<![CDATA[FI TRAVELGUY - Best of Finance]]>Fri, 01 Jan 2021 00:03:00 -0800Weebly<![CDATA[Do You Qualify For Student Loan Forgiveness?]]>Mon, 29 Jul 2019 07:00:00 GMThttp://fiwiththetravelguy.com/best-of-finance/do-you-qualify-for-student-loan-forgivenessThe burden of student loans can feel smothering. And not the smothered by puppies kind, but more a giant hairy man holding a semi-truck. With this being the case, people often want to know if they can get any student loan relief.  Let's see what you qualify for!

Something to be aware of, if you are going to be asking for loan forgiveness from the government you can't refinance out of their loans. Keep that in mind before you do any kind of refinancing!
1. Public Service Loan Forgiveness 
This program offers complete loan forgiveness for those who work in the public sector. This could be people working for non-profits, public school teachers or staff, government employees, doctors working in certain non-profit hospitals. Those are just a few examples.

This type of loan forgiveness requires you to make 120 qualifying payments (don't have to be consecutive), so basically 10 years of payments.  You must also be a full time employee and there is no cap on your total dollar amount of forgiveness.

Things to consider!
  1. If you choose this route, when you get your payoff it DOES NOT count as income and you wont have to pay taxes on it.
  2. In the meantime you may be able to reduce the amount you actually pay by reducing your overall income but maxing out things like a 401k, 403b, or a Health Savings Account.

If you think this is something you qualify for and want more information this link will take you to the official government site. 

2. Teacher Loan Forgiveness Plan
This program is designed for highly effective teachers who teach full time for five complete and consecutive academic years in a low income school.

With this forgiveness plan you'll be eligible for up to $17,500 if you teach math, science, or special education or $5,000 if you teach in other areas.

Things to consider.
  1. Their definition for a teacher is a person who provides direct classroom teaching, or classroom-type teaching in a nonclassroom setting. Special education teachers are considered teachers. 
  2. If this is something you are going to try and get you should make sure you work in a title 1 school.
  3. If you choose this route, when you get your payoff it DOES NOT count as income and you wont have to pay taxes on it. 

​This is the one the I used and got the full $17,500.
Picture
If you think this is something you qualify for and want more information this link will take you to the official government site.

3.  Income Based Repayment
This is the first of four main income-drive repayment plans and allows you to cap your loan payment at a percentage of you monthly income, typically capped at 10% to 15%. Your loans will be fully forgiven after 20 or 25 years depending on your plan.

To be eligible, your payment must be less than what you would pay under the Standard Repayment with a 10-year repayment period. 

Things to consider
  1. This may be best for someone with a lot of student loan debt and a lower paying income.
  2. Under current tax law, this type of forgiveness would be taxed as income. Keep that in mind that you may have a larger tax bill later on. 

​​If you think this is something you qualify for and want more information this link will take you to the official government site.

4. Income Contingent Repayment
This is the second option for income driven repayment and also adjusts your monthly payment based of your income. You’ll either pay 20% of your discretionary income or what you’d pay on a fixed 12-year plan, whichever is less.

This plan may not lower your payments as much as others, it is the only income-driven plan available to borrowers with Parent PLUS loans. 

Things to consider
  1. If you have a Parent Plus Loan, you can apply for ICR but you have to consolidate them first. 
  2. After 25 years of on-time payments, you’ll get the rest of your loan balance forgiven
  3. Under current tax law, this type of forgiveness would be taxed as income. Keep that in mind that you may have a larger tax bill later on. 

​​If you think this is something you qualify for and want more information this link will take you to the official government site.

5. Pay As You Earn
This is the third option for an income driven plan and is similar to Income-Based Repayment. The difference is you may be eligible for forgiveness after a certain period of time. 

The PAYE program caps your monthly payment at 10% of your income. After borrowers make payments for 20 years, any remaining balance becomes eligible for forgiveness.

To be eligible, your payment must be less than what you would pay under the Standard Repayment with a 10-year repayment period. 

