BiggerPockets Money Podcast 111: Starting Late? Early Retirement Is STILL Possible with A Purple Mom

BiggerPockets Money Podcast 111: Starting Late? Early Retirement Is STILL Possible with A Purple Mom

42 min read
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On episode 110, we interviewed A Purple Life. As she was sharing her story of financial independence, she casually mentioned that her mother didn’t start investing until later in life—and STILL managed to retire at age 55!

So this week, we’re talking to her mother, who has her own amazing story of early retirement, which she was able to accomplish even though she didn’t START investing until she was 40!

Momma Purple shares her pragmatic approach to money in general—buying what you need, trying to make repairs instead of buying something new, sticking to a budget and banking bonuses instead of spending them.

Momma Purple is also a big advocate for having multiple, passive income streams like rental properties and a pension.

Hear her story of weathering TWO market crashes during her investing journey, taking immediate action when she discovered her money was in the wrong investment, and how fabulous her life is now, after retirement.

Click here to listen on iTunes.

Listen to the Podcast Here

Read the Transcript Here

Mindy:
Welcome to the Bigger Pockets Money podcast show number 111, where we interview Momma Purple about starting later and still retiring early.

Momma Purple:
The other piece of advice I’d actually give is to always have a second stream of income, no matter what. So after being laid off eight times, I just said I cannot depend on these so-called permanent jobs for my livelihood. So after that second layoff, that’s when I said, “Let me look for some other source of income.” That wouldn’t replace it, because I couldn’t work two jobs but would actually not make me so nervous the next time a layoff comes, which it did six times in addition to that.

Mindy:
Hello, hello, hello. My name is Mindy Jensen, and with me as always is my sensational co host, Scott Trench. Scott and I are here to make financial independence less scary, less just for somebody else and show you that by following the proven steps, you can put yourself on the road to early financial freedom and get money out of the way so you can lead your best life.

Scott:
Wherever you are in your financial or life journey, you can begin rapidly moving towards a position capable of generating a great income, saving a huge percentage of that income and setting yourself up to make larger and larger investments on your way to financial freedom. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate or start your own business, we’ll help you build a financial position capable of launching yourself towards your dreams.

Mindy:
Scott, I am super excited for this week’s guest. Last week, if you recall, we spoke with Purple from A Purple Life. And as she was talking she just casually mentioned that her mom didn’t start investing until she was 40 and still was able to retire early. And that really spoke to me. That really spoke to you. You were typing in your little notes, “We should have her mom on next week.” Yes, we should.

Scott:
Yet, while she started investing at 40 it was really just a dabbling really. She began her approach to early retirement at age 45 in 2005, and was able to complete that 10-year plan right on track and have a early retirement. And this has been… Some feedback we’ve gotten from some listeners about, “Hey, how do I get started if I started later in life? I feel like I’m really behind, not sure how to go about it.” And I think this can be really refreshing because Momma Purple did not do everything optimally to get to that stage. She made some mistakes that we talked about and yet she was still able to do it and it’s just literally in some ways kickboxing, kicking ass in retirement.

Mindy:
Yeah. When Purple casually mentioned her mom, I was not picturing the woman that we interviewed today. She is a hoot and a half and I’m so excited for her story because you’re right, she didn’t do things optimally. in some instances, her plan, her execution actually kind of hurt her financial bottom line, but it didn’t derail it. And once she figured out what was going on, she switched gears and is now living her best life. She’s so busy, she doesn’t have time for a job.

Scott:
Well, should we bring her in because I’m so excited to get to today’s interview.

Mindy:
I’m so excited too. Momma Purple, welcome to the Bigger Pockets of Money podcast. I’m super excited to hear your story because last week we spoke with A Purple Life or Purple Daughter, and she shared her story of financial dependence and just offhandedly remarked that her mother didn’t start investing until a little bit later in life and was still able to retire early. And Scott and I were talking, he’s like, we have to talk to Momma Purple too. So I’m super excited for you to tell your story today.

Momma Purple:
Thank you so much for inviting me.

Mindy:
So where does your journey with money begin?

Momma Purple:
Actually, it really starts with my parents. So when I was a kid I saw both of my parents rarely talking about money, but what I actually observed was the fact that they were very frugal in saving their money. So it was always US savings bonds and certificates of deposits for them. That was it. And the other thing that I noticed that my father would always do was he would only pay cash for everything, cash or checks, even his cars, even my college education. And they didn’t believe in debt, they didn’t believe in credit cards. And so that’s what I saw growing up.

Scott:
Did you work when you were a kid or a teenager?

Momma Purple:
Never. I never worked. The only work I really did that I got some money for was if my parents asked me to do something. I was a nerd, so I would write a little contract and have them say, “Okay, well if you want me to do this, how much are you willing to pay me for it?” And I’d write it up and they’d pay me. I’ve always been fascinated with money.

Scott:
What was your situation kind of leaving high school? What happened after that?

Momma Purple:
When I left high school, went to college, I did not work in college and I went out of state for college. I actually applied to about four different schools and the one I really wanted to go to, my parents said, “We just can’t afford it.” And so I said, “Okay, well then I’ll go to this one.” And they could afford that, and they actually paid cash every year.

Scott:
And did you work during college to-

Momma Purple:
I did not. They wanted me to just focus on being in college and getting an education and so I didn’t work, not a day.

Scott:
Wonderful. What was your situation upon graduation? You had no debt. Did you have any cash or any assets at all?

Momma Purple:
I did not. So my parents actually said that they will buy me a car, but then I had to pay them back for half of it. So once I got a job… I got a job right out of college and started working and when I was able to pay them back little bit by a little bit, then that’s what I did. But I had no assets, I had nothing, absolutely nothing.

Scott:
Awesome. What’d you study and what was your first job?

Momma Purple:
I studied chemical engineering, and so my first job was with an oil company and it was doing real engineering kind of stuff. Didn’t last long, didn’t like that too much.

Mindy:
You didn’t last long. Did you hop around from job to job like somebody else I know?

