(Ep. 195) How to Optimize Your Student Loans and Finances Using Case Studies from Real Borrowers

All right. Hey everybody. This is Simcha Williger with Lauren Williams, and we are here with another episode of the Student Loan Planner Podcast. Today, we're going to be talking through case studies and frequently asked questions. I am so excited to be here with you today, Sim. It has been a while since we've been together on the podcast, but we got some good content for you all. So let's get this party started. So we have these cases we're talking about today, Lauren, just to let everybody know these are real people. These are real cases we've come across. We've changed some names and some details, but these are, you know, real stories. And so when we think about case studies, it's mapping out someone's student loan plan over the course of like what's going on in their life. So what is their student loan balance? What kind of income do they have? What kind of other expenses are going on? And then what are the options available to them based on their unique situation? So we've come up with a four or five different options for you to be able to kind of walk through. I'm sure something that we say today will resonate. So I think we can just jump right in with the first one. All right. So this is, like I said, a real person that I met. This is a doctor who is going for PSLF. His wife has decided not to work next year and they may or may not have more children and they may or may not be moving. There's a lot of unknowns in this scenario. When we were discussing their income, I noticed that, or he told me that he was contributing to a Roth 401k. Now Roth 401ks kind of outside of student loan planning are sort of debated amongst financial planners. You don't know how Roth 401k works. Let me break it down. So with a regular 401k, that's a retirement account that your employer may offer and you make a contribution on a pre-tax basis. It means you do not pay taxes on those dollars that you contribute into that account. With a Roth 401k, that means you are making those contributions on an after-tax basis. So no tax deduction today, but that money's going to keep growing and growing, and then when you retire and you pull out the funds that you contributed, you don't have to pay taxes on it. Now, if your employer's putting money into that as well, you're probably going to pay tax on that part. That's going to be pre-tax. But again, for you, Roth 401k, that's after-tax. Why is it so hotly debated, Lauren? It is hotly debated because people don't know what the tax liabilities are going to be way in the future. So what we're thinking about is, oh, I don't have to pay taxes ever. I don't trust the government. Taxes are going to be so exorbitant in the future. I don't want to have to worry about it. So I'd rather just pay my taxes now versus I'd rather save myself some money on taxes. A lot of people say that they are sensitive to tax liabilities and they're like, oh, I don't want to pay Uncle Sam more than I have to. You know, I'm single. I don't own a house. I get this all the time with clients. You know, there's no way for me to write anything off. Well, there's your pre-tax retirement account, but you save money on taxes now, which means you're going to have to pay taxes in the future. And so I'm in the camp of working on that pre-tax retirement, maxing out your pre-tax retirement account, and then using a Roth IRA above and beyond that so that you still have those two different buckets to choose from. Obviously your Roth bucket will be a little bit smaller than your 401k bucket if you choose the route that I like to take with clients, but you do have those buckets available. So if you fast forward into the future, a retirement age comes up, you have a Roth bucket, you have a 401k bucket or a pre-tax bucket of some sort, and then you may even have a brokerage account. So let's say you take like a hundred thousand dollars out. You might take 40 out of your pre-tax account, your 401k, 40 out of your Roth and 20 out of your brokerage. Well, if you have three different buckets to choose from, then you have a much lower tax liability because the Roth money came out tax free. The pre-tax money, you know, back in your working years, you might've been earning $200,000 a year. Well, in my example that I just gave you, you're only taking out $40,000. So your tax liability is based on a really low tax bracket. So in my idea of how this would play itself out, the client would be paying a lot less taxes in the future than they're paying presently by loading up their pre-tax account. Is there some other variations that you've heard that are the center of the debate, Sim? I have also heard of the three bucket strategy and I've done that when I was planning. I did that with a lot of people. You get some folks though, who are really just all about that after tax money and I don't hate it. No one, when they get to retirement, if they have like a big bucket of after tax money is going to be upset about it. They're not going to be like, Oh, you know what? Like I could have saved some more taxes. I don't think there'll be thinking that way. So I think the three bucket strategy is a good idea. I think Roth 401ks are okay. But then when we bring the student loan piece into it, totally different conversation. When you're going for PSLF or even for forgiveness on an income-driven repayment plan, you want to lower your AGI, that's your adjusted gross income as much as possible because you want to maximize how much you're going to get forgiven. Well, the only way you can do that is with pre-tax deduction. And so maybe the Roth 401k is great for retirement, but it doesn't do anything for your student loans. And so that's a situation where you may want to switch over and do the pre-tax 401k to lower your AGI, lower what you're paying towards your student loans, and then also pick up more forgiveness. Yeah. And I love this too, because like you said, if you're really focused on like return on investment, this is yet another