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Regardless of our profession, personal finance is a topic we should all discuss and study. After all, knowing how to budget, invest, save, and ultimately spend our hard-earned salary is crucial to a well-lived life. And as engineers, we’re more than capable of doing that.
On today’s episode, Danielle Schroeder (Dani) jumps back on to present a different side of a civil engineer’s life: dealing with money stuff. After having her first experience with personal finance while still a college student taking out loans to pay for housing and meal plans at Drexel, Dani has come a long way to build up an impressive 800+ FICO credit score!
Your credit score is basically the three-digit number that tells lenders how reliable you’re when it comes to paying them back when the loan is due, whether it’s a short-term loan or a long-term loan. Understanding and taking advantage of this number, as well as other personal finance aspects such as budgeting, credit card points, and cash back, can really put you in a much better financial position in the future, regardless of your situation right now.
According to research by LendingClub Bank, 54% of consumers in the U.S. are living paycheck-to-paycheck. Since engineers make a decent amount of money, this research shows that most people’s financial problems come from managing money―not making it. By elaborating on their previous experiences with money, the mistakes they’ve already made with it, as well as their knowledge about it, Dani and Luis teach you how to take the reins of your financial life and make the most out of it.
What you Will Learn in This Episode
- What your credit score is and why it's important
- Credit card alternatives for non-US citizens
- The importance of keeping track of your credit score
- How to use your credit card correctly
- How opportunity cost plays a role in personal finance decisions
- The meaning behind different FICO Scores
- How to build up a high credit score
- Why you credit score fluctuates from time to time
- How to optimize your credit utilization rate
- How to get travel bonuses from your credit card usage
- Net Worth ― What it is and how to track it
- Personal finance apps to help you budget
- How to get cash back without misusing your credit card
- Budgeting ― Apps vs Spreadsheets
- How credit cards can protect you against frauds
- How to get your credit report and why you should do so
Engineering Our Future Episode #15 (Empowering Women in STEM with SWE Senator Danielle Schroeder) – http://www.luisfelipeduque.com/015
Engineering Our Future Episode #37 (From $140k in Debt to Financial Coach as a Civil Engineer with Nicolai Oliden) – https://www.luisfelipeduque.com/037
FICO Score – https://www.fico.com/en/products/fico-score
Discover It (Student Credit Cards) – https://www.discover.com/credit-cards/student-credit-card
Her First 100K Podcast – https://herfirst100k.com/financialfeministpodcast
Kara and Nate Youtube Channel – https://www.youtube.com/channel/UC4ijq8Cg-8zQKx8OH12dUSw
Choose FI Podcast – https://www.choosefi.com
Chase Sapphire Preferred Credit Card
American Express’ Blue Cash Preferred Credit Card
Personal Capital App – https://www.personalcapital.com
Mint App – https://mint.intuit.com
Experian – https://www.experian.com
Equifax – https://www.equifax.com/personal
TransUnion – https://www.transunion.com
Connect With Danielle:
Website – www.stemchangemaker.org
LinkedIn – https://www.linkedin.com/in/danielle-schroeder
Instagram (@danitheengineer) – https://www.instagram.com/danitheengineer/?hl=en
Twitter (@danitheengineer) – https://twitter.com/danitheengineer?lang=en
Music by Jack Winders
Intro: Midwest Folks
Outro: Southern Skies
Follow him on Spotify: https://open.spotify.com/artist/0msfukZWdVoUHIvpFvanTU?si=U5jKEdjfSTOetL12ispLcg
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Engineering our Future
Luis Duque (00:00):
Welcome back to another episode of the Engineering Our Future Podcast. I'm your host Luis Duque. And this week I bring a conversation with a previous guest on this podcast, with Danielle Schroeder. She was on this podcast episode number 15, and she was one of the original guests on this podcast. One of the first guests I had here on the show. And it was just great to touch base with her again. We have stayed in touch all this time through ACI committees, ASCE events, and just on social media in general. We kind of do a lot of collaboration, which is a lot of fun. On this episode, we're going to be talking about credit scores, a little bit of personal finance, a little bit of travel hacking, a little bit of just budgeting in general. It kind of covers a lot of different topics that are really important for just knowing how to manage money.
Luis Duque (00:49):
I think that was kind of the bigger theme on this podcast. But it's just fine to talk to her. She shared with us some of the tips and tricks on how to get a better credit score. She has over a 800 credit score, which is amazing. And we just also share a little bit on her thoughts on student loans at the beginning when she was starting college and her decisions to take those loans when she was starting. Overall, just a great episode. Just to touch a little bit and expand the conversation on personal finance, which is a topic that I really, really enjoy. And it was just great talking with Danielle today. So if you're interested in this topic, make sure you let me know on social media. I'm always listening for what you like and don't like the podcast.
