When managing your finances, there is a well-known saying that “numbers don’t lie.” This means you cannot ignore the hard facts presented by your budget and spending habits. No matter how much you wish you could afford a particular expense, if the numbers don’t add up, you simply cannot afford it.
Today’s podcast summary features Mags Balisi-Benjamin, and she knows it is vital to be aware of the numbers and use them to guide your money decisions. By doing so, she ensures they are living within their means and setting themselves up for long-term financial stability.
$115,000 student loan debt to FIRE
A physical therapist based in Brooklyn, NY, by day and an aspiring early retiree by night, Mags first came across the Financial Independence and Retiring Early (FIRE) Community in 2016 when she had the chance to meet Ramith Sethi, author of NYT Best Seller, I Will Teach You to Be Rich and did volunteer work at his conference in the city. Still, it wasn’t until two years later that she and her husband applied the lessons learned from the FIRE movement.
One of the earlier challenges Mags faced was breaking free from her comfort zone. Since she wasn’t in debt and not living paycheck to paycheck, she didn’t have the motivation to improve the trajectory of her financial life intentionally. It wasn’t until she got married that she had to take personal finance seriously when his husband took a pay cut after switching careers.
At first, the job change did not go well with Mags since, on top of fixed expenses, they also had a $115,000 student loan to tackle. They revisited the spreadsheets, and the numbers don’t lie. Benefits from her husband’s new career did make sense financially. Health insurance through her husband’s city job at $8 a month provided excellent coverage, and it freed space to work on their debt-free life.
They aimed to eradicate the 6-figure student loan as soon as possible. To do this feat, they had 7 jobs between them and aggressively cut costs wherever possible. They are fortunate to have a very supportive family who invited them to dinners and even gave them take-out food to help with expenses. The family became a safe space for sharing financial goals and celebrating small wins. This strengthened them as a couple because they shared challenges and successes early in the marriage.
Halfway through paying off the debt, they realize they can start saving for retirement. After paying off the student loan debt in 15 months, they pretended to have it still, but this time putting the money aggressively in their retirement funds. Since they were already seasoned with a frugal way of living, it was easier to raise their savings rate substantially.
The Mommy Fund and Baby Fund
Having reached a comfortable net worth, Mags and her husband decided they were ready to start a family. They chose to wait until they had more financial margin to lessen the stress it could put on their family. People warned them that everything would fly out the window (budget included) once the baby arrived. However, Mags wanted to enjoy this joyful transition, so they created the Mommy Fund and the Baby Fund.
Photo by Fadime Erbass on Pexels.com
Just like travel or car repair funds, these are two sinking funds, meaning it is not calculated as part of your net worth because you save them for an immediate or fixed expense. The couple contributed a small amount every paycheck to cover all pre- and post-natal expenses and extended maternity leave with their newborn. Mags worked on being mindful of her well-being while waiting for their bundle of joy to arrive. She availed herself of prenatal wellness packages that included massage, acupuncture therapy, and stretch sessions.
Aware of their debt-free journey, family and friends send them baby hand-me-downs, so they saved most of the Baby Fund because they have everything they need until their daughter is a year old. The money saved was placed in a custodial account that will give their child access at 21 years old. Apart from this, they opened her a 529 plan for college and made her an authorized user of a credit card to build good credit. With careful planning and the right tools, FIRE is still feasible while rearing your child and setting her up for future success.
Enjoying a debt-free life
Living a life of hustling to pay their debts, the challenge they now face is to learn how to spend, especially with the new addition to their family. Their monthly check-ins help them not only to cut waste but to assess their feelings toward the budget. Both are open to changing plans when one of them feels deprived and can’t continue with it.
They also mark net worth milestones in their FIRE journey with gifts for themselves. These are no-questions-asked purchases that each of them could enjoy. Like the private tennis lessons, Mags got from achieving a recent milestone or the baseball card collection that his husband filled up from one of his asks. Slowly transitioning from working on massive debt to enjoying the perks of a debt-free life.
Achieving Financial Independence and Retiring Early (FIRE) is a goal that requires careful consideration of your motivations and a long-term approach to money management. No matter how much income your household takes home Financial Independence (FI) is possible, but it is very important to lay down a strong foundation from the beginning. Your Why of FI. A clear goal and mindset that will translate your plans and strategies into real-life actions.
In their debt-free journey, Mag’s household mindset was slowly transformed from the drive to consume to the excitement to save and invest for the future. By understanding these critical principles, they continue to work towards reaching their financial goals while also enjoying a fulfilling and financially secure life.
About Us
We are a Pinoy Physical Therapist duo living somewhat unconventional but intentional lives. In this podcast, we want to learn how Filipinos worldwide in different industries and walks of life earn, spend, save, and invest money to achieve Financial Independence.
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DISCLAIMER
We are NOT certified financial advisors, analysts, or CPAs. Investing strategies shared in this article and the website are not financial advice but our opinions for educational purposes only. We want you to treat our content as a preview to do your research so you can make smart financial decisions.
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