Momma Purple:
I actually did. That came after. After I left the first job I said, “Well, let me get a graduate degree. Maybe that’ll help expand some of my options.” So that’s what I did. Got a grad degree and then I started job-hopping around.

Scott:
Wonderful. With that first job, how long were you there for?

Momma Purple:
Three years.

Scott:
All right. And how much were you able to accumulate during those three years or finance grad school?

Momma Purple:
Very good question. I saved most of my money. My first job I actually made I think $35,000 and that was in 1981. And so I was able to save quite a bit of money for grad school. However, once I got to grad school, I applied to a fellowship since I had worked for an oil company, I got a fellowship with an oil company and they said, “Oh, we’ll pay for your two years of grad school.” I said, “Great.” But after the first year they said, “Well, you have to work for us during the summer and by the way, when you graduate.” And I didn’t want to because I was married at the time and my husband was in Georgia and all of their jobs were in the Northeast. And so I said, “That won’t really be good for my marriage. So no.” And they said, “Oh, okay, no? Well, we’re not going to pay for your second year.”

Momma Purple:
So then I was already there, had to decide how in the world am I going to pay for this because it was quite a bit more than I had actually saved, what I didn’t realize. And so I actually had to work during my second year of grad school.

Scott:
And you were able to then between the first year fellowship and then the second year working cashflow your grad school without taking on too much debt?

Momma Purple:
Not completely. I did have to get a small loan, but I paid it off within two years.

Scott:
Got it. Okay, so what year do you graduate and what happens after that?

Momma Purple:
Yeah, so I graduated from grad school in 1986 and applied to several jobs. Took me a while because again, I didn’t want to work in the Northeast, I went to school in Northeast and had to get back to Georgia. So that took quite a few applications, but finally got one and then came back and started working in Georgia.

Mindy:
Was that for the oil and gas industry?

Momma Purple:
Nope. I was out of that. So that first job was all that I did for the oil and gas. The next one was a technology firm here in Atlanta.

Mindy:
Technology in 1986, that sounds interesting.

Momma Purple:
No, it was scary. Yes. Yes.

Mindy:
How long were you at that job?

Momma Purple:
At that job, I was actually there seven years and yeah, that actually started, that was my very first job. So I’ve actually worked for 11 different companies and I’ve been laid off from eight of them. Laid off or there was a merger, or one of them was a nonprofit and they ran out of money. So that was my first actual layoff in my 33-year career.

Scott:
So you were at this first company for seven years and then got laid off?

Momma Purple:
Yeah.

Scott:
During that seven year period, because this is really the launchpad of your career, it sounds like, how would you describe this seven-year period in terms of your capital accumulation and how it sets you up for the next parts of your career?

Momma Purple:
Yup. Really didn’t start yet either. So that was the time period where Purple was born and my first marriage actually ended. So I then became a single mom, and so again, I was just saving money, but saving it in the bank or buying US savings bonds, just like my parents had done. Nothing with the stock market, nothing at all. So when I was laid off, they offered a package, a severance package which was wonderful and that helped me. Another thing that my father always told me, he said, “If you get a bonus or any additional money, don’t spend it. Act as if you didn’t get it. Live your life like the day before you got it.” So even with that severance package, I just banked it, I didn’t do anything with it and I already had someplace to go before I left those doors.

Scott:
The way you are handling your money at this time period and saving all your bonuses, putting them in the bank, when you look back and think about what your peers were doing, your colleagues, what was that different? Was that unusual? Were they spending more lavishly? What were you doing to drive that savings rate?

Momma Purple:
Wow, that’s such a fascinating question, Scott because during my era money and what you made and kind of how you spent it, taboo. Totally taboo. In terms of what I observed with how people were spending, I did notice that people’s houses were a whole lot bigger than mine, they drove newer cars than I did. So I noticed that, but it really wasn’t until like the year 2000 when I was 40 that I actually was able to talk to somebody about their 401(k). That was the first conversation that we actually had and she told me how much she had in there and I was shocked. She had over $300,000 and she was younger than I was. I was 40, she was younger than I was, and she’d been with this particular company for less than 10 years. And so that just woke me up.

Mindy:
I’m glad you had that conversation, but for the record, it’s still taboo to talk about money now.

Scott:
We just talk about it on this podcast though-

Momma Purple:
Okay.

Mindy:
It actually creates kind of a weird space because I’ll be talking to people and I’ll be like, “Oh, well what did you pay for that? How much money do you have? Are you maxing out your 401(k)?” And they’re like, “Hey, I just met you.”

Scott:
I feel the same way [inaudible 00:12:43]

Mindy:
You said you had a job before you left the first company, that lay off. Did you know that layoffs were coming?

Momma Purple:
Yes.

Mindy:
Okay.

Momma Purple:
They had told us months in advance and they gave us time to start looking for something else, doing something else, getting our resumes ready while at work. So it was really, it was sweet. Yeah.

Mindy:
Wow. That was a sweet… I mean, they laid you off, that stinks.

Momma Purple:
I know.

Mindy:
But the fact that they gave you a heads up, I mean, I don’t think that that’s something that happens a lot in today’s day and age. I wasn’t working in 1986 but closely thereafter.

Scott:
In addition to the layoffs though, one of the kind of questions I’m wondering is as a single mom, how are you able to save up so much during that? Was is it a budgeting thing? That’s kind of what I’m trying to wonder there. I bet you that your peers were less prepared, without knowing it, than you were, and I’m wondering what your practice was to get to manage your money so well.

Momma Purple:
Yeah, I did have a budget and so I would not really extend myself past that budget in case in point. I mean Purple needed braces and I couldn’t afford them. The place that I went to work after I was laid off was a nonprofit and so it was based on grant money that we were paid, and she needed braces. I couldn’t afford it, and I said, “Your teeth are just going to have to wait.” So I knew exactly what it was that I could afford. And the turning point for me too was I said, “Oh goodness, what am I going to do? What am I going to do?” And I said, “You have savings just for this.” Even though I’m not making as much as I was, I still have money, so live off of the savings. And so that’s what I did. That’s what lessened the stress level with me, that I just accepted the fact that I will supplement my income with my savings, and I was able to do that.

