Life After Student Loan Debt, Help Me

As I am closing in on paying off my student loans ( I know you have heard it before, but I’m talking days this time), I get the excitement and financial worries that come along with deciding where my future investments will go.  It is really a topic that I have considered over the past year in great length and research.  I think everyone’s situation is unique so some of the plans and ideas out there didn’t fit me, so I read and analyzed even more.

In my early retirement blueprint I suggest that all personal debt should be paid off.  In my situation I plan to break my own rules, but only a little.  Paying off my student loans is such a deep breath moment for me, I have been out of college for almost 10 years and during this time I paid off 85% in the last 2 years, I just want to breathe.  Quite honestly I’m sick of paying off debt.  I need a break, not massage my hamstrings with evaporated warm goat’s milk type of break; I just want to stop sprinting towards the finish line all of the time.  I think I’ve hit a point in my financial life that I’m sick of seeing my debt go down; I want to see my investments rise like a mountain.  Even Steven Money is going to jog to the finish of my last personal debt.

I am still keeping my allocated $200 monthly payment towards this personal loan debt (this is actually more than the minimum payment), but what I am going to do differently is make my plan entirely reliant on my side hustles.  My main source of side hustle income is eBay where I sell gently new and used men’s clothing, also as my blog gets more and more people who don’t want to throw themselves down a fiery pit after reading, the greater chance I have for making money via Even Steven Money or even some freelance work.  I’m not ready to put a For Hire sign on the door, but I’m serious about adding a writing gig or two along the way.

That is really only one small change in the big picture of reaching my financial milestone after paying off my student loans. One important detail to share is it’s not that I’m only freed from $199.85, a number that I will remember for the rest of my life as this was my monthly payment on my federal student loan during the last 2 years of student loan payments, it’s bigger than that.  I was taking every last cent possible and directing it towards my student loans, so the bigger than that is I am freeing up half of my income!


Where does all the income go and flow?


If you look at the top row in green and white these are the current income streams that represent the Even Steven Money Household Income ESMHI for short and I’m sure to catch on globally.  For example you will see that in the investment and debt repayment on your left in bold, Student Loan debt repayment only comes from Even Steven.

As you can also see under the Florida Mortgage we currently have three sources of income being directed at this including 1) Mrs. Even Steven 2) Chicago Income 3) Florida Income as we make this a priority in our early retirement plan.  Financially a few things will happen when the Florida Mortgage is paid off.

  1. Go from 2 mortgage payments to 1
  2. We are in better place financially with less risk
  3. Rental income will increase substantially as the mortgage payment is gone
  4. Creates flexibility, take away your mortgage payment see if that opens up the world a little

The major decision that needs to be made is what is the best use of the X next to Even Steven and Student Loan?

I’ve read fantastic articles by the Mad Fientist on Traditional IRA vs Roth IRA and why the H.S.A is the ultimate retirement account.  I’ve read similar and equally fantastic articles by JLCollins and his Stock Investment Buckets, Root of Good on how to shrink 150K to $150 in taxes,  and Go Curry Cracker on how to never pay taxes again.  I’ve read each article more than once over the last year plus and every time I read them I think that this is exactly what I need to do when I pay off my debt.  Not to get lost in the shuffle of options, I have also read Dividend Mantra who is keeping his investments in a taxable account.  All are interesting reads and I’m sure each writer would tell you each situation is different but these are great general guidelines to live by.  Well then let’s look at my situation, see what’s on the pages of my book.

My financial plan over the last year or two has looked something like this:

  • Make paying off our rental real estate a priority by taking the dominant amount of the income and apply to the mortgage
  • At the same time Even Steven will pay off any personal debt
  • All throughout the 7 5 years to FI we will gradually increase our tax deferred investments (401K, IRA, H.S.A.), although this money is tentatively planned for when we turn 59.5 and have access, the plan is to still use the Roth Conversion ladder
  • As we close in on the last year of FI in late 2019, we will build up a cash emergency fund equal to 6 months, but preferably a year in savings (some of this my have already been accomplished as the only numbers I calculate for FI assume that my only contributions are to the mortgage payment and I will make minimum payments on my personal debt)
  • Any taxable accounts investments that produce income for example: dividend stock, CD, peer to peer lending, etc will be a small buffer for any errors in numbers or problems with our investment real estate (similar to the last bullet point this could be built up depending on how well Even Steven does along the way)

As I read our financial plan out loud, I hesitate on a few things and I wonder if I’m trying to prepare for the unknown.  As I second guess updating my tax deferred investments to higher contribution rates, I wonder if moving back to Miami or at the least the expectation is holding me back.  Do I need to build up more cash for the possible purchase of another home?  Should I be creating a dividend income stream in my taxable accounts so it’s possible that the move can happen with or without a permanent 9-5 job?  If I stuff my tax deferred accounts full and have very little cash in my own account will I regret this in 2 years or 5 years going into FI?

