Stocks — Part XXVIII: Debt – The Unacceptable Burden

Debt ball & chain

A couple of years after I was out of college, I got my first credit card. They were tougher to come by in those days. Not like now when my unemployed pet poodle has his own line of credit.

The first month I racked up about $300 or so. When the bill came, there was each charge listed by vendor, with the total at the bottom. In the upper right-hand corner there was a box with a $ sign in it and a blank space beside it. Under this in bold letters it read: Minimum payment due: $10

I could hardly believe my eyes. I get to buy $300 worth of stuff and they only require me to pay them back $10 a month? And I can still buy more? Wow! This is awesome!

But still, in the back of my mind I could hear my father’s voice: “If it sounds too good to be true, it is.” Not “it could be” or “it might be.” It is.

Fortunately my older sister was sitting nearby. She pointed out the fine print. The part about them planning to charge me 18% interest on the $290 they were hoping I’d let ride. What? Did these people think I was stupid!?

As a matter of fact they did. It was nothing personal. They think the same of all of us. And unfortunately all too frequently they’re not wrong.

Pause for a moment and take a look at the people around you, literally and figuratively.

What you’ll often see, if you scratch the surface just a bit, is an unquestioning acceptance of the…

Ice wall

single most dangerous obstacle to building wealth: Debt.

For marketers, it is a powerful tool. It allows them to sell their products and services far more easily, and for far more money, than if it didn’t exist.

Do you think the average cost of a new car would be pushing $32,000 without E-Z financing? Or that a college education would cost over $100,000 if it were not for readily available student loans? Think again.

Not surprisingly debt has been promoted as, and largely embraced as, a perfectly normal part of life.

Indeed, it is hard to argue that it has not become “normal.” As I write, here in the US Americans carry a total debt burden of ~12 Trillion dollars:

  • ~8 Trillion in home mortgages.
  • ~1 Trillion in student loans.
  • ~3 Trillion in other consumer loans such as credit card debt and auto loans.

In the future, these numbers will undoubtedly be higher. And most disturbingly, almost no one you know will see this as a problem. In fact, most will see it as their ticket into the “good life.”But let’s be clear. This blog is about guiding you to financial independence. It is about buying your financial freedom. It is about helping you become wealthy and putting you in control of your financial destiny.

Look around at those people again. Most will never achieve this, and their acceptance of debt is the single biggest reason why.

If you intend to achieve financial freedom you are going to have to think differently. It starts by recognizing that debt should not be considered normal. It should be recognized as the vicious, pernicious destroyer of wealth-building potential it truly is. It has no place in your financial life.

If your lifestyle matches—or god forbid exceeds—your income you are no more than a gilded slave.

leeches covered

Carrying debt is as appealing as being covered with leeches, and has much the same effect. The idea that many, indeed most, people seem to happily cover themselves with debt is so beyond my understanding it is hard to imagine how, let alone why, the downsides would need be explained. But here are a few:

  • Your lifestyle is diminished. Set aside any aspirations to financial freedom. Even if your goal is living the maximum consumer lifestyle, the more debt you carry the more of your income is devoured by interest payments. A (sometimes huge) portion of your income has already been spent.
  • You are enslaved to whatever source of income you have. Your debt needs to be serviced. Your practical ability to make choices congruent with your values and long-term goals is seriously constrained.
  • Your stress levels build. It feels as if you are being buried alive. The emotional and psychological effects of being saddled with debt are real and dangerous.
  • You endure the same type of negative emotions experienced by any addict: Shame, guilt, loneliness, and above all, helplessness. The fact that it’s a prison of your own making makes it all the more difficult.
  • Your options can become so narrowed and your stress levels so high, you risk turning to self-destructive patterns that only reinforce the dependence on spending. Drinking perhaps, or smoking.  Or, ironically, shopping and still more spending. It’s a dangerous self-perpetuating cycle.
  • Your debt tends to focus your attention exclusively on the past, present and future in the worst possible way. You become fixated on your past mistakes, your present pain and the disaster looming ahead.
  • Your brain tends to shut down on the subject with the vague hope it will all resolve itself in some magical way and in the magical time of later. Living with debt becomes hardwired in your financial attitudes, habits and values.

Countless articles and books have been written about ridding yourself of debt. If after reading this post you feel you need more guidance and help, by all means embrace them. But be careful not to let the pursuit of the methods get in the way of the doing. The truth is, there is no easy way. But it is pretty simple.

Here’s what I’d do:

  • Make a list of all your debts.
  • Eliminate all non-essential spending, and I mean all of it.* Those routine $5 coffees, $20 dinners and $12 cocktails add up. This is what will free up the money you need to pour on the debt flames that are burning up your life. The more you pour the sooner you stop burning.
  • Rank your debts by interest rate.
  • Pay the minimum required on all your debts and then focus the rest of your available money on the one with the highest interest rate first.
  • Once you’ve blown that one away, move on to the second highest and right on down the list.
  • Once you’re done, send me a note and let me know. I’ll then be raising my glass in a kudos salute to you!


Here’s what I would not do:

  • I would not pay a service to help. This only adds to your cost and such credit counseling services have no magic formulas or techniques to make this less painful. You, and only you, can do the work.
  • I would not worry about trying to consolidate your loans in to one place, not even for a lower interest rate. You are going to pay these puppies off fast and hard. Once they’re gone your interest rate will be Zero. That’s your goal, not merely taking your rate from 18% to 12%. Focus your time and attention there, rather than on exploring clever strategies.
  • I would not pay off the smaller loans first for the psychological boost. I know this is a key part of at least one popular strategy, and if it makes you more likely to stay the course so be it. But as you’ve learned reading this Stock Series, I’m not a fan of such crutches. Better to “toughen up, cupcake” and adapt yourself and your attitudes to the numbers than to adapt the strategies to your psychological comfort levels.

In short, nothing fancy. Just do the work and get it done.

This is not going to be easy. Simple, yes. Easy, no.

It will require you to rather dramatically adjust your lifestyle and spending to free up the money you need to direct toward your debt.

It will require serious discipline to stay the course over the months, maybe years, it will take to eliminate your debt.

But here’s the good news, and…

girl jumping-for-joy-85505

…it really is awesomely good.

Once you’ve ingrained that lower spending lifestyle and made diverting the excess cash to your debt your path, you will have also created exactly the platform required to begin building your financial independence.

Once the debt is gone, you need only shift the money to investments.

Where once you had the satisfaction of watching your debt diminish, you’ll now have the joy of watching your wealth build.

Waste no time. Debt is a crisis that needs immediate attention. If you are currently in debt take out your sharpest knife and start scraping the little bloodsuckers off. Nothing else is more important.

Look again at those people around you. For most, debt is simply a part of life. But it doesn’t have to be for you.

You weren’t born to be a slave.

A few cautionary words on “good debt.”

Occasionally you will hear the term “good debt.” Be very cautious when you do. Let’s briefly look at the three most common types.

Business loans.

Some (but not all) businesses routinely borrow money for any number of reasons: Acquiring assets, financing inventory and expansion to name a few. Used wisely, such debt can move a business forward and provide greater returns.

I include small scale investment real estate by individuals in this category.

But debt is always a dangerous tool and the history of commerce is littered with failed companies ruined by the debt they took on.

Astutely dealing with such debt is beyond the scope of this blog, other than to say those who use it successfully do so with great care.

Home mortgages.

Taking on a mortgage to buy a house is the classic definition of “good debt.” But don’t be so sure.

The easy availability of mortgage loans tempts far too many into buying houses they don’t need or that are far more expensive than prudent. Shamefully, this overspending is often encouraged by real estate agents and mortgage brokers.

If your goal is financial independence, it is also to hold as little debt as possible. This means you’ll seek the least house to meet your needs rather than the most house you can technically afford.

Remember, the more house you buy the greater its cost. Not just in higher mortgage payments, but also in higher real estate taxes, utilities, maintenance and repairs, landscaping, remodeling, furnishing and opportunity costs on the money tied up as you build equity. To name a few.

Houses are an expensive indulgence, not an investment. That’s ok if and when the time for such an indulgence comes. I’ve owned them myself. But before letting yourself be blinded by the idea that owning one is necessary, always financially sound and automatically justifies taking on this “good debt,” run the numbers.

Student loans.

When I was in college at the University of Illinois from 1968-72, the total annual cost was $1,200. This $1,200 covered everything:  Tuition, books, rent, food and even a little entertainment.

Each 12-week summer I worked taking down diseased Elm trees. I was paid $20 a day over a six-day week. I saved $100 a week and by Fall had the $1,200 needed for the school year.

Of course, I lived in one room of a dilapidated old house that should have been condemned. White rice and ketchup served as dinner two or three times a week.

Fast-forward to 2010-14, my daughter’s college years. The all-in yearly cost averaged $40,000 at URI, also a state school. NYU, her other option, would have run $55,000 to $60,000 per year. As a former colleague of mine once said, that’s like buying a new BMW, driving it for a year and throwing it away. Then buying another. For four consecutive years.

Inflation certainly played a role. Using the CPI (consumer price index), what cost $1 in 1970 took $6.36 to buy in 2014. A six-fold increase.

In the same time period, a 4-year state school college education went from $4,800 to $160,000. A 33-fold increase.

Make no mistake: easily obtained student loans have flooded the system with money.

Universities have been and continue on a building boom. Fancier prices require fancier settings.

The average salary of a university president in 1970 was ~$25-30,000. Today it averages around $500,000 and can run into the millions.

Not only has this driven up the cost of everything college related, it has virtually eliminated the option of living cheaply.

That ramshackle house I lived in? Torn down to make way for fancy new dorms.

Eat in on rice and ketchup? No worries, my friends did the same. It was a source of pride. Today, it would be a source of embarrassment as all your student loan funded pals go out for sushi.

Moreover, one of the more unfortunate results of spiraling college costs and debt is the way it has warped the very concept of higher education. Rather than the pursuit of learning and culture, it has become the pursuit of job training in an effort to secure employment that will justify the astounding cost and debt incurred.

Even successfully applied, this shackles young people to jobs long after the appeal has faded. Youth should be spent exploring—building and expanding one’s horizons—not grinding away in chains.

Here’s the real kicker: Unlike other kinds of debt, as truly awful as they are…


you can never walk away from your student loans.

They survive bankruptcy. They will follow you to your grave. Your wages, and even Social Security, can be garnished to pay them.

No wonder banks are falling all over themselves to issue this debt.

I am a firm believer in personal responsibility and debts freely taken on should be faithfully repaid. But the ethics of encouraging 17 and 18-year-olds—who likely have little financial savvy—to almost automatically accept this burden gives me serious pause.

We are creating a generation of indentured servants. It’s hard to see the ethics or benefits in that.

Addendum I: While the mantra here is “avoid debt at all costs,” if you already have it, it is worth considering if paying it off ahead of schedule is the best use of your capital. In today’s low rate environment, here’s my rough guideline:

  • Less than 3%, pay it off slowly
  • 3-5%, whatever feels most comfortable
  • More than 5%, pay it off ASAP

Addendum II: *Want to know what “Eliminate all non-essential spending, and I mean all of it” might look like?: If we woke up in debt

Addendum III:   Some common sense on credit scores

Addendum IV:  The College Conundrum

Meanwhile and unrelated, recently…


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Important Resources

  • Talent Stacker is a resource that I learned about through my work with Jonathan and Brad at ChooseFI, and first heard about Salesforce as a career option in an episode where they featured Bradley Rice on the Podcast. In that episode, Bradley shared how he reached FI quickly thanks to his huge paychecks and discipline in keeping his expenses low. Jonathan teamed up with Bradley to build Talent Stacker, and they have helped more than 1,000 students from all walks of life complete the program and land jobs like clockwork, earning double or even triple their old salaries using a Salesforce certification to break into a no-code tech career.
  • Credit Cards are like chain saws. Incredibly useful. Incredibly dangerous. Resolve to pay in full each month and never carry a balance. Do that and they can be great tools. Here are some of the very best for travel hacking, cash back and small business rewards.
  • Empower is a free tool to manage and evaluate your investments. With great visuals you can track your net worth, asset allocation, and portfolio performance, including costs. At a glance you'll see what's working and what you might want to change. Here's my full review.
  • Betterment is my recommendation for hands-off investors who prefer a DIFM (Do It For Me) approach. It is also a great tool for reaching short-term savings goals. Here is my Betterment Review
  • NewRetirement offers cool tools to help guide you in answering the question: Do I have enough money to retire? And getting started is free. Sign up and you will be offered two paths into their retirement planner. I was also on their podcast and you can check that out here:Video version, Podcast version.
  • Tuft & Needle (T&N) helps me sleep at night. They are a very cool company with a great product. Here’s my review of what we are currently sleeping on: Our Walnut Frame and Mint Mattress.