Scott:
Okay. So you were at the first company in 1986, you stay there for seven years and get laid off.

Momma Purple:
Yup.

Scott:
You have a couple of different jobs in the meantime. And it sounds like there’s a turning point when you’re 40 in 2000, and have this conversation with a friend who’s got 300 grand in their 401(k).

Momma Purple:
Yeah.

Scott:
All right, so what goes through your head at that point and what changes about your practice with money after that?

Momma Purple:
A couple of things. That conversation with that colleague, but also the company I was working for at the time had a corporate goal to increase participation in the 401(k). So that’s really what did the push for me as well and their match, I don’t remember what it was, but I’m sure it was very good. So I started investing with the company and the 401(k). But I also started, because I said, “I don’t know how long I’m going to be here.” So that’s when my husband and I started talking to outside financial advisors, and this is where all the real fun begins, and I’m being very facetious.

Momma Purple:
We started talking to a financial advisor and he’d been in the business a very long time. So we trusted him. We got his name from a friend and we invested a slump some amount with him. We also invested for each child because he said, “You have three kids. Okay, well, I can help you with their college.” So we invested $1,000 for each child in a variable annuity. That was in 1998 actually. And 15 years later that $1,000 was $958.

Mindy:
Oh!

Momma Purple:
Yeah.

Mindy:
That sounds great.

Momma Purple:
Yeah.

Mindy:
You use the word annuity. I’m not a huge fan of annuity.

Momma Purple:
Oh gosh, neither am I.

Mindy:
Well, they pay really well if you’re the financial advisor recommending them. So at least he made out really well.

Momma Purple:
Yeah, he sure did.

Mindy:
Did he have you investing in anything else or was it just basically annuities?

Momma Purple:
It was the variable annuity for the three kids. I don’t even remember what the lump sum was because we lost money. I mean we knew, we said, “Oh… ” It was also 2000 so 2001 was just not good for anything, but we stayed with him for a little while thinking, “Okay, well this’ll turn around.” But yeah, it really didn’t. So we got out of that with him and then went to the other companies that we worked for and just started investing in those 401(k)s.

Scott:
Okay. So it’s 2000, we’re at that point in time. What’s your overall financial position at that moment in time, in terms of general ballpark of earnings and net worth, those kinds of things?

Momma Purple:
Yeah, I really don’t recall because by that time, let’s see, I was remarried. So my husband and I have joint income, joint funds and joint investing. So I really don’t remember the investment income at that time. What I do remember is five years later, because that’s when I got serious about it. But we were just doing what we had to do from 2000 to 2005, but then that’s when the engine started, if you will, in 2005.

Scott:
Great. I think it sounds like 2005 is a turning point that we want to get to.

Momma Purple:
Yeah.

Scott:
Just in terms of this period, 1986 to 2005, overall, I’m getting a picture that you were a good saver for this period and always were able to keep an amount of liquidity that you began dipping your toe into investments at around 1998 and 2000.

Momma Purple:
Yeah.

Scott:
Is that right?

Momma Purple:
That’s correct.

Scott:
Okay. And so when you hit 2005 you’ve got a lot of good fundamentals in place to begin the wealth journey, is that right?

Momma Purple:
That’s right.

Scott:
All right. So let’s hear about it. What happened around 2005 to catapult this thing?

Momma Purple:
2005 is when I said I’m going to put pen to paper and I want to get out of this rat race. And so that’s when I came up with my… At first I had wanted to retire at 50 because my parents did. And so then I said, looking at the paper, “I don’t think that’s going to be possible.” So I said, “Let’s make it 10 years.” So that’s when I actually wrote down a 10 year plan on what we had to do to be able to retire in 10 years. So not only did I look at what money do we have, how much are we putting into our 401(k)? I also looked at what is it that we owe. We had two homes, one that we rented out and then one that we lived in and I said they both have to be paid off before we can retire. And we had three kids all around the same age. They all had to be out of college and college paid for before we could retire.

Momma Purple:
And then we also had to have a substantial amount of savings because my husband and I are both kind of nervous Nellies about anything and we would just want to make sure that we have enough just in case. So those three things had to happen and that’s where it started.

Scott:
No problem.

Momma Purple:
2005.

Mindy:
Totally doable in 10 years. So I have the gift of hindsight and know that 2008 is coming up. Do either of you have any sort of like guaranteed income, like a pension or anything like that?

Momma Purple:
Both of us do.

Mindy:
Okay. Okay.

Momma Purple:
They’re both very small though. So my husband, I can tell you what it is. His is $1,000 a month that he was able to start drawing on, not until 2014. And then my little bitty one from the company I was working at in 1986 by the time I’m sixty, I don’t know, five I think is like $350 a month, when I’m 65. But I’m taking it early, and so it’s going to be 270. I mean it’s very, very small. I think that was the last time pensions were even given out. So to answer your question, those are the only two income producing things that we had.

Scott:
I’m sorry if I missed this. What was the catalyst for this in 2005? Did you read something? Did you have a conversation with something or did you just kind of sit down and decide?

Momma Purple:
No, I really just in talking with my parents and seeing how they were living their lives and the fact that they did it at 50 and I think the frustration level that I had at my jobs, just the corporate politics just makes me crazy. And having to continue to deal with that. I just said, “I don’t want to do it. I just don’t want to do it.” And I kept looking for other jobs thinking that would be different and it never was. So I said, I just want to stop working.

Scott:
Got it. So what did you do in order to make that happen? What changed after 2005 in terms of savings, income, asset allocation, all that kind of good stuff?

Momma Purple:
Yeah. So the savings really kind of bumped up because in looking at my plan and I didn’t use like calculators, online calculators or anything, I should have because I was really just kind of estimating. I said, “Okay, if we save this much every year and we increase it by this, how much will we have and how much cushion will we need before social security kicks in?” And so I mean that’s what I was doing and just based on that and based on the amortization tables for our two homes and knowing how much money do we have to put in, how much additional do we have to put into pay them off within this timeframe? Then that’s what we did. And we always kind of lived frugally anyway. I was talking to Purple at one time, I don’t even remember us really taking vacations. We went once to Disney World and we went in a RV. So not really a vacation, but that’s what we did.

