Achieving Adulthood Liftoff (Podcast)

Brianna Aviles 00:27
Hi, Amy. Thanks for having me today.

Amy Laburda
Also joining us is Mamie Odom, who joined our Atlanta team in 2023 after completing an internship with us the previous summer. Welcome, Mamie.

Mamie Odom
Hey, Amy. Thank you so much for having us.

Amy Laburda
So both of you contributed to the recent update of our book, The High Achiever’s Guide to Wealth. I'm not going to put anyone's actual age on blast, but the three of us are all still within the book's stated audience. You guys, though, are a little closer to a different end of that spectrum than I am.

00:56
So I hoped we might talk today a little bit about two of the book topics that can really sort of hit home in your early working life, which are figuring out where to live and navigating your student loans after you graduate. So to kick us off, when was the first time either of you were living away from your childhood home? Was it when you moved out into a college dorm or did you have some other sort of leaving-the-nest experience?

Mamie Odom 01:20
So my first time living away from home was in college; however, I didn't move into a dorm. I had a unique situation. I actually never lived on campus. I was very close to campus, but it was an off-campus apartment. Actually, my best friend from high school, her parents were buying an apartment for a couple of her friends and her to live in. So that was my first experience living away from home. It was a lease, but pretty informal.

Brianna Aviles 01:45
So throughout college, I actually lived off of campus. I lived in my parents' house and commuted to school for all three years. It was only about a 20-minute commute. I actually moved out for the first time almost a year after starting my career at Palisades Hudson, back in August of 2023.

Amy Laburda
Wow, I feel like I lived on campus, but in an apartment. At the time I was like, ”Ah, this is so, so unique.” But both of you had sort of the different off-campus experiences. So,

02:12
what was it sort of like on an emotional level? Were you ready to go or were you like, “Oh, this is a little bit intense for me?” Especially since you sort of had a different leaving point than a lot of your peers might have.

Brianna Aviles
Yeah, so, you know, I think a lot of my friends actually went away to college and stuff like that. And I kind of felt left out at first, you know, staying at home. But then I also knew that

02:36
I didn't really want to leave my parents, and I also wanted to save money. So I decided to go to a university close to my house and, you know, I didn't necessarily need to move out. It was more of a luxury than anything. I've been with my boyfriend for about five years. So you know, after starting my career here, a year later we decided that — we thought it was time to move out. But like I said, it wasn't really necessary. It was more so of a luxury. So I was ready.

Amy Laburda
Yeah. So as I said, I did live on campus the three years that I was

03:05
there, and then I had one year abroad, which was also an apartment but provided by the school. And I did the boomerang kid thing, where I then moved back home after my out-of-state college for a while before moving back here to New York, where I am now, which means that I ended up with roommates for a while, and I didn't sign my own lease until my late 20s, which is quite late as these things go for many people.

03:27
But I think whenever you get to your first lease, there's a level of, “Oh, I'm signing a contract. Oh, I have to focus.” You know, like, is this a normal thing? Is this not a normal thing? When you read and signed your first lease, Mamie, or maybe your first more-formal lease in your case, was there anything that seemed especially intimidating or confusing to you? Or did you feel like you had a peer, a parent, someone to sort of walk you through it that gave you a little more confidence?

Mamie Odom
The first leases that I actually sought out and read through and

03:57
negotiated and such on my own were actually subleases. The first being coming up here to Atlanta for my internship, which I needed a sublease for that summer. And then the second being my very last semester of school, when I had to switch apartments, because the one I had lived in for three and a half years was no longer available. So those were a little bit different because I was dealing with the person that was subleasing to me and not necessarily the landlord directly. My first full, normal lease directly with the landlord was when I moved up here

04:27
to Atlanta to start working full time. My mom was my cosigner my first year, but when I renewed this past spring, the landlord allowed me to renew without a cosigner. So that was kind of my first experience. It definitely helped to have my family as some support.

Amy Laburda
All right, so as I mentioned before, I didn't do the lease signing until a little bit later. And part of that was because I was in a few situations where, like Mamie, I was subletting or I was a roommate with people who were on the lease and I was just paying rent to them.

04:56
But when I was living with my parents, part of my initial plan for moving back was that I was going to apply to grad school, and then the Great Recession happened, and it was just a variety of circumstances that kept me there. So, Brianna, you mentioned that you lived with your parents during college. Did you have any sort of tension with them as far as,

05:18
“Oh, I'm living more an adult life now, but I'm still your child in your home.” Or was it a pretty easy transition for you?

Brianna Aviles
I would say it's a pretty easy transition. I think the only disagreements we would have was what we'd eat for dinner and stuff like that, you know. Before I moved out, they really didn't want me to move out. And you know, I had this perfect life at home, and I still do. And I actually only live about 15 minutes from them right now. So I'm still relatively close to them. And you know, I've

05:43
actually never gotten homesick, because I do see them at least once, if not more, two to three times a week. So I think honestly, like we hang out more now than when I actually lived at home. So it's a great bonding experience, I think, in my opinion.