Luis Duque (01:34):
And I know personal finance is a topic I really enjoy, and I really have a lot of fun, both researching as well as just bringing guests to talk about this topic here on the show. So make sure you subscribe to the podcast if you like episodes like this. I know we've been covering a lot of PE exam related topics and episodes with guests, and some of my own. And I promise this podcast is not going to turn into a PE podcast, but I think there's a lot of value in just sharing this information, since I have it so fresh and I just took the exam a few months ago. I will, at some point, compile all the episodes and all the resources for the PE exam and put into our website, so you can find it pretty easily. But episodes like this are the ones that really enjoy doing. Episodes like this with Danielle, as well as Nicolai in the past, and just personal finance in general. It's a topic that not a lot of people talk about, but I think it's super important to talk about.
Luis Duque (02:32):
And honestly just share kind of the thoughts of these guests and share the different ways we think and different ways we can manage money. And again, there's no really a right or wrong answer in terms of personal finance. And I'm just here to present to you some of the things that I've learned and some of the things that these guests have learned, so you can make the best decision for yourself. So without further ado, let's jump right into the conversation with Danielle.
Luis Duque (03:00):
So welcome back to another episode of the Engineering Our future Podcast, Dani. A repeat guest, the first one that I have come back to this podcast. And how are you doing today?
Danielle Schroeder (03:09):
Doing well. How about yourself? And thank you for having me back.
Luis Duque (03:12):
Yeah. It's been great to see how many things have changed since the last time we talked. And like I told you offline before we started this interview, I wanted to talk a little bit more things about, like, outside of engineering, like personal finance. I've been doing a lot of PE podcast episode in the past, but I think just this topic is very interesting to me. I've been learning a lot in the past, and I know you — Like, we both did an episode with Justin on his Declassified College Podcast, and it's just a topic that I really sparked my interest when kind of he put that call to action. And I've been just trying to think about ways that we as engineers can use personal finance in our favor. So let's just start with like your journey. Like, how has been your journey in personal finance? Maybe talk about — I know we were talking about the student loans and everything. Just maybe touch a little about that, and kind of your story with money.
Danielle Schroeder (04:10):
Sure. So I'll say my first major experience with personal finance was taking out a private loan to help pay for housing and the meal plan my first year on campus at Drexel. Another part of that was that I got my first credit card while I was in college, so while I was a student. And then other highlights of my personal finance education is — I graduated in 2017, so it's been about three years, almost four years now. So since then, I've gotten more intentional now that, you know, I have a, as I like to say, a real adult life job, you know? That entry-level engineer salary is a lot different than internships or co-ops. So I've been more intentional with that. And then, proud to say, as of some time last year, I think it was like this time last year, my FICO score, or my FICO credit score, passed that legendary 800 mark. And then primarily — I know you just talked to Nicolai, but kind of Nicolai kind of inspired me to recently start posting on social media a little bit more about personal finance, and kind of helping others be educated in that realm as well.
Luis Duque (05:29):
Yeah. That's amazing. I don't think my credit score has been that high. So you must be doing a lot of great things just with personal finance. You mentioned credit scores, and just give us a little overview what a credit score is. And maybe, I think there's five different categories that they rank here. So just maybe just give us a broad overview of those and we'll be, again, touching on those later on in this episode.
Danielle Schroeder (05:57):
Yeah. So, a credit score is typically that three-digit number, and it's designated to be the likelihood that you'll pay your bills on time. Essentially is what it comes to. There's many different credit scores and scoring models, but the most widely known is the FICO, which I kind of talked about. And that is a credit score that was created by the Fair Isaac Corporation. And just to give a little bit of statistics, 90% of lenders use that FICO score, so that's why I usually default to talking about the FICO score. And they're kind of important because, generally, if you have a higher credit score, when you're going to take out a loan for housing, or a car loan, if you have a higher credit score, you're more likely to get, one, get a loan—be approved for a loan—but also getting a lower interest rate.
Danielle Schroeder (06:53):
So the higher your credit score, usually the lower interest rate that you would get. And then you kind of alluded to this. Into the FICO score particularly, there's five main categories. So kind of going back to college when you're thinking about that syllabus, when you, you know, fill in this week or first week, not everything that you have for that class is weighed the same. So tests are weighted more, most likely, than homework. So it's these five categories that are weighted differently, that add up to that three-digit score. So going into those five categories, about 35% is your payment history. So again, 35%. So if you can, and most of them do, if not all, setting up automatic payments when you have a credit card is very important because one miss payments can affect that majorly.
Danielle Schroeder (07:47):
The second is the amounts owed, also known as that credit utilization. So when I first got a credit card, they approve you for X amount of dollars. So if I had, for example, a credit limit or credit of $2,000, and I used all $2,000 of that, then I would have a hundred percent utilization, which is not too good looking in terms of the credit score. Usually, I think on average, they say maybe 15 to 30% is where it is good to use for that credit utilization, because that's 30% of that total score.
Danielle Schroeder (08:25):
Back to the other types. There's the 15% that's based on your length of credit. So that's kind of what I'm alluding to in talking about that I got a credit card when I was in college. So I've had a credit history for nine, almost ten years now. So that really helps to boost your credit card of showing that I am consistent on paying my bills, I'm only using a small part of that utilization, but also showing that over amount of time. Showing that over two years and showing that over nine years can kind of help increase that score. And then the last two that are both at 10%, is that credit mix or different credit lines, so that could be auto or, like I talked about student loans, and then the other remaining 10% is that new credit or that total number of [inaudible]. So every time you get a new credit card, that doesn't look too good. So if you're getting credit cards — Try not to get credit card after credit card after credit card. That will temporarily affect your score and lower it.
