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Chris Pratt: We have an awesome guest today. He is America’s millennial money expert, founder of The College Investor, and get this, he did his own taxes from his own income at the bright and early age of 13 years old. His name is Robert Farrington. Welcome to the show, Robert, how are you?

Robert Farrington: Hey, great. Thanks so much for having me. I’m glad to be here.

Chris Pratt: Yeah. Thanks for coming on. So you are really big, you know, the title of your, of your site and blog is The College Investor. So you are really big on college students. You have a company called Loan Buddy. And so I think you’re a really great person to talk to about college students about debt and about investing and what you should be doing with the money that you’re earning. Because a lot of young people are just starting to make real paychecks for the first time. Most, I would assume not many were doing their taxes at 13 years old, so

Robert Farrington: Sure.

Chris Pratt: So you have a wealth of knowledge. I encourage people to check out his website @thecollegeinvestor.com. He’s got a ton of great information on there, on his blog and, and on his website, but we’ll, we’ll just dive right in. So I’m curious, could you just explain what your philosophy on student loan debt is? You know, who is it for it? Should everyone take out student loans? Should no one take out student loans? How much is okay. Do you have some hard and fast rules or advice for kids who maybe are in high school and deciding if they should, should be taking out a student loan?

Robert Farrington: Yeah, absolutely. I mean, that’s a great topic because I think even if you’re in school, we’re recording this in the middle of the pandemic and college classes are online now. So you might even be asking yourself, Hey, like, do I still want to borrow and spend all this money to go to a school that I’m not even going to? And I’m taking classes from my dining room table with my parents. So I think you make a great point is what everyone talks about the student loan debt crisis in America. And that we have, everyone has too much student loan debt, but I want to rewind it and say, you know, like student loan debt as by itself is not a bad thing. It’s just like any other kind of debt and debt can be a good thing for you, or it could be a bad thing for you.

It all goes back to how much you borrow. And I like to think of it as like buying a house or buying a car or anything else. Like if you mortgage yourself to the hilt and buy a house that you can’t really afford, and then, you know, you stop paying on the house and the mortgage and you lose the house. That’s a case of not good debt, right. But you know, it also be the entryway to, you know, what, if you buy a rental property and take out a small mortgage and your cashflow-ing in that, and that becomes a path towards wealth. Well, you know, in that case, that mortgage was good debt and the same is true with student loan debt. The big problem we see in America today is that people took out a lot of student loan debt, and then they didn’t get jobs in the future that paid enough to surface that student loan debt.

And so a lot of people feel jaded or bitter because the debt they took out and the education they got didn’t have the value that they thought it would going into it. And so that’s the real tough question that you have to ask yourself if you’re in college or going to college, is what is the value of this education to me in the future, because education by itself is great, but education is free. You can listen to podcasts, you can watch the best teachers from Cornell and Harvard share all their lectures online. Like you’re not going to college to learn like, frankly, that’s a byproduct. You’re going to, you really are. You’re going to college because you need to social signal to the world that I checked this box and I did it. And the question is at what cost, it’s an investment. And you want to make sure that the return on that investment is positive when you graduate.

So you were asking, what’s a rule of thumb. One of my biggest rules of thumb is how much student loan debt is too much or the right amount. And I argue that you should never borrow more than you expect to earn in your first year after graduation. Chris Pratt: Okay. Robert Farrington: So let’s, let’s break that down. Never borrow more than you expect to earn in your first year after graduation, we live in this cool day and age where you can Google everything. So if you want to be a teacher and whatever state you’re in, just go to Google and say, average, starting teacher salary, and you know, Oklahoma, and it’ll spit out a number for you. You can find it. And maybe it’s $38,000. I don’t know. I’m totally making that up. I don’t know if that’s true, but if that’s what your starting salary is, you can’t borrow more than $38,000 for your total cost of college.

Because if you start to borrow more than that, you’re going to start struggling financially after you graduate college, cause it’s gonna be expensive. And it’s gonna take a lot of your budget to start paying that bill. Now, if you’re going to be a computer programmer and engineer or some something in that field, maybe your starting salary is 60, well, then again, you could probably borrow up to 60 because by the time you’re done and you’re in working, you’re working, you can afford more of your monthly budget to pay on your student loans. So if you can focus on your goal, whatever your goal is, I don’t want to dismiss anyone’s career goals, but there’s always a way to get to your future goals and minimize your student loan debt at the same time.

