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BiggerPockets Money Podcast 154: Confessions of a Former Spender: How Allison Baggerly Paid off $110K in Loans on a Teacher’s Salary

BiggerPockets Money Podcast 154: Confessions of a Former Spender: How Allison Baggerly Paid off $110K in Loans on a Teacher’s Salary

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Ever had a card declined when trying to buy the basics? That was the start of Allison Baggerly’s journey into budgeting and saving.

As a big spender in college, Allison didn’t see a real reason to save instead of spend. She would take herself on frequent trips to the mall to treat herself when she aced a test, or make herself feel better if she flunked one.

It wasn’t until her first son was born that her and her husband realized they wouldn’t have enough in the budget to pay for childcare costs, and thus, the Inspired Budget was born!

After a few years of limited spending and frequent budget analyzing, Allison and her Husband paid off over $110,000+ in debt and are now on their way to financial abundance.

Allison talks about the importance of giving yourself spending, investing, and saving allowances and how you don’t need to sacrifice everything to become financially safe!

Click here to listen on Apple Podcasts.

Listen to the Podcast Here

Read the Transcript Here

Mindy:
Welcome to the BiggerPockets money podcast, show number 154. Where we interview Allison Baggerly, from Inspired Budget and hear her story of debt payoff on two teacher salaries.

Allison:
It’s a rollercoaster ride. It’s not just this straight up journey. I think that what people don’t realize, is that there are going to be ups and there’s going to be downs, but the downs don’t define you. Whenever you hit a struggle, it is for a season. I always tell people that, come into my inbox and they say, “I’m going through really hard time right now.” I say, “This is a season.” When you’re willing to live and live in a season of sacrifice for a period of time, you can live in a season of abundance for the rest of your life. That really helped us get through. I saw it as our season of sacrifice, so that I could reach that season of abundance.

Mindy:
Hello. My name is Mindy Jensen and with me, as always, is my scholarly co-host Scott Trench.

Scott:
I like that what an informed and educated intro Mindy.

Mindy:
Scott and I are here to make financial independence less scary, just for somebody else. And so 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 live your best life.

Scott:
That’s right. Whether you want to retire early and travel the world, go on to make big time investments in assets, like real estate. Start your own business or simply build a secure financial foundation. We’ll help you build a position capable of launching yourself towards those dreams.
Today we interview Allison Baggerly from Inspired Budget. Allison, really had to reckonings with money early in her story. The first is when she completely ran out of money and had to call home for it in her college days. Absolutely broke, literally zero dollars in the bank account, had a hard reset on her spending. The second one came a few years later when she realized, alongside her husband, that they weren’t going to be able to pay for daycare for their child. It was just going to be a completely unsustainable position, on top of their $111,000 in personal debt. Those two experiences, I think really set Allison up for a trajectory, with money following that.
That is, some people won’t believe. A lot of people that are like her, that are in the teaching profession, feel like they can’t be good with money. But I’m excited to share this story with you guys and show the power of discipline, and budget, and consistency, over a couple of years. And the enormous impact it can have on the life of really anyone, including two teachers with two kids.

Mindy:
Scott, I’m going to tag on to that and say, the power of knowing yourself, being honest with yourself, and being realistic about what you can do, and what might not be such a good idea for you. Allison knows that she’s a spender, she enjoys spending money. Does that make her a bad person? No. That makes her somebody who enjoys spending money. If she doesn’t have any money to spend, she’s not going to be super happy. But she sets up realistic boundaries for herself and then can operate within those boundaries. “Okay, here’s where I can go and here’s where I can’t.” Now I have a plan.

Scott:
Allison’s [inaudible 00:03:15] going to have a lot of money to spend. Today we’re good?

Mindy:
We should. Allison Baggerly from Inspired Budget. Welcome to the BiggerPockets money podcast. I’m so excited that we finally connected. How are you today?

Allison:
I’m doing great. Thank you so much for having me.

Mindy:
I am super excited to have you tell your story today. Where does your journey with money begin?

Allison:
I came into this thinking, I know exactly where my journey to money begins. Then I was thinking about it this morning and I realized, there was a moment when I was in college, and I had taken out all of these student loans to last me for my entire semester. I went into the grocery store, I had checked my bank account, I was like, “Okay, I have enough money, I’m good to go.” I went into the grocery store to get groceries for the week and my card got rejected. I was like, “No, this is okay, this is clearly an error on your part, grocery store chain.” I swiped it again and it was rejected again. I tried a third time and it was rejected.
I left the grocery store with all of my groceries sitting there. I went back to my home, where I was staying at the time, and I checked my bank account balance and it was at zero dollars. What I didn’t realize, was that my rent check had to clear. I had to make that dreaded phone call, where I called my mom and they said, “Mom, I don’t have enough money.” It was the middle of March, this money was supposed to last me until the end of May. Clearly, I was not doing a good job with managing this money. She said, “I will give you money, only if you come home and we look at your finances.”
I went home that weekend and she printed off my bank statements from the last three months and made me highlight every time I went out to eat, every time I was spending on pedicures, every time I was going to the mall. She said, “You are out of control. You are Spending money out of control, you’ve got to start tracking it so you can see your habits.” We downloaded Microsoft Money onto my laptop, it’s really old school, and I started tracking my money.
I didn’t make changes right away, that was actually not enough. You would think that would be enough to make me want to make changes in my money, but it wasn’t. It was just enough for me to not go negative again, it wasn’t enough for me to want to save money. What was really truly the thing that changed me and my life, and my husband’s life, is when we got pregnant on our honeymoon. We came back from our honeymoon, realized we were pregnant and realized that we could not afford an $800 per month daycare payment, when our son came. Yeah.

Mindy:
Wow!

Scott:
Wow! These are two extremely powerful money stories here. One, just to avoid going off the deep end or going completely broke. And not being able to pay for life spare necessities. It sounds like another event which encouraged you to begin building and accumulating wealth. So you could actually have some real life options downstream. How many years apart were these two experiences?

