BiggerPockets Money Podcast 221: Hard Decisions Leading to a $170k Debt Payoff (During Covid)

BiggerPockets Money Podcast 221: Hard Decisions Leading to a $170k Debt Payoff (During Covid)

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Darius Smith always knew how to make money, but wasn’t very good at saving it. Growing up, he had jobs ranging from delivering phone books, to running paper routes, to even putting up eviction notices on homes. He opened his first bank account when he was around nine years old! So how did Darius end up with almost $170,000 in debt? An even better question may be, how did Darius pay off all that debt in only a few years?

Darius spent time at multiple different colleges, racking up $40,000 in student debt, then buying a Mustang, paying for a wedding, putting some charges on credit cards, and finally combining his wife’s debt with his. They started to use the “debt snowball” method, but after having to take out business loans, the debt grew even more.

This is when Darius decided that he and his wife needed a plan to conquer their finances. They moved into a friend’s extra room for cheaper rent, stopped going out as much, began working more than one job, and siphoned all the money they could into savings and debt payoff. As of July 2021, they are debt-free!

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Read the Transcript Here

Mindy:
Welcome to the BiggerPockets Money Podcast show number 221, where we interview Darius Smith and talk about being conscious of your finances.

Darius:
Hey, I found this FI thing and I’m also interested in personal finance. I need you to not spend any money so we can budget and figure our lives out. So, that was a process to get that from one year to the other.

Mindy:
Hello, hello, hello. My name is Mindy Jensen and with me, as always, is my forward thinking co-host, Scott Trench.

Scott:
You’re always in front of us with these new adjectives to describe you. Mindy, thank you so much.

Mindy:
Scott, I know you’re here to make financial independence less scary, less just for somebody else, to introduce you to every money story, because we truly believe financial freedom is attainable for everyone no matter when or where you’re starting.

Scott:
That’s right. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, start your own business, or claw your way out of debt and back to zero, we’ll help you reach your financial goals and get money out of the way so you can launch yourself towards those dreams.

Mindy:
Scott, I am so excited to introduce Darius Smith to our listeners. I love his story. It starts out the same as everybody else’s. I had some debt and then I paid it off. But what I really love about his journey is that he is conscious of his money and conscious of his spending and conscious of his investing and conscious of his financial situation all the time. That really does make the difference between financial success and financial unsuccess, which isn’t the word.

Scott:
Yeah, I think he made a lot of decisions that put him in his wife in the hole years ago and in the last couple of years, I think, have taken a very sophisticated fundamentals-based approach to navigating his way out of money and then compounded that the whole situation is a very nuanced but I think intelligent navigation of the COVID situation. How do you handle COVID when you’ve got moving parts of multiple parts of debt, new jobs, moves, for your family, all that stuff?
He made a lot of interesting decisions that I think some may find controversial. But I, after thoroughly dissecting those decisions with him on the show, feel showcased a high level of intelligence and frankly, the right approach. I think I would have done very similar set of actions to him in his set of circumstances after discussing with him. So, I think we’ll learn a lot. I think that the way that he conducted his affairs and gotten the situation that he’s presently in is evidence, I think, of a good level of sophistication and intelligence and hard work and perseverance and all that good stuff. So, I think it’s a fantastic episode and yet another difficult and unique perspective.

Mindy:
Yeah, Scott, I really, really enjoyed listening to his story. Once he explains the reasoning behind his choices, it makes so much more sense. I want to highlight that what he’s doing is well within the constraints of the mortgage and the student loans and the programs that are available right now. So, he’s not doing anything illegal or immoral in my opinion, but I think it’s an interesting perspective.

Scott:
Yeah, I think it’s a sophisticated advanced approach that he says, “Hey, in the period of uncertainty, I’m going to give myself the greatest financial flexibility and largest pool of options, even if that could cost me a small amount of interest or whatever else downstream.” I think that that’s a really strong approach when you are faced with a lot of uncertainty with that flexible position and go from there. So, I think we’re going to learn a lot from Darius. Should we bring him in?

Mindy:
Darius Smith, welcome to the BiggerPockets Money Podcast. I’m so excited to talk to you today.

Darius:
I am very excited as well. I’ve been a longtime listener. I look forward to this moment. Not that it’s like my goal or anything but…

Mindy:
This is at the pinnacle of your existence.

Darius:
I’m going to go with a no, but it is definitely a very exciting day for me though.

Mindy:
I like the honesty. I appreciate the honesty. Okay. Well, let’s jump right into it. Where does your journey with money begin?

Darius:
So, for me, I would say it began as a kid. I have a lot of people in my family that are entrepreneurs or I will say one specific person. I have an aunt that was an entrepreneur that helped raise me a lot. She love money and I think I just got a love for money. I always wanted to be a millionaire. I guess she just taught me a lot of different things about money. I was always a side hustler from growing up. I have four brothers and I think one of my brothers specifically is one that’s the hustler of the family. So, we always learn a lot from him. I remember growing up, we would making money on the weekends and then go home and iron it and come home and fold our bills and make it look all real crispy and cool. My dad always worked a million, gazillion jobs.
We were the guys that were doing eviction notices putting on your houses. We were the ones doing the paper routes. I think everybody in my family has had a paper out. I think we also were the people that delivered phone books. I know people don’t have them anymore, but we did that. My mom worked at a bank. I didn’t think much of it at the time, but I think I opened my first bank account when I was eight or nine. She was a joint person on that account. But going back and thinking about it, that probably all built into me being really frugal and growing up the way that I did. I think I grew up very frugal, probably cheap starting off. I think it’s growing into frugality now. That’s probably the very beginning of it. I can give more detailed stories growing up as well, too.

Mindy:
Well, you did mention the F word, frugality, which is my favorite F word. I think that’s awesome. I think frugality is really huge in the journey to financial independence. Scott’s got his four lovers. Spend less than you earn. If you only spend this much money every year but you make this much money, then you have a lot more opportunity to try new things, because your financial outlay is so low. There are people on the other side of the coin, who are like, “Oh, you should just make more money.” Well, that’s great. Of course, everybody wants to make more money, but that’s not always the option. That’s not always easy.
Let’s say, I spend $30,000 or $40,000 a year. If I spent $120,000 a year, there’s a whole lot less opportunity out there for me to take a job that pays low but has great experience or I have to make at least $120,000 a year if that’s what I’m spending every year. So, when you reduce your expenses, I think your opportunities expand exponentially, which is a lot of X’s in that one sentence.

Darius:
For sure. I think reducing is the first step. And then now you can always increase it as high as you really want to. But if you don’t reduce or at least learn to reduce or have that frugality mindset or at least understand how to be frugal, then I mean lifestyle creep is a real thing. Your upside is always going to go up or has the ability to, but if your lifestyle creep follows, then there’s really no spread. So, you have a great point there.