Things to consider
  1. ​As with income based repayment, your forgiven balance might be treated as taxable income.

​​If you think this is something you qualify for and want more information this link will take you to the official government site.

6. Revised Pay As You Earn
This is the last income driven repayment option and works much the same way as Pay As You Earn. Your payments are capped at 10% of your discretionary income. Undergraduate loans are forgiven after 20 years while Graduate school loans are forgiven after 25 years.

There is no income eligibility requirement and anyone with eligible loans can apply.

Things to consider
  1. You could end up with a higher payment if your income begins to increase.

​​If you think this is something you qualify for and want more information this link will take you to the official government site.
Picture
This clearly has nothing to do with student loans but the topic is depressing and this is a nice picture..
​
​7. Student Loan Forgiveness For Nurses
Nurses with student debt have several options for forgiveness, like the Public Service Loan Forgiveness, Perkins loan cancellation, and the NURSE Corps Loan Repayment Program, which pays up to 85% of a qualified nurses’ unpaid college debt, if you haven't served in the military there is also an option of joining for get relief, or some states even offer programs.

Things to consider
  1. The Public Service Loan Forgiveness may be the mostly likely option, not a lot of people have Perkins loans, and the NURSE Corps program is highly competitive.
  2. At the time of this posting the Nurse Corps is not taking application but you can join their email list for them to notify you when they are.

If you think this is something you qualify for and want more information this link will take you to the official government site. 

8. Obama Student Loan Forgiveness
Be aware that there is no “Obama student loan forgiveness.” Some companies use it as a shady  way to catch your attention and charge you to enroll. If you see a company offering the "Obama Student Loan Forgiveness" think of it as an instant red flag! Enrolling in federal programs like income-based repayment and federal student loan consolidation is free to do on your own through the Department of Education.

9. Student loan repayment assistance programs for other careers. 
Some states have program to offer assistance to professionals in exchange for two years of service. The most common jobs are doctors, nurses, teachers, and lawyers, but some others may qualify.

Check your state’s offerings to find out if it has a loan repayment assistance program for you.

10. Military student loan forgiveness and assistance
The Army, Navy, Air Force and National Guard all offer loan repayment assistance programs and not just for Army and Navy doctors, but it also helps armed forces members and veterans. 

There are things like the Army’s College Loan Repayment Program, which pays one-third of your loans every year for three years. In total, you could get up to $65,000 in aid. Another option is the Navy program also awards up to $65,000, or the National Guard contributes up to $50,000.
​
There are plenty of programs for military student loan forgiveness so make sure you know what you qualify for.

Student loan discharge for special circumstances. 
This isn't loan forgiveness but would be just as awesome if it happened. In rare cases borrowers can get their student loans completely canceled.

There are seven situations when you could qualify for student loan discharge:
  • Closed school discharge
  • Student loan discharge in bankruptcy
  • Loan cancellation for total and permanent disability
  • Discharge for false certification or unauthorized payment
  • Unpaid refund discharge
  • Borrower defense discharge
  • Student loan discharge due to death

If you think you could qualify or want to learn more, speak with your loan servicer.

Cancellation
There is also one circumstance when you may be able to get cancellation.
​
Perkins Loan Cancellation - Borrowers with federal Perkins loans can have up to 100% of their loans canceled if they work in a public service job for five years. In many cases, approved borrowers will see a percentage of their loans discharged incrementally for each year worked. The Perkins loan teacher benefit is for teachers who work full time in a low-income public school or who teach qualifying subjects, such as special education, math, science or a foreign language.


Hopefully you can find something that can work for you to get some help because student loans are the worst!
]]><![CDATA[Health Savings Account - The Only Triple Tax -Free Retirement Account]]>Mon, 01 Jul 2019 07:00:00 GMThttp://fiwiththetravelguy.com/best-of-finance/health-savings-account-the-only-triple-tax-free-retirement-accountWhile listening to podcasts I came across a couple that mentioned the Health Savings Account (HSA) as the best retirement plan out there because of it's ability to be tax free when you contribute, while you let it grow, and when you withdrawal.

