In this episode, former teacher Allison Baggerly shares how she paid off over $100,000 of debt on two teachers’ salaries, and how her company Inspired Budget helps others do the same.
Listen to the episode in the podcast player below, or find it on Apple Podcast or Spotify.
How this former teacher got out of 100K in debt
Daphne:
Hi Allison. Thank you so much for being here today.
Allison:
Thank you so much for having me. I’m excited to be here.
Daphne:
Yeah. I’ve had a couple of episodes before with people who are in the personal finance space, and a couple of them are current teachers. Some of them actually just recently left the classroom. But when I connected with you originally, I was so excited to hear your story, because it’s a little bit different than those other people that we’ve had on in the past in the way that you actually started out really with your personal finance journey being in a lot of debt.
Allison:
You mean being not in the best situation, not in the best money situation. That’s correct.
Daphne:
Yeah, and that’s something that a lot of teachers really struggle with. They have low income, high student loan debt, all of the other responsibilities of life, and they’re just not able to really catch up. Do you mind sharing your own personal story about being in the classroom, and then what landed you in so much debt?
Allison:
Oh my gosh, yes. So I went into teaching right after graduating from college. I met my now husband. We were dating, and we never had a money conversation ever. So do not recommend doing what we did, but we kind of jumped into marriage, and we accidentally surprisingly got pregnant on our honeymoon. And it was a shock to everyone because I was on birth control.
But what happened was that forced us to have a conversation about our money, because he’s a teacher and I was a teacher. And there was no way financially where I could do the stay at home mom routes at the time. And I definitely didn’t know anything about working from home or the possibilities there.
And that was the first time we ever sat down and totaled up our debt payments, and we had over $111,000 of debt combined. And we had not even had this conversation when we were engaged, when we were getting ready to get married. I mean never. And I remember thinking, “Oh my goodness, how are we going to pay this off?” Because our goal wasn’t just to pay off the $111,000 of debt, it was to free up daycare money every month. We knew we had this deadline. It was coming. Whether we liked it or not, we were going to eventually have to pay for daycare whenever I did after having the baby, and did eventually go back to work after maternity leave. We didn’t have that freedom. We didn’t have that extra cash flow because of our debt payments.
And our debt payments were cars. Mostly cars and student loans. I have never had credit card debt and my husband had basically paid off his credit cards right before we got married.
Daphne:
And that is a significant amount of debt. A lot of teachers are potentially staying in the classroom, hoping that their student loans will get repaid depending on what program they’re in. But I personally had to pay off my master’s in full, and it was not close to that amount, but it still takes a big toll on you, and the interest rates on it, they’re so high that you want to get rid of it as soon as possible. That is a remarkable accomplishment for a number that large.
Allison shares the strategies she used in her personal debt journey
Do you mind highlighting some of the strategies that you did to start to actually pay off that debt?
Allison:
Of course. So the very first thing I did was I freaked out. Let’s just be real here. I freaked out. I remember crying and thinking, “How are we going to do this?” I went through these cycles of shame. I was mad at myself. I felt dumb. I felt very stupid. “How did I not know? I’m college educated, I teach other people how to be people. How is it that I have found myself here?”
But I had to eventually say, “Okay, I can’t change where I am and I can’t be mad at my previous choices because I was just doing the best I could with what I knew at the time. So now, what am I going to do that’s different?” And I had no idea. So I started devouring information. I was reading blogs, I was reading books. I was trying to figure out, if I don’t want to live this way and I want to free up money, what do I need to do?
And so our first step was to pay off debts. Specifically for us, we wanted to pay off our highest minimum payment, but lowest balance, because we had this tight deadline to be able to set aside $900 to $1,000 a month to daycare. So our goal was, what loans can we pay off that maybe have a $300 per month minimum payment, but have the lowest balance so we could free up that cashflow? And that’s what we did for… I mean longer than nine months, probably about a year because I gave birth in April and didn’t go back to work until August that following school year.
So we had all of that time from essentially August to August to clear out as much debt. But we were also thinking, “Okay, we have to set aside money for savings for these hospital bills that are going to come, because we don’t want our debt added onto us.”
So for us specifically, it was listing out our debts in order that made sense to us. We were not concerned about interest at the time, because we were strictly concerned about cash flow. We knew exactly what we needed, and that was extra money every month. But with that came budgeting.