Amy Laburda
Yeah. So it sounds like if you needed to move back home for any reason, there wouldn't be a lot of hesitation there. It seems like you're only kind of a step away right now.

Brianna Aviles
Yeah, I agree. There definitely wouldn't be any hesitation if it was absolutely necessary. Do I see that happening in the near future? Probably not.

06:12
I really do enjoy the freedom that comes with living alone. I like to decorate the way that I want, clean my house the way that I want, and make the food that I want. So like I said, if there was a time where it was absolutely necessary, I would not be opposed to it. I have a great relationship with my parents.

Amy Laburda
Yeah. So I think for many people, having the independence of your own space to clean and decorate and sort of live in the way you want is definitely a positive,

06:37
but one of the things that keeps more people from doing that is financial constraints, obviously. Our colleague Victoria and I teamed up to write the chapter on apartment leases in The High Achiever’s Guide. And we talked a little bit about the 30% rule in that chapter, which is sort of a rule of thumb in financial planning that you want to spend not more than about 30% of your pre-tax income on housing. Now, I live in New York City, so

07:02
I'm aware that that rule is approximate for a lot of people, that sometimes that's challenging. But I bring it up because as you guys were looking either for your current place or the first place you lived, was that something that you were keeping in mind? Or if not, how were you kind of looking at your budget for like, “What can I afford?” Were you looking at rent sticker prices? Were you doing more, “OK, I'm going to

07:23
calculate utilities and other expenses,” or was it sort of a thing that evolved over the time of looking for a place?

Brianna Aviles
Yeah, so I actually did not follow the 30% rule. Instead, I had a specific budget in mind that would still allow me to simultaneously accomplish my short-term and long-term goals. So I created this specific threshold that I did not want to pass. And that's kind of how I narrowed down my search for apartments.

Mamie Odom
I didn't rely on that ratio fully. I was similar to Brianna in that I had

07:52
my housing cost as a line item in my budget, and that was the more specific threshold. But it definitely was a good rule of thumb to just casually check if I saw an apartment. And I think that the size of that line item on my budget ended up being about 30%, give or take. So it can be a good guardrail to kind of use as a quick shortcut, but usually, as with many financial rules of thumb, it's usually not the full answer.

Amy Laburda
Sure. And as everyone who's moved knows, there's

08:22
all those lovely things like security deposits, and first and last month's rent, depending on where you're going, broker’s fees here in New York. So there's that — that 30% rule is great month-to-month, but sometimes the actual budget for moving into your own place has to be, you know, much higher. For yourself — or for anyone else, if you were advising a friend or a client or whoever you were talking to — how do you advise sort of going through your

08:48
your goals and priorities when you're picking a place to live? For example, do you want to live in a place that is a little bit more central, a little bit more convenient, but you probably have to have a roommate because it's more expensive. Versus, “Oh, I found this place with a ton of space, but it means that my commute is twice as long.” Obviously, those are personal, but did you have any sort of process for weighing those factors, or did it seem pretty self-evident to you what was most important?

Mamie Odom
Like you said, Amy, it is a highly personal decision

09:17
depending on your life situation as well as finances, and it is somewhat difficult to talk about in a general sense. I think a good way to approach the process is by being clear with yourself on what is truly a need and what is a want. These things will change over time, and sometimes quite quickly, based on your experiences. You might think that a short commute is a want and then determine, after experiencing a longer commute that impacts your quality of life, that it's actually a need. Similarly,

09:44
you might think that living alone is a preference at first, but once you get to a point in your career where you're doing continuing education after work at home, you might realize you need the freedom to have a quiet space you can come to without roommates to get those things done after work hours. So kind of weighing these preferences versus needs on a personal basis, I think, can be really helpful. It's also important to consider the hidden costs that come with some of these things. So I mentioned a commute, and this can come with hidden costs in gas and tolls.

10:13
Also, if you don't have a commute because you live in a more centrally located area, you might save money if it's more walkable or there's better public transport. It can be difficult sometimes to try to factor in every little thing, and you don't have to get it right the first time. You know, just being truthful with yourself about what currently is a want and a need and then kind of balancing those with the overall budget or 30% rule, whichever you're following.

Amy Laburda
Yeah I think, Mamie, you made the point that

10:40
not having to get it right the first time is something to bear in mind, which I think is probably very helpful for many people doing their first apartment. And when you're doing that first apartment, sometimes there are things that you don't know to expect expense-wise too. Did you have anything that really cropped up for you as a thing that you're like, “Oh, I didn't think about budgeting this because I've never done it before?”