I found myself thinking that can't be true, these people are lying! Retirement accounts are supposed to be taxed at some point. Believe me, the government wants their cut, so how is this possible?!
Surprise! It's not actually a retirement account.

An HSA is a tax-advantaged savings account for people enrolled in a high-deductible health insurance plan. Since you could have more out-of-pocket expenses, because of the higher deductibles, the government allows for tax incentives to help people save for those costs. 

The way it is suppose to work is people with an HSA contribute pre-tax dollars to the account and withdraw the money tax free when paying for qualified medical expenses. ​​
Normal Retirement Accounts
Typically there are two types of retirement accounts, your tax-free contribution accounts or tax-free withdrawal accounts.

Tax-Free Contribution Accounts
These are things like your 401k, Traditional IRA, etc. Your contributions to these accounts are made pre-tax, meaning they don't count against your income now. Let's say you make $50,000 and contribute $10,000, you'll only pay income taxes on $40,000 for that year. 

The government is saying, we are okay with you not paying taxes on it now because we'll let you grow it tax-free and we'll collect taxes when you withdrawal later on. 

These accounts are great to reduce your overall income now.

After-Tax Accounts
These are things like your Roth 401k, Roth IRA. Your contributions to these accounts are made after tax, meaning they count against your income now. Using the example from before, if you made $50,000 and contribute $5,000 you'll pay income taxes on $50,000.

The government is thinking, okay we took our taxes now so you can grow your money tax-free and not pay anything when you withdraw.

These accounts are great because you'll hopefully allow them to grow significantly and not have to pay any taxes on them later.
Health Savings Account
The HSA is designed to be a savings account for medical expenses that can provide some tax benefits. 

But, if done right, it can provide the best parts of both accounts described above, tax-free contributions and tax-free withdrawals.  Or in other words, completely tax-free money!

The magic of it is that you can make those tax-free withdrawals on a qualifying medical expense at any time you want!

As of now there is no rule stating you must withdraw money to directly pay for medical expenses or that you must withdraw in a certain time frame after a medical expense. You just take out the money whenever you want after you've had a qualifying medical expense. Assuming it was after you've opened your HSA of course.

See It In Action
We have gone over all of this and now you want to see how it would actually work. Let's assume I spend $300 a year on medical services and figure I can get away with having a high-deductible health plan (HDHP).  

With my brand new HDHP I decide to open up an HSA and max it out, and in 2019 the max is $3,500. Because this contribution is put in pre-tax I am able to reduce my taxable income by $3,500, meaning less taxes for me! Always a crowd pleaser!

​So when the time comes to go to the doctor and spend my $300 I have two real options. I can choose to use my tax-free dollars to pay for it now, or I can pay for it in cash now and reimburse myself later. 

That whole choosing when I pay myself back part is what makes it so great. If I'm able to pay the out of pocket expenses now, and keep the receipts (keep the physical copies but also make a digital one incase it fades) I can let my tax-free dollars continue to grow tax-free to withdrawal whenever I need. 

The Health Savings Account allows you to save money by not paying taxes on my $3,500 contribution, I also have $3200 that is growing tax-free, and $300 that will continue to grow tax free and I can withdraw whenever I want! 

Where The Magic Really is!
You may be thinking what happens if I save all this money and don't have any expenses or enough to pull out all my money? Well, that'd be awesome but what is magical about the HSA is when you turn 65 you can treat it like a traditional IRA and withdraw whatever you want. This will be treated as taxable income though. ​​
Things To Keep In Mind
  • Maxing out your contribution will lower your taxable income.
  • If you contribute via automatic deduction you avoid FICA taxes.
  • You can invest your HSA into low cost index funds (mine has a minimum of $2100 before I can start)
  • If you pay medical costs out of pocket you can withdraw that money whenever you want tax free if you keep your receipt (keep a digital copy!)
  • If you haven't had enough expenses it turns into a traditional IRA at 65.
  • Check to see if your employer will make contributions (mine does $700 a year- more free money).
  • If you wait to pull out the money later it will naturally be less because of inflation. $100 now will not be the same as $100 in 20 years. 

