$218,000: How Spencer and Jamie Paid Off 6 Figures of Debt | Military Money Manual Podcast Episode 15

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Paying off debt, especially when it's 5 or 6 figures, can seem insurmountable.

A journey of 1000 miles begins with a single step. The same is true for financial independence. The journey to being a millionaire investor starts with paying off your high interest rate loans.

In this episode, 2 Air Force officers Spencer and Jamie walk you through the exact strategies and techniques they used to each pay off more than $100,000 of student, credit card, auto, and time share debt.

Military Money Manual Podcast Episode 15 Links

Military Money Manual Podcast Episode 15 Transcript

[00:00:00] Spencer: Welcome to the Military Money Manual podcast.

[00:00:08] Jamie: In last week's episode, we covered the basics of getting out of debt. In this week's episode, Spencer is going to share some of his personal story of paying off over $100,000 in student loan debt that he and his wife carried. 

So Spencer, can you describe a little bit of your situation when you graduated from college in 2010?

[00:00:26] Spencer: So to get into the specific numbers, I had the USAA career starter loan, which when I took it out was $25,000. But while the payments are deferred until six months after you enter active duty the loan balance keeps growing from the interest. So it's a 2.99 percent interest or about 3 percent interest.

And it was, so the USAA career starter loan was $26,000. And then I had two Sallie Mae loans that were $15,000,000 and $20,000. That's $35,000 plus the $26,000. So $66,000 in debt and then in 2010 when I was a second lieutenant, I had $27,000 in income. So it was pretty painful. A third of my monthly paycheck was going towards debt repayment.

And while I was somewhat familiar with Financial Independence Retire Early, like the FIRE movement I really didn't feel like it was an option for me at the time. So much of my income, I couldn't set aside, I was setting aside 10 percent of my paycheck. $120 bucks per paycheck into my Roth IRA.

And that was really the only savings I was doing. I wasn't and then paying down my debt. So I didn't feel like we were getting ahead. I really just felt like I was drowning. And it was really far from the shore and there, it felt hopeless. It can seem like an insurmountable mountain when you have five or even six figures of debt that you need to repay and this was low interest rate debt, it was All that was under three percent, right? 

So my wife had forty five thousand dollars in student loans. She had gone to school in another country, New Zealand and as long as you stay in New Zealand, your debt is 0%, but then once you leave New Zealand, I think it jumps up to 6 or 7%.

So before she left New Zealand to move to the U.S. to marry me she worked for a year, lived at home with her parents, didn't go out very much, and she was able to save 80 percent of her income and pay off $40,000 of her student loans. And then once she got to the States they actually, they allowed me to make the final payment, $5,000 payment with a credit card.

And they gave you a 10 percent discount. If you made a lump sum payment over, I think it was over a thousand dollars. You got a 10 percent discount. So I was able to meet the minimum spend on one of my credit cards. This was way long before I was really into credit cards, but I was able to earn a welcome bonus by paying off her student loans.

[00:02:59] Jamie: Wait, so if she did 80 percent savings rate, she's one, she's way cooler than you. And why are we on the podcast and not her? 80 percent that's impressive. 

[00:03:09] Spencer: She likes to say that every one of my ideas on the website comes from her in some way or another, so I probably should give credit where credit's due, but I'm the one on active duty.

Come on. So yes.

[00:03:27] Jamie: All right. So how did it feel when you finally paid off six figures in debt and became debt free before the age of 30? What was that like?

[00:03:35] Spencer: So it was actually anticlimactic, when I, yeah, when I made that final payment and I think that's because, once you develop the habits and the behaviors and you build the systems, like so much of personal, my personal finance and what I advocate for in my book, The Military Money Manual is automating.

You want to automate everything that you can, that way you free up your brain. To worry about and think about and enjoy other things. So your money just, it all just happens automatically. Money comes in, money goes automatically into my investments, into the TSP, into my Roth IRA, it goes my credit cards are set up on auto payment it goes into my wife and I both have separate checking accounts, so basically every paycheck we get our own little personal paycheck and we can spend whatever we want out of that money right now.

It's $250 each, $500 a month each, and I can buy the latest and greatest carbon fiber bike to go and do triathlons if I want to. And she just saves hers. So she, right now I think our, I think I've got about $6 in there and she's got about $3000.

[00:04:44] Jamie: So you need to start saving yours for our trip next summer.

[00:04:48] Spencer: Don't that's right. Yeah, we do need to do that. Then, we were in a very fortunate situation where we had just PCS and we made a little bit of money on the condo that we had bought when we had first moved to that duty assignment. And so we had, I think it was about $45,000 is what we made.

And so we actually had, I was very close. I think that about $26,000 remained on my student loans. We also had an auto loan because we used an auto loan to purchase my car earlier within a year or so of selling the house. And so the decision we had to make was do we throw that money into the stock market, put it to work for us in an asset?

Or do we wipe out our debt and then now we're debt free and now every dollar that we get, from now on we get to decide what we do with and the mathematician in me, the economist in me said actually the financially optimal solution is to invest it because I know, the US stock market after inflation over a long enough period of time, it's going to make about 7 percent a year ish, maybe on average, historically who knows, what it will do going forward, but that's the historical trend, right?

