Imagine going to college while raising a young child. Imaging graduating from school with more than $200,000 in student loans. Imagine starting a new career as a single mom raising three children. Imagine tackling more than $15,000 in credit card debt.
I give you Christa Miller. In today’s podcast she shares her story. We talk about everything from being a single mom in college to low cost divorce to timeshares. She shares how she paid off $15,000 in credit card, how she budgets and the tools she uses, and even what Game of Thrones can teach us about personal finance. Oh, and did I mention she also blogs about her finances at Object Wealth?
The following resources are mentioned in today’s podcast:
- Christa’s net worth: She tracks her net worth and shares it on her blog.
- Credit Card Debt: Christa’s story on how she paid of $15,000 in credit card debt.
- Rockstar Finance Net Worth: A list of blogger’s who report their net worth.
- Game of Thrones: Christa’s take on what Game of Thrones can teach us about personal finance.
- Total Money Makeover: The book that helped Christa get on the right track with her money.
- Rich Dad, Poor Dad: A book that taught her the power of passive income.
- Richest Man in Babylon: A book she recommends; it teaches the importance of saving.
Rob: Christa, welcome to the show.
Christa Miller: Hi, thanks for having me.
Rob: Well, thanks for taking the time out of a busy, busy day for you. Why don’t you tell everybody a little bit about yourself?
Christa Miller: My name is Christa. I run a blog called ObjectWealth.com. I’m actually also starting a podcast that should be launching in the next couple of days. I am a pharmacist by day, blogger by night and I’m also a mother of three. So yeah, I keep a busy schedule.
Rob: Wow. I don’t know how you do it. What’s it take to become a pharmacist?
Christa Miller: It’s a doctorate degree. So, 8 years of school. Some people are choosing to do residencies now. I didn’t do a residency. I just went straight to the hospital after pharmacy school. But it is a lot of work. A lot of work.
Rob: One of the questions I’ve always wondered about—and I assume you guys use computers and all that sort of thing, but how do you keep from giving someone two different medications that don’t work well together?
Christa Miller: I work in the hospital and that’s actually one of the main things that we do. In retail it’s a lot more of checking medications and dispensing. Ours is a lot of maintaining patient’s orders so as you’re putting in one order, you’re checking it against the patient’s profile. Not only looking for drug interactions but also looking at allergies and things like that. So, some of it is knowledge-based. Like, when you’re putting in a drug that’s high risk— you just know you have to look for certain medications on the profile. And also, the computers help flag.
Rob: Right. So it’s kind of a double check?
Christa Miller: Yes.
Rob: Eight years. That’s amazing. And they’re even doing residency now so some folks are spending, what? Ten years?
Christa Miller: Yeah.
Rob: That is unbelievable. What does it cost to do 8 years of school for a pharmacy degree?
Christa Miller: It’s really gotten absolutely ridiculously expensive. My tuition alone for pharmacy school was $100,000. That’s just tuition. A lot of us are coming out with $200,000 plus in student loans and it’s actually only going up too. I graduated 5 1/2 years ago and I was just looking online at my pharmacy school’s tuition and I believe it’s up to $120,000 to $130,000 for 4 years.
Rob: And that doesn’t include undergrad?
Christa Miller: That does not include undergrad and that does not include any sort of cost of living either. Pharmacy school is tough and you’re not going to be able to work a lot. You just don’t have time because you’re studying so much so you’re taking out a lot of student loans just for cost of living.
Rob: You know, when I’m standing there at the pharmacy counter to get a prescription, it looks so easy. I mean, when you look behind the counter, it looks like you just count out the medicine. How hard can that be? Which I know is silly, but that’s just incredible. And—
Christa Miller: They’re—
Rob: Sorry. Go ahead.
Christa Miller: I was just going to say, retail and hospital are two totally different things. Retail is a lot more of that although it’s the technicians that are counting the medication. The pharmacist is actually the one checking to make sure it’s right. Checking the prescription to make sure it’s right with what the doctor wants. And also doing that drug profile verification— checking for drug interactions. But hospital is a lot different. We do a lot of dosing of medications. Certain medications have to be adjusted by kidney function and certain other medications like blood thinners that you kind of have to adjust according to a patient’s lab work. So it’s a lot different (from retail).
Rob: Okay. Well, let’s talk a little bit about your blog. We’re going to talk about a lot of things including student loans. We’re going to come back to that because you’ve got a story to tell about that. And we’re going to talk about debt and even divorce. Let’s start with your blog though. Why did you start it?