way to be optimizing your finances. So you pay uncle Sam less money. You load up your retirement account as, as everybody wants to do and needs to do, but then you also get this extra benefit. And this is where the additional return that's kind of hard to calculate. It's lower student loan payments. So less paid on your student loans means more money. That's freed up for you to invest or to do something else with. And so I think that's one thing that people don't think about when they're, you know, when we say, Hey, maybe, uh, consider pre-tax versus Roth IRA. One thing I wanted to ask about this case study though, is you mentioned the wife was, was not planning on working the following year. So that might be one thing is like the, in this household, the total income was going down. So that's something that needs to be kind of accounted for. But also like what state were they in? Because you know, it's a community property state that could be another strategy to take advantage of. Yeah. So they were not in a community property state, but if they were, that maybe would have helped them. Right. So let's talk about community property States. A state can either be a common law state, which most are, or you can have a community property state, which includes the following Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. So primarily we're looking at several States on the West coast and then randomly Wisconsin. If you live in such a state, what does that mean for you for community property? There's a few implications. One implication is if you decide to file your taxes separately, the way it works in a non-community property States, the way it works, for example, in Virginia, where I live, if I decide to file my taxes separately, they would break out. Okay. This is what Sim earned. This is what Sims has been earned. Totally separate, maybe an intuitive way to think about married filing separately and in a community property state, everything that everyone earns and buys is property of the community. It's property of the marriage. So in other words, it's kind of 50, 50. Spouse one earns, you know, $50,000 spouse to earn $100,000. They file separately. It's 150,000 divided by two. It's as if each person earned $75,000. Why is this a strategy we care about for student loans? And is it for everyone we care about for student loans? Let's go back to the example of this guy we were talking about. He's earning almost $200,000 and his wife soon not going to be earning anything. If they file their taxes separately, effectively what he's going to be doing is shifting some of his high income onto her by doing that. That's going to really lower his student loan payment even more. That is an excellent strategy. Like I said, we're talking about optimizing your finances. This is a really cool way to be able to do just that. And so sometimes people come to us, they're so stressed out about their student loans. They're just like, I am being buried by these things. It's the worst decision I ever made to go to school. But once you start digging into, like I said, what is my customized situation and how can I prioritize what's important to me and my family and work these student loans into the scenario as opposed to letting them be the thing that is taking the reins of your life and and dominating the scenario. There's a lot of cool things that you're able to do from a student loan perspective. The other thing I was thinking about is you were talking about community property states since we're case studying it up today. It's like it's all about practical advice is a lot of people are like, oh, no, all my stuff is mixed together. Well, estate planning comes into play as well when you're thinking community property states. So that's definitely something you know, if you just learned about community property by listening to us, like prenups are a thing that can still allow you to have separate property. And then there's post-nup. So if you're already married, you can still put some arrangements in place to be able to say like, hey, this is what I want to happen as opposed to following the community property rules. So just going to throw that out there. And like I said, financial planning is everywhere. It's involved in everything. Community property can be great for student loan purposes, but it also may be something that is not so great for whatever it is that is your personal relationship. And there are ways to work around that. So, Lauren, you know this with the forms that they're sometimes not done correctly. You've come across this several times. Oh, yes, this is a really good point, Sam. So there is a form that you fill out for tax purposes when you do this Mary filing separately strategy that Sam has brought up. And it's called the eighty nine fifty eight. So accountants frequently are using various softwares and in order to be able to file your taxes. Well, your accountant may be very good at their job, but they also may be in the middle of tax season. Things are going really crazy and they might not have dealt with a lot of Mary filing separately in the community property state. So it may be that they're just hitting the button on that form every year. There's actually like a button where you can override in your software and say, like, don't don't worry about this. I gives you a warning saying like, hey, you got to fill this out. And they just say like override. They move on. So buyer beware when you're doing Mary filing separately in a community property state. What happens is they're supposed to split your income evenly in the way that Sam described. So if you make three hundred thousand as a household, it's one fifty into each bucket, even though one of you may earn fifty and the other one earns two fifty. So you want to make sure that form eighty nine fifty eight gets filled out, right? You know, it's hard to say this, but you want to check behind your account and you're hiring them because they're the expert. But like I said, sometimes people are not very familiar with it or they're really