7 percent a year. And my debt was only 1.8%, 2.99 percent was the highest on my USAA career starter alone. So the financially optimal solution was actually to invest it and not pay off my debt, but I didn't want my wife and I had the conversation and we both decided we would just feel so liberated to not have any debt anymore and not have minimum payments, so every dollar that we received rom that day forward, we would get to decide what we did with it. 

And, looking back on it, Hey, I shouldn't have sold a condo cause it's probably worth many times yeah. But I think I would still make the same decision. I think I would still take that windfall.

That extra money that we weren't really expecting that we hadn't really budgeted for, because we had it all planned out. We were going to pay off our debt. We were only two years away basically from paying off our debt. But when I thought about that, I thought, man, like future me, it's going to be so happy.

That past me made the decision to pay off this debt. And sure enough, we were like every, like we never had to make a decision at that point on and consider, what did Sallie Mae, our student loan provider, do? We never had to consider how we were going to make the minimum payment on that loan.

So I loved it. I think we basically were making a thousand dollars a month in payments at the time. And so once we wiped out that debt with that windfall, now we had a thousand dollars a month that we could start throwing into the TSP thrown into, I think my wife's Roth IRA. And, we, yeah, it was, like I said, it was anticlimactic only because we'd already built the behaviors.

And so I think the, and the automation, exactly. So like it was inevitable, I can't remember who says that in the movie, it is inevitable. Kim Jong un and team America.

[00:07:51] Jamie: And it really was going to get us banned in North Korea.

[00:07:56] Spencer: Our North Korea subscribers are dropping by the minute.

But yeah, no, it really, it was an automatic. It really, once you have it systematized and once you have it automated then really at that point, the writing's kind of on the wall. So it's systematized

[00:08:12] Jamie: the word

[00:08:13] Spencer: I think it is. Yes, I think it is. All right. Yeah, so I know I would say for me, it was.

It's actually it, it, the feeling came in drips and drabs later when, whenever we'd, I would have a pay increase and we would just be like, cool, now we can save more achieve financial independent. And I think really, if you think about it, the achievement you get, once you, once the debt is repaid and you start throwing money into your investments, now you're going to.

Achieve financial independence that much faster because that money is going to start going to work for you. Yeah, I would, and one thing, one thing I'll add to is I took on a lot of debt. I had an ROTC scholarship, but I still took on a lot of debt to go to school. And if anybody out there is listening to this ROTC just go to a school that ROTC scholarship is going to cover.

You don't need to, you don't need to take on debt to go to a good school. There's plenty of good schools, state schools out there, plenty of great schools out there. And nobody here's the secret, right? Nobody goes to Harvard and nobody cares that you didn't go to Harvard. Like maybe if you work on Wall Street in New York City, somebody cares if you go to Harvard Business School.

Okay, but guess what? You can go to Harvard Business School after going to Wyoming State University. Actually, I don't even know what Wyoming University is, right? But at the end of the day, at the end of the day, University of Wyoming. Thank you. University of Wyoming. Yeah. At the end of the day, nobody, that's the great trick, isn't it?

Especially in the military, does anybody care where anybody went to school other than maybe the service academies and only because you have a little bit of a network out of that, but especially

[00:09:54] Jamie: those of us that didn't go to the academy, don't care that we

[00:09:58] Spencer: actually don't care that you went to the academy,

[00:10:00] Jamie: But also Spencer, that's a good point because a community college might be a good option.

A lot of people can hop from a community college, do a year or two there, keep the cost down and then transfer to a four year university and a lot of RTC detachments have what they call crosstown programs where you could be at a community college. For example, my wife and I commissioned out of the University of South Florida in Tampa, the detachment there, and it's not just an Air Force ROTC thing, it was available for other branches as well, Navy and Army and Air Force were all available at USF.

They had 16 crosstown schools, so you could go to Hillsboro Community College, you could go to the University of Tampa, you could go to all these other schools. And then do your ROTC at one school so you could start out at Hillsborough Community College or whatever community college near the college you want to do ROTC at, for example.

And then after two years transfer to University of Tampa or University of South Florida. And that's another way to help keep your costs down. And maybe even by the time you get to that point, maybe you've picked up a scholarship in ROTC, and then you don't have to pay for anything at all.

And then that'd probably be the ideal situation. No one cares. No one asked me where I went to school. No one asked to look at my…Is it called a diploma? My degree? 

[00:11:15] Spencer: I think it is a diploma.

[00:11:16] Jamie: Yeah. Okay. I thought the diploma was high school, but either way, no one has to see my diploma from high school, my college diploma or degree, whatever it's called.

And even now that I have a master's program, no one cares. Like I'm working on my second master's now and no one cares, don't let that mentality of I need to get into an elite school cause you to make poor financial decisions. It's a really good point you brought up.

[00:11:39] Spencer: Yeah. Yeah. So Jamie, I know we said that we're going to talk about my story in this episode, I think you've got a great story as well.