Christa Miller: Basically, since my divorce I decided I needed to get out of debt. We had a lot of credit card debt that we racked up on top of the student loans and once I got divorced I realized I had to support three children all on my income and there was no backup plan. I had to do something about it. But I just wasn’t going very far with it. I still wasn’t budgeting very well. I wasn’t getting further into debt or anything like that, but the only time I really, really could pay anything off was when I got my tax return.
Christa Miller: I’d throw that on the credit cards but I just wasn’t making much progress otherwise. One of my best friends became one of these super-frugal, super early-retirement, Mr. Money Moustache type people and we started talking about personal finance all the time. We were reading peoples’ blogs and I starting thinking I should start a blog as a way to hold myself accountable, get on a budget and really get going. And it’s really helped! It’s like night a day. Once I really set my mind to it, I paid off my credit card debt— the remainder. When I got divorced… My part after the divorce was something like $15,000 in credit card debt. I’m not exactly sure, but I think I paid off about $8,000 or $9,000 in 8 months or so. Something like that. And just from really, really setting my mind to it.
Rob: Right. Well, we’re going to talk about how you did that. Let me ask you though, on the blog, how long has the site been up?
Christa Miller: It went up in March, so it’s coming up on a year.
Rob: And are you enjoying it?
Christa Miller: I am, I am. I really, really, really just put everything on there. I don’t really hold back. I think it’s really helping some people like some of my friends or people who maybe learned about the blog from Facebook. They’ve sent emails or called and told me how I’ve encouraged them to start working on their credit card debt and basically thanking me for putting it (the blog) out there because people just don’t talk about that stuff. And you assume, you know, maybe you look at my life and think, “She’s a pharmacist who’s making six-figures and probably has a lot of money…” But, people are in debt. And you just don’t know what’s going on with people. So I think it can be encouraging when you put yourself out there. It just helps people know they’re not alone with it.
Rob: Of course. Do you have any plans to make money from the blog?
Christa Miller: I hope so. One day.
Rob: Right. Right.
Christa Miller: I did just recently start a resource page that has some affiliate links and stuff like that but I don’t really have— I’m not so sure about putting ads on the site. I don’t really like the look of it. I know that’s a big way that people make money but… I would really like to just cover costs eventually. But—
Rob: The crazy thing about blogging is, you know that they (blogs) can make money. You know that some people make a lot of money. But when you’re just starting out it’s all very much a mystery. At least for me, I didn’t get a whole lot of visitors and I didn’t make much. But if you keep at it, keep learning and keep putting out good content, eventually you hit a tipping point and it’ll take you by surprise.
Christa Miller: Yeah.
Rob: You’ll go from making nothing to making a couple hundred bucks a month. Maybe even enough to make a car payment or something.
Christa Miller: Yeah, or maybe some to throw at student loans.
Rob: Right, right. One of the things you do on your blog that I’ve never had the courage to do is you actually share your net worth.
Christa Miller: Yes, I do.
Rob: How did that come about?
Christa Miller: I’m super obsessed with J. Money, as he found out at FINCON. So I read his, Budgets are Sexy and stuff on his other site, Rockstar Finance. On Rockstar Finance there is a page that’s all about bloggers’ net worth. He has a list of net worth ranging from best to worst and when I first started it, I thought I’d have everyone beat for the worst net worth. But, I just decided to put it out there and think it’s really cool because I’m watching my progress. I never really watched it before. Last month I think my net worth jumped up about $5,000 or something like that which is huge when you look at it that way. I still have $200,000 in student loan debt and it’s such a hard number to think about. But when you can see that you’re actually making progress (at least net-worth wise) it does encourage you to keep going with it.
Rob: Yeah. Well, it’s great. I’m going to link to your November net worth in the show notes. I’m also going to link to the Rockstar Finance page you mentioned.
Christa Miller: Yeah, it’s awesome!
Rob: By the way, you’re not last.
Christa Miller: No, I’m not last anymore. I’ve moved up.
Rob: You’re second to last.
Christa Miller: Yes, yes.
Rob: The thing is, as you said, it’s the progress. I don’t know if you’re familiar with Personal Capital, but I just read an article about a study done that was specific to Personal Capital. Basically, the theory of the study was, if you track your progress, your net worth, your investments, you will tend to save more and make better progress than if you don’t track it.
Christa Miller: Yes. It’s like that, yes.
