Happy 1st Anniversary

Greetings from Austin!

It’s been exactly one year to the day since I paid off my $90k of student loans in seven months. While I’ve stopped making regular updates to this blog, I do plan on providing annual updates for the loyal readers and new visitors who might be interested in a more long-term view of all the goings-ons.

(If you’re brand new to this blog,  you can get a quick summary of what it’s all about here as well as two key posts to check out.)

When I paid off my debt and found myself with an extra $1,057 in my pocket every month, I wasn’t completely confident that I’d be able to fight consumerism due to my new-found purchasing power. However, I’m happy to report that I’ve continued to live well below my means and have grown my savings by several thousand percent over the past year. (Edit: To put that in perspective, I started with about $500 in savings after I paid off my student loans, so  going from $500 to $10,000 (for example) is a 1900% increase.) Instead of investing these and future savings in securities or buying stuff I don’t need, I’ve decided to enter a personal challenge to pay off my mortgage in three years and capture the guaranteed 5.25% return. But more important than the guaranteed return–which could very well be eclipsed by the bull run we’ve been on recently–this three-year journey will result in guaranteed freedom. (And unlike the time I paid off $90k in seven months, I’ll maintain  a 15% contribution to my 401k during this time.)

Most people who stop by this blog are typically on debt pay-down missions of their own, so my aim here is to inspire motivation to stay the course. To that end, let me take a brief moment to talk about the past 12 months of living without the student loan burden.

Life is not about finding happiness; it’s about experiencing richness. How do I define richness? Ever since I started living below my means and paid off my student loans, my life has been approaching the kind of richness that I’m thinking about.

Within the past year, I changed employers when I found a more interesting opportunity at a company that I truly believe in. The role I landed at this company was at a similar pay level to the one I had left (i.e., not a promotion), but the actual content of the job was something I had never done before, so failure was a definite possibility. However, I was living below my means and had paid off my student debt, so I was in a solid financial position to take a risk to try to improve my life. Fortunately, the change turned out to be a very positive one. If I hadn’t dedicated myself to cutting back and paying off my student loans, I’d probably still be at the old job with my blinders on, working for a paycheck to support my then-inflated lifestyle.

Within the past year, I’ve joined a competitive rowing team and enjoy exhausting pre-dawn rows three to five days a week. I’ve met a lot of great people in the rowing community and hope to make many long-lasting friendships. It feels unbelievably good to be back in boat and competing again like I did in college.

ARC

Practice with the crew

The eight-person boats I rowed in at the Heart of Texas Regatta won two gold medals and a silver, and we’re headed to California in April to race at the San Diego Crew Classic. We’re considering racing at the Head of the Charles in Boston later this year. If I were still maniacally focused on my career to fuel my inflated lifestyle and pay my student loans at the regular rate, I don’t think I’d have the energy to wake up at 4 AM to go rowing around the lake or the time to take a couple days off of work to go paddle around the Pacific. These days, however, a 50-hour work week is a bad week and the norm is closer to 45. (I still eat home-packed lunches at my desk to maximize frugality and productivity.) 

Within the past year, I met a beautiful woman whose values align almost completely with my own. (If only she didn’t like country music so much…) She’s kind to a fault and enthusiastically committed to the Daymaker Movement. She places a great deal of value on her health like I do and works out every day to stay in shape. In college, she worked two and sometimes three jobs at a time in addition to playing softball on a scholarship to keep her student loans at an expensive private college to a minimum. She has a great job here in Austin, but she still shops at goodwill, has a roommate, and drives a car that’s even older than my own 13-year-old Honda. We do challenge each other on occasion, but we have the best of times together because we’re often on the same page. I don’t think she would have given me the time of day if I had been embracing a free-spending lifestyle when we met, and that would have been my sad loss.

Within the past year, I’ve been able to contribute to society by keeping this highly personal blog online while also self-publishing an inexpensive book about dealing with debt. Just last week, a commanding officer in the US Navy bought the book for all 350 sailors aboard his ship in an effort to educate them about money management. We need more leaders like him–people who care about their team’s well-being not only on the job, but in their personal lives, too. If I hadn’t paid off my student loans, that book wouldn’t exist right now.

There are those who might believe that once they pay off their debt, they’ll have extra money to burn and blow on all kinds of things that will make them happy. My experience was markedly different. We’re not here for happiness, we’re here for richness, and in my mind, a rich life is achieved by having purpose (my career), having passion (rowing), having someone to care for (my girlfriend), and giving back (my blog and book). It’s not about the money. In fact, it was only once I stopped spending money like a complete jackass and paid off my loans that doors started to open up for me. I have no doubt that paying off my house will open even more doors, and I’m excited about what the future holds. I hope you’re excited about what your future holds once you pay off your loans, too.