So paying off the debt was going to free up the cashflow. Well, what was going to get us the opportunity to actually pay off the debt? And that’s where budgeting came in.
And I will tell you, the first time I budgeted, I hated it. I actually told myself, “Okay, we’ll do this for this period of time and that’s it. I’ll never budget again.” And now I have an entire business about budgeting. So we see that it didn’t go as planned.
Daphne:
Yeah. And that’s also something that’s such a big mindset shift, and especially for someone who is not making a ton.
Allison:
Yes.
Daphne:
You’re looking and you’re like, “I am not spending thousands of dollars on expensive handbags. There’s not something that I can think of that I can take off if I’m already almost feeling like I’m living paycheck to paycheck. Where am I going to find this extra couple hundred dollars out of thin air?” So what did that process look like for you?
Allison explains budgeting strategies that can help you get started
Allison:
Oh my gosh. So you’re absolutely right. I just want to say for anyone who’s listening that feels like, I see all of these articles online that it’s like, “Woman pays off $80,000 in five months.” I’m like, “Who is this? Who is this woman and what is she doing?” I don’t feel like that’s very realistic. So we were in that, like you said, that we’re already living paycheck to paycheck. We’re not taking fancy vacations. I’m not buying expensive clothes.
So for us, it was to really start noticing the patterns in our spending. I had no idea really where my money was going. I just knew I wasn’t overdrafting every month. If I didn’t overdraft, I considered it a successful month. And many people and teachers live that way. and there’s nothing bad about that, because my goal was achieved. I wasn’t overdrafting. But I also wasn’t optimizing and being efficient with my money.
So I started really looking at my money patterns. Where do I tend to spend money, and what am I willing to cut out? Because there’s some things that I was not willing to cut out? I’m not willing to cut out my Friday coffee runs. I’m sorry, cutting out my weekly coffee isn’t going to save me a ton of money, and I’m not willing to do that. So where was I willing to cut out?
For us, a lot of it came down to food and just kind of spending recklessly as two 20 something… I mean, I was 24. 24 when I got married, got pregnant, and had a baby, all at the age of 24. So my spending was that of a young 20 something. I was going out often for brunch and for drinks.
So just even getting control over that and being mindful and saying, “Okay, I’m not going to go out to eat three times a week. Let me just go out to eat twice a week.” And by slowly cutting back and pulling back, we were able to find different areas in our budget where we can kind of skim the top. This is my little trick for anyone who’s listening. Instead of saying, “I’m going to completely remove certain categories of my budget,” I said, “How can I skim the top off of several categories? How could I save $50 a month on groceries, and maybe $50 a month on restaurants?” I’m still spending money at the restaurants. I’m still going out to eat. I’m still buying groceries. But I’m skimming the top off of certain categories to free up maybe an extra 200 or $300 a month, that I can then put towards debt and pay it off faster.
Daphne:
Yeah. I think that our gut reaction to the word budgeting makes us start to freak out and kind of become like, “I’m a coupon clipper.” I will do this crazy rabbit hole of mind tricks on myself of, where am I going to save $2? And it’ll take me 10 hours to evaluate all the different options or drive to all the different grocery stores to save such a small amount of money. And then I finally sat down, went to an Excel spreadsheet, really did the math on, what am I spending on each thing? And the best bang for your buck is look where you’re spending the most. And that that’s usually the place where you can make the quickest cuts, without driving all over the city trying to save a dollar or to find that one thing for a couple dollars cheaper.
Allison:
Oh my gosh, I feel so seen. Because when we were in our budgeting journey just beginning, I started “couponing,” and I ended up with going to CBS, and I came out with 10 Dawn dish soaps. And I was like, “But I got each of them for a dollar.” My husband’s like, “Where are we going to put these 10 Dawn dish soaps? What’s the point?” And I was like, “Oh yeah, he’s right.”
So what I recommend is looking at the big four, I call it the big four. You have housing, shelter. How can we cut back on that? That can go into utilities, it can go into home insurance, shopping around for better home insurance. If you’re renting, looking for something cheaper. I know that that’s kind of hard to do these days. The next one is food. I mean, obviously, groceries, eating out. We tend to spend a lot more money there than we even think we do.
Transportation. Whether that is cutting back on gas, or even finding out how you can pay off your car, or even trade in your car if you have a car payment that’s just way out of your league, finding something that’s less expensive. So that was food, housing, transportation, and insurance.
