S2-Episode 15 -Personal Finance Issues

This episode of the "Teach Lead and Expire Father Son" podcast, hosted by Dr. Jordan Smith and his son Jordan III, focuses on candid discussions about personal finance issues and decisions, aiming to build a lasting legacy in health, wealth, and relationships.

Key Personal Finance Lessons from Dr. Jordan Smith:

• Importance of Insurance: Dr. Smith emphasizes maximizing insurance coverage due to personal experiences with the unexpected deaths of his parents, who left behind minimal assets or insurance. He highlights his consistent choice to take the maximum SGLI (Service members' Group Life Insurance) during his military service and prioritize employer-provided insurance when available, especially before he had significant savings.

• Prioritizing Savings: He candidly admits living paycheck to paycheck for his first 40 years of working. A pivotal change occurred after age 50, leading him to implement forced savings (like the military's allotment system) by having money automatically deducted from his pay, creating a "Murphy's Law account" for emergencies. He stresses the "pay yourself first" principle and regrets not starting earlier.

• Homeownership Protection: When buying his first home, he purchased a house warranty ($600-700 annually) to cover major appliance repairs (e.g., AC, water heater), requiring only a $75 deductible per incident.

• Vehicle Maintenance: He advocates for buying used cars (to avoid initial depreciation) and proactively maintaining them to extend their life and save money.

Jordan III's Experiences and Insights:

• DIY Skills: Jordan III maintains his bikes but finds his lifted truck difficult to work on himself. He acquired practical skills like automotive repair, woodworking, and plastics in high school, recognizing the value of these for saving money.

• "Worst Job" & Military Spouse Challenges: He recounts working undesirable, inconsistent jobs through temp agencies during a period as a military dependent. He highlights the difficulty military spouses face in finding stable employment due to frequent relocations. He suggests civil service jobs or internet-based businesses (like Mary Kay or Avon, if they have international shipping capabilities) as potential solutions for portable income.

Business Ventures and Financial Strategies:

• Debt-Free Business Model: Dr. Smith mentions a cousin who chose Amway to build a business without incurring significant debt. He also explores small business loans for veterans/minorities and the liability protection offered by an LLC, but he personally aims to build his business debt-free.

• Book Writing as a Business: He discusses his process of writing books, transitioning from self-editing to hiring professional ghostwriters and editors ($1,500-$3,000 per book) for quality. These expenses are legitimate business write-offs, allowing him to legally offset income.

Critical Discovery: Student Loan Interest and Payments:

• Viral Post on Loan Forgiveness: Dr. Smith shares a viral social media post about a veteran denied student loan forgiveness because her automatic payments were consistently "one penny short" for nine years, nullifying all those payments.

• Daily Interest Accrual: A major personal discovery for Dr. Smith was that student loans accrue interest daily. He found that paying his loan later in the month resulted in more money going to interest and less to the principal balance.

• Auto-Payment Pitfalls: He discovered that his own automatic payments, set for the 11th of the month, were incurring 10 additional days of interest (approximately $160 per month based on his loan's daily interest calculation of $16.43). This additional interest far outweighed the 0.25% interest rate reduction offered for setting up auto-payments.

• Customer Service Frustration: He faced significant difficulty trying to change his auto-payment date online or through customer service, encountering a representative who initially misunderstood his concern about the amountof interest paid versus the fixed interest rate.

• New Mission: Dr. Smith declared a new mission to educate people about daily interest accrual on student loans and the importance of paying on the first of the month to minimize interest and accelerate principal reduction.

Conclusion:

The episode concludes with an update on Jordan III's arm injury recovery, emphasizing resilience. Dr. Smith reiterates the podcast's mission to foster a lasting legacy in health, wealth, and relationships, strongly urging listeners with student loans to scrutinize their payment history and interest calculations. The episode features a spoken-word piece reflecting on the burdensome nature of student loan debt.