Scott:
Just one of the ways to make a lot of money to really scale your income is to embrace the irregularities that come with those types of opportunities like a sales job or equity in a startup or a business that’s going to take you a year to build and will pay off for three, four, or five years, right? If you spend all you earn, you just don’t have the opportunity. You can’t take those opportunities with that. So, that can dramatically improve your financial position in fits and starts and huge lumps forward that you can’t even conceive of if you were optimizing the income front and spending all of that. You just spend every dollar. Yeah, I think you start with exactly right there. It makes perfect sense.

Darius:
Yup, I agree.

Scott:
So, what’s your position graduating high school?

Darius:
Graduating high school, I would say I left my city. I was born and raised in Las Vegas. I left Vegas and went to an HBCU in Kentucky. I spent a year there and decided I’m spending way too much money and having way too much fun compared to what I’m learning at least. It helped me decide that I wanted to come home, so I went home and went to UNLV. At that point, I think I had racked up 20 grand in student loans maybe that first year just from living on campus, et cetera. I always worked in high school. I’ve probably worked one or two actual W-2 jobs, always had a candy business that I did in high school. My parents got a car.
I don’t think I saved any of that. I was always a person that knew how to make money. I was never the person that was actually saving it. So, after my first year, I would say I probably had 20 grand in student loan debt, but that’s it. I didn’t have any credit cards or car loans or anything like that. After that, I came back to UNLV and took the long route of graduating. It took me, I think, seven years. I got a computer engineering degree, which I guess in the long run is worth it, but don’t take the seven year route if you have a choice if anybody’s listening.

Scott:
What slowed you down? What happened to take seven years?

Darius:
There’s no really good reasons. It was hard. I didn’t pass my classes. I was distracted. I did work through college. So, I mean, I could say I worked full time. I worked at different restaurants on the Strip and things like that, but I don’t think those are excuses. I should have just worked harder. Computer engineering is a very big challenge though. It was the hardest thing I’ve ever done. There’s probably a couple of other things that are probably not related to the podcast that just are distractions really.

Scott:
Fair enough. So, what year do you graduate with the computer degree? What’s your financial position at that point?

Darius:
Yeah, so I graduated 2017. I probably, within that time period, racked up another 20 grand. So, I think I’m $38,000, $40,000 in student loan debt. I was working, so I thought I needed to buy a nice car. So, I bought a Mustang. I did do it the right way to where I got it used. I got it to where it never lost the amount of value that I bought for. So, I was always on an upside there. I got a couple of credit cards, but nothing that was extravagant, maybe $1,000 or $2,000 here and there. I was always working through college though.
I think at the time where I graduated, I had 40 grand in student loan debt. I got married the week or so before or after I graduated. So, that was another $4,000 or so. I think me and my wife, both having engineering degrees, was we both have some student loan debt. So, I just accumulate hers into mine as well. So, I checked both of our net worth, but as a family.

Mindy:
You only spent $4,000 on your wedding?

Darius:
It was five or six times of that, but that was the only thing that we had to put on credit cards.

Mindy:
Okay. I was going to say that’s intelligent. I mean, you could spend $100,000 in your wedding. There’s lots of really, really expensive weddings.

Scott:
All right. So, we’re in 2017. You just got married. We’ve got $5,000 in credit card debt, 40K in student loans. We’ve got a Mustang and two engineers married there. You have more student loan debt because you pulled that in. What’s the total there?

Darius:
I think my wife was a lot better than me. She also went through it a little faster than I did. So, I think she was only about 20 grand in student loan debt. So, she’s got $20,000. She had a really good job in Vegas, where she was a cocktail waitress and making really good money. So, she got an even nicer car and a little more expensive, but again, she’s paying for it. So, that wasn’t my decision. We weren’t married at the time. Another car was probably $30,000. I think we probably have another five grand in just combined credit cards, because we used to travel… Not used to, we still travel a lot. We traveled a lot in international. Before you know what you’re doing, it gets really expensive.

Scott:
So, what’s the total debt? What’s the total debt we’ve got going up here? We got car loans. We got student loans. We got some credit cards, all that stuff.

Mindy:
So, let’s say we’ve got $40,000 in your student loans and $20,000 in her, so that’s $60,000. Plus $30,000 for her car, so that’s $90,000. And then let’s call it $10,000 in credit card debt randomly, so that’s $100,000.

Scott:
[crosstalk 00:13:50] for your car.

Mindy:
And then his car, how much was your car?

Darius:
By 2017, I had to get another one. So, it went up a little bit. I think it was about $20,000. So, in 2017, once we both graduated, we moved from Vegas to Indiana. That was the breaking point for us. So, I think in that move, we were probably negative $110,000, $120,000, somewhere around there. That’s probably the best point to start of when I decided, “Okay, now we’re married. So, now you’re making really good money.” Oh, we moved, so jobs changed. But I can do what I know to control our finances and make better decisions, things like that.

Scott:
Okay. You’re saying this is a turning point. Do you look up and had trouble comprehending the debt? Do you do listen to something, read something? How does that pivot in your framing of the financial situation come about?

Darius:
There’s a lot there. I will put a few things. One is I will call it geoarbitrage or some geohack. We isolated ourselves, which is one thing that I always suggest for people to do. We moved from Las Vegas where I was born and raised. We both spent the last 20 years of our lives, all of our friends, everything we know, and moved to Indiana. It was for work, but at the same time, we don’t have friends here. We’re starting over from scratch. We’re not being influenced to do a bunch of different things. Second thing is we had gotten married that year. I know a bunch of stuff about finance and personal finances. I’m into it, but I worked at a small little restaurant. I was just a guy making whatever money on the side, so I can go through college.
She’s making really good money. She was also more of a spender then I’m more of a saver or personal finance guy. I always tell her, “If I was in her position, I would have turned our stuff around.” Maybe I wouldn’t have. I didn’t want to tell her what to do with her money when she was the one making it when we weren’t married. So, us getting married was more like, “Okay, now we need to figure out what we’re going to do with our money.” So that was another thing. And then the third thing I would say is, you guys say it all the time, who you spend the most time with is who you start being more like.
Because I did this geohack where we’re not around all of our friends, the people that I spent the most time with, it was really you guys. I was listening to the podcast, listening to a bunch of other FI podcasts. Every time I listened to the podcast, I would go and rent the book from the public library in Indiana or wherever any other library. I just pretty much read and listen to podcasts and was on Mr. Money Mustache and doing the whole thing and took a year of figuring a bunch of stuff out. There’s a really good story behind all that too.

Scott:
Well, let’s go into that. Let’s start with, “What does the conversation with your wife look like about money since that’s a big change? Is that an event or is that a process that goes on there?”

Darius:
It’s both really. So, the event is she’s making really good money working on the Strip in Vegas. I’m making not so good money. We both graduated. I dragged her for making all this really good money to Indiana where I get a job first. I’m making an engineer, but starting engineer salary, like $60,000, $65,000. She didn’t find a job until after we got there. So, she went from making really good money to dependent on me for a few months of income. So, that’s the event.
The process is, “Hey, I found this FI thing and I’m also interested in personal finance. I need you to not spend any money, so we can budget and figure our lives out.” So that was a process to get that through from one year to the other. It was a very fun process of change for her. It was definitely a struggle, but she’s like-

Mindy:
Wow, what a surprise.