Allison:
They were probably about four or five years apart. For about four or five years, I was just making money so that I could spend it. And end up with about $30 in my checking account leftover, before my next paycheck. But I had no stress about it. I had no worries about it at all. I was just living this lifestyle of making money so I could turn around on spending, going to brunch all the time and just enjoying my life. But not going negative, not going further into debt. But it really wasn’t until I had to step up as a different type of adult, for someone other than myself and my husband. To really say, “Whoa! This journey I’m on, the way I’m spending money, the way we are dealing with our finances, is not going to work for the long run.”

Scott:
Was there a change in your lifestyle, before and after the conversation with your mom? Or was it really a unnoticeable difference, just managing your money a little bit tighter, to not go broke again?

Allison:
Yeah, unfortunately, it was that.

Scott:
Okay.

Allison:
It was managing my money a little, but it was making me more aware. I was aware, I knew that I was spending money, but I didn’t see anything wrong with it. I was tracking, I could tell you how much money I was spending on eating out every month, I could tell you how much money I was spending on some of these frivolous things. I could tell you how much I had in savings. I knew I wasn’t going to go negative in my checking account. However, it wasn’t enough to make me want to change my habits. It was just enough to make me aware of my habits.

Scott:
What position did you graduate college in, then? You said you had some student loan debt, was there anything else?

Allison:
Yes. I had student loan debt. Then we got married, we did buy a car, so I had car debt. Then when I married my husband, we had never had the finance talk before we got married. We never sat down and really talked about our money. I know, it was not the wisest thing. However, everything happens for a reason. We had never sat down, I didn’t realize that he had over $60,000 worth of student loan debt and he had a car loan as well. Together, combined, we had over $111,000 worth of debt and we were making two teacher salaries.

Scott:
Okay. You’re both teachers and how many years after, maybe graduation, did you guys get married?

Allison:
About two years. I got married two years after I graduated. He’s older than me, so he was about five years after graduation.

Scott:
Okay, great. The lifestyle at that point, in the period right before and after you got married, you’re basically spending all of your money, every single month. Maintaining a close to zero balance, but with extreme discipline, which I think is very interesting. I’ve never heard of that before. Extremely disciplined budget here?

Allison:
It was extremely disciplined. It was less like, “How can I make sure I don’t go into debt?” It was less like, “How can I make sure I get by?” It was more like, “How much do I have left to spend this month on something fun?” It was disciplined, in the terms of, “I wanted to spend the money.” I saw nothing wrong with it. I remember my mom being like, “You should save some of your money.” I was like, “No, that’s for later on in life, mom. Don’t don’t be raining on my parade, I’m in my 20s, let me be me.” It was very disciplined in allowing me to determine how much I could spend on what I wanted.

Scott:
Walk us through some of the good things about this lifestyle in that year before you made the change?

Allison:
It was so wonderful. I remember I walked into Ulta one time with my husband, who was my boyfriend at the time, and I was like, “I just need to get a couple of things, makeup.” I walked out and I had spent over $200. He said, “Is this normal for you?” I was like, “You don’t get to judge me. Who are you to say, yes, this is normal for me.” It was just frivolous. I would go to brunch every weekend, I was going on trips. Pretty much anything that I wanted, I would make sure I had enough money to get it that month. Therefore, I had $300 in savings. That was it, that was my emergency fund, $300. At the time, I was like, “This is great, I have $300, this is more than enough.” But it was because I wasn’t aware. I know, it was because I wasn’t aware of what enough in savings really was.

Mindy:
How did you learn what is enough in savings? Because, I hear this story frequently, I am a spender or my spouse is a spender. We hadn’t talked about money beforehand. I made a face, when you said we didn’t talk about money beforehand. Carl didn’t talk about money either, I should not be judgy, because I didn’t have that talk either. But we both knew that the other one was cheap.

Allison:
Okay.

Mindy:
You know you’re cheap when you’re both using coupons and all the time. How do you make the shift? Because, I know there’s a lot of people who are in Allison college mindset.

Allison:
Yes.

Mindy:
And want to be an Allison now mindset, but you don’t know how to get there. Because you said, I would think how much money do I have left to spend on something fun. Which is, the thought that people have, “Oh, when I get to Allison now, all the fun’s gone. I never get to have another good time.” How do you overcome that? What did you give up that has now made your life so horrible, because you have no more fun?

Allison:
Well, that’s a lot of questions in one.

Mindy:
That’s how I roll.

Allison:
I know. But the first thing that happened to me was, I had to face my truth. I really had to face my truth and say, “Hey, realize, see the numbers on paper and see how much money I was really spending on restaurants. How much money I was really spending on all of these things.” It was almost this dramatic moment of, “Oh my gosh! That’s really what it is?” It was the moment of being able to realize that I could not afford daycare payments for my son. It was the punch in the gut that I needed. It was the punch of the gut that my husband needed.
Now, my husband, he does not like to spend money. I didn’t realize over time, that really all of my spending was making him incredibly uncomfortable, but he wasn’t saying anything. Because, happy wife, happy life, which is not the case. I believe happy wife and happy life is a lie, 100%. But it took realizing and facing my truth and saying, “Okay, I’ve been doing it wrong, I’m okay to own my mistakes. I’m going to own my issues with money and I’m going to set some boundaries in place for myself. So that I can change my money habits.”
Which isn’t going to happen overnight. But I can create boundaries overnight and I can work on them every single day for years on end. Then when you’re working on it every single day for years on end, and you’re staying within those boundaries, it changes the way you view money and it changes your money habits.