Luis Duque (09:34):
Yeah, yeah. How did you get your first credit card? I'm curious, because for me it was kind of a struggle. So I just want to hear, did you have any problems when you got your first credit card? Did you have to have like a secure credit card? How did that work out for you?
Danielle Schroeder (09:49):
So I didn't have to get a secure credit card, but that is a great option if you first is not approved. My first credit card was the Discover It college student, or student maybe is what it's called. So I got approved that first time, but it was a specific one for college students that's marketed towards college students, so that might have also helped increase my chances in that.
Luis Duque (10:12):
I think I have tried to apply to that one, and I don't know if this is the case for every international student, but I was not approved because I was not a citizen of the US, or for whatever reasons. But so what I ended up doing was just getting one of the secure credit cards. I think I had the credit limit was like $600. It was very little. But that just helped me at least get into like the credit score and kind of improve my credit score. So I think that's just another great option. If any person is listening that is not a US citizen, there are options. And obviously it's easier once you get your score or kind of the first few times, start building it now. Just with time, you're going to have, again, a good score, and that's kind of what we'll be touching on right here. Did you make any mistakes at the beginning? I'm sure you didn't really have a great score the whole time. Do you have any financial mistakes early on that we can learn from. And if not, like, have you seen other people do mistakes that you have recognized?
Danielle Schroeder (11:13):
Yeah. I think my mistake is really not paying attention to that as much earlier on, or just personal finance in general. Like I kind of talked about, I didn't intentionally look too much into personal finance in general until I graduated. So yes, I had a credit card. But I wasn't, you know, checking my credit score all the time through — I think through most credit cards, hey have options where they can track that in thei app. So like you can do that. So I don't think I was being very intentional when I first got it, until like the last few years where I've gotten more educated in terms of keeping track of that and really paying attention. So I don't think there was necessarily a mistake that I can give as a lesson learned, but just definitely that these things are important. I don't think I realized the importance until much later on.
Danielle Schroeder (12:06):
In terms of a common mistake I see, is not using your credit card like a debit card.
Luis Duque (12:15):
Danielle Schroeder (12:15):
Now I'm saying, emergencies do happen. Yeah. Emergencies do happen. We're talking more about — Right now, I'm talking about the want. I'm talking about those new shiny shoes, getting a new whole wardrobe. Not the needs. Needs is a whole different thing. But like, I know when I first got that credit card, it can be tempting to see that, you know, I have that credit limit of thousands of dollars. I'm going to be like, “Ooh! I want to go get all this new clothes” or things that I don't need. But make sure that you spend within your means, and just because you have that credit limit of that thousands of dollars, that you're not using all of that money. Because using it as a debit card, using the money that you actually have, as opposed to that or those wants is definitely easy.
Luis Duque (13:04):
Just like making sure you're paying everything down in full each month, it's super important if you want to keep both the credit utilization under 30%, as well as making those payments on time. I think that's another big factor of your credit score. So just kind of keeping an eye on that. Let's go back to the student loans. We kind of were talking about this before we started the podcast, and you mentioned you got some student loans, so you could live on campus, so you could just pay for some of that stuff. Do you want to just touch on your perspective on like getting student loans? I know a lot of people say college and student loans are some of the worst things you can do. But I think for engineers, it's almost necessary to go to college. There's too many things that we need to learn, so much think and knowledge. Sometimes getting a student loan it's not ideal, but it's a way to go through college. And we as engineers usually make some good money after we graduate. Just kind of give us your perspective on that. I know we're talking about that before the podcast, and I'm kind of curious to continue that conversation.
Danielle Schroeder (14:07):
Absolutely. Yeah. So, like I talked about, I took out a private loan for that first year at Drexel. Particularly, there was a program that I got into, called the Engineering Learning Community, and part of that was you had to live on campus for that first year. So you essentially lived in that same dorm as the rest of that ELC, or Engineering Learning Community. So to be part of that, I had to live on campus, which can be expensive. I think I was just looking it up, I think it was like three grand or so per term. Like, that's a lot of money to live on campus. So it's that, and then there's also the meal plan. I don't know how it was at your college, but that can be pretty expensive too. And that's something also that's required if you live on campus.
Danielle Schroeder (14:53):
So I think you talked about this in your previous episode about personal finance of that opportunity cost. So, yes. There was a lot of costs that were associated with this, but also the opportunity to be part of learning community, to be able to have that first year experience in a dorm meeting fellow engineers, it was part of that. So I took that opportunity and I said, “Yes, I'm going to take out a loan because I think this is important to me”. And thankfully I've paid off that loan now. I still have some small, more of the federal student loans, but I paid off that private loan, because as you said, post your graduation, once you have that full-time job, you're making a lot more money, so you can dedicate the money towards that to pay that off fairly quickly.
Danielle Schroeder (15:41):
And then kind of the converse of it, I guess. So I did a five-year program, and the second and third year of my five-year program, I ended up moving back home with my parents and commuting to school because it was close enough to school and it was a way to save money because I would have had to live on campus as well, and it was expensive. So there's opportunity costs that come along with it that, as you can kind of see, I kind of did something for that first year and then kind of changed it in the next few years so that I could save some money in the long run.