Chris Pratt: Yeah. And by the way, these are, you know, I said hard and fast, but these are not necessarily hard and fast rules. I find that a lot of people, you know, you mentioned average salary, a lot of people totally, you know, they go, they want to get an art degree. They want to be, you know, an artist and, you know, they’re really passionate about something that we know as a career is challenging to make a high income, but they say, I’m going to be above average. I’m going to do better than average. And so it’s going to be worth it to, uh, to spend, you know, a hundred thousand dollars on this degree. If I get a history degree from, um, uh, we won’t even go to Ivy league from, you know, a top 50 school, then, you know, I’m going to, my salary is going to be above average. And so then I can justify and rationalize, uh, paying ridiculous amounts of money, to go to college.

Robert Farrington: No, no. Chris Pratt: Okay. That’s great. Robert Farrington: You can’t do it because here’s the thing is if you want to be above average in your field, that’s great. But on the flip side, if you’re above average in your field, your degree doesn’t matter. Chris Pratt: I love that. Robert Farrington: Literally, if you are the best artist or the best freaking historian or you’ve done the work, no one cares where you go to school because on the flip side, I’ll challenge you on this point is how many programmers today don’t even have college degrees and are just freaking good programmers and Facebook. And all these internet companies are hiring them and paying them $350,000 a year because they can code. Like, if you are the world’s foremost expert on some history topic, because you’ve read all the books on it, nobody cares. If you are a PhD in history, they just want to know that you have the knowledge.

And that’s, what’s so important because I would also say that, you know, when you get a college degree, um, you know, it’s your ticket in the door, in your first job. But after that, nobody ever will ask you about where you went to college again, except maybe like at your like 10 year high school reunion or something, but like, nobody will care, no employer will care because after your first job after college, all that matters is your skills and what you can bring to your employer. It does not have anything to do with your degree or where you went to college or anything. And so that’s the other hard part here is that your value of your degree diminishes so fast, like it depreciates faster than your car, right? Like your car, you buy a new car, you might get 50% of the value in like three or four years. Your degree has like, literally zero value, maybe 5% after one year. Like it just appreciate it so fast.

Chris Pratt: Yeah. And, and I hear that all the time from hiring managers at some of the best companies and top companies in the world that say, you know, three years after you graduate, I don’t care what your degree is. I care what you did in your job. And, and a lot of them say, I don’t even care where you worked. If you worked at a big company or a top company, or if you just worked for some, you know, for your uncle, what did you do while you were working wherever you were and what did you contribute and what value did you bring to the table? Um, and Robert Farrington: Exactly. Chris Pratt: And people who are hiring, you know, they’re generally, you know, you can’t speak for everyone, but they’re generally not stupid people, right? Like they understand that depending on where you worked, you have certain constraints, right?

So I work at Microsoft. And so we don’t have nearly as many constraints as, you know, a startup who’s on their, you know, million dollar seed round and, and who can only hire five or six employees and an intern. Right. So the expectation is almost, I don’t want to say lower, but the hiring managers take context into consideration. Um, I actually spoke to a hiring manager the other day who said that, um, she didn’t care if you went to community college and then went to a state school, they actually look for those people because it shows that you’ve developed character. And that you were smart about your education and about going to school. I will say that I think that there is some value to certain schools for certain fields, because they are known for that field. So I know tech pretty well, right? Like, uh, Georgia tech is really well known in tech, obviously, you know, MIT, um, uh, Harvard, Carnegie Mellon, are big in tech, but like Georgia tech is a huge tech school. And so if you go there, you’re going to get a lot of attention from, uh, uh, from tech firms. So if you’re interested in a specific field, um, that’s something to consider as well. I heard you’re trying to jump in

Robert Farrington: Totally. Well, no, I was going to say like, you’re right. And because it also goes back to the ROI, because I’ll also say that email, maybe your goal is to do something scientific. Maybe your goal is to be a researcher. Maybe your goal is to go into some niche field because you’re really passionate about that. Well then, yeah, maybe you want to go to a more specialized school, because like you said, that school is known for something or, that professor, or that department has like, varied things. And your goal is to be a researcher that does that, like go for it. I don’t want to dismiss that. But then in that regard, there’s also other ways to fund it beyond student loans. If you wanna go to a different path, you need to do your research You need to see if there are fellowships or assistantships or other ways to pay, or can you get grant money or whatever it happens to be. And you don’t have to borrow your way to get to your end goal. And I think that’s the big thing that you gotta keep in mind is, you know, your ROI is diminished by student loans, but it could be, you know, improved by finding alternative funding means scholarships, grants, working through school, all these other ways that, you know, can help you have a better ROI on your outcome.