A lot of people don’t take the time every year to just shop around for better home insurance rates, car insurance rates, and that can actually save them $1,000 a year. If you just take an hour at the beginning of every January, this is what we do, to just shop around for different rates. Because otherwise, those rates that you’re paying creep up on you and they don’t change unless you look for something different.
Daphne:
When you were going through this process of doing all of this work and mindset shifts, and starting to commit to it, taking $50 here, $100 there, you still were having to pay off $100,000. So that is a lot of money. That takes a really long time to get to. You probably didn’t find 20 grand every month that you were able to like, “Okay, and I’ll have this done in one year.”
Allison breaks down ways she kept herself motivated to pay off her debt
How did you manage to stay motivated and committed to this goal with such a substantial amount of debt?
Allison:
Yes, that’s a really great question. And you’re right. This took us four and a half years. We ended up with two kids eventually during this process. You’re paying for two kids in daycare, and there were a couple of things that we did to help us out.
No, we never received an inheritance. No, we never won the lottery, nor did we play the lottery. I should have, maybe I would’ve won. But probably not. Let’s be honest.
One thing we did do was a big move we made, which really helped with our motivation was we changed school districts. So we went from a school district that was smaller and my husband moved one year, and got us a $10,000 raise just by teaching the same subject in a higher paying school district. And then the following year, I made that move as well. So we increased our income by just doing the exact same thing in a different city and saw that.
And then also, I’m going to be honest with you. There were times whenever we were not motivated. There were times whenever I had lost all motivation, and I’m the spender. I’m the spender. I love to spend money. It brings me joy, it gives me this high, I get the adrenaline rush, and I still do to this day. And I had to really deal with that motivation loss. And all I wanted to do was go spend money.
So there were times whenever I would be ready to give up, and that is when I would color in my visual tracker. I created this debt-free thermometer on, I don’t know, Microsoft Word. And that is when I would go into my closet, and we had it hung on our closet wall, and I would color it in. Because I needed a motivation push. I would wait until I had lost motivation to seek out motivation.
That’s also when I would read books. I would listen to podcasts. I would go on and try to find random blogs about people that paid off debt. Because if there’s one thing I can promise you when you’re paying off a mountain of debt like we were, there’s going to be ups and downs. There are going to be unexpected expenses that you’re hit with like your dog needing emergency amputation on one of his legs, and you have to pause everything. And there’s going to be times whenever you question why you’re doing something, and that’s whenever we have to seek out the motivation. Because sometimes it comes from within, and sometimes you just got to find it from somewhere else.
Daphne:
Yeah, that’s such a good point, that there’s going to be these challenges like roadblocks to it that you don’t anticipate, but that doesn’t mean that you didn’t make all this great progress.
I am very similar where I have to have some sort of visual reminder that I’m making progress on a big goal, or else I just lose motivation. And I think I had the exact same thing where I was filling in little squares of, I knew when I left teaching, and this is something we’ll talk about in a couple of minutes. But I knew that I needed to start supplementing a retirement. I felt I was 30 something years old at that moment, and that I was behind, and that was something that I needed to start doing, because I knew I was walking away from a potential pension. And so I had to sit down and just say, “Oh shoot, how much am I going to try and put in the next few years?” And just focus on that goal.
Before we move on to supplementing retirement, investment strategies, and all of that, I wanted to ask really quickly, I know you brought up a really good point about you just wanted to free up some spare cash by paying off whatever was going to be paid off almost quickest. How would you recommend teachers looking at their current debts to prioritize which ones to tackle first, especially if they’re dealing with multiple financial obligations?
Allison:
This is a great question. So I actually have a book called Money Made Easy. And in chapter five, I talk all about debt, and I talk about the different options, because different things you can do. My suggestion is find whatever way makes sense for you, and that you emotionally connect with, and that you can stick with.
So for us, that was the debt snowball method where we listed our balances out. We disregarded interest rates, we listed our balances out from smallest to largest, and we tackled in that order. But it’s important to know that we didn’t have any credit card debt. We didn’t have any of this high interest debt looming over us, making it really hard to make progress. So the debt snowball method made sense for us financially and just in our family with needing to pay for daycare.
But if you do have credit cards, anyone with credit cards knows that that interest rate, it is soul sucking. It is like going over 10 speed bumps slowing you down, and it makes it really hard to make progress.
