Denis O’Brien [0:37]
Welcome to Episode 209 The Cost of Deferring your Loans. Hey money clan, a warm welcome to the Chain of Wealth podcast. I’m your host, Denis O’Brien.
Katie Welsh [0:48]
And I’m KatieWelsh.
Denis O’Brien [0:49]
So Katie, really interesting topic that we’re chatting about today. And it’s something which you did a little bit of.
Katie Welsh [0:56]
I am 100% guilty of this. This is why I want to talk about it.
Denis O’Brien [1:0]
This is why Chain of Wealth was born.
Katie Welsh [1:2]
Well that, and this is why I also feel like I am allowed to talk about it because I feel like when you are guilty of something, even if it’s a little bit touchy, or a sensitive topic, if you are guilty of it, then it’s okay. It’s fair game.
Denis O’Brien [2:14]
Yeah, it definitely is fair game. So just before we dive right into today’s episode, we want to know, are you paying your student loans? And that’s quite a loaded question. But we’re looking to just get some engagement from you guys on Instagram, so hit us up. It’s @chainofwealth on Instagram, and let us know if you are currently paying your loans. And this is this is a no judgment zone. So whether it’s a yes or no. We want to hear what you’re up to. Alright Kate ready to dive into today’s show.
Katie Welsh [2:14]
Yeah.
Denis O’Brien [1:46]
Awesome. Let’s do it.
Voice Over [1:48]
Welcome to Chain of Wealth. here’s your host, Denis inspiring you to begin your journey of financial freedom.
Denis O’Brien [2:0]
Alright Kate, so I know we spoke a little bit about it in the intro but you had a conversation with someone today that is doing exactly this. So give us the scoop of what is the DL on one your friends is doing.
Katie Welsh [2:14]
Okay, so first, I want to start I know we have had quite a few episodes where our topics come from things that I eavesdrop overhear on the shuttle to work right. I’d like to point out that this was not an overhear.
Denis O’Brien [2:30]
This is actually actual conversation you had with someone.
Katie Welsh [2:32]
Yes.
Denis O’Brien [2:33]
Okay.
Katie Welsh [2:33]
So she comes into my classroom. And you know, we’re talking about stuff and she first has no idea of Chain of Wealth. I kind of have like, two
Denis O’Brien [2:45]
Dirty little secret.
Katie Welsh [2:46]
Well I have like two separate lives a little bit. So I go to work and I’m Ms Welsh and I’m the teacher and I’m fourth grade. And, you know, I’m that life. And then I come home and I’m Katie, the wife slash co-host slash only cook in the house. So
Denis O’Brien [3:5]
I take offence, I’ve cooked some really good meals lately.
Katie Welsh [3:8]
I snuck that in. I just wanted to see if you’re listening.
Denis O’Brien [3:11]
Course I’m listening.
Katie Welsh [3:13]
So anyway, she comes in and she’s all excited. She is asking me if how to get pay stubs.
Denis O’Brien [3:52]
Right.
Katie Welsh [3:24]
And we’re talking about it. And I was like what I think legally you have to be able to print them off because there are you know certain things in your life that you need your pay stubs for. And she’s like, yeah, I’m getting this new apartment. And you know, I like I can’t take living at home anymore.
Denis O’Brien [3:41]
Mmm.
Katie Welsh [3:43]
And I think we’ve all been there. We all love, love our moms and our dads. But there comes that time. Like, you’re just you gotta go.
Denis O’Brien [3:52]
Either that or you’re not welcome.
Katie Welsh [3:54]
I’ve never had that problem. I’m always welcome. I can move home tomorrow.
Denis O’Brien [3:58]
Well, you know, some parents say that they can’t wait till their kids leave the home. But then some kids leave when they’re like, almost 40 years old. So I think both ends of the spectrum here.
Katie Welsh [4:8]
So anyway, we’re talking and she is having to get her pay stub. She’s getting her for her first post college apartment. She had an apartment in college.