  1. PencilThinMustache says

    wow….where to even start. great post! I will share a little of my debt journey here. I found your blog (via MMM) in May of 2013 when I was on verge of completing my medical residency. I read your thoughts about abolishing debt and putting it out “like a fire” and took that to heart. I did what you said and made a list of the 6 student loans I had been carrying and paying the minimum on for years, organized by interest rate (range: 1.9%-9%). The damages: $206,841 in student debt. Then I got to work…

    Fast forward 18 months. Killed off the 9% loan with my first 2 paychecks. I have a credit card (with no balance of course) with a lower interest rate than that! My student loan debt is down to $99,000. Cash in bank to pay off car when lease is up. 401k and (backdoor) Roth topped off in 2014 and on track for 2015. I have met or exceeded the time frame I even thought possible. In contrast to what you recommended, I did consolidate my remaining student loans at 1.9% (variable) and plan to pay over 5 years. I figured those dollars can work a little harder for me in VTSAX…

    Anyhow, thank you for making my financial life a heck of a lot better. I even find myself making spreadsheets and graphs of investments and net worth. Still not perfect but I feel I’m on the right track. Keep it up!

    • jlcollinsnh says

      Thanks PTM…

      ..and thanks for sharing your story. That’s amazing progress. Kudos!

      With your remaining rate under 2%, I have no problem with your slow pay/invest strategy. Assuming you understand, as I’m sure you do, that it takes an investment of high volatility – VTSAX – and adds a bit more risk.

      Market plunges are always tough to deal with and knowing your could have used the money to pay off your debt would make it even more so. If you’re prepared for that, no worries.

      • PencilThinMustache says

        agree. we’ll see if I have the cojones for it. But even then–according to your rules–wouldn’t it make more sense for me to throw money at the 3.99% mortgage than the 1.9% student loans?

      • jlcollinsnh says

        Basically, yes. High interest debt first. At least if you don’t plan to default. 🙂 Those student loans will follow you to the grave.

        You might also take into account tax deductibility issues. While student loans are deductible, the rules around them are different. For instance:

        –$2500 is the limit of interest you can deduct each year.
        –Your income must be below 75k if single, 150k if married.
        –unlike a mortgage, you can take this deduction without itemizing.

        For more:

    • supreet says

      As another resident soon to be attending physician I hope to do the same. I find it amusing that one can get a home loan at 3-4% recentl, but my lowest loam us 6m9% (highest in the 8s and most of these are subsidized federal loans).

      Whom did you consolidate with? Was it a home equity loan or private lending company ( Sofia, DRB, etc)

      As I graduate my medical education I also realized I had not learned anything about finances and would like to thank Mr. JcollinsNH, MMM, Gocurrycracker, the MadFientist, and the whitecoatinvestor for their crash coursese in financial education the last couple of months.

      • PencilThinMustache says

        I actually consolidated twice. first was sofi from 6.8–>3.99 fixed. I paid that off a few weeks ago.

        Second was with CommonBond. took the other half of my federal loans which were already at 4% fixed and actually put them into a 1.9% adjustable rate.

        This wouldn’t be a good idea for most people (and may prove to be the wrong idea for me, who knows) but I have the income to pay it off in less than a year if I remain disciplined. In this case, I am actually trying to “game the system” by letting them hold my debt at a ridiculously low rate and make money on the market. As Jim pointed out this could be a losing proposition and I may chicken out and pay it off fast.

        In any event, I’d recommend either sofi or common bond, based on experience. both very similar and very easy process.

        One piece of advice: don’t bother applying until you have at least a few months of attending level paychecks in the bank. apply now and your rate will suck!

  2. David says

    I was very fortunate to receive scholarships, assistantships, and assistance from financially fortunate and savvy parents but this trend is very troubling to me. I attended graduate school at a local state university with every intention of pursing a career in academia. My department posted a position for a 20th century U.S. historian while I was in my second semester. Fortunately my department was relatively transparent and allowed graduate students to follow a great deal of the hiring process so we could get some kind of idea what we would be up against in the near future. To my dismay we received over 200 applications, many from prestigious and ivy league schools. Over 90% of these applicants never got a phone interview and only three were invited to visit the department and interview in person. I can’t imagine how many of my peers who had amassed six-figure debts must have felt. As an interesting aside the university had recently completed a structure costing tens of millions of dollars. Curiously, they called it a student center although it mostly housed corporate vendors selling foods and services on campus at premium prices. The experience has left me with significant doubts about the future of education. I’m a firm believer that education is vitally important to a functional society but I’m not sure that education is really what’s occurring at a lot of universities.

    • jlcollinsnh says

      Hi David…

      Sobering tale, thanks for sharing.

      Glad your educational expenses worked out well for you but, like you, I am concerned by the broader picture. Hence my post ending rant. 😉

      • David says

        I think the silver lining is that it’s getting harder and harder fence in the information, so to speak. People like you and MMM are helping people save a collective fortune that might have gone to underperformers in the financial services industry. The data is a few clicks and a pleasant afternoon’s reading away.

  3. Daehee Park says

    Those numbers on US total debt burden are frightening. I recommend David Graeber’s recent book titled Debt: The 5000 Years. It’s a very informative and interesting analysis of how we’ve come to this situation.

    • jlcollinsnh says

      Thanks Daehee…

      Sounds like a fascinating read. But for now, I’ve depressed myself enough for the time being. 🙂

    • Jian says

      I remember listening to a story about an old practice of Debt Jubilee, in one of the (too many) podcasts I subscribe to, right after the market crash of 2007-8. Thought that may not be such a bad idea for today. But of course, righteous people will cry “moral hazard”. 🙁 I would argue, the lenders are to blame too, maybe even more so than the hapless and clueless debters.

  4. Even Steven says

    This is bulletin board material, simply fantastic. While my goal is financial independence I feel like the black sheep of the FI crowd while I pay off my student loans. Reading this made me feel a little better today as I pay them off and slowly shift to bigger and better investing afterwards, not before.

    • jlcollinsnh says

      Thanks ES…

      …that’s high praise indeed!

      As I said to PTM above, once you get your interest rates down below 2% I’m not opposed to shifting to a slow pay and investing strategy. But it does add an extra risk dimension.

      But just blowing them into the dust is mighty fine, too. 🙂

  5. Patrick says

    I have a tough time with super-low interest loans. My wife and I combined have about 30,000 remaining fixed at 2.2% over the next 10 years. We save about $3,500 per month, and although we could get rid of the total balance in 9 months, I can’t convince myself to not put the $3,500 into VTI… Can you convince me?

    • Torbjørn Enger says

      If you saved those 3500$ towards stocks lately you will easily see the answer is no… Even with stocks doing only as good as your interest rate, you will win some. You get tax deduction on your mortgage, but the stocks you can hide in accounts that you will not need to pay tax on earnings until you take them out of the account. You can sell and buy and still have no tax before the day you cash out. The tax deduction every year you can loan freely from the state to reinvest. Stupid amounts of debt and stupid interest rates are stupid. This amount with this interest rate is not stupid in my mind. Of course your stock value can vary. But we are all in for the long run are`nt we??

  6. Jason says

    Wow Jim.

    I’ve never really been concerned by debt, never seen it as an issue for me since I only have a (rather large) mortgage, and I have a small amount of surplus funds to put towards investing most months – with investing being my focus. This is literally the first time that a post about debt has changed my perspective towards it. I’m on top of all those ‘facts’, but the message behind what you’ve written is really, really powerful.



    • jlcollinsnh says

      Thanks Jason…

      That’s a wonderful compliment and I’m glad to hear this post has given you pause.

      Good luck in any decision you pursue!

  7. Jon Corleone says

    Having spent the last 20+ years nailing my own coffin shut from the inside….financially speaking…this post belongs in the treasure chest with all of the other gems. I’ve owned fancy homes and fancy cars and shiny credit cards…and all they’ve ever made me were cash poor and jittery. As a newly minted member of Great Uncle Jim’s aka The Godfather of the FI Family….I finally see the light. Finncial Indepedence and F-U money trumps gawdy houses and fancy cars (and other $hit I don’t need ) all day, every day. The best time to have read this post was 20 years go. The 2nd best time is today!

    • jlcollinsnh says

      Great to hear you’ve turned the corner, Jon. I toast you!

      Financial independence has always seemed obviously more attractive than fancy houses and cars and the like.

      But then, I’ve always been the odd one out…

      Sorry I didn’t get this up 20 years ago for you… 😉

  8. Mike and Lauren says

    Too weird….Lauren and I have a video in the queue for tomorrow titled “If We Woke Up In Debt.” The only difference in our video is recommending paying the lowest balance debt first, a la Dave Ramsey.

    I was torn on which to recommend, but at the end of the day I figured people with debt clearly aren’t motivated by mathematical accuracies. If you can pay off that $500 balance and get a little boost in confidence I think it’s worth the small premium.

    Like you said, everything needs to be paid off so fast it shouldn’t matter anyway.

    • jlcollinsnh says

      Ramsey’s approach is, of course, the one I was making the veiled reference to in the post. Not my first choice, but if it works for some I’m all for it.

      The key is just, “Get ‘er done!”

      I look forward to your video!

  9. ElephantEater says


    I agree with the post entirely but especially the part about college debt. We try to share our message with young people and impress the importance of starting early. We regularly share your “How I Failed My Daughter” post.

    Unfortunately, the vast majority of college students are graduating with debt, and many of the ones I work with have crushing levels of debt. That will make following our path not impossible, but much, much more difficult.

    I generally hold the view that people should be responsible for their decisions and actions. However, I think it is sad how willing people are to pile debt on to an unknowing 17 or 18 y/o kid and how many parents have been conditioned to go along with it as they think it is a way to better their kids lives. This post should be required reading!


  10. Chris- DollarFlipper says

    Jim, this is good stuff.

    My parents did a few things that really helped set me up for success:
    1 – They paid as much as they could for my college (ended up being 4 years out of my 5 year BS/MS engineering program). This definitely made the loans a lot more manageable.
    2 – The caveat to #1 was that I could not have a credit card. I had a debit card though. I got that account down to under a dollar EVERY damn month. 0 budgeting and 0 saving. I’m not sure what I would have done if I had a credit card at the time. I’m sure I wouldn’t be in a good space like I am now.
    3 – They did push me in the direction of a lucrative position. Originally it was being a lawyer. When I told them I didn’t want to, they didn’t get upset, they just asked “what else were you thinking about?” When I said that I wanted to go for Chemical Engineering because I liked math and science, they said “OK!” I’m sure it was a relaxing moment compared to saying “Art!”

    In the end, we paid off the loans in 18 months. We did purchase a house since then, but including the equity, we’ll are well in the positive and we are still on our way to FI by the time I’m 40. Couldn’t have gotten here without my parents help though.

    • jlcollinsnh says

      Thanks Chris…

      Much appreciated.

      Thanks, too, for sharing your story and kudos to your folks. You’re lucky to have them and they you.

      I would have said “Art!” just for the reaction. 🙂

        • jlcollinsnh says

          Trafficking in stolen Masters? 😉

          Seriously, I always love hearing about successful liberal arts majors. What kind of work do you do?

  11. Danny says

    After re-reading this post a couple of times, I think this maybe one of my favorites you’ve written. For me, this personally hits home as I’ve been questioned lately as to why I’m trying to pay off all of my debts in 3-4 years. Some questions include, “Why are you taking on a second job?”, or, “Danny, why are you being so responsible? Your debts will be paid off over time”. Your post sums up exactly how I’ve been feeling for the past year…to attack it with full force and some intelligence. This is exactly the type of “pick me up” I needed to read. Thank you Jim! 🙂

    • jlcollinsnh says

      Thanks Danny…

      I appreciate you telling me.

      Truth is I resisted writing this one. There are, after all, many full blogs out there dedicated to the subject.

      The credit goes to Tim, my book editor. He pushed me hard to write it, feeling that it belonged in in Stock Series (and book) and that even with all else that has been written on it, people here would want to hear my take in my voice.

      I just sent him a note saying, basically: You were right and thanks.

      • Danny says

        ALMOST TWO YEAR UPDATE: Looks like you’ll be raising your glass in a kudos salute 🙂 As of today my debts have all been paid off! I had a car loan which was paid back in July, and just paid off the mortgage today. At the end of the day it took me a little under 3 years to pay off both.

        For those curious on how I did it, I think it boiled down to three keys things:
        1) Living on less than I earned. I was saving about 50-60% during the past 3 years and applying a majority of it to my debts.
        2) Since my original post 2 years ago I was promoted at my job, and given 2 additional raises. This certainly helped my savings rate, and will continue to going forward hopefully.
        3) Making the decision to go back to my childhood job 2 years ago (aka my side hustle). This is surprisingly where I received, and will continue to receive, the most criticism from friends, and select family members.