Chris Pratt: Do you have Some recommendations for good places to go to look for scholarships and grants?

Robert Farrington: Well, yeah, so grants are, you know, free money and that all starts with filling out the FAFSA, the free application for federal student aid. And you should do that every year. Starting when you’re a senior in high school, in the fall, all the way through college and grad school, you fill out the FAFSA every year. It asks for your income, your assets, your parents’ income, and based on what you have, you will qualify potentially for federal money, but the FAFSA also unlocks state money. And it also unlocks university money. And so depending on where you go to school and what they have available by filling out the FAFSA you potentially unlock that money. Scholarships are based on the work you do by applying for these scholarships. And they’re not easy to find, but they are so valuable because so few people apply to it. There’s like this misconception out there. It’s like, everyone thinks everyone’s applying for scholarships, but the truth is everyone’s lazy. And very few people actually apply for scholarships. And so you actually have a very good chance of winning a scholarship. If you put the work into apply for them,,

Chris Pratt: Especially, you know, most scholarships have an essay requirement. And the reason they do that is for that very reason, they want to, uh, limit the pool down to the people who are willing to write the essay in the first place. I remember at my school, there was a, it wasn’t a major scholarship, but it was a, uh, I think it was a $500 scholarship. Uh, it was either 500 total or 500 every year for a total of 2000. And there were only three people who apply for that scholarship. And two of those three people got the scholarship, cause there were two slots for it,

Robert Farrington: Dude. That is exactly what it is. So I run a scholarship on the college investor called The Side Hustle and Students Scholarship. And it’s my goal is to find entrepreneurial students and I want to give them a scholarship and we do a first prize of 2,500 and a second prize of a thousand. And, uh, I’ll tell you every year and I’ve done this now, this is my fourth year doing it. We get about a hundred applicants to the scholarship, right. But I will tell you every year and the statistics are the same for four years in a row. 70% of people are disqualified on our initial screening because they just didn’t even fill out the information. They didn’t provide an essay. Like I’ll tell you, people will send me like a Google doc, but they won’t like open the sharing permissions. And so like, I can’t open their document. Like just things like that, that you’re just like mind blown that you’re not following the instructions. So when it actually comes down to your expected value and the statistics of it, you’re in competition, two out of 30 are a one in 15 chance of winning my scholarship. And I’ll tell you, I’ve spoken to a lot of others that run independent scholarships and the stats are so eerily similar that almost 70% of everyone that applies to a scholarship gets disqualified simply by not following the direction.

Chris Pratt: Okay. So follow the directions, make sure that you’re, you’re paying attention to what’s on the form and, uh, do your best at, at whatever essay or, or questions that are asked. Um, and

Robert Farrington: Exactly. That was the same. And then you systematize it, right? So, uh, you find these scholarships, which that’s the hardest part of this whole process is where do you find them? There’s scholarship search engines, but you know, a lot of the scholarships search engines are paid to play. And so a lot of small scholarships don’t list themselves there because they don’t have a budget to give these scholarships search engines, money just to be on there. So the only things you really see on the scholarship search engines are these big national scholarships, which they do get more people applying to them, but they’re not the ones you necessarily want. I would encourage you to look in your community. I would look at like your church or local community groups, like a rotary club or volunteer organizations. Um, I would look at your parents’ companies, a lot of large companies in America offer scholarships for their employees’ students.

Um, I would look at trade groups and industry groups in your organization, or maybe your parents belong to one. Um, you know, this was very common in more trade fields where there’s like an electrician’s union or things and the unions and stuff offer scholarships to the kids, parents. Um, I would also look at your, your school typically as a scholarship page, but they also have like career based ones. So if you want to go into computer science or something like that, um, there’s a lot of ones that are niche down into your major or your field that you can apply to and share some stories in that. So there’s a lot of places to look, but that’s the most time consuming part of the process.

Chris Pratt: Yeah. And just asking your high school counselor, even they probably, if they’re doing their job well, they should have some ideas of places that you can look for scholarship.

Robert Farrington: Absolutely. Especially in your community, because those are the ones that are the best odds for you and hopefully your high school guidance counselor, has those community connections to kind of point you in the direction of organizations that might be able to help you.

