How to Pay Off 6-Figure Student Loans While Pursuing Financial Independence with Travis Hornsby

Scott: Welcome to BiggerPockets Money Podcast, Show Number 22.

“The takeaway message is that somebody who finds out about this financial independence stuff like later in their life after they made all these decisions, that they wished to High Heaven they could take back. You can still actually get out of that hole, which is so exciting. So it’s just really fun to be able to deliver that message sometimes to people that feel trapped”.

It’s time for a new American dream, one that doesn’t involve working in a cubicle for 40 years, barely scraping by. Whether you’re looking to get your financial house in order, invest the money you already have, or discover new paths for wealth’s creation, you’re in the right place. This show is for anyone who has money or wants more, this is the BiggerPockets Money podcast.

Scott: How’s it going, everybody? I’m Scott Trench and I’m here with my co-host, Miss Mindy Jensen. How are you doing today, Mindy?

Mindy: Scott, I am doing fantastic today. It’s a beautiful day out, as you said earlier—“Sun’s out, guns out”. I’m gonna show you my guns here. Okay, you win. Today’s show is so fantastic.

Scott: Yeah, we brought the big guns out with today’s guest so we’re having a long episode coming up and we’re going to briefly introduce his story for the first five or ten minutes and we’re going to launch into probably a 45-minute straight discussion of strategies that you can use to pay down student loan debt.

One of my favorite episodes of this podcast of all time, a perspective-changing podcast from my point of view but I’ve always viewed student loans as an obstacle to getting back to the starting point of financial freedom. You’ve got to pay off the student loan debt or find a way to work around it in order to begin building wealth.

But Travis kind of completely turn that theory on its head, I think, and has given a variety of options for how to go about it. And don’t expect these options to be for if you have $50,000 in student loan debt because this is for if you have significant student loan debt. Student loan debt that’s more than 1.5 or 2 times your annual income. You’re going to hear some kind of mind-blowing strategies and options that exist for you maybe that you have no heard of before.

Mindy: Yeah, and today’s show came about from several people e-mailing me asking me, can you interview somebody who can cover student loan debt repayment? And that’s something that I think that we both really want to present to our listeners is what they want to hear.

So if you have a question that you’re struggling with, if you have a money topic that you’d like to see covered, please e-mail me, [email protected] or e-mail Scott at [email protected] and we would really like to present topics that you want to hear about because that’s who we’re making the show for, is you personally.

Scott: Absolutely. And I think that if you have student loan debt and it’s a big part of your financial position right now and you’re really struggling to get through it, this episode—we could not have found a more perfect guest that can kind of go right into how to attack that problem and begin approaching financial freedom today, even with all that student loan debt.

Mindy: Yes, and this is really just an amazing episode. But before we bring Travis in, let’s hear a word from today’s sponsor.

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All right, big thanks to today’s sponsor. Mindy, should we bring Travis in?

Mindy: Yes, please.

Okay, so Travis Hornsby, welcome to BiggerPockets Money podcast. How are you doing?

Travis: Doing great.

Scott: Yeah, we’re very much looking forward to hearing your story today so let’s start from the beginning. Where do you believe your kind of financial journey began and when did you kind of discover financial independence?

Travis: Well, I think this is a little bit similar for you, too, Scott. But I found Mr. Money Mustache. That was like that first formal launching point. I was sitting in my cubicle working for a very large company, investment company, and just was not feeling energized every morning, getting up out of bed just feeling like what is my purpose? It’s not being fulfilled and then I found this idea of early retirement and financial independence. I thought heck yeah this is what I need to be doing.

I was very lucky in that I had set myself up very well up to that point so I graduated from college without any debt. I actually got paid to go to school, got a bunch of scholarships, and had a positive net worth leaving college and had always been very frugal. So I had been in a very fantastic position to work towards financial independence.

Mindy: Yeah, I want to know how you got paid to go to college. Let’s talk about that for a minute because my parents paid for my college and the subject of today’s show is student debt in general. I didn’t have any. How did you avoid it?

Travis: So one thing that my parents did which was very smart is they bought prepaid tuition for our state university, so they did that. And then I knew that I had two brothers—my dad was a teacher, my mom didn’t work because of some disability issues so we had a very limited budget and I knew that if I wanted to go to college, I needed to be responsible for it.

And I found out about a scholarship program that the flagship state university in my state, University of Florida had, that would pay you to go to school, would pay you to travel around the world for like summers abroad. It was really amazing. Yeah, I get living expenses and everything and you had to be like, number one in your class to get apply for it. So I had a lead time to know that I needed to work towards this goal.

So I found out about this scholarship maybe like sophomore or junior year so I just worked my tail off to make sure that I was the clear choice for the nomination because each school got to nominate one person and then got that scholarship. And I had other options like Vanderbilt was on the list, Scott. They gave me a half scholarship. It was still going to cost me like a Mercedes a year, I think.

So comparing that to the offer, basically I was able to stack all these scholarships that weren’t means tested and I was very fortunate for that. I maybe made about similar to a graduate assistantship type of income while going to school, so like $10,000-$15,000 and I worked part-time. I was really fortunate for sure.

Scott: Yeah, yeah. Very fortunate to decide to graduate at the top of your class to get a bunch of scholarships from great universities all over the country. Lucky you.

Travis: Yeah, I know. And that part’s not relatable. But what is relatable, I think is, a lot of people have parents that help at least.

Scott: Well what it is, is you chose to do that from a hard work and ethics perspective. That’s not a luck thing. That’s, you made this decision early on to do it that way. Sorry to interrupt.

Mindy: Yes. No, I’m going to interrupt, too, and say I had every opportunity to be the top of my class and I did not take advantage of any of those opportunities. But it’s not, like a learning disability, and even then, you had the opportunity to be top of your class if you’re working hard. And even if you have a learning disability, to a certain extent, you just work harder and that’s just what you have to do to become tops in your class. I mean, you didn’t just magically be like, I want to be tops in my class. Boom, there I am.

Travis: Yeah, and maybe to make this more relatable for listeners, too, let’s say that you’re maybe top 10% or top 20% in your class, right? Then you can basically do something where you go to the school that’s good. You’re not like barely getting in. Do you know what I mean?

So that’s another way that you can basically get some decent scholarship money or get a better cost of education because I think a lot of these state universities, they have fantastic resources. If you actually want to have a good education, you can have an equivalent experience, I think, to a lot of elite institutions simply by trying to take advantage of what’s available to you.

Scott: So where did you end up going and what was your position graduating and where did you go to work?

Travis: So I probably graduated college maybe with about $40,000 in net worth. So that was a great position to be in. I actually got a job off of the local head forum so I posted that I wanted to work for Vanguard because I heard all this stuff about how Vanguard was wonderful and my granddad who was an investor had a high opinion of them, so I just basically posted that and I got a private message from that and I ended up getting a position there.