        I just want to thank you again Jim for writing this, and Tim for pushing you to write this. In the past two years I’ve probably read this post more than any on your blog. When I needed some extra motivation, I always came back to this post to recharge my batteries. Although this is still all brand new to me, FI never seemed more achievable than it does right now 🙂

        • jlcollinsnh says

          Hey Danny…

          You made my day!

          Thanks for checking back and the update. Well played. Major league kudos! Glass being raised!! 🙂

          Free at last, free at last!

          Now all you need do is take that money that had been going to your debt and channel it into your investments.

          In a few more years I’ll expect another follow up announcing you’re FI. 😉

          • Danny says

            Thanks so much Jim, and definitely glad to make your day! Channeling the old debt payments (an extra $1,300/mo. all together) into VTSAX from now on was the plan for me from the beginning. Definitely have to thank you for the suggestion as my previous investment strategy was too conservative, and costly.

            Using rough estimates, I’m looking to reach FI in 6 years (that’s if my salary never changes and not continuing with my side hustle). I promise to follow up with you when the time comes 🙂

          • Danny says

            A THREE PLUS YEAR UPDATE: “In a few more years I’ll expect another follow up announcing you’re FI.” – It’s almost like you can predict the future Jim Haha!

            To respond to your comment from three years ago, I would not say we’re FI, more like lean FI. However, we now have enough to walk away from a situation whenever we choose, and it could not come at a more opportune time.

            In late 2018, me and the Mrs. had our first child. Also, around June of last year I was promoted for a third time at work. A normal person would be excited by this. Unfortunately, for me, I was not. I knew it would mean more responsibility and hours with less people at work, and more stress at home. I thought I could change a deteriorating work environment, and to my employees it may have looked that way on the surface, but deep down it was taking a toll in every aspect of my life. I knew I had to do something.

            Luckily for us, we had been growing a substantial pile of FU money due to paying off the debts I had from a few years ago. My personal savings rate shot up to slightly over 70% the late three years, and we put ourselves in a wonderful position should anything like this happen.

            So, when I told my boss the news I would be leaving, he was shocked. As my boss so eloquently put it, “You’re walking away from no longer having a paycheck, yet alone a six figure salary job with no immediate plan of finding another job. Are you sure this is what you want?”. My boss even suggested an alternative working arrangement. After trying to negotiate, I realized the value I saw in myself versus the value he saw in me were too far apart. When I told my team members that I manage the news, two of them cried. They said that they would have to find a new job asap as they had the same feelings that I did about the place we work.

            Now I will have the opportunity to spend time with our little one while I continue to think of alternatives as like you I enjoy working. Heck, me and a few co-workers are meeting up this week to talk about starting our own business. Although I have realistic expectations of a start up business, you just never know.

            To summarize, the first steps of paying off all of our debts and then building up a war chest has given us the opportunity to walk away from any situation. Thank you again Jim for writing this post as well as this blog 🙂

  12. Jason says

    Hooray to paying off all of your debt and I don’t think there is a thing called good debt, but in paying off those debts I still think that the debt snowball is the best method for most Americans. I mean personal finance and paying off debt is a change of behavior. And a change of behavior that most Americans won’t/can’t adapt too. Those that do need a psychological boost and a crutch. Studies demonstrate that the debt snowball method is actually more effective. I know mathematically isn’t the best way, but the “buck-up” camper line just doesn’t work with most people.

    No matter how you get there paying off debt is absolutely essential and your stock series should be required reading for my college students.

    • jlcollinsnh says

      You are probably right, Jason….

      …at the very least the snowball approach is far and away the most popular.

      Thanks for saying the SS should be required reading for your students. You’re the Prof, make it so! Doesn’t matter that you teach 16th Century French Impressionist Painting.*

      *Pure and unfounded speculation on my part… 😉

  13. Lian says

    Great post! Of course I’m already converted, as many of your readers likely are – maybe people who really need to see it don’t realize that you really can change your relationship to money and debt.

    I lived every one of the downsides of debt you listed. Once I decided to change it, I used every method you listed to get rid of my debt (including the mortgage). At the time, reaching the goal seemed so distant and difficult, and you and MMM weren’t yet available. It took nearly five years – not impossible after all!

    Going through this process changed my values in ways I didn’t expect. When I started, I anticipated that once the debt was gone, money would be freed up to buy a larger home and better stuff; however, once I got debt free, I found I wanted more freedom and less stuff.

    I’m old enough now that my FU money needs to be the same as the final FI stash, but it’s only a couple of years away. I’m much more content with my life now, and more optimistic about my future. There is nothing I can own that is worth more than financial freedom.

    And thank you for your stock series! The information is very clearly presented, and the overall strategy is simple and straight forward. It’s a relief to realize that investing doesn’t need to be complicated and intimidating.

    • jlcollinsnh says

      Thanks for sharing your story, Lian.

      It is interesting how we evolve. Things we once saw as important, fade in desire even as our ability to afford them increase.

      Thanks especially for your last line. Conveying that message is the central goal of my writing this blog!

  14. Fervent Finance says

    I knew I was going to have to foot the majority of the bill for my college education, so even at 17 years old I ruled out private universities pretty quickly. Another way I offset my expenses was by graduating with my undergrad in 3 years. I did this by enrolling in as many AP and college co-op courses that I could in high school, which made HS a lot more work for me than other students. But this was fine with me as this enabled me to bolster up my transcript which helped me receive a partial scholarship from the state university I attended.

    But in the end, would I have done it differently? Most likely. I took on too much debt to fund my education, but then again like you said, I was 17/18 at the time making these decisions so I can’t get too mad at myself.

    • jlcollinsnh says

      I can relate. I only applied to one school as I knew the U of I was all I could afford. It never occurred to me what I would do if I hadn’t been accepted.

      Three years is very impressive.

      Our daughter also worked harder than most, taking many AP and IB courses. Somehow, they didn’t translate into college credit. I’ve always wondered if it was a bit of a scam.

      Still the discipline and hard work served her well in college. She’s always said it was a breeze compared to HS. 🙂

      Too bad about the debt, but don’t beat yourself up. The deck was stacked against you. 😉

  15. Ben says

    “The emotional and psychological effects of being saddled with debt are real and dangerous.” So true…

    The amount of debt students are graduating with is astounding. I’m in my late twenties and most of the people my age have car loans, a mortgage and six figure student loans…I do worry about my generation. Far too many are unnecessarily enslaving themselves. Glad I woke up at a young age. If there’s one thing any college grad should read it should be your stock series.

  16. Sundeep says

    Student loan debt, yet another instance of the slow bleeding of the low and middle classes of America…

    Personally I’ve gotten myself out of debt and am a happy renter however a wrench has been thrown into my plans..

    I’ve lived in my apartment for five years now and have been extremely lucky not to have had my rent raised. For some reason I never imagined rents would be much higher however they are now that I’ve been booted due to change of ownership and subsequent rent increases.

    I now need to decide between paying a few hundred more to rent another place in a worst location and not as nice or make the leap and spend about $500 more to buy a condo closer to work…sadly I’m in Sam Diego so this is not going to be cheap, but I cam technically afford it.

    Moral of the story, things can change at any time so be in a situation to pivot fairly comfortably, which is doable for me as I otherwise have zero debt.

    • jlcollinsnh says

      Great point, Sundeep!

      Life is unpredictable and when tough times come, living with debt is walking the knife’s edge.

  17. Julie Ali says

    I love posts on debt.

    I have trained my sons to look upon debt like influenza–infectious and liable to end in fatality.
    The best way to make debt averse post-secondary children is to start early with a flyer route for the kids and show them how hard it is to earn cash and how easy it is to spend that cash.
    It is also supremely productive to be frugal yourself and set a good example for your kids.

    In our family, we have very minor expenditures now since we are debt free.
    We don’t carry any sort of debt.
    We save up for items before we buy them. We saved up for the new car before we bought it. I have a year of income saved up just in case work dries up in Alberta.
    You never know.

    I don’t go crazy with the credit cards. I have two credit cards that I use to track expenses and get points; I pay the cards off as soon as I charge the expenses.
    I don’t encourage my sons to get a credit card until they are responsible enough with their earnings.
    Even though they could get a credit card, I don’t think this is a good habit to encourage.
    I think it is best for teenagers to use cash only –even the debit card isn’t used.

    My older son is 19 years old, worked for one year after high school and put away enough money for post secondary education costs.
    He decided not to do university and went to the Northern Alberta Institute of Technology (NAIT).
    He is finishing first year.
    He didn’t need to use his savings for first year of school since I had some money saved up for him.
    I put some money in an RESP (registered education savings program) that covered his first year of education and the money he saved for school is going into mutual funds in a tax free savings account (TFSA).
    He uses our car for odd trips; he packs a lunch for school, and takes public transit for school.
    I see no reason to get an educational mortgage unless you enter a professional program such as dentistry or medicine where the costs of training are significant and payback is deferred.
    However, you do earn significant returns after graduation but I see that most professionals (my father included) are fairly uncertain about how to invest their earnings. At least my dad taught me to avoid debt and that is the one good financial lesson I have taught my sons.

    Debt avoidance is a habit.
    In order to do this sort of debt avoidance you might have to not indulge yourself, spread out your education over many years and simply use your brain. I did my undergraduate degrees, got some work experience, then went to graduate school. I bought a house in the place I did my graduate degree, and I paid for part of the graduate degree with scholarships. I still have the house which is now a rental house. I was lucky. Smart parents, frugal lifestyle and lots of deferred gratification. Hard habits to learn but if you do the hard stuff early on, it is easier for the family later on in life.

    Is there any good debt? I think the house might be the only good debt you should carry and even then you should pay it off ASAP. I was not able to save more than 20% of the cost of the house we bought in Edmonton. It took us about 8 years or so to pay it off. This was hard to do. But we did it.

    Now hubby and I go out for a meal once in a while and spend $40 for this treat. Mostly we still eat at home. It’s hard to be extravagant when you have been tight for your whole life.

    I don’t know how to invest what we save. This is why I am on your blog.

    Thanks for the chatter on debt. Please write more about it. Everyone is awash in it and they seem to think it is like detergent to be used for the dirty pile of bills they have collected.

    Debt isn’t a good thing. It’s influenza. It mutates. It harms. It makes you feel that the illness will never end; and it comes back in a more pernicious form, if you can’t rid yourself of it. Best to save for what you want and if you can’t save for all of the item, at least put down a major chunk. Money is a tool and you should learn to use it so you don’t hurt yourself in all the financial building projects you engage in. I’ve never understood why we can’t simply do without. It is what our parents did.

  18. Jamie V says

    I love reading your blogs posts. They are informative, and when I’m having troubles staying the course, you are a good healthy dose of the reality I am working so hard to get towards. I try to be strong and smart about it, but sometimes I realllly just want to be 5 years old again so throwing an absolute tantrum about my current state of existing is brushed off and forgotten by the adults. But here I am, an adult as well. So I must manage the frustration.

    This was a tough one to swallow/read, probably because I just had a really intense talk with my boyfriend Friday night about the same thing (college costs/debts) (yes, we sure know how to have a good Friday night!). I’m stuck paying off my hefty student loans for a degree I’ll never use (history) and I’m tired, so tired, of trying to be optimistic that I learned something that I can apply to life, that makes the degree-getting worthwhile, trying to convince other people of it as well.. You see, when I was nearing the end of my sophomore year, unsure of what I still wanted to do, I took a hard look at my transcripts one day during a one-time-per-semester meeting with my adviser. I saw I had accrued a large number of credits in history (and various related areas) so I thought to myself, “I must like history” and decided then and there that I’d just get a history degree. That was it. The office helped me sign up for the program, and I graduated a year and a half later with a BA in history, thinking, I don’t know, that I’d go be Indiana Jones somewhere. Dreams were dashed and my heart was broken when I did many unpleasant jobs after that to stay financially afloat.

    Looking back, that was one of the worst ways I could have decided what to do with my money and with my life. I had no direction and I had no help whatsoever. No one said, “Hey, you might want to think about what this means for the future..” Now, seven years later and full of regret, I am stuck in a job where I can’t move up because I don’t have the *right* kind of degree, and I’m reluctant to give up my almost-4-weeks of vacation privilege. I have little interest in pursuing history because unless you have a Master’s, the jobs don’t pay so great (and even with a Master’s, it’s “You don’t do it for the money” type of work). I think I am very fortunate to be making what I currently make, for not being “qualified” (I had two family members who also work here get me the job in the first place).