Luis Duque (16:14):
Yeah. And again, like, as the name implies, personal finances is personal. You're free to do what's best for you. But I think what you did is something that you probably took a lot out of it. You probably met some great people at you dorm. And like, it's just a great networking opportunity to sleep on campus and just being there. You probably have friends that you've met on campus that are doing also great things outside of work and having those connections. You never know when you're going to need those connections after college. So I think that's, again, it's personal, and that's what worked for you. I actually lived in campus just for one year and I moved out with some friends, just because different circumstances. Like, playing sports and everything was a little different in my case. So again, I'm not saying my way was right, your way was right. It's just a different way of going through college. And that's what I love about just talking to so many people with different backgrounds here at the podcast, as well as just talking about money. Because people approach it so differently and it's always so interesting to see what others have to say.
Danielle Schroeder (17:23):
Yeah. And you brought up one other quick point of the fact of some of the people that I met through the Engineering Learning Community became some of my best friends. Some of them were in the civil architectural environmental part, so they became part of my study group. But also, know it's been awhile for us now, but thinking back to that first year of college, it's a hard transition to get used to from, you know, the years prior and then going to college. So it was just nice to have that transition in person and on campus, as opposed to commuting back and forth and trying to make train schedules work and such. So again, those opportunities, and as you mentioned, personal finance is personal. This was the choice that I made. I may have not fully understood what I was doing when I, you know, taking out that loan and how I thought that that experience was going to be. But I definitely wouldn't change that for the world because of the experiences, the friends that I've made, everything that happened for our first year at Drexel.
Luis Duque (18:19):
Yeah. I actually had a pretty bad experience with my first roommate in college. So I ended up moving to, like, a different dorm my second semester. And the funny thing is all the people — Obviously I was in — Kind of similar to the engineering — What's it called? The ECL? Engineering Learning Community? ELC, yeah.
Danielle Schroeder (18:38):
Engineering Learning Community—ELC.
Luis Duque (18:41):
It's basically that. So the funny thing is that I was [inaudible]class of a lot of these people that were civil engineers later on. And I became friends with them and I became closer to them as the classes kind of progressed and you have like less and less people in those classes. And we kind of used to talk about, like, they remembered seeing me going in and out of practice and that's basically the only time they really saw me at the dorm because I was either studying, at like the student union, or I was in practice, or just like outside of the dorm because I really did not get along with my roommate, which made that first semester kind of a struggle, especially coming from a different country, different culture. It was kindo of a hard time. So I was glad to find — The tennis team was amazing for me. I think that was kind of my support system. People from Brazil, from Colombia, from like all over South America. It was great to have that diversity and just getting to know those people. So that was — Yeah. Living in dorms for me was not a great experience, and I didn't want to do at that time, but the rest of the people have great experiences. It's a big part of the college experience, it's a big part of just networking and meeting people in college. So I think that's super interesting. We've got deviated a little bit from the money talk, but what is a good reason to have a really high credit score? And why should we care about the credit score?
Danielle Schroeder (20:07):
So I think we kind of talked about how credit score is important because it helps lenders—so people when you ask for money—determine how likely you are to repay those loans. So kind of what I was talking about. The examples I usually think of is buying a house or buying a car. If you have those higher credit scores — An 800+ is that exceptional. But again, this is FICO scores. That 740 to 799 is still very good. The 670 to 739 still pretty good. That actually that 670 to 739 is the near or slightly above average for the US—again, US consumers—for a good score. And then kind of below that is more fair. So you most likely will still get approved for loans, but you most likely will get higher interest rates. And I think you kind of talked about interest rates and compound interest when you were talking to Nicolai, but those things add up over time. So you can fill that credit score by showing that you are able to repay these loans with a credit card now, and building that credit. It'll help you when you're going to buy that house, or buy a car, or things like that, that go into it.
Luis Duque (21:26):
Yeah, that's very true. And I know we bought a house a couple of years ago, and we've refinanced kind of at the end of last year with record-low interest rates. So it was definitely good to have a good credit score then, because that's saving us — I think it's saving us like $400 a month over 30 years, which is a real long time. We're probably saving a lot of money on interest. So it's definitely a big plus just to have a good credit score and make sure you maintain it at a high level and make wise decisions with credit cards, with car loans, home loans, or any other type of loans. What are some recommendations you have for people that may not have the greatest score right now and want to improve it? What's a couple tips you have for them to get that score up?
Danielle Schroeder (22:13):
Sure. So, my best recommendation is, if you don't already have a credit card, try to get one., especially if you're a student. Because as we've kind of talked about, that time that I've had, that 10 years of having that credit score, has helped me immensely to bring up that score, to bring up my score over time. So I recommend, if you can get a student card or the secured card, if it comes to it of that, getting that so that you can start building that credit. And then I think we kind of talked about this, but I'm not entirely sure. Making sure you set up auto payments. As I talked about, 35% of that total score is about those payments. So if you miss that one payment, that can be very detrimental to your score. So making sure one, you open that credit card, and then two, you immediately set up those automatic payments so that you don't miss a payment.