So I got my dream job. I thought that I wanted to work at a big company, be a manager, rise up the ranks, maybe manage a portfolio or lead a division or something. That was the dream, right? And then I got there and decided oh wow, I’m like a round peg in a square hole here trying to fit into a big company culture. And that was just something that I had never thought about or anticipated and I think that some people who fit in really well with big company life and some people fit in terribly. And I was one of those latter people.

Scott: So how much were you earning at the time when you got this job? And where were you located?

Travis: Yeah, so it’s $50,000 a year with some bonuses and I was in the suburbs of Philadelphia and I lived in a house my first year with four other guys. We had one bathroom for five guys, which I do not recommend. Probably splurge for the second bathroom, at least. But we had somebody living in the attic, somebody living in the kitchen. Like the extra room—not the kitchen itself but the addon room to it. And we had our rent down to like $300 a month. And hell, my first year, I think I saved like 80% of my take-home. It was pretty fun.

Mindy: Wow.

Scott: What year was this, by the way?

Travis: 2012. So I got super lucky there because I had a super high savings rate and you know, the S&P 500 was just on a tear, right? And so there was a couple years where I’m saving over 100% of my income just because in 2013, the market went up 35% or something like that. Talk about right place, right time. It had a lot to do with it.

Scott: What were you investing in?

Travis: Index funds but not as simple as a lot of people. So I believe in like the small value thing. So I put some money in that. I had a little bit of fun money where I’d buy individual stocks, like small percentage to portfolio, basically that kind of stuff, to just index funds.

Scott: I was trying to get you to say Vanguard because you worked there.

Travis: Oh yeah. Mostly Vanguard index funds. It was difficult. You had to get everything pre-cleared for trade so I didn’t do any wild stuff. So I actually ended up getting to a point in my career where I felt like my skillsets weren’t being used to the fullest potential that they could be because a big company culture, things move slowly for good reason. Like nobody wants a very successful company that’s doing a lot of things right to take big risks. That just doesn’t make sense.

So when you’re young and want to work hard and have all these ideas, a lot of times, that can kind of be a frustrating experience, having some of these ideas not be immediately accepted, right? Because I thought arrogantly, oh my gosh, my ideas are so great. Why isn’t everybody listening to it? So I actually found an ad on Facebook for a Wow airline ticket to Iceland for like $69 bucks so that combined with reading Mr. Money Mustache was the trigger point for me and it made me realize, wait a second, I’m not completely FI yet but I have enough money to not work for a pretty long time because I don’t spend it very much.

So what if I just straight up quit my job and just went to Iceland without a plan? So that’s what I started to plan to do. I saved up for that specific goal, went to Iceland, and kind of right before I left, after I bought the ticket, I met the woman who is now my wife. And so, that was really interesting. We kind of started our relationship while I was travelling around the world and that has been kind of the launching point for like the second phase of my working life.

Mindy: So how long were you gone in Iceland and I don’t want to dwell on this for too much time but what language do they speak in Iceland and do you speak that language or did you just like go because it was $69?

Travis: I just went because it was $69. I did something very stupid without a plan. A lot of 20something people do it, right? So I went there and then I bought like the tickets to mainland Europe and then I just like went all around Europe, so like 30 countries in Europe and then I came back to the U.S. to spend some time with my girlfriend.

Then I went to Latin America for a little bit with one of my friends who is actually our roommate now. We basically just wanted to do a celebratory trip because he beat cancer and he had a really terrible time with cancer and he made it through and survive and we just wanted to celebrate so we went to all these Latin American countries.

After that point, obviously if you’re travelling around the world but you’re in a relationship, that doesn’t necessarily line up perfectly unless the person was with you, right? So she’s in a traditional career in medicine and I had to choose between kind of this nomadic lifestyle of just travelling all the time and actually being present with her and I made that decision to be with her.

We got married and I moved to St. Louis, Missouri, where she’s working now and that’s how everything happened where I went from this very aggressive type of lifestyle to more where I’m in one place for the most part.

Scott: So can we back up and take a sec here? And talk about the timeline and numbers here? So how much did you save? So you got out of college and you got this job making around $50K a year at Vanguard. You save up money during this period. How much do you save up and at what point do you leave? How many years into your career did you leave and how long are you travelling before you get back? I’m sorry I’m asking six questions in a row there.

Travis: That’s okay. So the one thing that I was frustrated by when reading the Mr. Mustache stuff was that he was always talking about the Four Percent Rule. I have to have 25 times your annual spending to be FI and that’s what you needed. And so I was thinking in my head, do I really want to work in a place where I’m not completely happy every day until I hit this magical 25x number? And I didn’t.

And so to answer the question that you had, I had maybe about a little bit over $200K total in assets when I left so based off of about an $18,000 a year spending total at the time, I was maybe like 50% FI. So I was not at that point 100% and I didn’t have a plan. I didn’t have anything that I was going to, to get those extra amounts of dollars that I needed to be fully FI.

So in terms of the number of years, it was three years. So that’s how long I spent to build that up and that was a combination starting with money, saving a lot, and having this massive bull market that propelled me to having that amount of money. And so I had that plus a big cash position so I could feel psychologically secure with the travels.

And you know, when you’re a single guy travelling around Europe, travelling these different countries, some of the countries are super expensive, like Sweden and Norway. So I just went really fast through those. And then other countries in Europe like Ukraine, I could live pretty good on $10 a day. So I like spent 10 days there, kind of doing that geographic arbitrage with my travel, I was there about four months total in Europe.

Maybe I spent about $4,000-$5,000 including airfare. So I think if you’re willing to be extreme, you can hit that lifestyle that you’re kind of hoping for sooner. And I didn’t really have a plan. I guess I was thinking maybe I would go back to work at some point or maybe I’ll do something to make some money, but for now, I’m just mentally in a place where I need this time, to reset my life, to be transparent about what my path was. I was actually trying to become a PhD Economics professor while I was in college and then I had some things that happen that made me realize wow, this isn’t what I need to do.

So that’s what pushed me to get the job in corporate America. And then so I thought, okay, my job and my life ambition is to stay at this company for 20 to 30 years and be CEO of Vanguard and help all these people invest in index funds and I’m going to save the world. And then I realized that that wasn’t the thing that I was meant to do. And so, rather than just reach for the easy path which would have been to go to like a Wall Street firm, I just decided to take some time. That ended up being an incredibly fortuitous development.

Mindy: So how long were you travelling total? You said four months in Europe. You quit your job, you were gone for four months and you came back to America and then you went to Latin America and then you came back again? How long were you unemployed?