Mamie Odom
Yeah, for sure. So Brianna mentioned the joy that comes from being able to decorate your own space,

11:06
and when I was thinking about moving up here to Atlanta and living alone for the first time, I was really excited about that: having my own bedroom, own living room, own kitchen, everything my own. But I wasn't really thinking about the cost of actually furnishing all of those rooms just for me. Although my apartment that I ended up in is pretty small, it would still be fairly expensive to get a couch and TV and everything that you kind of want to have a full, complete home. So I was a bit surprised when I actually confronted going to buy the furniture.

11:35
Luckily, my landlord, when listing the unit that I'm currently in, had a furnished option. And I was able to negotiate with her to do a rent-to-own agreement. This increased my rent the first year by a good bit. It was still within my budget, although right at the top, but this was great because it meant that I was just paying a little bit more rent every month, and at the end of the first year lease, I now own all of the furniture. So whenever I'm ready to move out,

12:03
I'm taking everything with me: the bed, the bed frame. So I'm basically set up to go move again and have at least the basic pieces of furniture that I need. Like I said, this was a pretty significant increase to the rent. So it was a decision I had to weigh, but I would definitely recommend trying to negotiate these types of deals with your landlord to kind of set yourself up for the future. It is an upfront investment, but furniture pretty much always is.

Amy Laburda
Yeah. And then you have the eventual upgrade ahead of you, but you don't immediately have the

12:32
“I need a bed to sleep in, I need a couch to sit on” problem that faces you in your very first space. Brianna, what about you? Did you have any surprise costs that came up in your first solo living arrangement?

Brianna Aviles
Yeah, so I'd have to agree with Mamie. Definitely the furniture was a surprise cost to me. I didn't realize how expensive a couch was. And,

12:50
funny story, we actually went to a local furniture store near our apartment and, you know, we found this beautiful couch and we tested it out. And the sales associate was with us the entire time and, you know, I asked him, “Oh, how much is this couch?” And after about an hour of, you know, talking to him and him showing us all different couches, he told me that — The couch was broken up into like three sections, three to four sections. It was like a sectional. And he told me that, “Oh, the lounge piece starts at $7,000,” and you know, it's pieced separately. And I was like,

13:19
“Oh, OK, great. Thank you so much for your time. I actually have to go.” Yeah, so that kind of humbled me a little bit when looking for a couch. But, you know, I try to justify all my purchases as well. Like, well, we need to be comfortable. So let's, you know, get a couple thousand dollar couch. And, you know, I always try to justify everything. And that might not be the most smart decision. But we didn't end up getting a $7,000 couch, by the way.

Amy Laburda
I wouldn't have judged you. It's OK.

Brianna Aviles
Yeah, no, no, we didn't. Significantly less.

13:46
But yeah, like Mamie said, furniture shopping was definitely a struggle. And, you know, just trying to budget and, you know, still reach my short-term and long-term goals without depleting all of our funds. Something else that took me by surprise actually was the pet deposit. And, you know, I never knew that I needed to give a pet deposit for an apartment, that they're not going to be cleaning for me after my pet if he happened to have an accident and stuff like that. That was actually like $500 per dog. And when I first moved in, I only had one

14:13
dog. And shortly after I got another dog, and you're supposed to pay the deposit per dog. But for my sake, my dogs are both the same breed and same colors. So, I probably shouldn't be saying this, but I kind of smuggled my second dog in. And you know, it's been a year and they haven't said anything. So I guess in that way I could justify that purchase as well.

Amy Laburda
We'll just hope they don't listen to the podcast.

Brianna Aviles
Yes.

Amy Laburda
Don't recommend it to them. But no, I mean, that raises the question of accidents, which is, you know, unfortunately a fact of life,

14:42
both for pet owners and not. One thing that I was not familiar with before I became a renter was renters insurance. But I think it's a topic that a lot of people sort of come in either thinking, “Oh, the landlord has insurance,” or “Do I really need it?” Because unlike a homeowner, it's not usually required, though occasionally a landlord will. Do either of you have renters insurance, if you're comfortable saying. If not, why not? If so, why? And was it a thing that you sort of knew was on your radar, or is it another of those

15:11
unexpected costs? I'll kick it to you, Brianna, first.

Brianna Aviles
Yeah, so I actually do have renters insurance. To be honest, it was required by my apartment complex. It's not something that I personally probably would have thought of or even purchased, but you know, they

15:26
did tell us that it was required to move into the apartment. And we didn't really know the costs associated with it upfront, but once we found out it was about less than $200 a year, you know, it wasn't a big deal to us. That's like a fancy dinner out one night in East Boca [Raton]. So we do have renters insurance. And I think, you know, considering how inexpensive it is, I think it's worth it just to give you the peace of mind. Not only does it protect your personal belongings from damage and theft, but it could also protect you from liability. You know, like if something were to happen in your apartment and you were at fault,

15:54
the renters insurance will cover you up to a certain percentage. And, you know, a typical policy for personal belongings ranges from $20,000 to $30,000 of coverage, and liability can be covered up to $100,000.

