Was His $120,000 College Degree a Huge Mistake?

Money Guy Show

At 28, Joe shares his financial journey from $120,000 in student loan debt to a positive net worth of $70,000, discussing how intentional bu

Key takeaways

• Early financial education and consistent budgeting can reverse significant student loan debt even with high initial balances.
• Starting a Roth IRA in your late 20s, even while carrying debt, leverages compounding growth over time.

Main topics

• Student loan debt management
• Roth IRA investing in your 20s

Notable quotes

"You start at negative 120 six years ago, and here you are with a net worth of $70,000."

"Small, small decisions can have huge results."

Conclusion

Joe's story demonstrates that even after a costly college experience, disciplined

Transcript preview

Speaker 3 (0:00) You start at negative 120 six years ago, and here you are with a net worth of $70,000. When you came out of school, what Speaker 4 (0:07) was your plan? After we took out these loans, I never touched them. I didn't know what was going on with them. If you went from 120 down to 76,000, that's Speaker 3 (0:15) gotta Speaker 4 (0:15) be more than minimum payment. I didn't want to start paying down debt with nothing to my name. Speaker 3 (0:19) I can't remember how much your shoe collection was last year. Speaker 4 (0:23) Do you remember? I don't necessarily use it in like an arbitrage way where I'm trying to make money off of it. So what is this? It's just a hobby Speaker 3 (0:29) collection. Speaker 2 (0:30) You know, it's what we go do with them if you don't wear them. What about the Speaker 3 (0:32) crypto? Speaker 4 (0:33) If there is an opportunity to change the way that we do money, I'd like to at least have exposure to it. Speaker 2 (0:37) Are you really changing the world with a Coinbase account? Speaker 4 (0:39) Not changing the world. It's a hedge. Speaker 3 (0:47) All right, Joe, so give us the background. Who are you, man? What's the background? Where do you come from? And why are we sitting down here Speaker 4 (0:52) today? I applied because I think that what you guys do is absolutely amazing, first of all. So thank you for that. Yeah, Speaker 3 (0:57) man. Speaker 4 (0:57) My story basically goes back to... The good old get a college degree. The college degree that I got was something in like graphic design. Where'd you Speaker 3 (1:05) go to school at? Speaker 4 (1:06) I went to Wentworth in Boston. So right next to Fenway. Speaker 3 (1:09) What's funny is I went to a couple of years ago. I'm in this like entrepreneur group. We went to, we got to go to Boston and we got to like go do Fenway. And we actually got to take batting practice in the cages, not on the field, but like on the, in the background or whatever. That's a cool area. I had never been there before. I had never like walked around, seen all that. It was Speaker 4 (1:27) awesome. So I ended up going there and not really like understanding what it is to take out a bunch of debt at Speaker 3 (1:33) the end of Speaker 4 (1:34) the day. Speaker 3 (1:34) You're not alone in that. A lot of folks, that's their story. Speaker 2 (1:37) Hey, give me the mindset because, you know, you're not that far removed. We'll get what your age is here in a second. What does a student feel like when you're a coach? So the young people who watch this can kind of... watch out for the trap. The thing that I did was I just went to school and had fun. I Speaker 4 (1:50) mean, listen, I didn't do anything bad in terms of like, I got really good grades. But did you use student loans for lifestyle? No, I actually didn't really use it for, I mean, a little bit maybe. I mean, I wanted to live off campus one year. So because of that, I took out a little bit of debt to go ahead and get an apartment with some of my friends and stuff like that. But that wasn't super major, I don't think. More it was just like the degree that I got itself was way outside of some of the stuff that you guys preach today with being inside a certain amount of range of money so that you're not spending this incredible amount of money. And then the job that you get out straight out of school is not covering the amount of money that you had. Speaker 3 (2:26) How much is one worth cost? Like how expensive of a school is that? I feel like it just kind of depends on obviously what- Speaker 4 (2:31) How much it costs for you. Yeah. In total, all everything in was $120,000. Speaker 2 (2:35) 120 grand. How much student loan debt you run up? That was it. That was the whole thing. So no scholarships, no outside money, just student loans. And Speaker 4 (2:44) that's another thing that I would say that people really need to do and take part in is like, I just didn't care. You know what I mean? I was like, hey, we're taking out the loans. What Speaker 2 (2:52) was your Speaker 4 (2:52) starting salary coming out of college? Around 65. So way outside of the guidelines that we would have liked to be in just in the beginning. Going back in time, would you have changed colleges, changed