    What sparked the emotional outpouring on Friday night was, we had attended a free and totally awesome presentation by Dr. Michelle Thaller, Assistant Science Director for NASA’s Goddard Space Flight Center and it was so much fun. Here was a woman that I thought could be a perfect role model for me: a strong, outgoing woman who was doing a job she loved in !science! and was helping make a huge difference in the world! The boy and I got to commiserating about our poor decision-making skills ten years ago when we went to college. Pursuing our interests now is seemingly out of reach as the cost for continued schooling is so high and we are trying massively hard to pay off debt as it is (and it’s so depressingly hard). It’s not affordable to go back, we need to work so full time is out of the picture, and part time would just take too long (10 years or so). We just felt trapped and so stupid driving home that night. We’re so unhappy with where we are in life, and it all sort of just reached a point Friday night that was almost unbearable. We know we must learn to cope with past mistakes. We must not let fun events turn into nasty self-reflections and criticisms. This is all a learning process.

    So it is a bitter pill to swallow and I do try to toughen up. It’s just hard sometimes to *not* feel that I royally screwed myself over. I mean, I’m still paying for it after all.

    Jeez, sorry for the rant, Jim, I think I had something pent up that needed to get out..! Thanks for patiently listening for not $200/hour. 🙂

    I’ll add: We are still paying off debts to the best of our ability, more than the minimum required. We’re trying to buy a house to lower our monthly housing costs while establishing some housing equity and having that base. We both contribute to a 401K at work for the match as well as an HSA, put some money into stocks here and there, and our only 2015 vacation was all saved up for by the time it was paid for, so there are no outstanding debts from that. I’d like to think we’re on a good road.

    Thanks for the boost, Jim, for when I’m feeling low; for the motivation to harden my resolve and just make it through what seems to be an endless tunnel.

    • Julie Ali says

      Hi Jamie,

      I don’t know you but I’m going to tell you what I think.

      Nothing is ever wasted.
      Your degree has made you into the human being you are today.
      You’ve woken up to life.
      You’ve made some decisions that resulted in debt.
      But at least you made these decisions.

      The educational mortgage will be paid off even though it will take some time; we simply added it to the costs of paying off other debts. It took us years to pay off all our debts. But now it is done we simply have learned to save up before we buy anything.
      We understand that what we defer, what we do not buy, what we might think we can do without will cost us life energy that we are short of. Read this book if you haven’t already.:

      Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Ind ependence: Revised and Updated for the 21st Century Paperback – Dec 10 2008
      by Vicki Robin (Author), Joe Dominguez (Author), Monique Tilford (Author)

      Don’t be so hard on yourself.
      You did your best. You choose what you thought at the time you were interested in. That’s not bad. It’s better than doing what your parents or other people tell you to do as I see some kids doing.
      When you go to university or college you are usually about 18 years old. Even when you are old like I am you still don’t know what you want to do in life and at 18 years old you usually are at the beginning of searching for something to do.

      I stayed in university for ages.
      I liked it there.
      I learned heaps. Most of it won’t help me to be a bigshot. I won’t earn a ton of cash. But it has made me an independent thinker.
      Independence of thought is more important than anything else in my opinion.
      But of course it helps to have the other goodies.
      It is hard not to feel like a nobody without a big job title, lots of money and all that junk.
      But you are your job or your salary or really anything external.
      Sometimes, as I am picking up my sons’ clothes off the floor, I wish I had all these accomplishments of the good life that are sprung to us as the goals we should work towards and have, but usually I look out at the red winged blackbirds singing at the fake marsh near my home and I am happy with what I have and who I am.

      You will get to the end of your debt journey as we have.
      It just takes self discipline, the ability to defer gratification and lots of help from family.
      And you have a BA in history that was interesting to do; I think you should do all the interesting things you can do in life. It is very short. And accidents happen all the time.

      • Jamie V says

        Thank you so much Julie. You have so many good points in there. And you are right: independent thinking is a very important thing. College helped shape this. College opened doors that might have otherwise been closed.

        Thank you for recommending that book – I have indeed read it and it made a big impact on my life, which is when I like to think I “woke up” and expanded my mind a bit more! (The learning never stops, thankfully) The Millionaire Next Door and Rich Dad, Poor Dad helped shape my finances into what they are today, too – without those books (and various blogs), I might still be on the road to being penniless and, when I see where I was even four years ago, I can see how far I’ve come. I am very grateful to the community as well, you included, who are a constant source of inspiration and a pillar to lean on when times get tough, and I start doubting myself. Times like now. There is much change going on and I’ve started to call it growing pains, for lack of any better words. The uncertainty in there can get quite overwhelming.

        Thank you again for your kindness and your insight, Julie, I truly appreciate it.

        • Julie Ali says

          Hi Jamie,

          My reply was a bit muddled. I tried to edit it but it was too late.

          I meant to say you are NOT your job, or your salary or the goodies.

          You are important just as you are, at the stage you are at.
          All the stages of life are useful.
          We just sometimes don’t like going through them all to get to the end stage.

          You are also ahead of me at your age, because you are awake.
          It took me until very late in life to wake up.

          Cash seems like a big thing until you have it and then what?
          What will you do when you are debt free?

          You’ve a ton of time to collect cash.
          Cash collecting —is simply useful to do–to ensure you can do what you want to do in life and sometimes to be brave enough to speak up for others. Cash helps you write over all the accidents of life that none of us are immune from. Cash helps you when you lose a job, are sick and cannot work. Cash can buy you a lot of junk that you can use to make you feel better about situations that won’t sometimes get better (you are stuck) or that can only become better with a lot of hard work facing the problems we are all gifted with. Problems are gifts to learn from. Everything in life actually is a learning opportunity.

          This is your current problem –debt.
          But it is going to be solved.
          It will get solved if you listen to your own inner voice.
          Never ever doubt that inner voice inside you.
          It’s the voice that tells you when you are doing something wrong or right.

          Then ,when you need to, take the wisdom that is out there.
          There is plenty of it.
          We are all enriched by all the smart people in the world who we would never meet without the Internet and generous bloggers like this one (yes,I am being a brown noser here).

          Good luck!

        • jlcollinsnh says

          Hi Jamie and Julie…

          I’ve very much enjoyed your conversation here and really don’t have much else to add.

          As I said in the post, I’m still a believer in education for its own sake.

          A History degree may not lead to riches (although I’ll bet there are some very rich people out there with History degrees) but it does provide for a wonderful, educated perspective on the world.

          Further, the slings and arrows of fortune can rob us of fame, fortune and even health. But until we lose our minds or lives, we will always have our education.

  19. CharlesMakesCents says

    Interesting point about balance-vs-rate on ranking debt, and one I’ve thought about a lot. It isn’t particularly relevant to my life (I don’t carry consumer debt and only owe on a mortgage), but it’s still interesting.

    I’ve come to think that the ‘balance first’ method must be based on one idea–if someone already had the fortitude to pay off their balances based on the mathematically best order, they wouldn’t be seeking advice on them. By the time someone is buried in consumer debt, they need more help than the cheapest way to relieve debt–they need a way to boost their willpower and get things done.

    So, in my mind, the ‘highest rate’ is good advice for anyone who finds themselves in debt for the first time. It’s obviously the best way to pay down debt. The ‘highest balance’ is the method I would advocate for anyone who has shown that they cannot manage debt on their own.

    • jlcollinsnh says

      Makes sense and an interesting point there, Charles.

      For someone who really struggles with the process of getting rid of debt, it may well be that the extra interest cost paying off the lowest balance debt first for the encouraging satisfaction of seeing it gone might well be worth it.

      As I say in the post, if that’s what it takes to get ‘er done, so be it. Getting ‘er done is what matters. 😉

  20. David Rubenstein says

    I’ve been lurking around your site since last summer. I love your stock series. But my favorite post was the one you called “How I Failed my Daughter”. (By the way, I doubt you failed her.) As a dad of two young girls, I am heeding your warning to start preparing them early. The siren song of luxuries is always calling. And I do not want to see them wind up in the debt trap so many of my contemporaries seem to find themselves in.

    Since both girls are avid readers, my wife joked that the best way to communicate with them is to find it in a book. From your website, and her words of wisdom, I’ve toyed with writing a short book for them on living the Simple Life. If I find the time, I suspect I will refer them to your blog for further reading.

    So thanks for the wisdom, support, and great ideas. If I do in any way rip you off, I plan to do it in a classy way. And with full attribute!


    • jlcollinsnh says

      Hi David…

      Glad to see this post lured you from the shadows!

      Thanks for the kind words. As for my daughter, she’s turned out just fine and we are very proud of her. She just doesn’t share my enthusiasm in things financial. But, in fairness, neither did I at age 23. 😉

      Good luck with the book and I’d be honored if some of the concepts here find their way into it!

  21. Katie says

    You just hardcore motivated me to get rid of my debt fully. After this month, I will be debt free! There’s no way I will achieve the same returns as I am paying toward my interest rate!

    • jlcollinsnh says

      Glad to be of service, Katie…

      …and congratulations of the pending scraping of the last little blood-sucker off! 🙂

  22. Jian says

    Hi Mr. Collins,

    Some of my friends seem to think they are doing OK financially, if they can manage their cash flow month to month. I have tried to introduce them to your blog and MMM’s, but they just don’t seem all that interested, to my great dismay!

    Where I’m from and culturally, debt IS an emergency and there is NO good debt, not mortgage, not student loan! But personal finance is such a tricky topic. I know I can’t and shouldn’t impose my values onto others, even though this is one of the very few things I’m 100% certain of me being right. What is one to do? BTW, they are very good friends and I really hate to see them not manage their finance as well as they should. What would you do?

    • jlcollinsnh says

      Hi Jian…

      I actually got a similar question in the comments on my interview here:

      As I said there, when people don’t listen or aren’t interested it’s not really frustrating as I’m not really interested in persuading anyone.

      Sometimes I get people commenting who clearly want to argue with me. It’s kind of amusing, but I just don’t care. I present my ideas here as clearly and completely as I can, and I’m happy to answer any questions that can lead to a better understanding of them.

      For those who disagree, assuming their comments are understandable and not offensive, I’ll approve it for publication here for others to read. But there is really no reason for me to respond.

      I started writing this for my daughter, sharing what has worked for me and what has kicked me in the ass. I’m still amazed (and honored) anyone else is interested.

      As for people in “real life” I rarely discuss this stuff. There just isn’t much interest. We are definitely the odd ones out! In fact, this is what people love best about the Chautauquas: Spending a week with others who “get it.”

      On those occasions where there is interest, I’m happy to help if I can. Usually I’ll point them to the blog. Sometimes I think it is easier for people to read it than listen to it.

      People have to come to this stuff, if at all, on their own terms and in their own time. It’s like the parable of scattering the seeds. Some fall on rocky ground or in with weeds and never blossom. Only a few find fertile soil and grow. Sometimes that can be painful to watch, but if there is a solution I haven’t found it. 😉

      As for passing on the blog, my suggestion would be to send them a link to one post that specifically focuses on some issue of interest to them. If they like that, from there they can move on to others.

      Linking to the Stock Series with its 28 posts (as many do) can, I think, be too overwhelming.

      With your very good friends, be gentle and go slowly. Good luck!

      • jian says

        Words of wisdom! Thanks again for your quick response. It’s completely mystifying to me that people are not jumping up and down in excitement, when I share your blog with them and tell them that they could be FI in about 10 years if they choose to. And I know they do not love their jobs or their bosses! One guy blithely said, oh, but 10 years is such a long time (what’s left unsaid is, I can’t be bothered)! It is indeed; but not taking ownership of our financial life now only means enduring soul-sucking corporate life for at least twice as long which may still lead to a dubious financial future. How is that better? I honestly don’t understand the logic behind that comment. Maybe I’m (as many readers here are) too rational, too much of a nerd, and the rest of the world are more emotional decision makers.

        Anyways, thanks for your kind console, and I shall try to be more patient.

      • Draggon says

        Very good stuff (as usual), Jim!

        Speaking of your Stock Series, here’s a reminder to add a link to this most recent (and awesome) post to the “Stock Series” tab at the top of your page. Didn’t you hire a guru to take care of these trivial matters for you?? 😉

        • jlcollinsnh says

          Thanks Draggon…

          and thanks for the reminder!

          I do have a guru these days, but he works on the critical stuff like keeping the blog live and a pending redesign.

          The trivial stuff is still all me. And the lesser for it. 😉

  23. Meiguoren says

    Hey Jim,

    While I completely agree with your main argument that debt is bad and should be avoided at all costs and that easy access to student loans has increased the cost of a college education out of proportion to inflation, I can’t help but think that your comparison of the costs of your education and your daughter’s education was somewhat misleading.