So is there, thank you. Yeah. Especially especially when it comes to paying off your debt. But do you want to take us back to I think you were 21 years old when you graduated and got married and what was your situation? What was your debt situation like? I think it was six figures, right?

[00:12:08] Jamie: Yep. So I got married when I was 22, graduated when I was 21. So a young marriage, my, my numbers were bad. Mostly my wife. I love my wife to death. She's awesome. Spencer, she's awesome. Oh

[00:12:23] Spencer: Oh yeah. A hundred percent. And her, I think we both know who benefited more from the 21 year old marriage, the 22 year old marriage.

You did.

[00:12:33] Jamie: So she, as much as I love my wife, no one taught her about money. Growing up. So she brought a lot of debt to the relationship. I had some so in total, $118,728 is what we came into our marriage with when we combined our debt. I'm just going to briefly run through the numbers just to show you exactly what was there.

She had, let's see, about $22,000 in student loans that was from six different loans and another one that was $5,500. I had one student loan that was $1,700. I actually took out a student loan to take a spring break trip. This was probably a good use of debt and I would probably endorse this. My school offered a spring break class to Europe.

So for two spring breaks, I went to Europe and it was a literature class. And so I had a student loan for $1,700 that covered a spring break trip. And so we toured around Glasgow and Galway and all kinds of amazing places. And then I had to write a paper on it at the end. And that was three credits.

It was incredible. One of the best things I ever did.

[00:13:35] Spencer: I think we can officially have a Military Money Manual endorsed trip. Take a $2,000 loan, student loan and go to Europe. How long was it for? A couple of weeks or? It was spring break. So just one week. Oh, one week. Okay. Yeah. Yeah. I think that's, yeah, that is fantastic when you're young, get out there, travel, see the world.

[00:13:53] Jamie: And then my wife and I each had a $25,000 career starter loan with USAA. So $50,000 total. Wrapped up in that credit card debt. Ooh, man. We had a bunch of small credit cards. We talked last episode about the military star. I am just looking at my old spreadsheet. I had $479 of debt to the military star card.

I think that was probably the air force mistress. Cause it was like, you had to have that now. And that thing was pretty expensive. Owed a little bit of money on my wife's Jeep. That was $1,500. Some personal loans to family members, like $500 to my mother, or I'm sorry, $400 to family. And then a bunch of credit cards, like a Wawa credit card, Wawa is awesome.

But why did my wife owe $376 overdue to Wawa? And another loan to a sister, Macy's we talked about. And then we bought a Toyota Corolla and we owed $10,000, just over $10,000 on that. So again, $118, 278 was the total of our debt situation when we first got married.

[00:14:51] Spencer: And that's crazy when you think, because what were the two largest dollar amounts are at two 25K loans?

[00:14:57] Jamie: Let me just double check. I believe so. Yeah. The two USAA career starter loans. And then other than that, that the timeshare that we, I think we talked about before that one was the next highest.

[00:15:07] Spencer: Yeah, but yeah, if you just that's not a good episode idea right there, talk about timeshares, but don't do it, in summary, yeah, never, not even one episode complete.

Yeah, the shortest episode we've ever had. That's almost $120,000 of debt right there. And, but if you look at the two largest amounts, it's only two, it's 2 25K loans. And then. The numbers drop off pretty quick after that, but it's all these just like little, like nitnoid, like just all these little gremlins, like hiding in the brush that you gotta suss out and then whack on the head with with a debt repayment.

I'm not sure how that analogy goes, but I think it works. Yeah, so you mentioned that you, nobody had taught your wife about money, but did anybody teach you about money when you were a kid?

[00:15:54] Jamie: Ooh.

[00:15:55] Spencer: Or did you, what where did I come with? Yeah. Not only did, where did you, what did you come with?

But after you got married, what was the impetus? What was the drive that, yeah, that did you, Immediately, get married and go open up a Dave Ramsey book, or did you come in already having read Dave or was it Dave that you started with?

[00:16:16] Jamie: It was eventually, but not right away. About three years after we got married, as you guys know if you've been listening to the podcast, I'm a spreadsheet guy, right?

So I was looking at my spreadsheets and I had a category in our budget where the category was debt and all the debts were listed up and, I can't quite find my old, 2012 pay budget spreadsheet, but off the top of my head, I think it was something like 38 or 40 percent of our paycheck was going towards debt payment.

Now, at that time in 2012, we were dual income. We were mil to mil for a while. And so that helped a little bit. But it was a substantial chunk of our pay was going towards debt. And I don't remember exactly how it worked, but I think I Googled it and What to do about debt or something along those lines and then just got sucked into the Dave Ramsey YouTube podcast websites and all that stuff.

We didn't go through Financial Peace University until I coordinated it as like the teacher of that when we were stationed together the first time when we were in New Jersey, Spencer, in 2017 or so. I think I taught that class. Oh, wow. So I never went through FPU or anything.

[00:17:24] Spencer: The first time you took it was when you taught it.

[00:17:26] Jamie: Yeah. So it was just like self education similar to you, but I didn't go through a bunch of books. I just found a method that I liked and I made a spreadsheet and then went with it. And as my son and I have that very same, similar personality. When we get something in our brain, it's all we can think about.