Rob: And like you said, we’re all at different places. But even with a negative net worth, you see the progress you make each month. Eventually, month by month you’re just going to get better and better and better. One of the things that holds me back from doing this, apart from the fact that I think mine would be somewhat uninteresting, is friends and family coming to the site and seeing it. How have you dealt with that? Are you okay with that?
Christa Miller: A lot of my friends are my coworkers. I don’t know how people make friends with people that are not your coworkers. I really don’t know how you do that. [Laughter]. But, yeah, all of my friends are my coworkers and they’re all kind of in the same boat. Not all of them. It was tough for me. I took out— well, a lot of people took out as much in student loans as me but I did have a child to support at the time. So, a lot of them are in the same boat but they’re not actively trying to get out of it. They just took out 25 year repayment programs and have just put it in the back of their minds, but they are all in the same boat as me. My family already knew about my student loans. Because, if you look at my net worth, now that I’m out of credit card debt, that’s what’s really dragging me down are my student loans. And, I also have a timeshare… which is terrible.
Rob: I’ve got that in my notes to talk about too.
Christa Miller: Yeah. So it’s those two things. It’s really become this expected thing for people that are doctors, pharmacists, lawyers— coming out of school we all have these terrible net worth’s because our student loans are insane, so—
Rob: Yeah. My net worth when I graduated from law school in 1992, in today’s dollars, I was probably worse off. It was negative in today’s dollars of about $150,000 to $200,000. Of course, I graduated eons ago. But when you go to school for 8 years like you did, or 7 years in my case… I paid for a lot of my college with money I already had but then had to go into debt. So it’s easy to rack up a lot of debt. We’re going to talk about school loans, but before we move off the blog, tell us a bit about the podcast you’re going to launch and when you’re going to launch it?
Christa Miller: My podcast is going to be the Object Wealth Podcast. Basically, my goal for the podcast is to interview other personal finance bloggers just to get their stories because I think so many of us have such interesting stories. Mine, alone is a student loan story but other people have gotten themselves out of massive credit card debt. Other people write about being a single mom and trying to make it work on a single mom’s income. Then I’ll also have expert interviews about life insurance, 401ks and things like that. But really, it’s really about the stories. I just feel like we can learn so much from each other.
Rob: And when will you launch it?
Christa Miller: I’m hoping if all things go well, tomorrow.
Rob: Oh, okay. Then it’ll be live before I publish this interview so I’ll leave a link to it in the show notes. That’s great. You mentioned stories, so let’s talk about yours. Let’s start with the divorce and kind of— the thing that would be interesting to me, and I know this is something you write about on your blog, is the finances of it. For example, how much does it cost to get a divorce?
Christa Miller: Actually, financially speaking— strictly financially speaking, the divorce was the best thing for me. Our divorce was super cheap because we had an amicable divorce. We used the same attorney that specializes in amicable divorces so we didn’t have to fight anything out. It was all through mediation. I paid for all the attorney fees— I can’t exactly remember what it was, but all-in-all, it was relatively cheap. But for many people a divorce ends up being a financial hardship. For me, my ex-husband was a big spender. A very big spender. After being divorced and being able to take control of the finances completely, it became so much easier which is kind of shocking because all of a sudden I’m paying all this money for daycare and all these other expenses. But, it just still ended up being so much cheaper.
Rob: What does daycare cost?
Christa Miller: At the time it was $150 for my youngest and probably about $100 for my middle kid. So that’s like $350 a week.
Rob: Wow. That’s expensive.
Christa Miller: Yeah, and that’s not even as bad as some people have it because my kids were a little bit older. Once you’re talking about baby rooms and stuff like that, you may be talking about $200 a week. Something like that.
Christa Miller: I don’t know how people do it.
Rob: How old are your children?
Christa Miller: I have a 4-year-old boy, a 6-year-old boy and a 16-year-old girl.
Rob: Wow. Does she help?
Christa Miller: Oh, yeah. She is awesome.
Rob: Good, good. So, after the divorce you mentioned you had credit card debt of around $15,000?
Christa Miller: Yes.
Rob: What other debt did you have?
Christa Miller: There was the credit card debt, the timeshare and the student loans. I think when I got divorced I probably had maybe 5 months left of a car payment so that was quickly paid off. I don’t think I even took the whole 5 months. I just ended up paying it off fast. So I’ve had no car loan for years, which is nice.
Rob: Yeah, that’s great. Let’s talk about each of those. The timeshare— what were you guys thinking there?