Mindy:
You just said that your husband didn’t say anything, even though your spending was giving him the heebie jeebies. I just want to say to everybody who’s listening, if you want your spouse or partner to know what you are thinking, those words have to come out of your mouth and go into their ears. You have to tell them, they cannot read minds, you cannot read minds. So tell them. There’s a whole thing about talking about money with your spouse, and don’t be accusatory, and you know all of that. But if your spouse is spending money on things that you find frivolous, make a open ended comment. “Hey, is this normal for you? Do you normally spend $200 at Ulta?
“Oh, you know what, I do this once a year and I was out of all my makeup.” That’s a different story than, “Yeah, I do this every week. It’s totally cool. I had the $200 in my account.” And open, “I can’t believe you spent $200 on makeup.” “Well, yeah, once a year. That’s great. I don’t wear a lot of makeup.” So, that’s not my spending. I don’t know if $200 is a lot or not.

Allison:
Well, and that’s not my spending habits anymore either. Because, over time, everything changes over. You said, “What is what are the sacrifices that I had to make?” Well, our sacrifices looked like really tightening up everything. We tightened up, we saved first, so that way we could pay for our son’s hospital bills whenever he was born, in cash. We didn’t go further into debt. Then after that, we paid off debt and it looked like cutting way back. Which honestly, was not that hard to do. When you have a newborn, you don’t tend to want to go to a lot of places. I’m like, “I don’t want to go out to eat, because then I have to deal with all…”
For us it looks like really sacrificing. As two teachers, it looks like in the summertime instead of going on these nice Long vacations, it looks like working summer school. My husband is a band director, he has his driver’s license to drive a bus, so he volunteered to drive the bus. Whenever they would go to places, that he was already going to with the band, he would drive the bus and make $50 a trip. That was sometimes twice a weekend. That money went to debt. We made these sacrifices that, in the beginning, I remember thinking, “I will never live like this again. I will never budget again, once we have paid off this debt, I am done. I am living the life I want.” But four and a half years of that turns you into a different person, where you can appreciate what you really want and let go of what’s not important to you and your money.

Scott:
Around what year was your child born?

Allison:
He was born in 2012.

Scott:
Okay. In 2012, you’re sitting there with $111,000 in debt and a mindset shift here. In four and a half years, I’m hearing you paid it down to zero, is that right?

Allison:
Yes.

Scott:
Basically, through this, hey, discipline, budget and finding some extra ways to make money here and there. But mostly through that, just discipline with your budget that you already knew, you’re just now applying to the accumulation of wealth?

Allison:
Right. It took changing my mindset. Because, I really believed my mindset. Whenever we first totaled up the debt, I was scared, I was angry. I was in my first trimester of pregnancy, so just emotions everywhere. But my first one was almost defense of like, “Well, of course, we’re not going to be able to pay this off, we’re two teachers.” And this is the good we put out in the world, we’re two teachers, were never going to make a lot and that’s just our sacrifice. That’s our burden to bear. I truly had that mindset of, being two teachers was a burden, but we could take on the burden of debt. Because we were doing so much good in the world. I thought of money, making more money, meant we weren’t doing good. Does that make sense?

Mindy:
I can see where you’re coming from with that mindset. But, no, it doesn’t make sense. You can do good and make money.

Allison:
Exactly. But I didn’t have that mindset, because we have two teachers and I thought, “Well, this is just what it is for teachers.” After a while I thought, “No, I don’t care if that’s how it is with teachers.” I got to the point, whenever we were pregnant and I thought, “If this is how it is, this sucks.” I choose not to fall into this belief I had, that no one necessarily put on me, but I have formed in my own mind. That teachers cannot pay off debt and build wealth. Teachers will always be poor, teachers will always work, second jobs, teachers will always have student loan payment, because they don’t make enough to pay off their student loans.
Therefore, their children have student loans, because they don’t make enough to save for college. I just saw this cycle and I just said, “No, I choose not to play a part in this game, I choose not to play a part in the cycle.” When I brought it up to my husband, he is very much the visionary, he immediately got on board and said, “Yes, let’s do it. Let’s pay off our debt.” Because that’s step one for our family, to get to where we are no longer living in this cycle.

Scott:
I’m just so proud to hear you say that and fascinated by this concept. My fiance was a teacher for a long time. That mentality that you just described is present with a lot of teachers. You hear it in passing, “Oh, we’re not going to make much money, we’re teachers and all that stuff.”

Allison:
Yes.

Scott:
You know what, look, I know it’s not the highest income profession out there. But two teachers can make $40,000, $45,000, sometimes even upwards of $50,000 per year each, as the career progresses. With discipline, there is a path to becoming a millionaire early in life. Maybe not in your 30s, but certainly is possible in your later 40s or early 50s, to retire early with that. And we’ve had multiple examples of that here on the show. Of folks coming in, like the Millionaire Educator, who have been able to create millionaire status. There are advantages to every single profession out there. I love that you chose to approach it from a different angle, get disciplined, manage it mathematically and get that outcome [inaudible 00:19:14].

Allison:
Yes. Well, and that’s sometimes difficult. Because when you’re surrounded with other people, these other teachers that have that mentality, and you start trying to have these conversations. There were times I would get shut down a lot. Like, “Oh, you’re just dreaming.” Or people would say like, “Don’t pay off your student loans early, it helps you with your taxes.” I would just have these people and these older teachers, that would tell me that’s not possible. That’s just not possible, you’re two teachers. If I had listened to them, we would likely still have our student loan debt, we would likely still have car debt.
We would have all these things that would not allow us to be able to turn around and invest, and save for our kids college fund and live a life that we enjoy. Live a life where we are able to live and enjoy, guilt free, because we have budgeted for that family fun money. We’ve budgeted for me to go shopping every now and then at Ulta. We’ve budgeted for us to enjoy my husband going golfing every now and then. To enjoy our family life together.

Scott:
Okay. I’m fascinated and delighted by the mindset here. It sounds like you started this journey in 2012 and that you made really big progress by 2016/2017. When was it you paid off your debt?

Allison:
2016.

Scott:
Right. I think you told us that you immediately revert back to your previous pattern of spending every dollar that you bring in and not accumulating anything. Is that right or what happens next?

Allison:
No, I thought I would. I thought I would immediately do that.

Scott:
That was a joke.

