Show notes
How Kim paid off $45,000 in student loans in 3 years by negotiating her salary and being intentional with her money.
About Kimberly:
Kimberly Hamilton is the Founder of Beworth Finance. After earning her Master's degree in 2012, Kimberly moved to Washington, DC making $15/hour, with over $40,000 in student debt. It was a crash course in learning how to manage her money. Over the next few years, she would develop a system of managing her finances that not only enabled her to pay off her student, but also to buy her first home before her 30th birthday. In doing so, she noticed a lack of easily understood information regarding not only personal finance management, but also first-time home ownership, investing, and saving for retirement. Beworth Finance was established to address that gap. When not running Beworth, Kimberly still works at that same consulting firm, which now pays entry-level staff a higher starting pay. She is a travel junkie, wannabe foodie and personal finance nerd.
Website: www.beworthfinance.com
Social Handles: @beworthfinance
Resources mentioned in this episode:
The Budgets Made Easy Membership Community (www.budgetsmadeeasy.com/membership)
7 Day Pay What You Want Budget Challenge (www.budgetsmadeeasy.com/budget-challenge)
Beworth Finance Finlit (https://www.beworthfinance.com/finlit/)
3 Myths Busted to Help Milliennials Invest for Retirement (https://www.beworthfinance.com/finlit/2019/3-myths-Millennials-retirement)
Books mentioned:
Financial Freedom: A Proven Path to All the Money You Will Ever Need by Grant Sabatier (https://amzn.to/2ppBejj) (affiliate link)
Full transcipt:
This is Ashley Patrick with the money mindset podcast and budget's made easy. And today we're talking to Kimberly Hamilton, who's the founder of be worth finance. She a travel junkie, want to be footie and personal finance nerd. She teaches courses on how to be better with your finances and she makes personal finance more approachable for the average moneymaker. Welcome Kimberly, how are you?
Hi Ashley, I'm great. Thanks so much for having me today.
Oh, you're welcome. I'm so excited to talk to you today because you've got a pretty cool story, you know, on this podcast and on my website. I love sharing debt, pay off stories. Like for me it's super motivational. I, when I was paying off debt, I would read them and listen to them every single day to help keep me motivated. So that's kind of been my mission is sharing other debt payoff stories. Uh, so yes. So I just really love it. Um, so can you tell us a little bit about yourself and just kind of like your background and how you got started on, um, teaching finance and paying off your own debt?
Sure. And I'm happy to do that. You know, I think it's really interesting that you share these stories as motivation because I think so often it's the case that so many people have all different types of debt now. People have gotten so used to just dealing with it as opposed to talking about how people navigate conquering their debt and strategies to do that. So, so props to you. Um, for me, and my issue was, was student debt. So I've never had, um, medical debt or credit card debt like that. But you know, I'm, I'm a proud new Yorker. I moved to Washington D C to work for a government contractor in 2012 and for me, I, when I started I was making less money than the student debt I came out of grad school with. And I think that could just be really debilitating for a lot of them to have sort of a lower starting salary knowing you have all this student debt that's kicking in and, and no one was really talking about it.
And to be honest, for the first six months I didn't really know what I was doing. I wasn't looped into, you know, these motivational stories of other people and how they tackled it. So for those first six months, I was making the minimum payments because that's what I thought I needed to do. And I think a lot of people, um, you know, so many more people are moving away from their hometowns and making more money and things like that now. And it's easy to think that those people have it figured out when I think a lot of people struggle with how to pay off their student debt. Um, so I was one of those people and about six months in I decided to get educated about money and really started learning about fit things that seem simple now, but you don't know what you don't know.
Right? So at the time I didn't know that I should be making extra payments. I didn't understand the money that I could have been saving and an interest if I paid my student debt down sooner. But after six months I figured that out and that's sort of when I decided to double and triple down on my payments. Um, I worked side jobs when I could. I sold things on Craigslist. I negotiated my salary year after year to try and make bigger and bigger payments towards that. So, so that's the short story, um, of how I got started.