busy and they overlook how this form is supposed to be done. Why is this so important? Because if you're making two fifty and the other person's making fifty and you just do regular Mary filing separately, you're going to be looking at a much larger tax liability than you would if the income was equalized. So definitely something to keep your eyes on. I'll give a plug as well. There's a group we work with, the student loan tax experts. So if you are not confident in the person preparing the taxes or you're thinking about filing separately for your student loans, they're one resource that they're great to work with. And they are familiar with the strategy for your student loans. Yeah, definitely worth the investment to have an expert looking into this because it could cost you thousands or maybe even tens of thousands, like you said, depending on how big the discrepancy in income is. And the whole strategy, the whole point of the strategy is to be saving you money via your student loans and also, you know, doing what is most tax efficient. So it's definitely worth the investment. Yeah. So let's switch gears a little bit. Let's talk about running away from the country so you don't have to pay your student loans. Have you heard about that, Lauren? How people just run away, move somewhere else, and they think that they don't have to worry about it? Yes, people are frequently trying to flee the country for various reasons. I just had a consult where a gentleman was taking his wife and two children and moving abroad permanently and looking at what what are the options available to me because I have these student loans? I want to make sure that they don't come back to haunt us. The wife actually had public service loan for five years, a public service loan forgiveness. But they just felt like it was not the right time for them to continue to to stay in America. And we're trying to figure out what their options are. So if you decide to move abroad, there is this thing called the foreign earned income exclusion that you should be aware of and definitely take into consideration. So if you've always wanted to live abroad and you feel like you're trapped here in America because of your student loans, there's options for you. And if you are moving abroad, then you should get a plan in place for your student loan. So, Sam, do you want to break down the case that you recently had where you had to expect? Absolutely. So I met this young lady the other day and she moved abroad somewhere in Europe. She has student loans, maybe to the tune of fifty thousand dollars. And she was earning when you convert what she's earning to U.S. dollars. It was about sixty thousand U.S. dollars. And so her goal was to pay as little as possible towards her student loans. And so with the foreign earned income exclusion, what that means is any income that you earn abroad, you can exclude a certain dollar amount. And that's the first one hundred and twelve thousand dollars per person. So if you're married, that's per person, you and your spouse. So over two hundred thousand dollars total for her. What that means is she can get on an income driven repayment plan. And it's as if her income is zero in the eyes of the United States. She's earning under one hundred and twelve thousand dollars a year. So she gets on an income driven repayment plan like pay as you earn per monthly payments going to be zero and she can pay zero dollars for the next 20 years. And then at the end of the 20 years, she'll get her loans forgiven. Now, she may or may not have a tax bomb, depends on what they do with the current tax bomb that they've waived, if they extend it or not. But I'm like, you know, let's let's prepare for it. But you're still going to save a lot of money by not paying on your student loans. And it's illegal and you're not in default. This is a real legitimate strategy, you guys. Yeah. And an excellent strategy. I think a few people just stopped listening. They hung up the podcast already because they're like, I'm getting out of here. We're moving to Mexico, honey. But there are a few other things you should be thinking about as well above and beyond your student loan. So if you want to move to another country, like it's absolutely a plausible thing. Like I said, your student loans don't have to be that thing that holds you back. But you do want to consider what is the health care going to be like in that country, because your U.S. health care is not going to just transfer over. What is the cost of living going to be like in the country that you want to move to? So are you moving to a more expensive place or a less expensive place? If you're moving to somewhere that's going to be more expensive than America, then you might need higher earnings. And if you need higher earnings, then you've got to negotiate that. As long as you're under this one twelve, though, you know, you can still take advantage of it. And even if you make, let's say, 200K, well, the first one twelve is taken out. You're still going to have a much lower student loan payment than you would have had making 200K in America. So those are things to be mindful of as well as you consider leaving the country. And as you think about it to also decide, like, what are the possibilities or the probability that I might return? So maybe you have a spouse that is from another country and you want to go, you know, live over where their family is for a bit. But maybe ultimately you all will come back to the States. No one can really tell the future, but we're all kind of mapping out our lives as best we can. And so you want to be considerate of, like I said, taking advantage of things like the public service loan forgiveness waiver. That's what came up for the client that I was talking to recently. The wife had five years of public service credit or five years of credit that she was eligible for. And only three years of it that had been counted because she hadn't actually done everything she needed to for the previous two years. So we talked about like, hey, even though you're