Chris Pratt: Yeah. My, uh, my fiance actually in high school, um, her, her dad works for Pepsi and he got, uh, or she got a scholarship I believe through his, uh, through his union. Um, and that really served her well through college and put a dent in her student loan. So, okay. We’ve covered a little bit of paying for college, your rule of thumb for how much approximately you should spend for college. Um, if you’re going to take out loans, how much you should take out, and by the way, the FAFSA, before we move on, the FAFSA is really awesome. Okay. It’s like a form, I think the first time you fill it out, it might take you like 30 minutes. You probably want to do it with your parents because you need their, um, their income and information. Uh, I believe now actually you can just have it send an email and they can do it on their own time.

They don’t need to be there physically with you, but the first time it takes like 30 minutes. Then every year after that, most of your information is saved. So it takes like five minutes to fill out a new form. It’s completely free and there’s no downside to doing it. You know, it’s the federal government. They’re not going to send you ads, try to sell you a bunch of crazy stuff. They’re not going to scam you or anything like that. And even if you don’t get a grant from, uh, from the FAFSA or from the federal loans, like I said, like Robert said, uh, they, uh, forward to the States and, um, you can also get, uh, like I had to fill out a FAFSA just for my scholarship through my university. Um, they also do subsidized student loans. So you don’t have to pay interest while you’re in school, on the student loan. So there’s just a ton of stuff that you can potentially get just by filling out a single form. So if you’re looking for like the common app of, of student aid, the FAFSA is probably your key to the door..

Robert Farrington: Exactly. It is your key to unlock everything from grant scholarships, student loans, like you said, it is your key to the door. Yeah.

Chris Pratt: Okay. So you mentioned thismassive student loan crisis. So I want to shift gears to talk about what do I do if I already, you know, I’m in my third, fourth year of college or I’m, I just graduated. I already have a ton of student loan.Student loan debt rose from $480 billion to $1.6 trillion from 2006 to 2020. So in 14 years it rose a huge margin. It was 3.5% of GDP in 2006. Now it’s 7.8% of GDP as of 2020, in GDP is gross domestic product. So it’s kind of a common measure of kind of the entire US economy. So we’re essentially saying in simple terms, that student loan debt makes up 7.8% of the US economy. And I believe it is the third largest, uh, consumer or personally held debt in the United States. I believe number one is mortgage number two, I think is car. And then number three is his student loan. It’s certainly up there. So what is your advice for people who already have student loans? I know you have a ton of information on college loan forgiveness, and collateral and repayment.

Robert Farrington: Yeah. So let’s start at the beginning, cause this might actually be counterintuitive to, I think what a lot of people would think about, but my first step that you need to do is just get organized. And I say this coming from a place of helping people with student loans for a decade now that I would tell you that 98% of everyone that I’ve, that has come to me and said, I don’t know what I’m supposed to do with my student loans. I can’t afford my payments, all that kind of stuff. I say, well, how much do you owe? How many loans do you have? What’s your monthly payment and the car? I don’t know. I don’t know. I don’t have an answer for you. You have to get organized. Cause here’s some more scary stats, right? The average student loan or the average graduate has five student loans.

Right. And that makes sense, because you got one your freshman year or your sophomore year, junior year, senior year, maybe at a fifth year, took a summer semester. Right. Um, and so each of those loans could be at a different place, a different service or different monthly payment. So you got to get organized, you got to put them all down on a piece of paper or use some kind of app to track your money. Like, I’m very agnostic to what you want to do, figure out whatever style works for you, but you’ve got to lay it all out. Then you gotta look at your income and what’s coming in every month. And then we gotta look at your expenses and what other expenses are going out every month. Then we could figure out what levers to pull for your student loan debt. Like, do we need to change your repayment plans? Do you have potential for loan forgiveness? Or like, do you have mostly private loans? Like, do you need to just earn more? And there’s no real way out of this and that’s the lever we need to pull. So once you’re organized, though, we can have a discussion around all the different levers that we can pull to tackle your student loan debt.

Chris Pratt: Yeah. And you know, your income is one of your best wealth building tools. And in terms of paying back your loans, that’s probably going to be your best way to do it

Robert Farrington: Moreso when you’re young, too, I mean, you have so much more because income is honestly directly relationship related to time when you’re young. Right? Like it doesn’t matter how much you have invested, like your investments. Aren’t going to do anything for you when you’re starting out. It’s all about your time for dollars, um, when you’re young and, but you also have time, most people don’t have kids or a family and things like that. Like, so use your time to earn more dollars and you’re in your twenties.