Christa Miller: Oh, my gosh… I don’t know what we were thinking.
Rob: By the way, you live in Florida, right?
Christa Miller: Yes.
Rob: I mean, you don’t need a vacation, do you? You live where everyone wants to vacation.
Christa Miller: The timeshare is actually only 20 minutes from my house. The reason we got it is because it’s a really nice facility and if you purchase a timeshare you can become a member and use the facility all year long. Since I don’t have a swimming pool, it was a nice way to take my kids out to the pool. You know, they have the Lazy River and all that type of stuff. So it was more of just something fun for us to do with the kids. We were not really thinking about the $150 per month for 10 years though. That was a big commitment and I would not have done it if it wasn’t for it being close by so we could use the facility. Of course, I never actually stay there. We’d do the trade in and stuff like that.
Rob: Okay. Do you still have it?
Christa Miller: Yes, I do. I can’t get out of it.
Rob: You can’t sell it to somebody?
Christa Miller: No. Timeshares— they’re so flooded that you basically have to give them away. And that’s what people are doing because they don’t want to pay the annual maintenance fee. People that aren’t using it want to get out of that annual maintenance fee so they sell them on eBay for like, a dollar!
Rob: Oh, my.
Christa Miller: I saw my exact unit on eBay sell for $1,000 which is the most I’ve seen it sell for.
Rob: But after 10 years can you get out of it?
Christa Miller: After 10 years it would be paid off. Then I could sell it for nothing and recoup nothing, but I actually do use the vacations with my kids so once it’s paid off it’s worth it because then I’m just paying— Since I’m not going to make any of the money back it’s not like I can sell it for $10,000 or anything.
Christa Miller: So once it’s paid off it’s only going to cost me $300 or $400 a year for maintenance fees and that’s a lot cheaper than if we do a week vacation at a resort somewhere. So—
Christa Miller: Yeah, I’ve just kind of— Sometimes they’ll do a buyback program that timeshare companies do and I still can’t get out of it. I can’t figure it out.
Rob: Okay. Well, let’s talk about something you were able to get out of and that’s credit card debt. I saw an article you recently published that said it had taken you 2 years after your divorce to pay off the first $4,500 of the credit card debt then just 8 months to pay off the rest of the $15,000. And all because you had developed a strategy, got on a budget and worked an insane amount of overtime?
Christa Miller: Yes.
Rob: So, tell us your strategy.
Christa Miller: I had read Total Money Makeover. Actually, I read it several times before I was married but I just could not get going. It was very, very hard to budget with my ex-husband. We were just never on the same page with that stuff. Then I decided to reread it and do the ‘debt-snowball’ method which is his method of lining them up according to your smallest debt to the largest. Then I kind of rearranged some things because some of them had really high interest rates. So, if there were two credit cards that were close in the amount of debt that I owed but I ended up paying the larger one off first, just because it had the higher interest rate. Then another strategy that I did do was worked on paying off my Discover card because my Discover card always had the zero-percent interest on balance transfers.
Christa Miller: So I went ahead and paid off my Discover it® CashBack Match™ and transferred one of my higher balances over there. I think it was one of those 18-months to pay it off, things.
Christa Miller: But I wanted to be definitely sure so I divided up the amount I owed by 12 months and every month that automatically got sent there. That way I would definitely have it paid off. Then I focused on the other debt for my snowball.
Rob: Okay. You said you got on a budget. Did you use any tools? How did you do your budget?
Christa Miller: Well, now I use YNAB. But originally I was just doing an Excel document. I really like budgeting.
Rob: I don’t think I’ve ever had a guest on the show say that. [Laughter].
Christa Miller: Oh, I love it. I was doing an Excel document but because I had heard so many people talk about YNAB, I decided to give it shot. So I got on it (YNAB). And, oh my gosh, it has helped so much. So much! Because it forces you to look at every transaction. Sometimes it’s really easy to forget you ran to the store the other day and bought this, or you did that… But with YNAB you’re looking at every dollar. It also helps curb your impulse purchases because you know that money has to come from somewhere. So, if you’ve already done your budget and you have maybe so much set aside for restaurants and you want to go out but you’re out of that money, you either have to take it from somewhere else or not go because you just can’t magically make this money appear. Whereas before, if you really weren’t watching it, maybe you’d just pull out your credit card with the idea of paying it off at the end of the month.
Rob: Yeah. Sometimes I’m about to make a purchase and I’ll think, “You know, YNAB is going to find out about this purchase—”
Christa Miller: [Laughter]. Yeah.
