Ep 20A: Making Financial Decisions as a Couple, College through Parenthood: Angel & Stephen Thomas
Updated: May 11, 2022
Hello, This is Sirisha, welcome to my podcast!
Ep 20A: Angel & Stephen Thomas have been together since College and have always had separate bank accounts (barring the simple IRS hiccup). They share stories of how they funded college, "toy"ed with entrepreneurship, their philosophy on saving, investing and retirement and how they "rent" real estate for travel. You can walk the path with a young couple who started their financial journey early, what they learnt, what went well and what they wish they had done differently. This is only Part 1 of the conversation, don't forget to tune into the next episode as we deep dive into decisions that impact their long term goals and their family.
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Below is a transcript of the episode, slightly modified for reading.
PODCAST TRANSCRIPT OVERVIEW
[00:50] -Meet Angel & Stephen [Jump to section]
[03:12] -Entrepreneurship & First Jobs [Jump to section]
[07:37] - Saving & Investing from the first paycheck.. [Jump to section]
[09:04] - Scholarships to pay for College [Jump to section]
[11:15] - Financial Advisor [Jump to section]
[13:27] - Are their financial outlooks similar or different? [Jump to section]
[16:11] - Real Estate... Rentals [Jump to section]
[17:53] - Retirement Planning....Insurance... [Jump to section]
[19:58] - Time Shares [Jump to section]
Food for thought. Episode takeaways [Jump to section]
PODCAST DETAILED TRANSCRIPT
[00:50] Meet Angel & Stephen
Welcome to today's podcast. We are continuing our series on "Let's talk about Money" and I have some really good friends, Angel and Stephen Thomas joining us. Stephen is an independent consultant and he will talk more about what he does and Angel works in the high-tech industry as an engineer. They're both parents of two lovely young children, and we are going to walk through their journey from when they started college, all the way to where they are now in their life. I met Angel and Stephen when I started my first job, so we've known each other a long time and had financial discussions over the course of years.
I think it's a good perspective to hear on some of the decisions they made early on as they graduated college. So Angela and Stephen, welcome. Thank you for being here on the podcast today.
Angel, why don't you give some background about yourself and what you do today and how you got where you are?
So my name is Angel Thomas, and I'm originally from a small town in Iowa. I went to college at the university of Iowa and I majored in chemical engineering. I got my bachelor's degree and then from there I had done an internship down in Texarkana, Texas for a paper mill and so I went there for my first job.
Then after two years I moved from the paper industry to the semiconductor industry and I'm now working for NXP in Austin as a yield enhancement engineer.
That's where we met first, in the semiconductor industry. Stephen, what do you do? I know you're an independent consultant, you've actually almost always worked for yourself.
I am from Iowa as well, but from a bigger town and also at the University of Iowa. So I studied Chemical Engineering. I only used my degree for about a year after school and then decided that I really liked programming and computers more than chemistry.
So I switched gears from that into computer work ended up getting a job with one of the big five at the time consulting firms spent a couple of years there, then decided that I can work for myself contracting for firms just the big five. So for 14, 15 years now been working for myself as independent contractor, ironically, most about 10 of those years, I contracted back to the same big five firms that I quit from.
So it was unique to be right back with the same people, just like quite literally just making more money and I've been doing that ever since then. Don't plan to ever go back to a full-time job.
[03:12] Entrepreneurship & First Jobs
Your entrepreneurship, your independence is not something new, can you go back to when you used to trade figurines.
Yeah, so I started back in ninth grade and I was going to a school dance and I needed money. So I was doing a garage sale at my house, and I found these baseball cards in my house. I put these baseball cards out for sale and found that people would pay money for these baseball cards.
I knew nothing about sports. I don't follow sports at all. I knew nothing about baseball but I very quickly learned what pieces of cardboard people would pay more money for than others. I grew that into a full blown business. I had other people, their friends doing shows for me. I would do sometimes seven shows in a weekend, baseball card shows, setting up selling baseball cards.