Chris Pratt: Yeah. I hear that all the time from people, you know, people who have one-year-olds to people who have 18 year olds, they’re like, if you don’t have kids yet, please use your time wisely. Like you don’t understand, how important time, because when you have kids, so I’m looking forward to experiencing all of the wisdom that people with kids have been, imparting on me on the show and in my private life. Yeah.

Robert Farrington: But that’s it, I mean, so when you have that time, use it to your advantage to earn more income and don’t use it. Cause I would also challenge that most people, if they’re not using their time to earn, they are sadly using their time to spend, and it might not seem like a lot, but are you just sitting and watching Netflix? Are you ordering food? Are you doing things like typically if your time is not spent earning your time is spent working against you in some way.

Chris Pratt: Yeah. That’s, that’s exactly right. Like, what are you going to do is, even if you’re sitting at home watching Netflix a huge thing, uh, right now, especially during the pandemic is, um, GrubHub, UberEATS and, and eating out and take out. And I find that one of the things now that restaurants are kind of, some of the only things, uh, open right now, a lot of people are, are, um, either eating out or getting takeout, uh, quite often to kind of, uh, have something to do. Right. And they’re just kind of spending money doing that.

Robert Farrington: I was going to say, and I don’t want to you know, squash that, but I would also say that, like that also is your, you don’t get to, you, don’t get to complain. Uh, if you’re struggling with student loan debt, but you’re also ordering GrubHub and watching Netflix, you don’t get to complain about your student loan debt. Like you lose, you lose that card because there are options for you, but you’re choosing a path that is working and tie that. Does that make sense?

Chris Pratt: Yeah, it does. And I want to address something quickly, which is too to the point of organizing and it kind of addresses that idea of not doing what you need to be doing is this idea of well it’s not an idea. It’s a very real feeling of anxiety and fear and almost intimidation. Right? And I think that that is probably the number one reason that people don’t pay back their debt, aside from just the sheer quantity, the size of debt relative to their income. When you see when you graduate college and you have $50,000 in debt to pay back and you, uh, have never really made a dime in your life, right? Maybe you had a job in high school or whatnot, or you had a job in college or making a couple grand a year, that’s a big number. And the best way it probably feels like for you to deal with it is to just pretend it’s not there. Um, and, and I wanted to hear your thoughts on that and how people can overcome that feeling of like, this is just too overwhelming. So I’m just going to ignore it because nobody’s going to come bang my door down and you know, arrest me if I don’t pay back my student loan debt. Right? So you have the option to ignore it. How do you overcome that?

Robert Farrington: I would say your anxiety comes from usually a place of you. You have a lack of ability to deal with something, right? Like if you don’t know how to deal with it. You weren’t given that tool set. You didn’t, you didn’t develop that, those, those tools to cope with it. I mean, if you want to go to anxiety counseling for any type of anxiety, usually the psychologist is going to help you build some emotional and psychological tools that you can use to work through a problem while your student loan problem is a problem that we also have failed as a society to help a lot of people build the financial tools to deal with. We don’t talk to a lot of kids about money in high school, or even earlier. I mean, honestly, money conversations should start from, you know, three years old onward and be tailored at every age.

You know, people don’t have a lot of positive money, influences their life. You know, money is one of those things that’s typically absorbed. Like no one ever sits you down and has a conversation for most of us. You just absorb what you see in your environment. And so if your parents didn’t tick, basically have good money, skills or family, you know, you kind of absorbed the bad stuff, right? And so one of the things that we need to do is you need to start building that tool set for yourself. You can’t go back and change the past, but you know, if anyone’s listening and you’re, you have younger kids, we’ll set them up the right way. But if you haven’t built that tool set, that’s where you have to get organized. You have to start laying it out and you just have to start taking the baby steps of what do I have, what comes in, what comes out.

And then we can start learning about the different options for you. And I always go back to this. Like we live in this day and age, where information is not secret anymore. You can Google anything from your phone and you can learn about it. And then the same is true with your student loans, student loans are a federal program. You literally type in like student loan repayment options, and you will get a great search result in Google. That will walk you through all of your student loan repayment, options like this. Isn’t where you have to trust some weird financial advisor or anything like that. And you worry that you might be led astray, like, Chris Pratt: Or even us, you don’t have to trust us. Robert Farrington: You don’t have to trust me. Even though I do this for 10 years, like, don’t trust me, Google it, like, see what’s out there and see what people are saying and see what the, the literally the department of education has.