leaving the country, even though you may not be coming back, you should go ahead and get those other two years certified, because the worst thing that could happen is that your plans change. You return to America and she wants to return to public service. But, you know, now she's got to work an additional seven years when she could have only had to work an additional five years. So just because it doesn't seem like it's relevant in the morning doesn't mean you throw the baby out with the bathwater. It's just as simple as filling out a form for them. They need to go to a previous employer that would not have qualified until the waiver became effective. And so it's like, oh, just fill out this form. You can get two more years before you all go off into your new country. And so simple things like that to get yourself prepared to move abroad are really cool things that you can do to further optimize your finances. That's a really great point, Lauren. Just because your situation looks one way doesn't mean it might not change. And you kind of want to set yourself up if you can for multiple outcomes. For sure. All right. So we've talked fleeing the country. So what if you want to stay here in America and continue to live out? Let's talk about some other scenarios of case studies that you've come up against. I know one thing that I've not seen very frequently, but one that gets overlooked is the disability discharge that is available to people. So I think you had a case recently where someone was eligible for disability discharge. Oh, my gosh. You know, sometimes you just meet people that really like tug on your heartstrings. And I care about everybody that I meet with. But this case really got me. It was an older gentleman who loved his job. He was a teacher. He loved his students. You could just tell that that was his life. And he had no plans to retire. He was happy with what he was doing. But due to a certain medical diagnosis, he had to. He didn't really have a choice. He just couldn't work anymore. And so here we were thinking, OK, maybe he needed to like go on an income driven repayment plan and get it forgiven after a certain number of years. But no, he actually could qualify for what's called total and permanent disability discharge. So what he's going to have to do is he'll have to fill out some paperwork and it's going to have to get certified by his physician, meeting certain requirements. The requirements are kind of clearly laid out online if you go through it. But if you meet all of the requirements and you expect that this condition will continue, you can get your loans discharged completely. Yeah, and I know a lot of people are also kind of making their long term forgiveness plans based on total disability discharge in the sense that they're 60 years old now and they are just getting on an income driven plan, you know, maybe just doing a consultation. They're like, I'm ready to retire and I haven't really dealt with these student loans or I have some parent plus loans and they've, you know, done a double consolidation or something like that. And so they might be 85 before their loans get forgiven. And so, you know, kind of take some time and explain total disability discharge then, because what is the likelihood that you won't become disabled before 85 or somewhere along the way or, you know, by the time it's time for you to pay a tax liability that you might be in a situation where you're fully disabled for one reason or another? So it's something that is not talked about a lot, but it is relevant for people who, like you said, have come up with various medical diagnosis now, you know, unfortunately, that are life changing for them and have become totally disabled. But it may also be relevant for you in the old age. So a lot of people have a lot of stress about like what this plan is. Twenty five years, Lauren, like I don't want these loans hanging over my head for that long. It's all about looking at the opportunities instead of the obstacles. And there are tons of opportunities and tons of different pathways that you can take to manage your student loans to the best of your ability. And also, this is kind of a good argument, you know, from a financial planning perspective. I it's been an unusual few months, Lauren, where a lot of people I've met with are just gushing about how much they love their job. And that's so refreshing for me to hear. I'm so glad that people love their jobs. But as a result, some people aren't thinking about retirement. They're not thinking about, well, there may be a day where I just cannot work, even if I want to. And so a lot of people are pushing off their retirement savings, thinking like, yeah, yeah, I'll get to it. You may not have a choice. And so this is an argument where, again, time in the market beats timing the market. So starting young, starting low, safer retirement. And again, like we talked about earlier, it lowers your AGI if you're doing on a pre-tax basis and it can help you with your student loan payment. So that kind of comes back full circle. Yeah. And I would say, too, you know, I've started to talk to clients as as think of saving for retirement as insurance. And I know that sounds crazy, but you're right. Some people are just like, I am going to live forever. I really love my work. I have no plans to retire. I don't have any examples of someone in my life who has ever retired. And so I'm also not planning on it. If for whatever reason, you're not really ready to start planning for retirement. Think of it the same way. Like I said, you still have health insurance right now, even though you're young and healthy. You still have car insurance, even though your car runs well. You have homeowners insurance in case your your something happens with your home. Think of your retirement savings. If you really can't bring yourself to think of it as like, you know, me choosing to stop working as an insurance. What if I physically can't work anymore? What happens if there's a point where, like you said, I really want to continue