That started to slow down, so in college, I shifted from baseball cards to star wars toys. So I was huge into star wars toys. Again, not really a star wars fan. Yeah, I love the movies, of course, but I was more into understanding what the market factors were, what somebody would pay more money for again, and run ads to buy people's collections. So I had first quit my engineering job and did it full-time for about a year and a half before I got into the big five consulting.
It's helped me get into the big five consulting, doing all the computer stuff cause I was online. This was 22 years ago online wasn't as big or as simple as it is now. I didn't want to be a toy salesman my whole life, so I was very fortunate to sell my business that I paid off a hundred percent of my debt, which had been a lot accrued to run this business. Paid off all my debt from that, then I started consulting and haven't looked back.
That is fascinating considering , you studied market conditions and you are a teenager at that point.
I shifted to hockey away from baseball because there was no competition. So I do a show, I'd be the only one with no Wayne Gretzky card so I totally shifted into that market and beanie babies. I would meet people in a mall, parking lots and pay $1,800 cash for seven Beanie babies and then I'd have them sold within three days for usually double it.
Oh my gosh. Yeah, you hear about it now I guess there is no market for beanie babies, but I cannot believe $1,800.
Yeah, and this was 22 years ago. A hundred dollars, it was a lot more than now. It was a lot of money back then.
One time went in Florida and we drove there. I think he sold his star wars toys and he made like $10,000.
At my peak, I had seven people working for me and we'd ship about a hundred orders a day.
You did internet business before there was the Amazon and all of that and did it help you pay for your college?
It didn't help me pay for my college, probably quite the opposite. I got loans and money from my parents to help pay for the college that I used all my free money to invest back in the business. So at the end of the day, I had a pretty substantial amount of inventory, six figures worth of inventory again, but driven by six figures worth of debt.
I was very fortunate to be able to sell it, basically paid off everything to the penny, but, I have pulled some money out over the years while I was working. So I paid myself and I had a lot of fun, learned a lot of life lessons.
Did you go on your first dance? What did you do with your first paycheck?
I did and then she got lobster tail, so it was good thing, I sold a bunch of baseball cards to pay for it. I still remember it was like $47 at the time, which again was a lot back then.
Good memories and I think more than anything, it taught you to time the market, all the skills, what sold, what did not, go through the whole learning process.
Other than a very short stint in the corporate world, you've always been an independent consultant.
Oh and then that girl I took to the dance was Angel's friend.
We still talk to her, that's how we met.
So nice. What about you? What was your first job?
My first job was really back in high school. I didn't do very much. I concentrated more on studies and but I did a few days of detasseling corn that wasn't fun. I'd worked as a waitress at a restaurant and that only lasted a few weeks because that wasn't for me either. I was terrible at that job. My best job, I had to call people when I was in college to do cigarette surveys. That was fun, I did great at that. I worked for the professors in college like making copies out of books. I would go to seven different libraries and find publications and make photocopies dealing with research too.
[07:37] Saving & Investing from the first paycheck...
And what did you do with your first paycheck.
Went to savings. Yeah, one thing we did. So Steven and I were both pretty broke when college ended cause I grew up with no money and I did get tons of scholarships to pay for my college. So my senior year of high school, I spent like almost all my time applying for scholarships. I ended up getting 10 different scholarships they paid for my college fully.
But when I finished and Steven was like, let's get a credit card, he's a high risk guy and he's let's go travel because we'll never get a chance to travel again. So we actually traveled for three weeks to Europe that year before we actually started our job. We both went to the same paper mill for our first job in Texarkana, Texas and then during college, we met with these financial advisors and they came to our chemical engineering seminar and they told us that anyone that wants to come see them for six free sessions.