Darius:
But she’s my buddy though. She’s always been real cool about it. She’s always been open to a lot of things. I think now, I think she really, really, really appreciates it. We always look back on our Indiana years, because we’re there for two years. I think things literally did a 180 since then. I think she really appreciates that. So, do you have questions specifically about that process though?

Mindy:
Yes. So, what did you say to her? Because when you’re the spouse that is the spender and the saver comes up and says, “You need to not spend so much money,” it feels like an attack. So, how did you phrase it to her in a way that she got on board or was that a series of conversations? When you discover financial independence, you’re like, “Oh, we got to do this, we got to do this.” You think, “Oh, it’ll just be one conversation.” They’ll be like, “Oh, yeah, that sounds great.” It never really seems to be that conversation.

Darius:
Yeah. She’s super open minded. She’s like, “If you want to run with something, I got your back.” So, she was supportive. It was hard to change, I would say, though, real life decisions probably for her and for me as well, because I’m not going to say I just didn’t spend money because I was the same way as well. But what we did is we talked about it. I explained some of the easy numbers, the high level things. She’s like, “Okay, cool. How do we get it done?” We would have finance Fridays, where we would cook dinner and then just chill at home and then read a Mr. Money Mustache article or something like that. Sometimes I would send her the podcast that she’d listen to and enjoy. That was a little aggressive.
So, those didn’t always go through the same way, but I think she figured it out and understood. I would say, it’s just really experience. The more you’re exposed to it, the more it makes sense to you. It’s just like if I give you guys something that you don’t know and I’m like, “After X amount of time, it’ll mean something to you,” you have to experience it and go through. I think over those couple of years, it all started to make sense. In addition to that, it was a little bit easy for me, because we were in a position where if we didn’t do this, we would be struggling. I wouldn’t say more, because we were just barely getting by at this time.
When we moved, we had the debt. And then we also went from her making really good money to us both making mediocre salaries. We’re pretty much trying to grow it from there. We had the debt from when we were making really, really good money before our professional salaries or our professional careers. So, we had to cut back on some things and we had to take a step back. It was a struggle for us, but I think it was more so because of the salary change. We were forced to make some of these changes. So, it was good thing. The timing was perfect. Now, that we’ve both been working for four plus years in our current positions, we’ve increased our salaries or I’ve changed jobs that increased how much I have of my earning potential.

Scott:
What does this first year look like in terms of you paying off the debt or beginning to accumulate wealth in some way? You’re having these conversations. You’re spending a year listening to these things. I assume you’re making lifestyle changes and cutting back a lot on a lot of things. How much damage you’re able to do to that debt?

Darius:
Actually, that spreadsheet wasn’t created yet. So, I took the Dave Ramsey approach of the snowball effect. I listed all of our debts. Let’s start minimum payments and said, “Okay, we can put X amount towards it.” Excuse me, that X amount was very little at that time. There wasn’t much that we could do. We cut back on some of our lifestyle things and replaced it with things like hiking or things like hanging out and listen to music at home, et cetera. But there wasn’t much that we could do.
If I’m being honest, it actually probably got a little bit worse before it got better, because I opened business over here in Indiana. That business was going well for a really long time until I got exhausted and overwhelmed and probably closed it way before I should have and didn’t close the right way where I could have at least broke even on it. I actually accumulated even more debt because of the business and we didn’t knock off very much in that meantime.

Scott:
So, when is this? Is it about a year, year and a half after you moved to Indiana?

Darius:
I think 2018 is when I began working on it. By 2019, January is when it officially opened, so almost the second year.

Scott:
So, when does your debt level peaked? What’s the most in debt point?

Darius:
That happened, I guess, the day we decided to close business for good. It was like, “Okay, all these business loans that the business was paying for stopped.” Well, they stopped getting income. I got it under my personal name. So, I was still responsible for it. We still had all the previous stuff as well. So, at this point, I think we’re probably $170,000 negative at that point. Yeah, probably $170,000 negative and complete entire debt. So, yeah. This is summer 2019. From there, I was like, “Okay, before we decide to close it, we had to have a plan, because otherwise, we need the business to pay for the business debt.” There’s a huge reason why the business closed, but that’s I guess for the business podcast from BiggerPockets.
The plan was to leave Indiana, go back to Vegas where we have connections. We have roots and we have other things that we can do. I was going to pursue my career and go into a sales role, because I ventured off into post-sales. I wasn’t getting commissions or anything like that. From there, we can also do what I call a mini-house hack or a reverse house hack. So, I closed the business and we’ve moved from Indiana back to Vegas. We stayed with really close friends/family. What I call a reverse house hack is we’re not really house hacking where we own the real estate and we’re letting someone live with us, but we essentially get the same benefits out of it by staying with someone else.
So, we negotiated with our friends that we’ll pay $600 a month because their mortgage is $1,000 or less. I think it’s a little less. We repay $600 towards their $1,000, which would cover our rent for our one room out of their four. Plus, it would also cover for all of the utilities. So, now we’ve gone from $1,200 rent and plus another $300 or $400 of utilities down to just $600.
We still have both of our incomes. That cleared $800 of cash flow every single month. From there, I also was working remote. My wife got a job in Vegas. And then I also got another job in Vegas, where I was making pretty much double, but I still had the two jobs for a few months. That gave us a whole lot of cushion to where we were making really three incomes for a few months. One of the incomes was double of what it used to be.

Scott:
What did your household income change from on a monthly or annual basis in this period?

Darius:
We were both making in the 60s. So, I think it was about 5K a month before taxes. The other one was doubled, so it went from 5 to 10K total before taxes to $20,000 with keeping the other job. And then after I stopped working the first remote job, I think it was $15,000.

Scott:
What are the two jobs?

Darius:
So before, I was just a software engineer. I made my way to the sales process, doing professionals services. And then from there, I went and worked as a solutions consultant, which is another way of saying a sales engineer. So, I was working with the sales teams.

Scott:
Okay. The second job, what was that?

Darius:
That’s the second job. That’s this higher paying that was pretty much double job. The first job was the software engineer.

Scott:
So, you’re working 40 hours a week as a software engineer and after hours in this solutions engineering sales type role in addition to that. Same company for both of these?

Darius:
No. So, I was working with a company in Indiana. It was really all over the country, but I had the job in Indiana and started working remotely. That was more so I would do that when I had the time to do it. Every now and again, I’d have meetings during the day, but it didn’t intercede or overlap too much. And then when I did start the two, that’s when I had to quit the job. The first priority job was the sales engineering role. It was a local job that I had to be at and it was making way more money. So, I prioritized that for sure.

Scott:
What’s your wife’s two jobs during this period or job?

Darius:
She just had the one. So, she’s a civil engineer, a really good one.

Scott:
Okay. So, you go from making 10K a month to 20K a month and you’re paying $600 a month in rent and I assume continuing a lot of the frugal habits you developed in Indiana. Is that right?