on, but I just can't continue on anymore? That's when your retirement savings kick into action for you and become like a really cool insurance plan that you're you know, you're having to use. So think of it as paying your insurance as you throw your money into the investment account each and every month and do your, you know, employer retirement savings or if you're an entrepreneur, your personal retirement savings. But it's absolutely necessary to find a way to motivate yourself to save something for the future. I think that's a great way to think about is insurance, because another debate that's out there that I'm really not going to get into. But a lot of people are wondering, well, people of like my generation, right? Well, millennials even have access to Social Security when we retire. Will that money be there? I'm not saying one way or another, because obviously I don't know. And no one does. But if you save for your own retirement, you can be your own insurance policy that way, that you'll have something. Yes, it is. There's nothing worse than feeling like you're going to have to absolutely depend on government funding in your retirement because you don't have any retirement savings and then being really angry and bitter. We get that all the time now. You know, not enough saved personally for retirement. And the Social Security check just doesn't allow you to make ends meet. So there is something there for people right now. But depending on, you know, what they paid into or how often and all, you know, all these different things, the Social Security is not enough present day. So as somebody who has time to be able to plan for your retirement, like let's just let Social Security be an extra bonus. That's how I like to play with my clients, as opposed to it being the the forefront of how I'm planning to save or or to live once I am not able to work anymore. Lauren, I think that's a great segue into our next topic, which is how do I know if I should be throwing extra money to pay off my student loans or should I be saving more for retirement or my other goals? How do you think through that? This is a good one. And we get this all the time, you know, prioritizing paying off the debt or or investing, which one is more important? Well, the first thing I'll say is that when it comes to all the different buckets, the first bucket that needs to be filled is the emergency fund bucket. If you don't have any cash on hand, then you don't want to be prioritizing paying off your debt. And so that's what we've run into a lot is people are like, well, I just got to get rid of it. I put every dollar I can toward it. And you feel like you're doing the most adult thing. But what does that do? That leaves you vulnerable to anything that life throws you because life throws us all something sometimes and you being caught off guard and not having any money to be able to pivot or move around it. So you absolutely want to have an emergency fund. And, you know, my emergency refund rule is three times your take home pay, which is a little bit different than what you read on the Internet as it pertains to, you know, three to six months of expenses. If you do and you have if you have three times your take home pay, then you're definitely going to have three times your expenses. And we're assuming that you're saving some of your take home pay. So that should get you closer to the three or six months of expenses. That is normal. But that's thing number one is make sure you have some cash on hand that is not invested. You throw it in one of those high yield savings account or somewhere. You know, sometimes it feels a little bit hard to have money just sitting around, not working for you. But that's bucket number one. Then you tackle, OK, do I pay off this debt or do I start to invest? Well, if your employer has a match, you absolutely want to be taking advantage of that. So, you know, if your employer does 3% match and you put 3% in, you're at least saving 6% of your money. And now you can kind of reevaluate again. What are my goals as it pertains to getting this debt paid off in the timeline to be able to do so to save money on interest? And then what are my goals related to retirement? Should I be paying the debt or should I be getting ready to retire? Well, first, you need to know like how much you actually need to be able to retire when you want to. A lot of people are part of the fire movement who follows through the loan planner fire being a financial independence retire early. Well, if you want to retire at age 50, guess what? You've got to be a pretty aggressive saver. And so now you've got to figure out like, hey, what am I willing to sacrifice in order to be able to pay down this debt, invest at the rate that is necessary for me to be able to retire by 50 or 40 or a even 30? Sometimes you got to you got to know that math ahead of time. And if you're not really calculating, like you said, even if it's like, I'm OK with a normal retirement age and now should I pay off debt or should I invest first, then you still can go and walk into that math. But ultimately, it's going to be about what are your goals, what are your priorities and which of the things do you want to tackle? I will say that when it comes to paying off debt, you know, this is a student loan planner podcast. So we're definitely always working with that, working through that with people. But the other piece of the puzzle is credit card debt. Frequently, people come to us and they have, you know, one hundred and fifty thousand dollars of student loan debt, but they also have fifty thousand dollars of credit card debt. And so we have to have a conversation about overall spending that is resulting in you taking on this credit card debt because that's consumer debt. It comes at a really high interest rate. And, you know, the conversation with us mostly being certified financial planners, financial coaches, CFAs, we're all kind of diverting the conversation for a moment to talk about that high interest rate debt and what monthly spending