And so I became almost obsessed with how quickly can I get out of debt. If I pay five extra dollars more and I calculate all this debt snowball out when what's my goal and can I move it? A couple months to the left, or so I just became like an obsession of mine. At the time we had one kid and as my wife, she was a nurse in the air force, right?

As she was working nights, every three months, she would switch from days to nights, or when I was on a TDY, whenever I had an opportunity, it was what I thought about a lot. And so that kind of accelerated our journey. It was just me really enjoying the process of trying to figure out this puzzle and how I can solve it as quickly as possible.

[00:18:18] Spencer: Yeah. I think that definitely fits your personality. I don't think you have to be a spreadsheet nerd to know for sure to want to get out of debt. But I think for a lot of people, they don't even realize. How much debt is affecting their lives and how much better their lives could be if they didn't have debt, but it was, when you're setting up a spreadsheet and you can see, almost 40 percent or whatever the number was of your paycheck going towards debt.

That's like putting an additional person to work for you if you can pay off that debt. And then, you have all that additional income and you can, it's pretty easy if you ask people what would you do with an extra thousand dollars a month? People are pretty quick to visualize what that life could look like, right?

[00:18:58] Jamie: So not to mention the emotional benefits of it as well, of, we talked about before and it's a theme of getting out of debt is when you have a say over where your money goes and as you start to chip away at it, it's a huge emotional weight off of your shoulders and the burden is gone when you don't have to take the first 40 percent of your paycheck and send it to Sallie Mae or whatever.

[00:19:20] Spencer: So we talked about in the previous episode how in many relationships there's a spender and a saver. You said that you had an obsession with paying off the debt for anybody out there who's married and they hear this podcast and they're, they get the fire lit, lit underneath them and they go and talk to their spouse. And was it positive for the most part? 

And what was the reaction like? Was your wife excited about this or was she like, don't cut off, cut my shoe budget. What was the response there?

[00:19:50] Jamie: Yes. I think the personalities at the time, my wife was a little more non confrontational, so that may have been part of why she agreed to it.

But I did get agreement and wanted that. It was very important to me that we were on the same page with it. So she may not have been emotionally invested at the beginning, but as we started and I showed her the numbers and shared my why, here's what we can do with it. And we would love to go on vacation.

We'd love to go to Lake Tahoe. We just don't have the room in our budget right now. We're paying for the CDC on base for a kid or a nanny. We had a lot of nannies at that time because we had weird hours between her as a nurse and me as a pilot. It's just Brutal for childcare and there's no room to do any of these things.

I would love to go on a vacation with you. Our honeymoon, we drove to Gatlinburg, Tennessee and stayed in a cabin and that's not what we wanted. Like we wanted a better life than that. We love traveling now. And so we, I was able to frame it as a, think of all the great things we could do together if we didn't have this debt hanging over our head.

She bought into it enough to let me run with the numbers. And then we kept each other up to date. So it was definitely like my baby, but there was buy in, there was buy in, but not as much as what I was emotionally invested in, but it's very important to get buy in.

[00:21:15] Spencer: She trusted you enough to run with it and

[00:21:18] Jamie: and the other thing I'll add is we never took away, we may have cut the fun money or our discretionary spending for each of us. We always had that. So whether it was $10, $15, $30 a month or whatever, we each got a little bit on the side to do whatever we wanted with. We kept a clothing budget, we kept an eating out budget.

We still gave ourselves a little bit of wiggle room. Like you talked about in the last episode, we were very intense with it, but we still gave ourselves a little bit of breathing room as well. So it felt like there was a little bit of. Space for us to still live. We still hung out with friends, but we still made incredible progress.

So I think we found a really good balance of just enough intensity with just enough living and fun.

[00:22:01] Spencer: And I'm trying to remember the details here, so correct me if I'm wrong, but you, your wife, stopped working active duty about the same time that you guys finished paying off your debt. And then you started focusing more on saving for financial independence when, but that was when you went down to one income or no, she was still working at the time.

[00:22:21] Jamie: Is that she was still working when we finished paying off our debt. And I think probably about that time she was pregnant with our second kid. And then we PCS to New Jersey where we met for the first time and let's see about five months after getting to New Jersey. She separated from active duty and we had our second kid.

So we went through basically our entire time of building net worth. After getting out of debt, for the most part has been one income. She has had stints of working. As a nurse, extensive teaching as a fitness instructor and stuff like that. But for the most part, and one point on that, too, is we did our bills off of one salary.

So that was very important for us because we had one salary that could pay all the bills, and then the second salary was extra towards that extra towards saving and things like that. TDY or deployment, my first assignment Our first three years at Travis, I deployed once a year. So that money added up the tax freeze, the use of the savings deposit program, the SDP that we talked about in previous episodes that all added up.

And so all of that went towards, towards debt when we could.

[00:23:29] Spencer: And I think one of the cool things about both of our stories, as we both started with six figures and I had the cheat code where I was dual income, no kids for the entire time of paying off the debt and then starting our journey to financial independence.

But you guys were, you started off as dual income, no kids, but then you added three kids throughout the process. And at certain times you've gone down to one income, but the whole time you've just been planning on that one income. And I think that's something that, you know, even if you have a spouse that works, especially in the military if they're not also in the military.