​After finding out all of this was true I switched at the first chance I could when my job had its open enrollment and will be using an HSA starting the fall of 2019!
]]><![CDATA[How I Doubled My Income In 2018 Through Side Hustles]]>Mon, 17 Jun 2019 07:00:00 GMThttp://fiwiththetravelguy.com/best-of-finance/how-i-doubled-my-income-in-2018-through-side-hustles
Picture
Everywhere you go someone is talking about their side hustle and I am no different (even my dog Harper is on board!). Side hustles are great because they can help you get extra spending cash or if you do it right, it could even turn into a full fledged business!
I started side hustling because I had maxed out my defense (budgeting) and that was only getting me so far. If you want to see my old budgets or current one you can. I needed to develop a better offensive game (bring in more money). For all you NBA fans out there, think Kawhi Leonard. Started out as a solid defensive player who turned into a great all around player. Like Kawhi, I’ve been improving my craft and I think I’m starting to excel in all areas now.

Before we dig into how I doubled my income in 2018, lets talk a bit about side hustIes. 
​
What Is A Side Hustle?
 
​A side hustle is anything you do to make extra money outside of your full time job.
 
You can do anything – mow lawns, walk dogs, babysit, drive people, teach yoga, sell on etsy, flip items on eBay, or a millennium other things.
 
Picking A Side Hustle?
 
I listed a few side hustle ideas above but the options are endless. I’ll be coming out with a massive list of side hustles to get your mind working and then another post about which ones I feel are the most realistic. Look out for those!
 
When it comes to picking a side hustle there will be three things you’ll need to consider. First, what is the goal for your side hustling? Are you trying to get a little extra spending money? Create passive income? Are you saving for a big one-time purchase? Second, you’ll need to look at whether you want to use skills you already have or if you are willing to learn a new skill. Will you drive for Uber or are you going to learn a new skill, like coding? Lastly, you’ll need to decide how dedicated you are and how much time you are willing to spend.
 
After you have a few side hustle ideas just get started. Don’t overthink it. You’ll figure it out as you go. Remember, you aren’t stuck with any of your ideas, you can always test something and move on if it doesn’t work.
 
Improving Your Side Hustle
 
Side hustling is a simple trade of your free time for money.
 
I understood this trade and figured weekend mornings or weekday nights I would just be watching TV anyways and might as well make extra money. I view this as an opportunity, not a sacrifice, to be able to create more money to invest and save now, which will change my life later on.
 
For it to be life changing though you need to move beyond simply trading your hours for a limited amount of money, and transition to thinking about side hustling as a way to become your own boss.
 
I encourage anyone who is interested in side hustling to try and look at your side hustling as a business – and then build that business.
My Real Job
 
Real Job- Speech Language Pathologist
Total Gross Income: $60,679.09
 
I work in the public school system as a Speech Language Pathologist (SLP). This isn’t the most lucrative decision I could make. I know people making $80k working in a skilled nursing facility (SNF) or over $100k in a hospital.
 
I actually feel really lucky because according to the census bureau the average household income in 2017 was $61,372 and I only work 182 days a year. Plus, the schedule allows me to work 6.5 hour days, which leaves enough time for me to work on everything else I do, and travel! I’ll also get a nice pension if I stay that long. 

My Side Hustles
 
Side Hustle 1 – Real Estate Investing
Total Gross Income: $37,508.83
 
I currently house hack a quadruplex and operate as the landlord. I have been living in one of the units for free so that hurts the overall numbers, but you can see them here.  Last October I purchased an out of state property and you can see those numbers here. Landlording can be hit and miss on how time consuming it is and I am also working to rehab the units. I am definitely looking forward to the days that all my units will be run by a property manager!
 