So someone who’s facing that type of challenge, the debt avalanche method might be better for them. Focusing on those high interest debts first, so that way you can mathematically make faster progress.
Daphne:
Yeah, that’s such good advice. Because I feel like I have mostly heard people have one opinion over the other, but everyone’s circumstance is very unique. So that’s really great advice.
When you were going through this process, you obviously were doing a lot of research. You were all over the internet, looking for all these suggestions. Did you have a plan of what you were going to do once you finished paying off the debt of, “Okay, well then I’ll have $500 per month that I was spending on paying off this debt.” What were you going to do with that money? Nothing, or what were the next steps?
Allison:
The dream, Alison, would just spend it all on travel. I would just use all of it for summer vacations and be gone the whole summer. During this process, I still had not started my business. So four and a half years, we budget, we pay off the debt. Still, Inspire Budget is nowhere on my radar. And I remember the first three months, we just spent money like crazy, because we were sending on average $2,000, $2,500 a month to debt to pay it off as fast as we could, and especially towards the end. And we just blew money for about three months. And then after three months I was like, “Okay, this is getting a little out of hand. We had our joyride, if you will. We need to figure out what to do next.”
And honestly, I didn’t know anything about investing at the time. I really didn’t. And the idea of investing was very scary to me. I knew we both had pensions. I no longer have a pension though. But at the time we were both teachers, I knew we both had pensions, but I had this fear of, “What if the pension isn’t enough?” And so then I’m like, “Well, then I’ll invest.” And then I thought, “Invest in what? What am I actually buying and how do I know if it’s good?” So we did what any person would do and we said, “We’re going to hire a financial advisor.” And we did. We hired a financial advisor. We started investing into our Roth IRAs. And then after about two years, I was like, “I feel like I can learn this myself.”
And that’s when I really took ownership over understanding investing. And I realized after doing research, listening to podcasts, reading the books, doing the math, that by the time we retired, we would’ve paid our financial advisor over $230,000 in fees that could have been our money. And that’s when I was like, “Okay Mike,” our financial advisor, “You’re fired. We’re going to take this over ourselves so that way we can keep more of that money and retire sooner.”
Daphne:
That’s such a common story for people. And I went straight to robo-advisors. I went to, Betterment is the platform that I chose right when I left the classroom because I realized they kind of do that same thing. But I had read as much as I could about how much other platforms would charge as a fee, and that Betterment’s fees were pretty standard or compared to other platforms fees. I liked the fact that I didn’t have to make any decisions about what I was investing into. I just said, “Hey, this is my risk tolerance and this is that specific date.”
But so many people do start with financial advisors, because they’re really scared that they’re not going to be able to do it on their own. And also, I think a lot of teachers, they have this sense of stability and security with a pension, which is great. People have told them for forever, “You’re so lucky to have a pension. You’re so lucky to have a pension.” But when it comes to 401(k)’s, when it comes to buying their own stocks, investing on their own outside of a 401(k), that’s completely uncharted territory where they’re very apprehensive to put any of their hard earned money in something that could potentially just go away.
Allison shares why it’s good to start investing—no matter how small the amount
How do you teach teachers or people who have never really invested before about the actual risk involved with investing or the importance of investing, even with that risk?
Allison:
Oh my gosh, this is a wonderful question, especially for teachers. Because you’re right, we have this golden pension that the rest of the world envies, right? So we feel very lucky that we have a pension.
However, one thing I will say I want every teacher to do is actually do the math and figure out how much your pension will pay you, because it might not be as much as you think it is, and you likely want to supplement that pension.
So I know we live in the state of Texas. I rolled my pension out. When I realized I’m never going back to the classroom, I had done 10 years of teaching, and I did the online calculator and figured out at the age of 70, I would be able to get $10,000 a year. So I was like, “You know what? I’m going to take this money out and invest it on my own in IRA.”
So then my husband was able to use the same calculator, and we figured out that he’s going to be earning about $40,000 a year. That’s not including taxes, not including insurance, all of that. So when we look at that, we’re able to say, “Okay, do we want to live off of $40,000 a year?” And the answer for us is no, we really don’t. We would like to live off of more.
So that’s where the investing comes to supplement that extra money. So how are we going to supplement and maybe add another $40,000 in, or $50,000 in every single year?