Anytime you move, their job, unless they're a remote worker, their job is at risk. And a lot of military spouses have transferable careers like nursing and teaching, but sometimes you'd get new licenses and whatever district or whatever county you now move to.

Yep. And there's, there can be, roadblocks. And, frankly, a lot of times employers don't want to hire someone they know is going to leave in three years. And that's real. negative that the military just doesn't address. And so that's, that's a barrier to entry that a lot of military spouses face.

[00:24:36] Jamie: Yeah. One quick correction on the, we were single income for the first, about two years of our marriage. And then she started active duty. She was a year behind me in ROTC. So there was a period where she was a year behind and then delayed commissioning. So We started out with single income, then went double income and then we bounced back and forth.

So we've seen both sides of it for sure.

[00:24:56] Spencer: One thing that I think we both experienced very earlier in our career was living paycheck to paycheck. And I think we can both agree that it sucks. And when you have debt, when you have these minimum payments it's hard to break that cycle of living paycheck to paycheck.

Because you gotta put food on the table, you gotta pay your rent, you gotta put gas in your car, and, maybe you and me, we're, we're born savers no matter what happens, we're putting 10 percent into our Roth IRA or whatever, right? And, you still gotta, you still gotta have a little bit of fun, you still gotta go out to dinner, you, you don't, but if you wanna, enjoy life a little bit.

You got to have some fun money. And before you know it, especially if you have these minimum payments on the debt your whole paycheck has gone. And. If you don't have an emergency fund, you're really just one accident or disaster, whether it's a cracked oil pan on your car or a TDY that you're sent away to without any notice and you have to cover some of the expenses while you're on that.

It can really, and then you have to wait a couple months to get reimbursed. There's a lot of, there's a lot of negatives, obviously, to living paycheck to paycheck. But I think the biggest one is just the psychological feeling like you're drowning and you're not getting ahead.

[00:26:15] Jamie: One quick example of that we had. When we were in California, it was like 2015 or so. Man, maybe even before that, maybe 2013 or 2012. We had a, my father in law got sick and then passed away. So buying a plane ticket in 2013 was a significant emotional event for two people and a toddler to have to fly across the country.

This year, We have a sick family member, and I've had to drop twice in the last month, a thousand dollars for a last minute plane ticket. And it's not a big deal.

[00:26:46] Spencer: And it's just, but

[00:26:48] Jamie: because of the change of, yeah, so it's just a whole different mindset and an emotional victory that it's not a big deal.

In our very first episode, we talked about the car repair that I had, where it was $900 and it was like, ah, that kind of sucks, but it's like not a big deal. By the way, I never said that, but Honda actually ended up paying me back for that. So that was even a better win because that's awesome.

When you do the right things, you just get blessed sometimes. And when you're set up and I, you're charitable, things seem to go your way a lot more.

[00:27:19] Spencer: Yeah, one thing I'll say on that. I've definitely, it's crazy, but I've definitely almost become a believer in karma.

If you pay things forward, like if you offer good things to the world, a lot of times good things come back to you. And one thing I've noticed is that, and this might be hard to hear when you're just getting started, but yeah. Once you start accumulating assets and you've, you pay down your debt, you build good behaviors.

It seems to me, and now granted, I live in the United States and it's a pretty stable democracy, all things considered, even with the last six years or so. But it seems that the rich get richer. And when you start, a lot of times people are like, Oh, I just got lucky. But really it's luck when preparation meets opportunity.

So if you build these financial habits, you build these automated systems, you're saving and investing, you have the flexibility in your paycheck. When your friend asks you, Hey, do you want to go away to Lanai for a long weekend? Yeah, I do. And I can pay for it. Or if you have a family member who's unwell and you need to go visit them and you need to drop $1,000 on a plane ticket, you can just do it.

And I think when you build these financial habits, when you build a foundation, when you set up yourself with the strong behaviors it really. It really does seem like your wins just accumulate and the losses, nah, they might sting a little bit. Nobody wants to pay $2,900 for a car repair, but when it turns out it was Honda's fault and they reimburse you for it, it's okay, you covered it without any trouble.

And then all of a sudden it's almost like a windfall. It's almost like winning the lottery. They just give you the money back.

[00:28:58] Jamie: And if they hadn't covered it, it would have stung for a day and then it would have been, it would have been no big deal. Spencer, I saw recently a survey of millennials that said that 70 percent of millennials live paycheck to paycheck.

And that overall 54 percent of Americans are living paycheck to paycheck. And that those numbers just blow my mind because. We've both fallen victim to that same kind of period where we were behind and we struggled with our income, especially when our income was lower when we first joined the military, what we hope to convince you of is that there's a better way to do it.

And hopefully by sharing our stories and some of our pitfalls and things we learned the hard way that we can help encourage you to one, not make those mistakes, if you have made those mistakes and you're there that we can help encourage you to get out of it. And three, if you're not there, we encourage you to never go there.

