Student loan strategies and managing complicated family dynamics with author Melissa Jean-Baptiste

 

Episode Description: Melissa Jean-Baptiste, author of So This is Why I’m Broke: Money Lessons on Financial Literacy, Passive Income, and Generational Wealth shares her student loan story, the strategies she learned from it, and how we can all avoid the downward spiral of debt. 

Video Highlight: Melissa Speaks about Millennial in debt.

 

Melissa’s Bio: Melissa Jean-Baptiste, financial educator and author of So This Is Why I'm Broke: Money Lessons on Financial Literacy, Passive Income, and Generational Wealth is a first-generation Haitian American and former NYC high school teacher. As the Beyonce of personal finance, she paid off $102,000 dollars in student loan debt on a teacher’s salary while writing and producing the award-winning Millennial In Debt web series. She has since pivoted into personal finance and career coaching to help millennials and Gen Z build generational wealth and gain financial freedom in a shame-free digital environment. She can be found at millennialindebt.com and millennialindebt on all social platforms.

 
 

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Full Transcript:

Bobbi Rebell:

Melissa Jean-Baptiste, you are a financial grownup. Welcome to the podcast.

 

Melissa:

Hi, oh, I'm a grown up, I feel so excited. Thank you for having me.

 

Bobbi Rebell:

I know you're not the first person that said that, but I will tell you everyone that comes on this podcast, you are not allowed to come if you are not a financial grownup, and you very much are. And congratulations on your new book. “So this is why I am broke” I'm looking around to hold this up in case we use this little clip in our promotional. We're both, okay, for those of you just listening, we are both holding up our pretty, pretty copies of this book. The most cool, like this is such a cool cover. I just I'm not going to tell people what it was. They have to go and Google it so they can see it for themselves. But it is, so this is why I am Brooke. Money lessons on financial literacy, passive income, and generational wealth. We're going to talk a lot, especially about the idea of generational wealth and what holds a lot of people back from that. But before we do so, I want to give people some context because you have a very unique and yet not that unique background. You were the child of immigrants from a Caribbean background, but born and raised in New York. And you're a child of immigrants. It was a very, sounds like you had a very nice upbringing in many ways, supportive parents, really valuing education, supportive, really pushing you and your siblings to achieve.

 

Melissa:

Yes, absolutely.

 

Bobbi Rebell:

And yet, and yet,

 

Melissa:

And yet.

 

Bobbi Rebell:

you found yourself in some financial trouble. So at a very early age, really in your student years and the years right afterwards, tell us a little bit about briefly about your upbringing and then sort of where things derailed from this lovely upbringing and so we're giving a shout out to your very supportive parents that it is well-intentioned and well-meaning and really successful parents because you did get into a great school with scholarship money and all the things.

 

Melissa:

Yes. Yeah, so I always talk about it. I always big up my parents. They did a wonderful job raising us with the best that they could, but I'm first generation. They came from Haiti. They didn't really have all the answers that I would need or the tools and resources that I would need in order to be financially fit is what I call it, as an adult. There were a lot of things that there were a lot of gaps that had to be filled. And so when I graduated from college in 2010, I graduated with two degrees. I got a job. I was like, I am doing. everything I'm supposed to be doing. I am the epitome of an adult. I'm making my parents proud. And then three years later, I try to buy my first house, no savings account, by the way. I don't know what I was thinking. And that's when I find out that my debt was actually ballooning. Although I was paying off monthly, paying off the minimum, the balance had increased from the 50,000 I initially borrowed and was now hovering around 80,000. And so the real estate agent really kind of slapped me back into reality, like, oh, you have a really high debt-to-income ratio. we're not going to be able to get you approved for very much money. And from New York, $100,000 is not going to get you much of anything. You might get a Barbie house. Um, and so that really was eye-opening that not only did I not know a lot of things, but my parents also didn’t know a lot of things, and I was kind of taking on that responsibility of learning and teaching them and teaching my brothers. So it really kind of was an, all-hands-on-deck to kind of learn how to navigate money the right appropriate way.

 

Bobbi Rebell:

Well, you've given us a great opening to one of the first lessons, which is don't assume the people around you know what they're doing. And it's always okay to ask questions

and even to figure things out on your own. For example, you are not the first person, whether it's student loan debt or credit card debt that has paid the number that is often the biggest number that they show you on the bill. And then you dutifully set up the automatic payments. But little did you know what happened was, and what this real estate agent did you a big favor of showing you, was that you had paid three years, you had been paying off what you thought you owed, you assumed it was paying the principal. In fact, you had unknowingly signed yourself up for, or someone else signed you up for, an interest-only payment plan. And maybe, well, you tell me, I mean, did they just say, here are your choices of payments and you picked the lowest one? I mean, what happened there?

