Smart Money Podcast: Making Hobbies Affordable, and Saving Money Priorities

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Written by Sean Pyles
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Co-written by Liz Weston, CFP®
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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.

This week’s episode starts with our tips about how to make hobbies more affordable.

Then we pivot to this week’s money question from Veronica:

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"Good afternoon Nerds,

I am finally debt free, as a 40-year-old single female. My student loans were forgiven last year, through the expanded public student loan forgiveness program, and I was able to pay off the last of my credit card debt just last month (February 2023).

I live in a high cost of living area, and at some point, I would love to own a home. I feel like I am very "behind" in traditional life accomplishments (house, car, savings), so my question is what should I focus on next: saving for an emergency fund, a down payment, or retirement? I do not own a car, and do not need one. If I remain at my current job — I have been there over 18 years now — I am entitled to a pension, and I have some money in a 401K. My employer does not match, so I have not been putting a lot of money into that. I make about $110,000 per year. I currently have $8,000 in two separate savings accounts (one marked emergency/house and one marked travel/fun). My coworker told me I should just focus on the down payment, and that getting into a house is the most important thing to do next. Now that I have no debt, I am able to throw a good amount into savings, I guess I am just not sure what I should be saving for first.

If you need any more information, I am happy to provide anything that would be helpful.

Thank you in advance,


p.s. I love your podcast!"

Check out this episode on either of these platforms:

Have a money question? Text or call us at 901-730-6373. Or you can email us at [email protected]. To hear previous episodes, go to the podcast homepage.

Episode transcript

Liz Weston: Making progress on competing financial goals can feel like a zero-sum game. Do you channel all your money into one goal at the expense of all the others, or make gradual progress on all of them at once?

Sean Pyles: This episode, we talk with a listener about how they're balancing saving for retirement, building an emergency fund and saving for a house. Welcome to NerdWallet's Smart Money podcast, where you send us your money questions, and we answer them with the help of our genius Nerds. I'm Sean Pyles.

Liz Weston: And I'm Liz Weston. Listener, remember to send us your money questions, whether you're trying to tame some debt, but aren't sure how, or you're wondering how to get the best prices on airfare. Whatever your money question, we are here to help.

Sean Pyles: You can leave us a voicemail or text us on the Nerd hotline at 901-730-6373. That's 901-730-NERD. You can also email us at [email protected].

Liz Weston: As we said at the top, this episode, Sean and I are talking with a listener about how to sort through conflicting and expensive financial priorities. To kick off this episode in our “This Week in Your Money” segment, we're talking about how to make hobbies a little more affordable and a little less of a money-suck.

Sean Pyles: But, before we get into any of that, we have a really exciting announcement. NerdWallet's Smart Money podcast is officially an award-winning podcast. We won the Quill Podcast Award for Branded Podcast of the Year, and it's all thanks to you, listener. We asked you to nominate us for this category and you guys really showed up for us. We're honored to have this award and we're especially grateful for your help in making it happen, so thanks again. All right, now let's get on to the show. A few weeks back, I asked listeners if they wanted to hear my tips for gardening on a budget, and a bunch of you said that you wanted them, and who am I to deprive my beloved listeners of what they want? So, this segment is based on that, and we're also going to hear Liz's tips for how she makes her hobbies more affordable.

Liz Weston: OK, Sean, a lot of folks are going to think that affordable gardening is a bit of an oxymoron. You pour a bunch of money into soil and plants and tools and fertilizer, and at the end of the season, you get a tomato that costs more than it would at the farmer's market. So, how do you make gardening more budget friendly?

Sean Pyles: Well, one thing I'll say at the outset is that when you're investing in a hobby, it's something that provides you enrichment, so it doesn't have to be maybe more affordable than what you would get at a farmer's market. It's about the experience overall; but also, gardening is a practice in planning and in patience, and remembering those things will help keep this hobby affordable. So, I'll start by talking about the planning part, and it can really help to know what you want to accomplish this season. Maybe you want a bunch of tomato plants or a lush perennial garden — two things that I am focusing on this year. Going into gardening with intention can help you avoid overspending on things that you really don't actually need. It can be so tempting when you go to the garden store and you see all these beautiful plants to try to get one of everything.

Liz Weston: Yes.