So during college, we actually went and met them for six free sessions and they basically set us up with a savings plan. So it included a lot of different parts and one part was investments. So our very first paychecks 10 or 15% of it was went straight to an investment. So that was really good to start off, from our first paycheck with mutual fund investing and then we also had some insurance plans and then our 401k with, through the company that we work. So we never knew what it was like to have a full paycheck. So it was already like a smaller paycheck to start with and we did fine with that because we didn't ever know anything different.
[09:04] Scholarships to pay for College
You guys started really early and that's, what's great about your story, right?
You had your department come in, you took advantage of the six sessions and you obviously set your plan way before most people even see the money. So as you said, you started from zero and had it all locked in. And what I really appreciated is which I think is great, all those scholarships you've got for college, because I remember you saying this very clearly, and I tell the story to other people.
Even if it was a hundred dollars scholarship, it's a hundred dollars, I didn't have to pay for, or pay interest on. So you know that every little amount counts, because we're always looking for the big $30,000 and $10,000, it's great if you get those, but they're not easy to come by.
I got really lucky. One of the scholarships, I was actually the runner up for they're giving away one scholarship in the state of Iowa for this one program and the person who, he was in first place actually went to MIT. So he didn't use the scholarship, this is for an in-state Iowa school and so I was the runner up. I ended up getting to get that scholarship and it was a full four year tuition scholarship. So that alone was great and then I had other scholarships in addition that helped pay my room and board. Cause my mom didn't find any of my college, so it was just myself.
I did take out one student loan and that was to buy a car so I could get to Texas for my internship. I got really lucky with the scholarships for sure.
Yeah. I had no scholarships. Wasn't as good as student.
Then I also applied for a lot. I went through those big books that you've seen and I was like searching which ones might apply for apply for Tylenol or, bingo halls. I had to play for all different sorts of scholarships. I got quite a few, but a lot of the other kids, I knew weren't applying for all the scholarships. I spent a lot of time at it, but it paid off.
You have two young kids. Is it something you are going to make them do as well?
Oh yeah! They're going to be applying for scholarships We have an eight year old daughter and then we have an 11 year old son and he has some special needs. He has a rare genetic syndrome, so he might not go to college but because of that, we are preparing for his future.
You said they offered six free sessions. So going back to that, wondered if your friends took advantage of it.
They were very smart. They targeted MIS majors, which is a higher degree of business major.
[11:15] Financial Advisor
They targeted engineers. They targeted the groups where you make a lot of money and so they came in and we have four or five of us that we know of in our class who did it. It was a good sales and marketing for them, because I think everyone that we know ended up, buying stuff with talking, following their plan of action.
Yes, you probably did have to pay for some services, but I think to your point it set you up right off the bat. You never saw your pay check. You're doing well. You still got your traveling, you continue to travel.
And we made sure our Europe trip was paid off in couple months of our first job. So we made sure to pay that off right away and that was probably the last time we carried a balance on our credit cards. So we put everything in our credit cards just because we like to earn points and miles and all of that. Steven's quite the travel pro when it comes to points and miles and different rewards you can earn. So we definitely utilize our credit cards very heavily.
However, we pay them off every month. But back then, because we wanted to travel before our first career, we definitely put on our credit card and paid it off right away.
Do you have conversations with your kids about money? I know they're young.
Not really yet. They don't have a concept of what a dollar is really worth yet but we do talk about it.
Today, Hayden came with a whole piece of paper. She's like 'Mom, write down the chores. I'm going to write down how much money you have to pay me, if I do these'. Her amounts was a little steep. She wrote down a hundred dollars. I didn't pay any of that but they're starting to learn. We did just opened bank accounts for them. There was a local bank that if you opened a bank account and put a little bit in and he'd do a hundred dollars extra for a bonus for kids. So we're like take a hundred of your dollars and put it in there. So they already have that and we did set Hayden up with 529 plan probably a year or so ago. So we're investing a little bit in that for her, but we are going to tell her she has to pay for her own college and that way she's worked hard and she applies for scholarships too, and tries to, do well on her own. Then that will also help her, we just don't want to tell her up front.