Luis Duque (23:08):
Yeah. And I think that's super true. And just keeping those credit cards for as long as possible, even if you think you're not going to use them. Put it in a drawer, set up your Spotify or Netflix payment on that, and set up auto payments and just forget about the card. It's not going to get closed because you have something kind of going through it and sending the automatic payment. You make sure you pay it in full each month. So yeah, I think that's an easy way to just start improving the credit score. And again, this is not an overnight thing that you're going to get to 800 if you have a bad score right now. But it takes effort, takes time. Like, being conscious about what you spending on acredit card. Make sure you have enough money in your checking or savings account to pay for that in full each month, and just make sure you're paying that every month without missing any payment. Because I know that's a huge percentage of how they rate your credit score and making sure you're able to pay back the money that you are basically borrowing.
Danielle Schroeder (24:05):
Yeah. And then one other thing that I have not done, but I have heard about, there is those different credit bureaus or different credit things that have those boosts that you can do. They are free boosts. And from what I understand of them, they're taking things similar to what you just said, like Netflix or Spotify, where you have that monthly part, and they — I want to say turn it into a loan of some sort, but it's something like that to show you that you are making payments on something as well, so that that can also slightly help with boosting your credit score. Again, it does take time. It's not going to immediately change. But the other caveat that I also do give, I think it's plus or minus 10. Don't be upset if you see your credit score fluctuating like plus or minus 10, because that does tend to happen. Because as we talked about — We talked about the five categories and we talked about the approximate percentages, but they're approximate. They don't give the exact equation that you can use to double check it.
Luis Duque (25:12):
Yeah. And I see my score fluctuating plus or minus 10 or 15 a lot of times. I think it's just natural. As you use a credit card sometimes the cutoff is a different time or something and you have maybe a little higher utilization. Obviously, always try to keep it under 30. And a very easy way to keep it on the 30 is either open a second credit card so your credit allowance can increase, or asking for a credit line increase for your credit card. I've done that a few times and it always helps to just have a little more wiggle room. Even if you know you're not going to use the full 10 or 20,000 amount in your credit card, at least you have more limit, and then if you spend a thousand dollars, it's not like you're spending 40% of 50% of that allowance. So making sure you kind of consider that. Obviously, you don't want to go crazy and open a hundred credit cards in a year just to have more credit limit, but those are great ways to do that. We'll probably won't get too much into this topic, but I was kind of curious. Have you heard of travel hacking and getting like big bonuses when you open your credit cards? I'm sure you probably have heard that.
Danielle Schroeder (26:21):
I've definitely heard of travel hacking. Unfortunately, because of right now, as things are starting to open up, there is room for travel, but I have not used travel hacking yet. But that is the next on my to-do list, to buy a credit card of when I'm going to be frequently traveling and using that. For folks who are listening, travel hacking is usually those credit cards that are specific to either a bank that's connected to usually like a flight or airline or something like that, and using those points that I'm sure there's plenty of people on YouTube and other social media that you can see the different credit cards that they have, that they use it for different purchases and then they use all of their points to get free hotels and free airlines because they're redeeming all of their points because of that. So it's definitely something to keep track of. And I'm really excited to hopefully travel again soon and start travel hacking. How about yourself?
Luis Duque (27:23):
Danielle Schroeder (27:23):
The only one that I listen to is Her First 100k. Tory's fantastic. That's the main one I listen to. But on the more travel hacking side of things, the YouTubers Kara and Nate are who I follow in terms of the travel hacking. And definitely I have some ideas of what credit card is on my mind for airlines and such in the future.
Luis Duque (27:56):
So I listen to ChooseFI, which is a financial independence podcast. It's amazing. I think the concept of financial independence is great, but I think that some people just get carried away too much trying to retire when they're 30 or 35 and just basically living on nothing. But the overall concept I think is what has attracted me more. Just being a little more intentional with the money and creating some values and creating what's important to you. In that sense, I found financial independence amazing. Like, it changed the mind of my wife and I and everything we do. But going to the travel hacking, she was the one that showed me this episode—I'll make sure I link it on the show notes—from these podcasts, just talking about travel hack and everything.
Luis Duque (28:50):
And we actually have opened three different credit cards. So before we even go on this route, open the credit cards if you know you're going to have the spending limit without really buying anything extra. So your normal groceries, your normal utilities, whatever you have, don't open these thinking you're going to go buy new shoes, new video games or anything. Make sure you kind of covered that, your basic needs, without really going crazy. But we have opened three different credit cards right now. We are on the third one, which is the Chase Sapphire Preferred, which has like a 80,000, I think 100,000-point bonus right now. And it's one of the best because you can redeem it to a lot of airlines and you can — Again, this could be a complete new episode, but you can basically redeem it to airline and can travel for basically free if you have enough points.