Sean Pyles: Please don't do that. You can spend so much money, and then you get a hodgepodge of things that don't go together. Really be intentional about what you're going to be planting this year. So, if you aren't sure where to start, because gardening can be kind of overwhelming and really exciting, especially if you're new to it, I suggest you do a bit of research. There's a show called "Gardeners’ World" on the BBC. They have weekly episodes that lay out what you can be doing in your garden this week of the season, and I've learned so much from them over the years. They are available to stream on Amazon Prime. I just recommend you check that out, if you want to learn more about gardening in general.

Also, one thing I'll say is that the earlier you plan, the easier it will be to save money, that can mean starting veggies from seeds, even perennials from seeds, something that I've done for many years now. And starting earlier will also give you time to price-compare for supplies, things like that. I like to buy bulbs and tubers and bare root versions of plants that I want. And realize that it might take you a few years to get them to look really nice.

I bought a bare root plant, this plant called Pacific Ninebark. It has this really cool bark that peels back in layers in the winter season, and has these really beautiful white puffball flowers in the summer. I bought this plant that was a bare root, so it looks just like a stick with maybe three roots. I bought it in 2020 and just this year it's flowering for the first time, and it's enormous, this whole plant, and it's so gratifying to see that happen. But, it cost me $3 to get it looking like a bare root plant, and if I was to get a full-size one, it probably would've cost me $35, at least.

Liz Weston: Yes. We have a friend that was doing a big landscaping project and she actually bought her olive trees, which are expensive to start with, but she bought a smaller version, knowing that the project was going to take about a year, so she bought the plants and she left them with the nursery, so they were on the hook to ...

Sean Pyles: That's nice.

Liz Weston: ... Water and fertilize, and they grew quite large by the time she put them in, which I thought was a clever little trick on her part.

Sean Pyles: Speaking of olive trees, Trader Joe's actually had them for sale in the fall, and I picked one up for $10, and it's doubled in size.

Liz Weston: Seriously?

Sean Pyles: It was a baby plant when I got it. It's still pretty small now. Maybe it's like a toddler at this point, but eventually I'm going to plan on putting it outside because it is cold hardy for my region. But yeah, you'll be surprised where you can find pretty affordable plants if you're just looking all the time.

Liz Weston: Oh yeah. Trader Joe's is great for herbs as well.

Sean Pyles: Yeah. And then, another thing I'll say about gardening is that it's really about community, and that can help you save money too. Connecting or building a local garden community is a way where you can get connected to seed swaps, where you'll be able to trade seeds with someone who has them. One woman in my neighborhood has a free seed library, kind of like those free lending libraries for books, and she puts out seeds for tomatoes, zucchini, lettuce, all sorts of things, and it's free.

Liz Weston: Oh, wow.

Sean Pyles: It's a very Portland thing, which I love so much. Another thing is you can swap cuttings of plants. I was just visiting a friend in New York and she sent me home with a bunch of cuttings of things like hydrangea and all sorts of fun things that she had growing on her terrace, and they're growing quite well. You just keep them in soil and they begin to root on their own, and that's a free plant that I basically cloned with my friend.

Liz Weston: Wait, how did you get it through TSA?

Sean Pyles: They didn't care.

Liz Weston: OK, all right.

Sean Pyles: It's just I had it in a little pot with some soil and it's fine to fly with. I'm not flying internationally with them, so there's no issue.

Liz Weston: OK. That's really cool.

Sean Pyles: So yeah, a little unconventional, but that's a way you can save some money too. And then, one last thing I wanted to touch on is materials, because that can be so expensive, especially when you're just getting started as a gardener. I recommend going to secondhand hardware stores for things like shovels, hoses, rakes, maybe things that you don't need to be super pristine when you're using them because they'll be covered in dirt anyway after a day or so. My friend in New York who I did that plant swap with, she recommends going to the dollar store for things like lighting. She actually found these tiny, little solar-powered lights at a dollar store that give great light to her terrace, and they cost $1, $1.50 each, maybe.

Liz Weston: Sweet. Oh, that's great.

Sean Pyles: Yeah. Lastly, I'll say there are always going to be upfront costs when you get into any hobby; avoid the temptation to buy every single thing that you might possibly want or need for the hobby, and only get what you really need for right now. You can expand your tool library over time.

Liz Weston: Yes, absolutely.

Sean Pyles: Yes. All right, well, I could talk about gardening for an entire episode, or honestly even a whole podcast about gardening. But Liz, I want to hear from you about your hobby, which is making miniatures. You make small scenes that are super cool and really detailed, so please tell our listeners about what you make and how you keep your craft budget friendly.