Side Hustle 2 - Healthcare Contracting
Total Gross Income: $17,480.79
 
The flexibility in my schedule allows me to work with a healthcare contracting company as an SLP in nearby hospitals, rehab centers, and SNFs. This side hustle is a simple trade of my free time for money. I work the occasional weekend, holiday, and/or over my breaks (you know, those spring, summer, and winter breaks I get.)
 
This situation is great because they will let me know when a shift is available and then I get to choose whether I want to work. For the summer of 2018 I decided to take a two-week real estate licensure class, a week trip to Boston, Rhode Island, and NYC and still had time to work for 5 weeks at a hospital.
 
I am paid $49 an hour and put all this money toward real estate. I use this trade of my time for money to grow a business that will provide me passive income.

Side Hustle 3 – Website Testing
Total Gross Income: $5960
 
I have tried numerous different testing sites and the one I have had the best success with is Usertesting. I tell everyone about this!
 
The way it works is you have a window open on your computer, the site will ding anytime there is a test available, and you just take the screener to see if you qualify. It’s that simple. Because of all the things I do, I feel I qualify for a good amount of them.
 
If you qualify for a test you will work through tasks on a website, a prototype, or complete a live conversation. I have done tests for companies like Home Depot, Geico, and Verizon.
 
A test can range from a couple minutes to 20 minutes. From my experience they typically range from 10 to 15 minutes. For each test they pay you $10. If you complete a live conversation test, a 30 minute test will pay $30 and a 60 minute test will pay $60.
 
I keep a window open throughout the day, whether at work or home and like a true test subject, when I hear the ding, I come to take the screener.
 
This is another simple trade of my free time for money but is less restrictive. I use this money to help with life expenses such as concerts, travel, or new car tires. You can see my budget here to see why I may need help with getting “fun money”.

Total Real Job Income: $60,679.09
Total Side Hustle Income: $60,949.62
 
I'm not going to lie, it sucks spending my weekends or nights doing yard work, rehabbing a unit, or working a second job. But, I also know these side hustles won't last forever and I'm using them to accelerate my financial goals. When I keep that in mind, I'll take any opportunity I can to get there faster! Figure out what works for you and just take action! 

What is that quote? Live like no one else now so you can live like no one else later.
]]><![CDATA[How I Tripled My Return In The Stock Market]]>Mon, 03 Jun 2019 07:00:00 GMThttp://fiwiththetravelguy.com/best-of-finance/how-i-tripled-my-return-in-the-stock-marketHave you ever seen one of those compound interest charts that say if you invest $100 every month you’ll be a millionaire?
 
I first saw one of those charts when I was getting my undergraduate degree and it seemed easy enough if you used an average of 12% (historical average is 10% and from 1957 - 2018 the average is 8%). When it came time for me to start investing that is not how it went. It was more like a rock you try to skip along a lake. Just boppin along the surface and any growth I made eventually came back to the surface.
 
With this one change, and less work, I more than tripled what would have been my return in the stock market over the course of a year.
Picture
Stock Market Attempt Number One: Trying To Hit A Home Run
 
While getting my graduate degree I had a friend let me borrow Ramhit Sahit’s Let Me Teach You To Be Rich and that had another compound interest chart, something along the lines of this. ​​
Picture
Source - teachingismypassion.com. This is for a 12% return.
I dog eared the page so I could come back to it when I had the money. It recommended doing a target date retirement fund. They are a cool fund option that adjusts the ratio of stocks to bonds based on your age and adjust accordingly (it is actively managed so be aware of the fees). I remember thinking, ‘Okay, when I get to the point I can invest I’m going to do this. It’s so simple!’.
​
4 months after getting my first big person job I finally had enough to open a Roth IRA and make the minimum payment to get started with the retirement fund. Millionaire status here I come!
 
Since I was already going to be rich off of this I was also interested in stocks. Plus, it’s the grown up thing to do! I read a couple basic books to get some understanding. Testing it out was important to me just incase I was sooo wealthy in the future I needed a financial advisor.  I wanted to be prepared for those future discussions on what to do with my millions. Plus, my older brother is big into stocks and always gave me the analogy that it is like fantasy football. Figured let’s give it a shot!
 