I mean, honestly, we like to rag on the government for a lot of things, but their student loan resources are actually pretty good. Like they have a lot of good stuff there for you. So that, that’s how you can start working through this anxiety because, you know, you said, no, one’s going to come knock on your door. Well, that’s also false. The, the worst financial thing you can do in your life is avoid your student loans. It is a world of hurt financially for you. And if you have private loans, they can come knock on your door and they can sue you. And if you’ve ever been served with a lawsuit, it is really not a fun thing to deal with. Like, it’s not good. So make sure that like, you have to pay your loans because let’s take a step back here. I think a lot of people don’t really understand the collateral of a student loan.

So, you know, the collateral of a car loan, right, is if you get a car, you take on a car loan. If you don’t pay that loan, they come and repossess your car, right? Same thing with a house, a mortgage, you don’t pay your mortgage. They foreclosed on your house. Well, people forget that the collateral of your student loan is your future earnings. Okay? So you went to college and you’re going to pay that loan back with your future earnings. And this is why loans aren’t discharged. There’s this myth, that loans can’t be discharged in bankruptcy. Chris Pratt: Student loans, you mean ? Robert Farrington: That’s a myth they can be, but to judge student loans can, they can be discharged in bankruptcy 100%. But the judge looks at you and knows that the collateral for that student loan is your future earnings. And so they’re going to look at your stuff and they’re going to say, well, you still have the potential to earn.

I’m not going to get rid of your loans. People do get their loans discharged in bankruptcy. And student loans is charged to bankruptcy every year, but they typically have some kind of medical issue or disability or other factor that limits their future ability to earn. And that’s why they’re gonna get their loans discharged in bankruptcy. So as long as you have the ability to earn that loan is never going away and you got to pay it. And the only thing that happens by you not paying it is the balance grows and grows and grows and grows.

Chris Pratt: Yeah. Yeah, that’s right.

Robert Farrington: We got a little dark and deep there for a second, but I think, I think people need to realize that you might have anxiety. You might think that like ignoring is the way to do it. And it’s like the worst, worst, worst financial move that you can make in your life is defaulting on your student loans.

Chris Pratt: Yeah. And I love that explanation of collateral because you know, for a house it’s super simple. If you don’t pay your mortgage, they’re going to take your house, a car super simple. If you don’t pay your car loan, they’re going to repo your car. Um, with student loans, it’s the way you explained it is super simple, but a lot of people don’t think of it that way, that, that you do know your wages can be garnished and

Robert Farrington: Exactly your tax returns to be taken. Your wages are going to be garnished. You could be sued. You could be subject to a lawsuit. They could actually, if you have a private loans, they could, depending on your state, they could take your house. Like it all, like there’s a lot of levers that they can pull to get their money too. And so it’s not a good thing for you, but there are a lot of options that you actually really never need to default, um, when it comes to repayment and loan forgiveness and stuff too. Um, but it’s confusing. And I can, I know why people like avoid it because it’s complicated. It’s confusing, but there’s so many options. You just gotta kind of start working through them for yourself.

Chris Pratt: Okay. This is really great. Robert, you had student loans, correct?

Robert Farrington: Yep. I did. I had $43,000 in student loans when I was setting done.

Chris Pratt: Wow. Do you mind sharing your experience on how you were able to settle and pay those student loans?

Robert Farrington: Yeah, so I paid them off in about three and a half years and I did it by the same kind of thing we just talked about, which was the earn more income lever. And I did it by side hustling. So I graduated, I got a job. I worked at target. I made about $42,000, I think was my starting salary when I got out of college. Um, but I also, like, I don’t think I’m like the Saint here and paying these things off too, because I also graduated college and bought myself a brand new car. Cause I felt like I deserved it. And you know, like all these other things too. So like my job alone was enough to basically make my minimum monthly payment on my student loans, but I was able to earn more through side hustling. And I did that to the tune of about $2,000 extra a month. And I doubled my first side hustle. So that was really big at that time was selling on eBay. So I would go to garage sales, estate sales, and I would list things on eBay. Then I would, you know, sell them, ship them off and Chris Pratt: That is real entrepreneurial hustle. Robert Farrington: It is, a hundred percent. And so I was doing that all the way through and that between my day job and side hustling, I was able to eliminate my student loans at about three and a half years.

Chris Pratt: Okay. So you said you made about $40,000 and he made another, what? $24,000 inside hustles bring you up to about 60, 65 close to $70,000 a year.