Luis Duque (29:47):
We were talking about I was in vacation a couple of weeks ago. We went down to the Grand Canyon, through MOA. We live in Colorado, so we've went south to Arizona. And we payed all the hotels with the credit card points we got from, I think it's the — Let me remember. I don't remember what we stayed a whole day in. So we got a whole day in hotels for a week and we still have like 50,000 points. So my wife is the one doing all of these things. Maybe I'll have to talk to her to record another podcast here about this. But, yeah. I was just kind of curious because having the money and having enough savings in your account and having a great credit score and being able to pay your credit card in full each month, can allow you to do these kind of experiments, If you will. Just doing like travel hacking, open new accounts. And obviously these will affect your credit score slightly. I haven't really seen my credir score go down by 30 or 50 points. It's just gone down a few points and it kind of comes back up after that. So, yeah. I was kind of curious if you heard of that, because it's a complete new concept. And with us traveling to Colombia so much, and with our growing family, it's not getting any cheaper, with the years. So I was kind of curious,
Danielle Schroeder (31:07):
I was waiting for you to mention also going back to Colombia to visit family because that happens, hopefully a decent amount when you get to. But, yeah. I'm excited to start doing that a little bit more. And then also — I mean we met at a conference, but also, you know, there's conferences that we go to. Conferences are a great way to network. So it's also that. But, yeah. I like to call, like, what we were talking about first, of like that credit score, this is like the 101. And then travel hacking is that like 102 or the 200 part of it. That's once you kind of have that under [inaudible]. But it is an awesome opportunity to be able to use credit scores and points and all of that. And keeping with that personal finance of, What do you prioritize? What do you want? I personally also enjoy travel. So being able to use points to travel as opposed to having to pay for things is kind of cool too.
Luis Duque (32:09):
Yeah. Again, it's a big topic. There are people doing some crazy things with that. So it's just great to —
Danielle Schroeder (32:16):
Luis Duque (32:16):
Danielle Schroeder (32:18):
No. I was just going to say, I kind of also — I think you were mentioning about FIRE. Retiring Rarly counterpart. Like, there's also the extreme of the travel hacking part of it. So you can learn a lot from watching people that do these travel hacking things. You don't have to necessarily do exactly what they're doing, but you learn about what doing, and then you're like, “Well, what works for me?”, and kind of doing that. So it's a lot of education that is definitely important about this topic and almost any topic in general. Yeah.
Luis Duque (32:49):
Yeah. And again, just proceed with caution. I think every episode they record is the same. They just tell people like, it could be very beneficial, but if you don't have the control of having that 3,000 in three months spending and you're going out there and buying things that you don't need or just extra things, just to get your points, that's not really the way of doing it. It's just, if you have your normal expenses or, for us, with this last credit card, the Chase Sapphire Preferred, it was like a 4,000 in three months. But we knew we had to get new tires for the car, we knew we were doing a couple of trips that we had already saved for. We had all the money in savings account. So we're just going to put in the credit card and basically paying it off right away.
Luis Duque (33:28):
So kind of planning for that. I think that it's always smart and not going crazy, just buying a lot of things just because you can. I know we were talking about Personal Capital before and some of the apps to track your both credit score, as well as your money and your net worth. I use Personal Capital. I really like it. I founded again like five months ago maybe. I know you use it too. What are some ways that these app, or maybe just mention a few apps that you have used in the past and we'll talk about that later on too, how has that helped you maybe stay in control of you money?
Danielle Schroeder (34:05):
Yeah. That is a great question. There's plenty of apps out there, but I also really like Personal Capital. So mainly because it lets me see a snapshot of my networth. So for folks on here, the net worth equation is adding up all your assets, so bank accounts, cash, investments like 401k, Roth IRA, and then subtracting out those liabilities. So for my case, that's student loan, that small student loan that I still have. And then that gets you your total net worth. So it's nice to have a app where I can see all of those things in a snapshot and kind of see how things are going. But apps like this also give you the option to track that cashflow and budget. Like, I personally love how — I think you can do it with a lot of apps, but like you can add categories.
Danielle Schroeder (35:01):
So like food, rent, utilities. Like, I can add a category and then click through and toggle and be like, “Okay. I want to see how much I spent just on food in the past six months”. And being able to see that is really helpful. Especially, again, when we get to that credit score 200 where you having multiple credit cards that you're balancing, it's nice to be able to kind of roll that all into one app to see “I've spent this much on food on these different credit cards” in that kind of extent. Because we kind of talked about the travel part of it, but there is also credit cards that have different benefits as well. I think with the Discover One, there's a rotating category of that 5%. So if it's restaurants that month, I'm usually the one of me and my partner, “Okay. No. Let me pay with this because I get my 5% cash back on this time”. So keeping track of those things as well is helpful.
Luis Duque (36:05):
Yeah. I just want to say with that, like — You just made me remember, at some point it kind of becomes a game of “How can I use the credit cards to get rewards or get something out of it?”. Because obviously using the credit cards in a wrong way, make the banks rich. Like, you're paying a very high interest rate. Every time you use the credit card, they're getting a small percentage, especially if you don't pay in full each month. So we always tried to have a credit card that gives us the biggest amount of cash back. For example, I have the American Express Cash Preferred, I think it's called. And that one gives me, like, 6% on groceries every time. So I know that car is the one I'm going to use whenever I go to supermarket to buy food.