I read the articles again this week about tax deferral and reducing taxable income and I while it would be great to hold off on using our tax deferred investments like 401K and IRA, I think it will be extremely tight using only our real estate investment income to cover expenses.  I have always looked at our rental real estate income as the ultimate wealth building tool or the catalyst to our Early Retirement Blueprint, but as I begin to diversify or build up our investments, I am beginning to think about wrenches being thrown into our plan.  In some ways I feel like I’m playing checkers, but the other player gets to move his pieces without me seeing, I can only anticipate his moves and lean towards what I think the invisible player will do next.  I think there are weaknesses to every plan, ways that more money can be saved or changes that could affect the outcome, but the more I look into each move the more I believe that stuffing my 401K, H.S.A, and IRA full of money is a greater strategy than saving cash for a future house that may happen or creating a taxable dividend account like Dividend Mantra, to each their own of course right.  I think those things will eventually happen over time, I’m just not there yet.  As I transition from paying off debt to choosing investment vehicles, I have become dazed and confused in my own thoughts and plans, if you have read this far I would love to hear from you, help me decide what you suggest in my situation.


What do you think?  What would you do with the extra money based on my financial situation?

**Update Don’t forget to check out my interview with Brian from Debt Discipline and find out something new, I shared a few new things like my dream job and last purchase I made that I regret.

17 Responses to “Life After Student Loan Debt, Help Me

  • Personally tax advantaged accounts take precedent for me. 401k, HSA, Roth IRA and then after-tax accounts. It’s a pretty easy set-up since I don’t fund after-tax until everything else is maxed out (or set at a percentage where they will max out by 12/31). If I knew your mortgage rates I’d have better advice (from my side of the river) but if they’re low, I’d milk them and fund your investments. It’s all personal preference and whatever lets you sleep at night. Glad the student loans are almost gone!
    Fervent Finance recently posted…The MIA to LGA DebacleMy Profile

    • EvenStevenMoney
      3 years ago

      Thanks Fervent, the loan we are currently in a haste to pay off is at 5.375 I believe. I talked about it in another post, but the reason for paying this off quickly is not all about the numbers in this case, but considering it’s certainly at least a percentage point or two higher than we could get in the market today the numbers don’t hurt either. Mrs. ESM wants to pay off the mortgage for the FL house and that’s her goal, it also fits into our early retirement blueprint, so we are both happy.

  • I get the repayment fatigue. We average a $2k payment for 50 months. I like the idea of building wealth, and you can’t gain back the years so investing early and often is usually the best approach. I also like the idea of having the mortgage debt clean up too. So maybe it’s a little bit of both half of the money in retirement and half on mortgage repayment.
    Brian @DebtDiscipline recently posted…The Importance of an Emergency FundMy Profile

    • EvenStevenMoney
      3 years ago

      Thanks Brian for the advice. Our contribution to the mortgage payment won’t change, essentially I have half my salary each month to apply as I would like, since we already have 3 incomes hitting the FL mortgage I don’t really want to add a 4th towards this one, the payoff isn’t that much quicker either so less motivating to do so.

  • For us, taxable accounts have been our preferred mode of savings over text advantaged, though we’re still doing 401(k) through work. We don’t want to have to rely on conversions to be able to access our money, especially with all of the restrictions like the five year waiting period. We are willing to trade a few dollars in taxes for guaranteed access to our money while were in the earlier years for early retirement. So it’s Vanguard all the way with our spare dollars, along with paying off our primary mortgage as fast as we can.

    • EvenStevenMoney
      3 years ago

      Oh that’s pretty interesting, are you maxing out the 401k through work or getting the company match with your contributions. I should also say this is my income only, I don’t talk about Mrs. ESM other than she contributes to her 401K, while I put enough to get the company match as of today.

  • I second Fervent Finance’s comment if was for me. But since your heavily invested in real estate already and that was your original plan I would stick with paying off your real estate. I think you’ll have the most peace of mind that way, don’t worry about what other bloggers are doing with their finances we all have different plans and life goals.
    Mrs. Budgets @MrandMrsBudgets recently posted…HELP…My Wife Embarrasses Me!My Profile

    • EvenStevenMoney
      3 years ago

      You are 100% right about different bloggers and different goals, it’s just such good tax savings that I want to consider all options. We will still pay off the mortgages very early, this money will have zero affect on that aspect of it. I’m so real estate heavy that I’m looking to move into different investments right now.