Darius:
Yeah. So, we developed all those habits and we brought those with us. We started sharing expenses for groceries/eating out, because we’re living with a whole another couple. Pretty much everything we had cut in half except for our living expenses. It decreased dramatically. We were additional $1,000 to $2,000 a month extra on our debt.

Scott:
Okay, great. So, you’re paying $1,000 to $2,000 a month and going towards the debt at this point and on this new cash flow. How does that look like over the next 6 to 12 months? So how much damage you’re able to start doing?

Darius:
Yes. So, I would say that was the real turning point for us. So, in 2019, at the end of the year is when I got that second job. That’s when I started actually tracking our stuff, our debt, or I call it our… Well, let me look at that really quickly, because I have it right here. I look at it pretty much every day. Our wealth tracker goes back to 2019. We were at the negative $170,000. I’ll just go a year. I’ll just go to 2020. It looks like we were at negative $100,000. So, it’s a $50,000 to $60,000 change happening to that. It’s not just paying off the debt fast.
This is March 2020 that I’m looking at. COVID happened, so we got the COVID relief whatever, $1,000 per person. We also got tax returns, which actually increased quite a bit because of the debt from the business. I think those were the two big things that went into additionally paying just a couple $1,000 extra in debt. Plus, we also have retirement accounts that had increase. So, this is more of our net worth rather than just our debt.

Mindy:
Darius, just a moment ago, you said something that I thought was brilliant and it’s so simple. You said, “I created a spreadsheet and I look at it pretty much every day.” I have frequently compared getting out of debt to losing weight.

Darius:
Me too.

Mindy:
You know what you have to do and you know how to do it, but just because you know it doesn’t mean that you’re going to do it.

Darius:
Correct.

Mindy:
Just like when you are trying to lose weight, you step on the scale every day at about the same time. So, you’re not weighing yourself in the morning one day and right after a big meal the next day. You step on the scale every morning at the same time and you keep track. It’s real easy to see when you’re veering off course when you’re looking at it every single day. It’s really easy to skip that, “Oh, I know I had six beers last night. So, I don’t want to look at it today. And then well, I didn’t weigh myself yesterday. So, I don’t have to weigh myself tomorrow, either.” It’s so easy to veer off course. Recorrecting or correcting, I guess, is more difficult. You look at it every day if you keep it in your mind.
And then once you start doing that, you go out and you’re like, “Oh, I don’t want to buy this because then I’m going to have to enter this into my spreadsheet tomorrow. I don’t want to look at this and see the problem,” or “Hey, I know I don’t need this because I have been keeping track and we’re doing so well. I want to keep that momentum.” So, my husband is the same way. He gets up in the morning. Pretty much the first thing he does is open up the computer and check all the things. He loves to do that and it keeps it in his mind. It’s brilliant in its simplicity. If you want to change your debt, look at it every day and see where it’s going and see what you’re doing. I love that.

Scott:
Yeah. It seems like this is the turning point for you is after you started looking at it every day, we now see numbers really begin to move in a really meaningful way. I mean, that’s incredible to build $60,000, $70,000 in net worth in a matter of seven, eight months with this. I’d imagine a lot of that was going towards the debt paydown, which is not tax advantage. You’re not able to shelter this. This is just hustle and keeping as many of those dollars you’re earning as you possibly can with this.

Darius:
Yeah, exactly. I also compare getting financially fit to working out or losing weight. For me, it’s like one of those things that, for me, is like automation. You can’t automate. You’re still walking on a treadmill, but what you can do is automate your schedule to where every single day, you have to make sure that you work out. The way that I did that before is I had to make sure I wake up at a specific time and I had three things to do. I had to read something for X amount of time. I had to work out and I had to… I forget what the third thing. I think it was meditate. I literally had one hour to do this or I’d be late for work. So, this is how I automated that. I did the same thing with our budget.
That’s I think what helped me and my wife especially have some of the frugal ways that we have now just, because it’s easy to get off track if you, I guess, allow room for yourself to get off track. One thing that I say is people spend and you spend more than you want to, but when it stops is when your bank account is empty. You stop and you figure out what else you can do other than spend.
So, what I always do is I use different accounts that each get empty or they get refilled. But once that account gets empty, then you can’t spend for that specific thing. So, we have a bills account that we don’t touch. It’s sacred. You cannot move money out of that thing. Only money goes in and then everything’s auto-transferred out or auto-paid out. We also have a fun money account. If you want to do something and it’s for fun or it goes on that card, once that’s empty, then I mean, you’re done until you get money back in there. So, that’s one of the ways that we fixed that problem as well.

Scott:
How much do you a lot for the fun money?

Darius:
Today or back in the day?

Scott:
Both.

Darius:
Yeah, it started off with zero honestly. We share a fun money account. We didn’t have money for it. I set milestones for us once we pay off this amount of debt or once we get to this net worth, which is usually from negative $100,000 to negative $60,000. Then we’ll get $100 a month. Today, I think we’re at $500 a month each. We also have a travel account that we add to. So, it’s getting out of hand, but we’re still taking care of all of this important stuff, too.

Scott:
That’s the point, right? The point is to do this, so you can have those rewards. Mindy, you’re about to say something?

Mindy:
I was going to say, I love this idea. What you said is so spot on. When you are paying for things and you don’t have any more money, you don’t buy any more things. I mean, of course, you could put it on a credit card, but we’re not talking about that. We’re talking about paying for cash or using debit cards or things like that. I love that. When you’re out of money, then you don’t spend that anymore. If you’ve got the bills account and this is just for bills, I can’t take that and go out to lunch with my friend. That goes into my fun money account. $500 is a lot of fun money, but that’s your money to spend as you want to. I’m assuming that we have fast forwarded to paying off all this debt.

Scott:
Yeah, yeah. So, we’re in March 2021. We have negative $120,000 in net worth. Is that right?

Darius:
Uh-huh (affirmative).

Scott:
How do things proceed from there?

Darius:
So, I think from March 2020, this is July now, we have one debt left from the business. It’s like $8,000 now. We just passed last month the $0 mark in net worth. So, now we’re finally a positive net worth. Excluding student loans, because I’m still hoping for Uncle Biden to come through with those things, but we’re saving up money and not putting towards the student loans, but we’re saving up our monthly amount in another account. So, hoping that if they do pay those off, then we’ll just use it towards an investment. If they don’t, then we’ll probably just use it towards that. I think I missed some of the question that you asked.

Scott:
How are things proceeding? So, you’re saving a few thousand dollars a month. It sounds like the status quo continues. You guys are working, saving and periodically upping your fun money as you hit certain milestones with this, which I think is a great formula for success there. Last month, we got to zero net worth, it sounds like.

Darius:
Correct. So, we are currently just eight grand in debt other than the student loans. Two months, it’ll be paid off. So, after July’s payment and then after August payment, it’ll be paid off because August gets a bonus from my job. We’ll just use that to pay and then we’ll have $2,500 freed up of literally debt. So, now, we’re going to take that and start using that towards investments. So, we’ll probably save up to get a down payment for a house or we’ll figure out what we want to do. If nothing else, we’ll put it into index funds. That or my wife might work less or not at all, because there is a baby on the way. So, that’s the next plan. It opens up things for us to have opportunity of what we need to do or want to do for next year.