Luis Duque (36:48):
My wife has the discover card. I think it's probably similar to the one you have, and that one has the rotating categories where sometimes it's 5% on Amazon. So every time , the month that the 5% is on, that's the card we're using when we're going into Amazon. Trying to get, even if it's more than 0% on whatever you purchase, I think it's always a smart idea to do it just because you're getting something out of it. And believe or not , it adds up a lot. Like, I think that American Express card at the end of the year, we at least get at least $20 a month just in cash back. Just because they have really high percentages on like groceries and gas and everything. And over the entire year, it's $140 that I didn't have at the beginning of the year. And I can buy and maybe a Christmas present for us with that. So just being smart. I think for us has become like a game, how we can get the most rewards from the credit cards without really being dumb and buying extra things just to get the rewards.
Danielle Schroeder (37:46):
Exactly. Yeah. Don't go out of your way, but it's saying, “Okay. I'm going to buy groceries every two weeks making sure I use the specific card that maxes our rewards because of the rotating categories or the specific one”. And then another thing for folks that are listening that are maybe going back to the office and traveling, there's specific ones that have a high cashback for gas. So seeing and looking into those, how you can be strategic about, what ones you're using for a specific thing. And also highlighting that there's benefits to credit cards other than increasing that credit score. So there are other benefits that come along with it.
Luis Duque (38:25):
Yeah. I mentioned I use Personal Capital and that's been a great app. We don't really use it for budgeting. I don't think it has like a budgeting feature, you cannot really set like a budget amount. But you can at least keep track of where you're spending money on, and that's been great. In the past I've used Mint, which is also another great app. A lot of similar features, but I really like how Personal Capital has a little more on the investment side. I can see, like, the money that I've invested on, how it's performing, all that stuff. I like how Personal Capital does it better than Mint does. We won't get into investment because that's going to be a very long conversation. But we actually use —
Danielle Schroeder (39:05):
It can be its own episode, I feel like, investments. But the other thing I don't think Mint has as well, but I know Personal Capital has it. You can also manually add things. So like, my company has an [inaudible] for employee stock ownership plan. So I have to manually put that in. So I can still add manual things to really be able to really see my net worth a little bit more accurately, even though it doesn't link to something nicely to be able to update. So I still have to manually update it, but it's still nice to be able to see, again, all of those things in a nice snapshot in one app.
Luis Duque (39:39):
Yeah. And I guess for the people that don't really know what these two apps are, is basically you log in with all your accounts. Checkings, credit cards, car loans, home loans, and you put everything in, in one place, and that will give you a pretty good overview of if you have a positive net worth or negative net worth. I log in more to Personal Capital than I do to my other accounts because I can see everything. I can see all the transactions, I can see everything from Personal Capital. So that's been amazing.
Luis Duque (40:10):
We actually do all of our budgeting on a Google sheet that I put together maybe two, three years ago, and it's been evolving over the years. I've been meaning to like put like a template online and share it because I'm proud of it. It's it took a lot of time and it worked so great for us, and it's so customizable that we can see whatever we want to see, how much we spend in a certain week or project how much money we'll have in the future if we save a certain rate, and stuff like that. So maybe at some point I'll put the work in and create a template for that. But I'm curious, do you use like a spreadsheet to budget or do you just follow your Personal Capital and kind of make sure your spending is under a certain amount?
Danielle Schroeder (40:52):
So I do use a spreadsheet. I'm 99% sure it's not as robust as what you have. I keep it very, very basic and only check it I think now I think I do it every three months. I used to be in the very monthly of it, especially when I first got out of school, kind of checking with that. But, yeah. I primarily use Personal Capital for the day-to-day to just check. And then I hope it never happens, but kind of checking those transactions to see if something fraudulent happens. It's nice to be able to check there and be like, “Hey”, you know? “Something for $600 just showed up on here. I don't know what is”. So it's being able to see things like that, which is, sorry, a little bit of a tangent, but a nice thing about credit cards. It's being able to — Fight is not the word for it. But being able to mark those things where it's a lot easier to.
Luis Duque (41:49):
Danielle Schroeder (41:49):
Yes. Protection, thank you. There's protections of those parts of it, as opposed to, if you were using your debit card. Like, people say, don't use your debit card online because of things like that. Because unfortunately, you know, cybersecurity and such like that, we have to be careful. You don't want your identity being stolen, so make sure that you double check that things like that don't happen. But, yeah. Long story short, I do use a budget. Generally speaking, but I don't tweak it as much as I used to. I used to do that zero-based budget and kind of go into that. But right now, I've been a little bit more lax. I don't know if that's been possibly mirrored because of right now and the work from home. I don't know about you, but I haven't spent generally as much. So it hasn't been as, as part of that. But yeah. Budgeting is definitely important to see how much you're spending, to see if you're spending an exorbitant amount on takeout and needing to change those things to live within your means.