Rob: And it’s (YNAB) not going to be happy. Originally though, a spreadsheet worked for you?
Christa Miller: Yes.
Rob: I love that. I think YNAB is great, but I also understand that folks don’t want to spend the money on it. I mean, it can help you but so can a spreadsheet or piece of paper and a pencil. You also said you worked an insane amount of overtime. How in the world did you manage that with three children?
Christa Miller: I have a very funny schedule. I work overnights at the hospital and I do 7 on, 7 off. So I work 80 hours in one week. They’re 12-hour shifts.
Rob: Holy cow!
Christa Miller: Yeah, yeah. Then I have a week off which is actually the only reason why I have time to do a blog or podcast. But, there was a time where I would pick up one or two extra shifts on my off week. So you’re talking about working something like 50 hours a week— well, that’s what it would average to. Although it’s weird because it’s all smushed together.
Rob: When you worked all that overtime, didn’t it kill you to see how much taxes came out of your paycheck?
Christa Miller: Yes!
Rob: It’s awful. You look at it and think something is wrong. There’s been a mistake. Anyhow, wow. That’s a pretty neat schedule. I’ve never heard of that before. Is that pretty common for—
Christa Miller: It is for hospitals. At least for pharmacists that work overnights and also for a lot of the hospitalists like physicians and maybe nurse practitioners and people like that. They’ll do the 7 on, 7 off also.
Rob: What about student loans? I know you have a story to tell about some things you’ve learned. But as an initial matter, I think you said you had about $200,000 in student loans?
Christa Miller: Originally it was more like $220,000 or $230,000. Something like that. Now it’s down to about $200,000.
Rob: Wow. How are you tackling your student loans?
Christa Miller: Just like every other pharmacist or physician out there, I put it on a 20 year repayment program which is like having a mortgage for the next 20 years. Then about 3 years into working I found out about the Public Service Loan Forgiveness Program. I work for a not-for-profit hospital and I realized I qualified for it but was not on the right repayment plan so I had to switch my repayment plan—
Rob: To what?
Christa Miller: I’m now on income-based repayment. Which is funny because it virtually did not change my payments. I mean, every year you have to re-qualify so it changes depending on what your income is. Every year I get a raise it changes it a little bit. But it really didn’t have much of an effect on what my monthly, you know…
Christa Miller: But it now qualifies me to do the Public Service Loans Forgiveness.
Rob: And how does that work? Is it after 10 years that it’s forgiven?
Christa Miller: It’s after 10 years. You have to have the right type of student loans, the right repayment plan and work at the right not-for-profit (also for the government) type job. And it has to be 10 years of on-time, qualifying payments.
Rob: Wow. And does this cover all of your student loans or just part of them.
Christa Miller: This is only for my Federal student loans. I also have private student loans. With those I think I owe about $40,000 on. So that I’m just going to have to tackle on my own.
Rob: Right. And so when is your 10 years up?
Christa Miller: I have about 7 years left.
Rob: I bet you can’t wait.
Christa Miller: Oh my gosh. It’s going to be crazy.
Rob: It’s just a huge burden lifted, overnight.
Christa Miller: Yeah.
Rob: Boom! You’ll have all this money that you can put towards other things.
Christa Miller: Yeah. I was just talking to my daughter the other day and she’s doing a collegiate high school program so she’ll be graduating next December during her senior year of high school. She’s going to graduate early and graduate with her AA. So she’s going to be going off to college and I’m really trying to lead by example so I talk to her a lot about money and student loans. I was just telling her, “Can you imagine if I had that extra $1,600 a month that I’m currently paying towards my student loans? Can you imagine if I had that money?”
Rob: Well, and as you look back on it now, it’s always easy to say you’d do things differently. But, in terms of your student loans and your education, would you have done anything differently knowing what you know today?
Christa Miller: A lot of people ask me if I would still go to pharmacy school. Hands down, absolutely. Yeah, the student loans are really annoying. But after 7 years when I have them all paid off, I mean, it is such a good income. And even with the student loans, it’s not like I’m having to live this extremely meager lifestyle. I can still afford to take my family on vacation once a year and I still have some discretionary funds. Things I would do differently? I would have lived more like what you should in college and not gone out to restaurants so much. Restaurants are what I think my biggest spending thing was. I went out to eat more in college than what I do now. Now I’m super crazy about, you know… We don’t go out to eat once a week. So yeah, that was kind of a definite money waste.