  • I definitely think you’re making this too complicated. Like way too complicated because you are attempting to link income directly to investments without tying it to cashflow. Make a simple diagram and it will be clear to you. I will try to draw one here…

    Various forms of income-> Cashflow->Expenses
    ->Investments (including debt)
    1. Most Important to max (or as a % cash)
    2. Next most important to max

    N. Least important

    • EvenStevenMoney
      3 years ago

      Thanks Hannah, I agree I am making this way to complicated, I think it’s one of my weaknesses. Sometimes I just need to KISS, Keep It Simple Steven!

  • I think your pausing to question the plan is normal. As you mentioned, there are a lot of ways to approach an early retirement plan. It probably won’t go exactly like you planned, but making sure to leave yourself options and contingency funds is key. Most of us could just work part-time or go back to work if we wanted without much of a challenge.

    I tend to like Go Curry Cracker’s model the best of trying to avoid as much in taxes now and then convert to Roth over time (Root of Good also used this method). They also had decent taxable account balances before pulling the plug.

    I am trying to balance that and make sure I contribute some things to my Roth, taxable, P2P, etc.
    Vawt @ Early Retirement Ahead recently posted…How Much Is Your Vacation Worth?My Profile

  • First, congratulations on being almost there. I will bookmark this as inspiration. I am getting closer, but it may take a little longer. I think the dilemma you put forward is some that a lot of people share. For example, I have to realize that I need my money to go somewhere. I don’t like it just sitting around and doing nothing. I think that when I get most of this debt paid off I will loosen up on a bit more fun things, but what do I do with the extra $1500 or whatever it is that goes to debt. I am still trying to figure that one out. I wonder if you will divvy that money up or concentrate on one thing at a time. No matter you have done great and I certainly think whatever path you choose will be fantastic. Cheers.
    Jason recently posted…Financial Tip Friday: Why Don’t More People Own Homes?My Profile

    • EvenStevenMoney
      3 years ago

      Thanks Jason. Yeah it has been weighing on me for some time and I like to think out loud when it comes to stuff like this. I believe pretty strongly in focusing on one aspect of money at a time while giving the others minimum effort, but I’ve been focusing so much on paying off debt that it’s hard to make the transition so quickly right into another aspect of my finances.

  • Are you moving to the other side of the invest vs paying debt debate?? =) I’m on the investing side, though my student loan debt is ultra low so that’s different. Interesting discussion, and since I’m not as close to early FI, I haven’t really looked into the issues with withdrawal when you retire early…while I know the general concepts and ideas, it’s still something I am not that clear on. I’m currently in favor of the maxing out tax favored accounts to minimize taxes…but that leaves me very little in taxable where I can withdraw before I reached the requisite age. I just started with real estate investing and I am not in a rush to pay off the mortgage, rather, I’m hoping to refinance to buy more properties.
    Andrew@LivingRichCheaply recently posted…Who’s Worse with Their Finances: Gen X or Millennials?My Profile

    • EvenStevenMoney
      3 years ago

      I think paying off debt vs investing is a personal approach that each person should apply to their own situation and do what motivates you the most. I paid off roughly 25K over the last 12 months and I would not trade that for investing 25K regardless of the results, for me it became more about numbers. If the investment would have grown to 35K in 12 months I would still take the payoff of my student loans it has been more satisfying along the way, it means more.

      I’m certainly leaning towards minimizing my taxes with investing in tax deferred accounts, the math on this one is hard to beat and just feels right as well. I like to go at things with an intense FOCUS, so I want to be all in with whatever I do.

  • Not a bad problem to have Even Steven, having had such success with your debt repayments and being only a few years from FI! I agree the tax deferred accounts are hard to argue with, but I’d consider investing in some dividend paying stocks, and start seeing that additional investment income coming in and growing as you approach FI. I think there’s a great psychological benefit to that too, but I’m not sure how big an impact tax causes for you specifically – and I’m not too well acquainted with the whole Roth conversion thing.
    Jason @ Islands of Investing recently posted…Disaster strikes! A Tsunami hits the Million Dollar Islands!My Profile

    • EvenStevenMoney
      3 years ago

      I think you hit it on the head, there is not a ton to argue about with tax deferred investments so I probably should start there. Then again I don’t always seem to flow with the math and seem to head towards psychological so I could see me getting really excited about creating dividend income along the way. I think hammering down the numbers and seeing a goal of dividend income could be beneficial. Thanks Jason.

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