Travis: So I was unemployed for about a year and a half ago. Something along those lines in the sense that I didn’t have any formal thing that I was trying to do to make money. And I was in Latin America for like two or three months and then I came back, spent time with the girlfriend, and then I went back to Europe with my little brother to kind of show him around and then I came back.

So I was kind of like back and forth between all these different places for that year and a half and mostly just took advantage of the fact that you can get super good deals at international airlines if you’re willing to fly on a Tuesday. So I just did that for a year and a half and had that frank conversation with my significant other.

She was basically like, I completely respect that you like to travel and you enjoy doing this alternative lifestyle but hey, I work in medicine. I’m a surgeon. I have all of these patients that I have to operate on. I’m like, I’m not allowed to go work virtually from Germany or something while my patient’s bleeding and I need to stitch him up, you know?

So she said basically, I want to be with you and we have a future together. So I thought, that’s more important than doing this, what I want to do right now. And so that’s kind of what led me to move to St. Louis and what was interesting is, I decided that this was the woman I wanted to marry.

And so she is Asian-American and her parents are immigrants from Hong Kong and I had that conversation that you always think about, especially as kind of a little boy raised in the South, you go ask the girl’s father for permission to marry her and he looks at me and he’s like, no. And I’m like, whoa. This went way different than that Lifetime movie that mom made me watch.

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

I said wait a second. Your daughter has six figures of student debt. And I have six figures of assets. I said, that should be enough. And he said, no. Assets is not the same thing as income. If you love her, you’ll prove it. And so my choices were I had to either get a traditional job for kind of a weird reason, trying to impress your in-law to get his blessing. Or I had to start my own thing and make that successful.

So I had this very intense desire to be successful for that reason because the alternative was going back to this cubicle lifestyle I hated. And when we had the money talk, she mentioned that she had a lot of student debt. I built a spreadsheet with my skills from being a bond trader at Vanguard. And the spreadsheet was pretty good because of all the different options that you can use to pay back your student loans.

And I shared it online and it kind of went viral and all these people started asking me about it because so many people had student debt problem. So my now wife, Christine, was like, well you should just like charge people to tell them what to do with their student loans. And I was like okay, that kind of sounds interesting.

So I started doing that on a one-off basis for friends. And then when he told me I had to get a reliable source of income or else, that’s when I decided to start my now company, Student Loan Planner, because I needed to do something that could get an income that I could do on my own terms and now we’ve advised over a quarter of a billion dollars of student debt. So that was probably a good decision.

Scott: So one of Mindy’s favorite questions she likes to ask is, did you talk about money before you got married? So we’ll skip that one for now. But no, that’s incredible. So you started this business and at what point were you successful enough to go to your father-in-law and say hey, I’m ready to go here? I mean, it’s such a unique reason to start a business.

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

And so the first few months, I made maybe like $3000-$4000 in those months and then I took the business results back to the father-in-law probably when I passed the $10,000 revenue mark on a monthly basis and I said hey, this is pretty decent. This is a lot more than I would maybe make in a traditional corporate type employee and especially since the job market in St. Louis for investment folks is not fantastic. And so he kind of agreed and he gave his blessing. And I joked that every time my quarterly profit statements go up, my in-laws love me even more.

Mindy: So how long did it take you to get to $10,000 a month in income?

Travis: It happened pretty quick. Maybe like four to six months. I’d have to go back and look but it was pretty rapid. Because I just hit a nerve. This business, I was just uniquely situated to help it because I love talking to people, I love helping fix problems. And I love doing it with math and numbers.

And the student loan space is so volatile and it changes so much and there’s so much going on that a lot of people like your traditional financial planners or big banks, those big companies, they’re not interested in investing money into the space because it’s probably not a billion dollar industry. It’s not even a $100 million dollar industry.

So with the upside being limited, the big players were not interested in competing, I just stumbled into this as being this huge need where people have $100,000 or $200,000 or even a million dollars of student loan debt and they have no idea what to do and they’re paralyzed, and nobody has any answers for them because of just figuring it out for my wife and I, I was able to develop a system that helps give them answers.

Mindy: Wow. So one of the reasons I wanted to have you on was because so many people have student loan debt. As we talk to people on this show and even outside of this show, we get a lot of people who say I have no debt except for student loans and mortgage. Or I have a little bit of credit card debt or when I was in debt, I had student loans and credit card debt. That you were able to ramp up to $10,000 a month so quickly confirms that this is a really big problem. What is the biggest problem that you see in the whole student loan industry today?

Travis: I personally think that there is massive fraud going on, just to be frank. A lot of times, if you think about somebody who doesn’t know what to do in their lives, the next step. Like think about me. I had no idea what I was going to do with my life’s next step. The only reason that I had this awesome experience is because I had saved up a bunch of money.

But if that hadn’t been the case, if I hadn’t been blessed with all of these natural interests in financial topics and matters, then maybe I would have gone to grad school. Maybe I would have actually gone to try to get some sort of career where people will tell me, it’s super stable, it’s high income, it’s going to meet all my needs. And a lot of people do that.

The problem is, the price of graduate school has skyrocketed in the past ten to 15 years but the incomes people are making have not. And so you have this situation where people can graduate and become a veterinarian and they’re making $70,000 a year. But oh by the way, they have $300,000 in student loan debt. Or somebody can be a physician and to be a primary care family doctor but they’ll have $450,000 of debt and they’re making a resident salary, making $150,000-$200,000 a year. So that’s a really big issue.

Scott: So as your typical person you kind of—the strategy that you’ve put together and the way that you approach student loan debt, that’s typically more for the folks that have six figures plus in student loan debt or student loan debt that is a significant multiple of their annual income. Is that fair to say?

Travis: Yeah, I mean if you’ve got less than $50,000 of student debt, that’s actually pretty straightforward what you need to do, right? You need to house-hack. You need to live with roommates. You need to not take on a car loan. You need to have extremely frugal habits. When you go out to eat, eat at Chipotle. Don’t go out and eat at fancy restaurants. And just throw all your money at the loans and pay them off as fast as possible. If it’s less than $50,000. And for a lot of people graduating undergrad with that amount of debt, that’s possible.

Now, you can do things like refinance that debt and get a lower interest rate to pay it back a little bit faster. But it’s fairly straightforward and people don’t really need extra advice to do that. But when somebody is facing a gargantuan amount of debt, they have a lot of options. They can pay it back. They can go for a loan forgiveness type path and there’s tax implications to that where you go for loan forgiveness.

And so if somebody is to make that decision, do I go for loan forgiveness on $300,000 or do I pay it back and pay 50% of my take-home pay on the debt, that’s a massive decision. And what’s amazing to me is all these flat fee financial planners, even, which are the most kind of ethical people out there, they’re even kind of in the dark a lot of times with how to advise people because these rules are so new and they change so much.