Robert Farrington: Yeah, exactly. And then of course you got your taxes and stuff like that. So yeah, I would say it still took me about two and a half years, three and a half years to pay it off my loans. And you know, there was some other things in there I was spending money on and I was trying to pay off that car that I got as well and other things, but, you know, that’s how long it took me to get it.

Chris Pratt: But, but, and that’s great because that’s the perfect Testament to the fact that you don’t need to be perfect because going back to the anxiety thing, I think something that gives a lot of people pause is like, well, uh, what if I lose my job? What if, you know, X, Y, and Z happens and I have to stop paying my loans. And so they just think they can’t do it. People think they can’t do it. And so they just, they just never even start. And something that’s really important is that it’s okay to make mistakes. Who knows what life is going to throw you, uh, what ranch life is going to throw you. It’s okay to make mistakes in, bad things, bad things happen to good people all the time. And guess what those good people, most of the times get through it.

Robert Farrington: Well, yeah. And you know, we all go through seasons of life too, like, Oh, a big believer in this is that, you know, like our life today is so different than it was a year ago or five years ago. And it’s going to be different five years from now, right? Like we, we can’t predict either any future outcome, but what you can do is make a plan for today and then reassess and like a year and see if things have changed. And so one of the biggest, I would say for student loans specifically, one of the biggest, uh, repayment program options for people out there, especially if they don’t make a lot of money is income driven repayment plans, right? These plans will set your monthly student loan payment for your federal loans as low as $0 a month, because it’s based on a percentage of your income, right?

So if you don’t make a lot, you can have a $0 payment, but I get a lot of flack from people saying like, well then my loans, I’m never going to pay them off. I’m never going to pay them off. And it’s like, well, it’s better than defaulting. And I promise you in a year from now, or a couple years from now, your life will be very different than it is today. So if that is the plan that works right now in the here and now let’s do that. And then let’s reassess in a year when things might be different, or maybe you can try to do some, pull some levers side hustle, cut some expenses and reassess them too. But like make a plan, work your plan. And then just, just reassess it because man life changes all the time for all of us.

Chris Pratt: Yeah. I love that feedback. That’s really great advice. And I’m sure a lot of people need to hear that. You have, you have kids, don’t you? Robert Farrington: Yep. I do. Young kids.

Chris Pratt: Young kids. Okay. So, college is probably a long way away for them. I imagine you, want them to go to college or do you know that’s possibly..

Robert Farrington: Frankly, I don’t care. Chris Pratt: You don’t care. Robert Farrington: I really don’t. I have my, I have two kinds of thoughts that I like, I would view as a success for my kids. If they are one kind, I just want my kids to be kind to people. And then number two is good with money in terms of understanding how it works, the income expenses, no, seriously, you’re a kind person and you are good with money. Yeah. You’ll figure it. You’ll figure it out. Whether it college is the path, trade schools, the path being a business owner, an entrepreneur, it doesn’t matter if you’re a kind person and you’re good with money, you will be fine.

Chris Pratt: Yeah. I’m chuckling because you know, we’re on a personal finance show talking about money. So I’m glad that you’re prioritizing money.

Robert Farrington: Yeah. That’s the biggest life skill that I think is a huge gap for a lot of people. And like, it doesn’t matter what you make because the math is the math, right? Like if you’re making minimum wage, the math is the same as if you’re making $200,000 a year. It’s a lot harder. Like, don’t get me wrong. But like the math is just exactly what it is.

Chris Pratt: Yeah. So do you have a 529 or I forget what it’s called a savings plan for your kids for college?

Robert Farrington: We do. so 529 college savings plans. I personally think they’re the best way to go to save for college. There’s other options as well, but, um, they all have pros and cons, but I don’t actually contribute a lot to their 529 plan. I’m a big believer in a 529 college savings plan, but I think people need to leverage them as a gifting format. And what I mean by that is the only money that goes into my kids’ college savings plan is gifts from maybe grandma, grandpa for their birthday and Christmas. And we don’t really contribute anything to it. Um, we also live in California, so there’s no benefit for us to contribute to it. Um, some States do offer tax credits, tax deductions to contribute to a 529 plan, which makes it a better option if you need that from a tax planning perspective.

But for us, it doesn’t. And so I like to leverage it, like I said, for others to contribute for them. And I ask our family to do that in lieu of physical gifts. So like, you know, our kids get enough junk as it is. Like honestly, every birthday they walk away with like 15 new toys, right? Like I don’t need grandma and grandpa to give them another two toys. Like how about they take that $50 that they were going to spend, just put it in their 529 plan. Instead. I promise you, the kids will be fine with toys. And then the money’s going to a better purpose. Anyways. It’s like a win, win, win situation.

