Beth Kobliner, author of Get a Financial Life: Personal Finance in Your Twenties and Thirties, discussed retirement, credit, and basic personal finance.

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Miranda and Harlan are pleased to welcome Beth Kobliner to Adulting.tv. We discuss the actions you can take today to set yourself up for financial success in the future, and why you need to start thinking about the future right now.

One of the topics we cover is retirement. Regardless of how difficult it seems, there are ways to start putting away a tiny bit of income for retirement, and Beth shares exactly how that can be done. We also discuss other financial basics, including tips for improving credit even without a lot of experience with money.

Beth Kobliner is a commentator and journalist, and author of the New York Times bestseller Get a Financial Life: Personal Finance in Your Twenties and Thirties. Her guide for parents, Make Your Kid a Money Genius (Even If You’re Not!), was published by Simon & Schuster in February 2017. Kobliner has been a staff writer for Money magazine and a contributor to the New York Times, the Wall Street Journal, Redbook, Glamour, Reader’s Digest, and O, The Oprah Magazine.

She also served as a content advisor for Sesame Workshop’s financial education initiative, offering on-air money advice to Elmo. Kobliner was selected by President Obama to serve on his Advisory Council on Financial Capability for Young Americans.

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It would be nice if you could have an easy solution to student loans. You will have to work your ass off to get on top of the situation. Make it happen.

You went to college after high school because, well, that’s what you do and everyone else did it.

You took out student loans to pay your way through school because, well, that’s what you do and everyone else did it.

You went to school, got your degree, and just started your adult life. It’s just that now you have $100,000 in student loan debts and a low paying job.

What do you do? Here are five ideas.

Control current living expenses.

The first thing to do is get control of your current living expenses. The only way to make sure your debt doesn’t grow any faster is to immediately stop acquiring debt.

Calculate your net or true take-home pay per month. This is what you receive after you pay your taxes and benefits.

Then, calculate your total monthly living expenses, including minimum student loan payments, car expenses, entertainment, rent, and every other monthly expense you have.

If your monthly living expenses exceed your take-home pay, you must cut your monthly living expenses, increase your monthly income (more below) or a combination of the two.

It may feel like a cold reality, but you’ll do yourself no favors by overspending what you bring home from month-to-month.

If this means you must continue living at home or find more roommates to lower your rent, then do so. If you must switch from a premium phone company to a discount service company, such as Republic Wireless or Cricket Wireless, do it sooner rather than later.

Look for as many ways as possible to lower your living expenses. Just as every little calorie counts, so does every little cent as you work to get your student loans under control.

Pro tip: Apps such as Mint and Personal Capital can help you manage your budget all from your phone that’s now on a discount service plan.

Increase your income.

This is a two-part step.

First, increase your W-2 income. W-2 income is the income you earn from working for someone else and not contract employment. Because you currently have a low paying job, it’s in your best interest to increase this income.

Tell your current boss that you need to increase your income. Work with your boss to come up with mutually agreed-upon performance expectations to increase your pay in a specified period of time. This time is commonly relegated to your annual performance review, but some companies have more flexibility.

Then, work your butt off to exceed your agreed-upon expectations. Document every success. Save every email with even an ounce of praise. When you have your next performance review, sell yourself so hard it’s impossible for your boss to not give you a raise.

In the meantime, look for other, higher-paying jobs both within your current company and outside if only to improve your interview skills. If you find a higher paying job, use your improved performance and skills to sell yourself for a higher income.

Pro Tip: You can respectfully decline to answer questions about your current pay, but to decline to answer questions successfully you must do so impressively.

Something like, “Thank you for that question, however, I’m going to decline to answer that. I’m focused on the value that I can provide you going forward with my current skills and knowledge. This is different from what I was capable of when I was hired for my last job.”

The second part to increase your income is to make money outside of your primary job. Yes, this means getting a second or even a third job. While that’s painful, it’s not unheard of. Many people have several jobs until they get on their feet. I had multiple jobs at once, myself.

Pro Tip: You don’t have to increase your income with more W-2 jobs. You, too, can become your own boss.

Become your own boss.

I’m amazed by the opportunities of today’s gig economy.

Bloggers and YouTube stars you’ve never heard of are making millions of dollars a year. Peripheral workers, such as social media experts and virtual assistance, are springing up to help those bloggers and YouTube stars — and are making sustainable incomes of their own.