Liz Weston: OK, Sean, this is really a do-as-I-say-now, not as-I-did-then, because I spent this small fortune at the start of the pandemic, really getting into this hobby. And I kept finding new avenues to explore, new tools, new stuff to buy because this hobby has an incredible range. You can make stuff from literally trash. There's a maker out there called Studson Studio, and he's made two versions of Howell's Moving Castle from Studio Ghibli, and they are just mind-blowing. Or, on the other end of making things out of trash, you can spend hundreds of dollars on a single piece of bespoke furniture with wood inlay that's made by a craftsman that will blow your mind, as well. So, you can make and rehabilitate dollhouses in different scales; I've done that. You can make sceneries and miniatures for gaming or gaming things like that. Create book nooks, which I love to do. Those are little dioramas that fit into a slender box that you can put in your bookshelf.

Sean Pyles: Oh, fun.

Liz Weston: And then, there are actual artists out there making works of art. I went to a great exhibition in New York called Small Is Beautiful, and it had works by more than 30 artists who are working in different miniature forms. So really, really great stuff.

Sean Pyles: Cool.

Liz Weston: Yes. With all that, my advice now, after spending that small fortune and buying all the things is, like Sean said, slow your roll. It's easy to get excited about a new hobby and want to buy everything and try different things out. Make a list and give yourself a little cooling off period. I have a whole set of tools that I wish I just waited on, because I kind of took my art in a different direction or my craft in a different direction.

Sean Pyles: Do you find that there are a lot of things that you bought early on that you just don't use frequently?

Liz Weston: Yes, and there's some things I am going to use more in the future. I know because, well, my husband got me an airbrush. He's an artist, and he knew that the airbrush was going to be very helpful for certain things. I haven't used it enough to justify it yet, but I know I will down the road. We also bought a 3D printer, which I was so excited about.

Sean Pyles: Oh, wow.

Liz Weston: Has an incredible learning curve, and it's like, no, I just don't have the brain space for this right now.

Sean Pyles: I imagine an incredible price tag too.

Liz Weston: Oh, it was ... Not the top end. There's a real range in a lot of the tools that you may want to buy. So, there's going to be the beginner stuff, the middle, and when you talked about community, that's a really good thing to have because you can go and ask questions. Is this the best thing for a beginner? Should I be buying this? Should I pay for the upgrade? That kind of thing. You'll get different opinions, but at least you can sort through what other people have done and have learned.

The other piece of advice I would give is: Widen your search for craft supplies and tools. I bought way too much from just online stores without thinking about it. The Dollar Tree is awesome. Dollar stores have some great craft stuff, and Harbor Freight, there were a lot of miniature tools and artist tools that are available at the Harbor Freight hardware store. I found great stuff at yard sales. When you were talking about rakes and shovels, and stuff, that's another thing you can pick up at a yard sale. Thrift stores, flea markets, there's all kinds of ways to get secondhand stuff that can save you some money.

Sean Pyles: Absolutely. Cool. One last note around community: I found Reddit to be a really great resource for this.

Liz Weston: Yes.

Sean Pyles: For my own hobbies, whether it's gardening or painting, you can hear what people do and don't find to be worth it. You can get reviews on different things if you're thinking about buying them. So, I would just search "Reddit" plus whatever you're interested in, and you'll for sure find a community about it.

Liz Weston: All right. Let's get onto this episode's money question.

Sean Pyles: All right. For this episode's money question segment, we're talking with Veronica, who is 40 years old and lives in Oakland, California about how they can catch up on their financial goals. Welcome to Smart Money, Veronica.

Veronica: Thank you.

Sean Pyles: It's great to have you on. You wrote to us with a number of questions around how you can sort through financial priorities that might be in conflict right now. But, to start, can you tell us about your general financial situation?

Veronica: Yes. So, I am, like you said, 40 years old. I recently became debt free after I paid off my ... Yes.

Sean Pyles: Congrats.

Veronica: Multiple. Thank you. That's a celebration. After I paid off my credit card debt and my student loans were forgiven last year.

Sean Pyles: Which we will get into.

Liz Weston: Oh, that's great.

Sean Pyles: Yeah.

Veronica: Yes.

Sean Pyles: OK.

Veronica: So, now I'm just kind of wondering what's next? Do I save for an emergency fund or do I do a house?

Sean Pyles: Yeah. So, there are a few different priorities that you're considering focusing on. Can you lay those out?