Allison:
Okay. I was like, “No, I would not be here if you were…” Well, I think also the shift that happened during it. As someone who like, I generally love to spend money. Mindy, you and I are opposites. I get a high from spending money. There are times still that I fall into this trap of spending money and I have to pull myself out of it. Because, I find joy in it. Which was really hard for me, whenever we were on our journey, because my husband doesn’t find any joy in spending money. He doesn’t see the point, he would rather save money. There was a lot of compromise.
I remember I had no spending money, and I went to Target one day, and I had had a bad day at work. My emotions were high, and I just said, “Screw the budget. I don’t care what it says, I don’t care what our goals are, I’m going to get what I want right now. Because I am angry, I’m upset, I had a bad day and this is going to make me feel better.” I went shopping and I spent $200 at Target and I walked out. I texted my husband and I said, “I’m not taking anything back.”
What that led to, was the realization that, number one, I’m an emotional spender. Number two, that I need some spending money to my name, so that I can use that money to save up and spend it on what’s important. Not turn to emotional impulse spending in moments where I was not feeling good. I used to spend money whenever, in college if I got an A on a test, I’d go out and celebrate and buy something new at the mall. If I got an F on a test, I would go out and be like, “Oh, let me make myself feel better. I did bad on this test. Let me go get a pedicure.” If a boyfriend broke up with me, I would go spend money. If something good happen, I’d go and spend money. I was using money to celebrate or mourn all of my emotions. That carried into adulthood.

Mindy:
I really like that you said, “Okay, I need some money to spend.” It is so much easier to look at how much money you’ve got and where it needs to go and say, “Okay, I want a small amount to come to me. This is my Allison money.” Hubby can’t tell me what I can spend on, and I get $10 a week or $1,000 a week. Whatever you’re putting towards that. I get this money and I can spend this much. Then it’s up to Allison to only spend the money that’s in this account. Does your husband get the money too, does he have-

Allison:
He does.

Mindy:
And he just saves it?

Allison:
He gets some money too. Sometimes he does, right now has a long commute, so he spends it on sodas and random things. But he does get money as well. We don’t get a lot right now, it varies different amounts throughout the years. We were giving ourselves different amount. Right now I only get $25 a month. Here’s what’s happened is, that sounded ridiculous at the beginning of our journey, it sounded outrageous. “$25 a month, what? Do you hate me?”
But what I’ve learned is that, I don’t want as much. Instead, I save that $25 for something I really want. Being able to create these boundaries with my spending allowance, has allowed me to decipher the difference between what I kind of want and what I really want. When in the past I just really wanted everything. Right now I have $50, I leftover, I still have last month leftover. It allows me to build it up and I’m really just very choosy about how I spend my money now.

Scott:
This could be this is extreme discipline, I love it with this. How much were you able to begin accumulating, per month, by the end of those four years. In putting towards that debt and then beginning to accumulate?

Allison:
So, our debt payments at the beginning, the minimum payments for us were $1,400 dollars a month. That was our minimum debt payments as a family of four, basically. Our goal was to always send $2,000 to debt a month or more, depending. Things came up, we had another child along the way, our daycare expenses went up to 1500 dollars a month. Things shifted and changed when we got any… If we had tax money, we would send it to debt. We did whatever we could just try to knock it down. Then there were times, whenever my youngest son needed an unexpected surgery. That happened one month before we were supposed to become debt free.
One month before we were supposed to become debt free. We found out he needed this surgery and it was going to cost thousands and thousands of dollars. We paused and I worked summer school that year, to help cash flow the cost of the surgery. One month after his surgery, we became debt free.

Scott:
Wow!

Allison:
It’s a rollercoaster ride, it’s not this straight up journey. I think that what people don’t realize, is that there are going to be ups and there’s going to be downs, but the downs don’t define you. Whenever you hit a struggle, it is for a season. I always tell people that come into my inbox and they say, “I’m going through a really hard time right now.” I say, “This is a season.” When you’re willing to live and live in a season of sacrifice for a period of time, you can live in a season of abundance for the rest of your life. That really helped us get through. I saw it as our season of sacrifice, so that I could reach that season of abundance.

Scott:
That’s an amazing quote.

Mindy:
I love that. Yeah, that’s fantastic. I am going to correct you, because I don’t think it’s a sacrifice, I don’t like that word. Because, so many people are like, “Oh, well, I have to give up everything.”

Allison:
Yes.

Mindy:
No, you don’t have to give up everything. But if you try it, who was it Scott? Liz Frugalwoods, Mrs. Frugalwoods. Came on the show and she said, “I discovered FI, I gave up everything for a month. And then I discovered I wanted to add some of this stuff back.” Great, add that back, add back the stuff that works for you. But get rid of the things that don’t, get rid of the things that don’t spark joy. Who is that, Marie Kondo?

Allison:
Yes.

Mindy:
That’s not trendy anymore. But-

Allison:
It’s okay.

Mindy:
[inaudible 00:27:09] trendy.

Allison:
I still appreciate it.

Mindy:
I love that quote. It’s a roller coaster ride, ups and downs, but the downs don’t define you.

Allison:
They don’t. And they aren’t your future. Your deepest, darkest moments with finances, aren’t your future. That was the mind shift I had to make. Whenever we were sitting there, at the kitchen table, I had my heads in my hand. I was thinking, “How on earth are we supposed to bring a child?” I was 24. I was not ready for children. I will put that out there and own it. And I thought, “How are we going to do this if we’re always going to be in debt and we’re just two teachers?” But then I had to turn it around. I had to question the thought, because your thoughts can lie to you. And I had to turn it around and say, “It doesn’t have to be this way. Where I am right now does not define me now and it does not define my future. I have the ability to change my future.”

Scott:
When you got back to zero and thank you for sharing that that final, I guess, problem at the end there with the surgery there and all that. I think that’s a really good bit of color there and illustrates, this is not just some smooth journey [inaudible 00:28:20]. But it does sound like you were able to save about $1,400 to $2,000 a month on average. With some bumps and bruises, some tailwind, some headwinds, is that a fair way to describe your situation?