Could you be the next million-dollar internet guru or billion-dollar app creator?

Possible, but not probable.

What is possible is that you could create a nice income for yourself to supplement the income from your W-2 and better tackle your student loans. It’s even possible that you could create enough income from being your own boss that you don’t need a W-2.

Pro Tip: This strategy is playing the long game. An overnight success actually takes years to accomplish. While there are lots of winners in the gig economy, most of them won because they persisted.

Avoid more debt.

Not unlike controlling your living expenses, avoid adding more debt to your portfolio of debt.

Avoid taking on a mortgage, a car loan, if possible, more student loans, loans for a cell phone or furniture, payday loans, or any other opportunity to finance an improved lifestyle. Debt is debt.

The less you take on until your student loan balance is paid off, the better.

Pro Tip: The possibility of increasing your income by earning another undergraduate or graduate degree is enticing. Many employers will pay for some or all an employee’s additional education. Before going back to school, see if your employer will help pay your way. If not, consider bouncing to another employer who will.

Refinance your student loans.

Under certain conditions, you can refinance both federal and private student loans and there are several banks and other businesses to help you.

If approved, you could lower your interest rate, lower your monthly payments, or lower both your interest rate and monthly payments.

Each year, you can apply for an income-based repayment plan. There’s no fee to apply and if you qualify for one of four different kinds of repayment plans, it may help you meet month-to-month expenses until the following year.

Understand the fine print of your income-based repayment plan. For example, if you’re married, you may have to file taxes separately from your spouse. There’s also the possibility that your remaining balance will be forgiven in 20 to 25 years.

This hasn’t happened for anyone yet and there’s the possibility that you’ll receive a tax bill for any amount forgiven, which could be expensive. (Public Service Loan Forgiveness happens sooner, and doesn’t come with a tax bill.)

Pro Tip: Simply lowering your monthly payment will likely mean that you’ll pay more money over the life of your loan. Put as much money that you free up from lowering your monthly payment towards your highest interest debt to pay your debt off more quickly.

Bottom line.

The best way to improve a bad situation is to have an improvement plan.

This five-point plan should get you headed in the right direction. As you proceed, tweak as necessary to continue heading in the direction of paying your student loans off and increasing your income fast.

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You don’t actually have to pay off your student loan early. In some cases, it might make sense to pay off your debt slowly.

When I first started my career as a freelance writer and financial expert, my main selling point was the fact that I had paid off my student loans early.

I did it in three years.

While I’m still proud of that accomplishment, I did it because that was the best decision for me. That doesn’t mean it’s the best decision for everyone.

There are plenty of factors that could have made my debt strategy pointless – or even downright harmful. I constantly meet and consult with people who would be better off paying their student loan debt down at a slower rate.

But how can you tell which camp you fall in? Here’s what you need to know about paying off your student loan:

When you shouldn’t pay off your student loan early.

There are times it just doesn’t make sense to pay off your student loan early. It seems like a lot of the advice is to get rid of the debt as fast as possible, but here are some reasons to think twice:

If you have other debt. Student loan debt typically comes with lower interest rates than other forms of debt. Plus, the interest is deductible on your taxes.

It’s better to pay off credit card debt or other high-interest loans before focusing on student loans. Once those high-interest loans are paid off, pay off any loans with comparable interest rates, since they’re unlikely to offer the same tax benefits as the student loans.

If you qualify for a forgiveness plan. Anyone who qualifies for a loan forgiveness plan through the federal government or other organization, such as the Public Service Loan Forgiveness program, should make the smallest payments possible on their loan — especially if they won’t owe taxes on the forgiven debt.

If you’re in this situation and pay more than you have to every month, you’re just throwing money away.

If you don’t have an emergency fund. Paying extra on your student loans only makes sense if you already have an emergency fund in place. An emergency fund allows you to pay cash for crises like car accidents or hospital stays, and without one you may have to use a credit card or high interest loan. Save at least $1,000 for an emergency before putting extra money on your student loans.

An emergency fund allows you to pay cash for crises like car accidents or hospital stays. Without emergency savings, you may have to use a credit card or high-interest loan. Save at least $1,000 for an emergency before putting extra money on your student loans.