When I was able to look at the facts of the situation, I was able to say, “Okay, this is not what I want. It’s great. I love that he’s going to get this pension and I want him to stick out teaching for another 12 years until he can access it, but that’s not going to be enough.”
The good news is, we’re not starting at zero. So no teacher is starting at zero. So already, we tend to be very goal-oriented people. You’re not failing, you’re not starting at zero. But the truth of the matter is you likely are going to want more money than what that pension is bringing in. So you have a couple of options.
Option number one, you can work part-time whenever you retire. A lot of people do it right? I might want to work part-time when I retire, but I also want the option of sitting around drinking coffee on my front porch, judging my neighbor’s grass because they haven’t cut it enough or something. I want the option to not do that.
So that’s when we come in and we say, okay, then that means we need to be investing in some other options like a 403(b), you said a 401(k), even an IRA, by simply investing just even $500 a month, which I know is a lot of money for a teacher. So let’s cut it down to $200 a month consistently over time. If you can essentially use that to supplement that pension, then it makes it to where retirement number one, you can retire at your age instead of continuing to work, because your pay will be less in retirement than what you currently make. And then number two, it allows you to keep the lifestyle that maybe you want and you’re used to.
Daphne:
Yeah, I love that. And this is oversimplifying things. We do have a video, you can find it at teachercareercoach.com/pensionvideo for anyone who wants a breakdown of just, how do I decide if I know I’m leaving teaching and I know I’m leaving it forever, if I keep my money in the pension or if I should pull it out and just put it into a different retirement account?
And usually if you are newer to teaching… So I left before I was even five years, it did not make any sense for me to leave it in. I pulled it out, I put it in my own investment, and it would’ve supplemented if not made more than leaving it in the account that it was in for California.
But if you are closer to retirement, that might not calculate. You may want to leave it in that bucket, in the pension bucket. I’m probably saying the wrong terminology.
Allison:
No, I like that.
Daphne:
But just wait until you retire and you can still pull it out, and use it like a pension, but it’s going to be less if you retire early. So those are all things to really weigh. You really want to see where you’re at. The further away you are from retirement and the fact that you know, “I’m never going back into teaching,” that’s when you really start to recognize, “Okay, this pension might not be,” one, worth staying for 20 years if you’re not happy in that career. But also, might not calculate to make sense to leave it there, if you actually look at statistically the returns of putting it into a different bucket.
And that was the hardest thing for me too, is actually, once I started to look at the data and hear different examples of if you put $500 in per month, what does that look like in 20 years? Or if you put $500 in, what does that look like in 40 years? That’s where I started to realize, “That’s the power of investing.” And one of the best ways that I feel like I’ve heard it described is whatever you put in today, basically if it does the exact same average that it’s done for the past however long the stock has even existed, it doubles pretty much every seven years. Is that how you’ve kind of calculated it?
Allison:
Yeah. I use a compound interest calculator, so I’ll just say, “Here’s how much I have. Here’s how much I’m committing to use for the next couple of years.” And I think one thing is there is freedom in paying off debt, and budgeting, and investing to always pivot and do something different. Just because you are investing a certain amount now, doesn’t mean that you can’t pivot and increase or decrease those investments.
That was one thing I had to get around, especially on a “teacher” salary for my husband. And I remember thinking, “If I’m not investing $1,000 a month, why does it even matter?” And I had to be like, “No, it does matter.” Even if it’s $100 a month, even if it’s $200 a month, just starting is so helpful. And we don’t know what the future carries, so there could be a time when I am investing $1,000 a month.
And guess what? It happened. We got there, while we were still teaching. So I was still a teacher, and we were able to increase it based off of just our expenses of being debt-free.
I think being open to the idea of investing and allowing yourself to say, “I’m not locked in. I’m not locked in on how much I’m willing to invest for the rest of my life. That number can change. It can fluctuate and serve me.” I feel like it opens doors and it takes away that expectation layer that sometimes we put on ourself, that if we’re not doing this much, then it’s not good enough. And that’s not true.
Daphne:
Yeah, I have to use this, the strategy of pay yourself first. I have to put that money in or else I’m going to say it doesn’t exist. But if I put it in, then I make it work.
And then another strategy I’ve heard people use is with teachers, you are not going to have huge pay increases. Knock on wood, depending on if any of these American Teacher Act bills ever actually passed and people got substantial increases in raises, that would be wonderful. But you do potentially know when you’re going to go up in the salary schedule, and can you keep at your current spending level, and every time you increase your salary, begin to put that excess into an investment account?
