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This is our final interview episode with Bekkah and Joel about paying off $120,000 in student debt. Listening to the tips they have for you to get practical and creative about paying off your student debt will be an inspiration to get you motivated on your own debt snowball! Using Dave Ramsey’s principals, they give you advice on how they achieved their goal. If you missed the first two parts in this series, definitely go back to download the first to episodes!

Welcome to Business Talk Sister Gawk. I’m Bekkah! And I’m Ruthie! And today we are once again joined by the wonderful: *attempt at mouth drum roll* That’s my drum roll… Joel! And we are going to do part three of our series on how to pay off student loans. Bekkah’s gonna give us a brief recap of the past two episodes that we’ve done on how to pay off your student loans.

Bekkah: We have been talking about how Joel and I paid off $120,000 in student debt. The previous two episodes, I’m just going to give a brief summary of the bullet points to catch you up.

• Get out of the concept of I need this just in case.

• Utilize coupons.

• Go to the ads and meal plan in advance.

• Identify what makes you overwhelmed and what makes you claustrophobic and talk about that with your accountability partner.

• Have a timeline goal.

• Take every opportunity to make extra money.

• Turn your habits into strengths.

• People substitute time with money so use your time to personalize things and develop deeper relationships.

• Stop watching TV.

• Don’t be afraid to ask to borrow something but be responsible with it.

• Don’t be afraid to tell people what you’re doing and people are very respectful of that. If they’re not maybe they shouldn’t be your friends.

• If you really like something prepare to be an expert in it by doing your own research and knowing so much you never need to pay someone else to do it.

• Then, try to do things for free by doing them yourself.

We’re going to keep going on this today by talking about when you have to pay for something. Because there are times when you will deplete your emergency fund which we talked about in the previous episodes but it’s a thousand dollars that you should always have on hand to make sure you can cover emergencies. When you have to pay for something what is what you should do first, Joel?

Identify the Need and Find a Cheaper Alternative

Joel: Well the first thing you want to do is, I mean, obviously, identify your problem but do a little bit of shopping around and figure out where you want to find what you need. Is that are you going to look on craigslist? Are you going to ask around to your friends? Because, typically, you can find a lot better prices if you do some searching on used items if possible. Or just ask other friends who might know more than you do on the topic.

Ask Someone Who Has Done It Before

Bekkah: We do this all the time. I more so probably than Joel because I do not like researching. Especially if I know somebody already did it and I can just go to that person. An example of this, we had to redo our heating system and part of it was putting in like an electrical panel and all this stuff and we had to pay for the plumber to come and hook everything up but then they were like, “Okay, we’ll be here tomorrow so make sure the electrical’s done.” And we’re like, “Oh, no…” If you did not know this, as a homeowner, you can do your own stuff on your house.

If you have a commercial property you need to pay someone to do it but on your house you can do your own work as long as you get it inspected. Which we did. Within that one of my friends we knew had put in a whole new heating system and so literally we called up that night and said, “Hey, we know you guys already did this can we come over and look at your basement?”

Ruthie: Right now!

Bekkah: It actually kind of was! In like two hours! “Can we go look at your basement and see how you wired it?” They gave us some tips on what to do and what supplies to buy, saved us so much time, and we didn’t have to pay somebody to go do all these things and boom. We got it all finished so that was –

Ruthie: It wasn’t like “boom”. It took long time.

Bekkah: No, it literally was not. It took a lot of time and we were up really late that night, but it was worth it because by the time the plumber came back everything was ready to go. That was super exciting because we didn’t have to do it by yourselves and I felt way more secure knowing, “Yes, someone else did this already. They know exactly what they’re doing and they gave me pictures of the step-by-step process so that way I don’t mess it up.” And this we do a lot with our cars, too.

Every time we have an issue we bring it to one of our friends and we say, “Hey, this is what’s happening.” And they’re a very gracious friend who says, “Well, it could be this or this so check these things and then if you need this is what you got to do.” Which is amazing! Because that saves me so much time! Okay, when we’re talking about relying on people with personalities and experience, I’m gonna go back to that other point, research it so that you know so much you don’t have to pay someone.

Know What You Absolutely Can Not Sacrifice In Your Budget

When we’re talking about that there are things in your budget that you might have that you’re just saying I really cannot sacrifice this. I really need this in my budget. For us, one of those things is coffee.

Ruthie: True! Just hot drinks in general.