Every month I put $50 into a Robinhood stock trading account. Side note - if you are looking for a place to invest I recommend them, they don’t have trade fees.
 
The whole concept was going to be easy, buy low, sell high. I got that!
 
Spoiler alert, that’s not how it went. I lacked any real buying power so I was stuck trying to buy stocks in the $5-$15 range and hoping they would take off. I would check multiple times a day and eventually got out with a loss of around $25.
 
When I gave up on stocks I moved all that money into my Roth IRA and into that target date retirement fund.
 
Stock Market Attempt Two: Mo’ Money, Less Problems
Okay, the first attempt did not go as planned. I was also no closer to being a millionaire.  The problem was I did not have enough money to get the good stocks. If I had things like Facebook, Google, Amazon, etc. it would have gone better. Also, more diversification would have helped.
 
I asked around, read articles like ‘Best 5 Stocks to Buy in 2018”, and was going to use $1000. This time was going to work! I bought stock in Facebook, Pfizer, Verizon and more big brands like that.
 
This time I lasted about 2 months, took a $100 loss, and figured out picking stocks is just not for me.  I watched the market too much and became obsessed with how my money is doing. I also didn't research it enough to know when to buy or what the deals are.
 
Again, all that money went to my Roth IRA.
 
My Roth IRA was not getting me any real returns either so I started moving my money around to find something better. I sampled a high dividend yield account with half my money and put the other half in the S&P 500. Figured that would be the easiest way to get my 8%.
 
Stock Market Attempt Three:  Show Me The Money!
Picking stocks still isn’t my thing and I’ve maxed out my Roth IRA each of the past two years.
 
I recently passed the one year mark of when I gave up picking stops for good and was interested what would have happened had I held.
 
As I sat to pull up the stock charts I was surprised to find that if I held not only  would I have gotten all my money back, I actually would have made money! The return on my money would have been 3.22% (Not that 12% I needed) and was less that what the market was doing over that time. You can see for yourself!
Picture
My Roth started to have growth when I switched to the S&P 500 and slowly transitioned all my money over to both that and the Vanguard Total Stock Market (VTSAX).  This eventually gave me a return of 18.6%. That is quite the difference over the course of a year!
Picture
If you compare the results over the past year of the things I’ve tried at any point, VTSAX had the best result. 
​
From 2/5/18 – 4/25/19
 
Stocks – 3.22%
Target Retirement 2060 -3.5%
S&P 500 (VOO) – 6.8 %
Total Stock Market (VTSAX) - 10.18%
 
What really helped me was my timing. I maxed out my Roth at the beginning of 2019 when the market dropped and I bought all I could and the market eventually came back up and I got all that growth. Looking at these numbers makes me want to focus on only buying VTSAX from now on.
]]><![CDATA[A Budget That Works: Spend On What You Want!]]>Mon, 06 May 2019 07:00:00 GMThttp://fiwiththetravelguy.com/best-of-finance/a-budget-that-works-spend-on-what-you-want
Picture
​I know that title sounds like click bait but just continue reading and you’ll realize it’s not. You’ll learn you can create a budget and customize it to allow you to spend on whatever you want AND save money.

​We'll go over the steps to make a budget and then work to personalize it for you.  ​​

Creating Your Budgeting

Before you start to make a budget, try and figure out what your financial goals are. Mine were, and are, being able to aggressively pay off loan debt, save money, and still travel. I wanted to do all that but not feel like my life was compromised. If you want to see my actual budgets you can here.
 
Part One: What Is Your Net Income?
Your net income refers to the money you actually get per month. Your gross income refers to the total amount before all your pre tax deductions, taxes, Medicare, etc. are taken out. For this we only care about the money you have access to every month.
 
Part Two: Determine Your Total Expenses.
This will be broken up into fixed and variable costs. Fixed costs refer to the expenses you have every month that are going to stay the same price, such as, your rent/mortgage, car insurance, gym membership, Netflix, etc. Variable costs are things that can change every month. This would be your food, gas, or entertainment. Everything you spend should be accounted for.
 
