional $1,620 on a minimum monthly basis over the course of 35 years.

Contributing a compound monthly. Beautiful. Following the average stock market return of 8% would be $4.2 million, which is pretty cool. And that's not your income even going up at all. So, you know, we're being, I'd say a little more on the conservative side there. After inflation, it'd feel like $2 million in today's money. So with following the 4% rule, you could walk with $80,000 a year.

That's not including the 401K. That's including the 401K. That's everything invested. So that's your 401K, just hitting that 20% of your income. Gotcha. 20% of your income invested will be that. It would actually be a little more because the income,

what I'm trying to think. I think 1,620 is a good number to go off of. amp that to 25% as well if you want to do more than that. But again, it should be higher than $2 million in today's money because your income will go up over time. But that's just what it's looking like today. So, yeah. I think you're set up for success. It's just the big thing right now is just cut back a little, make the budget what I listed, and then pay everything aggressively towards this. I haven't seen any indication that you have so far. You've been putting a little bit into Marcus, but even Marcus is only up to $25,000. With the money you've been making,

like if you didn't bullshund last year the private student loans would be gone like we've shown that. So right now it just depends what you're actually going to do. Knowing yourself, knowing you in the life you live, tell me what is going to happen

when you leave this place and you go home. Yeah, I'm definitely getting rid of the car. It's something that's been on my mind past couple months. I just have been worried about about the negative equity on it and the fact that we've been looking at a house as well.

So I was like, you know, I have the savings, but it's for down payment on a house so I don't feel comfortable selling the car and having to pay that out of pocket. But yeah, definitely getting rid of the car, using whatever from savings I need to to offset that. And then, yeah, just aggressively paying down

the private student loans. It's kind of been my plan, but I like I did have in my plan getting the house at the start next year. So definitely going to make sense. going to wait on that a bit longer. Good. If you follow this, dude, you're going to be a multimillionaire by the time you retire.

And then, of course, we have a combined household income at some point. What does she do for a living? She's a teacher. Okay. So with the combined household income and, you know, the benefits that teachers get, you guys are going to be multimillionaires by the time you retire. And a pretty early retirement, too. You're not going to be working in your 60s.

Or you can if you want, but you're not forced to. Not going to be working in your 70s, especially. So, you know, right at that 59 and a half when you can start, some withdrawals, dude, you can start them and it's great. It's awesome. Any final thoughts? I just want to say anyone else who's in my situation

and, you know, sees themselves going down like a path just spending a bunch of money and not realizing it, you know, hope you find this video helpful. Also, shout out Bo and Sylvia for finding Caleb and showing him to me. Bo and Sylvia, let's go.

For John, obviously he piled up an insane, amount of stupid debt. But unlike most, with his income situation, being able to get rid of the Tesla and living at home, I think he's going to be the quickest out of anyone that's been on the show to get to a 10 out of 10 from where he is today. When it comes to his hammer financial score at this point, when it comes to spending, solid middle-the-road 5 out of 10,

he was certainly spending money he shouldn't have that should be going towards the debt and was a little over his budget of $150 that he said he was falling. it clearly wasn't. But five out of ten, pretty middle of the road. Debt, not good, not the worst we've seen. The private student loans, come on. The Tesla at his age, come on. Two out of ten. Retirement, very happy where he is for his age, five out of ten emergency fund. It's fantastic. He saved that $24,000. This is a 10 out of 10. I would have to take points away from that, but I'm not going to, but I would because it has to go to the student loans. But again,

he saved that up and that's where it is today. So I'm very happy 10 out of 10 for that. Real estate, that'll be like a six, seven out of ten, maybe a ten out of ten eventually, but right now it's a zero out of ten. But that'll get there soon. Hammer Financial Score, four and a half out of ten. I have all the resources in the description below that I use or would use the files in specific situations. I've partnered with them specifically for helping you. I don't partner with any company unless it actually provides benefits.

So feel free to check those out. Don't forget to follow my Instagram and Twitter. Thanks. Thanks to SOFi for sponsoring this episode. See if rates are competitive and if you can save money on your student loans by going to sophy.com forward slash Caleb.