Bekkah: Okay this is not even planned but I’m just gonna say right now, that have you ever heard of “Pavlo’s dog“? It’s where they like the guy rings the bell –

Ruthie: “Pavlov’s“.

Bekkah: Is that it? Okay? He engineers this whole system where he rings a bell and then gives a dog food and eventually he just rings the bell and the dog-like automatically salivate.

Ruthie: Because he associates it with food.

Bekkah: That happened in our house. I hate having to wait for tea or whatever but Joel has conditioned me classically so that every time he turns on the hot pot, I’m like, “Oh! Cup of tea! Sounds good right now!” And I hear it boil and I’m like, “Yeah that’s a good idea!” Anyway, I was never like that until I married this man.

Ruthie: Duly noted.

Bekkah: Okay he’s gonna tell you a little bit about how we save money on coffee because we cannot sacrifice our lattes.

Joel: Yeah so we talked about some of those things that I had suggested to write down some of those things that you’re just not willing to give up or you know that will be the most difficult for you if you go on a strict budget. For us one of those items was coffee. The alternative to making it at home is to go to a coffee shop which I’m sure many of you know that that can get really expensive really fast. You start investing a lot of money fairly quickly when you actually sit down and calculate how much you are actually spending on those things.

What we decided to do is, “Okay, maybe we should look into getting ourselves our own espresso machine.” And that’s one of the ways that we were able to make our own beverages. We searched for a while on craigslist and found a espresso machine for $50 and we knew you know after like 10 drinks that this thing would pay itself off.

Again be creative in those things and then I think once we had our own espresso machine we learned that really this is something that is almost more convenient to have at home than to have to travel somewhere and get coffee at a coffee shop anyways. It was kind of a more enjoyable experience for us in the end anyways.

Ruthie: Okay, can you please tell us more about this coffee or this espresso machine, because it was like So nice!

Bekkah: Ok, yeah, no! Joel is not even – he’s being very humble right now. We need to just back the train up, because first of all –

Ruthie: How do you back up a train casually? Back up the vehicle. Okay.

Bekkah: Okay a vehicle is a little bit easier than a train. You’re right.

Ruthie: Fair. Fair point.

Bekkah: So let’s just put out there that Joel is a researcher, right? And he knew everything about espresso machines. And this is another point that I wanted to make that if you’ve done your research you know when something is a good deal.

Ruthie: And gonna pay off.

Research and Find a Car that Isn’t a Money Pit

Bekkah: Yeah and worth investing in when the moment arises and I want to go back to the car example because when we needed a car I was like, “Joel, look at this car!” and he’d be like, “No, that year has major transmission problems.” And I’m like, “How do you know that!?” “I don’t know! I just researched it!” And he just knows stuff like this off the top of his head so he can spot a bad idea and a really good idea.

With all of the espresso machines that he researched, first of all he did rely on a couple other people that had already looked into it or worked at a coffee shop that was independent because let me tell you people who work at chain coffee shops usually have no idea about the machine that they’re working with. But if you had to take the time to spend the money on it you do take the time to research because you’re like, “This better work for the long haul.” Knowing those things and saying, “Okay this is a really good machine.”

This machine originally because he had looked at how much they run for normally, what could potentially be the issues with them, what are common problems that happen. This was a $600 machine! And it was on craigslist for $50 dollars And he was like, “This is a good machine! You need to go pick it up.” Thankfully I was in the area that I could and so I did! But, on the post, and Joel’s really good at picking out problems. Where someone’s saying, “I’m just not sure if I can fix this part and or whatever.”

With this one, it had a cracked tank. And Joel was saying, “You know what? A crack tank is really not that big of a deal! We could totally get that glued or buy a replacement part for that and the replacement take is only like a hundred bucks and that’s still way less than the machine!” So he already had like figured all of his stuff out. I go there to pick up this machine and the guy says, “Oh, yeah, you know, I just got a new one because this one really doesn’t make the drinks the way that I want it to taste.”

Find the Manual for “Broken” Used Items and Fix Them

It came with all this stuff and I just want you to know that you can also usually find the manuals for these things online at the manufacturer’s website. When he got this machine home, Joel tweaked it after he read the manual. Amazing! Surprise people should do that! And got the machine working perfectly so that it made great drinks. Whereas this guy was just messing with it on his own and never opened the manual.

Ruthie: But also, he never cleaned it. So Joel spent a lot of time running this machine with all the cleaning stuff and everything.

Bekkah: And testing it out making sure it had the right filtration etc.

Ruthie: It probably tasted gross because he didn’t clean it!