We made stupid mistakes. Like I took out a sales credit card to pay for our engagement ring. The timeshare I mentioned earlier, we literally lost thousands of dollars. Like no exaggeration. We paid. Over $17,000 for a timeshare. We sold it on some forum for $2,400 or something like this.

We just wanted to get out of it so bad that we were willing to lose. We were never going to get, we were never going to get value from it. We were going to have to pay annual maintenance fees and all those dues. And we literally, what is that like $15,000,000. I forget the numbers I said, but like $15,000,000 lost when we were new in our journey towards trying to fight this.

Imagine if I had $17,000 to help put towards my debt earlier and then start building my net worth earlier, $17,000 in 2013 money. That'd be substantial here in 2021.

[00:30:38] Spencer: Oh, yeah, definitely. I was gonna run a quick calculation on what the return, let's see if you put that in the U. S. stock market. All right.

What year did you say 2013. Yeah. All right.

[00:30:52] Jamie: So $17,769 if you want it exactly.

[00:30:58] Spencer: It's a, it would have three X'd. So you would have had today, you would have let me just do that real quick. $51,000. So that's not an insignificant amount. And that's one of those live and learn mistakes.

You're just, I guess the biggest blessing there is it wasn't any larger, but yeah just what, so you guys didn't have the money, the cash to pay for that at the time, right? Correct.

[00:31:29] Jamie: Yeah we were in debt and I think this was, it was obviously before we started getting into the Dave Ramsey stuff or else we probably wouldn't have done it, but we actually won it.

A stay at a timeshare at the squadron Christmas party, and it was like a blessing in disguise because someone gave us a three night stay in Lake Tahoe and, and part of it was when you got there, they were like, Hey, would you like to do this timeshare presentation? And it wasn't a requirement, but they made it seem cool.

We went to the thing and the initial interest rate, like it was, there are so many red flags, like emotional decisions. We'll offer, we'll give you this meal or whatever incentives it was. And you hear this presentation. And you had to finance it through them if you couldn't pay. And it was something crazy, like 17%.

And they're like, don't worry. You can always go to your bank and refinance later. If you don't like that interest rate, and so it's just it was so smooth. They had all the answers, man, it was so bad. And so now when I see those, I'm just like, man, they are still, obviously it works because they're still doing the same timeshare presentations and people are still buying into it.

But if you're ever tempted. And we did, we also, before that we did one on our honeymoon that I talked about earlier. Oh yeah. They gave us, this is how broke we were. They gave us $100 cash and a$ 50 gift card to TGI Fridays to attend this timeshare presentation. And we were really close to doing that one.

I'm surprised looking back on it that we resisted. But we were like, we actually have a selfie with the sign of the timeshare company with our $100 cash and the TGI Fridays gift card. That's how cool we thought we were, that we had tricked these people into giving us a hundred dollars and a crappy dinner.

It's man, people fall to it all the time, but I'm thankful for those lessons. I'm so proud of you. I know. I'm thankful for those lessons and that we were able to. Hopefully I'm not the only idiot out there.

[00:33:28] Spencer: You're definitely not. And I think that's actually, I'm really glad that you're sharing that story and I'm not sharing that story, but there's hope for you still, thank you.

Yeah. But yeah, I, there's definitely some young airmen or soldier out there that are going to get, stay at the Hilton in Waikiki and go and listen to the timeshare spiel because they're going to get a free meal out of it. And hopefully they listen to this podcast before they do.

And I think I'm not falling for that. Yeah.

[00:33:57] Jamie: I have good friends that have bought into timeshares like the Disney timeshare and I respect and love them and they're very smart and they're very good with money, but something about timeshares just sucks people in and I really don't know what it is, but it's never a good value.

If you run the math like they're tricking you. It's not. It's not good. You're never going to vacation like that. The availability that they promise is never going to be there. You're never going to get your money out of it in the monthly, or I'm sorry, the annual like maintenance fees and the buy in dues are just going to continue to go up and up and up to where even if you don't use it, you're going to be paying so much a year that you, for something you probably can't even use,

[00:34:34] Spencer: I've never seen it work financially.

And so many things in, in personal finance, right? It's psychological. So some people, what are they actually buying or what do they think they're actually buying time with their family, right? They're like, they want to be the father or the mother or the grandfather, the grandmother that gets the whole family together.

And they think that this time share is a way to have that big, happy family. And it's just, it almost never works out that way.

[00:35:03] Jamie: That was a big rabbit trail we just took there, but it was, we're sharing some personal stories of failures and stuff, but Spencer what tactics or techniques did you use to pay off debt when you guys started your debt journey?

[00:35:18] Spencer: Yeah, so I'll just run down the list real quick, but, one of the things that we did right off the bat, and I encourage people to look at this, especially if they build up the good behaviors and the good habits where they're making, all their payments are, and they still have money left over at the end of every paycheck, but refinance your high interest rate debt.

So the way that I did it. Was the USAA career starter alone, right? 3%. And I had student loans. I think maybe 8%. And I was able to refinance those student loans by just paying them off with the USAA career starter alone. You can also use the Navy federal loan, right there. And today you've got so many options.