Mamie Odom
Like Brianna said, the coverage amounts usually range between 20 and 30K, which should be plenty for people our age, who haven't had time to accumulate a ton of valuable belongings. Even though we don't have a ton of valuable belongings, it's still a small expense to protect those things to make sure we can carry them with us into the future.

Amy Laburda 16:23
And yeah, Mamie as you said, buying an apartment's worth of furniture, even if you're just replacing things damaged by fire or flood or whatever, is still a pretty significant outlay, especially compared to, you know, $120 a year, $200 a year, what… the kind of things most people are paying. I also think Brianna mentioned liability insurance, which was a thing, when Victoria and I were writing the chapter, that came up that I hadn't really thought about, even though I have renters insurance. But just for people who might not be familiar,

16:52
if someone trips and falls in your apartment and hurts themselves, or has some other injury, they could, in theory, sue you about that. And I think that was the thing I always assumed, “Oh, they'd be suing the landlord, because it's his building.” But actually, if they're in your unit, you might personally need the liability protection. So it's another good reason to pursue it, but one that I think, unless you happen to have been privy to that kind of lawsuit before, might not be on people's radar. Also

17:19
I will throw out: I don't have a car because, again, New York City, but Victoria and I did discover that a lot of renters policies cover things that are in your car if they're stolen or damaged in any way, which is a thing that people might not think about. So lots of benefits there, which actually leads me to a question. Both of you are financial planners, and I'm sure many of your friends know that. Do you have friends asking you questions like, “Should I get renters insurance?” or “How much should I spend on housing?”

17:48
Mamie, is that a thing you've had anyone approach you with, or not so much?

Mamie Odom
Yes, for sure. I don't think I've had people approach me about housing specifically, more so investment management type of stuff. But I do really enjoy discussing personal finance with family and friends. It makes me really happy when I can help them or just point them in the right direction. And spreading financial literacy is really one of the main things that attracted me to this field. So it feels great when I can

18:16
discuss these things that I'm learning in my job, in my coursework, with people close to me.

Amy Laburda
Brianna, how about you?

Brianna Aviles
Yeah, so it's funny. I actually kind of have the opposite experience of Mamie. I'm pretty private with my professional life, but you know, when I'm out and stuff like that, people do approach me and ask me what I do for work. I tend to tell them. And I think people get taken aback sometimes, knowing how young I am and, you know, when I tell them that I work for a financial planning firm and, you know, I'm studying for my CFP® and stuff like that.

18:43
They're kind of taken aback. So the conversations are pretty surface-level. I also think that, you know, getting into someone's finances is a very vulnerable and intimate topic. So from my experience, I don't necessarily have a lot of experiences with people asking me for advice, but I wouldn't be opposed to it if that were to occur.

Amy Laburda
It makes sense. I think sometimes certain friendships are more likely to lead you to discussions about money than others, just because of the vibe between two people, how open the other person is. As you mentioned, it can be very vulnerable.

19:12
I also think you both talked about budgeting as sort of part of your housing costs calculus, which I think makes a lot of sense. For listeners who want to go more into budgeting, we actually do have an episode planned specifically about budgeting later this season. So come back for that one. But while we're here talking about budgeting and housing, we sort of talked about ranking things that are important to you about a given housing situation, which leads into the importance of goals when you're making a budget.

19:40
Has either of you found that your work, either learning to be a financial planner or your practical work now that you've been at Palisades Hudson, has shaped the way you think about your own financial goals? We're talking about housing, but also just more generally, is it a thing that you have gotten more specific with or have refined? Or is it a thing that you sort of had a gut sense for that sort of led you towards financial planning in the first place? Brianna, I'll kick it to you first.

Brianna Aviles 20:04
To be honest, I would say that I kind of had these similar principles established before starting my career at Palisades Hudson. I remember I actually got my first job when I was 14, at Monkey Joe's, and I was a bounce house attendant. And there, you know, when I got my first paycheck, I was ecstatic. Like, maybe it was $100. And from that day on, I just knew, like, how valuable money was. And I wanted to start building really good financial habits. So I saved every penny I made.

20:32
You know, throughout college, there were times where I had internships and when it would end, I was eager to go to the next internship or get a job, because I was so used to working at such a young age. And I wanted to continue that. And, you know, when I started my career here at Palisades Hudson, I do think that I started adopting better habits for retirement planning and building an emergency fund. Working with clients and managing their portfolios has really taught me the importance of saving for retirement and investing. So I do think now,

20:59
you know, that will be a long-term goal of mine.