Scott:
That’s awesome. Congratulations on the new family member with all this stuff and getting back to zero.

Darius:
Thank you.

Scott:
Look at that, the work that you just put in to knock this all out probably makes that decision to have your wife potentially stay at home for a little bit that much easier than it would have been if you hadn’t gone through this grind-

Darius:
Absolutely.

Scott:
… this three-year grind that you just described here.

Darius:
Absolutely.

Mindy:
Well, easier or even possible. There are a lot of two-income families that cannot be two-income families. So, I think that’s fantastic. Again, it just opens up more options. Are you going to continue to live with this other couple? Do they have children? Do they know about your baby?

Darius:
So, we actually don’t live with them anymore. Last year, after I started making more income, we bought a house. We bought a new built. So, we had a bunch of time to save up for… Really, we weren’t saving. We were paying off debt. And then we had just enough money for our down payment. That switch happened sometime last year as well. So, we actually are doing the different house hack right now, where we have a three-story house in Vegas. Third story’s like a whole suite, bathroom, bedroom, everything. We have someone renting that out. So, I guess I left that out into this growth path as well.

Scott:
On your net worth spreadsheet, how is your net worth per month trended? Did you start off with maybe $1,000 or $2,000 and begin accelerating that to $3,000, $4,000, or $5,000 a month over time or how’s that looked?

Darius:
Yeah, for the last few months, it’s been five grand every month our net worth has gained or between. It varies. Sometimes it’s like $4,000, sometimes it’s like $6,000. And then every third month or every quarterly, it goes up to about $10,000, just because of the bonus that I get. But before this current job that I have, I think before then, it was going up between $2,000 and $4,000. So, it’s just been accelerating since some of this is going towards investments rather than just going towards paying down the debt.

Scott:
Yeah, I mean, it’s a huge inflection point that you’ve grinded out for two years, two or three years to get to. You’re in great shape now. Can I ask how old you are?

Darius:
I just turned 30 this year as well, both me and my wife.

Scott:
All right.

Darius:
So, we have very similar timelines. I follow the podcast for a long time. I feel like we got married around the same time. I feel like we are around the same age. Once you were at BiggerPockets, I think that’s around the time that I got my first professional job. Actually, I think you were a little bit before that one.

Scott:
Nice. Yeah. I was remembering. You sent me an email a few years ago about a lot of this progress here-

Darius:
I did.

Scott:
… in a lot of detail. So, that was really cool to see is to hear that and now here you are that put you back to zero and in great shape with a lot of this stuff.

Darius:
For sure.

Scott:
I would love to dive more into the student loan conundrum with that. What is your student loan balance today? How does one noodle on this? Because I think it’s an art here, but I want to hear what’s going on in your brain about that decision and the amounts and the stakes there for you.

Darius:
So, there’s two things. I’ll start with just answering your question directly and then there’s another caveat that’s probably also something that people might have opinions about, but I don’t really mind too much. So, my thing is there’s rumors that they want to pay off X amount of dollars in student loans. I don’t want to miss out on the opportunity if I have that chance. Right now, there’s no interest on it. So, I’m not losing out by not paying it. So, we are just literally putting that payment towards another debt, because we know for sure that it’s going to take effect right now and actually help us out. If they do pay it off, then my wife should be completely cleared out, because she’s gotten lower. Mine is I’ve always just paid the interest. So, I’m still at 38,000.
We’ll have enough money to just pay that off completely if we choose to do that. I won’t choose to do that though. So, it doesn’t really matter either way, but I’ll still at least get some of it paid for. The second part of it is within all of this, I worked when I got the new job as sales engineer for startup and that startup folded. So, last year, less than a year into me working for this new company, it went under. The month after we paid our first mortgage, I lost my job, which is the bigger job that’s paying all of our bills. It was panic mode for a day, then it was like, “Okay, we’ll be fine.” But because of that, we put our house into forbearance and we’ve not had to pay a mortgage. We’ve been increasing our forbearance.
So, we have three months left on that, but I got another job a couple months later. We’ve been paying ourself the mortgage into a high interest savings account. That way, once the forbearance is over, if we need to just give them all that money, then we’ll have that money available to give them. Hopefully, they just put at the back end of the loan and we just get a year of free mortgage and that would be beautiful. They will either use that towards actual down payment for another mortgage or I don’t know what we’ll do with that, but we have a few options there. So, there’s 20 grand in an Ally account that we’re also not touching as well.

Scott:
So, what’s been happening is you’ve been making no payments on the student loans with no interest. You’ve been making no payments on the mortgage. You’re house hacking and you’re saving a ton of money as a result in cash. You’re building up a very large cash balance as a result of this.

Darius:
Correct. So, it’s just lucky timing to lose your job, which is I don’t know how that works, but yeah. Exactly what you said, we’re house hacking, saving up money, not paying a couple of things that the government said that we don’t have to for now and saving up that money to be able to pay it when they do tell us we have to.

Scott:
So, the current picture for your financial position is a slightly positive net worth with 38,000 plus some in student loan debt, a mortgage balance and-

Darius:
Correct.

Scott:
… a savings rate of a few thousand a month, but a forbearance balance building with a lot of this stuff and a couple of investments in work 401Ks, those kinds of things.

Darius:
I don’t include my mortgage in my network that I track, because you never know how much somebody would buy your house for, but you do know how much the debt is. But if we include that, because we bought right before this crazy market started, I think our starting price for our house has gone up $50,000. So, we have a whole lot of equity, but I don’t include that in our net worth though.

Mindy:
Okay. Did you have to prove a hardship? Did you have to say, “I lost my job,” and then they put you into the forbearance plan? What I understand is that the payments that you’re not making currently just get tacked on to the end of the loan. You used the phrase, “So we just get a free year.” You’re actually going to be paying interest on that-

Darius:
We are. Yeah.

Mindy:
… for that extra year.

Darius:
Correct.

Mindy:
So, it isn’t free.

Darius:
For sure.

Mindy:
I want to make sure people aren’t hearing that as free, but I understand what you’re saying. You got another job right away, which is nice. I’m not sure that you’re going to be able to get a mortgage in the next year or so. This is something that you should talk to a lender about before you start looking for another property, because you were in the forbearance program. Scott, was it Seth Jones that we were talking to about that? I didn’t even look up his episode number. I have to go back and look it up really quickly.
We talked to him right when that first came out. So, I’m not even sure that that’s completely 100% correct information now as well, because I’m sure there have been things that work themselves out over time. But I would definitely talk to a lender and see if I can’t get a loan next year, when can I get a loan? There might have to be a year before you come out of the forbearance plan before you’re even eligible to get another mortgage.

Darius:
Yeah, there’s three ways of doing it. Putting it at the end was one of them. Changing how much your mortgage is by increasing it just to catch up is another. And then just paying it all out right is the third option. So, I think it’s dependent on your situation. So, I’m just waiting for them to tell me which one is for us. I’d prefer to put at the end. If that is an option, then we can do a creative financing way to get another house, but if not, we can always invest somewhere else as well. So, I’m open to all those options.

