So before I get into this post, I want everyone to know that I'm obviously not a trained financial professional by any means. What I am, however, is one of the millions of people in the US with student loans. I have learned quite a bit from the experience of having this debt, so one of my goals for this blog is to share what I'm learning as I pay off what I owe in the hopes that it helps others in the same position. In a way, I'm ensuring some more accountability on my part as well by sharing this journey. Take it all with a grain of salt; it's up to each person reading this to decide what's best for their situation. Having said all of that, let's get into it!
Where It Started
So, flight school is expensive. I paid about $70,000 for my flight training, the vast majority of which was paid for with borrowed money. There have been a couple times throughout the course of my career where I've had next to nothing to my name in the way of cash. The worst instance of this was the period of time in between finishing my certified flight instructor (CFI) training in Dallas and starting my first job as a CFI in Phoenix. During this time period, I watched what little bit of money that I had left disappear before I got my first paycheck. My credit card was maxed out, and the line of credit that I used to pay for the last bit of CFI training was also maxed out. I actually had to ask a friend of mine to borrow some money to keep me fed until the first paycheck. Yes, I paid him back as soon as I got my first check.
This was a humbling experience, and it marked the beginning of the toughest year of my life in terms of financial health. Being a CFI is hard work because the pay isn't typically great and the hours can be long. When you've got a pile of debt like the one I had at the time, it can be tough to make ends meet. Thankfully, a year later I had changed schools and become a manager which came with a significant pay increase and more financial breathing room.
As I mentioned above, I'm sharing this because there were some valuable lessons learned from which anyone can benefit. I'm also sharing this because I want everyone specifically with the goal of aviation as a career to know what it can be like at the beginning. It's sometimes an unforgiving industry for those without much experience, so it's important to have a system in place so that you can make ends meet. I wish I had a better understanding of this before I started working as a CFI.
The Desire to Change
I was working on paying everything off as soon as I started flight instructing, but two events inspired me to truly address my relationship with money at a deeper level. Firstly, I was simply just tired of being apprehensive every time I logged into my bank account. Secondly, I witnessed a couple loudly arguing about money at the gas station one day and told myself that I never wanted to be in that position. That's about the time that I really began learning about money and how to have a better relationship with it. Finally, the beginning of the pandemic back in 2020 showed me that I needed to have some sort of backup plan because you never know when something will happen that affects the availability of jobs.
The first thing I did was log into all of my accounts and take a hard look at both the numbers and my own mindset. Next, I listed out my loans and all my monthly expenses and compared it against income. At first I did this on paper, but I've since moved everything to a living document that I can access from any of my devices and make edits when numbers change. This approach is more hands on, but it lets me see where all of my money has to go at first. Then, I can decide where I want what's left over to go. Right now that means more money towards loans before anything else, but eventually that will change.
In addition to drawing everything out, I bought some books and spent some time researching and learning online. There are plenty of great books out there that'll provide a starting place, but if you don't want to spend the money there is a ton of free information available as well. I will link to some of the books below as well as a couple of my favorite videos and YouTube channels.
Addressing the Mindset We Have About Money
After spending some time learning, I made an important determination: the root cause of anyone's financial position - be it good or bad - is mindset. This mindset is born and cultivated from our observations of the people we are around and the beliefs we acquire as we grow up and eventually enter the workforce. This is why most people tend to maintain a similar financial position as their parents, grandparents, friends, etc. Furthermore, while we cannot control the circumstances into which we are born, we can control the circumstances we create for ourselves going forward. In other words, we can't choose to be born rich or poor but we can absolutely choose whether we die rich or poor.
In order to do this, we have to take ownership of our habits. The first step towards having a healthier relationship with money is to look in the mirror and be honest with ourselves. Instead of stating "I'll never have enough money," why not ask "how do I change my habits to have better financial health?" Making a statement about never having enough money means you've given yourself an excuse not to change things. However, by asking questions you naturally open the door to finding solutions. See the difference?
Unfortunately, these days it seems like most people would prefer to ignore their mindset entirely instead of doing a little bit of planning to understand where everything is coming from and where everything is going each month. There is so much fear and stress surrounding the topic of personal finance that it can be easy to brush it off and "just look at everything tomorrow." I get it because I was one of those people for awhile. The problem is, tomorrow often ends up meaning never which eventually translates into too late. It's a little heartbreaking to read about how many people in the US are ill-prepared for retirement or living paycheck to paycheck, and there's no way it's not having a negative impact on everyone's mental health. A quick search online provided some of the following statistics (US):
- 64% of Americans live paycheck to paycheck.