Part Three: Subtract Expenses To Equal Zero.
Your income minus your expenses should equal zero. If you have money remaining, that is awesome! You can already begin to save or pay extra toward loan debt, if you have any. If you are over, you will NEED to start to find places you can begin to cut.

Part Four: Be Conscious Of Your Spending.
This could be tracking your spending to see how much is going out. There are apps for this, I hear Mint or Personal Capital are great. I personal don’t track my spending, I don’t have that level of dedication. I simply know a rough estimate of how much I can spend each week and try to stay under that. It is almost a game at this point. I don’t always succeed but I do more often than not and that is all I can really hope for.
 
If you need help creating a budget you can use either of the following excel spreadsheets. The simple is just that, it is super easy.  If you are interested in your percentage breakdown, or want to plan for different things every month, like holidays or birthdays, you can use the changing budget.
simple_budget.xlsx
File Size:117 kb
File Type:xlsx
Download File
changing_budget.xlsx
File Size:135 kb
File Type:xlsx
Download File

Customizing Your Budget

Now that we have a rough outline of a budget let’s begin to personalize it so you can stick with it!
 
Part One: Evaluate Your Spending?
You have now allocated all your money and can see where it is going. Earlier I asked you to determine what you were creating a budget for and now I want you to think about what is important to you? Does the spending in the budget you just created match what is important to you or your goals?
 
Part Two: Stop Spending On Things That Don’t Matter.
If you saw that you spent $150 ($5 per day) on coffee in the past month but waking up and going to your local coffee shop or Dunkin’ makes you happy, then keep doing it. If you realize it doesn’t really matter but is just a convenience thing, suck it up and make it at home and save that money.
 
If you like fine dining but don’t care about what car you drive, don’t have a car payment. Maybe you like the social aspect of getting lunch with coworkers or going to happy hour but you don’t really care about shopping for the latest clothes. You get the point. Choose the things you don’t care about and reduce your spending there.
 
These are the areas that can make a big difference. If you don't really care about going out for lunch but do it because you are a bum, stop being lazy! If an average lunch is $10 and you eat out 5 times a week for 4 weeks, that is $200 a month, or $2400 a year. That's a lot of money you could use elsewhere!
 
Part Three: Spend On What You Care About.
If you want to be successful, spend on the things that make you happy and not on the things you don't care about.
 
For right now, the car I drive or where I live aren’t a priority. I drive a 10 year old Toyota Camry with 120k miles and plan to drive it to 200k. I like not having a car payment and want to use the money in other ways. I went from living with Craigslist randos for 5 consecutive years to living in a 500 sq ft apartment, but never spent more than $450 a month on rent, and am currently living for free. See how by checking out my first deal.
 
Clearly I love to travel and I make that a priority. 2019 will be the third consecutive year I take an international backpacking trip when I go to Asia for a month. But my flight to Asia will be free through travel hacking. Those trips aren’t always cheap and I am okay with that because I cut back in other areas. I spend on what I care about!
 
Part Four: Enjoy The Benefits! 
Here is the fun part! Now that you have identified your goals, what is important, and have cut the expenses that do not matter, let’s spend that money!
Picture
Let’s say you cut $100 per month, you can pretty much fly anywhere in the world for $1,200.
 
Maybe you hate travel but want to pay off your mortgage early. Paying an extra $100 a month on a 120k mortgage at 4.5% interest will save you $27,944 in interest payments and reduce your payments by 7.5 years.
 
Imagine if you cut $200 a month and put that into a Roth IRA for additional retirement. $200 a month at an average market return of 8% per year would give you $293,630.08 in 30 years.
 
This is the time to put that money where you want!
 
Looking back, yeah it sucked living with random people from Craigslist when I could have afforded to live alone. But, I would have done the same thing because within 5 years from starting my career I will have paid off 90k in loans (that interest will get you), completed 3 international back packing trips, lived in Brooklyn, New York for a summer, and have 5 rental units and a single family for myself (coming in the fall of 2019). To me, those memories and accomplishments will bring me more joy and satisfaction than going out to lunch everyday.
 