Denis O’Brien [4:20]
So this is like it, this is like your first time she’s moving out, she’s gotta buy everything. It’s all those overheads it’s not knowing about signing the lease, all that kind of well, she area. Yeah?
Katie Welsh [4:22]
So I sort of I think No, I didn’t pry for that too much. Because we were on a limited time frame.
Denis O’Brien [4:39]
Right.
Katie Welsh [4:39]
But um, she did say she had an apartment in college. So I assume that maybe she has something. But anyway. So that obviously leads into student loans. I’m not super sure. It’s a little fuzzy how that connection was made. But
Denis O’Brien [4:57]
I mean, I have to ask did you pry it into student loans? or did she kind of volunteer it?
Katie Welsh [5:3]
No. So that is a that’s a legit question. Thats fair. But no, because she said, You know, I am living at home and I love my mom. She’s driving me nuts. And she keeps asking me when I’m going back to school. And she just graduated. And the girl was like, you know, I I just need a break. I’m not ready to go back to school yet. Like I want to go, but I haven’t done it yet.
Denis O’Brien [6:0]
She wants to do her master’s.
Katie Welsh [6:1]
Yes.
Denis O’Brien [5:33]
Okay.
Katie Welsh [5:33]
And I was like, Girl, I get it. I totally get it. Because I would love to go back to school. But I’m not gonna lie. I might have a small problem now.
Denis O’Brien [5:45]
The moment you hear someone mention a student loan, you want to tell them you’ve paid yours off?
Katie Welsh [5:48]
Yeah. So I was like, Girl, I get it. Like, don’t worry, because I only have my bachelor’s degree. And I would love to go back. But I just got done paying my student loans. So I’m not touching that mess again, like
Denis O’Brien [6:0]
yeah,
Katie Welsh [6:1]
this is it for me. Done and she went, Oh, man. You paid off your student loan? She’s like, an every person who is paying their student loan that I’ve talked to they go. Yeah, I need to get better as my student loan. So not. Now I feel like it’s you know,
Denis O’Brien [6:20]
It’s now fair game. Yeah.
Katie Welsh [6:21]
Yeah so I was like, What do you mean, she was like, yeah, you know, like, I deferred my student loan. And I was like,Yeah I’ve done that, too. And I think I tell them, you know, I don’t tell them about chain of wealth, or, like my whole back drop story. That was like, when I graduated college, I graduated with owing 30,000. And when I paid my loan off, it was 40,000.
Denis O’Brien [6:43]
Yeah,
Katie Welsh [6:44]
So go ahead, differ. Like you wouldn’t have been able to tell me differently when I was 24 either. But just know,
Denis O’Brien [6:53]
There’s a cost to what you’re doing.
Katie Welsh [6:54]
Time does not freeze money.
Denis O’Brien [6:56]
No and deferring doesn’t stop interest.
Katie Welsh [6:59]
No. So just know, a little bit of what you’re doing. And so then she was like, yeah, yeah, yeah. And then her mom tells her that she needs to pay her student loan as well. And then her mom.
Denis O’Brien [7:10]
Wait, wait the mom has a student loan.
Katie Welsh [7:16]
So the mom is telling the girl to pay her student loan.
Denis O’Brien [7:19]
Okay. I thought it was like a parent plus aswell.
Katie Welsh [7:50]
But then the mom also says you need to be paying your student loan because I’m also paying my portion with my parent plus loan.
Denis O’Brien [7:29]
Oh no.
Katie Welsh [7:30]
And all I could think was, oh, you wish you would have had a 529 plan?
Yeah Kate.
I wish your parents would have done a 529 plan for you when you were three, and now your mom wouldn’t be paying her Parent PLUS loan. So that is, that was my day today?