Momma Purple:
We just didn’t do those types of things. We would keep cars until the wheels fell off, but that’s how we lived anyway. So nothing really had to change that much. We just had to increase some of our savings, get the colleges out of there and get the homes paid for.

Scott:
And so when you say increased savings, get the homes paid off, was your plan basically to use rental income from one of the homes, your savings and then your pensions? Was there any stock investments or anything like that, that you were thinking about as well to supplement that?

Momma Purple:
I really wasn’t. So my little sheet of paper that I found from 2005 that I wrote down, it actually didn’t have the stocks at all. It had our 401(k) but not as any income that I was going to be using when that 10 year period was up. It had CDs on it. I said, okay, we can get this kind of interest, which was again inaccurate. But yeah, it was just looking at the rental income and not looking at either the pension or social security until much, much later. So I was just really basing it on how can we live off of our savings.

Scott:
Okay. So you start off and it’s just savings and rental income, right? Basically it’s spread to the early retirement piece. How does that evolve as you begin approaching your goal?

Momma Purple:
Yeah, so unfortunately a couple of things happen. So my mother passed away and my father had passed away 10 years before she did. So they lived in the Maryland, D.C. area. So when they actually had their house built in the early ’70s, I think the house costs $30,000 or something like that, and it was worth 10 times that when they both passed away. So we were able to sell their home and I have two siblings, so we were able to sell their home and have an influx of cash from their estate. And then unfortunately my husband’s father also passed away and he also received some estate income. And so the money that we were able to receive from both of those, we put them right into our IRAs that we had at the time and that really helped big time.

Scott:
Okay, got it.

Mindy:
Does your husband have any siblings?

Momma Purple:
He does.

Mindy:
Okay, so it doesn’t sound like this is a super life altering amount of money coming in. Do you know what you’re spending every year approximately?

Momma Purple:
Right now I’d say it was about $40,000. 40 to 50,000 a year.

Mindy:
Okay, so you’ve got the pensions, that will be 1200-ish?

Momma Purple:
One pension, $1,000. I don’t get mine yet.

Mindy:
That’s right. Yours doesn’t come in yet. What does the rental property bring in?

Momma Purple:
Rental property is 1200 a month.

Mindy:
Okay. Okay. So with a 40,000 a year spend, $2,500 a month is more than adequate. Is it more than adequate? Let’s see.

Scott:
It’s about $30,000 a year. So you have 10,000 left to make up-

Momma Purple:
From our investments? Yup.

Mindy:
Okay. And what did you invest in?

Momma Purple:
Our first… Well, our last, I should say, financial advisor, it was with Edward Jones and they had us in, I think it was 100 different funds. I really don’t even know. Couldn’t tell you. And so Purple, it took… I didn’t take too long. Maybe a couple of years. Tell you it’s changed. Get out of them. And we also found out how many fees we were actually paying to them. Didn’t know. And it was $1,000 a month in fees, just in fees.

Mindy:
Oh, well there’s your-

Momma Purple:
There it is.

Mindy:
There it is. Wow. $1,000 a month.

Momma Purple:
$1,000.

Mindy:
So I know that that’s not the first line on the invoice that you get. [crosstalk 00:26:49] $1,000. How did you discover that you were paying $1,000 in fees?

Momma Purple:
Every month we have the fortunate task of being invited to these different free dinners and from these different financial companies. And they’re always willing, “Oh, let’s take a look at what you have. Let’s look at all your funds.” And so we said, “Fine. Here.” We gave them everything from Edward Jones. And they had some kind of software that showed the hidden fees that we didn’t see, but Purple also, she did the same thing. And she said, “You know you’re doing this, you’re spending this.” I said, “Oh no, we can’t be. We like the guy.” So after having seen the documents from their software, then we said, “Yeah, we’re out of here.” We called the next day. [crosstalk 00:27:47]

Scott:
If you liked the guy, if you like me, you can just send me $1,000 a month, I’ll be happy to take that and deliver you worse than average market returns as well.

Momma Purple:
Oh my God.

Scott:
No problem. Sorry Edward [inaudible 00:27:59] though I guess you guys, I don’t know, specific story there just general.

Mindy:
Yes. I want to put in a plug for personal capital right now because personal capital has a fee analyzer and that’s where we discovered that we were also paying, I don’t know exactly the number, but it was an obscene amount of fees in just like random little things. And I was also being facetious when I said yeah, “That’s the first number up there.” It’s so hidden. The fees are not called fees, they’re not right out there. You really have to dig to find them. And if you like the guy, why would a guy that I like point me in the wrong direction. It’s so easy to be paying $1,000 a month and I’m really glad that you were able to get out of that. What did you do with the money that was in those funds?

Momma Purple:
So the next day we called Vanguard because Purple had told us all about them. She’d been telling us. And so when we gave them our information and they came back with, “Okay, we only need to put you in a few of these funds.” I know we had 50 funds that Edward Jones had put us in. It was a ridiculous amount. And they kept saying, “Wonder why they had you in this. I wonder what that was for.” But the more funds, the more money for them.

Scott:
I have trouble believing that that folks are intentionally… at least the account managers or the customer service people are intentionally screwing people over. I just think that there’s a lack of understanding from the financial advisors in these firms in general about what’s best for their clients. That, “Hey, no. An index fund is in most cases way better than these actively managed funds. And something you understand is often much better than the enormous complexity like your situation where with 50 different funds across all these different things that no one can possibly comprehend what even all those funds are much less what’s in those funds. I mean it’s just an amazing a mess there. So I like to believe in the good side that these folks are not evil, they’ll understand the theory very well about how to make this work, but maybe not.

Mindy:
Well, I would say they’re probably not nefariously trying to do this. Is that the right… I don’t think that’s the right way to use that word. It’s not like they’re trying to be evil, but the index funds don’t pay nearly as much commission as these actively managed funds do Scott.