Allison:
Yeah. There were times when it was more, there were times where it was less. I’m the big dork, that I would try to… We are paid monthly, and so about two weeks before we were paid, I would make a budget and I would give myself a goal. This month, I’m going to send $2,000 to debt. By the time that it came, I would say, “Okay.” And I’m able to reach my goal. My goal would sometimes be, to send $1 more to debt this month, than I did last month. There were moments of just encouraging myself, just with some internal motivation, talking about it with my husband to keep going. Because it’s a long journey and it’s easy to give up. There were times I wanted to give up. There were not times my husband wanted to give up, but he’s a different person.

Scott:
What was the interest rate on your debt? Do you know the general average?

Allison:
Back then I was not as into it. I learned about budgeting and personal finances throughout my journey, and I soon became super passionate about it throughout my journey. But I think our highest interest rate was like 6%. We didn’t have any of these huge, massive credit cards, with 18%, 20%, 24% interest rate. I have never carried a credit card balance, though we didn’t even have that to speak of.

Mindy:
That’s interesting. You’ve never carried a credit card balance.

Allison:
No, I haven’t.

Mindy:
I feel so judgy now. For somebody who loves to spend money, that’s actually a pretty big accomplishment.

Allison:
Mm-hmm (affirmative).

Mindy:
Because [inaudible 00:29:59] to carry a credit card balance.

Allison:
I know, but remember, I would see my money. Just in terms of how much can I spend to get to zero and never go beyond that. It was always like there was this line in the sand for me as a spender. They’re still there. I mean, just even last year, we moved into a new house, my spender heart took over and I started falling back in my old ways. I was buying all these new things for our house. We weren’t going into debt, but I was putting it on a credit card. Then we weren’t able to save as much, as we wanted to each month, because we were paying off the credit card in full. I had to get to a point where I said, “Whoa! Allison, you’re going back into these old habits.”
I gave myself boundaries with the credit card. My husband did not tell me this, because I’m very big. I’m like, “You’re not going to tell me what to do with this.” But I said, “Okay, I know there’s a problem.” And he said, “Yeah, you’re getting a little bit out of hand. This is starting to get out of hand, we’re not going to be able to reach our goals if you keep doing this.” I said, “Okay, I will not use the credit card, unless we talk about it first and we both agree it’s a purchase we need to make.” He said, “Okay, and I won’t do that either.” Which he never uses the credit card. So, that wasn’t.
But it was that solidarity. It was creating these boundaries where, whenever I wanted to make a purchase, I had to say, “Okay, I’m going to have to bring this to Matt, who is my equal in this marriage and helps decide our finances as well. Do I think he’ll approve it? Probably not, because it’s just something I want that I don’t even need?” That was enough for me to say, “Okay, I don’t need it.”

Mindy:
I think this is huge, that you recognized that issue, spoke to your husband and he said, “Yes, I recognize this.” But hadn’t harped on you about it. Which is a testament to his commitment to the marriage, in that he’s not just going to yell at you for spending money, because you’re not now in debt anymore. But he had noticed it, maybe Matt… He also knows you slightly better than I do or a lot. He knows that maybe you wouldn’t be so receptive, if he was like, “Hey, Allison, stop spending all this money.”

Allison:
Exactly.

Mindy:
That’s very important that you guys started talking about it, and “Hey, I’m not going to spend money without discussing it with you.”

Allison:
Yes.

Mindy:
That’s the mindset that Carl and I have. I like to think that our marriage is successful, we married in 19 years in January. But I feel like, if I want to spend money, I should consult him. “Do you mind if I spend this money?” He always says, “No.” He always says, “I don’t care.” It goes back to, he was always the breadwinner in our relationship. He made a lot of money and I made slightly more than minimum wage and that I stayed home with our kids. I was like, “Oh, well, what’s his is mine and what’s mine is his.” But, “Oh, this isn’t my money, this is his money. So, I should ask.” I don’t know why I have this mindset, because he never felt like that. But I’ve gotten into the habit. Now that he’s retired and I’m the one making the money, I still confer with him, “Hey, do you care, I just spent $200 on a purse.” I haven’t spent $200 [crosstalk 00:33:13].

Allison:
I heard that in another episode. Good job. I commend you, you get that purse.

Mindy:
I love this purse, it’s so pretty.

Allison:
So good.

Mindy:
And it’s so big, it puts everything, it’s wonderful. But that was really hard for me to do. When I told him, he’s like, “I don’t care, whatever.” It’s no big deal. It’s just it’s hard to get past that for me and I think it’s really fabulous that you have recognized that and took a step back. Good job.

Allison:
Well, it also comes down to therapy, years of therapy. That helps, because in therapy, I learned that my thoughts lie to me. This thoughts that I’m thinking, that come into me, can lie to me. For so long, I believed everything that came into my head and I didn’t question my thoughts.

Scott:
I just want to point out here that, both of you guys have worked out relationships with money and your spouse, that are healthy and work in the context of your relationship. Right. Mindy, in your case, this is 100% what you love to do and are willing to do. You’re willing to move into a dilapidated house and spend your own time and effort fixing the house up and then resell it later for hundreds of thousands of dollars. Right?

Mindy:
Right.

Scott:
I think that entitles you to a $200 purse when you want it-

Allison:
Yes.

Scott:
In relationship to that. Right. Allison, you guys have a little bit of a tighter budget, at least at first, did not have access to some of those really meaningful ways to leverage your wealth. The answer had to be discipline and coming up with this reserve that you could spend as you wish whenever you want it on it, right. That’s wonderful, that’s what you needed at those times in your relationships. As time goes on, and you become Millionaire Educators over the next couple years, those dynamic are going to change. And you’re going to have a different set of options, when it comes to spending guilt free in those types of things over time.

Allison:
Exactly. It’s a journey, it changes. I think so many people think that where they are now is where they’re going to be forever. It doesn’t have to be that way. That’s what I thought, eight, nine years ago.