Luis Duque (42:49):
Yes. We have definitely not spent as much money as we were before. And I mentioned these on Nicolai episode. Like, when we moved to Colorado, we had a baby,, and then we had a second baby and we were not really in a position of spending that much money. I think we were just not spending wisely. I think that's the correct term. And I think we had at some point about like 15,000 in credit card debt, which was a lot of money. But within the past year, we kind of became more intentional, became more conscious of what was really meaningful for us, what we really want to spend money on, and we paid all of that off. And I think right now we have a saving of like 20 or $30,000 in the bank just because we really just became intentional and became — I had like a goal of just getting rid of that credit card debt because it was a burden. Like, every time you open the statement and you see that you have all that amount of credit card debt, it's painful. So if anything people take out of this episode, just protect your credit score. It's valuable if you want to save money down the road with interest and everything, and be intentional with how you spend your money. And make sure you have your money goals aligned with your actions. So, anything else you want to share with us, Dani, as we kind of end up this episode?
Danielle Schroeder (44:07):
I think that's generally about the credit scores. I did want to mention about credit bureaus. So for folks on here, under the federal law, you are entitled to a free copy of your credit report. So this is the entire report. Your credit score is like your resume. It's a quick snapshot of you spend your money. That credit report is that entire list of that first loan you took out to all of that that it shows there. And it kind of shows like on there if you had a miss payment, it'll show a little X in that part or a circle. I forgot exactly which one's which. But it'll show where you missed payment. So again, you're entitled to free copies of those credit reports from the three credit reporting agencies, every 12 months. These three places, and the three places only, are Experian, Equifax and TransUnion.
Danielle Schroeder (45:05):
And to bring us back to the credit scores that we've been talking about, the FICO score is calculated based on information from these credit reports that are maintained by these three bureaus. So a tip for folks that are listening in, and I know you like to talk about tools like notion or automating things whenever you can. I recommend that folks add to their calendar reminders to check one of these every three months. So for example, like putting in April to check the Experian one, and then August to do Equifax and then December TransUnion, so that you're using all three of the ones that you get every 12 months. And again, checking if identity fraud happened, or in the example of — One of my friends has, I guess, the same name as someone. And they were getting that person that that that person was married to that had the same name, and their debt was showing up on there. And they're like — So because there's these things that you can talk about when you get married, and how that part goes into it. But again, that could be a whole other episode. But things like that that can affect your credit report and your credit scores. So kind of being on top of those things and just checking for those fraudulent activities or those wrong information is important.
Luis Duque (46:21):
Yeah. That's super important. Thank you, Dani, for coming back to this episode. Just will have one last question and that's how can we continue engineering our future?
Danielle Schroeder (46:30):
Sure. So engineering our future in terms of personal finance, I think, if you take anything away from today, is that this change doesn't happen overnight. So if you want to plan for financial independence in your future, getting a hold and educating yourself about personal finance now, and you know, Luis is doing a fantastic job through his podcast and there's other resources as well. So getting educated in terms of personal finance, will help you set up your future and engineer your future, regardless of where you are in your career, studying, or anything right now.
Luis Duque (47:12):
That's great. It's always fun to see what people have to say when I ask them that question. And I'll have to look back and listen to what you answered last time, but I think it was related to STEM outreach, which was the topic of that episode. So, yeah. It's great to have you here on the podcast. It's crazy how things have changed since we last spoke here on the podcast. We've always been able to talk online on social media and different [inaudible]. But this is fun to see how different life is right now. So again, thank you for coming to the podcast. Where can people find you online and reach out to you?
Danielle Schroeder (47:45):
Sure. On most social media, my handle is @danitheengineer. And then I can send you my LinkedIn. My full name is Danielle Schroeder, so that's where you can find me on LinkedIn.
Luis Duque (47:59):
Okay. We'll link all those in the show notes. And, yeah. Thank you so much for coming back to the episode.
Danielle Schroeder (48:04):
Thank you for having me!
Luis Duque (48:05):
So there you have this conversation with Danielle today. Again, she is an amazing person, she's doing a lot of great things in engineering, but also has a lot of interests outside of engineering, such as personal finance and some other things kind of going on around her career. I've been in touch with her for a long time, a couple of years now, since the [inaudible] comes back in 2019. And it has been a lot of fun to see how far we both have come since we last recorded the episode over a year ago now. And just seeing how our careers have really evolved has been a lot of fun. And I've been following her on social media and she's doing a lot of presentation for students, a lot of stem outreach, a lot of big things in her career, which is amazing to see.
Luis Duque (48:49):
So I really hope you guys enjoyed this episode. I really hope you took a lot of value from this episode. I know I got a lot of new ideas for future episodes around the topic of personal finance, maybe a little bit of travel hacking, maybe a little bit of budgeting. So make sure you let me know on social media, make sure you reach out to me. Email or leave a comment if you're watching on YouTube. Let me know if these topics are interests of you. I know I could go on on many episodes talking about personal finance, but I want to make sure I am listening to you and make sure I'm giving you the content that you want to hear. So make sure you reach out. If you're enjoying the podcast, make sure you subscribe on any platform you're listening to. Review the show on apple podcasts. It really helps get the show there, really helps Apple show them that the podcast is interesting, and that you're gaining some value out of it. So I will really appreciate it if you do that. And overall, I really hope you're enjoying the show and all the guests I've been bringing in, as well as some of these solo episodes that I've been recording. So that's it for today. Thank you Jack Winders for the music. And as always, let's continue engineering our future.