Christa Miller: A lot of my student loans were— I was a teenage mom and when I turned 18, me and my daughter moved off to college together. She was with me. I went to the University of South Florida and they have family housing there so we lived on campus. They had an on-campus daycare. It was a really nice setup. But I did have to take out student loans. Actually, with undergrad I think I ended up with $30,000 in student loan debt because I did have scholarships and things like that too.
Rob: So you were a single mom with your young daughter going to college?
Christa Miller: Yes.
Rob: I’m glad you shared that with us because I think sometimes when people tell their story— when asked how they got out of credit card debt they say, “Well, I budgeted and used a zero-percent balance transfer.” And it sounds so easy after the fact. But what’s hard to get out of the story is all of the sacrifices that had to be made. Budgeting is more than just using and Excel spreadsheet or YNAB. It’s making tough decisions day-in and day-out. College was hard enough for me alone. I can’t imagine raising a child and going through 8 years of education. That’s just incredible.
Christa Miller: I was just really determined. When I got pregnant— when you’re a teen mom there’s obviously a huge— people really look down on you and a lot of people were saying mean things behind my back. Things like, “She ruined her life,” or, “She’s not going anywhere.” And I was just determined to prove them wrong.
Rob: Good for you!
Christa Miller: Yeah. I knew that I had a purpose too. I needed to provide my daughter with an awesome life. I ended up graduating third in my high school class, went off to college and got my Bachelors. Then I got my Doctorate degree. Now everybody that was saying that stuff, you know [laughter]…
Rob: Yes. The best revenge is to live well.
Christa Miller: Yeah, that’s right.
Rob: Well, good for you. That is phenomenal. Okay. Student loans; Public Service Loan Forgiveness program. A good thing for folks to know about. Is it as simple as working for a non-profit or is there more to it than that?
Christa Miller: You definitely have to have the right type of student loans. Like I said, my private loans don’t count. And there are other loans too. I can’t remember off the top of my head, but a lot of them you can just consolidate and then it becomes the right type of student loan. That’s what I had to do. Then, check your company’s tax code to make sure that it’s a qualifying company. Nobody’s actually completed… The first 10 years have not been completed since they’ve started the program. I think perhaps 2017 might be the first year that people will start qualifying with the 10 years of payments. So we’ll have to see how that goes once we see people starting to qualify.
Rob: Yeah, yeah. Okay. One question I get a lot— and looking at your net worth statement, it seemed like a good question to ask. Folks struggle (myself included) with setting financial priorities. You know— you have debt. You want to buy a home. You want to save for retirement. You want to save an emergency fund— all of these different competing goals. Folks often ask how to prioritize those. Looking at your net worth statement I know you have a home. You have a 401k. You have an e-trade account. You have an emergency fund. And, of course, you have debt. How have you worked out how to prioritize all of those things?
Christa Miller: I did do the whole Dave Ramsey’s, Thousand Dollar Emergency Fund although I think right now it’s a little bit less than $1,000 because I’ve had some car issues. I knew I wanted to get that going before doing the credit card thing. And I understand his point. When you’re trying to get out of credit card debt, you don’t want to be relying on your credit cards if something were to come up so just having that $1,000 set aside, that way if you do have some big car problem or some other emergency comes up, you have that money and you’re not just going straight for the credit card.
Christa Miller: So I knew I wanted to do that. I also needed to start hitting my match for my 401k.
Christa Miller: That was really important to me and that took me— Let’s see. When I first got divorced I wasn’t really contributing anything much to my 401k. I really struggled with getting the spending under control when I was still married. I just— it was just really hard. Every dollar that came in was just gone! But, as soon as I got divorced, I started slowly upping my contributions to my 401k because I knew I wanted to hit that match. That was an every 6-months type of thing where I would up it by a percent. And then at the same time I wanted to tackle my credit card debt. I had to refinance my home because I needed to get my ex-husband off the mortgage, and I was looking into whether I wanted to 15 year or 30 year mortgage when I realized that a 15 year was going to cost me an extra $125 a month from what I was currently paying. So, yeah, I’m doing a 15 year.
Rob: Good for you.