Scott:
You mentioned that you said, “Hey, if we spend this money, we’re not going to be able to reach our goals.” What are your goals, or what were your goals, as soon as you became debt free? And where are they today and how they evolved?

Allison:
When we became debt free, our goal was to save the money. We didn’t have any idea of saving the money, we didn’t have a plan. Let me just say we want to save, that’s it, we want to save. We had our eyes so long, we are so focused on paying off debt for so long, that we just said we want to save. We set up some retirement accounts, we set up a college savings account. Now, I’m no longer teaching, I work on my business full time. But my husband does have a pension and we don’t get a say in that. It just automatically comes out, we don’t have any say in what it goes to. It’s just there.
But we set up some savings goals and we realized, and this might shock y’all, is that we felt like because we then in turn were saving so much money that we weren’t able to enjoy life. We were coming up short every month on our budget. I’m talking, this is in the past year. In the past year, we’re coming up short every month on our budget. It wasn’t me going out spending too much money at Ulta, I promise this time, that was not the case. When we looked at our savings, I said, “Matt, we’re saving so much money.” Which is wonderful and I love saving money. However, this isn’t allowing us to enjoy our family time. This isn’t allowing us to enjoy our life, can we cut back, and I know that sounds crazy.
Can we cut back a little bit on the savings, still save a lot, but cut back and give ourselves a little bit of family fun money. Because, what we were missing this summer, we got into camping a lot. We’re going camping, we drive long distances, we take our kids on these trips, we get them outdoors. And it’s a big passionate thing for our family to be able to do this. We weren’t having enough money to go on these camping trips, and they don’t cost a lot. We’re not talking about $1,000 a month for this family spending money. I just said, “Can we just cut it back a little bit and adjust and then give more.”
Because we were saving so much, we weren’t able to give more. About six or seven months ago, we went to a socially distant dinner where it’s just us, I brought my computer. We had about a two hour talk where we dive deep into our finances, which we had not done in a while together. We talked about our goals, we talked about our dreams, we talked about how we didn’t want to just save. But we wanted to give back to charities that mean something to us. And we talked about which charities that are and why they mean to us. We talked about saving for kids college fund and is this enough right here. We revamped our normal budget, so that we also have money right now, to live a life we love.
To be able to take some of those trips, to be able to do some of those things with our family. Because, as much as sometimes my kids drive me crazy, which they do. I only have them with me here for a moment of time. I’m not using that to justify, I know people use that all the time to justify not saving for retirement. They use that all the time to justify going into debt. But that’s not what the case is. The case is that I wanted us to have about $300 a month, specifically for family experiences.

Scott:
Wonderful. When you say your saving, what do you mean by that? Is that going into the bank account, is that going into an investment fund? What does that specifically mean?

Allison:
We do have some money going into an investment fund, we have money going into a kids’ college fund. We actually saved up money into a high yield savings account and then turned around and bought a car. Used car in cash, earlier this year. Money was being saved for that. Now we’re actually starting to increase our emergency fund more.

Scott:
Okay, you spent four years accumulating this cash at a pretty, three to three and a half years or something like that, since you came out of debt. Accumulating this cash. Your position now is, you have a very strong emergency reserve it sounds like. You’ve got these funded accounts for retirements, a paid off car. Do you have any other assets at this point when you have this conversation?

Allison:
I mean, we’d love to pay off the house one day, we do have a mortgage. That is something that we’d like. Honestly, I’m still learning and my husband is still learning, more about investing. Because for so long, our focus was paying off debt. We’re actually starting the process of learning more, so that we can be more hands on. Because, just like paying off debt is a small season in our life, that small season of not sacrifice but paying off debt. The season of growing wealth is going to be longer. We do want to be more informed, more aware of what’s happening with our money, so that way it can grow.

Scott:
Okay, wonderful. I love the head of money date. What do you think Mindy?

Mindy:
I love the money date. The money date is so important for getting on the same page and then staying on the same page. Spending an extra $5 here, there, is no big deal. But when it starts to add up, it’s $5 this week, and $5 next week, and then it’s $10, and then it’s $15. Then all of a sudden your budget’s all out of whack. All of the couples that we have interviewed, the most successful couples, on the same page financially and growing towards financial freedom have a money date, a regularly scheduled money date. Weekly, I think is too early. I’m sorry, stop sign. Weekly, I think is too frequent, except in the beginning. If you do it for a month, weekly for a month, and then bi-weekly for a couple of months. Then once a month or even once a quarter.
I think Christy and Bryce sit down once a quarter and revisit. JL Collins and his wife sit down once a year and revisit. But it’s an every single X amount of time, they are getting together and having a conversation, and just keeping it present. Being conscious about where their money is going together as a couple, it isn’t one person saying, “You have to do it this way.” Because, that is like you said, I don’t want to be told what to do.

Allison:
Right.

Mindy:
[inaudible 00:41:33] else. I super don’t want to be told what to do. I want us to do this together. That’s fabulous.

Allison:
Can I make a suggestion for the money date, for people who have a spouse who don’t want to have the money date. Because, we do have weekly, I call them family business meetings. But they cover just basic spending. Just “Oh, we have this much until payday.” That kind of stuff. And like, what our weekly meal plan, who’s cooking the meals and activities. We do that every Sunday night. Once a year, we have a big goal setting meeting. Where we talk about our goals we have for the year and this finance goals. But we also have family goals, faith goals. And then we even set goals with our kids, we talk about with our kids. Our six year old sets goals.
It might be, read a book or read a book independently, or maybe something like that. But even when our kids were young, we would set goals for them. Like, “We want Evan to be potty trained by this year. We want you know him to recognize all letters.” We would do that. But the way I was able to get my husband to start this, because he did not want to have this meeting. It was while we were traveling for Christmas and it was in the car. Because, he couldn’t escape me. That is how it started.
I would wait. Now we have this tradition. Where if we’re traveling for Christmas, which now we live close to family, so I’m not going to be able to do this. But we would have these five hour trips. And our kids would hear us talking about it. I would open up the Notes app on my phone, and I have our goals from years past. To say, “Okay, what is it that you want to do? What is it that you want to do in terms of finances? How much do you want to have saved this year? What do we want to save for?” All of these things? He could not escape me. Because if I try to do it at the house, there’s going to be a football game on, there’s always these distractions. But when you’re in the car, they can’t escape you. It’s good for kids to hear these conversations as well.