If you have a low interest rate. Many people only make the minimum payments on their student loans if they have a low interest rate.

Instead of putting extra money toward their debt, they can earn a higher return by investing that money in the stock market. It might seem crazy to willingly carry debt, but the math could work out in your favor. For example, students who took out federal student loans after 2016 have a 3.76% interest rate, while many index funds have an average 10% rate of return.

It might seem crazy to willingly carry debt, but the math could work out in your favor. For example, students who took out federal student loans after 2016 have a 3.76% annual interest rate, while many index funds have an average 10% annualized rate of return.

Investing isn’t a sure thing, though, so make sure you think it through before taking the plunge.

If you aren’t saving for retirement. Saving for retirement should be the most important financial priority for anyone, including millennials and Gen Z.

Paying off your student loans early is a valiant goal, but it shouldn’t distract you from saving enough for your golden years. You should be saving between 10% and 15% of your income for retirement before you even consider putting extra cash towards your student loans.

When you should pay off your student loan early.

There are definitely times that you need to tackle those student loans right now, and pay them down as quickly as possible. Here are some of the times you can feel free to demolish your debt as quickly as you can:

If you don’t have other financial obligations. There are very few reasons not to pay off your student loans early if you’re already saving for retirement and are otherwise debt-free. Paying your student loans off early could save you thousands in interest – and make it easier to save for other goals like a vacation abroad or a new car. Being debt free will also increase your credit score and make it easier to apply for a mortgage, business loan or rewards credit card.

Paying your student loan off early could save you thousands in interest – and make it easier to save for other goals like a vacation abroad or a new car. Being debt free will also increase your credit score and make it easier to apply for a mortgage, business loan or rewards credit card.

Being debt free will also increase your credit score and make it easier to apply for a mortgage, business loan, or rewards credit card.

If you have a high interest rate. When I graduated and started paying my student loans, my interest rate was 6.8%. That rate is comparable to what I could’ve earned if I invested my money in the stock market. In that instance, paying off my student loans and saving on interest made more mathematical sense. I saved more than $5,000 in interest by paying off my loans early.

In that instance, paying off my student loans and saving on interest made more mathematical sense. I saved more than $5,000 in interest by paying off my loans early.

If you get anxious about your debt. A study published in the European Journal of Public Health found that adults with debt suffered from significantly more mental health issues than those without.

It’s not surprising, given the omnipresent weight that debt represents. Debt can cause constant pressure. You feel the nagging at the back of your brain. Paying off your student loans earlier can relieve anxiety, stress, and depression, plus increase your quality of life and stifle that subconscious negativity.

If you want to switch careers or start your own business. Not having to pay on your student loan every month frees up your budget for other things. It allows you to switch to a low-paying job you love or even become self-employed.

Becoming debt free faster means you can gamble on your salary without the risk of missing payments or defaulting on your loans.

Where do you stand? Are you aggressively paying your student loan early? Or are you taking it slow?

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Broke AF? Worried about your debt? You might think you can’t invest, but maybe you can. Here’s how to decide what step to take next on the road to financial freedom.

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One of the best ways to build wealth for retirement is to invest.

Putting money in a retirement account now is a good way to get a good start on building a nest egg that leads to financial independence later.

But what if you have debt?

Can you invest when you have debt and feel broke AF? Does it make sense to pay off your debt before you begin investing?

This week, we talk about the considerations that come when trying to decide whether or not to start investing when you still have debt.

Concepts

  • The importance of investing.
  • Ways debt can slow you down.
  • Are you really ready to invest?
  • Can you balance paying down debt with investing?
  • Have you taken care of other areas of your finances, like an emergency fund?
  • Tips for making investing more effective.
  • How to decide if it makes sense to invest instead of pay down debt early.
  • Different types of debt and which you should tackle first.
  • The importance of being able to sleep at night.

Don’t forget to listen to our “Do Nows” this week. We’ll take a look at how to create a debt payoff plan, open an investment account, and assess how much you need to start saving today to hit your retirement goals.

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Hosted byHarlan Landes and Miranda Marquit
Produced byadulting.tv
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Do you have a true concept of what is “real” about money after college?

I had plenty of money in college. I was rolling in it. My parents had given me a credit card so I could charge anything I needed, like groceries, utility bills, oil changes, and more. They paid my rent and didn’t ask questions when I spent more than $250 a month on food.