    You don’t say it explicitly in your post, but I assume you and your family were residents of Illinois while you were attending U of I and therefore paid in-state tuition. I’m pretty sure you didn’t live in Rhode Island while your daughter was attending school there recently and therefore had to pay out-of-state tuition, which is typically 2.5-3x the cost of in-state tuition. Don’t you think that exaggerates the increase in tuition rates, just a little? 🙂

    Maybe I’m just being picky, but it’s frustrating to me when I hear people complain about the high costs of college tuition, but yet they apparently make no effort to do simple things to rein in those high costs. My family and I live in Hawaii where we have a perfectly good state university. For some reason, though, many people in Hawaii seem to believe that our university system is not as good as universities on the mainland, so they pay huge amounts of money that they can’t afford, to fly their kids back and forth and fork over expensive out-of-state tuition so that their children can go to state schools on the mainland. Conversely, many people who live on the mainland seem to be willing to pay 3x UH’s in-state tuition rate so that their kids can go to school in Hawaii.

    I realize you were able to afford to pay cash for your daughter to go to school in RI, and if that’s where she wanted to go and you didn’t mind forking over 2.5x+ the in-state tuition fees, then that’s totally up to you. But many families I know take on huge debts in order to send their kids to state schools in other people’s states. I just can’t, for the life of me, understand why someone would do that. And then they complain that college is so expensive and moan and groan about how much their student loan payments are costing them.

    To me, a basic rule of thumb should be: if a student or her parents can afford to pay cash for a college education, then, by all means, go where ever her little heart desires, but if any amount of student loans are needed to pay for a college education, common sense should dictate that you not go to a state school in a state where you’re not a resident. If necessary, MOVE, establish residency, and then go to school there if you really have to go to a particular school.

    My wife graduated from UH Manoa, and then she got a scholarship which covered the full tuition for her to get a master’s degree at a university in Boston. The only catch was that the scholarship only paid for her tuition, not for her living expenses. Boston’s an expensive place to live, and my wife didn’t have the money to pay for an apartment. So, she looked around and found a position as a nanny with a family who lived closed to the university campus. In exchange for helping the family with child care and doing a little light house work, my wife got free room and board, right within walking distance of her university and was able to graduate with very little debt.

    My point is, while it’s true college tuition is expensive, if you go to a state school in your own state, and you’re willing to be a little bit creative in your living arrangements and maybe have a part time job while you’re going to school, it’s still possible to graduate relatively debt free. Even today.

    • jlcollinsnh says

      Welcome Meiguoren!

      Here in New England, I suspect because these are all such small states, the state universities have three tuition levels:

      –in state
      –out of state

      The cost for regional falls in between. So while URI was more costly than UNH would have been, it was still far cheaper than full out of state tuition would have been. Plus, URI offered her a very nice scholarship.

      That said, I fully agree with you in principle. It would be very hard for me to spend out of state levels of tuition for what is, after all, a state school

      If money is a challenge, look no further than your in-state school options. This was indeed the case for me and why I only applied to U of I.

      You might also be interest in the post linked to in Addendum II above.

  24. Luke says

    I’ve been reading your blog for over 6 months now after stumbling upon it while doing research on how to invest.

    You (and MMM) are probably the main reasons I was able to reign-in my finances and pay off my remaining student loan debt within that amount of time. You pretty much conveyed what debt feels like (especially the student loan aspect of it): a heavy weight always just hanging waiting for you to mess up.

    Being younger and less savvy at money, I jumped on the student debt band wagon (but not all the way, thankfully. Semi-dilapidated apartment and rice for dinners plus 2 years at a satellite campus made the financial brunt of college a bit easier). Except I made the mistake (or best decision of my life) of pursuing education that interested me instead of a specific major-to-job track so popular these days. The past years had been a scary, what am I going to do with my life with this giant shackle around my foot?

    Now I’m employed full time, with a different outlook on what a job is, and a long term goal to be financially independent. All debt is gone, and it’s weird to now have to enter a new phase of things: investing. It’s crazy watch net worth go up with every pay period (and over time).

    Sometimes I feel like I’m doing it wrong. I see everyone around with there cars and houses and new stuff, while I take the bus or walk and am content getting books from the library. But, at least I know how I want to live, it’s definitely the right way for me to do things.

    Not sure what I’m really trying to say here other than thanks and I wish more people read this outlook on debt.

    • jlcollinsnh says

      Well Luke…

      You’re certainly not doing things wrong, but you are certainly doing things differently. Vive la différence! 🙂

      Thanks for sharing your story and congratulations on breaking your shackles!

      I’m delighted you took the time to write and very pleased to hear this blog played some small role in helping you to reach your debt freedom.

      Please keep us posted on your progress as your wealth grows.

  25. Jeremy says

    This is my new favorite post

    The leech reference made me think of the scene in Stand By Me, where one of the kids has a leech stuck to his junk. How is that for a visual for debt?

    I had drinks recently with an old friend, and his daughter is now in college. He went for a visit, and was amazed at how students are living a middle class lifestyle while in college. They have a private dorm room, professional chefs cooking food to order in the cafeteria, they drive cars to get across campus instead of walking 6 blocks, and the college is undergoing a building spree of fancy new buildings and climbing walls and other niche sports facilities. Holy shit, no wonder it costs $30k/year

    We concluded: a guaranteed way to be trapped forever in the working middle class is to try to live like you are middle class while you are studying

    • jlcollinsnh says

      Thanks Jeremy…

      I’m delighted to hear it. As I mentioned above in the comments, it was one I almost didn’t write.

      Thanks, too, for the great story and perspective. So true!

  26. Brian says

    Debt is a monkey on your back that is for sure. My wife and I just pulled the trigger on retirement and this would not have been possible with debt. We are completely debt free.

    I remember to this day my wife turning to me after we walked in the door from our honeymoon and saying, “Brian, how much do you owe on credit cards?” We have never had credit card debt since that day. We quickly paid off our house by focusing on the true joys in life, which is living within your means and being happy with what you have and not what you want. It was a shock to my system to adjust to not living with credit debt, but it was needed.

    We still use credit cards for every possible purchase, but we pay them off monthly. (We love the rewards.) As for house debt, we managed it by having a large downpayment and extra monthly payments.

    Now, my wife (50) and I (48) can spend our time raising our 7 year old daughter.

    Jim, thanks for all the great post. I enjoy the insight and your writing.

    • jlcollinsnh says

      Hey Brian…

      Congrats on the retirement!

      And thanks for sharing your story.

      Any post-working plans in place or are you just going to kick back for awhile?

      • Bran says

        At this point, we don’t have plans given retirement started just two weeks ago. But, we busy people by nature so I expect plans to happen very soon.

  27. Lindsey Kenner says

    As a young adult (28), both registered with my series 7/series 66 and insurance licensed, you make understanding some of the most hardest concepts easy! Thank you for this.
    I can honestly say some of my peers have no understanding of debt, nor retirement. Luckily for me, being in this industry and having a great mentor, has put me ahead of the curve.
    I just ran across your site a couple days ago and haven’t left it since! I will continue to follow your posts! Keep them up!!

    Lindsey Kenner
    Dupo. IL

    • jlcollinsnh says

      Hi Lindsey…

      Congratulations on your series 7 & 66! I gather you are in the business. What role?

      Thanks for the kind words; glad you are enjoying the site!

  28. Martin says

    Wow, this is a great list and throughout post about debt. I totally agree with you on hiring someone for help as wasting time and money and no no thing. This is all about discipline and if you do not have it, no third party will help you anyway. There is plenty of free advice on the internet, so go ahead, read, create a plan and execute it, that’s all.
    Great post!

  29. Danny says

    I loved reading this post on so many levels. I share your absolute rejection of debt as a normal way to go about living.

    -Your analogy of leeches to debt is both visually descriptive and easily understandable.

    – The path out of debt is simple, not easy. Love that. That sums up all the principles of financial independence.

    – Your insight that the practice of eliminating debt will provide you the very same habits to then build wealth and achieve FI. Jim, that is such a powerful message. It is a paradigm shifting type of statement that brings hope to anyone saddled with debt. It can take someone from feeling helpless to now resolved.

    Thanks again for continuing to publish your thoughts on these topics.

    • jlcollinsnh says

      Thanks Danny…

      High praise indeed and very much appreciated.

      You managed to sum it up in three simple bullet points. Well done!

  30. John says

    Hi Jim,

    You often mentioned that you’ve always bought homes that cost significantly less than what a lender was willing to give you. How have you personally gone about deciding how much home you could afford–and how much you were willing to borrow? I’m not looking to purchase for the next probably two or three years, but being debt averse makes me weary of purchasing something expensive…and where I live everything is expensive with high property taxes. Sorry if this is the wrong post to ask this question (and if you’ve answered this before…you have SO much content) but it’s sort of a debt question!


    • jlcollinsnh says

      Hi John…

      That’s a great question and one I don’t recall being asked before.

      How much you can afford is easy. Any real estate agent or lender will be happy to take your income and calculate it. Figuring out the maximum you can borrow and spend is what they are geared up to do. What rattles their collective cages is when you intend to spend less. They get very confused. 🙂

      In our case, we’ve always been much more interested in buying the best house for our needs rather than the most house. We’ve done it two different ways.

      When we moved to Cleveland we rented for three years. For the last two of those years we made a hobby out of going to look at houses. We looked in all different communities and neighborhoods, in all different price ranges. Including those we couldn’t afford. Mostly we went to open houses and avoided getting tied to an agent who would push to see get a deal done. We weren’t in any rush. It was fun and we would not have done it this way otherwise.

      We figured, we’ll know it when we see it.

      In the end we found and fell in love with a beautiful old century home with all the details intact. It cost about a third of what our max was and it wasn’t in the fancy towns my work peers had chosen. The agent never knew we could have afforded more.

      When we moved to NH we were looking to buy immediately and so didn’t have the luxury of a long slow search. Instead we selected a town based on commuting time from my work and school reputation as our daughter was in second grade.

      We then looked at virtually every house for sale in that town up to our max. Drove our agent nuts. We found one we loved at about 1/3rd max but it was sold before we could get our bid in. The market was red hot at the time. The next one was ~1/2 max and we snagged it with even a small discount. It wasn’t as nice as the other place, but still very nice indeed and served our needs just fine.

      Because we are now renting again, if I ever buy another I’ll again use the “Cleveland technique.” 🙂

    • jlcollinsnh says

      Hi John…

      I liked your question well enough that I’ve added it and my reply as an addendum here:

      I also added this to my reply there:

      The first property I ever bought was a sad tale, and one I describe in detail beginning here:

      I also bought a condo for my mother as I described in this post:

      Before moving to Cleveland, I bought a 2-flat in Chicago, but that was purchased as an investment and I’ve yet to write about it here.

  31. Ryan says

    Hi James,

    I recently graduated college with $77k in student loan debt. I was wondering if I should focus on paying off my student loan debt before investing, or slowly pay off my student loans while investing.

    • jlcollinsnh says

      Hi Ryan…

      It depends on your interest rate.

      While my mantra is “avoid debt at all costs,” once you have it, it is worth considering if paying it off ahead of schedule is the best use of your capital. In today’s low rate environment, here’s my rough guideline:

      <3% -- pay it off slowly
      3-5% -- whatever feels most comfortable
      >5% — pay it off ASAP

      Make sense?

    • Mr. FC says

      Hey Ryan – a certain popular radio show / book seller / public speaker / all-around personal finance shaman would tell you to pay off your debt first and then start investing, but I think as Jim said it depends on what the best use of your funds are. We personally did both at the same time, and it worked out really well…it took a little longer to pay off the student loans (ours were around $180k and we finished them in about 4 years), but we also bought a house and had kids and my wife stopped working AND we invested during that time. In retrospect, If we’d done it one step at a time, we would have missed the stock market rebound (dollar-cost averaging FTW) and would have been trying to buy a house right about now instead of in 2009.

      It should be noted that we never really tried to time the market, it all just worked out in sync with our goals at the time. I think that’s the big takeaway – set your goals, make progress every day and revisit / adjust accordingly.

  32. The Bob's says

    Great article Jim. It’s fascinating to me how folks will use debt to keep up with the “Jones” when knowing full well they can’t afford. I believe all the new housing developments are proof of that approach. It’s everywhere around us. I work with someone who would love to proclaim his FI but is tied to reality because of their big house (built in 1906, imagine the maintenance), nice cars, camper, blah, blah… Nice guy but didn’t think about the long term and now, I think regrets it.

    We know what would have happened if he had been realistic and shoved that nice salary and 401k into a Total Stock Market Index fund…..

    • jlcollinsnh says

      Thanks Bob’s!