Other People’s Work
While I have your attention, here are a few of my favorite reads from the past year. They’re all all completely applicable to anybody who’s currently engaging their debt in a battle or considering taking on debt.The list is book-ended by a couple of solid, existential articles while the middle articles deal with the usual suspects: student loans, retirement, and the cost of living.

6 Harsh Truths That Will Make You a Better Person
#6 The world only cares about what it can get from you
#5 The hippies were wrong
#4 What you produce does not have to make money, but it does have to benefit people
#3 You hate yourself because you don’t do anything
#2 What you are inside only matters because of what it makes you do
#1 Everything inside you will fight improvement

NMHD: If you read only one article from this stack, let it be this one. Strong.

Colleges Lose Pricing Power
“We have a more informed class of college consumers,” said Bonnie Snyder, founder of Kerrigan College Planning in Lancaster, Pa. “Everyone today knows someone who went to college and ended up with a career that didn’t justify the cost. They see college as a more risky investment.”

NMHD: Helllllllllllllllllllllll yeah!!!!!!!!!!! Go high schoolers!!!

Millennials Are Paying Off Debt — but That’s Not Necessarily Good News
Last week, Pew Research released a new study showing adults younger than 35 reducing their debt levels faster than older generations. Millennials cut their overall levels of debt by 29% from 2007 to 2010 (from $21,912 to $15,473) while Americans 35 and older only cut theirs by 8% ($32,543 to $30,070). In fact, according to Pew, the share of younger households with debt of any kind fell to 78%, the lowest level since the federal government started collecting that data in 1983.

NMHD: If you read it, this turns out to be a real fear-mongering article, but let’s focus on the positive: Millenials are seeking FREEDOM!

Workers Saving Too Little to Retire
[Joe LaCascia, a 75-year-old retired insurance broker in Polk City, Fla,]  estimates he only has enough to last until [his wife and he] are 85. He said he is more concerned about what the future holds for his children, a 51-year-old art director-turned-roadie and a 49-year-old third-grade teacher. “They’re never going to be able to create wealth, other than what our generation leaves them and what they do with it,” he said. “They have more uncertainty than we have.”

Your Credentials Are Holding You Back
We make career moves based on ever-increasing sunk costs. As any microeconomist will tell you, there is no surer path to bad outcomes than incorporating retrospective expenses that cannot be recovered into your decision making. But as the cost of accreditation rises, the temptation to “use” our degrees and certificates to land high-paying (but ultimately dissatisfying) jobs has never been greater.

NMHD: At the end of the day, this is probably a better articulated reason for why I chose to get rid of my debt so quickly. The author is simply using a lot of big words to eloquently describe the pursuit of one thing: freedom.

A Minimum Wage Job in Austin Gets You a Two-Bedroom Apt. – And a 111-Hour Work Week
Austin has the highest average rent in the state of Texas. And Austinites trying to afford housing on minimum wage need to work close to three full-time jobs.

NMHD: If you still have student loans, find roommates!

10 Things Your Commencement Speaker Won’t Tell You

  1. Your time in fraternity basements was well spent.
  2. Some of your worst days lie ahead.
  3. Don’t make the world worse.
  4. Marry someone smarter than you are.
  5. Help stop the Little League arms race.
  6. Read obituaries.
  7. Your parents don’t want what is best for you.
  8. Don’t model your life after a circus animal.
  9. It’s all borrowed time.
  10. Don’t try to be great.
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46 Comments

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46 responses to “Happy 1st Anniversary

  1. Jay

    Good to see your post, Joe. Glad you’re doing well. Read your book, even though I don’t have any significant debt (except a couple of thousands car loan), it was an eye opener – just like your blog. Hope you keep posting! :)

  2. Heidi Moen, the Netherlands

    Thank you for another inspirational post Joe, and happy anniversary

  3. I’m not sure I ever posted when you initially wrote your story, but I did read all of your posts. The journey you took for the world to see really impressed me. I’m glad to hear you’re still doing well. Thanks for keeping us posted!

  4. olgav100

    Was happy to see a post in my email box – and happy to read you’re on track, with financial challenges (we’re on plan to pay off house in 6.5 years, but we do have kids and colleges:)), with job, fitness, and even with a wonderful partner. Way to go!

  5. Glad you’re doing good. I can’t believe it’s already been 1 whole year!

  6. andrea

    So glad to see an update from you, Joe! And, what a great update, too! Congrats on the new job, rowing, and the girlfriend!!