That's a good move. Mine are teenagers in high school, getting ready for college, that's exactly the thing. You still have to do your part.
[13:27] Are their financial outlooks similar or different?
We'll support some of it. You started together when you were in your first job, are your money outlook similar or different. Initially I was in a lot of debt and , I was financing my business, so it wasn't like I bought goods. Like I had an asset to back it up as long as somebody would buy that asset.
So we were very different then, and probably after I sold the business our thinking aligned pretty well. I got lucky that I didn't marry a spender. So Angel has the means to buy a, a Rolex watch, if she wanted it. And she doesn't, she might've got one as a birthday gifts, but like she could afford super ultra luxury things and, we choose to save that instead.
Don't buy a lot of new clothes, I don't have the expensive purses and things I could, but I don't. But at the same time, anything we needed, we're just Amazon and here it is the next day. So we definitely we take advantage of what we've saved over the years and that we'll still use coupons too.
We tried it and we look for good deals on things. So if something is expensive, but it's a good deal for it, then we'll, purchase it. But like one thing with cars, we'll keep our cars for at least 10 years or longer, until we feel like maybe they're not reliable and then we'll buy a new car. But now we're finally at the point where we can pay cash if we want to for a car, which is a great place to be in our life.
The guy almost fell out of his chair when we said we were paying cash because the main reason we had to at the time, 'he's like it's 0% financing', is we were building this house and we couldn't have that show up on our credit report.
So that was the main factor and he still just didn't understand it.
So you've been very thoughtful , going to all the transitions.
But he's definitely much riskier than what I am. So he'll play with the stocks a little bit and he started playing with the cryptocurrency , actually four or five years ago, before it was really popular. I've dabbled a little bit in it and he has a lot more than I have, but in general, we're pretty similar spending wise.
We've actually have our own separate accounts. So one person will pay the mortgage. The other person helps pay all the other bills. You don't have the person paying the mortgage needs more money then we transfer over to their bank account.
We did have to get a joint account one year, a few years back because the IRS was issuing tax refunds and it happened to be made out in both of our names and neither of our banks would cash it. So we had to open joint accounts. So we do have one joint account, but we're still pretty separate. We trust each other and now we're pretty similar with our spending and savings.
I'm glad you brought up the two separate accounts because last time we talked, we were talking about that.
So what are some of the decisions, when you have made them, what have been some easy ones. And what have been some challenging ones that you thought, 'oh, I, maybe you made a mistake on it and that you would've done differently' for someone who's going through and learning that process now.
[16:11] Real Estate... Rentals
I think some of the things that we would have done different or made different decisions is maybe how we bet our money on real estate. We sold all our houses to buy the next house, we always had to do, because financially we couldn't afford it, but a lot of people have rental homes and rental income.
I think we weren't ever positioned with decisions, do we buy this rental house or not? But we should have put ourselves in that situation. I think I would have been happier if we'd have looked back and had three rental houses, even if we didn't have so much in retirement just cause it is a good long-term investment in general.
For sure. I wish you would have done some real estate, especially with right now the way the market is. It makes you really look back and we've had two houses just with in five houses of us, sell today and looking at the prices they sold for today.
We're like, why don't we have five more houses right now? Because the market is so high, the prices are so crazy. And I wish we had some other houses that we could be selling right now or condos somewhere. But at the same time, for him., he would probably do that easily. For me, I want to do it, but to take our own house and rent it to someone would be tough on me cause I'm too OCD. It's personal to me and seeing someone else living in my house and maybe destroying the carpet or, not taking care of something the way that I would take care of it would be very stressful for me.
And also just having to deal with we're not very good with maintenance on homes or doing all the managing. So having to hire a management company in that .I wish we would have done more real estate for sure, but I'm happy the way we started saving from day one for our first paycheck, we've done a lot of ESPP, the employee stock purchase plans with our companies and then 401k with all of our companies.