That's awesome meat. It's great that you figured that out so young and early in your career because like for me, I paid on my student loans for 10 years and I had only paid off $3,000 and 10 years taking the minimum pay. Like it's insane to me. And so I just love it when people figure it out early and don't waste all that time, you know, building real well. So how much debt did you,
and how quickly did you pay it off? I had, I'm a little over 45,000 and I ended up paying it off in a little over three years.
That's awesome. And so tell us, um, and that was all student loan debt, right? Nothing else.
All student loan debt. I was lucky enough to, I didn't have any student debt from my undergrad, which was amazing. But for me it was the decision to go to grad school that put me into debt. And I think with student debt in particular, it can be really tough because you think you're making the right decision and you think you're investing in your education and you're going to come out on the other end of it and make a higher paying job. And that doesn't happen for everybody. Um, so it could be a little bit of a rude awakening when you know you're working so hard to get yourself ahead and then all of a sudden you're faced with how do I know, navigate those and money can be such a taboo topic that I think not enough people are talking about it or talking about strategies of what they can do to get ahead. Um, so I was, I can't even say that, you know, I, I heard a podcast or I came across the information on my own. I think I just had so much anxiety about my debt that it forced me to really take a hard look at it. And that's when I started learning some of the tips and tricks you can do there to get ahead.
So what do you think? Did you have like an aha moment or was it just kind of just stress dude, just building up about the student loans?
I, I think the stress was always there. I did have an aha moment though. I mean, they have so many calculators. Anyone can, you know, Google, um, uh, uh, calculator on what an extra payment would do. And for me, I think it was the day that I used one of those and I found out that if I had taken 10 years to pay off my loans, um, I would have paid an extra 22,000 and interest [inaudible] the price. Yeah, my loan. And I was just like, this is ridiculous. Like, right, yeah, we do the calculator. You're like, no, no, no. Um, and finding that out and thinking, wow, what could I do if I did have an extra $20,000? And you know, for five years when I moved to DC, I think paying off debt does, you have to take a hard look at what you have.
And if you don't, um, if you're not making enough income to make those extra payments, you're probably going to have to make some sacrifices. And for me, I had three roommates in DC for quite a few years, but that really helped me. Housing could be such a big cost in someone's budget and that really helped me pay off my debt quicker. And then I having that extra $20,000, you know, I've, I bought my first apartment in D C two years ago. And so I think it was, that was my moment thinking, Oh my gosh, what could I do with an extra $20,000 if I could pay this off a bit more quickly? Um, and at first I was only thinking of cutting off a few years, but once you sort of get started and making some of those changes to your lifestyle and getting more disciplined, I do think it gets easier.
Yeah. Yeah. That's so true. It's like, how much faster can I do it? Okay, I've made this much progress. Now what else can I do? And it just like built so much momentum that makes you want to do it faster and faster.
Exactly. And I think luckily those habits stick with you after you pay off your debt as well. Or at least I hope they do. You know, that's sort of my number one advice to people is don't let that, that discipline and that drive stop the second you're debt free. You know how you can use that to start building wealth and, and you know, even if you're the first one out of your friends or family to make some of those decisions, don't be scared of letting that discipline, um, dive with, with your debt.
Absolutely. Cause I know with me and that I've heard it the same from other people. Like when I was paying off my debt, I was so intense about it. It was almost easier than saving money. Cause then once we were debt free, you know, I bought some things that we had been holding out on so that we could pay off the debt faster. You know, if it could wait a month or two, it waited. But then it was like once we got to the saving money part, it was like something was constantly coming up. And luckily, I mean we didn't go back into debt or anything like that and have no plans to do that at this point. You know, we have enough money saved up that, you know, we shouldn't have to for anything at this point. But sometimes it's hard like when you have the debt, you know, it's like you owe somebody else and it's motivating to keep going. But then when you're just saving for yourself, it's like it's so easy to slow down. And I think that it's great that you kind of focus on, no, just keep going and building those.