Momma Purple:
And just to throw something else in there, what we also found out about our Edward Jones’ advisor, he’s not even a Certified Financial Advisor. Didn’t know that. So his background isn’t even in finance. Didn’t know that. And again, Purple showed me some articles, how they select their people. I don’t even know what to call them anymore. And it’s just based on how they interact with others, how they can talk to you. It’s very, very salesy, but not the pushy salesy. So I don’t even know what his background is. I would hope he would know that he’s doing something for his clients. But I kind of doubted it because then they sent us a letter saying, “Oh, we’re going to be a fiduciary now.” I’m like, “Wait a minute, I thought you were before.” And this letter was very, very vague, but pretty much saying, “We have to do this. Now, we have to be a fiduciary.” And so again, we said, “We thought you were all along.” But no.

Scott:
Okay. So you have this money invested in Edward Jones and you pull it out after learning this and you put it into Vanguard. What year is this?

Momma Purple:
So that was 2017, I believe. 2017.

Scott:
2017 okay. So this is after you have retired?

Momma Purple:
After I’ve retired. Yes. Yeah.

Scott:
Okay. So in retirement, I think he retired in 2015 is that right?

Momma Purple:
Yes.

Scott:
Great. So you hit your goal, retire in 2015, you have $1,000 in pension, you have $1,200 a month in rental cash flow, and you’ve got investments, it sounds like, in Edward Jones and then a savings account. Is that right? [

Momma Purple:
Yes.

Scott:
And that’s how you’re funding the retirement here?

Momma Purple:
Yes.

Scott:
In 2017 you switch over to Vanguard and wisely make a lot more money after tax there. What else is there kind of to the picture here? Is that kind of more or less the snapshot of your financial position there?

Momma Purple:
It really is. And the other nice surprise once we went to Vanguard was that I would talk to that truly CFA about what we like to do, and travel is one of the things that we love to do because we had to modify our expense budget in order to be able to qualify for the affordable care act with the healthcare coverage. You have to keep your adjustable gross, I think it’s no more than $40,000 or something like that. And so in order to do that, we weren’t able to take out as much as we would’ve liked to, to make life just a little bit easier. So once we got to Vanguard, he talked about, “What do we typically do? What do we spend money on?” We told them everything and I said, “I really would love to have a travel budget.” He said, “Oh, what would you like?”

Momma Purple:
So I told him and he said, “well, we can make that happen.” I was floored. I was happy, but I was floored. And with Edward Jones, there were some months that he said, we might have to change the date that you’re going to receive your monthly funds because there’s not enough funds in the account to do that. That’s never happened with Vanguard.

Scott:
All right, hope you’re enjoying the show. We’ll be right back after a word from today’s show sponsor.

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Scott:
So tell us about your formal transition into retirement. What were you doing at that point and then what was the retirement like? What changed about your day-to-day there?

Momma Purple:
Oh, the transition with like what I do.

Scott:
Yes.

Momma Purple:
That’s a question that I think every retiree receives. Like, “What do you do when you’re retired?” Because you’re so amazed that your days can be so full when you’re not going to work, when you stay in your pajamas all day, which is a lot of what I do. And so the transition is really… I’ve had a bucket list since I was 30 and I’ve been adding to that and taking things off. It was like 150 things on my bucket list. So that was kind of the first thing I actually did, was looked at my bucket list. I said, “What do I want to do? What do I want to accomplish now that I can do it whenever I want to.”

Momma Purple:
And so every year I have about three or four things that I learn or experience or knock off the bucket list. I actually actively exercise now. Didn’t ever really do that, didn’t like to. Still really don’t, but know that I have to and should. So I walk 45 miles each time I go walking, which is every other day just about. And then just things come up. The travel, that takes a lot of my time. The prepping, the research, the planning because Purple and I have trips planned out until 2024. So that takes a lot of upfront work.

Mindy:
2024?

Momma Purple:
2024.

Mindy:
Wow!

Momma Purple:
Yeah.

Scott:
What are some of the big bucket list items that you’ve checked off so far?

Momma Purple:
Oh wow. Purple and I did a half marathon last year. I’ve learned how to fence, how to blow glass. I’ve done kickboxing, taken Spanish, we’ve traveled to the most beautiful beaches based on National Geographic’s lists. Yeah, that’s-

Mindy:
Wow, I’m sorry retirement’s not working out for you.

Momma Purple:
I know. I know.

Mindy:
That’s awesome. You learned fencing and glass blowing.

Momma Purple:
I did.

Mindy:
The half marathon, I did run last year too.

Momma Purple:
Oh my God. Never been. [crosstalk 00:39:15] That’s enough.

Mindy:
That’s fantastic. So you said something that I think is really, really so true. My husband is retired and he’s busier than he ever was. And you think there’s all these things that you want to do and you don’t have time for them when you’re working, then all of a sudden you don’t have a job anymore, you’re like, “How did I ever have time to actually work?”

Momma Purple:
I know.

Mindy:
But it also sounds like you were not a sit still kind of girl before retirement either. Is that a fair assumption?

Momma Purple:
To a point. So I’m kind of a daredevil if you will.

Mindy:
Yeah, you are.

Momma Purple:
Trying to get Purple to be a daredevil with me, and she’s a trooper, we took dirt bike lessons together and we went zip lining. We’ve done things like that, but she’ll put the brakes on me at some points.

Mindy:
She’s not the boss of you.

Momma Purple:
I’ll do it by myself. She won’t do it, can’t get her to do it, can’t get my husband to do it. Jumped off the stratosphere in Las Vegas twice. Loved that, loved it. So yeah, I like to do those types of things and have been doing those for years. But that’s it. I’ve never been a volunteer kind of girl. I’ve never been a gardening kind of girl. I don’t really like to cook, but I do it and I try to learn how to cook new keto things that I love. So I mean that’s my life.