Mamie Odom
Similar to Brianna, I was already interested in personal finance before starting work here. A lot of my information would just come from looking up questions online when they would pop up for myself or a family member. I did also take a one-semester personal and family financial planning class at my university as part of my minor, during my undergraduate studies.

21:24
And that had a lot of really basic, but really valuable information. And I would encourage people who have access to courses like that as an elective, at any level of education, to take them. It can be a really great way to lay the foundation, like Brianna said, to build those healthy financial habits and kind of just understand the bigger picture of your finances, and the way that cash flow and long-term savings goals and net worth kind of all tie together.

Amy Laburda
And I think

21:52
It's very natural for many people to think about budgeting as spending versus saving, right? Those are kind of like the two main things when you get money; Are you keeping it or are you spending it on something? But I also think, for a lot of young adults, one of the sort of complicating factors of a budget is also debt repayment. A lot of people want to be debt-free. Obviously, you have some amount of required debt repayment. And for many young people, student loans are going to be the main thing on their minds. So, without getting

22:21
too personal, despite the title of our podcast, without mentioning amounts or anything: Did either of you have student loans when you graduated? And are we talking about private loans, government loans, or a mix of both? Brianna, I'll kick that to you first.

Brianna Aviles
Yeah, thank you, Amy. So my first year of college, I actually did qualify for the first-generation grant. I was the first one in my family to go to college, and that helped with paying some of the tuition for my first year. However, I did have to obtain loans. I have federal loans.

22:50
I actually have three subsidized loans. And you know, the federal government offers two main types of loans: We have subsidized and unsubsidized loans. I have subsidized loans. And you know, while they're fairly similar, there's also a big difference. Both of the loans are administered by the federal government, and they are daily interest loans, which means that interest is added to the balance daily. They both also have fixed interest rates. But the main difference with a subsidized loan is that the government actually pays the interest on the loan while you are in school,

23:19
and you don't have to start paying the interest and the principal payment until six months after graduation. There's a grace period. And with an unsubsidized loan, the interest actually starts accruing while you're in school, so the government won't pay that. So I'm fortunate enough to actually have the subsidized loans, and I didn't have to start repayment of principal and interest till after graduation.

Mamie Odom
So I don't have any direct experience with student loans, but Brianna, correct me if I'm wrong that for subsidized loans you do have to qualify. It is need-based, and that's kind of the difference

23:49
and which kind of loan the federal government will give to you.

Brianna Aviles
Yes, that's correct.

Mamie Odom
Cool. So yeah, I didn't have any experience with loans. I actually had a state scholarship from Florida called the Bright Future Scholarship. This covered every undergraduate credit hour. It was a great scholarship. I really encourage people to look into state scholarships, whether it's need-based or merit-based. This one was through the state of Florida. It's funded by the state of Florida Lottery,

24:16
but there's also a lot of private organizations that give out scholarships. I actually sought out a scholarship to help me with my CFP® education requirement. So I think it's worth the extra time and effort to seek out scholarships and apply to them. My scholarship covered all of my undergraduate credit hours, as I mentioned, and then it also ended up

24:35
covering about half of my graduate credit hours. So my decision to get a dual degree was partially financially based, because I did save money on not having to pay full tuition for the graduate credit hours. But it was also partially because the pandemic started in spring of my freshman year of college, and I was not ready to graduate after three years, two of which were in the pandemic. But it ended up being a really good financial decision overall.

Amy Laburda
All right, thanks. I think

25:02
Mamie, you really sort of emphasized the importance of looking for those kinds of scholarships, because it sounds like that was a fairly hefty influence in how you financed your education. So, Brianna, when you took out your loans, since your parents did not go to college, did you have anyone you knew — a counselor at school or a teacher or someone who you could talk to about your decision to take out student loans? Or did it just kind of feel like, “Oh,

25:28
this is what people do to go to college.” It was just a thing that seemed sort of a natural path to follow for you.

Brianna Aviles
Yeah, so I think it's a mixture of both. I don't think they really prepare you at all in high school for what the future holds, and how to take out a loan and what to expect with all that. But fortunately, I actually had a very nice guidance counselor in high school.

25:48
I was very close to him, and he helped me a lot throughout high school. And my senior year of high school, I actually sat down with him and he arranged an appointment with my mom and I, and he helped me create my account for the FAFSA, which is the Free Application for Federal Student Aid. And he created my account for me and walked me through the process and kind of explained everything that I should expect from this form. And ever since that initial time sitting down with him, I knew that the FAFSA had to be completed annually. So that was just something that I stuck with.