Right. I mean, I do think you'd have to build in, you know, the thing, obviously you build in the things that are really important to you and I think you have to build in some of the fun stuff too. Otherwise you're never going to develop that discipline to begin with, cause upset. So for me that thing was, was travel. Right. You know, I mentioned I'm a travel junkie and it's something I have always considered distantly done no matter where I've been at in my finances. But they have changed what used to be, you know, when I was paying off my debt, what used to be a weekend trip or you know, time going to New York to visit my family. Now I could take, I got back from France in may and that was a little bit more expensive than a trip to visit family in New York. And so I do think you can change some of those things, but from the get go, keeping what's important, um, and some of the fun stuff in your budget I think is an important to you just may have to think about how you change how you do it.
Yeah, exactly. Do you have any, um, actionable tips, like specific things that you did to pay off the money that somebody else can do?
Specific things that I did. I mean, I think I mentioned it earlier, but taking a look at what you're really large expenses are. For most people, that's housing, transportation and food. Really analyzing those in your budget and where you may able to be able to cut back. Or is it worth living? You know, an extra 20 minutes, it could mute if it's going to save you, if it's gonna enable you to pay an extra few hundred dollars every month on your debt. And the impact of that can be thousands and tens of thousands of dollars over time. So I encourage people to think about that. I do, I understand that sometimes people just aren't making enough money to make those extra payments. So I encourage courage people to look into all the different various ways you might be able to generate extra income now. Um, whether that's, you know, having a side hustle or Airbnb being your place or what have you, just to generate that extra income.
I'm building in the small wins like I said earlier. And then something interesting I did, I'm not sure if they do it anymore, but I would actually use, um, I was with Citibank at the time and, and I don't recommend any specific bank, but I was actually able to use my credit card points to make extra payments on my student loans. Oh cool. I think not a lot of people look into, so I encourage you to check it out cause that was actually really helpful. Even if it's just, you know, a lot of people think to get ahead of their debt, they need hundreds and hundreds of dollars. And um, I think it's important to appreciate even what like a $50 extra payment can do. And I think that's total totally doable to find over the course of a month.
Oh, absolutely. I mean, I, one thing that I did with paying off my student loans was I figured out how much interest I was paying every single day and it was almost $5 a day. So even if you just, if you only have $50 that month or $100 a month, that's still lowering how much interest you're paying every single day on those student loans. And it adds up in course of a year and over time. So I think that's great. And I love that you had, what'd you say, three roommates? That's, that's insane. Like did everybody get along? For the most part, at least
for the most part, we actually did. You know, I think in big cities, having more, having a roommate or having multiple roommates may be more common than living in rural areas. We had a, we had a crazier too along the way, but for the most part it worked out and I'm happy I did it because I wouldn't have been able to pay off after I paid off my loans. I stood an extra year and I wouldn't have been able to afford the down payment on my apartment had I not done that.
That's awesome. So I always like to ask people, um, and you did say that your, um, undergraduate was, you didn't have any student loans, so this was all your master's, so, um, do you use your degree then?
Yes, I do. Um, my nine to five when I'm not running Beechworth, which I call my six to 10, my nine to five, it's an international development. Uh, I work for a company that does government contracting and foreign aid and my masters degree was in international affairs. So, uh, yes I do. I do use it.
I don't think I'm happy to see that they are starting to bring in some [inaudible]
more trade schools and vocational schools and things like that. I think some of the decisions that people feel like they have to do, like I have to buy a house or I have to get, um, the, you know, the advanced degree or whatever. I think those are very personal decisions. Um, so I encourage everyone to think about them carefully. But yes, I do use mine.
That's awesome. Cause a lot of people, including myself, don't use their degree. Like I never technically needed a degree for what I did and what I do now. My degree is not in finance or anything like that. Um, but I have thought about getting my master's ums or in business or finance or something. But yeah, I said, there you go. It's absolutely, yeah. So it's so, I mean it's just crazy to me. I mean, and I was the same way that, you know, we spend so much money on this degree thinking we need it when in reality a lot of people don't. I mean obviously some people do. Um, but yeah, so I was, I always like to ask that question. So do you have, so if you don't mind me asking, how did you get through your undergrad without any debt? Um, I had family support
court and I had a partial scholarship.