Mindy:
I’m laughing because you said, “I’ve never been a gardening kind of girl. I took dirt bike lessons.” I would venture a guess that most gardening type girls are not often taking dirt bike lessons. And if you do, I’m very glad for you. There’s a great skydiving place right by my house. So come visit, you can sleep over at my house.

Momma Purple:
Done it. Done it twice.

Mindy:
Oh, you’ve done?

Momma Purple:
I’ve done it.

Mindy:
No, this is not part of the story that Purple told, when she was telling her story. She did not say she had such a… I was going to say a word that has a bad word in it. So I will just say daredevil mom. This is awesome. I love this. Okay, so it seems like we’re kind of at the end of your money journey. I have a lot of listeners who reach out to me and they think that because they are older than 20 they’ve started too late, they’ll never be able to early retire, they’ll never be able to retire, why should they even bother? Do you have any advice for people who are thinking, “I’m just never going to be able to this, it’s too late for me.”

Momma Purple:
So if you actually do the numbers and look to see what does it really take to live, that’s the first thing. Because I mean me starting at 40 and then having the market crash a year later and then having a crash again when I’m still trying to accumulate money in the stock market, just I’m the test case. You see it. I’m living it. Now granted, I am married, but I wasn’t married the whole time. And so fortunately my husband is also the type of person that looks at money the same way I do. He’s very frugal. Just buys things that he needs and tries to fix and make things himself. So that I think is also very helpful.

Momma Purple:
The other piece of advice I’d actually give is to always have a second stream of income, no matter what. So after being laid off eight times, I just said I cannot depend on these so-called permanent jobs for my livelihood. So after that second layoff, that’s when I said, let me look for some other source of income that wouldn’t replace it because I couldn’t work two jobs but would actually not make me so nervous the next time a layoff comes, which it did six times in addition to that.

Scott:
What I think is outstanding about your story here is you start in 2005 and we’re not getting a picture of you starting with a sky-high income or a tremendous amount of assets or anything like that or even a optimal investing approach in a lot of ways, because we talked about some of the fees there. And I love that you are able to achieved so much success over that 10-year period, which did not include great market conditions on average overall. And I just think it’s inspiring because if you’re starting now and you’re thinking about, “Oh, I’m behind.” You can look at Momma Purple and say, “Hey, I can now follow a playbook that has been maybe a little bit better optimized in some ways from some of these podcasts and lots of the websites around there and the fire community that kind of show you how to make an even more optimal approach to play catch up and move towards that early retirement days. Is that a reasonable way to look at it? I’m sitting here at 29 so what do I know?

Momma Purple:
Yeah, it really is. And especially because since Purple is so transparent with her income, I mean I’ve told her with what she’s making now at 30, my last job, I made 110,000. My last job. And so it’s not like you’re right Scott, I didn’t make all that much money throughout. It was a progression, but it was a slow progression, a very slow progression. And we did get bonuses, we did get stock at maybe three of the jobs I had, restricted stock, which was wonderful. But that came much later in my career and only for a few years.

Scott:
No, I think it’s fantastic and I think it seems like it’s highly motivated because I know my perspective. I don’t know the perspective of someone who’s getting a little started later in life on this journey. And so I know that’s been an issue that some of our listeners have had is wondering how to get started when you’re not late 20s tech bro in Denver. That’s single. Who’s single?

Momma Purple:
Yeah.

Mindy:
It’s never too late.

Scott:
I am not single any more, I’m being [inaudible 00:45:36] later this year.

Momma Purple:
Congratulations.

Mindy:
Yeah, you started at age 40.

Momma Purple:
Yeah.

Mindy:
And I will say that you didn’t start from a position of like significant debt.

Momma Purple:
That’s right.

Mindy:
It sounds like at age 40, you had maybe mortgage debt and that’s it.

Momma Purple:
That’s it.

Mindy:
But you make smart decisions. You don’t buy things that you don’t need. Everybody should do that.

Momma Purple:
I know.

Mindy:
Stop buying stuff you don’t need to impress people you don’t like. Coco Chanel, I say this all the time, my favorite quote of hers. “I don’t care what you think about me. I don’t think about you at all. You think drive a crappy car, you’re right. And that doesn’t bother me. If you think that my clothes aren’t top notch, you’re right, I got them at a thrift store and I don’t care that you don’t appreciate that my dollar sweater it fits, it covers the parts that need to be covered. That’s all I care about.” And that’s a tough position to get to. But once you’re there, it’s so freeing. I don’t need this stuff. I’m not going to buy it.

Momma Purple:
So true.

Mindy:
So you started at age 40 and you retired in 10 years.

Momma Purple:
2015. Well, from age 40 it was 15 years after that. 15 years after the plan.

Mindy:
15 years? And that 15 years encompassed 2000, the stock market crash in 2000 and this little tiny crash called 2008 that lasted how long? Three years, five years? So yeah, you were really had the deck stacked against you for a while. To anybody who’s listening that said, “Well what about the stock market rise of 2013.” Yeah, that’s great. That was huge. But there’s also we’re in kind of unstable times right now where everybody’s calling for a bubble, but you’ve got a couple of really solid income sources, the pension, the rental property-

Momma Purple:
And in a year it’ll be social security. So once we actually… We’re going to both be taking social security at the same time, I’m taking it as 62. My husband’s waiting until full social security at 66, and when we do that, we won’t have to touch our investments at all and have more than we’re getting now. So that’s kind of that gap I was trying to make sure that we could get through when I did have my 10-year plan. I just said we have a gap. Once we get through that gap, we’re good.

Mindy:
You’re good. Smooth sailing.

Momma Purple:
We’re good. Yeah.

Mindy:
So I don’t understand why all these people are writing these articles that say, “Oh, I’m never going to be able to retire.”

Momma Purple:
I don’t either.

Mindy:
Not if you buy stuff with every dime you have from now until age 55. Do you live a life of deprivation?

Momma Purple:
Not at all. I’m not one to even look to see… I know Purple does this. She knows how much every piece of everything she buys. I don’t do that. I don’t really have that strict of a budget. I know about what everything costs, but I don’t add it up like that. I say, “All right, this is how much we have to spend.” And we figure that either we have it or we don’t and we make it work. But I don’t have a strict budget.