is looking like, because that's one of the things that can really get in the way of you being able to pay your student loans off in the most efficient way and also invest in the way that you want to. Yeah, I think that's a great point, Lauren. And sometimes I'll meet a person who really wants to pay off their loans. They say they want to pay it off aggressively. And so I'll say, OK, well, what's your timeline? Because sometimes their timeline is maybe different from aggressive or maybe sometimes we can do two things at the same time where we can focus on paying off our debt and make really good progress and we can still save for retirement. I met with someone earlier who really wants to pay off her loans over three years. And I'm like, OK, that's great. That's her goal. So I told her how much she needed to save a month to get the three year mark. And that's pretty much all of her extra income. So for the next three years, she's just paying down her debt. She's not going to be making progress on her retirement for her. That's fine for someone else. They maybe would have said, maybe I want to pay it off in five years. And then with what I have left, I'll put some of that in retirement. And that's OK, too. So there's there's something to be said. There's a combination of behavior and what you really want to accomplish versus how does the math turn out? Yeah. And there's no one size fits all on, you know, which one do I do first? It's all going to be based on what your personal scenario is. But there's also the piece of the puzzle of having organized finances. And so I'll jump in with a little bit of a story or a case study of someone that I worked with recently that came to me and had this exact question, I'm thinking about slowing down on my student loans because I feel like I'm behind on my retirement because this has been my only focus for the last six or seven years. They had started paying on their loans in like twenty seventeen. You know, as I started to learn more about the situation, this person earned five hundred thousand dollars of income and had three hundred K of student loan debt when it all started. So they came to me just recently with 50 K of debt. So they paid down two hundred and fifty thousand dollars of student loans over the last few years, which is excellent. But they hadn't saved very much for retirement. And as we started to kind of talk about it and back into the numbers, you know, we got to, you know, they're bringing home roughly thirty thousand dollars a month. It was not they were not in a situation where they could not have both paid down the student loans and also have saved some for retirement. But the retirement fell by the wayside because it wasn't, you know, the loans were priority number one, but then priority number two was having a good time. And so what does it look like to automate your savings in a way that, you know, loans are taken care of and I'm done by X number, you know, by X date? I'm going to do X amount a month to be done by this period of time in this particular situation. They wanted to be done by age 40. It was like by my 40th birthday, I want to be debt free, which is a really cool thing. So the math had been done to be able to do that. But the math had not been done to say, how much of this money do I need to save of what I'm bringing in in order to be on track for retirement and then let me live off of what's left over? So there's multiple pieces of this puzzle. And sometimes we get so focused on just one piece of the puzzle. They did a really great thing by paying down 250K of student loan debt. But they also didn't prioritize their retirement. And it wasn't so much because of the student loans. It's like my student loans got in the way of me being able to prioritize retirement when really it was like some other additional expenses on a regular monthly basis. So we also have to have that kind of very real conversation with ourselves of, you know, what is a nice lifestyle? Can I have three thousand dollars of discretionary income on a monthly basis? Can I have thirteen thousand dollars of a discretionary income on a monthly basis? It varies widely based on what you're earning. And, you know, there's somebody listening saying, like, I only make three thousand dollars. Somebody has just discretionary spending of three thousand. You know, like I said, no plan is one size fits all. And we've definitely seen people come to us where, you know, in the same day, I'll do six or seven student loan calls and I'll talk to someone who makes eighty thousand dollars and is putting the full twenty thousand five hundred into their employer retirement plan and someone who's making five hundred thousand dollars who's doing, you know, the bare minimum into their retirement plan. You get to choose. All of this is your choice. So paying off your student loans, optimizing your finances, saving for retirement, you know, what you want to do on a monthly basis, go to the movies, go on a trip, pay for your kids education, you know, buy your kid a car at age 16. The list goes on and on and on for all the various ways that money can be going out. You know, that brings us back to this term called opportunity cost. You know, what am I giving up in order to be able to do this other thing? And you have to really decide about those things and take into account that there are multiple different priorities to manage as you're making your plan. Don't just focus on one thing. Lauren, I think that's a really good point. And often when I have conversations with people about their finances, whether or not they're creating a budget, I know some people don't like budgets and that's fine, but you need to organize your finances and you need to make sure that you're planning for your values. If you're not putting in like any fun money at all, if you're just doing rice and beans and like a total life of depravity, you're going to burn out. You're going to ruin your mental health. You have to have some things that you plan for that. To borrow a phrase from Marie Kondo, it has