Denis O’Brien [7:50]
Well, Kate, you know, the thing is, like, it just goes to show, it seems like such a, oh you know, you gotta go get the loan, you gotta go do this. And let’s see how much money and you have to sign and you have to have the Parent PLUS loan. But realistically, if you had planned even a little bit, like, back in the day, when she was a small child, you know, like, it would have had such a big impact on where they are today. And instead of being in a position where they are debt free, she’s having this massive loan hanging over a head, and she’s not able to probably get the apartment that she wanted, because she’s got like money locked up, or whatever the situation is, like she’s in a much tighter position now because of that inability to plan earlier on.
Katie Welsh [8:38]
So Den, because we have talked to so many like, and when I say so many, I feel like it’s hundreds of people between, you know, personal life friends, which I guess is personal life, people on the podcast, were 529 plans and college saving plans. Were there around when we were kids like what was going on? Because it seems like a majority of people don’t have it. So what was it going on 30 years ago, that none of our parents did this?
Denis O’Brien [9:13]
Well, Kate, you know, I feel that there’s a number of reasons people don’t do it. I’m not sure exactly when 529 plans became available. But whether it’s a 529 plan, or you’re just saving for someone’s college education, it’s essentially the same thing. Yeah, like 529 plan might be more tax advantaged, and you get all sorts of deductions and stuff. But if you’re still stashing money away, that’s money still going to grow, and you’re still going to be able to be in a better position than what what you were at. So it’s, I don’t think it’s a case of people didn’t know that maybe they didn’t know that was available, because the education today is typically a lot better,
Katie Welsh [9:54]
Right.
Denis O’Brien [9:54]
But I think people sit in their little world and they think to themselves, yeah, like, I really should put some money aside for my child. However, I’ve got bills to pay. And I need to save for my position, or whatever it is, and it just gets away from me, life just gets away from them. And, you know, like, I’d like to chat a bit more about what you should do going forward. But really quickly, before we do that, I just like to take a very quick break and say a very big thanks to our sponsor, Kate, for today’s sponsor, it’s going to be a Chain of Wealth Instagram accounts. And we’re doing some quick shout outs to say a very big thanks to people for listening. So quick shout out to this is all @’s the danetrain28, tomwreck, hotmesstodebtfree, freezeman24, thebudgetbounds and miguelperez_19. A special shout out to @hotmesstodebtfree for mentioning that there is the hashtag debt free community on Instagram. It’s a really cool, they showed it to us, they are over 701,000 posts all about people in the debt free community. So definitely check that out. And if you’d like to get featured on a future episode of chain of wall, hit us up, it’s @chainofwealth on Instagram.
Katie Welsh [11:18]
Yes.
Denis O’Brien [11:19]
Alright, Kate. So swinging back towards chatting about your friend and what they’re planning could have done. So let’s firstly chat about her deffering her loans.
Katie Welsh [11:30]
Okay.
Denis O’Brien [11:30]
So what is that going to have? Like what impacts that are really gonna have on her like, she’s 24 years old.
Katie Welsh [12:5]
Right. So first, I want to point out like, I totally get it. She wants to go on with her life. You want to grow up, quote, unquote, and get your own thing going. And you know, you’re starting out, you don’t have a ton of money. And when you’re loan provider says, Oh, yeah, no problem. Go ahead, defer. It’s fine. When you don’t know better, you do it. And part of the conversation I didn’t get to tell you earlier.
Denis O’Brien [12:5]
Sorry. Sorry, Kate just interrupt you just on that note real quick. So your loan provider is not there to consult you and to make you feel better?
Katie Welsh [12:13]
No
Denis O’Brien [12:13]
Right
Katie Welsh [12:14]
Do not take advice from them.
Denis O’Brien [12:16]
Your provider is there
Katie Welsh [12:17]
To make money
Denis O’Brien [12:18]
To collect money,
Katie Welsh [12:20]
Right.
Denis O’Brien [12:20]
And they’re going to try and do whatever it takes to get you in a position to pay them back. And if you say I don’t have money, right now, they’re going to say, no problem, that’s fine, because I’m just going to charge you more interest will get you later on,
Katie Welsh [12:33]
Right.
Denis O’Brien [12:33]
They are not your friends. They are there to work with you to try and get you to make payments not to help you with your own student loan in your own position financially.