Allison:
Yes, and that is something that I think a lot of people battle with is that lifestyle creep. As you start making more money and you start spending more money, it is harder to keep up with that lifestyle increase.
Now, I’m not saying all lifestyle creep is wrong. Two years ago, I was able to hire a housekeeper and it’s changed my life. She’s amazing. I have housekeepers that come every other week, and I’ll get rid of Netflix, and I’ll make my kids, we’ll never go out to eat before I stop paying for the housekeeper.
But it’s important to realize that as you make more money, as you do get these small increases here and there, that you’re not increasing your necessary expenses along with it, and getting yourself to a point where you have almost locked yourself in to making a certain amount of money, and that leaves you less money to invest.
Daphne:
Yeah, absolutely. I think my most clear example of that was I was living paycheck to paycheck as a teacher, and Los Angeles’ rent is very high. When my now husband, but at the time, boyfriend and I decided, “Okay, it’s time for us to move in together.” And we both finally split rent payment. I remember there was three months where we were like, “We are the richest people in the whole world right now. We have so much extra money.” It would be $800 extra a month that did not exist before.
And then by maybe one year into that, it almost felt like we were living paycheck to paycheck again. We had forgotten that feeling of, “Oh shoot, look at this money. What are we going to do with this money?” It just kind of sneaks up on you with things that once you start to budget and look back, it isn’t necessarily important. It is overly spending on things that you’re like, “Oh shoot, clothes I’ve never worn that live in a closet.”
But I also think that it’s really important to look at how scrappy teachers are having to live and how low their pay is. Many people are not living these lavish lifestyles, and the little bit, they should be able to go on a vacation during the summer. They should be able to get that weekend coffee, or spend on a nice outfit that makes them feel valuable, or just really pretty for the day.
Allison talks about balancing your present enjoyment with your future financial security
How do you feel like they can strike a balance between enjoying their lives in the present, but planning for a secure financial future?
Allison:
And you make a really great point. I will say that, because you’re right. A lot of teachers feel that way. I felt that way. I remember it.
I would say that for me, I see my financial future as a bill in my life. It is as important to me as paying my water bill or paying my electricity bill, because I don’t want my lights turned off.
Now, I will say that for teachers who don’t have all of this extra money, even starting out with $100 a month, you have your pension. If you say, “I’m going to take $100 a month, and I’m either going to put that towards an emergency fund in a high yield savings account, or I’m going to take that, I’m going to put it into an IRA so that way I can have extra money during retirement,” and just putting that on auto draft and just saying, “This money doesn’t exist,” and then take the rest of it and use that money for fun. Use that money for your spending. I mean, use that money for living.
But by treating it almost as this necessary expense, we can kind of trick our minds into seeing, “This is a non-negotiable. This is non-negotiable for future me, because I know I’m going to need that money one day.” And so I think that that’s the difference.
And then also realizing that you have a pension, so you don’t need to be investing $1,000 a month. And when we see all of this on social media or in trainings, I mean even I share it on social media, how investing can have an impact. We’re also sharing the numbers for people who don’t receive pensions. So the everyday person has to invest that much every month into a 401(k) because they are not getting that pension. That is not automatically taken out of your paycheck. And I want you to know if you have a pension, that money is taken out of your paycheck every month
Daphne:
In the same way that a 401(k) works, in the same way that you’re investing on your own. And that is such a great point, because so many teachers are afraid to leave teaching because then they’re like, “Well, I have to supplement my retirement somewhere else.” And it’s like, “You are right now.”
Allison:
Yes, this is not free money that the teaching places, the state is giving you. Let’s just lay that out on the table. You are putting money in every paycheck into your pension. Your state likely matches or gives you some sort of contributions as well, just like an employer can match your 401(k). So you are investing. You’re an investor already. You just didn’t know it.
So it’s just about deciding, “Hey, I don’t have to go big or go home. I don’t have to invest all of this money. But even just 50 or $100 a month outside of my pension can make a massive difference by the time I am ready to retire.” It could be the difference between you working part-time at a preschool that you really don’t want to work at, because you just want to be sitting at home watching your drama shows or spending time with your future grandkids. That is the difference that it could make. And I say preschool. That was so cliche of me, I shouldn’t have said that. I’m going to say working at a gardening center instead.