Oh, awesome. Awesome. Um, okay, so you did mention something earlier that I want to touch on is negotiating your salary. Um, so I think you said you negotiated every year with your, um, is it with your employer? Um, do you have any tips on how to negotiate? Because you know, especially women were afraid to negotiate. I think, um, you know, we don't think that we can or that it's not worth it or you know, we're just insecure about it
or whatever it may be. So do you have any advice on negotiating your salary? Absolutely. And I will say, I think one of those years I skipped, I gave my employer a break. There's this misconception that just because you went in for a raise or something last year doesn't mean you could do it twice. And that's entirely not true. Um, I think similarly to the decision to go to school, which you were just talking about, you know, that that's an investment in your education. Um, I named my company be worth finance cause I want people to be worth the investment in themselves. And I think it's a similar mentality when you're talking about negotiating your salary. Um, some points of advice I would give are to prepare well in advance. So don't wait, you know, until the two weeks before or the week before to to get sort of your, your pitch together.
I think it's really important to develop a relationship with your employer so you can check in, you know, six months before you may be up for a raise or as advanced as you can to sort of set benchmarks to make it more difficult for them to say no the day of. Right. So what are your performance indicators that you're going to strive to me over the next six months to make it difficult for your boss to say no to that raise or to that higher pay band and keeping track of how your responsibilities or how your role may have changed and really how your maybe going above, above and beyond to get the work done. The statistics, and I have this on a, I wrote an article on this recently, I'm on my blog, which people can find that be worth finance.com/finlit, one of the statistics of the amount of people that do ask for money, it's a very, very high percentage that actually get it.
And, but I think it's so difficult to sort of pump you pump yourself up for that ass, right? So that's why those setting those benchmarks and setting those performance indicators in advance really help. Um, I'd always say go for higher than you think your employer's gonna land. So you're asking for, you know, if you really want a 10% raise, asked for the 15 and see what happens there. And then everyone's fear is always the worst case scenario is they say no. And I try to tell people not to look at that as a negative because if your boss said no this year, that gives you a really awesome window of opportunity to say, okay, well, you know, I understand it's not in the budget or maybe I'm not performing where you would like me to. How can I change that? What can I do in the next six months?
And maybe you don't wait a whole nother year to go for that next ass, right. Set it up so that you have benchmarks and you have indicators you can meet, um, in the near future that you can revisit those and then it's going to be really difficult for them to say no to you twice in a row. The, the cost of replacing a high performing employee is likely much, much tired than the raise that you're asking for. So that's always something to keep in mind as well. A lot of people working in HR know that already, but it's easy to forget when you're on the other side.
Oh, absolutely. And I think that we, like, I didn't know some of that. And of course I work, I worked in a government job so there's, you know, set, pay raises and pay scales and all that. So there really wasn't room to negotiate on my end. But even if I was in a job where I could negotiate better, I don't think that I'd have the confidence to do it. But I think after listening to you explain it like that, it's like, Oh, that makes total sense. You're, you're, you're right. So I think that people should definitely negotiate more and um, the better. And then of course I'll link in the show notes to your articles so that you can jump over there and grab those helpful tips as well.
The other thing to keep in mind, just quickly on that point, Ashley, is even if you're really constraints, like you said, you, you know, you're within a certain pay band or it's not in the budget or what have you. Keep in mind that you can negotiate benefits as well sometimes. So it's not necessarily always be about your salary. If you could increase your employer match, for example, to your retirement plan or we were talking about side hustles earlier. If you can negotiate more, you know, paid time off, more leave so that you can generate more income that way. Those are also things to consider.
Oh, I, yeah, I didn't even consider that either. That is great advice. Um, so one more thing. What is your number one tip or advice for someone wanting to get started on managing their money better? Whether it's paying off debt or budgeting or anything. Like what's your number one tip for people?
Ooh, well number one is, is hard, but you know, I think you really need to be realistic with yourself in terms of what challenges are you facing with your finances, what are your, what are your habits that you know are going to be really difficult to, to break and be honest with the goals that you set for yourself as well. I think, you know, a lot of people have this feeling like learning about finances only for someone that works in a bank or is only for our financial advisor. And so something I really try to tell people out at be worth is D, don't be, don't feel embarrassed if maybe you're not as educated about money as you would like to be. You know, I try to break it down so it's more relatable to get rid of some of those fears that people have.