So basically, it’s just trying to figure out for that person, do I pay the massive debt off or do I go for loan forgiveness strategy and then answering the second question which is like, what’s the most optimal way to do that?

Scott: Can you give us maybe a case study of both of those options real quick, like maybe a minute or two on what’s an example of where I want to go for loan forgiveness and what’s an example of I just want to pay off my massive debt?

Travis: Sure, let’s say we have a dentist. Let’s say John’s a dentist and he’s got $550,000 of student debt from graduating from NYU. Yeah.

Mindy: That seems soul-crushing. Did John go with the loan forgiveness program?

Travis: He’s probably going to but when you’re looking at that situation, he’s got the $550,000 when he graduates. He makes $130,000 working for a corporate dental group. So $130,000 is a great salary. That’s almost more than double the median income in America. But the problem is he’s got the $550,000 of student debt. And so to pay that $550,000 off, he’d have to pay $6,000 a month to pay it down within ten years.

And is that practical? Is that a reasonable thing to do to neglect retirement savings, emergency fund, preparing for other financial goals like saving for kids’ college. They don’t want to end up like that. Is that a practical thing to do to put $6,000 a month towards debt and the answer is, it’s not really practical.

And so is there ever a situation where he’ll eventually make enough money to pay off his debt? Well, even if he makes double what he’s making now, $260,000, that still represents a massive percentage of his take-home pay. And so what probably makes sense instead is to use something called Pay-As-You-Earn.

In John’s case, he paid 10% of his income towards Pay-As-You-Earn, so that’s maybe roughly about $800-$900 a month. And he would pay that for about 20 years and it would adjust upwards with his income. At the end, that balance is going to be even higher than $550,000 because it’s grown because his payments aren’t covering the interest. So now, let’s say he owes a million dollars at the end of the 20 years when the loans are forgiven. Now, he’s got to pay taxes on that million dollars as if there was a bonus to his income on his W-2 in the year of forgiveness.

So all at once, in 20 years, he’s got to pay taxes on a million bucks. So that’s probably $400,000 and so what the math is behind is that you would figure out, does it make sense to pay the debt off aggressively like this or do the cash flows make sense to pay that 10% of your income over time and then have that tax bomb in 20 years? And if you do like a present value calculation, you just figure out what the cost is in today’s dollars and you can answer that. So for John’s case, he’d have to make a massive amount of money to pay it off. So it’s very unlikely. 

And I’ll give you a flipside case study to see the alternative approach. So let’s say that Susie is a pharmacist. She makes $110,000 a year. She’s not going to have much of a deviation from that. It’s going to go up by inflation for her career and she has $130,000 of student loans and she works for CVS. So that $130,000 of student loans, she could pay that off with like a $1200-$1300 payment in a ten year time frame and if she can pay it off in five years, if she pays maybe like $2000something.

So the loan forgiveness math is going to result in her paying that balance off in full before she receives any loan forgiveness at all. So that doesn’t make any sense to pay that loan balance over a long period of time, to have a really high interest rate. So she needs to refinance her loans and move them with a private lender that’s going to give her a lower interest rate based off her credit profile and her debt profile being an attractive thing for a private lender to lend for.

So we would probably save her a couple of thousand dollars by moving that debt from public debt to private student loans and just have her pay it off as fast as she could. So that’s an example of two of the kind of opposing cases.

Scott: So you just laid out two cases, one where you basically pay a percentage of your income and then get that forgiveness. And then you have a tax penalty as a result of that. And the other where you just basically pay off your debt as fast as possible with the lowest interest rate. Are there any other major cases or does that cover the typical choice that these folks have to make?

Travis: Unfortunately, there’s more. So another case, another big case is this thing called Public Service Loan Forgiveness and you can work for ten years for a not-for-profit or a government employer and make these income-driven payments based on your income. And then at the end of those ten years, your loan balance can be forgiven in full without any tax consequences. So that’s a very generous program. And who qualifies for that?

A common example is a government lawyer would qualify for that. Most physicians qualify for this. So if you’re a physician, you’re probably working full-time at a not-for-profit hospital during residency and many people go on to work at academic hospitals or hospital systems that are not-for-profit when they’re attending physicians as well.

So there’s these crazy loopholes where physicians can actually pay $80,000 over ten years to have their balance forgiven in full and then maybe a veterinarian who doesn’t have that same opportunity working for a not-for-profit, actually has to pay loans for 20 years and then have all these tax consequences.

Mindy: So I think this is the program that my sister-in-law is on. She has some hefty student loan bills because she has a master’s in speech therapy and she’s now working in a school. How does she best use this repayment program? Is there a minimum payment you have to make and it sounds like it doesn’t make sense to make a higher payment on these loans when they’re totally forgiven at the end and you don’t have to pay taxes on it. What’s the best way to pay that back? I’m assuming there are loopholes and I’s to dot and T’s to cross.

Travis: Yeah, there’s a boat. The very straightforward thing to say is that she needs to be on a income-driven plan so paying based on her income. So you want to pay as little as possible, so you pick the income-based plan that has the 10% of your pay instead of 15% because there’s one that does 15% of your pay instead of 10%. So that’s one thing to do. The other thing would be to minimize her taxable income.

So a lot of people are not aware that there’s these things called retirement accounts that you can put money into and not have taxes on their contributions with the pre-tax retirement accounts, right? We hang out with financial nerds all the time so it seems like why wouldn’t somebody understand that? But you know, $18,500 is what you can put into that. So if you can put that money into the retirement account, then that comes off of the calculation for the 10% of your income and so it’s like adding an additional 10% in marginal tax savings to someone’s retirement account contributions. So that’s—yeah.

It’s kind of like an indirect match for people who are going for that program. So making people aware of that often makes them able to save for a really high tax rate on the return of the contributions and then HSAs are also eligible for that. So then it becomes a game of like, we’ll minimize the payments using every available loophole and trick you can. Make sure that you’re on the right income-based repayment plan. Make sure all your loans are in qualifying status so making sure they’re all setup right. They’re all direct loans.

Like you don’t have any old loans in an old program that don’t qualify or like a Perkins Loan that doesn’t qualify. Make sure it’s all the right status and then make payments for the ten years. At the end of it, it’s all tax-free so if you wanted to protect yourself, take that money that you would have been paying towards student loans and put it in a side investment account or a savings account just to have a fund available for a backup plan.

But it’s crazy to see people that are depending on this program. Because I’m a member of these Facebook groups and people are so anxious about this program. People are just losing it. People are so worried that this is just going to go away and Congress is going to eliminate it or President Trump is going to eliminate it and so a lot of it is just doing therapy with people and helping them walk through all of Plan A, Plan B, Plan C kind of stuff.