- 23% of Americans have an emergency fund that would last between three and six months.
- 23% of Americans have no savings at all.
Pay as Much as Possible Per Month
Note: I'm going to use super basic math here for the sake of simplicity instead of exact amounts.
Minimum payments are basically the bare minimum we pay in order to reduce the amount of debt we have. This may be easier each month, but by the time the balance hits zero you've paid significantly more than you started with. For example, one of my loans has a minimum payment of about $320. I've been paying this one down for a couple years now so a little less than half of this is allocated towards the interest, but at the very beginning of the loan term I was paying more interest than principal. At this rate, if I were to pay the minimum on that loan for the entirety of its term (15 years), I'm going to pay more than $16,000 extra for that loan at its current interest rate. I may have paid about $70,000 for my training but if I'm not putting more than the minimum in on my loans, I'm really going to end up paying uncomfortably close to six figures. I don't want that so I'm throwing as much as I can each month at my debt.
Avalanche VS Snowball
I'm using the debt avalanche method which is where I tackle the loan with the largest interest rate first. It meant starting with one of my bigger loans, but it will cut down on the amount of interest I pay over time. The alternative approach is the debt snowball which is where you tackle the loan with the lowest balance first. The idea here is that you see yourself make progress quicker, resulting in motivation to keep going. Ultimately, it's up to you to decide which one works better for you.
If you have multiple loans like I do, it's important not to reduce what you pay every month when one gets eliminated. For example, let's say you've got three loans out. Let's say the minimum payments are $300, $200, and $100 for a total obligation of $600 minimum each month. Let's also assume that your income allows you to put an extra $200 towards your payments, bringing us up to a total of $800 each month. Let's say you pay off the loan with the $300 minimum payment first, bringing your obligation down to $300 a month. Don't consider this income as having been freed up; instead take that $300 bucks and throw it all at the next priority loan. Now, in addition to the extra $200 you can add, you're throwing $700 at the loan with the $200 minimum payment. You can see how this will increase the rate at which you pay off that loan by quite a bit.
Lastly, it's tempting to raise our standard of living if a raise comes along at work. For those of us in debt, it's important to avoid this so that we can continue making progress. Instead of raising our standard of living, let's raise the amount that we throw at our loans so that we can increase the rate of progress.
Automate the Process
Many financial gurus say that automating finances as much as possible helps keep you on track. I love this idea, and I have all of my loan payments set up to be withdrawn automatically on dates that are strategic to when my paychecks come in. This is mainly so I don't forget, but also so that I'm not tempted to keep more than usual here and there.
Don't forget to budget some fun money each month if you can!
I imagine that this won't be possible for some, at least right away. I personally had to sacrifice more fun money at the beginning of this journey because I had so much to pay off and made so little. However, when you get to the point where you have more breathing room on payments, make sure you allow yourself to have some fun every now and again. I firmly believe that even though throwing as much money as possible at my loans each month is the priority, I should also allow myself to have fun sometimes (within reason). This might be a night out with my lady, or going to a coffee shop or something. I truly believe that if we don't allow ourselves these simple joys, it'll have a negative impact on our mental health. I don't know about you, but I'm perfectly willing to sacrifice a bit more money for the sake of maintaining good mental health.
Conclusions
The approach I've built for myself is the culmination of everything that I've learned. I've got plenty more to learn along the way and I'm far from having a perfect relationship with money, but I'm happy with how far I've come so far and I'll keep sharing the journey as I go. Hopefully this is helpful to some of you!
Resources
Dave Ramsey: The Total Money Makeover
Ramit Sethi: I Will Teach You to Be Rich
Dave Ramsey's Complete Guide to Money
Dave Ramsey's YouTube Channel
Matt D'Avella: Video 1 and Video 2 (he has some other good videos too)
Nate O'Brien's YouTube Channel
So this last one is an alternative way to approach money that involves entrepreneurship. It's called The Millionaire Fastlane and it opened my eyes up to a totally different way to approach money. The title is a little gimmicky but it's an amazing read. The author has two other books that are fantastic as well.
Notes
If you like what you're reading, please consider using the Sign Up button to subscribe to my email list! I absolutely will not spam you every day; the email list is a way to have my weekly blog posts delivered directly to your email.
Sometimes I post links in my articles, and some of them might be affiliate links. If you make a purchase through them, I make a small commission at no additional cost to you. This allows me to continue creating content for this site.