to spark joy. There has to be something that you're doing for yourself outside of just financial obligations. So plan for it. Don't go on the other extreme and say YOLO and then all of your discretionary income just goes to shopping and travel. So make a plan, make sure it works for you. And you can kind of hit your buckets in whatever way makes sense with what you're bringing in. Absolutely. I think that is an important piece of the puzzle. Do not sacrifice yourself. And like you said, your mental health, your stability overall, the work life balance piece of it, like self-care Saturday, self-care Sundays, all of those things. You can kind of have your cake and eat it, too. It's just a matter of like, how much cake do you want to eat? That's the biggest thing is making choices. I say I don't like the term sacrifice. Making choices related to how I want to live my life and saying, like, this is priority. I'm going to feel really good if I accomplish this particular thing and then moving on from, OK, I've accomplished this particular thing to I want to accomplish this thing next or having three things that you're working on. One other thing I'll say is like, you know, you can't have 15 goals at one time. And I've bumped into this quite a few times where someone is saving $10 into 15 different accounts, you know, because they got 15 different goals. And now it results in them taking forever to get to any one of their goals. But then on top of that, they just get, like I said, burnt out as well. It's just like, gosh, I'm not doing anything. What if I just focus on these three things? I was really excited and I got this, you know, thing number one knocked out and then I can move on to thing number four, you know, as a result of that. So don't bite off more than you can chew, because that's also where you get overwhelmed. You maybe get paralysis or you maybe just stop altogether. And so as we talk about mental health, I think it's also important that we talk about the idea of relationships and how student loans are affected by that. One of the things that happens frequently, I won't say it's a case study per se. Maybe, Sim, you have a specific example, but people come to us because the student loans are weighing on their relationship. People come to us because they're like, hey, we're thinking about getting married and we know that it's going to affect the student loan scenario. So maybe we shouldn't. What do you all think? We're actually right. We also become marriage counselors in this process or they got married and they didn't know that your student loans would be affected or their income driven plan would be affected. And they're coming. They're like, oh, my God, it's so expensive. Help. What do we do? So, Sim, what have you seen from a relationship standpoint with student loans? Oh, my gosh. A lot, Lauren. So first of all, I do get that question a lot. Should I get married? And I, for many levels, hate that question. One, because I understand there's a practical reality that you have to consider when you're marrying somebody, how it's going to impact your finances. And I so wish that people would be able to have the ability to make such a personal decision without having to consider these other things that like you're getting married because you love the person, want to share your commitment, all these other things. But the reality is it does have a consequence on your student loans. So there's the financial piece and then there's the relationship piece. I'll talk about both the financial piece. So if you get married, you have to think about what is your spouse earning? If they're a high earner, does it make sense for you guys to file your taxes separately? If you file separately, then that means, for example, you're not thinking about a plan like revised pay as you earn. That's an income driven repayment plan that just does not care about your tax filing status. It will always treat you as a joint unit. You know, it looks at it says cute strategy, but no thanks. We're going to look at both incomes. So that's one plan that might be off the table. If you live in the community property state, we talked about that earlier. So what's that split going to look like if you file separately? And how is that going to impact your student loan payment? Then there's just the relationship piece of how the stress of having student loans impacts your relationship. Maybe you have one person who's like I see this all the time. Lauren, we have two people. One person's like the money person. They're the ones that pay the bills, know everything that's going on with the finances, and then the other person who doesn't. Maybe they have other contributions to the relationship, but they don't know about the finances. And so maybe that's the person who has the student loans. And sometimes it creates friction and frustration because maybe that person is not making as much progress on the student loan as the financial person would like, but maybe they've agreed to keep their finances separate. There's so many layers involved. Right. And I actually do meet a lot of people who maybe it's a second marriage for both of them and actually met someone this week. She was getting remarried and they've already decided we're going to keep our household finances separate. Like I pay for my stuff, you pay for yours. Well, if they live in the community property state, that doesn't matter because that person's income is going to be included anyway. Yeah. And I think one of the things that's tough about that is the idea of, you know, separate separate finances. Is there any sort of household meeting about, you know, how we're organizing things? So I think there's a level of transparency that's going to be necessary, even if you decide to keep the accounts separate related to finances. Otherwise, that can cause, you know, so you said some of the problems that are related to trying to figure out is the student loan payment plausible for me, because what happens, like you said, if you're married, filing jointly, but you have