Katie Welsh [12:44]
Exactly.
Denis O’Brien [12:44]
Sorry to just cut you off that was an important thing. I wanted to just get that point accross.
Katie Welsh [13:17]
No that is important. And they do make you kind of feel like you’re talking to your friend. So they they kinda weasel you into making a bad choice. What do you feel like you’re doing a good choice?
Denis O’Brien [13:1]
Well, yeah. And they also make it sound so appealing as well. And then don’t worry, we’ll sort it out. We’ll just deffer it. No problem if you can’t make the payments. And while that’s good and all hearing that. And you probably think to yourself, this is awesome my student loan provider, like just gave me an extension or whatever.
Katie Welsh [13:15]
Yeah, they’re such good company.
Denis O’Brien [13:17]
That’s not what it is. They’re there. They’re contracted by the federal government most times, and they’re there to collect money, not to put you in a better position.
Katie Welsh [13:26]
They should really end every phone call like that with like that horrible villain laugh,
Denis O’Brien [13:31]
They really should. Right so in your conversation what did you miss out.
Katie Welsh [13:36]
So I asked her because I told her about mine through Fedloan. And I was like, Who’s yours through? And we’re similar, you know, educational backgrounds and everything and she was like girl. I don’t even know. And I was like, well, I thought oh, dear, but I also thought, I know exactly how you feel. And what boat you’re in. Because that was me. But at 28 not 24. I was in that boat at 24 too. But I was still in that boat at 28.
Denis O’Brien [14:14]
Yeah, and it Kate you know the thing is it’s so easy to just stay in that boat.
Katie Welsh [14:17]
It’s a very nice boat.
Denis O’Brien [14:19]
It is a nice boat, because you not making payments, you got more money. Well, you think you have more money.
Katie Welsh [14:23]
Yeah.
Denis O’Brien [14:23]
Well you are actually doing yourself is a disservice. And like you said earlier, your loan grew from like, 30,000 to 42,000. Because you deferred your loans.
Katie Welsh [14:31]
Yes.
Denis O’Brien [15:1]
So there is a big cost and that was like six years,
Katie Welsh [14:35]
Something
Denis O’Brien [14:35]
Yeah, like six years? I yeah, that’s crazy. If you think that that six years cost you $10,000.
Katie Welsh [14:41]
I try not to think about it.
Denis O’Brien [14:42]
No but that is the fact of it though, that’s the cost of deferring. And that’s only six years. So if you do it for longer than six years, it’s even worse.
Katie Welsh [14:50]
Right? So let’s talk about, again, I’m, we’ve said this before, I’m not good at like, just information, dumping advice on people,
Denis O’Brien [15:1]
Right.
Katie Welsh [15:1]
Without them wanting it.
Denis O’Brien [15:3]
Well, yeah.
Katie Welsh [15:5]
And I told her this time, I did do better, because we talked about it last time, the bus scenario
Denis O’Brien [15:12]
Right and what should you have done?
Katie Welsh [15:13]
And what should I have done? So I tried, I did try to do better this.
Denis O’Brien [15:16]
So how did it go this time?
Katie Welsh [15:18]
Well, I did tell her, you know, at the end, you know, he’s like, yeah, like that. It was really tough. And, you know, student loans, they do suck, but you really should think about paying them, at least a little bit. And then she walked out. And not the best advice. I’m not gonna write a book about it. But at least I told her to pay it.
Denis O’Brien [17:11]
Yeah, well, the thing is Kate like. Okay, if you were back in her position, like a 24 years old, what would have motivated you to actually walk out of that classroom and have a set plan and want to pay it off? What would that conversation have looked like? Because like, you know, you’re 24 years old, you’re young, you want to go out you want to hang with your friends have mimosas whatever your day looks like, like what would have actually, like struck a chord with you?
Katie Welsh [17:11]
Ah, geez, that’s a deep question. You didn’t know me at 24 I was, I will put it out there. I was a bit of a train wreck.