Scott: This is brand new information to me. I had no idea, literally, 20 minutes ago, that any of this existed. I should probably have done more research. But is that what you find, that a lot of these graduate students kind of come in with? Do people have these loans? Someone who has $550,000 in debt just has no idea how to begin approaching the problem at all? Is that at all typical or are they generally aware of these types of things coming into the conversation?

Travis: It’s a mixed bag. I mean, people that don’t have a high level of financial literacy in general don’t tend to have a good idea of these loan options but I would say that the majority of the people actually have a pretty good idea of the programs or at least, they think they do. It’s just an extremely complicated system and so a lot of times, it’s interesting, especially with a lot of the physician clients.

Physicians are super intelligent people and so they like to think that they should know it well enough to do it on their own, and a lot of times, I’ll point out things that they didn’t even think about like oh, by the way, did you know you have a 457 Plan that you can put an additional $18,500 into? And reduce your marginal tax rate even more. Or did you know that maybe you should be filing separately for taxes and excluding your spouse’s income to lower your PSLF even more, and save even more money?

So a lot of times people will be making all these mistakes even when they think they’re doing the right thing. And this is just because you have a student loan system that Congress has created that instead of taking old programs and eliminating them and coming out with a new program that everybody has to follow, they just add it on as a layer.

Like think of it as soil, right? There’s all these different layers of soil from different eras and stuff? That’s basically our student loan system where they started off with the oldest rule set and they just keep adding on like more options and so if somebody’s got like 12 different options to pay their student loans, oh, and by the way, they can go answer this mail thing that they get from all these private banks that wanted to refinance, that’s extremely confusing to most people.

Mindy: Yeah, I can’t imagine navigating this.

Scott: So it sounds like there’s just a huge rabbit hole for all of this. And I assume that we’re going to link to some resources in the Show Notes where people can kind of begin just digesting this and learning a little bit more. By the way, the Show Notes will be at BiggerPockets.com/MoneyShow22. And then maybe kind of moving onto like, these are options for people that already have a lot of student loan debt or already are set to graduate with this and kind of go on this career path. That’s when they need to go and figure out these resources and what their correct path or repayment is.

What would you kind of recommend to someone who’s considering going to medical school, dental school, grad school and knows that they’re going to have to take on some level of debt other than maybe like try to minimize that debt, what are some strategies or ways they should be thinking through this problem ahead of time to set themselves up for better options than a ten years of getting 10% of your income syphoned away?

Travis: I love that question, Scott. So the first thing that I would say is that think about who’s giving you advice, the schools and the programs that you’re trying to go to and is that advice in your best interest or in the school’s best interest? So a lot of places, I’ve heard, have said outright lies to their students about how fast their students pay their loans off, how successful their graduates are, what the graduates’ incomes are after graduation. So a lot of times, people will just like take it for face value. The person at the Financial Aid office is telling the truth.

And the answer in a lot of cases is especially if it’s like a private or for-profit school where the tuition’s super high, they may be, at least not giving the whole story, even if they’re not lying or anything. Maybe they’re not giving you the information that you know what? Actually, we have a quarter of our students that couldn’t get great jobs or our incomes are way less than we expected.

So I think just having a healthy dose of skepticism would be the first thing and then the other parts would be if you’re sure you want to go into this field and become a veterinarian or a doctor or whatever you want to do, like just make sure that that is the only thing that would make you happy professionally that you can think of. And maybe even see if you can defer your acceptance for a year just to take some time off, the thinking time that I was so blessed to have.

Take some time away. Just make totally sure that is actually what you want to do. Go to Europe and travel for a year like I did and if you find yourself reading medical journals and still being interested in medical stuff and reading all the latest health news and stuff, then yeah, that’s probably a great indication that you should be a doctor, right?

And so, I think a lot of times, too, people think that the only thing I can do with this $200,000-$300,000 of student loans is just invest in myself and get a degree. Well, what if you took that same amount of money and invested in real estate, like the BiggerPockets community? That’s what it’s all about. What if you took that $200,000-$300,000 and invest it in a business and start a business with it or you paid off your mortgage or something like that? Is that the best piece of capital that you can be making?

And so if you can get over those hurdle questions, like is this the best use of my money? Is this career the only thing that can make me happy? Am I just looking for something that’s going to be like that next step in my life and I feel like I’m going to miss out if I don’t do this, if that’s like the answer, then you really have got to take some time away. And also don’t think that like, you’re not a successful person if you don’t end up becoming the pinnacle of all these different careers.

I have a lot of super financially successful people that are veterinary technicians or dental hygienists that realized, they didn’t want to take out $600,000 of student loans or something to become a dentist or a veterinarian. So now instead of having all that debt and being stressed out, maybe they have $100,000 in net worth and they have no debt and they have flexibility over their lifestyles. So they have options. So I just want to tell people, take a step back, pause, and ask themselves, is this the right decision for my life?

Scott: Yeah, it seems like you are trapped if you come out of college or grad school with the student loan debt to the level that you were kind of mentioning right here, like $300,000 plus dollars. Several multiples of your annual income that you’re going to earn pre-tax. And your advice, I think, is fantastic. It’s like hey no, if you’re going to do that beforehand, that is exactly what you want to do because you’re going to be doing it even though there are ways to kind of have that forgiven and stuff. I mean, this is kind of like very overwhelming of a problem to kind of tackle.

Travis: One thing I just wanted to say real quick is that just about the financial independence, it’s actually possible even if you have that massive amount of student debt. So that’s part of what I’m helping people figure out, too, is how do you get from that point of feeling trapped and feeling overwhelmed and having no options and transforming it where you have all the options in the world and that’s mainly possible because of these complex government programs that you can take advantage of.

Mindy: Yeah, I have a comment going back to the advice you gave, are you sure this is the only field that would make you happy? Make sure this is what you want to do for the rest of your life. I am significantly older than Scott and probably significantly older than you as well. So I have—you guys have been out of college for what, five or six years? And so a lot of the people you went to school with are still working in the same field that they went to school for.

I would say at least 60% of the people that are my age are not working in the field they studied. I surely am not working in the field of fashion design which was my brilliant career choice. And I think it’s really unfair to force these 18-year-olds to decide what they want to do for the rest of their lives. Oh, I like dogs so I’m going to go be a veterinarian. And then you discover, hey, I really don’t like dealing with animals all the time or you know, I don’t like being bitten by cats or you know, whatever the reason is for not wanting to be a veterinarian anymore. But they do feel really stuck.

I think that’s such great advice to take a step back for a minute. Is this really the field that would make you happy? And so many people that I know are not working in the field that they studied for. And being saddled with $100,000 worth of student loan debt, I think, would not allow you to leave the field that is making you this high income. Oh, I can’t just go be a vet tech because they don’t make enough money. I have to stay as a veterinarian. That’s a really, really, really important point that I just want to hammer home.