Veronica: Yes. So, there's an emergency fund, which I've heard you guys talk about, and there is the goal of homeownership, and all the costs that that entails, and of course, the ever-looming retirement.

Sean Pyles: Yes. Those are all really important and expensive goals, and let's take them one at a time. So, starting with the emergency fund, how much do you have saved right now?

Veronica: I've done a budget about what I'd need for about three to four months emergency fund, and my goal is around $12,000 to $15,000, and I'd say I'm about 75% there.

Liz Weston: Oh, OK.

Sean Pyles: That's great. Yeah, that's really good. Are you setting up direct deposits into this account? How do you have the contribution structured right now?

Veronica: Yeah, it's a direct deposit. It's the first thing that comes out of my paycheck into a Capital One savings account, which I learned about from you guys, actually.

Sean Pyles: So, it's a high-yield savings account, is that correct?

Veronica: Yes.

Liz Weston: And you double-checked to make sure?

Veronica: Yes.

Liz Weston: OK.

Veronica: Yes.

Liz Weston: Good.

Veronica: Thank you, Liz. I was one of the people who had the 0.3%.

Liz Weston: Oh.

Veronica: And, I went and checked and realized, yes ...

Liz Weston: If you missed that previous episode, some accounts were getting a very low interest rate, when those of us who had them thought we were in a high-yield account. So, it's very important to check and make sure the actual rate that you're getting, and basically to do it after every interest rate increase you hear about the Fed. You might want to have to wait a month or so, and then check, but just check to make sure you're still getting all the interest rate increases you think you're getting.

Sean Pyles: OK. So, it seems like you're on track to fund your emergency fund to have three to four months. Ideally, folks can have six months of at least a bare-bones budget saved in their emergency fund, but it seems like you're more than capable of doing that. Another goal of yours that you mentioned when you first wrote to us was buying a house. Can you talk about that goal and why it's something that you're really interested in doing right now?

Veronica: Sure. I would say for me, the goal of homeownership, the draw is really the stability that it brings. Living in the Bay Area, the rent control is a bit of a golden handcuff, and you never know when something's going to happen, or your building might be taken off the market, or something like that, and I just don't like moving.

Sean Pyles: Yup, right there with you.

Liz Weston: So Veronica, are you in a rent-controlled apartment now?

Veronica: I am.

Liz Weston: OK.

Veronica: I am now, yes.

Liz Weston: And the concern is that the building will be converted to condos or something, right?

Veronica: Yes. In fact, it was sold recently and that was a bit of a panic; but it was sold, and then it's still being offered as rental units. But, just the looming fear of anything like that.

Sean Pyles: Yeah, there is that uncertainty. OK. And where are you thinking of buying? Do you think you would look for a place in Oakland, maybe further out? What are you considering, at the moment?

Veronica: I'm considering multiple options, maybe in Oakland, maybe further out, someplace that I could retire. There are a couple homeownership programs in San Francisco that I could try and apply for. A couple I don't qualify for because I make slightly too much money.

Sean Pyles: A good problem to have.

Veronica: But, there are some. Well, yeah, it's like I make too much money to qualify, but not enough to not need help.

Sean Pyles: A lot of people in the Bay Area are in that position.

Veronica: Yes, I have good company. But yeah, so I'm really looking all over San Francisco, Oakland, maybe somewhere further out, that I could really see myself settling into.

Sean Pyles: You also mentioned in your initial email to us that you don't have a car, and that one concern is that if you buy a place further out, you might end up having to buy one, which that gets expensive. You have a car loan and then you have insurance. And so, that on top of a mortgage can really change your budget.

Veronica: Yes, dramatically. I haven't needed a car since I've lived in the Bay Area, which has been fantastic. But, the further out I look, the further away I am from friends or work, the more that I have to factor that in.

Sean Pyles: Yeah, and you have to think about the quality of life and what you really want. Do you want to be closer to your friends so you can meet up for an impromptu dinner on a Tuesday? Or, do you want to have to really plan something on a Saturday saying, "OK, we're going to meet at this park, at this time." It just gives you a lot less flexibility when you are further away.

Veronica: Exactly.

Liz Weston: Well, and I'll just drop in being single, it's really important to have a quality of life that matters to you, and if you're spending a lot of time in the car going back and forth, and I'm just picturing a single family house in the suburbs is supposed to be some kind of ideal. That is really isolating, potentially, if you're on your own. It can be really tough to be so far away from everything that you might be interested in. So, why would you look further out rather than where you are, or closer to the city?