    I knew you would commit to paying off that mortgage so you can be totally debt free. I have to ask though…why on earth are you sitting at 5.25%? You can do waaaaaaay better than that!!

  7. Case

    Joe-
    Thanks for the update. I really miss the posts. Perhaps you’d consider blogging about your mortgage pay off??

    A good friend of mine paid off his mortgage. When God called he and his wife to be missionaries in Africa with their three kids in tow, they were free to follow the call!

  8. MJ

    I knew you’d be back :)
    Now, to actually read your post.
    Talk about an Easter surprise!

  9. MJ

    Flipping fabulous to hear happiness and confidence spilling between the words. Happiest for you about your heart. A rich life: Bravo!

  10. Can’t wait for the next update! Keep up the inspirational work Joe!

  11. marge201

    Joe, you are so insightful! And a great writer. Really happy for your new project of getting rid of that mortgage. The rowing and the girl sound fabulous. Daymaker, very interesting! So happy to be on your mailing list!

  12. Happy Anniversary Joe! It sure is nice to see you updating! AND dating someone special! :) It’s also great to see you rowing!
    Thank you for the articles and..did I mention how nice it is to see you again? :)
    I can’t wait to follow your mortgage journey!
    You made my day by showing up.
    :):):)

  13. So glad you’re back! So glad you’re in love!

  14. Jenny

    What a great update! So happy that things are going well for you on all fronts… and thrilled that rowing has been working out. B has been so happy to have someone with your work ethic and dedication on the water. Hope y’all have a great time in San Diego.

  15. poultryfactors

    Joe, thank you for sharing your personal finance journey. Stories like yours reaffirm my journey and my own blog on the topic. Congrats on your anniversary and newly found life richness! ~Vanessa

  16. anylight

    Thank you for updating and for sharing your journey! It inspired me (as it has so many others) to share my own debt pay down journey: goodby30.blogspot.com

    Please keep updating as your journey continues! All the best.

  17. Barbara

    Joe, you certainly have a gift from God with your writing abilities…so well written and encouraging!

  18. DanielMorris

    Congratulations! But who needs 90K in student loans when you can get an honorary doctoral degree for just a $69 donation? http://www.ladc-institute.com In Alternative Health, to boot! lol

  19. Katya

    I just read every blog article in this site! It was uplifting to see you get more “real” as the posts went forward, get more connected with what matters in life and what you really want.
    I’m coming from a very different place. I live off $400/month now, because it’s all I can work, and most of my bills are medical. But the transition from having a motorcycle, living alone, and having an active social life to feeling deprived and roommating is definitely something I can relate to.
    I only went to college because then I could get a loan and afford to live a little longer if I did. Ultimately I was too sick to graduate, so I still have student on paper somewhere, waiting for me to get well enough to work again and pay it, but I’m still not well enough to work. It’s crazy that it’s so easy to borrow $100,000 for school, but I don’t know of any lending service for investments in one’s health, which is more of a job requirement than a degree, and usually more urgent! $3000 of tests and treatments 7 years ago, or even when I was a teenager, would have saved me $100,000 in medical expenses (mostly written off as tax deduction for hospitals since then).
    I’m writing this from bed, where I’ve been all day. I really believe that soon after the Student Loan bubble will come a Health Crash, where preventable health issues (early diagnostics and treatment would have saved me from these years of disability – I lost half my twenties, essentially) will bring the workforce to a crisis of being unable to fulfill daily obligations.
    But no matter. I make small, regular payments and borrow money for the treatments I need to hopefully recover. I now know what really matters in life, who my friends really are, and how to just do what I can and not worry.
    I really liked to link to the Stoic article about imagining things worse than they are as a way to be content with present things.
    Thanks for writing all of this. I hope that someday I can be free of treatable but prohibitively expensive illnesses, and medical/student loan debt, and when that happens, I hope that I, too, live well within my means!

    • Katya, you bring up an excellent point about lending for health investments like testing and whatnot. I really think we need that. You could pioneer it.

      I hope you recover soon. I wish you all the best.

  20. Lesley

    Thank you so much for sharing your rich experience, Joe. I’ve been following your blog since you paid off your debt (then I went back to read almost every post that got you there) and it inspired me beyond words! I’ve been paying down my student loans for years at $400/month, but recently took $8K from my savings to pay off a portion of one of my loans and it felt glorious! The biggest takeways I got from your blog are that a) financial education is imperative and we need to teach our kids this young (and by example!) and b) living more simply promotes happiness.