Bekkah: There are so many things like maintenancing your stuff to make sure it stays nice over time is really important too! Okay. That is my like tangent about no, no. You guys don’t understand like this was a huge process but it saved us so much money. When we’re looking at those things, if you do your research, you know when something’s gonna be a good deal but always evaluate the investment payoff. Will it pay for itself?

Do the Math and Know If It’s a Good Investment

Now Joel was talking about we knew that in a few drinks this thing would pay for itself. We knew that right away it was an easy decision to my accountability partner to say, “Yup this is a good investment.” And we did that also when we got a small roaster – coffee roaster because we knew that we really like quality beans but sometimes they can be like $10, $15 a pound! Which is ridiculous! And we figured out, “Okay, well we can buy green beans for $3.99 a pound which is the same price, by the way, as the cheapest coffee at the grocery store in our area!”

We decided, “Okay if we can buy green beans for the same price as really gross beans at the store that are really old, how can we get a roaster, and how much is that going to cost?” Well, we calculated it out and it paid for itself in less than a year.  We knew that was a good investment because we were going to be using it for our coffee every single day and it was something that was high quality in the long run. And we still use it! It’s paid for itself 20 times over by now, probably.

Be Aware of What You Need and Be Patient

So think about how you can plan for the future because sometimes those opportunities do come up but what I find is, for example, if I really need something. I really need an ice cream scoop. Ruthie just pointed out I don’t have one.

Ruthie: It was a real struggle earlier with just a regular spoon.

Bekkah: Okay, but think about this, if I were like, “Yeah, you’re right, Ruthie! I should go get an ice cream scoop!” I could go and buy one. Or I could wait knowing in the back of my mind that someday it’d be really nice to have an ice cream scoop. Not like a huge problem right now. I can get around it. But when I need it that bad that I have to spend money right now I’m gonna spend way more.

But if I casually know that and keep it in the back of my mind when I see it at like a garage sale, a thrift store, or whatever I can snatch it up and know, “This is a good deal, I’m saving money, and it’s actually something that I need.” And I do that all the time. Especially with clothes or with anything that has to do with something in our house that we’re looking for. The next tip we have for you guys is this one is gonna come from Joel because I know way too much about this.

Don’t Become Obsessive and Controlling Over Your Budget

Joel: Okay the next point is don’t become obsessive and controlling. Have humility and check yourself often. Just don’t overthink everything, because really when you’ve sat down and gone through your budget, you know what you need by that point. You don’t really have to keep going over things in your mind over and over again. I think that’s a big temptation too of being on a strict budget. You’re trying to control every aspect of your life and that’s not the way it should be.

Make a List of All the Things You Want to Do When Debt Free!!

Bekkah: In that, if there are things that you really want to do but you just can’t afford it right now or whatever, those are things that you put on a list. We had a list of things we said, “Alright, these are great ideas maybe, or maybe they’re good investments for the future but we just don’t want to spend the money on them right now.” So we made a list of all of the things that when we’re done with our student loans this is what we’re gonna do and we ranked them in priority but then it was kind of like, “Well, these things shift based on the time in our life that we’re at.”

One of the things that we put on our list was our bathroom. Which we already talked about how I tried to jump-start that by getting everything for free. But put those things on a list because when you do finally get done they’re gonna be a few things that you actually can do on that list! Which might be small things like, “When I get off this budget I am going to get a new thing of face wash.”

Ruthie: A really expensive one!

Make a Clean Break From Large Payments Right Away

Bekkah: But whatever it is, you know! If it’s not something that’s for right now have those small things that you can celebrate because it makes you look forward to it even more. Another tip we have for you is make serious transitions at the very beginning so that you break ties and create a new mindset for yourself. If you’re thinking, “Okay I’m going to pay off student debt and I’m going to take this really seriously.”

If you need to finish paying off or getting out of a really expensive rental agreement or transition into a different vehicle so you’re not constantly paying a monthly payment because, you know, I could probably sell this and buy a car that I don’t have a monthly payment on because I didn’t have to take out a loan for it. Make those transitions at the very beginning, because they’re going to help you later on in knowing, “Yeah, this is the mindset that I’m making for myself and this is a life choice.

It’s similar to a diet. If you don’t want to keep messing up you take out the stuff in your life that is going to tempt you in the process. And when we did that I mean we did that with sweets in our house too we took them all and put them away for a while because we wanted to eat healthier. It was a really good decision to help our bodies feel better to be more active in the things that we could do with our spare time to stay on a budget.