Mamie Odom 26:16
So like I mentioned, I was extremely fortunate to not have to take out loans in order to complete my college education, but I still did fill out [the] FAFSA my senior year of high school going into freshman year. And no one in my life really had any grasp on this stuff. Even the guidance counselors at my high school, due to the general population of my high school and their socioeconomic status,

26:41
that really wasn't the focus of the guidance counselors. They were really trying to get people through high school and not necessarily super focused on the college part. My mom's an immigrant, so she didn't experience this stage in her life here in the U.S. And then, although my dad grew up here, his information was pretty outdated from when he went to college. As I've worked through my CFP® coursework on this subject, I've been humbled by just how little I really understood about education funding in general, including loans.

27:10
I remember when I did fill out the FAFSA, I was really surprised at how high my expected family contribution was. Now looking back, I can understand how factors like my grandma passing and my dad receiving that inheritance affected the inputs, and then obviously the outputs, of the FAFSA for me. And it would have been really helpful at the time to understand where those numbers were really flowing from,

27:36
because they can be kind of surprising. When you see the expected family contribution in your head, you immediately think, “Well, there's no way we can actually pay that every year.” This subject can be pretty complicated and intimidating. And that's why, as I've been saying, I really encourage people to seek out, whether it's online or with a financial professional, just ways to understand it more. You still might not get the exact loan or financial aid that you really want, but it's helpful to just kind of understand where these numbers are coming from and

28:05
how they're determining how much they expect you to pay out of pocket.

Amy Laburda
Yeah, I think even as someone who, like both of you, went through the FAFSA and also I ended up filling out the CSS Profile, which a lot of private colleges use in addition. It's really confusing. And I think even knowing that, going into writing the chapter with Brianna, there was just so much to include that it did feel a little bit like we're throwing a lot of high schoolers into the deep end here, as far as

28:33
understanding what they're contributing, making these choices. So not to toot our own horn, I do think the chapter that we wrote turned out pretty well. I'm pretty proud of it. But there are also a lot of online resources to look into. And, you know, even me and Brianna here learning a lot of things as we were writing it, just because there's so much to know about the student loan and education financing process. So one chapter before in the book, in Chapter Three, our colleague Thomas talks a little bit about

29:02
debt repayment methods as part of tackling your budget, and mentions the avalanche and snowball plans. Is that a thing either of you had encountered before, or was that a thing that came up more professionally in your coursework or at Palisades Hudson, your understanding? And could you, for our listeners, just kind of briefly talk about what those two methods are? Mamie, I'll go to you first.

Mamie Odom
Thanks, Amy. So I actually was aware of these terms, due to the class I mentioned before that I took

29:31
in my undergraduate studies. And I found this really interesting, because debt repayment is probably one of the most common personal financial planning needs that people have day-to-day in their lives. So both of these methods concentrate on paying off one debt at a time, but the order that you pay off the debts is really what differentiates the two. So I'll start with the snowball method.

29:56
This method prioritizes paying off debts from the lowest total balance to the highest total balance. This works for many people because you pay off complete loans faster, which can give a really great psychological boost to keep going and paying off the debt. Eliminating the loans faster at first can also ease the mental burden of managing numerous loan payments at once. As you pay off each loan, you'll basically have one less to worry about. The avalanche method, once again, focuses on paying off one debt at a time while making minimum

30:26
monthly payments on all of the others. However, this method prioritizes debts by interest rates, ranking them from the highest to the lowest. You basically concentrate on tackling the highest interest rate debt first. Once the highest interest rate debt is paid off, you move to the next highest and so on. This results in paying less interest overall and usually becoming completely debt-free much faster. However, it can also require more discipline and patience.

30:51
For some people, like me, knowing that you're saving more money on interest in the long term is enough to keep you disciplined. But for others, based on personality, you may need the constant boost of knocking a loan off of your balance sheet to really help you keep going. I personally haven't come across a large debt yet, thankfully, that I've needed to use either of these methods for. But I think it's really interesting to be able to

31:15
give people a strategy, or an option of these two strategies, to really make a plan and stick to it. That really is the biggest thing in debt repayment, is keeping up the momentum. It can be really easy to get discouraged, but there are currently, on the internet and social media, tons of people going through debt repayment journeys. I see it all the time on the internet. And even that can be inspiring to watch and kind of help you on your personal journey, to know you're not alone and a lot of people are working through this at the same time.

Amy Laburda 31:40
Yeah, I paid off my student loans during 2020. And the joke for a long time was it was the one good thing that happened in 2020. But yeah, I think it's a thing that truly can feel like a slog, because for some people, it can take quite a few years. So there's that dopamine hit with the snowball method, where you knock one out, or sort of the more slow and steady over time approach of the avalanche. But I think, too, you sometimes hear

32:07
people in our profession, in financial planning, talk about student loans as good debt, quote-unquote. And Brianna, I wondered if I could just kick it to you briefly, putting your financial planner hat on a little more. What do financial planners mean when they talk about “good debt” versus “bad debt,” and why do student loans often fall in one of those categories?