    It struck me when you wrote in your most recent blog that having paid off your loans and being challenged to understand what is important in life afforded you the opportunity to take a risk on a new career – otherwise, you would be working towards paying off a lavish and ultimately unfulfiling lifestyle, which is sadly what I think most of us do.

    I am continually inspired every time I read your blog and I just wanted to thank you for unabashingly sharing your experience. I’m glad you are working on paying off your mortgage. It seems that your journey has not only been successful in its original goal, but has empowered you in ways beyond. It’s awesome to know it is all possible.

  21. Joe, awesome that everything is going so well. It’s great that you found someone who shares your ideals.

    Your blog was one of the reasons that I got serious about paying off my debt right out of college (90k of it, yikes!). I still come back here once in a while when I need a kick in the pants, but I’ve already paid back a third of it. Thanks again for all the inspiration!

  22. Congrats man – count me as another converted. I’m going to blog about my ambitious goal of 62k in three and a half years: http://teachingdowndebt.wordpress.com

    Oh and Go Blue! from a fellow Michigan grad

  23. Whitney

    Hi Joe!
    I have read and re-read your blog journey. I accidentally stumbled onto your blog after a long phone conversation with my student loan servicer. The take away from that conversation was, “…Well Whitney, you can either end up paying the federal government an extra $100K in student loan interest if you continue paying off your loan at the rate you are; or you can find a way to get this debt paid off as soon as you can.” After hearing that I was shocked and devastated for taking the silly loans out anyway. My student loan debt has always been a “dirty-little-secret” between me and my husband. My husband who is frugal, financially responsible, and unbelievably understanding has always tried to get me to see the light in paying off my student loan debt faster than 30-years. After that phone conversation with the loan servicer my husband walked in from work and I stared at him and said, “Okay, I think I am turning into you…We need to sell our 2nd car, the motorcycle, my road bike, all our extra crap and start paying this loan off ASAP.” That was exactly one-month ago and while we have not sold the vehicles yet we have managed to open up an ebay store, an amazon store, and since I work from home I started a Doggy day care business as a side job. All that has netted and extra 3K this month that is all being forked over to my 66K of student loan debt. Your blog motivated me to sit down with my husband and see the light. We have since created a dedicated budget plan to pay off the loan in 2 years. However, I am hoping with my new side business and selling all of our excess online I can get this down to 1.5 years. You are an inspiration. Happy Anniversary and congrats to finding richness in your life!

  24. Louise

    Joe, It was great to here from you. I have made significant strides in getting rid of my unsecured debt, June 6th,2013, I will be rid of all debt except the mortgage(which is so next). I send extra in every month already. It is reaffirming to see where your strategy and accomplishments have taken you.
    When individuals are on top of their game, and in the moment, all the time, so much is achieved. I so believe this, you are an example. I can hardly wait for your next update. Best Always Louise.

  25. Joe, you are an inspiration to many. I’m curious about your perspective on student loan reform. Are you familiar with the Student Loan Fairness act and do you think it is the right idea? http://studentloansherpa.com/case-h-r-1330-student-loan-fairness-act/

  26. Elise

    Your journey is inspiring! My husband and I are trying to pay off our $169K in student loans. It is depressing that the interest rates for our three big Grad Plus loans are over 8%! And it makes it challenging for us to pay any extra down per month since I stay at home with our three small children. But we are looking forward to the day when we can say we are debt free!

  27. Congrats on such a great accomplishment!

  28. While I’m late to the party, glad to see things are going well – personally and professionally. Since you left, I’ve been hanging out at MMM to keep my consumerism under control. Looking forward to your intermittent updates. (HubbyJD totally mentions you every time he sees a pedi-cab)

    • Thank you Jane! It’s so good to hear from you. It sounds like things are extremely busy on your end. How’s the biking going? Good for the wallet and health!!

  29. Wasim Shefa

    Great job Joe! You illustrate that drive and determination are the limiting factors when it comes to reaching goals.

    I’m on my last $15K of my Student Loan balance ($80K 1 Year ago). I have my remaining balance at an interest rate of 2% (highest was 8.0%). I’ll be investing sooner than expected.

  30. He spoke at Duke graduation – see video halfway down the page. Super cool

  31. Congrats and great job! I’m just starting out on this journey, and the entire story, and this entire blog has been really inspiring. My student loan debt is a little over double my annual salary before taxes, and while I’m being really responsible and paying more than double my minimum each month, it can still feel like I’m drowning sometimes. I love this blog and the tips, struggles, and inspiration it shares — I hope to be out of my debt in under 5 years, which is completely possible if I really work for it!

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