Let's Talk About The Benjamin's Podcast Ben Knapp

Podcast Episode 23 Pay off & Avoid Student Loans
I had the pleasure of speaking to Dave Nash CFP, CFA owner of Magister Wealth. David and I spoke about more advanced financial planning topics including but not limited to target date funds and the state of the economy.
Target date funds are a good simple DIY financial planning tool. They aren’t a comprehensive end all be all type of investment. The rate of return for target date funds can be less than more sophisticated investment plans. The reason for this is because these simple plans don’t reflect what’s going on in the market. If you rebalance or tactically allocate your portfolio you can adjust for higher or lower rates of return in the market. A great example of this that David addressed is that the current interest rate for Bonds is incredibly low. This could lead to your investment portfolio having significantly lower returns by as much as 2%. This may not seem very meaningful but you have to consider that this could lead to a reduction in your end retirement portfolio by hundreds of thousands of dollars!
The rate of return on your investments can be just as impactful as the rate of return on debt that you owe. To do a simple calculation to find out how long it takes to double your investment divide 72 by the rate of return. The really impactful thing for most people is how this impacts people paying debts. If you don’t pay your 7% interest debt the balance will double in 10 years. If you don’t pay your 21% interest credit card debt it will double in 3.4 years. This really shows the impact of not paying off your debts.
When you are investing for your financial future you should consider what your current tax rate. A good way to conduct your financial investment plan is to try to smooth out your tax rates for your life. So on average you should have the same rate of tax return throughout your life. The way you can do this is by increasing your investments in your 401k, 403b, and ira/roth ira. If you have a low tax year or a low income year you can lower your overall taxes by doing a roth conversion. I’ll include a link to an article by Vanguard where you can read about the roth IRA conversion here.
Target date funds do represent a better alternative than not investing or saving for retirement. There is little financial planners can do for individuals if they don’t invest. It is like not exercising and eating donuts every day for 15 years. The problem with our financial mistakes that they aren’t as easily seen as poor health disciplines. If you gain 50 – 100lb of fat in two years people will be able to see it easily. If you rack up 20k in credit card debt no one will know, because they cannot see it.
The current state of the economy within the United States is effected  by the large amount of government spending in 2021. Many people are beginning to feel the effects of printing large amounts of money in a limited time. Also there is a growing debt load that is enormous which the US has to pay back. The only way to effectively pay this back is through taxes the governments main revenue source. To be able to pay this debt off the United States will have to go through a large technology that disrupts major industries.
If you want to learn more about planning for your financial future and David Nash, CFP & CFA approach on investing go to Magister Wealth.
Please note the disclaimer below:
THIS IS GENERAL FINANCIAL ADVICE THAT MAY NOT APPLY TO YOU. PLEASE CONSULT WITH YOUR TAX, LEGAL, INSURANCE OR FINANCIAL PLANNING REPRESENTATIVE BEFORE MAKING ANY CHANGES.