Brianna Aviles
So when financial planners talk about student loans being good debt, I think that they're referring to that

32:32
student loans itself have fairly low interest rates, and the cost and burden of borrowing is pretty minimal since they are administered by the federal government. So having extra disposable income can allow you to allocate some of your income to other financial priorities, such as credit card debt, which do have a fairly higher interest rate. You could also use the extra money that you have to plan for retirement, emergency savings, savings in general, and even travel. So

32:57
student loans itself, like I said, with the interest rates being so low, is not so much a financial burden when compared to other things such as credit card debt.

Amy Laburda
And we're also, we're talking here about subsidized student loans, obviously, since private student loans can often have a higher interest rate. But I think also there's the question of what you're taking on debt for. This is probably more in-depth than we necessarily need to go. Obviously, you two are both financial planners, so you went a particular way with your education.

33:27
But I think sometimes there's a real discussion, when you're talking about taking on a lot of loans for a degree that is likely to lead to a higher earning career, such as medicine, versus the poor philosophy majors. We beat up on them too much. I'm a liberal arts major living in a glass house in that particular regard. But I think sometimes there is the discussion of good debt as being debt that

33:53
then can pay off in other ways, and that education can sometimes go that direction. Which actually leads me to the question: It sounds like both of you had a fair amount of just genuine interest in money management and finance. How much did you think about sort of building a career, in deciding to study that? Or was it a thing where you were just pursuing your interest, and the career opportunities were kind of a happy side effect of that? Mamie I'll go to you first.

Mamie Odom 34:20
I would say probably the latter. I was really just pursuing my interest. I had a really hard time deciding on my major, to be honest. I started out as undecided, and at my university, that meant that you had to choose two majors and be somewhat working towards them. They didn't want you just running around with no real direction. So I ended up choosing economics because it fit my interest and fit the

34:47
type of challenge that I wanted, which was a mix of more technical math and statistics, but also the liberal arts side of understanding our society and the world a little bit better by following the money. I basically pursued my interests and then let the career opportunities decide where I would finally end up.

Amy Laburda
How about you, Brianna? How did you end up where you ended up?

Brianna Aviles 35:09
It's actually pretty interesting. Initially, I actually wanted to be a veterinarian. And I grew up my whole life around animals and dogs, and volunteering at horse farms. And I really developed this strong love and admiration for animals. And as I progressed through my life, I realized that wasn't the career path I wanted to pursue anymore, because you don't necessarily see happy animals coming to the vets. Usually for a…

35:31
they're usually going there for help, right? And the outcome might not always be positive. So that was an eye-opener for me. And I thought, “Well, what's the next best thing that I love?” And I knew that I love math, as silly as it sounds, and numbers. And before I went to college, I knew that I did want to pursue a career in financial planning.

Amy Laburda
So if both of you continue to grow your careers at Palisades Hudson, which I can say we hope you will, you'll both be in a position to be giving more direct advice to clients over time, as you become managers.

36:01
As you prepare to give advice directly to clients rather than assisting them, do you feel that your own experiences as young professionals will shape some of that advice you give? Or do you tend to feel that everyone's situation is too unique, your experience is your own experience, but it's not really going to affect what your clients feel? Brianna, I'll let you answer first.

Brianna Aviles
So I definitely think that there's not a one-size-fits-all approach. I do believe that every client situation is different.

36:30
However, I do think that my own personal experiences may influence the way that I give advice in the future, although I do want to remain unbiased in that aspect. You know, you always want what is in the best interest of the client, without necessarily throwing so much of your own personal experience and opinions on their situation, right?

36:49
So I think it also comes down to identifying what your goals are, right? And I think people have different preferences and priorities in life, and goals that they would like to accomplish. So I think just taking a step back to identify really what it is that you want to tackle short-term and long-term can really influence the way that someone could give you advice. For me particularly, I'm pretty debt averse, and I pay off my loans pretty aggressively. And like we just mentioned earlier, student loans are considered “good debt.” and

37:17
some people may disagree with how aggressively I am paying off my loans. But I made it a goal, a short-term goal for myself, which is ironic because, you know, student loans are typically long-term. But I made it a short-term, one-year goal for me to pay off my loans, and I'm happy to say within the next two months, I will be completely debt-free of student loan debt. So that's something.

Amy Laburda
Congratulations.

Brianna Aviles
Thank you so much. That's something I'm definitely excited about and going to celebrate.

Amy Laburda 37:41
Mamie, how about you? Do you feel your personal experiences are going to shape your advice, or is that a thing that you're more going to set to one side, do you think?