Scott:
Yeah, I think that would be a good one to talk to your lender about and see which one of those will give you the best chance to recover from the fact that you have a forbearance now in terms of getting that next mortgage if you’re going to try to invest in real estate with a lot of that.

Mindy:
Yeah. I would ask them, “What is the scenario for each one of these?” Consequence isn’t the right word. Scott, what am I trying to think of?

Darius:
Ramifications.

Mindy:
Yeah, ramifications. Yeah, what happens if I choose to put it all at the end of the loan? What happens if I choose to just pay it out? If you choose to pay it out and then you can get a loan right away, maybe that’s the best option if you’ve got a property that’s really great. I mean, right now, this market is so nuts.

Darius:
Crazy, yes.

Mindy:
It almost doesn’t even make sense to be looking.

Darius:
Right, I’m with you on that.

Mindy:
Yeah, I would definitely talk to them and talk to them now and see what options you have. There might be options that we haven’t even thought of.

Scott:
Darius, how do you think about your cash flow right now? What’s your cash flow right now that you’re able to accumulate on a monthly basis? What would it be if you have to pay that mortgage and begin paying off the student loan debt to some degree?

Darius:
So, essentially, the cash flow will be the same. So, we’re paying the mortgage. It’s just not going to the mortgage company. It’s going into an account that we can’t touch it or we don’t touch. So, it’s not in any of the money that we’re touching. So, we have the money for the mortgage.

Scott:
I see.

Darius:
We’re also budgeting that we’re paying our mortgage or we’re paying everything as well. Student loans as well, that money is going towards that last step that we have, but it’s 200 something for mine and 100 something for my wife’s. We’re paying $2,500 a month extra on that last loan. So, we’ve got a lot of room there.

Scott:
I see. I see. Sorry, yes, you mentioned that before and it makes sense. So, you are continuing to operate very conservatively as if you are making these payments.

Darius:
Correct.

Scott:
You’re just stockpiling it in cash while you’re assessing your options and seeing how the cards fall with a lot of those things.

Darius:
Right, right. So, either way, we’ll be able to go either way they tell us that we need to go.

Scott:
I think this is really interesting and something I haven’t fully wrapped my brain around yet with part of your story here, because I can see why you’re making the moves you’re making. I have a few heart palpitations about the way that you’re doing it with the forbearance piece and then the wait and see approach with the student loans with those types of things. Hey, I can completely empathize now that I’m seeing that and I’m trying to noodle on that as an approach for this. How do you think things are going to play out? What’s your hope going forward over the next six months as you come out of forbearance? Let’s assume that there is no federal markdown or contribution to the student loans.

Darius:
Yeah. So, I’ll go worst case scenario first. Worst case scenario is the forbearance is over and they say, “Hey, you owe us 20 grand.” Then I’ll just take the 20 grand or it’s more than 20 grand in the account, take 20 grand from it, pay them and continue paying the mortgage just as we’ve been doing before. The student loans, let’s say that ends and we have to pay that, then instead of paying almost $3,000 on the last debt, we’ll pay $2,700 on it.
Even though the payment’s only $400, we’ll paid $2,700 and put the $300 towards that. Everything else stays the exact same. We’re still saving the same amount. We’re still investing the same amount. We still have the same amount of fun money. We still have the same amount in our bills account. We still have the same amount in our joint account as well. Are you going to say something?

Scott:
So, Darius, I think you’ve got an interesting approach here and a unique set of circumstances with the moving parts. You’re in the middle of a very long grind to pay off all of this debt. COVID hits, and suddenly, a lot of things that were certain before become uncertain. The interest rate in your student loans goes down to zero. There may be a benefit to not paying down the student loans. You lose your job and you take the appropriate defensive step of going into forbearance. You’re able to get another job, and you’re not required to come out of forbearance at that point, I believe, with those types of things. So, you’re continuing to assess your situation and build a more and more defensive position, which I think is a natural reaction to the COVID environment.
Now, you’re waiting to see where the cards fall. I think that you can argue all day about interest rates and spreads and investments and inflation and all this stuff, but I think that the way that things unfolded, I can completely empathize and understand the way that you set this up in a defensive conservative approach to that. You’ve been applying it all to a bank account with all these types of things to wait and see where the cards fall with a couple of these things. If you can come out of forbearance and tacking on the end of the loan, great, you have that to apply to the highest interest rate debt or the next one in your snowball. If you have to pay it off right away, you go ahead and do that. You can assess your options from that point.
So, I think that you’ve navigated this circumstance from a position of, “How do I create the most flexibility and assess my options when there’s more certainty at a later date?”, which I don’t think you can argue with at the strategic level, right? I’m sure people will argue with it to a certain extent, but I understand the strategic intent behind what you’ve done with this. I’m trying to think about how I would have handled the situation under the same circumstances. I wonder if I would have made dramatically different choices in some of these areas. So, I think this is going to be a really good discussion here. We got to be careful to make sure that no politics get into the discussion.

Darius:
It will.

Scott:
The comments in our YouTube channel or Facebook were not going to go into politics on those types of things. We’ll just remove them. But I’m really interested to hear at the strategic level how other people would have navigated this. I get it. I think that that makes sense. It’s hard and there’s no right answer. It’s a mess in the middle of COVID, losing your job while you’re in the middle of paying off debt. I think it’s fascinating. Thank you for sharing all of this with us, because this is art, not science. This is a mess. How do you attack a problem like this other than to attempt to build out flexible position and assess options from there?

Mindy:
Well, and not only did he lose his job, he lost the main job that was paying the bulk of the bills. It’s so easy to sit here in July of 2021 and say, “Oh, well, he got another job.” When you lost your job in March, April of 2020 in the middle of the pandemic, where we didn’t know how it was spread and we didn’t know what was going on and everything was shut down and you hear all these stories on the news about how everybody’s losing their job, of course, you think that it’s going to take you forever to find another job. So, I want to throw that out there too. Remember he’s making these decisions a year ago when we didn’t know anything. So, I think that the mortgage forbearance was a really smart decision based on the information you had at that time.

Scott:
Yeah. I think that debt, to me, is beyond argument at that point, right? You lose your job. You’re not building a large emergency reserve, I imagine, at the time, because you’re in debt paydown mode, right?

Darius:
Correct.

Scott:
So, why would you build an emergency reserve if you have debts to pay, right? So, it makes perfect sense. So, that’s why the tool exists. The strategic question is continuing it after you got the next job with those types of things. That’s, I think, the interesting one. I don’t know if there’s a right or wrong answer there with that. I think that’s where the debate begins around that as a technical choice and how to proceed from the current state with this, because right now, what you’re actively doing is you’re arbitraging the mortgage interest rates. You’re still paying that, right? That’s still accumulating with that.

Darius:
Correct.