      I think most people, if surveyed, would say FI appeals to them. It is just when the choices have to be made, the big house, fancy cars and toys appeal more. Certainly those things are more tangible ways to impress the Joneses.

      If your coworker truly regrets taking the “stuff path” you might gentle suggest to him that houses, cars and campers can all be sold for a fresh start. 🙂

      • Mr. FC says

        One thing I think you may have said in the past (I’m attributing it to you anyway so there!) – “I did spend all my money, but I spent it on buying my freedom.”

      • jlcollinsnh says


        I actually came up with that at the last Chautauqua:

        “Not only have I spent every dime I’ve ever earned, I spent most of them almost immediately. It’s just that I spent over half of them buying my financial freedom.”

  33. Andy Lomon says

    Great post Jim!

    And the stock series is just spectacular!! I’ve just finished it (for the first time), I am pretty sure that I’ll re-read it at least one more time!

    I’ll take my time to write you an email with a few doubts collected along the way and hopefully receive an answer but, in any case, I would like to thank you for your blog, the stock series and sharing all your knowledge with such a clarity!

    Thanks again!!
    Best Regards
    Andy (From Argentina)

    • jlcollinsnh says

      Thanks Andy…

      Glad you like the post and the series.

      Please also post your doubts on the blog so others can benefit from our conversation.

      Where in Argentina are you? We’ve never been, but it is on our short list!

      • Andy Lomon says

        Hi Jim, I live in Buenos Aires (capital city), if you plan to visit the country I would be very glad to help you organizing your journey! and of course meet you if possible.
        Sorry for the delay. I’ve been re-reading and writing down my doubts/thoughts and figured it out it would be clearer if I write them in the parts where they belong.

        David, hope you find my doubts/thoughts useful!

        So, I’ll start with this one (Part XXVIII): The end??? NO!!! plz, we want more!! Seriously. So, considering the 12 Trillion debt, is this possibly the next big bubble? If so, just toughen up or any further recommendation?
        I share your thoughts on student loans, despite the fact that they are not that common in here. I recommend the vid ‘what if money was no object’ by Alan Watts. I guess that even sadder than finishing your college with a huge debt, is finishing with a career you dislike (or hate) and also a huge debt!

      • jlcollinsnh says

        Hi Andy….

        That is a very kind offer. It will likely be a year or two before we make it there, but it would be great to meet you and your help on the trip would be most welcome.

        Maybe we could even have a reader meet up: Buenos Aires!

        Every time I think I’ve finished the Stock Series, another post idea comes up. This debt one was from my book editor. So, while I’m not sure what will be next, I’m not so rash as to say this is the last. 🙂

        12 Trillion is a scary number, but I am not overly concerned. My guess is it will unwind slowly thru economic growth and a bit of inflation. Remember, unlike household debt, the national debt only needs to be in balance with the size of the economy and its growth rate.

        The main concern is that it prevents young people from fully engaging in other economic activities with their money. This, of course, is a drag on the overall economy.

        Here’s an excellent video:

        • Paula says

          Hi Jim,
          thank you for this great post! I’m in charge of the finances in our household and determined to pay my husband’s 96,000 student loans debt in 5 years after long talks with him to try to bring him back to his senses! I can’t live with that burden over my head!
          I’m originally from Buenos Aires living in NY for the past 15 yrs and wanted to encourage you to visit this amazing city! The more so if you have your private tourist guide! Cheers to both you and Andy!

        • jlcollinsnh says

          Hi Paula…

          Glad you like it!

          Buenos Aires, and the rest of Argentina, are definitely on our list. Because it is far and we’d want to spend a long time, and because our summer when we have the most time to travel is their winter, we’ve yet to make it.

          But the time is coming!

  34. Heather says

    Well said. Debt in the form of homes, cars, student loans, and credit cards may be the “norm” to some people, but it really does diminish our lives and freedoms! My only debt is my mortgage, which I’m aggressively paying down!

  35. Kurt says

    Fantastic primer on debt. Pretty much everything one needs to know to get out or stay out of debt trouble right here. And I’m not just saying that because I’m a U of Illinois grad (’80 and ’82) 🙂

  36. Claudia @ Two Cup House says

    I am new to your blog and really enjoyed the section on how mortgages are not really “good” debts to have. Currently, our mortgage is our greatest burden, one we’re trying to eliminate as quickly as possible by moving into a much smaller house to meet our needs. And we’ve made all the other usual mistakes with credit cards, car loans and student loans. I look forward to reading the backlog of posts I’ve missed! Thank you!

    • jlcollinsnh says

      Welcome Claudia…

      Glad you’ve enjoyed this post.

      Since you are paying off debt, you might also check out Addendum 1 which I just added to it.

      Enjoy the rest of the blog!

  37. Gradual Millionaire says

    Great post, Jim! Even those of us who are more financially mature sometimes need to be reminded that debt is not just a financial tool, but a burden with the potential to ruin you. I’ve always been skeptical of the seemingly universal acceptance of the “good debt” concept. Too many people overspend and overleverage in the big categories of mortgages and student loans under the impression that these debts are okay to take on!

    • jlcollinsnh says

      Great point, GM…

      Plus those that issue such loans have a tendency to encourage borrowing the most possible rather than the least needed.

  38. Tracy says

    Hi Jim,

    First I want to say thank you!!! I read through your entire stock series and your how I failed my daughter post over the last two days and I’ve shared it with all my family and friends…at least the ones who I think will listen 😉 Your blog along with mad FIentist, EE, and JD Roth are changing my life. I apologize in advance for this novel of a comment.

    I wanted to get your opinion on how I should pay off my loans versus investing money into my VTSAX.

    To give you some background on my age/financial situation…I am 26 years old and have a good paying and stable job (I make about $83,000 annually). I moved out of my parents house a few days ago and now paying $1350/month in rent, I’m estimating $140/month in utility payments. I also pay $120/month for my martial arts membership, about $400 give or take on groceries, $74 on gas, and estimated $40 for “amusement/entertainment”.

    I have $11,500 left to pay on my student loans, and between the three groups of loans they’re sitting at a 5.3%-6.5% interest rate. For the last few years I was only making the minimum payment of $200/month but after reading this post I am now making payments of $600/month, with the majority of my payment being used to pay off the loan with the highest interest rate. I also receive $500/quarter bonus at work which before reading this post I was going to use to invest…but now I’m thinking I should use all of to pay down this loan.

    My second loan, and I wish I had read your blog before doing this as it is slightly embarrassing, is financing for a new prius (my only excuse is I got rid of my gas guzzling and horribly financed subaru wrx I purchased back when I was younger and dumber, I also plan on driving this prius until it dies). I financed $16k for 5 years at 0.9% interest rate. My monthly minimum payment is $285.

    Would you suggest I focus on paying off my student loans entirely before investing any of my extra money into VTSAX? And I continue to pay only the minimum payment for my car loan for the remainder of the loan?

    The second part of this post is just to demonstrate how much you’ve changed my life!!

    My ex and I sold our house last year, and I kick myself for waiting so long to do it, but the last few weeks I’ve gone on a financial blog reading binge and I decided to put $28,000 into VTSAX, $2,200 into a traditional IRA, $3,300 into a Roth IRA (the reason why I have it split is due to my income level I can only deduct $2200 for tax purposes) both are in vanguard’s target retirement fund. I’ve also changed my 401k contributions so that I will hit 18k by the end of the year. After your reading post about 401k fees I reallocated my funds (75/25) into fidelity’s spartan 500 index fund (only an exp ratio of .03%!) and fidelity’s spartan extended market index fund (exp ratio of .07!). The management fees for both are also less than .1%. WIN WIN WIN!

    Thank you again for all your help! Just this morning I told my cousin about all these interesting financial blogs I’ve been reading and she told me that she’s been thinking about getting a financial adviser of which i told her PLEASE DO NOT!! AND READ THIS ARTICLE!!!

    I’m very excited to start my path to financial independence!!!!!

    • jlcollinsnh says

      Hi Tracy…

      Thanks for your very kind words and especially for passing the blog along. You might suggest your cousin read this post before hiring an advisor:

      I agree that paying off your student loans should now be your #1 priority. Check out my recently added Addendum 1 below the post. In doing so you’ll also see that, now that you have it, I agree with paying the car loan off slowly. Of course, I would have told you never to borrow money to buy something as silly as a car in the 1st place. 🙂

      Other than that, big time Kudos! It sounds like you’ve gotten your savings/investing house in fine shape. Well played! 😉

  39. amber tree says

    Hey Jim,

    Nice post on debt. Living in Belgium, our situation is different, as most people do not have student loans, this is a good thing. We do have a need for bricks in this country, and I can imagine that people first see how much house they can afford, and then look for a house. Reading your blog, it would indeed be better to look for the house you actually need.

    I guess I am somewhere in the middle between what I can afford and what I need. In the last years, I took action by refanancing the loan and paying off big parts. My goal is to be financial independent, and then a monthly mortgage loan repayment is not helping.

    On addendum I: I will break the rule and pay off debt fast that is lower than 3pct. I plan to do one more lump sum repayment this month to lower the monthly charge even further.The money comes from the emergency fund that is a surplus there. I prefer this route over putting my money now in the stock market. I will just stick to investing each month my savings in index funds. It makes me sleep at night, and that is worth a lot also…

    Thx for your blog and stories

    • jlcollinsnh says

      Thanks Amber!

      It is always interesting to hear how things are elsewhere in the world and the unique opportunities and challenges living in different places presents.

  40. Sensim says

    Hi, thanks for your website with so many clever answers! I have a question about what the best thing is to do with my student loans.

    Living in Sweden, we have a system with state loans through CSN for financial aid for studies. Each year, you repay four (4) percent of your income from two years earlier (for loans taken until 2001, after that the terms got less favourable). The Swedish Tax Agency reports your income to CSN. The interest rate is determined and set by the government each year and calculated on the average of the Swedish government’s cost of borrowing over the past three years. The interest rate is 1 perent during 2015. You repay the loans until the debt is zero or (if you are still in debt) the loan will be written off when you turn 65. If your health turns really bad or you suddenly get substantially lower income, you can apply to have the annual payments reduced.

    Interest rates:
    2015 1,0
    2014 1,2
    2013 1,3
    2012 1,5
    2011 1,9
    2010 2,4
    2009 2,5
    2008 2,1
    2007 2,1

    I really love the idea of being 100% debt free. And I *could* pay the loan off if I sold mutual funds, but does it really make mathematical sense to pay it off faster than the plan in this low interest scenario we are in?! I invest a healthy portion of my monthly income in mutual funds and stocks and I have no other debt.

    • jlcollinsnh says

      Welcome Sensim….

      Very interesting. I thought education was free in Sweden. 😉

      If you check our Addendum 1 above, you’ll see even at the highest interest rate of 2.5% in ’09, it falls comfortable within the range I would pay off slowly. This is especially true in your case given the other factors you mentioned.

      I share your feeling of wanting to be 100% debt free. But in this case, keeping this debt and paying it as slowly as possible while leaving your money invested will very likely make you wealthier.

      If for some reason the interest rate should spike sharply higher, you can always pay it off then.

      Good luck!

  41. Shilpan says

    Hi Jim,

    This is one of your best articles; it is because it sums up why some people never achieve financial freedom.

    Unfortunately, in consumerist society, millennium generation has embraced debt as essential part of their lives. It never cease to amaze me that easy money has destroyed the fabric of once what made this country great.

    Slavery will always exists in different forms; we abolished slavery but created a new generation of slaves.

    This article ought to be read out loud in colleges and universities but it won’t happen for the obvious reason.

    • jlcollinsnh says

      Thanks Shilpan!

      This is one I never intended to write, or really wanted to. But my book editor pushed me on and, well, here it is.

      As it turns out, it has become one of my best read.

      Perhaps some day I’ll be asked to give a commencement address and I can read it on a campus then! 😉

      • Shilpan says

        Great to hear that you are writing a book. When will it be published?

        I am sure your readers want to know more about that too and I will be honored to write a review if you consider me worthy.

        Congrats Jim! I am sure that your book will impact many lives.

      • jlcollinsnh says

        If all goes well, by year end. Maybe a bit sooner.

        When the time comes I’ll write a post announcing it. Hopefully someone will buy a copy or two.

        I’d be honored to have you write a review!

  42. AMCR says

    Hi Jim,

    I have been working through your stock series and blogs and I can definitely say it has been such an eye opener! I wish I could have known about it sooner. My only debt at this time are my student loans…however they are debilitating. When I graduated in 2012, I was advised to consolidate since I had a variety of interest rates both low and high. These are graduate loans. Ultimately the set interest rate is at 7%. (Cue the hyperventilation and panic attacks). I am also in the veterinary field where the debt/income ratio is severely imbalanced. We have loans similar (sometimes worse) to those in human medical field however our salaries GREATLY differ. For those on the human medical field, although their student loans are huge, their salaries in time will balance it all out and the likelihood of complete loan repayment is pretty good. Unfortunately, that is not the case in the veterinary profession. Prior to my admission to the profession, the financial aspects were not bad. I entered veterinary school in 2009 where everything changed…..