[17:53] Retirement Planning....Insurance...
We've been doing some traditional IRA converting to the Roth IRA for savings. So we have a lot of savings in our for retirement. So we're very well set for that and we've also done a lot of insurance purchases to protect what we have. So we have an insurance plan that when we retire, we can actually pull out of it.
So we'll have a monthly income from it but then when we actually passed away there will be a full insurance policy. Whole life, instead of just the term insurance. So it's nice to have that already set. We do have term as well, that term gets, very expensive as you get older.
So we have a term policy right now for, to a certain age, but we have plenty of insurance for our kids for when we die someday. We started that, right out of college and that those policies will be fully paid up here soon. So we don't have to pay on that anymore and I'll just be set in place, which is really nice.
So many different moves. You've talked about insurance, you've talked about your retirement, your 401ks, IRAs, ESPP, all the benefits that we all encounter. talked about rental, we rented our old place. We did it for a short time. It is quite hard. It is not as easy as it sounds because to your point it was very personal for us because it was our house and we had a tough time with it.
So we actually sold the place because we couldn't manage it for the same reasons, just emotionally tied to the house and. I know having rentals is a way of investment and obviously it's a great investment, but I think there's a personal touch to it. So it may not be everyone's cup of tea.
I had some friends who had tenants that would take a hammer to a bathtub and it's smashed to pieces. They had completely demolished rental homes and so it was really tough on them to have to go and fix all that stuff up and, they lost money. I can definitely see both sides for sure, but I do wish we did that.
It is a source of income and investment for the long run and the pros and cons and how your style fits with how to manage it different, whether it's, you're personally managing it or a management company and you're aware of it and walk in with eyes open, then it's really good.
[19:58] Time Shares
Vacation condo might've been a nice way for us to go. Having a management company and just a condo instead of a freestanding house might have been something easier that we could still try in the future.
We have two timeshares again, very researched and bought very strategically.
One of our timeshares we bought in Thailand and the reason is because the maintenance fees in Thailand are very low and we could still use it for a week at a Marriott anywhere. So why not, buy where the price is low and the maintenance fees are low instead of buying like on Hawaii where we can still trade our week from Thailand for a week in Hawaii. We're actually going to go again here shortly, then we went and used like three weeks last year in Hawaii. So we've been really fortunate to be able to trade our timeshare and we also have a week we own in Scottsdale. And again, we've never been back there, but we just traded for other locations. So we've really enjoyed and the way we bought them we've saved a lot of money from our timeshare.
For sure, but a lot of people don't buy correctly. At least I would say correctly and they ended up losing a lot of money.
Timeshares not for everybody, not advocating a timeshare, if you know how to do it.
And most, I would say 90% of the people probably are not using their timeshares correctly.
We paid very little amount for a timeshares and we made sure that the maintenance fees where we got them at are relatively low.
So you travel a lot. Obviously a lot of travel is also determined between your airline miles, your credit card points, your hotel stays, Stevens, travel business points, and now your timeshare optimized it. I think the key, keep coming back to that word, you have planned everything very precisely to make the most out of it and being very thoughtful. Obviously you've done a ton of research. You're telling people to do the research and see what's right for them.
In today's episode, you got to hear Angel and Stephen's story right from when they started college to where they are today. And how they manage their finances as a couple in the short-term and the long-term. Tune into part two of the interview as we deep dive into some of their other financial decisions and how they've set themselves up for the future
Food for thought. Episode takeaways
Are you applying for scholarships to pay for college?
Are you saving investing part of your pay checks in 401k etc.
If you are planning to invest in Real Estate Rentals listen to Paula Pant's @Afford Anything Podcast.
Do research before buying a time share
Guest: Angel Thomas
Guest: Stephen W. Thomas
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