Chris Pratt: I wonder, uh, I’m assuming they don’t know about this yet. Robert Farrington: Who doesn’t know ? Chris Pratt: The kids that you’re diverting their toy money to, uh, well, they still get a 529 saving plan?

Robert Farrington: Oh no. Not at all. Well because they will still get a thousand toys, every single holiday, like man, cause it’s like, look like Christmas is a great example. Like mom and dad get him a gift. Santa gives them a gift. Their brother or sister gives them a gift. Like they get some stocking stuffers, you know, there’s always that one relative that like ignores are plead to put it in the 529 plan and still gets him a gift. Right. So like they get plenty of gifts, but like we do have a good chunk of grand, the grandparents and stuff that, you know, are accepting of that and send it to their 529 plan instead.

Chris Pratt: That’s awesome. I love that. okay. Yeah, absolutely. Awesome. This is really great information and advice. Robert. I wanted to make sure I touched, I touched on the kid thing for people who have kids and for people who are thinking of having kids in their future, um, because

Robert Farrington: You know, you can use a 529 plan for yourself, especially if you live in a state where you get a tax credit, right?

Chris Pratt: Well I was gonna asked, You mentioned California, what is it with California that makes the 529 plan, not the best idea. And then what is it about other States that, you started to get into a tax credits that that makes it potentially beneficial?

Robert Farrington: So, Well the one thing with 529 plans that makes them super confusing is that there’s 50 States and there’s 50 rules. Every state gets to create their own plan and create their own rules for your plan. And so there’s the federal tax law for 529 plans. And then every state gets to decide if they conform to the federal law or they’re going to do their own thing and they all do their own thing. So in California, you don’t get any type of tax credit or deduction for contributing to a 529 plan. You do get the same tax free growth inside the plant. And if you pull the money out for college or other education expenses, it’s tax free, but you don’t get a benefit for contributing to it. But in some States they’ll give you a tax credit or a tax deduction up to a certain amount.

Um, if you contribute a lot of States do like about 5,000 bucks or so. So like you can take a tax deduction of up to $5,000 on your taxes. If you put it into a 529 plan, which is a great perk for not only saving in taxes, but also to incentivize saving for college. But what some people do is if they’re paying for college themselves, right? There’s no like you don’t have to leave it in for a certain period of time in most States. So like, you know, if I’m going to already write myself a check for 5,000 bucks to the school, well, why not write myself a check to the college savings plan and then pull it out of the college savings plan and give it to the school and saved myself $5,000 in taxes.

Chris Pratt: Really? You can do that?

Robert Farrington: Yeah. Especially, especially for a, you know, for parents that might send their kids to private school too. Most States, not all most States allow you to take up to $10,000 for private school tuition every year. And you know, you can just divert the money right through the 529 plan and into the tuition. Um, but once again, 50 States, 50 rules, um, California is not one of those that let you use it for elementary education. Some States do. it’s all on the rules of your state. So Google it, we have a guide on our site as well by state, you can click your state and see the rules, but you gotta figure out those state rules. Cause a lot of people get surprises when they’re like, well, the federal government says like, well, the state says too,

Chris Pratt: Yeah, you don’t wanna mess with the federal government or the state government. You don’t wanna mess with the government. Um, okay. Last thing, before we end here, we covered what to do. If you’re planning to go to college in terms of loans and in terms of paying for college, we covered what to do. If you have a ton of loans in terms of paying them off. Now let’s say I don’t have any loans anymore. I just have income, no kids, you know, time is money. What should I be doing with all this money I’m making

Robert Farrington: Save and invest until it hurts you like you have student loans again, or you got to put it all away as much as you humanly can because there’s no one in this world that cares more about your personal finances and your money than you. And there’s no one here that’s going to protect you and take care of you and you can’t get loans for the future. You can’t get loans for retirement. So put that money away and let it grow and invest for the future as much as you humanly can.

Chris Pratt: I love that! Robert Farrington and everyone.You could find his website @thecollegeinvestor.com. He also has an awesome ebook, uh, correct me if I’m wrong. I think it’s called, The Definitive Guide to Student Loan Debt that is available for free on his website. So please check that out. thecollegeinvestor.com. Thank you so much for coming on the show, Robert. Robert Farrington: Yeah, no, thanks for having me. This has been great.

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