Mindy:
Not anymore. Because you had a strict budget before.

Momma Purple:
That’s true. [crosstalk 00:49:04]

Mindy:
And then you get used to it. And then like once you have this in your mind, “I can spend X.” Maybe you spend X plus $10 it’s not a big deal, but you keep it in your mind, I can spend X and that’s what you’re spending.

Momma Purple:
Yeah.

Mindy:
Plus or minus a little bit. Yeah.

Momma Purple:
And not having a mortgage is probably the most freeing thing ever. And that was something else actually that my parents instilled in me. They said, “You’ve got to own a home, you’ve got to own a home. You don’t rent. Renting is just waste.” And so that was instilled in me. I mean, I know it skipped a generation Purple, but I know you don’t believe that, but it was just drilled into our heads that you must own a home and pay it off as soon as you can. I mean, my parents also paid their home off early. They just paid 30,000, I think their mortgage was $300. I mean, I couldn’t believe it. But it still took them 27 years instead of 30 but still, I mean, they were so proud of that. And they just told us, “Own, own, own.” But not having that mortgage was just the best thing ever.

Mindy:
Yeah, that can be really freeing.

Momma Purple:
It was.

Mindy:
It was so Momma Purple, was your husband always on board with this plan?

Momma Purple:
No, actually he believed that he’d be working until he died. I mean literally. He never saw retirement as an option because he worked for a very large company and when he looked to see what his pension would be, he said, “I can never live off of that.” That was his mental thinking at the time. And so when I brought this up, when I came up with my 10-year plan, started it in 2005, I took from 2005 to 2010 to convince him. So he was working out of town those five years and he’d come back home every weekend and every weekend I tried to say, “Would you take a look at this? Let’s take a look at this. Can we sit down and take a look at this?”

Momma Purple:
And he said, “Oh no, I’m tired. I just want to… ” He didn’t want to deal with it. And kind of just, “okay, if I just keep saying this, maybe she’ll go away.” But I never did. And we kept investing like I wanted to, I mean putting more money into the house, still saving and 401(k)s and he was doing the same, but it was five years before he said, “Okay, I’ll look at it.” So then finally he said okay, but then he didn’t believe it. He said, “No, I don’t see how this is going to happen. This doesn’t look right.” And he said, “What do you have behind this?” I’m like, “Oh my gosh.” So then in 2013 he took my numbers to three different financial advisors. We were already with Edward Jones and so of course they had the calculator. They said, you know, whatever percent, I forget what they call it, greater than 99% possibility of this actually working until you’re a hundred, that plan.

Momma Purple:
And so then he took it to Merrill Lynch. So a friend of mine has her investments in Merrill Lynch,” took the same documents to them and they said, “Yeah, this will work. Until you’re a 100 you’re good.” And then he even hired an independent financial advisor. We paid him money to look over our numbers and he’s like, “Yeah, this is fine. You’re good.” And so then finally he was convinced. So that was 2013 and this is where Purple just laughs because that was 2013, he retired in 2014.

Scott:
I hope he’s listening to this.

Momma Purple:
Oh boy. Yeah. So he retired a year before I did. And that’s what’s up.

Scott:
That’s amazing.

Mindy:
But I can understand his point of view because you work until you’re 65. That’s the law. You don’t retire early. Early retirement is 62, so when somebody says you can retire at 50, ‘Oh no you can’t.” “No, no. You can retire at 55.” “No you can’t.” That’s just why would you… And then you show them, you’re like, “Well, that kind of makes sense, but there’s got to be a catch. It looks right, but am I just… ” You start to second guess yourself. It looks right, but am I just hoping that this is right?” Because who wants to work an extra 10 years? Not that many people.

Mindy:
Scott and I are kind of anomalies, we both really love our jobs. But who wants to work an extra 10 years? When you’ve got all these numbers, you’re like, “Oh no, that can’t be right. No, they can’t be right.” So I could see where he was coming from. I’m so glad that you were able to finally get him on board. So if you are listening to this and your spouse is not on board, apparently the answer is just harangue them until they acquiesce.

Scott:
Just keep it up for five years and then spend… How much money did you spend having him assess your plan with multiple sources?

Momma Purple:
Just that one financial advisor that we had to pay. That was $500 to pay him. The other two did it for nothing.

Mindy:
Money well spent. 500 well-spent dollars because now he doesn’t work anymore.

Momma Purple:
That’s true.

Scott:
That’s right.

Mindy:
Okay. Momma Purple, Is there anything else you’d like to share before we move on to our famous four?

Momma Purple:
Nope.

Mindy:
Okay. What is your favorite finance book?

Momma Purple:
I’ve never read one. So I don’t have one-

Mindy:
Wait, whoa, whoa whoa! You’ve never read one. How can you be early retired if you’ve never read a finance book?

Momma Purple:
I probably should have the based on going with some of those bad… I don’t know about that, but I should have but never, nope, don’t read them.

Mindy:
That’s okay. You’re still early retired without having read one.

Scott:
I love that answer. All right. What was your biggest money mistake?

Momma Purple:
That was probably blindly trusting these financial advisors. Had I read some information, I probably wouldn’t have trusted them the way I did or invested in that variable annuity for the kids for 15 years.

Scott:
Okay.

Mindy:
In your defense, you’re not the only one.

Momma Purple:
Okay.

Mindy:
What is your best piece of advice for people that are just starting out?

Momma Purple:
I really think it would be the having a second source of income, just always looking for some other way to make money. Doesn’t have to be much, but something that you know, just in case. Just in case.

Mindy:
That’s awesome.

Scott:
All right. What is your favorite joke to tell at parties?

Momma Purple:
Okay, so I asked my grandfather, I said, “After 65 years of marriage, you still call grandma beautiful, honey, darling, what’s your secret grandpa?” And he said, “Well, I forgot her name five years ago and I’m still too scared to ask her.”

Scott:
Love it.

Mindy:
Okay. Our last question is where can people find out more about you?