If you want to see my actual budgets you can here or need help working on yours, please reach out!
]]><![CDATA[House Hacking: How To Live For Free]]>Mon, 22 Apr 2019 07:00:00 GMThttp://fiwiththetravelguy.com/best-of-finance/house-hacking-how-to-live-for-freeHouse hacking is the idea of using your primary residence as an investment property. The term is most often used when talking about buying a multi unit property, so a duplex, triplex, or quadruplex. The goal is to live in one of the units and rent out the rest and live for free, or as close to free as possible.
The term is used very loosely, and to me, it just means trying to have all of, or part of, your housing expenses paid for.

​Why House Hacking is Great?

I mean, you don't have a housing expense, do you need more?

​In case you do, I got you covered. As a general rule they say you shouldn’t spend more than 30% of your income on housing. I'm not quite sure who “they” is but “they” are about to be disappointed. According to the Bureau of Labor Statistics in 2017 the average person spent 37% of their income on housing.  I don’t know about you but I can definitely find a better use for that money. 
 
Luckily for me, I do house hack and live for free. You can see the numbers for my house hack here and take a peek at my budget to see how I’m using all the extra money.
 
But wait, it gets better.
 
Possible smaller down payment – If you use an FHA (Federal Housing Administration) loan you can put as little as 3.5% down or 0% through a VA (Veterans Affiars) Loan. I used an FHA loan for mine.
 
Better financing terms - Owner occupants get lower interest rates and more appealing terms than investment properties.  This is a huge advantage if you keep the property as a long-term rental after moving out.
 
Learn how to invest in real estate - House hacking can help you get on the job training for various aspects of real estate investing like, managing rehabs, landlording, screening tenants, etc. Everyone makes mistakes while learning, but it’s easier to recover when you’re on site and personally involved. This helped me to better learn the process and helps when I try and communicate with my property manager on my property out of state.
 
Easily transition to a rental property – Since you lived there you'll know the property and tenants well and it'll be on a low interest loan for better cashflow. 
 
More units the better – The obvious part is more rental units means more rental income. The hidden advantage is that your first experience with rental properties can impact how you view them. I began with three rental units. One unit has been a consistent problem. Whether it has been roof rats, plumbing, mold, there is always something. The other two have been relatively easy. If I only had the one and it went terribly I may have given up on real estate.

How To Use House Hacking?

Purchase a multiunit home
We touched on this earlier, but this can mean buying a duplex, triplex, or quadruplex. This is your best option if you are trying to grow a real estate portfolio. You can quickly go from 0 units to living in one and renting out the other 3 over night.
 
Get A Roommate
This may be an obvious one but I still had to put it in here.  You can buy a single family house and rent out the rooms for more income. There are various ways to go about finding a roommate, ask friends, family, craigslist, roomiematch.com, roommates.com, etc.
 
Use Airbnb
Cities have been cracking down on renting out properties on Airbnb. At the time of this post it is my understanding that if it is your primary residence, and you live there, they don’t have an issue. You should look into your local laws before taking this route.
 
As your primary residence Air Bnb can be used in two ways. Option one is to rent it out over weekends and stay with family, friends, a significant others or when you are gone on trips. The second option would be to rent out an empty room. Obviously you have to be okay with people coming into your house. I often stay in a rent a room situation when I travel and the people that host say they enjoy meeting new travelers from around the world. Also, with the added cleaning fee you could either be paid to keep your place clean or have a cleaning crew come in every so often.

You Gotta Just Go For It
When it comes to house hacking people can always find an excuse, 'I couldn't do that, my spouse would never', 'We have kids it's not that easy', 'I don't know how to be a landlord'. It ultimately comes down to what you are willing to do and this doesn't have to be a permanent thing.

​There is definitely a difference between "can't" and "choose not to". Don't confuse the two. ​
]]>