Today I have this week’s installment of our segment: Interviews with Money Experts. I talk to Mr. Heartland from Heartland on FIRE.
Without further ado, here’s the interview.
Could you give a little background about who you are and how you came to start your blog?
My wife and I are a couple in our 30s raising two kids in the St. Louis area. I am a Geotechnical Engineer (think soils and foundations) and she is an IT analyst.
We were frustrated that, despite having two solid careers, we weren’t accruing any savings and it seemed like we would be paying off auto and student loans forever.
We resolved to eliminate the loans as fast as possible utilizing concepts from Dave Ramsey’s “Total Money Makeover.”
Once that debt destruction was in progress, we could see the light at the end of the tunnel (paid off loans) and were wondering “where to go from here?”
This opened our eyes to the fact that financial independence was not just a pipe dream, but that it was possible and within our control.
As a result, in 2017, we paid down over $56,000 in debt and are now debt free (excluding mortgages on our house and a rental home). This year we are working on diverting the money we spent on paying off debt to investing.
The idea of starting a blog came out wanting to share just how far we came, both financially and mentally, as well as to provide accountability to keep us focused on our goal of achieving financial independence.
How were you able to pay down so much debt? What’d you cut out of your budget?
Probably the key factor is that we bought less house than we could afford when we moved a few years ago. Granted, we live in a nice house in a great neighborhood, but from a financing perspective, we could have purchased a much more expensive house.
Additionally, our new home is located close to where we work, which reduced fuel and other commuting costs.
We determined that we were eating our savings, by going out to eat all too often. We realized this was primarily due to failing to plan meals in advance.
We had a habit of shopping at higher priced grocery stores and now we primarily shop at Aldi, Walmart and Sam’s Club. We also ditched conventional cable and now use streaming services with a digital antenna.
For the most part, though, we didn’t cut out things so much as we found less expensive ways to do what we’ve always done. Such as shop at lower cost grocery stores.
The one crazier cost savings measure was I decided to cut my own hair.
I’m assuming paying the debt got easier later because of the progress you witnessed, but how do you stay motivated in the early stages?
Before we started paying off the debt we were interested in acquiring a rental property, so we had been saving up for the opportunity.
When we decided to go hard after the debt we diverted that money from a possible rental to paying down debt. So we had some initial success there.
Outside of that, one of the benefits of the “Debt Snowball” approach is that you can reach some milestones relatively quickly by paying off loans with small balances first.
I strongly believe in setting smaller milestones along the way to the big goal so that you can taste success along the way.
Any interest in adding more to your rental portfolio?
We have a love/hate relationship with our current rental. I absolutely love getting a check in the mail each month and the concept of generating “relatively passive” income from real estate is very intriguing.
However, we experience a lot of stress over how the tenants treat the home and our former neighbors. Additionally, there is quite a bit of work when during tenant turnovers.
So, I am not sure if additional rental properties are in the cards. But real estate will likely play a role in our future savings plans, perhaps in the form of flipping.
I am a hardcore DIYer and the appeal of harnessing that drive and turning it into profit may be too hard to ignore.
In your experience, what home renovations give you the most ROI?
If you are selling your home, then I agree with the general consensus that kitchens and bathrooms give you the most bang for the buck from a financial perspective.
If you are not selling and are simply looking for the best ROI in terms of comfort I would say replacing your shower head! It’s inexpensive, easy to install, and you can enjoy the fruits of your labor every day!
Another, high ROI renovation item is updating weather stripping in your doors and windows. Department of Energy studies claims you can save as much as 20% on your utility bills by replacing worn weather stripping.
For around $100 you can update most of the exterior doors in most houses. With a 20% energy savings, this project can pay itself off in less than a year… and you can reap the benefits for years to come.
What are some lessons you were taught growing up that you appreciate now?
Of the many great lessons I picked up from my parents, two stand out as they pertain to our quest for financial independence.
They taught me the value of investing. They did this by opening an investment account for me when I was born and showing me the growth over time. They taught me the power of taking action.