Momma Purple:
Wherever Purple is, I’m usually there too. So that’s about the only place.

Mindy:
Perfect. And that is apurplelife.com.

Scott:
All right,

Mindy:
Oh Momma Purple, I’m so happy you came on the show. I know we’re going to get a lot of people reaching out and saying this was the best episode ever and this was really, really wonderful. Thank you so much for your time today.

Momma Purple:
Thank you so much. It was fun. I was nervous, but it was fun.

Mindy:
Oh my goodness, you did not seem nervous.

Scott:
This is outstanding.

Momma Purple:
I was nervous. Oh boy. Thanks Scott. Thanks Mindy.

Scott:
Thank you.

Mindy:
You’re welcome. Thank you. Okay, that was Momma Purple. Scott, what did you think?

Scott:
I thought it was really powerful and wonderful to hear that story. This is a real money journey. Not that all of our journeys aren’t real money journeys, but this is a money journey that that didn’t come from a book or from… I’m trying to optimize all out in pursuit of financial independence. Like for example, I did starting out my career with a playbook handed to me or whatever. This is someone who is almost like she’s an inventor. She came up with her own plan independently on her own, on a piece of paper, executed within 10 years. Got her husband on board after eight of those years and is now realizing the benefits from it. That’s monumentally impressive, I think. That’s independence of thinking and brilliance there that I wish I could say I had, and come up with my plan.

Mindy:
Yeah. Like you said, she didn’t have the playbook handed to her. She created her own playbook and she showed us her picture of her plan, and there’s nothing sophisticated about it. It’s just pure, simple brilliance.

Scott:
To caveat all that, I do love the fact that she said, one of the pieces of advice she would give would be, if you have read some books, you would have been able to avoid a couple of the mistakes that she made.

Mindy:
Yes, but she was still able to make those mistakes and reach financial independence early after starting late. That’s just such a great overarching theme in this story. “I made some mistakes, I moved on. I made some mistakes, I moved on. Oh, that’s not good.” The next day I took action. She didn’t wait a week, a month, a year, a decade to figure out that she needs to change.

Scott:
That’s a great point.

Mindy:
She’s like, “You’re charging me how much? I’m taking action the next day.”

Scott:
Yeah. I love that you pointed that out. I didn’t put that two and two together. That is also extremely impressive to come up and to be like, “Nope. Now I know I’m going to take immediate corrective action.” Some people, they know what they’re doing is inefficient and yet they don’t take corrective action even though it’s right at their fingertips to make these big changes that will improve their lives, and that was not an impediment for Momma Purple.

Mindy:
Not in the least. Okay. I am going to ask our listeners for a favor now. I’m going to say, if you know somebody who is struggling with, “Oh, I can’t do this because it’s too late for me.” [inaudible 00:59:27], share this episode with them. This is a story that like all the stories that are so successful, she’s not really breaking new ground. She’s breaking new ground in that nobody ever showed her how to do it, but she’s frugal. She saves more than she, how does that go? She spends less than she earns. Yeah. You don’t save more than you earn. You spend less than you earn and she invests. This is the richest man in Babylon all over.

Scott:
Yeah. Now, here’s an interesting thing and feel free to beat me up on this if I’m generalizing too much, but I found that with a lot of couples that typically and not always, but often it seems like the man in the relationship is trying to convince the wife or the significant other there to get on board with financial independence. And I thought it was interesting that Momma Purple found the opposite to be true where she was on board with early retirement and her husband was not. And I wonder if that dynamic is in play for folks that are closer to a traditional retirement age, if that balance begins to flip to a certain degree. And I was wondering if that’s something to think about. I have no idea. I just throw it out there as a concept to think about.

Mindy:
That is interesting. And I know that’s how it was in my relationship. Carl was the one who, I mean we were both always frugal, but he was the one who introduced me to financial independence. And I’m like, “Yeah, do it because you hate your job. So quit.” And then now I’m on board too, obviously. But yeah, that’s interesting. I wonder, so if you were the one who was the impetus behind your financial journey, send me an email, [email protected] and if you think that’s got as being sexist, you can send him an email at [email protected]

Scott:
Feel free. I just pose it as a question. It’s something I’ve observed. I don’t think it’s sexist.

Mindy:
I don’t think it’s sexist either.

Scott:
I think it’s just something that we have a lot… Real estate investors tend to skew more male. Our audience is 75% male on Bigger Pockets. Bigger Pockets Money is a little bit more gender diverse with that in terms of our listenership. But that’s just a fact of life in the real estate community. We’re trying to change over time. But I wonder what those gender dynamics… I think they are real in this space and the law of large numbers here, and I wonder what they’re like for folks that are closer to traditional retirement age and whether there’s some interesting differences that play out the numbers there that we can begin exploring.

Mindy:
Yeah, I’d be really interested in hearing that. So again, if you have a story of you being the impetus behind your financials journey, send me an email, [email protected] Scott, shall we wrap it up today?

Scott:
Let’s do it.

Mindy:
From episode 111 of the Bigger Pockets Money podcast. I am Mindy Jensen and he is Scott Trench. And this has been a very Purple show. Very purple couple of weeks. We are royally out of here. This is horrible. Sorry if you’re still listening. Sorry about that.

Scott:
I love it.

Mindy:
Okay. Bye.

Scott:
Bye bye.

 

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In This Episode We Cover:

  • Momma Purple’s journey with money
  • What her life was like when Purple was born
  • How she managed her money and was able to save up so much as a single mom
  • Money practice she followed after a conversation she had with a colleague
  • Her 10-year early retirement plan
  • What she’ll do once she retires
  • Her advice to older listeners
  • And SO much more!

Links from the Show

Books Mentioned in this Show:

Tweetable Topic:

  • “If you get a bonus or any additional money, don’t spend it. Act as if you didn’t get it; live your life like the day before you got it.” (Tweet This!)

Connect with Momma Purple

Momma Purple shares her pragmatic approach to money in general—buying what you need, trying to make repairs instead of buying something new, sticking to a budget, and banking bonuses instead of spending them.