I had the pleasure of speaking to Andrew Pentiss a senior writer for Student Loan Hero. Andrew and I spoke about how to pay off and avoid student loans.
Part of the problem is the poor education on student loan borrowing for college. I remember when I went to college there wasn’t a discussion with the financial aid office about how to pay off my student loans. Instead the only conversation was how to finance and pay for my education. Also the cost of education is increasing over time. I read an article that has shown a ten fold increase in the last decade. Part of this increase has been to pay for the additional cost of administrative staff instead of paying for teaching or research staff. There has been an increase in the amount of adjunct staff. This has lead to an increase in the profitability of the college business model. It’s important for you to look at the cost of education before you get into it.
There are a few alternatives to returning to college or going to college in the first place. You could go into an apprenticeship in a skilled trade for instance. According to the bureau of labor statistics  Bureau of Labor Statistics electricians make $56,180 per year on average. There are also tech boot camps which allow you to be able to pick up the skills that you need to be hired as a web designer, programmer or a graphic designer. These types of jobs can have starting salaries of $60,000+.
There are several different types of payoff methods for student loans. The method that is popularized by Dave Ramsey is the Debt Snow Ball Method. The point of the debt snowball method is to list all of your debts smallest to largest and then pay off the smallest then to work on the next largest. After doing this you will be able to slowly and steadily increase the amount of debt you are paying off.
The debt avalanche method is a different method for paying off your student loans and other debts. With the debt avalanche method you list your debts in order of highest interest to lowest interest. Then you begin to pay off your debts with the highest interest first. There are also a couple of different types of forgiveness programs for student loans. If you work at a non profit for 10 years and make consecutive payments then you can have some of your student loans forgiven. For more specifics on this you can go to the link here Student Aid. The other type of loan forgiveness is public loan forgiveness for a particular type of profession. Student loan hero provides excellent examples of student loan forgiveness like this one for attorneys.
One of the most underrated forms of repayment is to repay it while you’re attending college. Even $50 a week can be hugely impactful. If you took out $10,000 in student loans at 6.2% accruing interest in 4 years you would have $46,596.46 owed by the time you graduated. If you paid $50 a week each week over those 4 years your total owed would be $40,892.57. The difference owed would be $5,703.89 in savings in interest.
The best ways to avoid student loans are tried true and probably beaten to death. Apply for all of the financial aid that you can. If you’re not in college currently try to save as much as you can even if it’s just with a part time job.
If you want to learn more about avoiding student loans or how to pay them off you can go to  Student Loan Hero.
 

I had the pleasure of speaking to Tess Downing CFP, founder of Complete View Financial. Tess has been a financial planner for 13 years. Tess and I spoke about how to get started investing as a new employee.
There are several recommendations that Tess Made to get started with investing. The first thing that you have to look at is where are you financially. Take a look at the sample budget below to determine how you much money that you have to save.
Monthly :
Paycheck Deposits
Less Debt Payments (Credit Card, Student Loan,  Mortgage, Auto Loan, etc.)
Less Rent
Less Groceries                                
Money Left over to Invest
That is a very simplified budget and I recommend using something like that to determine how much you can save. The next step is to look at the different types of financial goals that you can have based on the timing of those goals. Typically most goals are broken down into three categories: short term, midterm and long term. Examples of a short term goal are building up a savings account buffer. A medium goal example is to save up for a down payment on a house. A long term goal is to save for retirement. The general rule of thumb is to save 10% of your net income and 15% of your gross income for retirement. Remember those numbers are the minimum that you have to save!
Some general advice to simplify your finances and automate the savings process. This is very easy with todays computer world. All you have to do is to tell your human resources department and then you will be able to start having your funds automatically deducted from your wages. By doing this you should be able to get your employer’s retirement plan match. The impact of obtaining this match can be huge. At workplaces that I have worked at in the past they have matched 50% on the first 10% that you contribute. This means that if you contribute 10% then receive the 50% match they will give you 5% as your employer match. That can be hugely impactful because it will allow you the ability to meet your 15% savings rate goal by just contributing 10%. If you cannot contribute the full 10-15% now don’t worry you should be able to get annual raises that will allow you to be able to increase your savings rate. If you get a cost of living adjustment or raise of 2% a year that can be funneled into your retirement plan contribution to be able to meet your investing goal.
Over the years the investments that have been placed inside of a retirement plan have changed. Over time the options have moved towards simplification restricting the number of investments that are in a plan. Typically there will be several target date funds some bond, stock and REIT funds. This simplification is because most employees ended up investing in Target Date Funds instead. The reason for this is because of the simplicity of the investment. By investing in a target date fund the fund will pick risky investments at first to  be able to get higher returns. As you get closer to retirement the investments get less risky and the returns will be lower. Typically this means a move from stocks/reits to more bonds as you get closer to retiring.
The one thing that most people don’t really look at is the fees on their plan. The effect of a high fee on your investment can be hugely impactful. I am going to do a simple calculation to show the effect of fees on investment return. For this example I am going to assume a 25 year old invests 15% of their gross pay earning $40,000 per year till they are 65 at an 8% rate of return. If they 25 year old does all of that then they will have $1.75 million in retirement savings. If there is a 1% fee on that rate of return then will end up with $1.31 million. That means a 1% fee would cost you $400,000 in retirement savings. To make up for that difference in fees the 25 year old would have to be saving at least 20% of their pay. That is an additional 5% of gross pay just to get the same result b

