I am doing the best that I can under the circumstances. You’re paying about 3 percent towards your debt. Yeah. I think you could do better. But why? Here I am at Simon’s apartment, excited to go upstairs and meet him. I’ve heard some numbers being tossed around, like $235,000 in student loan debt. That’s a lot but there’s always a way to pay debt off. So first I’m going to talk to him, then he’s going to meet Doug. All right, let’s go. My name is Simon Galperin. I’m 29 years old and my problem is that I have $235,000 worth of student debt from my public education that I see no way of paying off. This is the first year, last year, that I’ve made $65,000 in a year. The year before that I made $27,000. My partner and I have been together for over eleven years now. We just don’t know what marriage looks like with student debt. I don’t want to be focused on paying off my debt. I want to be focused on building a life for myself. I know that I’m facing some sort of decision in the next couple of years. We want to buy a house. We want to get married. So I need to get informed. All right. I am so curious to hear about your financial situation. How much have you paid off for your student loans? A negligible amount. OK. So right now are you paying the minimum payment each month. Yes I pay $35 dollars a month. How does that make you feel, $35 a month? My goal is to pay $35 a month until I die. You can’t begin to grapple with paying more. Why? If I began to think about what does it look like to pay down $235,000 in debt, knowing what that looked like for my parents when they bought their house 30 years ago. I need to make decisions about my life right now. So to me that means building a life for myself that doesn’t focus on paying down my debt. You could pay an extra 100 bucks a month, and you could cut that loan term down to 25 years. You could pay more and cut that loan term down to 16 years. Suddenly it becomes very manageable. And that’s just paying a little bit more. Now how do you do that? Obviously there’s two or three ways I call CEO: cut costs. Earn more. We can talk about that, you’ve already gone up 30k in a year which is amazing. And then optimize your spending. So there are certain areas that you are probably spending on right now that you could shave off 100 bucks a month, 200 bucks a month. I believe that if I chase an income, I’m not going to live a life that I think is worth living for me. I am really oriented on mission and making sure that my work has a positive impact. I’m not interested in seeking more income for the sake of seeking more income. And I’m I am taking back my power and I will not participate in that system. And maybe what that looks like is my parents passing and I do not want that to happen. It is a cost that I will bear that we immigrated from the Soviet Union and my parents bought a home and they lived their whole lives for their son. And then at the end of the day, he has to sell a house to a bank because he was intended to fulfill this dream that they had for him. I’m fulfilling the dream. My goal is not paying off debt to some company whose CEO can buy himself a private golf course. My goal is to change the world, leave it better than I found it, chasing income is not the way to do that. Simon, you only have three ways that you can approach this financially. If you want to pay your debt off, which is a big if, if you want to pay it off faster than 30 years, then there are three ways to do it. You can cut costs, which you told me you don’t want to do. Or it might not be possible. OK. You can earn more which you told me you don’t want to do. And you can optimize your expenses by calling up and negotiating 100 bucks here in there. So there’s no magic solutions here. All of those though would work very well and would allow you to cut that debt down dramatically. What is the benefit of me paying an extra $500 a month? What if your debt was paid off a year from now? What changes in your life? Not much. If you don’t see any change yet when your debt is paid off. If you haven’t internalized that then why — But what’s the change? Your parents will have to pay 600 bucks a month towards your debt. That’s true. And maybe the conversation with your girlfriend changes as well, and maybe the conversation about saving for a house, or whatever else you want to do, changes as well. If you don’t see that then it’s no surprise that this conversation is stuck. I want to make my life today not worry about what my life is going to look like 40 years from now. Listen, Simon I appreciate your time. I wish you the best. This is like useful though. I’m really grateful for your time. Simon, it’s good to see you. I heard you had a conversation with our friend Ramit. Has anything changed in your financial life since then? Sure, so since my conversation with Ramit I’ve gone to halftime at the company I was previously working full-time for. OK. So things that were previously difficult may be even more difficult right now? Certainly. Tell me a little bit about what your financial goals are. What I really think is important to me is a savings account of three to six months and beginning to save money to put a down payment on a mortgage on a home. So it sounds like these more short term goals are more important to you than perhaps paying off student loan debt or some longer term goals that you have. Yes I think so. OK. Tell me a little bit about how you’ve come to terms with the fact that there might be consequences to not paying back your debt. You know, it’s possible that I will die with debt, that I won’t be able to retire because of my debt. I know that all of these things are going to happen. So I’m playing my cards. Right. So you think you’re making a
calculated decision as to, okay, this is what I’m going to do because again, life is either too short or there are things I want to do today I’m not going to be, you know, denied. Now I still think you should pay back your debt. I still think that obligation needs to be paid. Yeah. But how you go about doing that might not be as conventional as people think it is. But still I’ll throw it out there. How much time is being spent doing things not related to work? Could you take on a job that maybe you don’t want to? The answer is yes, you’re choosing not to. But you know why it is you’re doing that. I think hands down one of most fascinating things about the conversation we had in the context of Money Makeovers is we typically look for that solution at the end of it, that easy answer and if there’s anything I can say here is there is no easy answer. There’s you, your life, and the decisions that you’re going to make. And I admire that you’re taking ownership over your situation, whatever that may bring you. So for that you have my respect and I wish you the best of luck with everything you do. Thank you, Doug. I appreciate it.