Scott:
You’re arbitraging that for a savings account from this. So, I think it’s probably around time to make a decision about what to do with the forbearance and move out of it. I would be interested to see what the group thinks or what you decide as the option to move out of that with there and how you would apply the 20 grand that you racked up here.

Darius:
Yeah. So, I’ve only got, I think, a couple months left. Like I said, I have the almost a year’s worth of forbearance in a bank account. Really, there’s three options, but there’s really two options. Either give them all the money because they asked for it, or use that money to do something else with it. I am going to do whatever is legal. I’d just say that first. If they tell me I need to give them money, then I’ll give them money. If they tell me that we can put at the back end of that and it’s my choice, absolutely, I would rather have 20 grand, rather than have a year’s less of paying my mortgage off, because I can almost guarantee that I won’t pay this house off in the next 29 years. I don’t plan on just staying here. Whether I keep it or not, I don’t plan on trying to pay it off fast.
So, if this stretches out and I can get 20 grand every year for it, I would. So, as long as it’s legal, as long as I’m following the rules and as long as these are options that my mortgage company is giving me, I would definitely prefer to take the advantage that I have. The advantage is not that I’m getting, I guess, a free mortgage. The advantage is that they’re giving me the option because of my situation.

Scott:
The way it’s worked out is you’ve effectively arbitraged the 3.5% interest rate for 12% depreciation or whatever it is with this.

Darius:
Correct, probably more honestly.

Scott:
Yeah, yeah, maybe 20% annual depreciation or something like that. So, that makes perfect sense. You’re not going to pay down the mortgage early. You’re probably going to sell the asset before you ever pay down the full mortgage-

Darius:
Correct.

Scott:
… with that. So, maybe this is making a lot of sense to me with the way you’ve handled the situation. I think it’s brave of you to share this circumstance here, because I think some people have opinions on it.

Darius:
For sure.

Scott:
But I think it’s been a valuable discussion with this. I think that this is the hard stuff you got to deal with when you’re paying off debt like this and going through this situation. You lose your job, and you’ve got the student loan debt still and all this other stuff. That’s the messiness that is personal finance with this stuff. I think it’s a great discussion.

Mindy:
I do too. I just want to say, hey, we encourage respectful discussion in our Facebook group. I’d love to hear what you have done in this similar situation, what you would have done. I do not want to hear anything about, “Oh, you’re doing it wrong and you’re taking advantage, blah, blah, blah.” He lost his job at the height of a pandemic that hasn’t happened in 100 years. I like what you just said, Darius. I’m going to do whatever options my mortgage company gives me that are best for me, legal options. That’s your right.

Darius:
Yeah. And then in addition to that, I will also say that there are lots of advantages in life. You take advantage to what’s given to you. Some people are born into a rich family and there’s nothing I can do about that. My family is not rich. Some people are born with incredible athletic ability. Who’s to say that they shouldn’t use that? Some people worked hard to get to certain situations. They got to those certain situations, but maybe they were in the right time or the right place that they wouldn’t have gotten full advantage of, even though they worked hard.
So, to me, I’m not going to turn down a really good option. To me, I don’t even think it’s really that great of an option, like losing your job. I just lost my job and then followed through what everyone else did. And then they automatically give you a certain amount of time. And then I’m just making sure I have the ability to pay or not versus what the options they gave me.

Scott:
I agree.

Darius:
I’m okay with whatever comments that would love to talk about it.

Scott:
I love it, man. I agree. I think you should approach it from that position of self-confidence and knowing that you’re doing what is best for you and your family. You’re doing that from a position of knowledge and a certain amount of self-education and a fundamentals-based approach that you’ve been applying for years in a row, methodically moving towards wealth. You do you. I just thank you for bringing this topic to discussion with this and want to make sure that we’re showing the detail and analysis behind that. You build the most flexible and defensible position with the best set of options that you thought you could create out of navigating the pandemic circumstances.
I think it’s great and I just applaud you. I’m grateful you came on the show and discussed it with us, because I think this is going to help people think about their situation if they’re in a certain similar set of circumstances and going through similar things that you guys went through. When did you take the forbearance? Did you take it right away after losing the job or did you wait a little bit or how did that work mechanically?

Darius:
Yes. So, for me, once I got the notice that we were all losing our jobs, we were getting laid off, it was a last check. And then there was about three months of emergency funds that we use to pay mortgage, to pay every other bill that we have. I thought I would get a job pretty quickly and it did take about four months. On that fourth month, things are starting to hit the fan. I don’t know if you can say that word on there, but it was starting hit the fan.
It was either start to reverse back or to take that forbearance. That’s why I still have a few months left on that forbearance, because I didn’t do it initially. So, now, we have a 12-month spread, but it did take a while before we decided to do that. Otherwise, I wouldn’t have taken it if we could have just survived that period or if I didn’t lose my job. It wouldn’t have even come to mind.

Scott:
Nope, I love it. Yeah, I love the way you’ve thought about this challenge. I think it’s a fascinating area to navigate and you’ve done it from a fundamentals principle based approach about, “What is best for your financial position? How do I navigate my cash flow? How do I set up the most flexible future situation?” So, I think it’s a fascinating discussion and thank you for sharing it with that. Let’s go ahead with the famous four if now’s a good time. Mindy, do you want to kick us off?

Mindy:
I always want to kick us off on the famous four. Darius, these are the same four questions we ask of all of our guests. What is your favorite finance book?

Darius:
A few, but I’ll just give one. Can I do three?

Mindy:
You could give us multiple.

Darius:
Okay, they’re all going to be repeats because I literally get my whole list from your podcast at the end. Sometimes I’ll just go to the end and then just make sure I write down these books, but I’ll give you one that’s probably not from this podcast. The number one that I have is Profit First, which is actually a business book.
For me, it taught me how to section everything off into different accounts. So, that way, once I run out, then I don’t have money in there. It stopped me from spending more. In addition to that, there’s a few others like Smart Couples Finish Rich or smart whoever fill in the blank finish rich. I think another really big one was I Will Teach You to Be Rich by Ramit Sethi. I think it’s called I Will Teach You to Be Rich or I Can Teach You, something like that. Those are some of my tops.

Mindy:
Yeah, I Will Teach You to Be Rich.

Darius:
There you go.

Mindy:
He is very forceful.

Scott:
We’ve actually had Ramit on the show twice now. Get those episodes in the show notes.

Darius:
Yeah, great episodes.

Scott:
Darius, what was your biggest money mistake?

Darius:
I’ll say my, because I’m on the show, but me and my wife combine everything. Our biggest money mistake by far today, which is so bad, is the stupid timeshare thing that I fell for. I’m really big into sales. I always say like, “I can’t be really sold to.” We travel a lot. So, there’s this thing. Hey, come to this casino or this hotel and let’s just talk for a minute. They’re like, “Hey, you guys travel? You should buy this timeshare. It’ll save you all this money.”
Obviously, it didn’t work out. We’ve never got to use this a single time. It was like a credit card plus a thing that we financed every single month. And then there’s this one time a year fee that was $900 that you get some backup. It cost us probably thousands of dollars. We just paid it rather than ruin our credit. It was bad. It was a four-year thing. That was the biggest thing I was happy to get off of my back in 2018.