Mamie Odom
I pretty much agree with Brianna that it's important to strike a balance. Obviously, your personal experience is going to inform how you view things, and you're going to have some implicit biases resulting from your personal experiences. However,

38:04
it is important, like Brianna said, to do what's in the best interest of the client and understand that their situation is likely a lot different than yours. Especially for our client base, a lot of our clients are a little bit older and have acquired their wealth either through successful high-level careers or family inheritances, or combination. So our client base might have a different resource level, in general, than we did when we were going through these experiences. So it's important to first and foremost, keep their

38:31
financial situation in mind. But yeah, it's kind of impossible to completely erase your personal experience, since that's what we lived through.

Amy Laburda
Sure. I can confidently say after a season and change of this podcast that “there's no one-size-fits-all answer” is perhaps the anthem of financial planners. And I think that makes perfect sense. You're giving such tailored advice. But you know, you also bring yourselves to these conversations. So I think that's, that's a very

39:01
logical answer. So I've made it something of a tradition to ask my guests, at the end of the episode, if there's anything that I didn't ask that they wanted to talk about. So do either of you have any thoughts about starting your financial life out after college: housing, loans, something else that we didn't really touch on, but that you feel is important, that you want to include?

Brianna Aviles 39:22
Yeah, so I'll kick us off. I don't know if it's necessarily financial advice, but what I do think is important is recognizing that there's no specific timeline of events when things need to be accomplished. And I think that being a young adult, we're pressured into thinking that there's this specific timeline of events where things need to be accomplished. You need to graduate high school and immediately attend college and obtain a four-year degree. And after college, you have to get married and have kids. And you know, as I'm

39:44
aging, throughout my life, I'm realizing that the timeline that I had in mind originally five years ago was unrealistic. And you know, I think it's important to understand that there is no definitive timeline, the same as there's no one-size-fits-all approach, right? And I think that we tend to overlook our small accomplishments and are always looking for what's next. And I think it's important to take a step back, and recognize and appreciate, like, how much we've accomplished already. You know, graduating high school is an accomplishment. And going to college is an accomplishment.

40:14
Obtaining a scholarship or federal loan is an accomplishment, right? These are all things that we have never had experience with, and it's a first for all of us. So I do think it's really important to just take a step back and appreciate how much we've accomplished and what's to come. And I think part of that is growing as a person, right? And growth doesn't necessarily happen overnight. That doesn't necessarily need to be a short-term goal. Could more so be a long-term goal, and it should be. You should always want to be better than you were yesterday. And I even think that the first part

40:43
to growth is recognizing the problem, or what you want to accomplish, and from there taking the necessary steps to achieve that.

Amy Laburda
Great. Mamie, did you have anything you wanted to add?

Mamie Odom
Yeah, I guess I can add to the pep talk a little bit. I think that, like Brianna said, this can be a pretty hard time in your life. Usually it involves transitions and where you're living or how you're living. And those transition periods in your life are never easy. Things can take a while to settle, and sometimes it feels like you never really settle.

41:10
I think it's important to just be patient with yourself and lean on your support system. All you can do is try your best. And even older adults who have been quote-unquote “adulting” for a long time still make mistakes, big or small. Whether it's forgetting to take out the meat out of the freezer to thaw, or taking a loan with too high of an interest rate in a time of desperation, whatever it may be. It's easier said than done, but instead of dwelling on any mistakes that might have been made, it's important to just try to learn from those mistakes and do better going forward.

41:40
I think it's also important to listen to your instincts and trust yourself. We talked earlier about leases, and I had some not so great experiences with potential landlords. And I think it's important to trust your instinct and not do business with anybody that you get a bad feeling from. It takes a while to kind of fine tune those skills of knowing what's really worth it and what's not worth the risk, but really just learning to trust yourself. And like I said, not dwelling on mistakes, not beating yourself up.

42:05
We all want to have it all figured out immediately, but the reality is we never will. So just embrace the chaos and cherish your youth and be kind to yourself.

Amy Laburda
I think that's a terrific note to end on. So Brianna, Mamie, it's been such a pleasure talking with you today. Thank you so much for joining me and for being willing to get a little bit personal, sorry about the pun, in this episode. I look forward to having you both back on the podcast sometime in the future.

Mamie Odom
Thank you so much, Amy.

Brianna Aviles
Thanks for having us, Amy.

Amy Laburda 42:36
“Something Personal” is a production of Palisades Hudson Financial Group, a financial planning and investment firm headquartered in South Florida. Our other offices are in Atlanta; Austin; the Portland, Oregon metropolitan area; and the New York City metro area. “Something Personal” is hosted by me, Amy Laburda. Our producers are Ali Elkin and Joseph Ranghelli. Joseph Ranghelli is also our director, editor and mixer.

43:03
Our firm has written two books: Looking Ahead: Life, Family, Wealth and Business After 55, and The High Achiever's Guide to Wealth, which offers advice for younger professionals, entrepreneurs, athletes and performers. Both books are available on Amazon, in paperback and as e-books.