 

Melissa:

That is exactly what happens. So typically they'll give you that six month grace period where you graduate in May or June and you don't have to make your first payment until around the holidays. And so they sent me that first letter in June. I was like, who cares? Like this is summertime, I'm having fun. And so when that October, November time period came and they send that letter again, like, oh, you have to choose which payment you're going to be making or we're gonna take the standard payment, which was about $1,100. As a teacher, I'm like, I'm not giving anyone $1,100. I'm not gonna be able to drive or eat or do anything besides pay this bill. And so I chose the lowest payment, but I didn't know that that lowest payment was only going to tackle the interest. And then besides that, I didn't know that there was going to be more interest added than the payment itself. So if I was paying $210, they were adding 350 a month. And so I was never actually attacking the principal and I was barely even covering the interest. And I just don't know at 21. what anyone could have told me to choose a different option because that low payment just seems so alluring. You have so much other money you could do things with, but I didn't realize what I was really signing up for was an eternity of debt, an eternity of loans, you know, to kind of derail all my other hopes and goals and aspirations.

 

Bobbi Rebell:

And to back it up even further, at 17 when you were entering college, what you also didn't know is when does that interest start accruing?

 

Melissa:

Yes. So I went to a really great high school, which is another thing like you can go to all the best schools and all the best places and these things these conversations just aren't coming up. And so when I was Signing up for this loan, I had no idea what the difference was between subsidized and unsubsidized. I didn't know that I could make payments while I was in school. I'm like, oh, yeah, it's on deferments. I don't have to worry about that. But had I known that I had so many unsubsidized loans, which are the type that gain interest, the minute you sign that promissory note that you're going to pay this money, they start tacking on that interest, I would have. I don't know if I would have done different, but I would have at least known, I would have been cognizant that, oh, this $7,000 by the time you graduate, it's gonna be around $9,000. So I'm like, I wish, these are things I wish I had known and I'm so happy to share with people now so they can make better decisions, right?

 

Bobbi Rebell:

And you know, it's so this is going to come out very soon after the president has announced that they are resuming student loan payments.

 

Melissa:

Yeah.

 

Bobbi Rebell:

Now, the pause in the student loan payments that's been going on for the last few years, that was sort of what I would say a real pause. In other words, if you had those loans, you really it really was like they stopped time. That was not the case for you when the interest was accruing. The other thing I want you to talk about is that the interest rate can change on you and very few people know about this.

 

Melissa:

Oh my goodness, yes. So that was probably one of the worst and most shocking things to see was I'm like, oh, when I signed this loan at 17, when I signed this loan at 18, it was

 

Bobbi Rebell:

at 17 was anybody talking to you? Did you have a high school counselor anyone your parents? anyone in there with you

 

Melissa:

I had a high school counselor, but they weren't there with me when I had to sign up for classes or when I had to sign this loan. They were just like, oh, yeah, go to the best school. You get

a scholarship. You'll do this. But no one sat down and talked to me.

 

 

Bobbi Rebell:

Okay.

 

Melissa:

And definitely no one talks about affordability, right? They're like, oh, you know, this is what you're going to do if you're going into this major. This is what you typically can expect to make. And this is how long it will take you to pay off your loans, right? These conversations would be so. I was like, I'm just going to sign this. I need the money. I need to sign up for classes. I don't want to be closed out of any classes. And then 10 years later, I'm looking at the almost $100,000 in loans. I'm just like, oh, wow, this is not, yeah, this is not what I signed up for. I signed up to teach kids how to read, you know, like this is just the thought pattern was really different and it would have been really important to understand that if I'm signing a loan today with a variable interest rate. that in three years and five years when I graduate, it's not going to be that 7%. It's gonna be closer to 16%, which is going to be tacking on a lot more interest and I'm paying this interest only payment. So I just really had a lot of odds stacked against me. And that was just due to my things that I didn't know, my own ignorance. And so read the terms.