majors? What would you have done differently? So I don't think I would have changed the major. I think a lot of the people that I met, you know, the experiences that you get, that's, you know, once you experience it once, you really wouldn't trade it. So it's like hard to say that you wouldn't do that again, right? But in terms of how much I would have paid, the things, the scholarships that I would have applied for, the off-campus housing that I would have gotten, like I would have. definitely stripped a lot. Speaker 2 (3:25) Would you have considered going to community college for two years and then transferring in or would that not be feasible? I honestly don't know. I Speaker 4 (3:30) feel like I would. I don't think that I really took away anything from the experience if I did that. We're not Speaker 2 (3:37) here to go back and redo. We don't have the DeLorean. So we're going to get you out of whatever situation you're currently facing. I'm just curious because I think that's truly something that all young people are facing right now. So if we can kind of put a... put a light to something that somebody can watch and be like, hey, I just, or maybe you got kids that are close to going to college. I just want to kind of bring, shed a light on that because college is so noble, Speaker 4 (3:59) but Speaker 2 (4:00) it's so noble that we've all fallen into it. It's kind of alluring trap of not thinking that there's, that you have to pay attention to what the end goal is. You know, we think it's all noble. Just go to school and it'll all work out and get that degree. Just like you said, get the college degree. Yeah. But. if you don't know what you're actually going to be making your living and what the debt's at, you can find yourself in a bad situation. Speaker 4 (4:22) Exactly. And I mean, my dad's first, not first generation, my mom's first generation here. My dad moved here from Italy when he was 21. He didn't know the language. You know what I mean? So for me to have the opportunity to go to college, it was like, oh my God, this is like, I want my son to go through this, you know what I mean? And experience that. So I, you know, went straight into it. You know, I was like, this is exactly what I have to do, regardless of the job that I was going to get outside of college and whatnot. And that put me in a pickle. straight out the gate. And then that's kind of when I found you guys. Like literally at that exact moment, I was like, I have to figure this out. I have to do something. There's got to be a better way to do it. And started watching you guys back in 2020 because I graduated August 2020. Speaker 3 (4:59) Okay, so you're, and how old are you now? 28. 28. So 28 years old now. and you graduated in 2020. And when you graduated, you had $120,000 in student loan debt. Speaker 4 (5:09) Right out the gate. Speaker 3 (5:10) If you did a net worth statement in 2020, were you like negative 120? Did you have anything else going on? Or was that- Speaker 4 (5:15) I Speaker 3 (5:15) probably had Speaker 4 (5:15) around $10,000. Okay, Speaker 3 (5:16) so it was like, you're starting from a hole. And again, I think a lot of young people find themselves in that position. What I think is really awesome though, you're 28 years old. So we're six years removed. You were kind enough to share a net worth statement with us. When we look at it right now, six years in the future, you are not at negative 120 Speaker 4 (5:31) ,000 Speaker 3 (5:32) anymore. Speaker 2 (5:33) I mean, I was already- impressed to take 120 down to 76 in a short period of time pretty impressive yeah already and then to see that you actually have stacked on top above and beyond the debt dude you're you're kind of painting like a a sad story here and i'm trying to figure out how we can you know, throw some rays of sunshine and then you've already done it. I mean, you know, this is, this is already kind of a redemption story in the making right now. Speaker 4 (5:57) Yeah, definitely. I, and it's, it was just through, you know, everything that you guys preach and also a lot of hard work at the end of the day. Well, I want to know more Speaker 3 (6:03) about that, right? So you start at negative 120 six years ago, and here you are with a net worth of $70,000. What'd you start doing? Like when you came out of school, what was your plan? You'd said you're making $65,000 a year. How would you even find money to start? just chiseling away at this. Like walk us through what you did. Speaker 4 (6:23) So one of the blessings that I did have was being able to live with my family. Okay. That is- Like after school. After school, yeah, I stayed at home. So that definitely did wonders in terms of the ability to save some money and then also just heavy budgeting. at the same time. A mixture of those two things created enough margin for me to be able to go ahead and start the Roth. And that was the beginning of my journey. Speaker 3 (6:43) I think it's so great for young people to hear that. Speaker 4 (6:45) You made the decision. Do you still live at home now or