Christa Miller: Yeah, so I’m on a 15 year. And now that I have my credit cards paid off, I’m really focusing—Everything else that I have is really low interest. All my other debt is really low interest. So my Federal student loans… Well, that’s a little bit higher, but since those will go into the Public Service Loan Forgiveness, there’s not much point paying extra on that. But, my private student loans are at, like, 3.25 percent. And that’s fixed. So although I’m not going to take the full time to pay them off. I want to pay them off early. If you look at my net worth, I’m making a lot more money by contributing to my 401k. So I want to max out. That’s newest thing right now is getting to hit the actual max for 401k contributions.
Christa Miller: Although I’ve recently found out that with my company I can’t actually hit this max. There’s something about this high-earner thing where you’re supposed to be able to put in $17,500 a year. And at our company you can only do about $16,500.
Rob: Huh, I’ve never heard of that before.
Christa Miller: Yeah. It’s this very weird thing. I’m going to write a blog post about it because I just could not find a lot of information about this. And I think this is so weird. I’m about ready to get a raise at work which is awesome. But that’s going straight to 401k. And I do get this question a lot on pretty much every net worth post that I put out, where people ask why I am contributing so much to my 401k when I have all this student loan debt. Well, when you’re talking about an interest rate of 3.25… Technically, I make more off what my employer contributions are than even the interest I make monthly. You know what I mean?
Rob: To me, that’s a no-brainer.
Christa Miller: Yeah, yeah. But I get that question every time I put out a net worth statement.
Rob: Folks at iQuantifi that were at FINCON— I don’t know if you met them. You were at FINCON, right?
Christa Miller: Yes, yes I was.
Rob: They talk about debt and say they don’t see getting out of debt as a goal which I thought was interesting because I always thought of it as a goal. You want to get rid of your credit card debt. But they see it as an obstacle to your goals. So your goals are to save for retirement, save for an emergency fund, save for college, save for a home or whatever. And debt is just an obstacle to those goals. If you think of it that way, in your case you’ve been able to minimize that obstacle by refinancing, by converting to the program for Federal student loans and all that sort of thing. So, when you’ve got the 401k match, boy, I don’t know how you’d pass that up.
Christa Miller: Yeah, exactly. Also, I get taxed at a very, very high rate because of my income, so 401k contributions really help with taxes also.
Rob: Right. Absolutely.
Christa Miller: With prioritizing, I knew I wanted my emergency fund and I knew I wanted to get out of credit card debt but at the same time it was slow going at first with contributing to my 401k because I did want to start hitting that match. But, now that I’m out of the credit card debt, focusing on maxing out my 401k— at least maxing it out as much as I can get. Then I’m going to start— Right now I would say that I throw about $500 to whatever debt I am currently working on.
Rob: And what debt is that right now?
Christa Miller: Right now I have a small student loan that I’m almost done with that has—
Rob: Oh, yeah. I see it right there.
Christa Miller: Yeah, yeah. So what was my last net worth at?
Rob: Eleven seventy-nine.
Christa Miller: Okay. So I’m throwing money at that. Then after that I’ll be throwing money at the timeshare.
Rob: I like how you describe the timeshare. But I’ll just let people go to your net worth statement to see how you do that. It’s very creative.
Christa Miller: I try to tell everyone not to get into a timeshare. It’s so horrible.
Rob: Where do you keep your emergency fund? I always like to ask people that.
Christa Miller: I just have that in a savings account. Once I have an actual 6-month emergency fund which I’m probably not going to be able to work on that until after my private student loans are paid off. But once I do that, I’ll probably have it in an index fund. You know, Vanguard or something like that. Just so it’s not sitting in a savings because most likely I’ll never really have to touch a 6-month emergency fund.
Rob: Yeah. What’s up with the e-trade account?
Christa Miller: That was just more— I just knew nothing about the stock market whatsoever. So that was more so just to see what that was like. I had worked some overtime and had some extra money which I know I could have thrown at debt, but I just wanted to— I’m not actually contributing extra to it. It was just to see what it was like to actually buy a stock. It’s not something that I would continue doing in the future. I’ll focus more on index funds and stuff like that. That was more like an experiment to see what it was like.
Rob: Okay. Do you know off the top of your head, your asset allocation for your 401k?
Christa Miller: Actually, I have a company called Bloom. That’s B-L-O-O-O-M, that manages it. I don’t know if you’ve heard of them. They’re a newer company but they have won some awards. I pay $10 a month, but if your 401k is less than mine (I forget what it is) then it’s $5 a month. They take care of that because it was just so confusing to me. If you think about it, if you actually have someone managing it as opposed to you just guessing what you want, you can make a lot more than what that $10 a month is.
Rob: Do they actually have access to your account and can go in and make trades and rebalance?