 

Bobbi Rebell:

read the terms, right? This is so, so that therefore you started teaching reading instead of reading sort of age appropriate. I can see you coming into class and maybe instead of reading, whatever the assigned reading normally is, you're having your, your students read student loan, you know, documents and understanding because that, I mean, honestly, like all kidding aside, maybe that's the reading we should be teaching people is don't forget to read the big print and the little print. every single thing that you sign. And we've all been there. I'm a homeowner. I can tell you, I have not read every single document related to the home that I own. I read a lot, I read a lot, but definitely, I mean, the piles of paperwork that people throw at you sometimes can be overwhelming and it's often in a pressured environment because you don't really have choice. You don't necessarily have negotiating power as a 17-year-old. You just need the money. And you talk about in the book that... You didn't want to disappoint your parents by not graduating on time So when it came time to need more money, you just did what you needed to do You got the money through the loans and you weren't really shopping around necessarily not that you could have But you weren't going to shop around your goal was to make your parents proud

 

Melissa:

Right, absolutely.

 

Bobbi Rebell:

And that goes to societal pressure One thing you talk about is the societal pressure to go to the what's perceived as and I'm gonna be very emphasizing college We have in this country some phenomenal public colleges that I think and community colleges that are very much underappreciated. Talk about your decision and what you would do differently there.

 

Melissa:

Yes. So especially in New York, we have some phenomenal CUNYs, which are city schools, phenomenal SUNY state schools. And at that time, at 17 years old, I was coming from a private school, a very like elite view, like a view of an elite school. And it was kind of frowned upon or people looked at you a little weird if you're like, oh, yeah, I'm going to go to the state school. I'm going to go to this city school. And it's not as prestigious as a private four year school. But I ended up, and I say this all the time, and there's no like, downside, I ended up teaching with some of the most amazing teachers in all these schools, who went to city schools, who went to state schools, we got the same education, we got the same degree, and we're working for the same salary, but they don't have student loans, or they have far less student loans than I have, and that really was super eye-opening, because I'm, you know, kind of complaining and the teacher's like, oh man, I have this like, 30,000, 40,000 left, 50,000 left, and we're. in the same teacher's lounge teaching the same thing. So there's no shame in going to a city school, a state school, a two year school, because you're getting that education that you need to be in the career that you want. And I wish I had known or been more understanding about that at 17. I mean, I don't know who really is, but that is definitely a conversation I'd go back to have with myself like, oh, you can go to the really amazing city school that has an amazing teacher program in your in your neighborhood. And you don't have to go to this four year school to prove anything to anybody. So. That's my advice for a 17 year old Melissa.

 

Bobbi Rebell:

100% and for all the 17 year olds out there and people of all ages that are frankly influenced by the people around you. That may be relatives that you want to please. We are not, I shouldn't say all of us, but a lot of us do want to make our parents proud of us and also maybe not competitive in a bad way, competitive in a good way with our siblings and our peer group. And you talk about the importance of who you surround yourself with in terms of your friends. and your peer group and the influence that can have, not just on what you spent on college, but on what you spend in life, that social pressure, especially cultural social pressure. Can you talk a little bit about that?

 

Melissa:

absolutely. So we've all heard the quote where you're the average of the five people you spend the most time with. And I think it's really important to find your advisory board. And I talk about it like this all the time, because you're going to want to be in a group or in a room of people that even if they're not like minded, you have similar goals or similar ideas that you want down the line. And so it was really important for me to surround myself with people that wanted to build generational wealth that wanted to grow their wealth and even if they're not doing it the same way that I am or They're not talking about it in the same way that I am I wanted to make sure that I had good people in my corner or rooting for me to support the goals that I was doing And attacking without feeling like oh man. I can't go to brunch today or oh man. I'm not buying like the latest BMW I'm not keeping up with the people that I'm hanging around with right because it's like that social pressure is so real Especially when you're in your 20s and you see all your friends doing these things. We're like, oh I kind of I want to do that too. And I made a joke in my 20s. I'm like, how is everyone affording to go to Thailand? I can't even go get my nails done. But it's really important to have that advisory board that you can have these conversations with, especially people who have some more backgrounds and some more cultures with you. Because you're going through a lot of the same experiences, even if you're not publicly talking about that. And so one of those experiences is the black tax, which I talk about very often. And so I feel this pressure. And my friends and my family, they other people in my group, at my corner, I say, we all feel this pressure to do well, succeed, build wealth because we want to take care of our parents, or we wanna take care of our family, or we wanna make sure they're good, or like my parents are close to retire, my father just retired, shout out to him. And you wanna make sure that if something happens, that you can step in and take care of that. And that is really difficult to navigate alone, that conversation, that feeling. So it's so important that you... have that advisory board where you can discuss these things and figure out how to navigate them without feeling that over pressure that we're, because I already feel stressed, right? I don't wanna feel overstressed thinking about how I'm gonna make sure my parents are good or make sure my siblings are good.