I had the pleasure of speaking to Sharon Koifman, founder of Distant Job about obtaining a retaining a remote job. Before I go into an in depth discussion about obtaining a remote job I would like to talk about Sharon. Sharon’s company is a remote recruiting company for technology firms in North America.  Sharon has written the best seller called "Survive Remote Work".
If you are currently working at a job there are many companies that are starting to offer remote work due to the corona virus. If your company does offer this benefit then you should focus on becoming more valuable to your firm. The way to do this is by developing a specialized skill set. Take the time to self-educate or study to become better at a skill set.  If your company doesn’t offer the ability to work remotely you should focus on becoming specialized in a particular skill set.
If your company doesn’t offer the ability to be ability to work remotely then you should look at applying to another company. The types of positions that offer remote work are tech, marketing and admin positions. Only a few accounting positions are being added remotely because of the slow integration of technology in this industry. In the accounting industry a lot of the work that requires an accountant to be on site can be resolved by simply having someone scan and upload documents to the cloud.
Now that the types of industries/jobs that are available remotely let’s discuss other aspects of remote work. If you are applying to a local company to work remotely you should be able to command a comparable salary to an in the office position. When applying or working for a remote job dress appropriately. Every day cannot be casual Friday! Invest some of your own money or the money provided by a company as a stipend into getting good technology and equipment. A great example of this is buying a walking treadmill. This could be expensive but if you’re going to be working remotely for a long period of time investing in your home office could pay dividends. Another thing that you could invest in is VR Goggles like the Oculus Quest 2. You can create a great workout with this technology investment.  When Sharon said to set up your home office he said a great quote that I will include below.            
“Try to get the experience you have physical, the connection between one person as if they set in front of you on zoom.”
When preparing for a remote interview there are several things that you should to prepare yourself. Make sure that you dress as nicely as you would for a regular job interview. Sharon has said that a lot of candidates will dress in a casual fashion just because the interview is remote. Another important point is to be punctual. Show up 10 to 15 minutes early for your interview. When you are preparing for a remote interview check your internet connection and technology beforehand. Have a practice “interview” wit one of your friends and make sure that you sound and look great. Also check for dead zones in where ever you are going to do the interview. You don’t want to go to your interview and drop off the “call” for five minutes due to poor connectivity. There are two questions that you are going to have to answer if you are going to work remotely. The first question from any employer is why should I let you work remotely? I would stress identifying that you will be more productive and provide concrete examples of out performance versus other potential employees. The second question you will be why should I hire you? You should emphasize the skills and expertise that you have to differentiate yourself from the other applicants.
The one thing that I discussed with Sharon that was particularly impactful to me was to focus on your social experience while working remotely. You can do this by focusing on booking a social experience with your coworkers/friends. One of the things that you could do before the corona virus was to grab a cu

I had the pleasure of speaking to Jonathan VanSchaack a senior Security Engineer at a non for profit. During the course of his career Jonathan has built several businesses from the ground up. Jonathan has been networking for over a decade to build these businesses and his network.
 