I worked during college, too – sometimes two jobs at once. Those jobs helped me buy what I wanted (which was a lot). If you’ve ever been to a college town, you know that there’s a plethora of shopping options nearby. Within a five-minute walk, I could access boutiques, vintage shops, and record stores.

If I wanted food, I could get anything delivered. Even if I had a fridge full of groceries, I’d get pizza, pad thai, or fried chicken delivered to my house. In a given month, I’d spend more than $100 on eating out.

I never told myself “no.”

That is, until I graduated.

Welcome to the real world.

The summer following graduation, I had an unpaid internship and a part-time job. For the first time, money was tight. I was paying my own rent that summer and commuting an hour one way (this is back when gas was close to $4 a gallon).

Suddenly, I had to reign in my spending. I said no to going out and shopping. I read blogs about couponing, cooking cheap meals, and getting free stuff.

That summer was a wake-up call. I couldn’t keep spending the same way. When I finally got a full-time job and started being totally responsible for all my bills, I realized how important it was to budget. I was only making about $28,000 a year, and after bills and student loan payments, there was hardly anything left.

Even though my budget was cramped, I decided I wanted to pay off my student loans early. I started tracking every dollar religiously. I was now saving money with the same intensity that I had spent money in college.

I found freebies, coupons, and special deals. I shopped at Aldi — my favorite discount grocery store — and stocked up on the essentials. I avoided eating out and always brought my lunch to work, even when it was Chef Boyardee ravioli.

In 2012, I created my blog to chronicle my debt payoff progress. I wanted to see if I could actually pay off my debt in three years. I thought my blog could serve as inspiration to anyone else trying to do the same thing.

A year after I started my first job after graduation, I got a new job and a small pay raise. When my rent went down, I put the difference toward my loans. Any time my expenses decreased, I just added that money toward my debt.

When my then-boyfriend and I moved with another friend, my rent was cut in half. Again, I put the amount I was saving toward paying down my student loans. That year, half of my paycheck went toward my debt. In November 2014, I made my last student loan payment.

Friends and family members started asking how I paid off my loans so quickly. I directed them to my blog, where I had written about my debt payoff journey. But soon I decided that I wanted to create one simple place where people could go and learn how to pay off their own student loans.

That’s why I created the Student Loan Knockout: A 20-Day Journey to Debt Freedom, my self-paced online course where you can learn the steps I took to become debt free. There are action items for each module and basic steps you can follow. This is not a course for finance experts. It’s for people like you feeling overwhelmed by your student loans and wondering where to turn.

In the real world of money after college, you need to make tough choices and get serious about your budget. Even though the road to debt freedom was filled with sacrifice, being debt free feels sweeter than any shopping spree or take-out meal.

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You’re not a bad person for borrowing money to get a college degree. You may be smarter than some financial “experts” lead you to believe.

You finished your bachelor’s degree and you’re out in the real world. You’re feeling real pressure to find a good job along your career path. It’s those massive student loan bills. You dread opening them because they remind you of the four or more years you lived without a major concern about your finances.

Now your college education seems like a burden. What did your bachelor’s degree get you, anyway? You’re 22 and you don’t have a job yet. Or you’re 30 and you’re still not sure if you’re on the “right” path.

If you haven’t been ignoring the reality of your debt, with your head in the sand like I was for a few years after earning my bachelor’s degree, you’re fully aware that student loans — like all debt — reduce flexibility in your life. You can’t afford to delay your career. You can’t even afford to go out with your friends (but you probably will anyway).

And if it feels a little unfair that all you did was earn a college degree like your parents, it might be. The cost of a college education has grown much faster than income for most Americans.

While your parents could have afforded their education at a state college on their own by working through college, the economy doesn’t make that as easy today. At the same time, college students and millennials are told en masse: “You have no work ethic.” “You expect everything to be handed to you.” “You want the best of what life has to offer without putting in the effort to achieve it.”

You’ve been set up to fail financially by the world while you were a teenager, and that same world does blame you unfairly. Well, we all have friends who embody the millennial stereotype — but not you, right?

Is college no longer worthwhile?