Travis: And actually, the veterinarians have one of the highest suicide rates of any professions in the country. And a lot of these heavily indebted occupations have significantly above average suicide rates and one of the big reasons is because of that psychology of having all of this debt, feeling like they gave so much of their life, their best years, studying to do this one very specific thing and then they feel like they have no options.

They feel trapped. They are dealing with all of the stress, the incomes, as more and more people go into these professions, a lot of the fields are becoming more saturated and the stories of working four days a week, making great money, are not really the economic reality for a lot of people anymore for a lot of these professions. And so the goal I guess I have, too, is now I feel like maybe in a couple cases, maybe I’ve even contributed in a small way to saving someone’s life, which is really exciting.

Like you know, when I was working at Vanguard, I was part of the mission. I felt like I was contributing to the goal of like lowering investment expenses for people and enabling them to use their own money for better things. But at the same time, I wasn’t actually getting to touch any of the problems, like specifically. I was just kind of helping in a very small way, in a high level, and now it’s like actually being able to talk to that person who’s maybe their marriage is falling apart because of this.

Maybe they’re thinking about not having kids. Maybe they’re thinking about how do I just even get up out of bed every day and go into work? And make them realize okay, first off, if things are so bad that you have to go for the loan forgiveness, at least they only take 10% of your income. That means, after taxes, maybe you still have 70% to do whatever you want with. So if you live this frugal lifestyle that a lot of us like to preach, then you can take that and maximize your retirement accounts.

So now you’re going to have a really solid retirement one day. And then also you can put a little bit of money away every month for this big tax bomb in the future that’s way off because we can invest that in index funds at Vanguard and you’re going to have $100,000 one day if you put $300 a month into that account.

And so now all of your student loans are actually totally covered based off of doing those two things. So now we still have money to play with. We still have 20-30% of your income to do something with. So instead of buying this big fancy house and this nice, new car that was advertised to you on TV, what if you put that money away for your financial independence one day and then actually, it’s the same calculations, somebody who has $500,000 in student loans.

It’s the same calculation to become financially independent than somebody that has no student loans except that you just have to say, I have to have enough money to pay the tax penalty one day. Once you get enough money where you’re going to have that tax penalty covered, like with projected future investment earnings growth, then you can say okay, I’ve got that set up, how much do I need in my portfolio or cash flow every month to meet my expenses?

And then it’s the same calculation because 10% of zero is zero. Right? So you could actually be paying zero dollars a month and getting credit towards your loan forgiveness. And I have some clients doing exactly that, that are living in like Australia and New Zealand and taking advantage of the foreign-earned income exclusion.

So I mean, I’ve seen all kinds of stuff. I guess the takeaway message is that somebody who finds out about this financial independence stuff like later in their life after they’ve made all these decisions, that they wished to High Heaven they could take back. Like, you can still actually get out of that hole which is so exciting. So it’s just really fun to be able to deliver that message sometimes to people that feel like they’re trapped.

Scott: I just want to throw out how I love what you’ve just done for our listeners. The people listening to the show. There’s going to be people that have a lot of student loan debt, right? And there’s a path to repaying that. They understand now there’s a couple of different options and there’s a way to repay that, that’s going to make the most financial sense. It’s going to be a complex calculation that you have to go through and know the nuances of these government programs and all of your options available.

But there’s going to be a choice that makes sense, or several that make sense, given the set of assumptions you have about your future. And you can achieve financial independence same as anybody else. 10% of your income is not very much, right? Especially when you’re earning a huge amount of money. You have that ability to potentially save for retirement.

I love that. Not only is there a way to pay them off but there’s also a way to begin moving towards financial independence, which can seem impossible to people, except to graduate and maybe go to residency where they’re either going to make money for the high salary they are expecting for a couple of years.

So we have—at the beginning of the episode, you gave us this offhand remark that hey, $50,000 and below, it’s pretty straightforward. Refinance at lowest rate, pay it off, right? Do you have a rule of thumb or a sliding scale based on potentially income of where it begins to make sense—what are some rules of them where I just know, hey, these options aren’t really a good bet for me and I just need to focus on paying down the debt. And then where do I begin to cross that maybe grayish line of I need to begin assessing these options?

Travis: Yeah, that’s a great question. So I say 1.5 times your income and below while working in a private sector job, just refinance your debt and pay it off. 1.5 times. So if I have $100,000 of income and I have less than $50,000 of student loans, I should pay them off. I should refinance them. Get rid of them. If I’m working in a for-profit kind of sector where I’m not eligible for the special PSLF program.

So when you refinance, I would highly suggest that you get a cashback bonus, too. Most of the companies will give you like $300-$500 bucks. If you find one of those links to refinance and shop around a couple of different places. So that’s the rule of thumb for that. And then if you have less than two times, your debt to income ratio is less than two, then you can think about it.

Like okay, if it’s less than $200,000 and I’m making $100,000 of income, then I could have the conversation. I could decide, I really hate debt. I’m really not interested in loan forgiveness type programs. So that would be okay. So there’d be kind of like the discussion between 1.5 and 2 debt to income ratio. And then above 2 to 1 debt to income ratio, so if you owe more than $200,000 on that $100K income, then it’s a discussion of are you eventually going to have a bunch of income relative to your debt?

In which case, you’d want to figure out how to set your stuff up for eventually paying it off. Or is it very unlikely that you’re ever going to cross that 2 to 1 debt to income ratio within the next few years? And if that answer is still no, if you’re probably not going to cross that ratio, then you probably need to go for one of these loan forgiveness programs.

Scott: So you’ve mentioned a couple of anecdotes about a dentist and a veterinarian. And you’ve mentioned doctors a few times. Are those the typical professions that you see kind of in these 2x or 1.5x income their total debt? Are those typically the professions or do you see it in other professions as well?

Travis: Yeah, any profession that requires more than a year of postgraduate study is going to have this problem at some level. So some of the universities that are low-cost, maybe they’re going to have a pretty easy debt to income ratio to handle it. So like, the low-cost, in-state public universities providing these professional school programs are going to be in decent shape.

But I would name a couple more. So, chiropractors, pharmacists, attorneys, air traffic controllers, nurse practitioners, physicians’ assistants, teachers to a lesser extent. There’s a massive number. Basically any program that you can think of that has a “College of” major university has a problem because politically, undergraduate tuition is a lot more difficult to change and increase than graduate school tuition. And the programs allow for unlimited borrowing for graduate school but they cap it for undergrad programs.

So the schools figure this out and they want to make profits. They want to make big revenues so they can build that beautiful research hospital, right? Or hire a bunch of new faculty and rise up the U.S. News Rankings. So the graduate schools have become the profit centers for most universities. Any grad program, you just have to be super cautious and just make sure it’s what you want to do.