Jonathan identified several different methods of networking during a downturn. Start with looking at your personal network. Look at where you work currently, have worked in the past and know outside of your workplace. If you have a job currently and take one person from your workplace out to lunch every week for a year that’s 50 new people in your network that you didn’t know. Also it will really deepen the relationships that you have in your current workplace. Another option that you can have to network is to join after hour party’s with your workplace or other groups you are a member of. Conferences are a great option for you to attend as well because you can meet people you wouldn’t otherwise. Also you could travel and see something that you might not otherwise. This will be limited by your ability to network currently during the corona virus but you can get around this by buying your coworker lunch and have a zoom meeting to talk.
One of the big opportunities to be able to grow your network currently is through the use of technology. It’s hard to give someone corona virus through a zoom chat. Try using digital tools like Linkedin to start building a new relationship digitally. Also there are other websites like meetup that you can search for “local” networking events to be able to interact with people. Another option that you have at your fingertips is to reach out to classic networking groups like your local Chamber of Commerce and see what they have digitally.  You can also reach out to a few other things like discord groups, online forums, Facebook groups, etc.
There are some major drawbacks to networking digitally. The first major drawback is that you have to have the technology to be able to network digitally. If you don’t have a good internet connection, good audio set up and computer I would reconsider it. You want to make a good impact on someone when you are first meeting them. If this is your first time meeting someone then it’s important to make a good impression. The second drawback of networking digitally is that you cannot know the person as well as you would if you talked to them face to face.
One of the important things that you can do right now is focusing on maintaining your network. You can make sure that you are meeting all the needs oft the people in your network that may need you. One of the books that Jonathan mentioned was  Give and Take by Adam Grant PhD. If you focus on helping others during the time when they may need you it will really help your network in the long term. Everyone has had a time when they needed assistance with something and it can be extremely impactful for you to help them during this time. When networking  instead of focusing on growing a list of professional contacts grow relationships. It’s important to keep track with your network. Make a list of your contacts and then over the course of the year contact them at least once or more. If you don’t schedule the time then nothing will change.
 
 

I had the pleasure of speaking to James Furlo, founder of Furlo Family Homes. James began his real estate investment journey when he was a child. He told his mother that he was interested in investing in Real Estate. Over time he went to College and left California to move to Oregon. He got a job out of college in the tech sector and was able to save up some money to buy a home. Many people in his position would have just bought a home but James was intentional in the fact that he wanted to buy a an investment property first. He had this talk with his wife and they went out and bought their first investment property.
James bought his property and began interviewing prospective tenants. He was going through the interview process for his tenant and he knew the tenant wouldn’t be a good tenant. His initial gut reaction was to say no but the tenant was able to convince him that he would be able to get a job soon. The job that the tenant was expecting to get never came. James’ tenant said he wouldn’t smoke inside apparently the garage wasn’t inside. The tenant kept being behind on rent until they got a massive tax refund. This was the moment when something changed within James where he realized that he had to be tougher on his tenants. After this realization James laid the law down on his tenants after this that tenant was gone within 30 days of him telling him that he would have to pay on time.
There are two important things to note about this James had read a lot of real estate investment books prior to buying this property. He had an idea what he was doing but doing it was different. Also the other point to pay attention to is that James could have just quit after this set back with this tenant. Now years later after this first “horror” tenant he likes being a land lord. He went on to buy more properties after this and used this as a learning opportunity for him to grow.
James was able to continue to buy properties every other year by saving a large portion of his and his wife’s paycheck. By living frugally they were able to continuously grow there property empire. Doing these small things over several years allowed James and his wife to transition out of full time work into self-employment.
If you want to find out more about James real estate investing business go to http://furlo.com/.
I had the pleasure of speaking to James Furlo, founder of Furlo Family Homes. James began his real estate investment journey when he was a child. He told his mother that he was interested in investing in Real Estate. Over time he went to College and left California to move to Oregon. He got a job out of college in the tech sector and was able to save up some money to buy a home. Many people in his position would have just bought a home but James was intentional in the fact that he wanted to buy a an investment property first. He had this talk with his wife and they went out and bought their first investment property.
James bought his property and began interviewing prospective tenants. He was going through the interview process for his tenant and he knew the tenant wouldn’t be a good tenant. His initial gut reaction was to say no but the tenant was able to convince him that he would be able to get a job soon. The job that the tenant was expecting to get never came. James’ tenant said he wouldn’t smoke inside apparently the garage wasn’t inside. The tenant kept being behind on rent until they got a massive tax refund. This was the moment when something changed within James where he realized that he had to be tougher on his tenants. After this realization James laid the law down on his tenants after this that tenant was gone within 30 days of him telling him that he would have to pay on time.
There are two important things to note about this James had read a lot of real estate investment books prior to buying this property. He had an idea what he was doing but doing it was different. Also the other point to pay atten