Consider Buying a Home Instead of Renting BUT! Do Your Research

Those transitions, one of the things that we did was that when we were like, “Yeah, we want to start paying off our student loans.” One of the big things that Joel was very passionate about was that we needed to get into a house instead of an apartment and that’s actually not what Dave Ramsey says, so Ruthie will probably tell you a little bit different but in our area, it’s actually more expensive to be in an apartment than it is to be in a house. Which is really weird.

But do the research in your area to see if the place you’re living is actually costing more money than another place you could be living to save a significant amount. Even if it’s a little smaller or whatever for that short time period that it takes you to pay off your student loans it could be a really good move to get you started off right and save money.

Ruthie: And what you have to kind of take into consideration with that is your monthly rent obviously and then versus what you would be paying for a mortgage on a month-to-month base basis. Then you also have to factor in the different maintenance things that you would have for your house. Make sure you’re accounting for that when you think, “Oh, can I afford this more? Would buying a house make more sense for me in my budget or would staying in an apartment?”

Because if you don’t have money to like if you’re trying to buy a house that needs a new foundation, you probably shouldn’t do that! You know, just keep looking around. But that’s one of those things too, if you do enough research then you know when something comes out that is good quality and is on the market and you know that it’s a good deal and then you can snatch that up right away because you’ve been preparing for months and months and months and doing all this research to find out what is actually good for your area and what is going to be cheaper than what you currently have.

Bekah: Yeah and I’m just going to point out, you should never buy a house with a bad foundation. When we looked for a house we totally looked for over a year. We looked at so many houses, but when we found one and we knew it was the right one because it was like in our price range, it was less than our monthly apartment for our mortgage payment, all of that. We jumped on it right away because we knew that it was a good investment because we’ve taken the time to evaluate the market and do our back end research. Okay, Joel’s going to give us the last point for this episode.

Decide Which Loans to Pay Off First

Joel: Yeah so the last thing I want to mention is is just the idea of “what loans do you pay off first?” Should I pay off the smallest loan first? Should I pay off the loan with the most amount of interest first? What does that look like? I would say that it highly depends on who you are for one. I would highly recommend you focus on paying off your smallest loans first. Even if they’re lower interest rates because again it goes back to this idea that it is all about psychology.

If you feel like you are not going to be motivated enough to pay off the higher student loans, then you need to start with the smaller ones first. However, if you find that you’re a really motivated person or you’re with someone who’s very motivated, then I think in the long run you may benefit from starting with the loans with the bigger interest rates. But I would err on the side of paying off the smallest student loans first.

Bekkah: We did that and let me tell you what halfway through we were paying off the little ones and I was really happy about it and then Joel was like, “We should go after the high-interest ones because it’s gonna save us more money in the long run.” And he did all the math on and had all these calculations and I’m like, “No! I don’t want to!”

Ruthie: Because they were making a lot of progress with the little ones. Kickin’ ’em down.

Bekkah: Yeah! We were! And then I was like, “We could maybe do two little ones this month!” And he’s like, “No, let’s do the big one.” I was like. “But then we would have to save for one more month to pay off the whole thing!” Anyways, I was just freaking out and he’s like, “But if we do it we’ll save more money! Just hold on! We can do it!” Yeah, he’s way less dramatic than that though, let me tell you.

Don’t Consolidate Your Loans

Ruthie: And I think one thing that’s important to note on this topic is that you really should not consolidate your loans. Yeah it might give you a lower interest rate but again it goes back to the psychology of it. If you go from having $120,000 or $100,000 in loans and you have 10 loans and all of a sudden! Or you have varying amounts for each of those loans and you’re doing a good job and then now all of a sudden you’ve consolidated them all into one $100,000 one, that is really, really intimidating. So I would not recommend consolidating your loans.

Bekkah: And because if you pay off an individual loan that’s a monthly payment that goes away. Whereas a consolidated you have to pay a consistent payment regardless of how much you’ve paid off. Which is kind of a bummer. Okay so we’re going to go into our transition to our Sister Gawk portion, but before we do I really hope you guys enjoyed this series we obviously did a lot of personal research to prepare for this. If you’ve liked the stuff that you’ve listened to so far you should totally check out sharing this podcast with a friend and if you do tell us about it and we will send you a sticker of our logo.

Ruthie: And to tell us about it just reach out to us on our Facebook page which is business talk sister gawk.

Bekkah: Yeah or you can send us a message on our website businesstalksistergawk.com.