Mindy: You’ve mentioned refinance your debt a couple of times. How do you refinance a student loan and at what point do you refinance? I know that there’s different interest rates and are they locked in like a mortgage is locked in? Or does your rate vary? Talk to us a little bit about how you can refinance your debt?

Travis: Sure. You can do variable or fixed. In today’s interest rate and environment, I would recommend fixed. You can do anywhere from 5, 7, 10, or 15-year terms. And sometimes, you can do 20. I typically do not suggest 20 because if you’re going to do 20, you might as well go for the loan forgiveness program and see what happens, if you’re going to take that long to pay your debt off.

So the way to do it is you basically just, it’s a pretty fast application in all these different places and there’s a lot of different companies that you could check out. My site has like a refinance page that you can look at a bunch of different cashback bonuses to check it out. There’s other sites that might have other ones but you just apply—I’ve actually got a refinancing quiz to help people figure it out because it’s kind of complicated to figure it out.

Do I need to check all of these? I always suggest yes, because it’s like five minutes. You might as well, right? It doesn’t hurt your credit to do that, to do a soft credit inquiry and see if you’re even getting any offers and if you are, then you can actually submit for like all of your income information and all of that to actually get some finalized offers. And as long as you do that within 30 days, it only counts against you one time, like applying for a credit card.

So it’s a very easy process and I just want to make sure that when people do it that it’s definitely the right decision because once you do it, you cannot undo it. And so you lose all that loan forgiveness. You lose access to this PSLF program. You lose access to extended forbearance periods. So refinancing is a great thing. It can save you thousands of dollars of interest that are instead going to pay down your principal. I would just suggest to anybody that’s interested, shop around at least two places, preferably three and try to shoot for a 10-year or less repayment period.

And you can refinance again, too. You don’t have to refinance only once and then you’re done. You can refinance as many times as you can get a better rate. So I know a lot of people from like reader activity on my site, I know that they will refinance and get a bonus and then they’ll like refinance again and then get another bonus. It’s kind of like the credit card hacking game.

And so, the really smart way to do that is do a 10-year to start and then pay down your debt, and then refinance it again and do a 7-year. And then pay down some more of your debt. And then refinance it to a 5-year. And each time you do that, you might be knocking down some of your interest rate. It’s probably going to be somewhere between like 3 to 5% for most of the refinancing interest rates these days.

Mindy: Okay.

Scott: Do you notice that a lot of people have bad credit going into this process because they’re not sure about the payment plans or anything like that? One of the things that struck me as a comment was should you be preparing yourself credit-wise for a little bit of time before applying for these refinancings?

Travis: So most of the people that I’m working with actually have pretty good credit. Especially the ones that are refinancing. Like the ones that don’t have good credit, that’s usually an indication of maybe some other things going on that push you to use forgiveness. But most of your credit score, it’s actually mostly based off of your capacity to pay, not necessarily like how much debt you have or how scary it looks with all of your income.

I mean, I’ve had some people that have had $400,000 debts with $70,000 incomes and still have really good credit scores. So they should refinance, right? I mean, I think that most of the people that will be successful refinancing have something above a 650 credit score but it’s really nothing to worry about too much.

The only exception to that is if you’re trying to buy a house or you’re trying to buy a business with business debt, that you lock that in first before doing the student loan refinance. Because once you do that, the banks are going to look at your cash flow that’s required out of your pocket every month and they’re going to penalize you more, if you go for a really aggressive refinancing and you’re trying to buy a house, for that debt to income mortgage calculation.

So they are going to want to see an income-based payment that’s required of like $500 a month, so their mortgage underwriting can feel super confident giving you the mortgage for the house of your dreams and then once you get the mortgage, the student loan refinance companies only care about your monthly mortgage payment. So then they’ll give you a good Refi deal.

Scott: You know so much about this topic.

Travis: Yeah. So I’ve advised close to a thousand people with an average debt of about $280,000 each and I’ve seen anywhere from $20,000 in debt to a million in debt and so when you do something a thousand times, like you learn a couple of things along the way. And yeah, I mean it’s cool. I’m super passionate about this and I just want people to get the right plan because the consequences of not having a plan are really, really bad because the average person, I’d like to track this.

So 10% of the people that I’ve worked with haven’t really saved any money. We’ve just kind of confirmed like yeah, this is the right path. When you’re doing all the right things and 90% of people do save money and their average savings is around $70,000 projected over 20-25 years from correcting the mistakes. So you know, $70,000—that’s like a whole year of you having to work that you could have back in your life. And to do something else with.

So you know, whether you’re going to do this on your own, do this by yourself, and read all the free content out there that exists or hire somebody to do it, I think is just really, really important to have a clear plan. Exactly what you’re going to do with your student loan debt and not put your head in the sand and pretend that it doesn’t exist.

Scott: Well, awesome. Do you have anything else to add on this topic of student loan debt or story or anything like that before we transition to the Famous Four?

Travis: I think I’ve covered it. Get a plan.

Mindy: Get a plan. That’s a really good bit of advice because yeah, I think the kids just go into this, oh I want to be a veterinarian. Well, what else? Is there anything else you can do? That’s just such a great piece of advice.

Travis: People don’t think about that. If you’re smart enough to get into dental school or medical school, there’s a ton of other things you could do. But you just maybe haven’t thought about it yet. I’ve worked with people that manage like social media accounts. Like that’s their job.

Who would have thought that would have been a thing back even like, Scott, you and I are pretty young guys, like back when we were in undergrad, who would have thought that people would literally make money posting things on Facebook and like getting all these things optimized for Pinterest and stuff?

Just you know, be creative and have a lot of cash and reserves to like weather downturns and maybe you could do something that you haven’t even thought about. I mean, I still want people that are passionate about being a veterinarian or a dentist or doctor or whatever, lawyer, to do that stuff. But don’t do it just because you think it’s a path to an easy life or you’re going to have an easy income and it’s going to be stable.

The economy is just moving, I think, very far away from all these formal, highly trained kind of fields to a more gig economy type of world. So just have skills and be flexible with your finances so that you can be a part of it.

Mindy: That’s great. Okay. Scott, shall we move to the Famous Four?

Scott: Let’s do it.

Mindy: Travis, these are the same four questions that we ask everybody. There’s actually five but we don’t know how to count so we call it the Famous Four. What is your favorite finance book?

Travis: I’m going to take a different approach to this book and go with Grant by Ron Chernow, the guy who wrote the Hamilton book that the musical is based on and it’s not explicitly a finance book but it’s a biography of Ulysses Grant, the guy who won the Civil War for the Union and why I think it’s interesting from like a financial perspective is this guy was fantastically brilliant in warfare, but he was a complete idiot when it came to money.