Denis O’Brien [16:22]
Kate everyone’s a train wreck or 24?
Katie Welsh [16:23]
I don’t, Den
Denis O’Brien [16:25]
Most people are train wrecks at 24.
Katie Welsh [16:26]
To be honest with you. I don’t really know if there is anything that would have motivated me, which is I did talk about my student loan with my mom. Kind of often. And my brother a little less often, but still occasionally.
Denis O’Brien [17:11]
Yeah.
Katie Welsh [16:43]
When I was 24. And they would say, yeah, you need to pay and I go, Yeah, I will, after this trip, or after that trip, I my brain was not there. So I don’t know. To be honest with you. I know. That’s not the answer you wanted to hear. But I think as awful as it is like one of those like hard life lessons, like you just have to learn it the hard way sometimes.
Denis O’Brien [17:8]
Yeah. I mean,
Katie Welsh [17:9]
I feel like that was terrible advice.
Denis O’Brien [17:11]
Well, I mean, like, I think if someone sat me down, and they explained to me how much money it was costing me, but that would be the point for me that I’m like, Oh, damn, like, this is a serious problem.
Katie Welsh [17:24]
But like that, it was not that kind of situation. This was like, I know, we’ve drawn this out for a few minutes. But this was really only, like, a five minute conversation. Like, and she was not coming to me to ask for student loan advice. She wants she was coming to me. Kind of to escape her kids. She was hiding
Denis O’Brien [18:16]
She was hiding, taking a bit of a breather.
Katie Welsh [17:49]
Yeah. So she was seeking out advice. She was looking for a quiet corner to text her boyfriend. So or whoever she was texting, so it was not
Denis O’Brien [17:59]
Right.
Katie Welsh [17:59]
A coming to me for advice.
Denis O’Brien [18:1]
Yeah, yeah, no of course.
Katie Welsh [18:2]
Situation. So I, you know, I’m gonna take it back. I feel good that I talked to her a little bit, told her my side. And then I told her to pay her loan.
Denis O’Brien [18:12]
Yeah, cuz you you told her like, what it cost you right?
Katie Welsh [18:15]
Yeah.
Denis O’Brien [18:16]
Yeah. So I feel like that should have struck a chord with her. And she should have been like, Whoa, that’s a lot of money. And maybe I should think about doing that too.
Katie Welsh [18:25]
Yeah. But
Denis O’Brien [18:55]
It would save her a lot of money.
Katie Welsh [18:27]
Yes, and to whoever’s listening, if you are 24, or 23, or 25, if you’re around that age, first of all, just know that you are light years ahead of the rest of your friends.
Denis O’Brien [18:39]
Just listening to a podcast like this. Yeah, you’re gonna be all set financially.
Katie Welsh [18:43]
Yeah, you are the exception, not the rule. But I don’t feel like at 24 you are typically there.
Denis O’Brien [18:55]
Yeah. But I mean like Kate we do have a lot of our listeners that are in that age gap as well. So they are people that are in that position. But I mean, like, if you’re sitting in that position, and you are listening to financial podcasts at such a young age, they’re not necessary different, but you should think about, like telling a friend and not necessarily about oh let’s go listen to Chain of Wealth, tell them just about like, what you’re learning, you know, and like where they can find more information. And if you want to tell them about Chain of Wealth, tell them about Chain of Wealth, but, you know, just having that conversation like and it’s such a simple thing of Hey, I you know, I was reading an article and listen to podcasts. And this is a topic that came up. You know, it’s it’s very powerful, how strong that can be. And especially people is really, really cool.
Katie Welsh [19:43]
Yes, because you take advice from your friends from everything. So yeah,
Denis O’Brien [19:48]
Yeah, I totally agree, Kate. And we really hope you guys have enjoyed today’s show. And once again, tell a friend about the podcasts. So they won’t be in a financial mess. But yeah,
Katie Welsh [19:59]
Yeah. And don’t forget to hit us up on Instagram @chainofwealth.