Veronica: It would simply be because of affordability.

Liz Weston: Oh, OK.

Veronica: Ideally, I think I would prefer to stay closer in the city, but as you get further and further away, the prices ... I'm not going to say significantly drop.

Sean Pyles: A little better, at least.

Veronica: A little better.

Sean Pyles: Are you maybe looking into condos? Could those be a more affordable option for you?

Veronica: Yes. I've started looking into condos and I'm talking with a housing counselor about one, the different programs that San Francisco offers, but also the challenges in condo homeownership, their resale value, the HOAs, which are just foreign to me, wrapping my head around that because that seems to ... You can't predict year to year what the HOA fees might be, and that kind of detracts from my homeownership goal.

Liz Weston: Well, and for people who don't know, homeownership association fees, typically there's like a monthly fee that covers maintenance, and then there can be special assessments. So, if the roof needs to be replaced, that covers that. So, there's good news and bad news, and the good news is that you are sharing these costs with a bunch of other people. If it were just you, in a single family house, you'd be replacing that roof all on your own and trying to figure that out. The bad news is, as you said, Veronica, you don't always get a lot of advanced warning when something like this needs to be done.

Veronica: And then, I've heard horror stories, so I'm just trying to figure out what a condo homeownership looks like.

Sean Pyles: Yeah, I'm fairly HOA-averse because I don't want someone telling me how I'm supposed to be landscaping my yard, but I think one way to consider this is that either way you're going to have a cost. So, if you end up getting that house a little further out, you're going to spend a bunch of money on a car, like I mentioned, and on insurance, and it would probably end up costing you more than an HOA, depending on where you're living. So, it's kind of a matter of where you would rather have your money go.

Veronica: Yes. I think I need to make a serious list of pros and cons.

Sean Pyles: Have you at least viewed any houses or condos?

Veronica: I went to one and I got very excited, so I decided I should not do that until I'm ready.

Sean Pyles: That can go both ways. I think that sometimes when you look at a condo or a house, when you're just beginning homebuying, you can get super excited and maybe, hopefully not, but some people will rush into it. But then, at the same time, the more you view houses and condos like that, it's almost like exposure therapy. And so, you begin to become choosier, and you can see, oh yeah, this one is maybe a little bit better than the last one that I saw, but it doesn't have this feature, or that sort of thing. So, you can numb yourself a little bit to that giddiness that you get.

Veronica: That's true.

Sean Pyles: All right. Well, one thing that you mentioned was that there are some home buyer programs, or there's one in San Francisco that you don't qualify for, but there are other first-time home buyer programs in California, so I want to make sure that you're aware of those, as well. The California Home Financing Authority has a number of different programs to help home buyers, and all do have income limits, but in Alameda County where Oakland is, the income limit is nearly $150,000, and you said you make just over $100,000, right? So, you could qualify for that.

Veronica: I did not know that, so thank you.

Sean Pyles: Well, I'll email you a link after this conversation.

Veronica: Thank you very much.

Sean Pyles: And then, another thing that you wanted to talk with us about was retirement, and as I understand, you have a pension. So can you talk with us about how you're thinking about retirement savings, and how you consider that pension as part of it?

Veronica: Yes. The pension is a dying art form, so I'm very lucky and privileged to have it. So, I have the pension, which I'm vested in. I vested after five years.

Sean Pyles: Great.

Veronica: And it's a combination of, you have to reach a certain age, and then have a certain number of years to get a good pension, basically.

Sean Pyles: And then, just to interject, for folks who may not know, being vested means that you get full access to the pension, which in your case would that cover your full salary? So, you'd be getting your full salary in retirement?

Veronica: It would depend on how many years I have when I retire. The soonest I could retire is 50, and I would get 1% or some percentage, times the number of years that I have.

Sean Pyles: I see, I see.

Veronica: At 55, I would get 2%. So, if I had, I don't know, 25 years at 55, then I would get 50% of my take-home pay, if that makes sense.

Liz Weston: When you first vest, that just means you have a right to some usually-very-small amount of money, and the longer you're there and the more you earn, typically that amount goes up. So, a traditional pension is going to be more generous typically, than social security, and this is an aside Veronica, but I'm guessing you get this instead of social security, right?

Veronica: No, I also get Social Security.