Daphne:
I imagine myself working at or volunteering at a botanical garden, walking up and down. But you want to be able to have the flexibility and freedom to know, “Hey, if I wanted to retire five years earlier, I hope that I can,” and be able to see that.
Allison:
Yeah. Or if you just want to spend more money, if you want a lifestyle where you can spend more money. Because realize, and I’ll just say for my husband as a teacher in the state of Texas, he’s going to make about 60% of his top five, the average of his top five years of earning. So you’re looking at only 60% of his salary. So it’s still a cut.
So that means that for us personally, we’re asking ourselves, “Okay, how can we make sure that we pay off our house? How can we bring down our cost of living by the time that comes? How can we do this?” Because we know we’re going to have to live on less money, and we don’t want to live on rice and beans per se. We want to be able to enjoy retirement. We want to be able to travel and do these things. So by investing now, it allows us to kind of level up our future spending.
Daphne:
Yeah. And there’s definitely a lot of anxiety that’s taken away once you’re able to crunch the numbers and see, “This is how much I am going to have matter-of-factly and this is how much I need to put in using one of those investment calculator or compound calculators online.” There’s plenty of them that are really easy to use, and just saying, “Oh, okay. I don’t have to kind of go in this blindly. I can just have the clarity and know what the future will hold for me, or how I can make it a little bit more comfortable for myself and my loved ones.”
This has been such a great interview. I wish I could talk to you for another hour. We’ve gone over budgeting. We’ve gone over saving, spending $100,000, or paying back $100,000, and then investing. I know that there are so many teachers who are probably looking to connect with you and learn from you. Do you mind sharing some of the easiest ways that they can find you if they want to learn a little bit more right now?
Allison:
Of course. So I’m @inspiredbudget on social media. Inspiredbudget.com is my website, and I have a free budget class for anyone who is new to budgeting and is thinking, “How does this work? What is the process that I can take?” Because it can feel very overwhelming. I have a free budget class. If you go to my website, you’ll see it there.
I do just want to say really quickly, one takeaway. Everything we talked about can feel very overwhelming in an hour. So I just want whoever’s listening to know that I didn’t get here in one day or even one year. where we are financially now has been, oh my gosh, how old is my son? It’s been 11 years in the making.
And so it’s not about making the fastest progress or cutting out the most stuff and living on basically nothing, so that way you can get there as soon as possible. It’s not about that. It’s not about killing yourself, and working seven extra jobs, and starting a side hustle so you can get to where you think you need to be. It’s about just taking one next step. That’s it. We talked about investing. That might not be the next step for one of your listeners. The next step might be writing down all of their expenses and figuring out how to write a budget.
And that’s okay. Because if you are willing to take just that one next step, you’ll start having that confidence and that clarity that so many people lack with their money.
Daphne:
Yeah, that’s such a good point. Even myself, we had a conversation before we started this interview where it took me about five years to be where I’m at, and I’m constantly having conversations with friends of mine who were never in education. So this is not just a teacher issue. It is something that a lot of people are really nervous and hesitant to start, because they do see the news of saying, “The stock market’s been bad,” and they’re like, “What does bad mean?” But long term, it does usually show on the average of the span of the stock market that this is the best way for you to supplement your retirement and to build income with the money that you have to beat inflation, and to use your money smartly.
Allison:
Yes, I agree 100%. And really what you’re talking about is knowledge. Knowledge combats fear, knowledge combats confusion. And so it’s just being willing to spend the time listening to a podcast like this, reading a book about money. I also have a podcast, I guess I should have mentioned that, Inspired Budget podcast. Listening to that, to be able to equip yourself with the knowledge to combat those fears and those confusions. And just be able to develop a doable plan with your money.
Daphne:
Yeah, absolutely. Well, thank you so much for being here, Allison. It was so great to meet you, and I am looking forward to learning from you in the future.
Allison:
Thank you so much for having me. I appreciate it.
Mentioned in the episode:
- You can find Allison at InspiredBudget.com
- Our career path quiz at www.teachercareercoach.com/quiz
- Explore the course that has helped thousands of teachers successfully transition out of the classroom and into new careers: The Teacher Career Coach Course (If you are a Teacher Career Coach Course member, you can also sign up for our one-on-one Career Clarity calls.)