Scott:
We don’t really talk about the timeshares too much on the BP Money show, because I’ve just been so conditioned via South Park to stay away from those. Timeshare is not a good one, I think. For folks listening, stay away in a general sense, I think.

Darius:
Right, for sure.

Mindy:
I have never heard somebody say, “I went to the presentation. I said no and they let me go.” They always want to push, push, push. I’ve never heard anybody say, “I bought a timeshare and I enjoy it. I’m happy I did it. I love it. I get to use it all the times that they said.” I have taken a friend’s week a couple of times. A couple of different friends had weeks. They’re like, “Oh, we can’t use it.” I can use it and it’s less expensive than if I were to go and rent a place at the same location. But with travel hacking, I can’t support timeshares. I have very strong opinions and will keep them to myself.

Darius:
Me too.

Mindy:
If you have the opportunity to go and sit through this free presentation, skip it if you can’t say, “No, I’m not going to do this,” and walk away. It sounds so awesome. Oh, we’ll give you-

Darius:
A free whatever.

Mindy:
… a free stay in the hotel. Yeah, no, skip it. Just don’t even go.

Darius:
The free stuff that they gave us didn’t turn out to actually be real or free. So, just throw that in there too.

Mindy:
Shocking, shocking that they didn’t live up to all of their promises. Just say no, don’t even go to the presentation. Okay. What is your best piece of advice for people who are just starting out besides don’t go to the timeshare presentation?

Darius:
Figure out how you can make more money, but after you figured out how you can get your spending to where it needs to be. You can only decrease your spending so much, but there’s an infinite amount that you can increase your earning potential. I guess part B to that is one thing I always tell all of my friends or people is that the job that you get is literally the job that you apply for. So, there’s a bunch of jobs out here.
Let’s just say you do retail. You can literally work at, let’s just say, Gap. Not that that’s a bad job or anything, but you can also do the exact same job and work at the Gucci store. You know what I mean? It just really depends on where you’re applying or what your mindset is. So, if you think you want to work in retail, if you want to do whatever job it is, apply for the highest paying version of that and just keep applying until someone gets you in. So, that’s part B of that one.

Scott:
Yeah, thank you. We even heard that advice, but I think it’s spot on. Go after what you want and be relentless for it. Go to the higher end of the scale or the spectrum with that. Pick the hardest job, the one that will lead you to the best career potential with those types of things. I think it’s awesome. What is your favorite joke to tell at parties?

Darius:
Everybody always struggles with this and I’m more of a on-the-go guy, like you are, Scott, or at least I like to think so. I even Googled something and I have notes right in front of me. It just has joke right now. I don’t know, but I did read something that said, “Where’s the best place for a fortune teller to work?”

Mindy:
Where?

Darius:
The bank. I thought that’d be a pretty good FI joke, maybe not. Scott didn’t laugh.

Scott:
I think it went over my head.

Darius:
They tell your fortune.

Scott:
Oh, yeah, I see. Yes, the bank teller-

Darius:
Plus, a bank teller.

Scott:
… of the fortune.

Mindy:
Wow, Scott.

Darius:
It finally sunk in, guys.

Scott:
That’s good. Yeah, that’s great.

Darius:
I read that.

Mindy:
Okay. Darius, where can people find out more about you?

Darius:
I have a website. I’m not on social media as much on social media. I have a website that’s called wealthismyworth.com. I don’t know if you guys want to put that in the show notes, but you guys can definitely find more information about me and what I do with money there. In addition to that, you can just email me. So, you can email me at [email protected] or I’m on LinkedIn. That’s probably the better place to find me, more professional things like that. I do have social media too, but I don’t want to link it on here.

Scott:
Yeah, absolutely. We will link to all of those and any social media that you want to include in the show notes at biggerpockets.com/moneyshow221. Can you tell us a little bit about Wealth is my Worth?

Darius:
It’s a course that I’ve recorded and I also teach it live as well. I’m really just teaching people a lot about personal finance. It’s really like what we covered today, going from negative net worth and getting all your debt paid down and getting really back to zero. I think there’s other opportunities and courses that can get you from zero to investing and things like that, but what I focus on is really just going from a negative net worth, paying down debt, and not budgeting really. So, you’re putting money in accounts. When it runs out, it runs out. I think that’s the best way I can describe it in 30 seconds.

Scott:
Awesome. That’s at wealthismyworth.com. One last thing, you have a spreadsheet that you’ve used that’s very detailed for what you’re doing there. Would that be something that we could share with the listeners, redacted version or something like that?

Darius:
Absolutely. So, that is actually what I use for Wealth is my Worth, for that course. I do sell it, but I can give it to people on here for free, just because it’s a side hustle thing. It’s not a main income thing.

Scott:
So, we’ll have a free version of Darius’s in-depth net worth tracker as well at biggerpockets.com/moneyshow221 as well. So, thank you so much, Darius. This has been a fascinating discussion. Wonderful to see your journey and get back to zero and all that stuff. So, congratulations on all that success. I’m really interested to see how the end of 2021 plays out for you here and how you begin attacking the next stage of the wealth journey and the investing grind that you’re about to get going into, which is fun and exciting, and see where you are in a few years.

Darius:
Sounds good. Thank you guys for having me. I’d love to update you guys.

Mindy:
Perfect. Thank you, Darius. We’ll talk to you soon. Okay, that was Darius Smith. Scott, I loved when you asked him for clarification on the mortgage forbearance. I think that really helped frame the scenario that he found himself in and the circumstances that he found himself in. He’s taking advantage of something that’s being offered. It’s going to change his financial picture a little bit, but in the immediate future when he didn’t have a job and he wasn’t sure what he was going to do, it gave him the flexibility and the breathing room to try and figure something out, instead of working from a position of franticness or desperation.

Scott:
Yeah. I think that regardless of feelings about whether or not the government should pay off student loan debt, which we’re not going to get into on the show, the choice that Darius has confronted with is, “If that is coming, do I put myself in a position to receive the gift or do I not?” I think that it’s really hard to argue with the logic of, “Why would you knowingly give up that gift right there to a large degree?” I think that that’s a difficult position to argue with there. I think again, he’s approaching his situation from position of giving himself the best possible set of options and playing the wait and see game during the period of uncertainty that we’re currently in.

Mindy:
I think he’s really thinking through his options and making choices that could have the best financial impact on him personally. From episode 221 of the BiggerPockets Money Podcast, he is Scott Trench and I am Mindy Jensen, saying swish, swish, goldfish. It’s just hard to say really fast.

 

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In This Episode We Cover

  • How to prepare to take on student debt (when needed)
  • Avoiding lifestyle creep and finding ways to lower your expenses
  • The “reverse house hack” and renting a room for far cheaper living expenses
  • Mortgage forbearance and student loan forbearance in 2021
  • Isolating yourself” from friends or influences that will cause you to spend more
  • Having a money date with your partner and going over finances regularly
  • And So Much More!

Links from the Show

Books Mentioned in the Episode

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