two separate sets of accounts. The person who earns thirty five K a year is now paying a seven thousand and seven thousand seven hundred dollar a month student loan payment because of the other person in their household's income being taken into consideration. And so now you're, you know, trying to handle that on your own. Your spouse's income is taken into consideration, but it's your responsibility in totality. So this is where conversations become so important. Even if, you know, you've been through various things in the past, a lot of people have had trauma where they're not willing to merge their finances. There still needs to be some aspect of teamwork so that you can't can have transparency and openness. And, you know, you can win with money together despite having these student loans and come up with the best plan that is going to be optimal for both you and your spouse. Yeah, because another thing that people don't think about is what if you two want to buy a house together someday? Well, you're going to apply for a mortgage and they're going to look at your debt to income ratio. And so maybe the person who feels like, well, I don't have debt. I have all my stuff together. What if you marry someone who has so much debt that even with your incomes combined, their debt is still higher, right? You have a high debt to income ratio that's going to come into play, too, when you guys try to buy a house and what kind of rate you might get offered for the mortgage. Or maybe maybe you only want to put the house in one person's name, which is a very big decision. And don't do that without talking to a financial planner and an attorney. But sometimes there's practical implications that way. Yeah. And you brought up a great point. I was going to jump right back in like, hey, I talked about the pre-nup and the post-nup. This is another area where, you know, as financial planners, this is the stuff that we're talking to clients about because everything's hunky dory and it's wonderful. And, you know, we're still in love and, you know, they had the better credit. So I just did it this way. Yeah, it's all good until it's not, which is why you want to plan in advance for what happens if things go bad. You know, hopefully they never do the same way. Like I said, with insurance, you know, we're paying every month on health insurance, car insurance, life insurance and hoping that we don't need to use any of them. You want to have the right documents in place should something come up. If you choose to put like a house in one person's name or like you said, someone is the main person over the finances, you want to make sure that, you know, where do I get access to these things? What if something happens overnight? You want to have some baseline awareness of what's going on financially, even if you're not the money person in the relationship. And I'll say, too, you know, that you were mentioning earlier that, you know, revised pay as you earn doesn't care. The couple that I spoke to recently was reaching out because the student loans have been a huge burden on their relationship. The gentleman was saying that the wife needed to, you know, do a little bit more due diligence before going back to school. And she was kind of more of a free spirit. You know, it's easy to get these student loans. It won't be that much. I'll be making a lot more when I get done with school. And it turns out that, you know, she finished her education and was not earning as much as she thought she was going to be earning. And so the student loans have become a huge burden because the husband was a higher earner. He was saying that he didn't want her to take on this debt in the first place and that there might have been some other options initially. And so it had become a big point of contention in the relationship, which is why they were reaching out. And they had gotten on the revised pay as you earn plan, but weren't feeling the relief. And they didn't realize that it was taken into account both people's income, because even if you're doing Mary filing separately, that's what revised pay as you earn does. So I was able to help them quite a bit. One, walk through all the different plans and scenarios that exist. But to understand how these loans don't have to be debilitating for their overall financial situation and how they can start to work together as a team. And so I was glad that both of them were on the call and honest about the fact that this had been a point of contention. But we were also able to work through it. And, you know, I'm speaking into existence. They're going to be married forever. Lauren, I'm going to give a shameless plug for a student loan planner that we also do pre-debt calls. And so if you think this is going to be a point of contention, you can meet with us before you even take out the debt in the first place and we can go over what repayment might look like, how much might you borrow. We can go over scenarios before it even happens. So if you're kind of in a situation where you guys are maybe fighting about it, sometimes it's good just to get a third party to kind of take a look at it. Yes, that is a excellent point. We have all types of different people coming our way. We have all types of different scenarios, as you saw today. You are not the only one going through whatever it is that you're encountering with your student loan. So if you feel like you need help, do not hesitate to reach out. Set up a 60 minute consultation. We are now a party of nine at Student Loan Planner. Excellent consultants, certified financial planners, certified student loan professionals, CFA's, you name it. We've got all types of experience and expertise over here, and we're ready to help you organize your student loan situation and get your finances organized so that you can win with money and win in life. So if you need something, please don't hesitate to reach out to studentloanplanner.com. We're happy to help. Lauren, I can't think of a better place to end. 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