    I wanted to give you a brief background of why I have such a high interest rate and loan. I graduated with ~253K in loans and now I am up to a staggering 338K (and counting–cue a series of panic attacks). If I could go back in time I would likely tell my former self to go in different direction. Don’t get me wrong, I love what I do but it comes with such a high price.

    I am currently under a student loan forgiveness Income Driven Repayment Plan where my monthly payments are significantly lower that is scheduled to be paid out in 20-25 years and the remainder balance will be forgiven . When this option was first revealed, everyone thought it was a God send. The catch however, is that your “forgiven” balance will be considered as a taxable income… I am trying to project that amount but who can really predict what the taxes will be in 20-25 years…. I estimated that by the time my loans are “forgiven”, I will owe the IRS another obscene 6 figure number.

    My husband and have talked about this many, many times to see how this can all work out. Ideally it would work out if we are able to aggressively save X amount over 20-25 years. However, that is in 20-25 years. There is the standard 10 year repayment which will result in a higher final amount but the loan will be done in 10 years. Sadly, the monthly payment is significantly higher (~550/month vs 4K/month) which makes it almost impossible to do.

    I apologize for such a novel but I hope it was able to give you an idea of our unfortunate predicament. Look, I know I signed up for this loan and it is my responsibility get rid of it. I already accept the fact that I have horrible and horrible-er repayment options. My question to you is: knowing our predicament, do you think it is at all possible/worth to save/invest etc at this point? Or should we accept the fact that we really should just focus on getting rid of this debt (even though it can take anywhere from 10-25 years) AND then focus on saving/investing?

    Sadly, all of our consults with financial experts have been quite depressing. I will greatly appreciate your input!

    • David R. says


      Reading your comment brought a tear to my eye.

      How do you and your husband buy a house? Start a family? Live a life?

      The schools you attended burdened you with a debt that cripples your entire life.

      The good news is you graduated. Staggering numbers of young adults bear massive debt and never even got a degree. Or an education.

      I cannot provide any ethically/morally acceptable advice on how to solve your problem, outside of making a lot of money. But I am not sure how to do that as a vet. (Around me, there seem to be 3 vets for every pet …)

      Ultimately, the real solution to the student loan “crisis” is to change the incentive system in place.

      The government needs to get out of the business of subsidizing these loans.

      And colleges and universities need to get into the business of bearing the risk.

      Only then will you see price normalization, a thinning of the administrative herd, and end to facilities porn, and a re-focus on the in-classroom product.

      • AMCR says

        David R,

        Thank you for your reply. Your questions about us truly living are ones we ask ourselves frequently. This is unfortunately a harsh reality that is now common amongst the new generation of veterinarians. It was a childhood dream that has become a nightmare (financially speaking). It breaks my heart when I hear/talk to the youth that have aspirations to become a veterinarian. How do you begin to explain the financial repercussion? I always try to give them a warning…

        You are absolutely right about “making more $”–If only! Again, our salaries GREATLY differ from our human medical collegaues. The minority of vets that make anything close to a human physician is likely a hospital owner. You stated: “there are 3 vets/pet”–that is very, very true. The competition is intense. Not only do you have privately owned hospitals, but now corporations are buying them out too.

        Unfortunately, I do not see the government/educational institutions procuring a solution anytime soon. I have looked into employment that includes Public Service Loan Forgiveness (your debt is truly forgiven income tax free as long as you make qualified payments/10 years) however it has not been successful.

        I am 29 y/o and graduated 3 years ago. I do not think there is a solution to my debt other than to pay it off someway or another. This is truly heavy burden which I will inevitable carry for quite some time. There are many things that I would love to do that will have to be placed on hold in interim. My question is: At this point in my life, does saving for retirement/investing etc. have to be one of them?

    • jlcollinsnh says

      Hi AMCR…


      Well first let me add my +1 to David’s comments, right down to the tear.

      OK, here’s what I’d do and some ideas on how to think about it.

      1. What’s done is done. Short of a time machine there is no going back.

      2. You certainly have the right responsible attitude toward all this, but as I say in the post it is criminal that young people are lured into this kind of debt.

      3. It sounds like the 20-25 year payment plan with debt forgiveness is the only way to go.

      4. If I understand correctly, that means paying $550 a month for all that time.

      5. $550 is ugly, but people routinely take on never ending car payments at that level to keep themselves in new cars. So it’s not the end of the world.

      6. So it’s ugly, but not something that should destroy your life. You just have to accept and live with it.

      7. Think of it as a $6600 cut in your annual income. It hurts, but it shouldn’t prevent you from living and enjoying life.

      7. As part of that, by all means you should save and invest and grow your wealth. No reason to let this prevent you from reaching FI.

      8. In 25 years, when the balance of the loan is forgiven, that balance will be treated as income. But you won’t own the whole balance to the IRS, you will owe only the income tax due on that balance.

      9. So if the forgiven balance were $100,000 and you were in the 25% bracket, you’d owe $25,000. But only if that is on top of other income that has you in the 25% bracket.

      But let’s suppose the $100,000 was your only income that year.

      Married filing jointly you have:

      $12,600 in standard deduction
      $8,000 in personal exemptions @ $4000 each. More if you have kids.

      This leaves $79,400 in taxable income.

      The first $18,450 is taxed at 10% = $1845
      The next $56,450 is taxed at 15% = $8468
      The last $4500 is taxed at 25% = $1125

      Total tax due = $11,438

      What if it’s $200,000? Again, as your only income that year:
      Married filing jointly you still have:

      $12,600 in standard deduction
      $8,000 in personal exemptions @ $4000 each. More if you have kids.

      This leaves $179,400 in taxable income.

      The first $18,450 is taxed at 10% = $1845
      The next $56,450 is taxed at 15% = $8468
      The next $76,300 is taxed at 25% = $19,075
      The last $28,200 is taxed at 28% = $7896

      Total tax due = $37,284. Welcome to our progressive tax system.

      This is based on 2015 taxes:

      So how do you get your other taxable income to zero? Basically you retire. Or take a sabbatical in the year this loan forgiveness takes place.

      Now of course this is all based on what we know today and a lot can happen in 25 years.
      –You might not want to retire
      –Tax brackets could be higher, or lower
      –We could have a flat tax, which would benefit you greatly
      –or any number of things, good or bad, we can’t conceive of.

      Think of it only as “what if” analysis that hopefully shows things not to be as bleak as you fear.

      So make this a routine bill you pay, live your life and plan to retire in 25 years, if not sooner.

      Hope this helps!

      • AMCR says

        Thanks for your input Jim, I really appreciate it. As long as there is a light at the end of the tunnel, albeit a LONG LONG tunnel, it gives me some assurance!

        • Jeremy says

          Jim’s perspective is fantastic

          One thing I would add is that inflation will erode the payment and the loan value over time

          With projected inflation of ~2%/year, over the next 25 years the dollar will be 40% weaker.

          What that means is today’s $550/month payment will feel more like $330. Assuming no tax structure changes, the tax brackets will also be 40% higher, reducing the tax burden for loan forgiveness by a large amount.

        • Todd says

          Hopefully thinks are going well for you a couple years later. I just wanted to thank you for bringing this up. In my own situation, I have a smaller hole (loan balance) of about $75k at 5.5%, but I also likely have a smaller shovel (income) than you, at just over $30k. When that ratio just doesn’t add up, it’s so frustrating to see that balance go up every month.

          Right now, I’m trying to pay off consumer debt of about $10k before touching the student loan. Through that, I’ve found that even cutting the lifestyle down to minimum, there’s only a little over $9k a year to spare (When incomes goes below a certain threshold, there’s only so much you can do to increase your savings rate). So once my consumer debt is done in a year or so, it would take the better part of a decade at minimal lifestyle to pay off the student loan.

          The overall situation isn’t as bleak as yours, but even in my situation, I find the idea of another 8-9 years before I even start investing to be troublesome. Obviously, increasing the income would do wonders for the overall math here, and I’m doing what I can on that, but I have to plan based on what is, not what might be. If I can up the income, great; there’s always room to adjust.

          In the meantime, though, I’m on the income-based repayment plan. At my level of income, the payments are tiny ($22 a month), and with income going to investing instead, by the time that 25 years (gulp) is up, taxes on just under $100k of loan forgiveness should be much more bearable.

          I’m still hoping I can get the income up and pay the thing off in 2-3 years instead. I’d jump at it at that point. But the current 8-9 years seems way too long to delay investing.

  43. Kristin says

    The above story in comments breaks my heart…

    I’ve finished the stock series and I am about to start over and read it again. The information is starting to click. What frustrates me is that there isn’t a mandatory class in high school that addresses finance. I’ve ignored it most of my life as a boring subject and as something I didn’t want to think about and I probably wouldn’t have enjoyed it as a teenager but maybe something would have soaked in and at least some sort of information base about finance would have been there. I’ve always viewed money and especially the stock market as something ‘bad’. My dad has lost hundreds of thousands of dollars in the stock market so that didn’t improve my view any. I am now realizing finance is a part of my life whether I want to accept it or not and ignoring it doesn’t improve my situation at all, in fact quite the opposite. So I want to thank you for the umpteenth time for taking the time and energy to make this information available.

  44. phil rod says

    Mr. Collins,

    I am a recent visitor (and now total junkie) on your blog. For a few years, I’ve watched over my wife and I’s finances, but never really took notice of everything until the past year or two. We are 31 and 32 with two kids.

    I am 7 years into a pension system, at 8 I am vested 40% but enjoy my work and plan to work till 45 when I will be fully vested. I’d love to establish 45 as my Financial independence and see a path to get there.

    Long story short, I have always paid into the pension; have maxed out my Roth IRA every year since I was 22. Set up another Roth IRA for my wife three years ago and have her maxing out but never invested in stocks. After reading your series, I am rip-roaring ready to go BUT she has 45K in student loan at 6.8% interest rate. This year, we paid of 20K in graduate loans in one year and next year we’re going for the gusto to pay off her entire loan in one year.

    I guess my question is: Is it right to take a year hiatus of saving money (our Roth’s- but I will continue to make payments to pension) and therefore also push off my new found excitement/desire to begin saving/investing until we destroy that puppy?

    Any thoughts would be greatly appreciated.

    • jlcollinsnh says

      Kill the puppy! 🙂

      At 6.8% it eats way too much.

      Also, if you are paying Federal income tax, a Traditional IRA with its tax deduction is a better option for you than the Roth. Dollars lost to taxes are gone forever as is all the money they could have earned for you over the years.

      Do not switch your existing Roths to a T-IRA. You already paid tax on that money. Keep them and let them grow.

      • philrod says

        Wow! Thank you for your quick reply..much appreciated!!! We’re going to the barebones to take that bad boy out but we’re super motivated to do it.

        To clarify your statement earlier on switching to a traditional IRA, even though I paid taxes on the Roth money already, wouldnt it still be worthwhile to transfer all that money to a traditional Roth since its a somewhat decent chunk of change? Based off everything I’ve been reading..wouldn’t that amount do better in a higher risk stock index fund with vanguard. Could that help us get things going while we are tearing down that loan?

      • jlcollinsnh says

        No problem. You caught me on the computer. 🙂

        I think you are confused between IRAs and the investments you hold in them.

        You’ll want to keep your Roths. They are great to have and an index fund like VTSAX would be a good investment to hold in the Roths.

        You’ll create a new T-IRA for future contributions. You’ll likely want to hold VTSAX or something like it in this as well.

        For more:

        • philrod says

          I clearly need to re-read the series!!! Thank you for the guidance. Look forward to delving in further. Will drop a note when we pay that bad boy off and get on our way to FI…

        • philrod says

          Sorry to pester you with one more question but I was thinking about this article and your response ‘re: paying the puppy off asap. Would it be wise to take out the money we just started putting into my wife’s Roth (only 6K as we just started two years ago and she’s a stay at home mom…she makes a little extra Teaching so we can’t max out much in this one like we do the Roth I have had since 22) and help pay off that ubdergradtuate loan of 45k faster. We have a plan to pay it off in one year but that would be a big jump start.

  45. Andrew says

    Dear Jim,

    A few months ago I finished repaying $212,000 in federal student loans from medical school. I am 31 and have a low net worth and hardly any retirement savings, but at least I am debt free. I was never foolish enough to carry credit card debt or the like, but I could have made better choices to get a cheaper education. Dealing with the student loan debt was so difficult and bitterly unpleasant that I have no plans to have any type of debt again – none of that “good” debt you talked about either.