Liz Weston: And you also get ... Oh, good. Oh, that's great. Lots of guaranteed income in retirement is such a good thing. So, that puts you in a much better stead, but so you're already vested, but you do need another 10 or 15 years to get a really good pension, it sounds like.

Veronica: Yes. If I do stay another 10 or 15 years, I also would get full medical.

Liz Weston: Retiree medical?

Veronica: Yes.

Liz Weston: Oh, that makes my nerdy heart sing. Well, because that allows early retirement. You can retire at 50 or 55, you don't have to wait for Medicare, and then you can have another career or do some fun things. Oh, that is absolutely awesome. So, you said if you stay, is there a question that you might not?

Veronica: Well, no. I mean, right now I'm very happy.

Liz Weston: Excellent.

Veronica: I never ...

Liz Weston: Yeah. Yeah. Life is uncertain. I totally get that.

Sean Pyles: One thing I'd like to hear about, Veronica, is how you envision your retirement. Do you think that you'll be in the Bay Area, or when you think about you post-career, as you have it now, what does that look like?

Veronica: I would love to stay in the Bay Area, assuming affordability, it works out. I really like a lot of things about where I live, so ideally, if I could, I would stay here. I have a good friend and support network out here, and it would be my ideal situation.

Liz Weston: You had mentioned in your earlier email that, you were asking, "Should I buy now or should I wait til retirement?" It sounds like you're moving more towards buying now.

Veronica: Well, I would like to, I'm just not sure. I'm happy to wait a couple years. I'm just not sure if buying in retirement or close to retirement is advisable. I read a lot of articles about people paying off their house before retirement. And so ...

Liz Weston: Yeah, a lot of people do carry mortgages into retirement, but financial planners, that makes them nervous because then you've got that big expense that you have to deal with, and frankly, the sooner you get on the equity-building train, the better. If you can get into a place now and build equity, typically you'll have more options when you do get to retirement age. It doesn't necessarily mean you have to buy a home to live in right now. It could be a rental property, it could be a vacation home, it could even be investing through a real estate investment trust; but just having some real estate exposure is generally considered important for a total investment plan.

Veronica: I hadn't really thought about the rental aspect.

Liz Weston: Not everybody wants to be a landlord, and frankly, I wouldn't want to be a landlord in California. That would be tough.

Veronica: It sounds very difficult. I don't know that I ...

Liz Weston: Yeah. But, I do have a friend who's been doing it for years and has been very successful with it, single mom, and she's done great. So, it's obviously possible to do it in any state, it's just a little more challenging.

Sean Pyles: Well, we touched on this a little bit before, but Veronica, I'd love to talk more about your competing priorities, and think about what's maybe most important to you. So, when you think about each of the goals that you have — buying a house, saving more for retirement, really filling out that emergency fund — I'd love to hear about which one gets you most excited. Or maybe another way: Which one would alleviate the most anxiety if it was accomplished.

Veronica: I thought a lot about this because ... And I actually think it's retirement.

Liz Weston: Oh.

Veronica: Yeah. Because I think having a very secure future and not having to worry about things when I'm ready to leave the workforce is just my priority, I think.

Sean Pyles: So, you want that peace of mind knowing that you'll still have money to rely on when you aren't working anymore.

Veronica: Yes, and I'd like to be able to travel and visit friends and do things.

Liz Weston: Oh, I love that. You're in such a good position with a pension. I mean, it's not like you shouldn't save additional money because you should, like we talked about, life is uncertain, but you’re head and shoulders above so many people that are struggling, basically, to afford the whole thing themselves, or afford it on top of social security. So, a pension really gets you so far along the way.

Veronica: Yeah.

Sean Pyles: You have a 401k as well, and that reminded me of a friend of mine who has a pension, and he also saves with a 401k, and when he's talked with his financial planner about this, he has essentially allocated his 401k money as his travel budget when he is in retirement.

Veronica: Oh, I like that.

Sean Pyles: The pension will cover day-to-day expenses.

Veronica: I like that. I think, ideally, my goal this year is to talk to a financial advisor, because I just opened a Roth.

Liz Weston: Good.

Veronica: So, I didn't know whether the Roth or the 401k should be my priority, and so I wanted to talk to someone about that. What makes most sense?

Liz Weston: Does your workplace offer any financial planning help?

Veronica: Not that I'm aware of, but I would have to look into that.

Liz Weston: OK. Yeah, it's becoming more common, if every employer doesn't have this option, but that's one place to look, and we have lots of information on the site about choosing a fiduciary fee-only planner. Fiduciaries are the ones that are required to put your interest first, so you don't wind up paying commissions or getting talked into investments that might be expensive or poor performing. The site has a lot of information that can help you find somebody that can help you.