Financial experts are now making headlines by tearing apart the idea of higher education. Whether it’s due to the evolution of the curriculum over the years, or the lasting effect of the recent recession on the idea that the only worthwhile type of education is one that leads directly to a job that in high demand, loud voices are encouraging alternative paths.

When someone tells you striving to get the best education possible was a stupid mistake, and you should have gone to a trade school to learn a skill instead of getting a degree, don’t take it personally. And don’t feel bad. These are the two most important financial justifications for pursuing a college education:

But return on investment (ROI) isn’t the only benefit of a college degree.

Ignore the financial experts.

Here’s some more good news for those who are being told their degree is worthless.

Student Loan Debt

If you grew up in a middle class environment, some of the opportunities colleges affords the world are privileges you all ready have. And financial experts take advantage of those who don’t recognize their own privilege, especially when it comes to talking about debt. Whenever the unemployment rate is high, we find more encouragement in the media of entrepreneurship as the singular path to a lucrative life, replacing of education.

You have probably heard at least one person tell you that education is overrated and the best path to success is starting a business. You don’t hear that most businesses fail and that a college education still plays a major role in financial aptitude, even for entrepreneurs.

  • A good educational foundation greatly improves someone’s ultimate entrepreneurship goals by enhancing the cognitive, business, and life skills that good entrepreneurs need.
  • Many of your anti-education role models had other types of assistance that you might not have, and the louder they talk about their success, the more they’re hiding about their privileges.

Sure, you should try to keep your cost of education low. Grants and scholarships are better than loans, of course. But now that you’re out of college, the goal is to manage the debt you do have, not allow the world make you feel guilty for prioritizing your future livelihood over buying a house immediately upon graduation.

So here’s what you can do.

Here’s the four-step plan to dealing with student loan debt.

Student Loan Debt

1. Recognize that your debt does not make you a bad person, nor did you (necessarily) make a bad decision to pursue a college education. Yes, you may need to make some sacrifices now to manage your finances responsibly, but in most cases, the degree will be worth it.

That will be true even if you decide to change your career path, away from the focus of your degree! Any bachelor’s degree is better than no degree. If you didn’t screw around too much in the four-plus years it took you to pursue your undergrad education, and if you took a variety of courses and exposed your brain to a diverse array of ideas you wouldn’t have considered elsewhere, your education will never be worthless. It will continue to help you with whatever life you decide to live.

2. Get organized and pay attention. You can’t ignore your bills forever, so don’t even start ignoring. Tackle your responsibilities head on — and your student loan debt may be the first real responsibility you have in life for which there are consequences.

I ignored my bills for too long. Working at a low-paying nonprofit organization after college didn’t help. But I figured my life out and found a path that allowed me to totally eliminate all of my debt. This path wasn’t related to my college degree but I know that I succeeded thanks to my college experience.

3. Look at some of the options for helping you eliminate student loan debt. If you have federal student loans (and these are almost always better than private student loans), you can look into income-based repayment plans. If you’re just starting out in your career, you can lower your monthly payment to help you with cash flow.

You may qualify for loan deferment, so your payments are put on hold, and in some cases, you will not need to pay more interest while you wait for your deferment to end. If you don’t qualify for deferment, you may qualify for forbearance, which also gives you a grace period on your payments. But with a forbearance, you’ll still accrue more interest while you wait.

If you’re a teacher or you have a public service job, you may even qualify for the cancellation of some federal student loans. That’s not the only way the government is willing to help you. It is possible to get a tax credit for the student loan interest you pay.

I’m not going to suggest consolidating your loans, unless it’s with a federal consolidation at an interest rate that’s lower than what you have now. Now there are private companies willing to refinance your student loans, and there are some disadvantages; namely, you lose all the advantages for borrowers mentioned in this section.

And watch out; these private lenders pay financial “experts” bounties for signing up new borrowers through websites, and thus there are many more positive reviews on the internet than there would be otherwise. Still, you could end up saving some money — in exchange for a fee and limited flexibility — when you refinance with a private lender.

4. Pay it off consistently and regularly. Work out a plan to pay the student loans off well in advance of your schedule. Student loans will stick with you even if you need to declare bankruptcy (almost always), so do what you can to get rid of them as soon as possible.

And then celebrate! Because not only did you pay off your student loans, but you received a college education, and will most likely be better off in life than people who say you made a bad choice for getting a college education.

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