So FI is one of the I think since like social finance, but so fi. com it was one of the big movers into the. Refi of credit or of a student loan debt. And there's so many companies out there now. I know that people who still have student loans, they probably get a dozen flyers in the mail a week.

Offering to refinance their debt, and I would highly encourage you if you do have a lot of debt and you're just getting started in your journey or you still got a couple of years left to go in your journey refinancing might actually save you a ton of money. So if you've got and the interest rates are going to change, especially in this high inflationary or this, moderate inflationary environment that we're moving into in 2022, but highly encourage you to at least look at your options.

Make sure that you understand all the fees you're going to pay. Make sure you understand exactly how it's going to work. But if you've got debt, that's 8 percent and so far, or one of those types of companies is coming along and saying, Hey, like fixed interest rate, five year terms, and we'll offer you 3%.

That's a no brainer. Take it, that's, you just saved a 5 percent interest rate. It's going to lower your minimum payments probably especially if you stretch it out, over 5, 10, even longer periods of time. So don't use that as an opportunity to grow your lifestyle and grow your discretionary spending.

Keep making the same payments. This is the psychological trick that keeps people in debtor's prison. Yeah. If you don't, if you don't make the additional payments on the debt, you're never going to pay it off. So you have to lower your minimum, your monthly payment from $300 to $200, keep making the $300 payment.

Cause if you were making the $300 payment before you can keep making it now. And in fact, it might be a good opportunity to increase your payment. If you're going to save so much on interest and keep applying that, you know the additional payments to the principal and payoff that debt even faster.

I didn't get through my first point yet, but refinance. So you're just going to read them off. I was just going to read them through, but I got too excited about this one because refinancing your debt, I think is actually a really good tactic, but okay, from the top again, refinance your high interest rate debts to lower interest rate debts.

Keep your expenses low, increase your income, focus on reducing your monthly payments which just builds flexibility into your budget. I personally paid off my highest interest rate debt first, but that just, my, that, I'm a math guy and, I picked the debt avalanche instead of the debt snowball.

I made the payments automatic and then I put my windfall payments towards eliminating our debt. So I'll just run through, I already talked a lot about refinancing. Keeping expenses low. That's just, personal finance one on one right there. Just avoid lifestyle inflation and when you get promoted, keep, maybe increase your lifestyle a little bit, if, when you're a captain live, like you're a Lieutenant when you're Sergeant live like when you were an airman, so keep your expenses low.

Keep your. Don't allow your lifestyle to outpace the growth of your income, increase your income. I mean that, in the military, we get pay raises almost every year. You get time and service pay raises, you get promotion pay raises. It's not as good as in the civilian sector, but it is consistent, right?

You know that usually year to year, you're going to be making more money. Focus on reducing monthly payment. So that for me was just like paying off debt. So in my case, I had the USAA career starter alone, which was 470 a month. As soon as I had that paid off, that freed up five, almost $500 from my monthly budget and I just turned around and applied it, to my next loan, But it just gave me so much more breathing room.

So if there was a month where like shoot I do need $500 then I can just make the minimum payment on the loan and then I can use that $500 for whatever, you know Maybe we had christmas presents or maybe we wanted to buy plane tickets to Fly and see our family for our you know, once a year trip so using you know paying off the loans that have a large monthly payment can be very liberating cause it frees up a lot of your cash and allow your cash flow.

Again, I use the debt avalanche. You can listen to the previous episode. We covered debt snowball versus debt avalanche there, but I focused on the highest interest rate debt first. All the debts were about the same value. There was, I didn't have any tiny debts, like a hundred dollar debts. But if you do, I think there is a giant psychological victory in paying those off.

And then I made the payments automatic. And that's just, going to the website, setting up the automatic payment and it just, whoop, it just comes right out of your, my account. And I even made the additional payments automatic and I made sure that it was automatically applied to the principal.

So it didn't keep pushing out my payment date. It just hit the principal and knocked that down. And then I think I talked about in the previous episode, but we made 45,000 off after we sold our condo at my first duty station. And we used that windfall, that additional money that we weren't really expecting.

We didn't know if we were going to make money on our condo. But we just took that and we wiped out the rest of our debts. So that was and I think you talked about TDY and deployments when you have that additional income and you have, per diem or you have tax free months, throw that money at your debt and just watch it, drop like it is so satisfying to, to go from on a three month deployment to start the deployment at $50,000 in debt and end at $40,000 in debt. And when you come back, you keep that intensity up and you keep chipping away at that debt.

Yeah, no magic tricks in any of my tactics. It was just the basic principles, a lot of patience and then you add five years of time and that's, that's pretty much personal finance right there is right. Just gotta it's simple. But it's not easy.

[00:41:52] Jamie: Yeah. And a couple of episodes ago, we did a whole episode on deployment finances, where we talked about how to take advantage of the extra income and some of the tax free incentives and stuff like that.

So if you haven't heard that episode yet, make sure you go back and listen to that. One cool thing is that people say that, or they say that people really overestimate what they can do in a year, but they underestimate what they can do in more than five to 10 years. Sorry, you're good. They underestimate what they can do in a five or 10 year period.