Christa Miller: Yeah. You give them… I don’t know if it’s called power of attorney to do that, but yeah, you actually do sign documents so they can go into your account. And actually, one of the founders emailed me (because I got in with the company pretty early on) and he told me my asset allocation is actually better than what a lot of people have set up. That is one thing that I’ve heard, is that a lot of people have horrible asset allocation.
Rob: Where is your 401k with? Is it with Fidelity or—
Christa Miller: Milliman is the company. But I know that a large percent of mine is in a Vanguard index fund. So Milliman is the overall company—
Rob: The administrator?
Christa Miller: Yeah, yeah. I guess that’s the word. But when Blooom came in and took over where my asset allocation is, I know now that a large percent of it is a Vanguard index fund. I’m not sure which one, exactly. But—
Rob: Well, I’m definitely going to have to check that one out. That’s a new one to me because one of the problems I’ve been trying to think through is, you know, there are those robo-advisors like Betterment, Wealthfront or Future Advisor that can’t handle 401ks, so that’s one of the things that’s kind of kept me away from them because I wasn’t sure how helpful it’d be if they could only help me with part of my investments. Although Future Advisor can handle some 401ks. Interesting. Okay, so that will be a new one for me to check out. Switching topics completely, you have a post about what Game of Thrones can teach you about personal finance. Now, I’ve not read your article. Nor have I seen an episode of Game of Thrones—
Christa Miller: Oh, oh.
Rob: Maybe I’m the only one who’s never seen Game of Thrones. Is it a show worth watching? And what in the world can it teach us about money?
Christa Miller: It is definitely a show worth watching. It is so, so good. I think that was just one of my fun posts. I really like doing some silly posts. I think I also had a post about Eric Northman of True Blood—
Rob: You see, right now I have no idea what you’re talking about.
Christa Miller: [Laughter].
Rob: Don’t know what True Blood is and I don’t know who that guy is.
Christa Miller: [Laughter]. I’m pulling up that post now, the Game of Thrones post.
Rob: I can link to it. I’ll link to it in the show notes. But—
Christa Miller: Yeah. You know, I pulled out some, like, money quotes that some of the different people have on the show and just kind of like wrote about it. One of my favorites (from Game of Thrones) is Cersei. She has a quote in the show that says, “And unhappy wife is wine merchant’s best friend.”
Rob: Right. I’m looking at it right now.
Christa Miller: Yeah. It’s a good show. It’s fun. It’s really good.
Rob: Well, before I let you go, you mentioned Dave Ramsey’s, Total Money Makeover. So I’m guessing that’s on your list, but what are some of your favorite personal finance and investing books that have helped you?
Christa Miller: Definitely, Dave Ramsey. I don’t agree with all of his strategies. Like, I’m not going to throw money at my house to pay it off any faster. I think 15 years is pretty good. After I’m out of my student loan debt, I’d rather be throwing my money at investing.
Christa Miller: But as far as, get out of debt goes, hands down, that’s a must read for people that are in credit card debt. The first book that got me thinking about money in a new way though, was Rich Dad, Poor Dad.
Christa Miller: I think I read that one for the first time probably back in early college. That kind of always made me think about the whole idea of the passive income and building portfolios. And, in the future (because I don’t have the money for it now) I would like to get into some rental properties. I also really liked, The Richest Man in Babylon, because it talks about— it’s sort of this weird read. I don’t know if you’ve ever read it before, but it’s in this old-time like language and it’s just stories basically about how you should pay yourself first. Invest your money. It’s just good, basic finance lessons and stuff that not everybody really thinks about. A lot of people don’t pay themselves first. Meaning, when you get your paycheck, saying, “Let me pay all my bills first and see what I have left over,” instead of looking at it the other way around and saying, “Okay. This is how much I’m investing this month and then let’s see what we can do bill-wise and discretionary funds,” and stuff like that.
Rob: Right, right. Yeah, those are all very good books. Okay. Well, I really appreciate you sharing your story with us. It sounds like you’re doing fantastic. Talk about inspiration— the things you’ve had to work through, it’s just amazing. I’m looking forward to the podcast. I hope it goes well for you. I’ll certainly link to it. It sounds like it’ll be out by the time I publish this interview so I’ll be happy to link to that. The best of luck with it and everything else.
Christa Miller: Well, thank you very much. I’m so happy that I was able to come on.
Rob: Well I appreciate it. Thanks so much.
Christa Miller: Alright.