A Guru Investor Showed Us How To Get Out Of Debt | Millionaire Mob

This special edition of our motivational series “Get out of debt” features a guru investor -Millionaire Mob. He is taking a short break from investing today and showed us how to get out of debt

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What do you do for a living?

I currently work in private equity making investment across North America. It’s a great gig that doesn’t totally feel like a job.

Really, I get to log in, look for investment opportunities and evaluate new investment opportunities.

The day-to-day can vary depending on the cycle of potential investments. It’s a great way to interact with people daily and have a hybrid of responsibilities.

I used to work in investment banking, which I got sick of. The demanding nature and egotistical colleagues can get old really quick.

You can see why I write so much investing related content. I have a niche focused investment theme at my day job, but then writing for broader investment strategy helps keep my mind fresh.

In addition, I love building models to keep my mind active and running various scenarios. This is why I created my dividend reinvestment calculator to help people plan and take action in their investing goals.

Do you have a degree and are you currently using your degree?

Yes, I graduated with a Bachelor of Science degree in Finance. I use my degree every single day. I’m grateful for going to a school that had an outstanding curriculum and prepared their students for post-graduation life.

How long have you worked in your field and what is your current salary range? Only if you want to, however, it is better to give our readers some perspective. If they are low-income earner vs high-income earner, the strategies might differ.

I’ve worked in this field for 8 years now. Whoa, that sounds like a lot as I type this out. I feel like I just got started yesterday. It was only a couple of years in my career that I wasn’t making six figures.

I’ve hopped around jobs a bit the last 2-3 years, so my income has stayed relatively consistent.

Currently, I’m making in the $160,00 to $200,000 range from my day job income. I continue to find different side hustles to increase my income further. I love using side hustles as a ‘sidecar’ since its an added bonus to accelerate my investing goals.

What major debt have you paid off that you feel is a hurrah moment for you?

I’m fortunate enough to have paid off my student loans in less than 5 years… Well, a majority. I had a small piece outstanding because the interest rate was so low. I felt like I could put my money in better spots elsewhere.

I just paid that small balance off recently. I’m very happy for doing this. It was such a big relief off my back. I also paid off my car loan, which was a huge relief too. I hate putting money towards depreciated assets. I’m also not a big car or driving fan.

Describe to us in detail, the strategies you used to pay off that/those debt(s)

There were so many different strategies that I used. I would take anything really to prepay my debts. Even if it was $50. I would instantly prepay my debt.

I remember finding ways to make money instantly just so I could continually prepay my student loans. Now, I can take a step back and think about the bigger picture.

A few items that come to mind to pay off that debt are:

1. I play a lot of fantasy sports, when I would win a league I wouldn’t go shopping or buy the latest iPhone. I would instantly prepay my debt.
2. I started doing side hustles as a freelancer. Specifically, I helped small businesses create presentations for fundraising or even do financial modeling.
3. At times, I’d do small things online like surveys to earn small income that I could put towards debt. Every little bit helps!
4. I also refinanced my student loans. I loved how easy that was and how much it freed up in additional cash flow. It made it a lot easier to extinguish my debts.
5. Then, I was fortunate enough to work in an industry where you receive a large end of year bonus. I invested a lot of the end of year bonuses to save for a house. However, I used most of that bonus income to pay off high-interest rate student loans.

Do you have any other debt left? What kind of debt? What are your goals to pay off this debt?

Yes, I have a mortgage on my house. I’d love to fully extinguish that and live mortgage free. The interest rate is low enough that I’m finding ways to invest some side hustle income into ways to earn even more income.

I’m taking the sweat equity approach of building a sustainable business online that I can eventually sell. I’d love to use the proceeds to pay down my mortgage or make other financial decisions.

Do you budget? Why or why not? Which method do you use?

I don’t really budget much. I have a method that’s worked well in the past. Only spend one paycheck’s worth in a month (if you get paid bi-weekly). The other paycheck I get I invest fully.

Also, I was fortunate to bite the bullet early in my career to max out my 401(k) and Roth IRA. I knew if I did it early and my income increased, that I’d only have to make sacrifices that the first year of doing it. From there, it was only downhill.

What percentage of your monthly income do you save?

Well, I haven’t done the math actually so let’s do it. On my base salary, I’m making about $10,000 per month. About $2,000 per month goes to retirement accounts and I save half of my remaining paycheck. That would make about 40% of my income. Then, for my bonus this is typically 50-70% of my base salary, I treat that as well… a bonus. I put that directly as savings.

Thus, I save about 40-50% of my total income on a monthly basis.

Do you have any passive income sources?

Yes, I blog for my site Millionaire Mob and I also have a few eBooks. In addition, I sell a few stock photos of my travel experiences. These don’t pull in significant income, but it’s something. It can pay for at least my Netflix on a monthly basis!

In addition, I like building passive investing streams (hence a bit of the dividend investing focus).

I love investing in stocks that are undervalued and have some growth, leading to a high likelihood of dividend increases in the future. I actually like low-yielding dividend stocks. I want dividend increases in the future! Not dividend cuts.

I’m currently looking at income properties. I like duplexes in my city to maximize income potential. This could increase my income in a mildly passive manner.

Do you rent or own your own home/condo/apartment?

Yeah, I actually rent out the basement of my house. I don’t use it much. This can help me prepay my mortgage more.

It hasn’t really inconvenienced me at all. Only thing is some nights on a quick turnaround, I’m really not looking forward to washing sheets.

Which side of the argument are you in terms of paying off mortgage vs investing?

I kind of tinker with both depending on how I’m feeling. At the end of the day, I’m a big numbers person.

The market returns overall 7-9% over time. If you are investing on an after-tax basis, that is 4.2% to 5.4% tax affected (conservatively).

If your mortgage interest rate is significantly higher than that then you should definitely be paying down mortgage first. If not, you should invest instead. 

Here is the link to binge on all the get out of debt series

Other posts in the series include 

Xrayvsn crawled out of $600,000 debt and the worst divorce in history and still managed to reach financial freedom.

From one Geek To Another became debt free at a tender age of 27. Phenomenal post, soo good, it also got featured by passive income journal club MD.

Money Saved Is Money Earned is the master in stretching that dollar. Low income did not stop him from getting out of debt. 

How We Paid Off $340,000 Mortgage In 3 Years By Saving 86.5% Of Our Income (By HisHerMoneyGuide)

Wealthy Doc became financially independent in 17 years after starting his real job. 

Marc from Vital Dollar paid off his 30 years mortgage in just 4 years. 

Check out some of the tricks we used to pay off over $200,000 student loan debt by 6 months out of training.

Let us know if you have paid off a certain debt and would like to inspire others. 

Please comment and let us know what you think or add your own story

Adebayo

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I am a pulmonary and critical care doctor by day and personal finance blogger/debt slaying ninja by night.

After paying off close to $300,000 in student loan debt in less than 6 months into my real job, I started on a mission to help others achieve the same. There is no magic to this than to strap up and get it done. Some of the ways we achieved this include side hustle, budgeting, great negotiation skills, and geographical arbitrage.

When I was growing up, common knowledge in Nigeria is that there is one thing you cannot trust anyone else with, and you guessed it – your money.

Being frugal came easily to me based on my background. However, the concept of building wealth did not solidify in my mind until when I finished medical school. I wish I knew what I know now when I was 14. Still, I don’t know enough and I am constantly learning to improve my knowledge.

My goal is to reduce financial illiteracy among young professionals. I am catering to the beginners – babies and toddlers in financial literacy.