Sean Pyles: I want to talk more about your student loan forgiveness, because you're kind of a unicorn, having achieved student loan forgiveness. So, can you talk with us about how you got that?

Veronica: It feels like a miracle. I feel like a miracle preacher. The Public Service Loan Forgiveness program has been an interesting journey. I started at a qualifying employer in 2005, so I was working at a qualifying employer before the program started in 2007. But I heard about the program and I thought, "Oh, this is great. I already have one qualification down." And then, about a little bit before 10 years in, when I thought that I would qualify to have my undergrad loans forgiven, I realized I was on the wrong payment plan and had the wrong type of loan, so none of those years counted. I had a loan called a FFEL loan, which is a federally backed private loan, and they do not qualify for forgiveness under the Public Service Loan Forgiveness program. But recently, the Biden administration has made changes to the program, which allowed previously unqualified loans to be switched over to qualifying loans, and all of those past years to count.

Liz Weston: Yes, I remember that happening.

Veronica: And so, I went and did some research, and realized that if I switched my loans over, I could get forgiveness for my student loans. I put in my paperwork, I think in December of 2021, and I didn't receive word that I had been forgiven until June of 2022, but it was backdated until February of 2022.

Sean Pyles: That's fantastic.

Veronica: Yes.

Sean Pyles: So congratulations on that.

Veronica: Thank you.

Sean Pyles: Some people might be listening to this wondering, where is my student loan forgiveness? I'm kind of one of those people too, who applied to have my student loans forgiven by the Biden administration. Your forgiveness was from a very specific program, not the general Biden debt cancellation that folks might have applied for in the fall of 2022.

Veronica: Yes. This is for Public Service Loan Forgiveness, where you have to work at a qualifying employer for some amount of time. You have to make 120 qualifying payments under the right repayment plan, with the right type of loan.

Liz Weston: Yes.

Sean Pyles: Lots of conditions there.

Veronica: Yeah, there's conditions.

Sean Pyles: So, how did getting this forgiveness change your calculus around your financial goals and what you do with your money?

Veronica: I feel like it's turned it 180 degrees. It just felt like I was never going to get ahead or anywhere, because with this looming debt, it was really hard to get ahead on my credit card debt, and putting aside money for retirement.

Liz Weston: You may have mentioned this, but how much was forgiven?

Veronica: Just under $125,000.

Liz Weston: Wow.

Sean Pyles: Wow. That's incredible.

Veronica: Yes.

Sean Pyles: Oh, my gosh. So, really, congratulations.

Liz Weston: Yes. That must have felt great.

Veronica: Yes.

Liz Weston: OK, sorry.

Veronica: I called many friends. I cried many tears.

Sean Pyles: Yeah, I bet. But, I can really empathize with that feeling like you're treading water financially, and no matter how hard you try to change what you're doing with your money, what you have coming in, what you have going out, you just can't seem to move ahead, and sometimes it takes a really dramatic change to get you out of that rut. That's something that my partner and I experienced when we were living in San Francisco a number of years ago, and we ended up moving up to Portland, Oregon, just to find a more affordable place to live, to just alleviate what we were spending on housing, specifically. And so, that was one way we were able to get not as dramatic a transformation in our budgets as what you had, but something kind of similar. And I would encourage anyone who's feeling kind of stuck in where they are with their finances to think about what could be a big positive change they could make.

Veronica: Oh, yes. Before that, it felt almost like one step forward, two back, and then this really allowed me to make some headway.

Sean Pyles: I imagine after that, you were able to think more broadly about what your different financial priorities are, like we're talking about today. Is it retirement? Is it really beefing up that emergency fund? Buying a house? Is that what led you to thinking about these three big categories?

Veronica: Yes. It felt like it opened several doors at once, where I was before just thinking about getting out of these loans, at some point.

Liz Weston: How much credit card did debt did you have when your loans were forgiven, and how long did it take you to pay that off?

Veronica: Well, I was actually able to make good headway during COVID, because of the payment laws, and that really allowed me to get some headway. But, I think total, I had about $40,000, and this is over the course of 20 or 25 years.

Sean Pyles: Paying that off is also a really big deal.

Veronica: Yes. That felt, that last payment ...

Sean Pyles: Talk about crying happy tears.