Scott:
It sounds both wonderful and terrifying.

Allison:
Well.

Scott:
Thank you. That’s a great tip.

Mindy:
Financial ambush. But yeah. No, that’s true, he can’t escape. “Hey, let’s just talk about this.”

Scott:
Maybe you set him up to know, “Hey, we’re going to have this conversation in the car.”

Allison:
Well, now he knows. One time I tried talking to him about it beforehand and he said, “Hey, I don’t want to talk about this now, I’m prepared to talk about the car.” He was like, “Don’t be pushing this on me now, I know what’s happening in the car.” He knows now, every year we have these conversations that happens on our long car rides. We’re going somewhere, actually, this Christmas. Maybe we’ll have that conversation then as well. But it’s usually in the car.

Scott:
How much do you think you’re going to save this year? After you pull out the $3,600 of $300 a month for family experiences?

Allison:
Goodness, this year has been crazy, this year has been unprecedented. So, it’s different. We did buy a car, we’re still saving. I would say we aim to save $2,000 a month among different savings goals.

Mindy:
That’s good.

Allison:
That’s pretty good.

Mindy:
$24,000 a year on a teacher salary.

Allison:
Yes. Well, he’s a teacher and then I run my own business. But I pay myself what I made as a teacher.

Mindy:
Nice.

Allison:
I still pay myself my normal salary. We didn’t change anything, I let money sit in my business savings as well. But I still pay myself what I made. The difference, because we are able to still live a little more extravagant life, is that my youngest son went into kindergarten. That daycare savings really does help, no more of that preschool tuition or daycare payments.

Scott:
Wonderful. I’m really excited for you, Allison, to see what you guys think through. After you’ve done a little bit more research on investing and get a framework around that. Because you guys are in such good shape, I think, in terms of your accumulation rates here. I mean, that’s $24,000/$25,000 per year in savings. You can do some real damage with that, in terms of whether it’s stock investing, or even buying real estate, and those types of things. I’m interested to see where you settle and what you come up… Or building or reinvesting in your now business.

Allison:
Yes.

Scott:
You’ve got a lot of really good options and a really strong position.

Allison:
Yeah.

Scott:
It sounds like that’s about to improve even more, with kids entering school age.

Allison:
Yes. We’re excited. I asked my husband if he would ever invest in real estate. He said, “No.” We’re working on that. You got to plant the seed early. That takes time, to be able to get him on board with something like that.

Scott:
All right. Well, because it’s BiggerPockets, we’ll just say. There can be some advantages for teachers, for example, in real estate investing.

Allison:
Yes.

Scott:
Because, you can buy one at the beginning of the summer and fix it up during that summer and stabilize it, then repeat next year.

Allison:
That right there is a selling point. Because he loves building, he loves doing things, he loves [inaudible 00:46:41]. I said, “If you could leave teaching and work with me one day, what would you do?” He said, “I don’t want to work with you. What I would do is, I would leave touching…” He said, “I would leave teaching and I would completely remodel our house to one of my own.” That is his goal. Actually, like that is his dream.

Mindy:
Let me introduce you to a little concept called the living flip.

Scott:
[inaudible 00:47:02].

Allison:
Yes. So, that his dream, is to remodel our house. To learn everything, to learn electrical, to learn plumbing, he wants to do it. And then I said, “Well, you could do that for other homes. You could help people or we could buy a house and you could flip it.” He said, “Yes, and I’ll practice on ours.” I was like, “Uh!”

Mindy:
He can come practice on mine, I’m doing everything.

Scott:
He’s right. Here’s the deal, if you can take your own house and increase it in value, the way that your husband seems interested in doing it. You got to be smart and make sure that each improvement is actually increasing the value of the property. That’s where you can go and talk to a couple of investors. But that’s really powerful. Because, if you live in a place for two years or two or more years, you can sell the place and not pay any capital gains on the profit.

Mindy:
Yes.

Scott:
It’s really smart, in a lot of ways, to start with a live-in flip, which is Mindy’s whole shtick here that she’s done a bajillion times. It’s incredibly powerful way to build wealth. Then if you can apply that to real estate, you can flip a dilapidated rental property, turn it into a habitable one and rent it out or sell it for a profit. You’ll pay taxes on the sale though, if it’s a true flip.

Allison:
Right. Well, and I think he would love that, I really do. I don’t want to sell our house, I love our house, I love her neighborhood. But he is a very much a hands on person, loves to build, loves to fix things. The other month, we had a really tight month and he wanted to do some stuff with the house. I said, “Here’s $50, you do what you need to do.” And he was like, “I got $50.” He was so excited to go to Home Depot, $50 and do things to fix up our house. He found ways to make it stretch.

Scott:
You’ve got a great husband.

Allison:
I’m telling you he and he is cheap, he is very [inaudible 00:48:46]. I don’t want to say he’s cheap. He is mindful of everything, he wants to do it himself, he wants to change the car oil himself, he wants to fix cars himself, he’s very handy. He would actually, I think, really love to buy a property flip it and do all of the above. He just doesn’t know it yet. So, that’s what I’m working on now.

Mindy:
I’ve got a book to send you. It’s called BRRRR: Buy, Rehab, Rent, Refinance, Repeat. That’s where you buy an ugly house, you rehab it, you put a tenant in place, you rent it for a year and then you pull out all your money in an ideal BRRRR. You pull out every dollar you have into that property. It’s still cash flows afterwards and then you take that money, you recycle it and put it into the next one and do it again.

Allison:
Yeah, I think he would like that, but I think he doesn’t realize that yet.