Just being honest about, you know, this is where I'm starting, but I want to learn more about how to pay off my debt or how to invest, um, knowing what your habits are so that you can build that in to how you're going to go about achieving some of those goals and then not being ashamed of you. If you know that you want to take a crazy vacation every year or you want you, if your dream goal is to have, you know, a car you really like or whatever it is, that's fine. Just build it in to something that's realistic and to a financial plan that's, that's gonna work for you. Um, because of if it doesn't work for you, then you're never going to meet any of the goals that you set. So really just being real with yourself in terms of, um, where you are with your finances and, and not being scared to take them one step further.
That's awesome. Um, okay, so I lied. I said one more thing, but I have actually a couple more questions if you have tech. Um, I also saw recently that you were on Forbes, which is
crazy.
Congratulations. That's awesome. Uh, and it was about three myths, myths busted to help millennials to save for retirement. And I really just wanted to touch on that really quick, um, because the myths are really accurate and so, um, can you talk about that real fast?
Sure. Um, you know, jogging my brain a little bit here, but thank you for the congratulations. I mean, being honest of yourself where you are with your finances. It's sort of a whirlwind to go from seven years ago I was, I was struggling with all this anxiety about debt and then to have a publication like that was pretty cool. But what I had wanted to do with the article is there are so many reasons, well first of all, millennials get a lot of flack for PE. They're not saving as much for retirement as they should be. And there are a lot of systematic reasons about that stagnating wages being one of them. But I wanted to get just like the things you hear around the office about why millennials, you know, people 22 and 35 aren't saving as much as they should. And so some of the myths that I included in that article were things like [inaudible] people have a fear, a lot of people will jump job to job because it's a way to, they're scared about negotiating a salary like we talked about.
And it's a way to increase their income if they jumped from employer to employer. And a lot of people feel like they'll lose if they start contributing to their retirement plan, that they won't have access to that money. And so that's not, it could be true, but that's not necessarily true. And it's something to check when you're accepting a new position with a new employer. What the vesting schedule is like for your retirement plan because it's possible that you could, I'm 100% vested, which is basically the point at which you can walk away from an employer and have access [inaudible] to your money to those friends. Um, so that's not always true that you're going to lose your retirement benefits just because you change employers after one or two or five years. So I encourage people to check that. The other one that I remember from the article is that so many people are starting their own companies and doing their own side hustles and working for Uber and things like this.
And I think it's a common misconception that if you don't have like the standard nine to five, if you're not working in an office that you don't have a retirement and plan to contribute to. And so a lot of people are just, you know, stashing their money or saving it somewhere instead of putting it in a tax advantage account that could really save them tens and hundreds of thousands of dollars over time. Um, so I talk a lot about independent retirement accounts, IRAs, and in the article and throughout be worth, I recommend that everyone, if you're eligible to get a Roth IRA, which is, uh, a retirement vehicle, you could set up completely on your own, um, with a Roth IRA. The cool thing about that is any money that you contribute to that Roth IRA with other retirement vehicles, you would be penalized if you take that out before you retire, which a lot of millennials get scared about not having access to those funds with the Roth IRA, at least any money that you contribute to it, you can take it out without any penalty, without paying any additional taxes on it. So that's something I always recommend people check out. But there are, there are several different types of these individual retirement accounts or, um, there's a spousal IRA if you work and your partner doesn't, there's, um, a SEP IRA if you're a small business owner. So these are all ways millennials can save for retirement without having your standard nine to five. So don't think, just because you don't have a traditional employer, that's not an option for you.
That's awesome. And I'll link to that article in the show notes as well so you can go and check out the full article on Forbes. That's awesome. Okay. And you also have an upcoming course. Uh, would you like to talk about that?