So keep that in mind and set your goals and make them realistic. But, mate, there's plenty of people out there that say exactly how to make good goals, but you want to make sure that They're reasonable and there's stuff you can achieve, but it's okay for them to challenge you a little bit.

But the important thing is to have a goal that you're working towards and don't just be Wandering aimlessly through your personal finance journey spencer any other advice you would add to someone who is struggling or trying to work through a mountain of debt

[00:42:49] Spencer: Yes, I mentioned them briefly in the closing of the last episode where we just talked about how to get out of debt But I'll just reiterate them again, give yourself breathing room, relax when you can.

And then I think often overlooked tactic is to use a windfall to either make the final payment or make or like the killing blow. If you will or just, use a windfall throughout the process to really leap ahead. And, if you have this goal of, okay, I got a hundred thousand dollars in student loan debts, I'm going to have it paid off in five years.

And you go on a three month deployment and you make $10,000 and you just sit in your account. Boom, just throw that at your debt and guess what? You're going to be debt free six months earlier now. And that's crazy when you start seeing that finish line creep closer and closer, not only as you move forward in time, but as you make the additional payments and move and knock that principle down and move the finish line closer to you in time.

I'll just go through. And you talked about it too, Jamie, where, you left yourself, even when you were making you, you had this intensity and you were paying down your debt, you left yourself breathing room, don't budget down to the last dollar, or if you do, still have a discretionary fund, still have that fun money.

It's, if you're only a few days away from your next paycheck and you've only got $20 left in your checking account, that's a very stressful place to be. And it's so much more liberating when you're not living paycheck to paycheck. And so if you can, build up a little bit in your checking account, have that thousand dollar emergency fund set aside and still keep up that intensity on paying off your debts, even if that means, okay, you're going to have them paid off and it's going to take you a month or two longer, but you've built that little cash cushion for yourself.

I think that's so important to give yourself breathing room, both in your budget. And in your checking account and then, like little things will, things will pop up like people get married. People go skiing. You want to have enough flexibility in your budget that you can occasionally say yes to those things.

And sometimes it sucks. And you're just like, look, I have this habit. I have this goal set in mind and I already went, I went skiing last week and I just can't go skiing this week, if you live, if you're stationed in in Japan and your buddies are going skiing, that's you can rent skis on base for $15,000 bucks and a lift tickets, like $20, go skiing, go you're young, you're living overseas, enjoy it, but at the same time, you want to recognize that, okay, like maybe I can do that once a week, but maybe I can't do it twice a week.

[00:45:28] Jamie: I think it's important to remember that any restrictions you place on yourself or any like tightness in your budget or cutbacks or whatever you want to call them, it's temporary.

So if you say I'm not going to go skiing until I'm out of debt, for example, or I'm not going to go on a vacation until I'm out of debt, or I'm not going to eat out until I go out of debt, however extreme you want to be with it it's temporary, right? Hopefully it's only a few years. And I think, there's some numbers out there of how quickly people can get out of debt, but for most people, we're talking a matter of months for to pay off non mortgage debt, a couple of years we're not talking about, you're never going to be able to go have vacation or whatever for 10 years, more like two or three, probably for most people, depending on where they started and what their income is.

I don't remember specific numbers out there. I know they exist, but. It's a temporary restriction or tightness of cutting out some of the unnecessary spending to help you meet your goals and pay your future self, give your future self options, which is again what personal finance is all about is having options of what to do with your money.

And when you're in debt, you limit your choices and limit your ability to make choices of your money.

[00:46:39] Spencer: Jamie, do you have any takeaways for the listener today?

[00:46:43] Jamie: They're going to overlap pretty heavily with last week. So the only real one I'll add to the takeaways for today is just to remember that no one's journey is perfect.

Your journey towards financial independence is going to have bumps in the road. And if you've ever seen that meme where it's like. Our plan is a straight line from A to B, but in reality, it's like this curvy loop de loop with hills and valleys and 360 turns and backwards progress. Just remember that progress is better than perfection.

All you want to do is be making progress each month in your journey. Don't worry so much about being perfect because you won't be able to be there. No one can be perfect in this. You're going to make mistakes. You're going to fall victim to a marketing ploy, whether it's a timeshare or getting too many packs of gum or driving through McDonald's.

When you see those like golden arches calling your name or whatever it is, nothing's going to be perfect. So just try to make progress each month. And that's what I would leave with them today.

[00:47:37] Spencer: Thanks for that, Jamie. That was great and thank you for hanging out with us today for part two of our get out of debt series.

I hope our stories can inspire you on your journey to debt freedom and financial independence. If you have a good get out of debt story or if you have a bad get out of debt story, we would love to hear it. Info@MilitaryMoneyManual.com And if you're enjoying the podcast, please help us spread the goodness by reviewing hopefully five stars.

We'll take four though. Nah, just give us five Apple podcasts and subscribe wherever you're listening to probably Spotify, probably Apple podcasts. Just hit that subscribe button. Smash that subscribe button as the kids say on YouTube and you'll get updated on all of our newest episodes,

[00:48:21] Jamie: please don't ever say that again.

[00:48:24] Spencer: I tried. All right. I tried. All right. Thanks again, guys. And we will see you next week.

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