    Not long ago, I received a notice from the Office of Personnel Management (the federal government’s HR department). I was one of some 21 million people whose social security number, fingerprints, and other biographical data were stolen by hackers. My information was stolen because I had been credentialed for practice at a VA hospital. The government offered me three years of free identity theft protection.

    No one has tried to steal my identity so far, but I worry about it happening someday. The thought that someone could take out more student loans in my name, credit card debt, mortgages, undergo medical treatment in my name, etc., and push me back into wrongful debt is a nightmare. This makes me feel hopeless again because I know how hard it was to repay student loans that were rightfully mine (the loan servicing system does NOT want you to repay early). To get rid of fraudulent student loans or other debts would probably take a lawsuit and a lot of time, if my past experience is any indication.

    It seems like ID theft could be a major impediment to any plan for financial independence. Do you have any thoughts or encouragement on how to deal with this type of risk? Thanks.

    • Bill says

      Andrew, my partner has also been in the security rodeo with the federal government. He also works at one of the local VA hospitals here in St. Louis. Like you, we’ve received the notification saying his PII (P)ersonally (I)dentifiable (I)nformation) may have been compromised.
      I urge you to get a credit freeze on your credit file at all major credit bureaus asap. With this action, no one will be able to check your credit much less open a new line of credit without this information. It can be temporarily lifted when applying for mortgages, auto loans, a new credit card, etc. I believe it’s around $5.00 per agency to initially set it and $5.00 to lift it for a short amount of time based on a request from you. You will be assigned a personal pin when requesting the freeze that you’ll need it in the future for a temporarily lift. Keep it confidential in a safe place. The credit bureaus also offer Identity Theft Protection if you decide to go that next step. We have chosen the security freeze as our preventative action so far. I’ve added the freeze links to the three major reporting agencies are below:

      Experian Credit Freeze –
      Trans Union Freeze –
      Equifax Freeze –

      It’s unfortunate that stories like yours are becoming common place. It could have been much worse for you but you’re taking proactive next steps to prevent tragedy. The bad guys are always looking for new ways to obtain this type of information. Once your information is stolen, it’s sold to other hackers for profit. Everyone needs to have credit freezes in place in order to protect their personal data.

      I’ve been in the IT Security career for 17 years. One more thing everyone should be doing is making sure they’re running up to date AV and malware protections on their computer. Malware comes in all forms but keyloggers and botnet clients on our computers are the most vicious. You can inadvertently download these from infected web pages and you will never know it. They record information while you type it and send it off to the bad guys without your knowledge. Personal information protection should be multi-layered. If you take care of these two items, you’re off to a good start. Hope it helps.

    • jlcollinsnh says

      Hi Andrew…

      Fortunately, Bill has provided a great primer on ID theft for you.

      Thanks Bill!

      So all that is left for me to do is the fun part of offering my congratulations on your successful debt slaying efforts!

      Now you are in a perfect position to turn that cash flow stream to your benefit by investing it.

      ID fraud is certainly a risk and a pain if you need to deal with it, but it is no reason not to pursue your financial freedom.

  46. jager says

    Mr. Collins–
    Bravo for so clearly and succinctly capturing the abusive relationship many have with consumer debt. I have recommended it to anyone who will listen. Given that so many struggle with debt, this post could serve as a gateway drug for the Stock Series, the wisdom contained therein, and the great comments posted by your readers.

    For what it’s worth, I made this post mandatory reading for the servicemen/women in my command and sent the link to all hands. We have focused on financial readiness as a key component of overall readiness (hard to fight bad guys abroad if one is fighting creditors at home…) and have started weekly classes at our pre-weekend safety briefs. They are now “Safety and Savings” briefs where I or another leader cover financial topics. When I asked how many had actually read the article, few had. So, a week later, this post became part of a guided discussion for all departments during an operational pause. Listening in on their discussions, I was amazed/dismayed at how pervasive the belief of “everyone’s doing it, so I may as well, too” was among my guys. Your post has clearly changed some minds–so thank you!

    I’ll keep plugging the Stock Series–the more they know the better we’ll all be.

    all the best,

    PS–your Marine friend Tom would likely have some pretty funny thoughts/stories on the weekly safety brief. Recommend you ask him next time you chat…

  47. jlcollinsnh says

    Hi Jager…

    Thank you so much for sharing this with me.

    I am honored this post is now part of your “Safety and Savings” briefs. Although I imagine a few of the troops are cursing me. 😉

    You are very correct about the “everybody’s doing it” syndrome. That attitude is no accident. Marketers work hard to instill it.

    Did you happen to catch this despicable ad during the Super Bowl:

    Get ’em to borrow a bunch of money to buy a house so they have to spend a bunch more money to fill it with crap.

    Inadvertently, they exposed the underlying game. 🙂

    • Jager says

      Exactly!!! I saw that very ad and couldn’t believe they laid it out so plainly. Even my eldest, middle-school son picked up on it– “Dad, isn’t that probably just a bunch of stuff they didn’t need in the first place?!?”

      They are 180 degrees out from the message we’re trying to send our boys.

  48. KGo says

    As I read this on my lunch break at work, a coworker opens a piece of mail in a nearby office and exclaims “My new credit card is here! I have money!”

    Immediate validation of your typical person assessment. Thanks for your detailed writing!

  49. Kyle says

    If I have debt with > 5% interest rate, would I pause retirement savings while we pay the debt off?

    Or continue to max out 401(k) and pay whatever extra we can beyond that to the debt? This route will take much longer to pay off the debt, but will lower our AGI and make me less nervous about missing a year or so of 401(k) contributions.

    • jlcollinsnh says

      Hi Kyle…

      As I say at the end of this post, with an interest rate >5%, killing the debt is job #1.

      I would fund the 401(k) only to the level needed to fully capture the match, if any.

      Once the debt is gone, channel that money into your investment options.

  50. cv says

    Hi Jim

    I am at a crossroad. I’m a 38yo professional female who is getting married in september this year. I have 55k (principle) mortgage left on a 140k condo, originally planned to pay in full in a little over 7 more years (3.25% interest rate). My fiance and I have been talking about paying it off with his saving from mutual fund from Vanguard; that way it will free us up of about $700 a month in mortgage payment, in case we decide to live on only one income after we get married. Is this a good idea in your opinion?

    • jlcollinsnh says

      Hi CV…

      Check out Addendum 1 in the above post. It provides my rough guidelines for paying off debt.

      Given your interest rate, I’d keep the money invested in the fund.

  51. Drharhar says

    Hey, just wanted to say thanks. We just paid off our student loan debt and entering into our wealth building phase. I’m excited about dumping all my extra money into VTSAX and letting it RIDE! Thanks Jim.

    • jlcollinsnh says


      Being debt free is awesome and now that same discipline and cash can be diverted to building your wealth.

      Well played, Doc!

  52. Jane says

    I have a Q on student loans. I have enough money to pay off all my student loans (<4% interest) and still have enough money to cover about 4 months' rent. Should I just pay it off or should I continue gradually paying it off and in the meantime place my excess money in an index fund?

  53. philip k says

    Thanks to everyone commenting here and to you Jim from a lurker – I can’t begin to elaborate on all that I’ve learned

    • jlcollinsnh says

      Thanks for checking in Philip!

      Some of the very best content on this blog is in the comments! 🙂

  54. Scotty2Hotty says

    What are your thoughts on using IRA money before age 59.5 to pay down/off credit card balances? My wife and I regularly discuss this. I am in the no, the opportunity cost is too great camp, while she is in the just pay sh*t off and be done with it camp.


    • jlcollinsnh says

      I’m very much in the “be done with it camp”

      The problem with using funds from your IRAs is taxes and penalties. Even then, the CC interest rate might make it worthwhile.

      But first things first:

      –You’ve cut them up, right?
      –You’ve eliminated ALL discretionary spending until they are paid off, right?
      –You have side hustles/second jobs for more income to pay these off, right?

      Otherwise, to use or not use your IRA is rearranging the Titanic deck chairs.

  55. Vlad T says

    Hi Jim,

    I’ve read through the whole series and I have to say thank you for writing in such an accessible way. I’ve shared it with friends and everyone has been blown away by the simplicity of the simple path.

    I have only one question, on the matter of debt. Living in Switzerland and with negative interbank rates (about -0.75% for 3 year now) I have access to seemingly cheap consumer loans of e.g. 120k CHF at 0.75% fixed for 5 years. Having regular income in CHF to keep me safe from short term USD/CHF fluctuations, do you think it would make sense to take the loan and invest in VTSAX to grow my portfolio earlier or should I just pass?


    • jlcollinsnh says

      Hi Vlad…

      Very interesting question.

      What you are basically talking about is leveraging your portfolio with debt, an idea made more appealing with the low cost of that debt.

      However, that low cost doesn’t mitigate the risk. With leverage when the market goes up your gains are magnified. So too when it goes down. Leverage enough and you can get completely wiped out.

      So, not what I would do. See:

      A safer option would be to put the borrowed money in to something that pays a higher interest rate, like VBTLX. Not safe, but better than the volatile VTSAX. 😉

  56. Justin says

    Good evening,

    I want to make sure I am understanding this correctly. I should pay debt first until the balance is zero and then I should start to invest? I have been applying the larger portion of my extra earnings to debt while applying the rest to my betterment account. I understand that the markets greatest value is time and I do not want to miss out on it but I have been having the thought that I am fighting an uphill battle by not using all of my extra money to pay down my debts. Thank you JL and all for the info.


    • jlcollinsnh says

      In most cases, yes. The rare exception would be when the interest rate on the debt is exceptionally low and you are willing to take the risk that your investments will outperform it.

      Personally, I would focus on diverting as much of my income as possible toward paying off the debt. This hardwires a high savings rate.

      Then, when the debt is gone, I’d just redirect that money to investments.

  57. Frugal Steve says

    Great post! I just came across your series a month or so ago and have enjoyed everything so far. It boggles my mind how dumb so many people can be with their money. I find it interesting how many of the employees at my work (that are probably making half as much as me) have $60K+ trucks and go drop $10/day for lunch. I drive a 12 yr-old Mazda and have no debt (except a small mortgage @ 3% interest) and I’m eating leftovers for lunch everyday. I think it is important to enjoy life as you go and I’m willing to spend money on things that I feel bring value to myself and my family. But shackling yourself down with tens or hundreds of thousands of dollars of consumer debt so that you can drive a nice truck back and forth to work every day and eat out all the time is insane. How many years earlier could these people retire if they just spend $15k on a car and didn’t eat out everyday? If they spent $50k less on a car and took that money that they would have been putting toward payments (assuming $50k loan for 7 years at 5% interest) and invested that money each month into an index fund averaging 6% return, they would have over $270k in the bank after 30 years. That’s only putting the money in for the first seven years! If on top of that they stopped eating out each day (assume saving $7/day on lunch) and put that money into the same index fund, they would have another $130k+ in the bank (probably be a lot healthier too). That’s over $400k for a truck that will only be worth less and less each year and fast food that literally ends up in the toilet!

    -End Rant-

    • jlcollinsnh says

      The really interesting thing is, Steve…

      I’ll bet if someone independently surveyed your work place it is you that most of the folks there would think is insane. 😉

      We are the odd ones out: The few, the free, the FI. 🙂

  58. Tortoiseandthehare says

    I am 33 years old and carry a high student loan debt of 255k at 4.9% (Thanks medical school) and a 230k mortgage at 3.75%. The only good thing is my education allowed me to get a healthcare job where now, after a couple of years, I am making about 200k per year. For the last 2 years I have been maxing my 401k and a backdoor Roth IRA. I have a financial advisor but am studying up to do it myself to save the extra money. I believe I can refinance to get my Student loan under 4%.

    I could take the next 7-8 years and make no retirement contributions while knocking out the debt or, take an additional 5 or so years and max out the 401k and IRA along the way.

    As much as I want to be rid of the debt monkey I don’t think I’m comfortable with the idea of not saving until I’m in my early 40s. I am nervous to miss the compounding train, And I am hesitant to stop my contribution to the 401k largely because of the tax rate that last 19k would be in (over 32-34%). I will be in a much lower tax bracket once I retire.

    So I’m thinking of continuing to max out at least my 401k and IRA and take an extra couple of years to pay the debt. Plan is to be completely debt free by 48 (14 years from now) at the latest. Then take the extra payments (50k per year) and move it to an investing account along with taking advantage of the extra payments allowed over 50.

    My maximum retirement goal is 60, although I’d like to aim for 55 and maybe work 1-2 days a week or open a BnB somewhere.

    Does this plan make sense or am I overthinking the steps?

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