And they talk so much in the book about all of the things that he would do with his money, like he was one of the first victims of a massive Ponzi scheme that left him bankrupt as a former U.S. President at the end of his life when he was relying on money from strangers to live. He had no sense for business and when somebody told him to go buy a horse and to offer the guy $10 bucks, and if he won’t accept any less, then give him $20.

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

I don’t know. I just got so many funny anecdotes out of that, that I keep pestering my wife with, because I think they’re so funny. I read all the typical ones like Millionaire Next Door and Enough by John Bogle where he talks about how he had $50 million of assets instead of $50 billion if he had kept Vanguard a private company. And so I just thought I’d mention that one just to be a little different.

Scott: That’s a great answer to that question. Can I modify that book question with a second follow-up here which is, what is your favorite student loan related resource beyond your own site, that people can go and check out and learn more about how to come up with these strategies?

Travis: Sure. There’s a guy named Ben White who’s a physician. I think his site is like BenWhite.com. But he is a physician that’s super brilliant that just had an extreme interest in student loans and he wrote a book about them. It’s pretty cheap. It’s online. You can buy it and it’s got a lot of the tricks and the tools that I use to help people in it. So if somebody is like hey, I don’t like the idea of paying somebody for help, like they should just go read that. I think it’s pretty good.

Scott: Awesome. What was your biggest money mistake?

Travis: So I was in college and I wanted to try and impress people so I was trying to get a new car and I wanted a car that’s going to be really sleek and cool and like, it had to be something that I could actually pay for, and so, at least I knew don’t take out a car payment. At least I had that much sense at the time. But I decided I was going to buy an $11,000 used Chevy Equinox and I don’t know if any listeners that own Chevys can relate but mine had a ton of problems.

And so the issue with it, really, was that I got all the bells and whistles, like a sunroof, like this nice grill in the front. I was thinking, it looks so cool. I’m a college kid that’s got its own car, a nice big car, and then the sunroof started to leak. And I had massive repair bills and it was just a total money sink and I wish I just had some sense and bought like a $2000-$3000 used car on Craigslist from the beginning. But luckily that wasn’t too terrible of a mistake.

Mindy: Do you still have that car?

Travis: No, I sold it. Actually, this is a true story. I sold it to a one-eyed rapper off of Craigslist for about half of what I paid for it before I left for my Europe trip. The guys in the bond trading desk had a bet that there would be no way that I’d sell the car for any less than a certain price. And so I took the bet and this guy, he actually was a really nice guy.

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

It just shows you, you shouldn’t judge a book by its cover, right? So that was a funny story because that’s his full-time job, is he’s trying to make it in the music industry and he wanted a car that was kind of bigger and affordable and you know, his dad helped him pay for it, I think. But weird story, right?

Mindy: What is your best piece of advice for people who are just starting out?

Travis: Get $10,000 in the bank as rapidly as possible and live like a broke homeless person until you have that. If you get $10,000 in the bank, you’re always going to be operating from a position of financial strength, be it needing to buy a new car because your car collapses or car repairs or you know, I need to put down a big payment for a rental contract or I need to take a couple months off from work because I’m about to lose my mind and I can’t take this anymore. So I think that the $10,000 in the bank is a great starting point for a lot of people that are new grads.

Mindy: That’s an excellent tip. I’ve never heard anybody say that.

Scott: I love that advice. I mean, that’s like, just the concept of getting to wherever a position of financial strength means to you and that’s as good as anything because if you have $10,000 in the bank, you’re not going to be facing an immediate problem in the near future unless you have some sort of truly once in a lifetime disaster come in and wipe you out. So, I love it.

All right, the most difficult question here of the Famous Four—what is your favorite joke to tell at parties?

Travis: Oh boy. So, my wife accuses me of being longwinded but I’ll try this one. So, the pope flies in to New York for a meeting at one of the buildings. So he’s late, he needs to get there in a hurry, and so he takes this taxi. And this joke is from before Uber or Lyft so maybe it’s old. I need to update my jokes.

But he takes a taxi and he’s driving through traffic and the taxi guy is not super aggressive so the pope is like, this is ridiculous. You’re not going fast enough. I’m late to this meeting. Get in the backseat. I’m going to go up to the driver’s seat and I’m going to drive us because I’m a better driver than you. So the pope is driving and he’s going really fast, weaving in and out of traffic and one of the NYPD guys sees this taxicab being really aggressive.

So he pulls him over. And the guy goes up to the window, and he backs away and freaks out and he gets on the radio and says, I need backup. I need backup. This is a big deal. We’ve got a big VIP celebrity in New York. And I need you to come down and see this. And then all the bodies on the radio are like, well who is he? The governor? And he’s like, bigger. The president? Bigger. And he’s like, who the heck is he if he’s bigger than the President? And the guy goes, I don’t know who he is but he’s got the Pope driving him around. My wife would slap me if she heard me tell that joke.

Mindy: I like that joke. It’s way better than Scott’s crappy jokes. Scott likes the dad jokes.

Scott: I can’t top that one. That was pretty fantastic.

Mindy: Okay.

Scott: Where can people find out more about you, Travis?

Travis: Well, they can go to my site, StudentLoanPlanner.com and then I’m also happy to have anybody that wants to send me an email so my email is [email protected]. They can reach out with whatever they want to.

Scott: Awesome. I think you’ll have some people reaching out. This has been a fantastic episode full of information. We went very long. We’ll make sure everyone knows that we went very long in the intro but I think this is going to really help a lot of people that are struggling with this problem so thank you very, very much for coming on today.

Travis: Thanks for having me on, Scott and Mindy.

Mindy: Travis, again, thank you so much for sharing all of your information with us. I know that I learned a lot. I know that Scott learned a lot. Because we didn’t know much before you got on. This was amazing. This was super fantastic and I just really appreciate you coming on the show.

Scott: Thanks for having me.

Mindy: So with that, we will say goodbye and we’ll see you around.

Scott: All right, that was Travis Hornsby with StudentLoanPlanner.com. Mindy, that was one of my favorite episodes I have ever recorded with you on our podcast. What a mind-blowing wealth of information.

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

But I really like how it gives people options and it gives people a path to follow or you know, places to go for more information. We have all of the links that Travis mentioned and I have sent him a note and asked for, what are the most important links on your site, that we are going to put in the Show Notes. You can find those at BiggerPockets.com/MoneyShow22.

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

Mindy: Yeah, but they’re not the nail in your FI dream’s coffin. Or they don’t have to be.

Scott: Love it.

Mindy: All right. Scott, shall we get out of here? We’ve been asking a lot of our listeners to stick around with us for so long today. We really appreciate you listening. So for the BiggerPockets Money Episode 22, this is Mindy Jensen, over and out.