I would. Thank you. I'm very, very excited. It's actually, um, being tested by some of my viewers subscribers now. So if anyone wants to check it out, you can get on the email list for be worth at the bottom of any web page on my site. And the first course that'll be launching, uh, later this year or early 2020 is called the money moves accelerator with be worth because I know so many people, uh, get anxious about talking about money. I wanted to provide something that people could take at their own pace and not if they're worried about having those conversations with people. I wanted them to, to have a course that they can take, you know, in the comfort of their living room, but still digest that information and have a, a way to really improve their finances. So they're, there are four modules, so the money moves accelerator.
I'm focusing on how to build a budget, how to pay off debt, and that's not specific to student debt. Also covers his credit card debt, medical debt in that as well. Um, the third module is how to level up your finances. So automating your money moves so that there your budget's more easy for you to implement. And the fourth module is saving for retirement or investing for retirement. If you're at a stage where you're investing 10% of your income or less, if you're already on top of that and you're investing 10% of your income or more than you would fall into a later course from be worth. But I'm very excited to get that out. The whole course will take people about two and a half hours to go through, separate from the work they'll have to do on the side and setting up their budget and things like that. So it should be a quick way for people to make some really impactful, um, moves when it comes to their finances. And I'm, I'm very excited to get it out the door and in the next few months here,
I'm excited for you too. I think it's going to be great for people to really, um, start working on that. Especially, you know, at the beginning of the new year when people start making resolutions and they decide they want to manage their money a little bit better. So I think that's awesome that you're doing that to help people. Um, one thing that I do like to ask everybody is what their favorite nonfiction book is. Cause I'm always looking for more books on learning how to grow and self-improvement and all that kind of stuff. Um, and of course this podcast is all about, uh, improving your mindset and things like that. So what is your favorite nonfiction book?
Oh, I love the book question. I'm actually in a book club and I've been trying to sneak in some finance books there. We tend to go more fiction lately. But I think my, one of my most recent favorite books on the nonfiction side, I actually did a giveaway contest on my Instagram account not too long ago is called Financial Freedom by Grant Sabatier. He is part of what's called the financial independence retire early movement. Um, and so the book is really [inaudible] a story, but he also weighs out quite a few strategies that he used to go from. He was living with this parent, you know, he had a standard nine to five living with his parents had $2 in his bank account, which she actually took a picture of it included in the book, which is, um, pretty brave of him to post there a mass thing over 1.2 $5 million in wealth before he, uh, I think when he turned 30.
Wow, that's awesome. So there are lots of tips. Even though I think it's really easy to say, Oh my gosh, that's never going to happen to me. Or maybe, you know, I'm 31 but maybe someone listening to this and saying, you know, I'm already 40 so retirement at 30 isn't going to happen. But I think even opening your mind to those possibilities and he talks a lot about where he invested his money or the strategies you use to generate additional income. Everything from um, you know, air being, being your apartment, two different side hustles you can do and where to invest those funds. I think even just learning about those opportunities, even if you have no plans to retire early, can do nothing but help you in your finances and it's just a fun read.
Awesome. I'll have to check that out. Um, all right. Any last words of wisdom?
A lot. You've had a lot of good tips in here, so you know, you may not, I don't know if you'd think of anything else. Um, I think, you know, I think I said it before, just, just don't be a lot of people. It's so easy to, to look at money as a negative thing and no matter where you are, just get started and you know, don't, don't let your debt, um, stop you from taking control of, of the rest of your life. And so I think, you know, not being intimidated to get started, no matter where you are in your financial journey, it's never too late to, to make a few steps to improve that. So, um, I'm sure all your listeners are already one step ahead cause they're tuning in to begin with, but I think that's really important to keep in mind.
That's great. And where can people find you? Oh sure. Um, well they can visit the website. I have some free tools up on there as well, like the smart money moves checklist, which is a really quick, um, three minutes checklist they can use to make sure their finances are headed in the right direction. So you can find all of [email protected] as in be worth the investment or be worth the time. Um, and I'm a big fan of Instagram, so you could find me on Instagram. That'd be worth finance as well. And I look forward to hearing from everyone. And thanks for coming. It was such a joy to talk to you today. Thanks so much, Ashley.
Special Guest: Kimberly Hamilton.