Liz Weston: Yeah.

Veronica: That felt, yes, it was very emotional.

Liz Weston: Just out of curiosity, were you making extra payments on all your cards? Were you targeting high rate first, the smallest at first? How did you approach it?

Veronica: When I first started to really get serious about getting debt-free, I didn't know what I was doing. I did some research and I actually did the, there's a method where you can do the highest interest first, and I didn't do that. I did the smallest amount first because of the emotional win, of getting to another, paying off one debt and then moving to another one, was really ... It really gave me momentum.

Sean Pyles: Yeah. We talk about that as the debt avalanche versus debt snowball methods. The debt avalanche, you focus on your highest interest rate debt first, while making minimum payments on your other debts. And then, with debt snowball, you focus on your smallest balance. So, like you said, Veronica, once you're done paying that off, you get that huge rush of excitement and satisfaction, and you can put that amount you're paying on that debt into your next biggest debt, and so on until you pay off all of your accounts.

Veronica: Yes.

Liz Weston: I used to be a huge fan of the avalanche, just because it's very Nerdy and numbers-based, and I knew it would save more money, but people really get that psychological hit from the debt snowball, and research shows it works. So, oh, good on you. That is great to get all that done.

Sean Pyles: There's this way of thinking about managing your finances, where it's about being reasonable over being rational, and I think this is one of those areas where it's really great to be that way, because if we are always thinking about how we can do the most cost-effective thing, one, it's not very fun, and two, you're not going to feel great. You want to enjoy what you're doing along the way.

Veronica: Yes.

Sean Pyles: All right. Well, Veronica, you seem to have a lot of really fantastic opportunities ahead of you. I know we've just kind of started this conversation, but if you could make a decision right now about which one of these three priorities you would focus on, what are you thinking right now?

Veronica: Oh, I really go back and forth. I think I'm really into the idea of growing my retirement fund at the moment, and really just setting myself up for a great future.

Sean Pyles: Great. Well, that's great to hear, and I'm sure that when you talk with a fee-only fiduciary planner, they'll be able to help you think through this as well, and bring in the amount you might be able to get from your pension into play too.

Veronica: Yes. I just used your Social Security calculator.

Sean Pyles: Fantastic. We were just talking about that on the podcast, thank you. All right. Well, Veronica, thank you so much for joining us today.

Veronica: Oh, thank you for having me.

Sean Pyles: So Liz, what do you think about Veronica's situation?

Liz Weston: Oh, I'm so excited for her. She's such a unicorn for one thing to get that all that debt taken off her shoulders, that's huge, and to pay off the credit card debt, that's great. It surprised me a little bit that she is most excited about retirement because usually people are thinking about buying a house, that's their focus. But, she's got a really good situation. She's got rent control, and yeah, something could happen to that, but she could always, if she wants to buy, buy a vacation house, maybe out in Tahoe or Reno, and she could enjoy the space with her friends. She could get some appreciation going, and she could still enjoy the lifestyle that she really likes in Oakland.

Sean Pyles: I agree with you. I was a little surprised by the emphasis on retirement, given that she has a pension. But, I think living in the Bay Area, speaking from experience here, it can feel so unattainable, even the prospect of buying a property or a condo. So, focusing on how much money you can save for your retirement does make sense to me, and I hope that she can find some way to maybe get a property, like you said, a little further out, so she can build that equity and accomplish her many goals simultaneously. Because that's one thing that's important to do as well, is not only focus on one thing, but to see how you can make progress on many different goals simultaneously.

Liz Weston: I love the fact that she was making progress on the credit card debt even before she got the forgiveness. She took advantage of the pause on student loans, on federal student loans, to accelerate her payments there. And now she's just in a really good position. She's got a good job with incredible benefits, she's thinking about her priorities and what to do next. She wants to get the help of a financial planner. She's just moving in the right direction. That's exciting to see.

Sean Pyles: Yeah, I completely agree, and I can't wait to hear how this pans out for her.

Liz Weston: Yes. All right. Well, that's all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. You can also email us at [email protected]. Also, visit for more information on this episode, and remember to follow, rate and review us wherever you're getting this podcast.

Sean Pyles: Here is our brief disclaimer: We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

Liz Weston: This episode was produced by Sean Pyles and myself, with help from Tess Vigeland. Kaely Monahan mixed our audio. And a big thank you to the thoughtful folks on the NerdWallet copy desk for all their help. With that said, until next time, turn to the Nerds.