are you out on your own? I move out the 28th of this month. Speaker 3 (6:50) You've been living with your parents. Do you regret that decision? Because a lot of people, they graduate like, oh, I can't go back home. And I got to not recognizing that it could be this wonderful opportunity if your parents are in a situation that that's a possibility. to let you really start stacking cash and changing your future financial trajectory. Speaker 4 (7:09) If Speaker 3 (7:09) you were talking to a graduate right now that's trying to decide, okay, do I go back and live at home or do I just go huff it on my own? What would you tell them? Speaker 4 (7:16) I would tell them that, obviously, personal finance is personal. That's number one. For me... Where'd Speaker 3 (7:22) he get that from? I don't know. I don't know where he got that from. Speaker 4 (7:24) That's Speaker 3 (7:25) an Speaker 4 (7:25) echo. That's exactly what I would tell them, though, because it was like, for me, that was the option. It was like, if I want to be able to, you know... move forward in my life post this, you know what I mean? Like that was the sacrifice that I had to make. And I just wanted to be smart about it. Did I want to do it? No, not necessarily, but we all do a bunch of things that we don't want Speaker 2 (7:41) to Speaker 4 (7:41) do at the end of the day. Looking at it from a holistic view and not trying to sugarcoat it, I think is the best way to go about it. Speaker 3 (7:47) So you're living at home, you're saving money on rent. You said you started budgeting. How'd you set up your budget? How'd you know how much to pay towards student loans? How'd you know how much to spend? eating out? Like how'd you design categorically where to put your money? Speaker 4 (7:59) I think I kind of worked backwards from it a little bit. I was more of just like, I really want to knock down this debt. And what's the best way for me to do that is to say, Hey, I want to put this amount towards the debt to get rid of it in this amount of time. And then whatever's was left over was the thing that I kind of played. Speaker 2 (8:13) So what is that plan right now? Cause it must be pretty aggressive to go from one 20 down to 76. Yeah. Speaker 4 (8:18) I Speaker 2 (8:18) was probably saving. Speaker 4 (8:20) For a long time, I was probably saving close Speaker 2 (8:21) to 40 Speaker 4 (8:22) % of my income. Speaker 2 (8:23) That's awesome. Speaker 4 (8:24) Now, part of the reason why I also wanted to come on the show was to get your advice on some of the things that I can do moving forward now because I am moving out, right? I am moving out next month. That is another expense that we see that's going to be on the list. And the savings rate is dropping dramatically to around 11%, even though I found I'm living with someone so that the price would be a little bit cheaper. Speaker 4 (8:48) 11 % is just not going to cut it for me though. So it's like building a plan around that and figuring that out would be awesome as well. Speaker 3 (8:53) Well, walk us through your current saving. When you think about where your dollars are going right now, how much are you putting on student loans and how much are you putting into your other investment accounts? How are you navigating that? Speaker 4 (9:01) I just max out the Roth every month religiously. In preparation for the show as well, I stopped doing all of the excessive investing that I was doing and I kind of pulled back and said, based on what kind of recommendations I get here, at least I'll have a little pot of money to go ahead and make some decisions with. Other than that, the debt is also something that I have to tackle that is Speaker 2 (9:19) massive. Speaker 4 (9:19) So the only thing that's Speaker 2 (9:19) set up automatically currently is just your Roth IRAs being fully funded. And Speaker 4 (9:23) then basically everything else that's outside of the budget just goes towards a savings account. And then I delegate that where I think it should be that month. So it's not like necessarily that it goes into the brokerage. About Speaker 3 (9:34) how much is going into that savings account? Like what's the... Excess capacity with which you have to work every month. Speaker 4 (9:41) It was all of the rent, basically, that I'm going to start paying now. So Speaker 3 (9:44) about $1,700 a month is what you did have in excess, Speaker 4 (9:47) but now that's about to get consumed by rent. Exactly. And Speaker 3 (9:52) when we look at your student loans, you have a number of different student loans, number of different interest rates. How have you prioritized paying them down? Like if you have a bunch of different ones, a bunch of different rates, what strategy have you employed? Speaker 4 (10:03) So I have done something that I think is kind of a sin over here. I basically just make minimum monthly payments on everything and I didn't prioritize any of that stuff to begin with. And the reason why I say that that's kind of like a sin based on what we're doing now is because some of these interest rates are