My Dad was often a coach on my athletic teams and he would always say “Keep Hustling! If you are going to make a mistake, it’s best to do it at full speed!”.
Of course, the deeper meaning didn’t hit me until much later on, but I’ve seen time after time, the value of consistent effort and taking action.
Specifically, I’ve seen that even in failing to achieve my original goal, the effort and learning as part of the pursuit of that goal have opened up other opportunities.
What are your best tips for someone staring at a pile of debt with the goal of paying it off?
Start with smaller goals. For instance, if you have debt from credit cards, student loans, etc., start by focusing on paying down just one of them. Perhaps the one with the smallest balance or the highest interest rate.
If you don’t have excess cash to pay down debt you could instead focus on reducing your spending first in one category… say going out to eat. You can get new quotes on your insurance to see if you can save on premiums. Find something within your control… anything… and get started.
As you free up cash make sure to immediately put it to use according your plan. Resist the urge to spend it on items contrary to your financial goals.
What are some lessons you hope to pass onto the next generation?
Don’t give up hope! It’s amazing how quickly you can turn your financial situation around with simple (not necessarily easy), consistent effort. Take time to think about what really makes you happy.
Then start making changes to focus your time, money and effort on those things and cut out the distractions. Action is powerful. Whatever your goal is, start pursuing it now. Think about what can you do today that will get you closer to your goals.
What are some family friendly, low budget activities/events you do for fun?
St. Louis has one of the best zoos in the country and it happens to be free!
We also have plenty of good parks and playgrounds nearby. I particularly enjoy long bike rides and we have a great trail system very close to our house. I enjoy cooking and love making my own pizza.
We try to make an activity out of it by letting the kiddos make their own pizza. In general, we try to get out kids outside to play in the yard or go for walks, but we also have special “movie nights” at the house where we pop popcorn and build “tent fortresses” to watch the movie from.
When the weather is nice we have BBQs and rotate hosting between our friends’ houses. I also love homebrewing beer, which CAN be low budget… though I often get a bit carried away.
What’s an app, a book, and a blog you’d recommend to someone that wants to improve their financial situation?
App: I love Personal Capital for tracking our net worth. One of the best features is the ability to see exactly how much you are paying in investment fees.
Book: I would recommend different books based on where are you financially as follows:
Just starting out: Dave Ramsey’s “Total Money Makeover” and Thomas Stanley’s “The Millionaire Next Door” – These books show you that financial independence is possible.
Once most of your debt is gone: JL Collins “The Simple Path to Wealth” and John Bogle’s “The Little Book of Common Sense Investing” – These books simply investing and present great arguments in favor for index investing.
Any other lessons you picked up from those three books?
From Total Money Makeover, we picked up on his “Debt Snowball” approach. Which is paying off smaller loan debt balances then adding the former payment to the next larger loan and so on.
The Millionaire Next Door really cemented the benefits of a frugal lifestyle and dispelled my earlier notions of who millionaires really are. What I previously perceived as “the rich” were all too often folks that “looked rich” but were not.
Key takeaways from the Simple Path to Wealth and The Little Book of Common Sense Investing include an understanding of the historical behavior of the stock market, the low odds of beating the market by picking stocks, and the real impact of investing fees.
Is there anything else you can provide that would benefit the reader?
I think it’s critically important to appreciate the power of compounding. Either compounding interest and fees or compounding investment returns.
When you are making decisions to purchase an item or considering an investment, I believe you should consider the future value of your choice 5, 10, 20 years or more down the road.
$1,000 today with 7% interest is nearly $2,000 in 10 years. The fact that your money can make money on its own is powerful. You can lose that extra money or reap it.
Where can people go to find out more about you and your work?
That concludes my interview with Mr. Heartland. I hope you gained some new insights into how to improve your Financial Health and grow your Wealth.
Come back next week for my interview with Karsten from Boost Your Finances.
So readers, what was your favorite point made here? Any questions for him?