 

Bobbi Rebell:

And how do you navigate that with friends too? Because there's also cultural pressure among your peer group.

 

Melissa:

Yeah, it's a lot of competition or it can be a lot of competition. So you have to pick your friends wisely. And you also have to know when a friendship has kind of run its course or is no longer the same, right? Because we tend to have friends from college. We tend to have friends from work or friends from high school. And sometimes you grow and evolve, especially when it comes to money or careers and what you want to do with your money and how you want to grow your money. Sometimes you can't keep that same group. That social pressure is going to keep you or prevent you from achieving the goals that you want to achieve or the job that you want to go and get or seek out. So I say that it's important to have these conversations but also know when to walk away and kind of adjust that group that you have in your current life.

 

Bobbi Rebell:

That's hard to do, friendshipbreakups.

 

Melissa:

yeah.

 

Bobbi Rebell:

How do you, do you have a conversation or do you sort of quietly ghost them? I mean, how, or do you try to save it? Sometimes they may not realize what they're doing and very often when you're wondering how they can afford something, the answer is they can't.

 

Melissa:

Right.

 

Bobbi Rebell:

And they're going into debt maybe because they're perceiving that you expected of them and it's maybe in some cases a friendship worth saving because.

 

Melissa:

Yes.

 

Bobbi Rebell:

You'll actually help them by saying, hey, you don't have to do this elaborate birthday dinner for me, let's just go chill, whatever it is. You know, sometimes it's a misunderstanding.What do you think about that?

 

Melissa:

I love that you said that. So I think it depends on the situation. I'm always for a conversation. I'm a big communicator. So the ghosting option is like, although in my early 20s, that might have been my choice. I think now it's super important. You know, whether having that communication, that conversation where it's like, okay, we're gonna, you know, go separate ways, or we're having that conversation to see if we can save it or see if we can see where the misunderstanding fell in through. And it's so funny that Millennial In Debt actually was born out of a conversation with a friend. communicating about how I felt about money and how I felt ashamed and embarrassed that I couldn't go to her group birthday that year. It was a really big birthday to her, and I'm like, I really can't afford to do this for you right now. I would love to celebrate you. I would love to take you out somewhere, but right now it's just not in my budget. And having that conversation was uncomfortable because I felt like I was letting them down. I felt like I wasn't being a good friend. I was ashamed that I was in that financial situation where I couldn't afford going to a birthday dinner with one of my closest friends. And... We sat down and she was just like, you know, I barely can afford, you know, this birthday celebration for myself. And I just wanted to kind of do something to celebrate myself. But she's just like, now that I'm thinking about it and navigating it, I can do something crucial, like super important to celebrate myself and it doesn't have to be this big elaborate thing. And I took her story with money and I started having other conversations that I were uncomfortable with my friends and family. And that created my first web series where I took all of their stories and kind of added a little bit of humor and education to it. But it really made it, it made my relationship stronger with these people because I was able to be vulnerable and tell them, you know, this is my financial landscape right now, these are the things I can't do, these are things I can do. And it just made it a lot more comfortable and it took a lot of that shame and pressure out of the mix. So I love that you say that a lot of times it is a misunderstanding. People just really don't know because we're not talking about it.

 

Bobbi Rebell:

Exactly, and it was a sigh of relief for her because she could kind of let her guard down and be like, yeah, let's just not. And then you can be so candid. It's like I once said to somebody, do we really need to order that big, shared appetizer? And she's like, no. And I'm like, let's just skip it

and move on. And sometimes it's better to just say it in a casual way and let them know that you don't need to be impressed because sometimes it's their insecurity that they're impressing you. We can all be good just going for a walk in the park together or whatever it may be.

 

Melissa:

yeah, I agree.

 

Bobbi Rebell:

Melissa Jean-Baptiste, you are wonderful. Tell us where we can find out more about you. I know your book is everywhere.

 

Melissa:

yes, book is everywhere. So this is why I'm broke.com if you'd like to take a look. But I am on all social platforms. I'm all over the internet, Millennial in Debt, Millennialindebt.com. Send me an email, DM. I'm always around ready to chat.

 

Bobbi Rebell:

Thank you for being here.

 

Melissa:

Thank you so much for having me.

 
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