Mindy:
Wow! Maybe he should get a book for Christmas called BRRRR.

Allison:
Maybe he should, maybe that’ll make its way into the tree.

Scott:
Well, we’ll send you a few potential books here.

Allison:
Okay.

Scott:
It won’t break your budget. So, we’ll just go ahead and send them for free in your favorite format. Another idea here, just because I’m getting excited this is, if he wants to work on your own house, there’s a way to leverage that as well. Let’s say your house is worth, I’m making this up, $250,000. Okay. If he improves it and you get somebody to appraise it for, let’s call it $350,000. Well, now you could theoretically pull out $100,000 in the form of a home equity line of credit. If that was a goal, is to practice on your personal house and learn those skills as a fun project. Now you could potentially use that as it as seed money to invest in real estate, or other investments, or for the business. As long as you’re careful about that. Making sure that is being put to good use.

Allison:
Yeah.

Scott:
If you take the money out. But that’s another way to think about it if you don’t want to sell the place.

Allison:
I don’t know if he needs to do it full time, I don’t know, I don’t know what the answer is. But I know he has summers where he is bored out of his mind.

Mindy:
My God, send him to me.

Allison:
He has spring breaks. I’m telling you, he has to have a project on spring break. I’ll find a piece of furniture, I’ll say, “Build it.” Every project he gets to buy a new tool. He gets really excited about projects, because then he gets to buy a new tool. I’m not the only spender in this marriage.

Scott:
It seems there’s a lot of good possibilities ahead of you.

Allison:
Yes, I agree.

Mindy:
Well, this seems like a great place to start talking about where you are currently investing. You had made a comment that you want to learn more about investing, but that you are currently saving. Where are you putting your money currently?

Allison:
We do have two Roth IRAs. Yes, we do have my husband’s pension, we do have college fund and then we do have a high yield savings account. We are trying to save, specifically in a high yield savings account and build up our emergency fund even more. Especially now that I am a full time business owner. I do have business savings to help cover things. But it’s just in case, you never know. That’s currently what we’re doing. However, I have been reading and learning. I’m the annoying person that, when I read and learn and I highlight everything, I go to my husband and I’m like, “Did you know.” Then I read from the book, which I’m sure he hates. But that’s me.
I am reading and learning more about investing and I’m really excited, because I’m thinking that I want to almost give myself an investing allowance. Where you have your spending allowance, giving myself an investing allowance and say, “Okay, this is what I’m going to invest every month. Just practicing, it doesn’t have to be a ton of money. But being able to learn more about it, by putting money in and watching it grow and learning just even more. That’s something I’m going to be talking to him about as well. Because, I know that we have a lot to learn and I’m willing to do the work to learn.

Scott:
I find your story particularly interesting. Because most of the people we’ve interviewed, I would say the vast majority, you may be the only exception actually. Who has saved for multiple years in a row, with extreme discipline, and aggressively, and kept that strict budget. Without an express goal of that being investing and creating long term passive income. Have we interviewed other folks with that mentality, Mindy?

Mindy:
I don’t have a good memory. I don’t think so. I think that people put money into investments, but they don’t save for investments.

Scott:
What is your why, Allison? Why are you continuing to be so disciplined with your spending, if not to create passive income or invest the money and build wealth and those types of things? What’s the motivator there?

Allison:
I think the motivator there is almost a limited mindset. I’m going to call myself out on this. A limited mindset still, that I need to break through. The motivator is almost just having cash on hand just in case. I have a lot of these what if moments. What if my husband loses his job? What if my business fails? My son had an emergency surgery when he was three years old and it landed us in the hospital for a week. Those bills covered our entire emergency fund, even negotiated down. We had used our entire emergency fund. I have a lot of limiting beliefs and fears when it comes to money, that I’m still working through.
Which is why I have to question my thoughts. I have to question, is it realistic? Thankfully, because I am emotional and money is emotional, I have a husband who is not as emotional as me and he’s more realistic. When I do have a fear, related to money or related to anything, I can go to him and he can say, “Okay, is this realistic? Is this fear? Is this really going to happen?” I’m able to work through my thoughts and my fears, so that that way, I don’t fall into them and live in those fears. Make decisions so emotionally when it comes to money. But I can tell you right now, when it comes to saving money, we have had some situations come up in our life that have required quick cash. I want to have the quick cash on hand.

Scott:
Absolutely. I think it’s a requirement of building wealth, frankly. Is that everybody needs to have a strong emergency fund, whatever strong means to them.

Allison:
Right.

Scott:
Whether it’s three months, six months, 12 months. More or even a little bit less, depending on how things go. But everyone needs to have that strong emergency fund. But once you’ve got that emergency fund, the cash on hand, the surplus. I’m interested to see how your motivations change, as you do more digging into this concept of investing, financial independence, retiring early. Those types of models can be really powerful motivators to keep accelerating your progress there. I’m really excited to see what you uncover there.

Allison:
Well, thank you.

Mindy:
I want to chime in with a couple of suggestions.

Allison:
Okay.

Mindy:
To steer you towards. The first one is the 457 plan. Your husband as an educator has access to, or should have access to a 457 plan.

Allison:
Yes.

Mindy:
Which is like the 401k, but it’s so much better. The 401k, the contribution limits for 2020 or $19,500.

Allison:
$19,000.

Mindy:
I think it’s the same for 2021, but I can’t remember and it doesn’t matter. It’s only going to be like 20,000 if they increase the limits, it’s not a huge deal. But either way, I mean, that’s still a lot of money $19,000.

Allison:
Right.

Mindy:
When you put it into a 401k, essentially, you can’t access it until you’re retired. There are ways around it, but for the sake of this argument, you can’t. When you put it into a 457 plan, you can access it as soon as you separate employment. And that’s all that I know about it, I know enough just to be dangerous. It doesn’t affect me, so I don’t have to do a lot of research on it. But luckily, the Millionaire Educator who was on Episode 124 knows all about it.

Allison:
Okay.

Mindy:
He talked about it. He actually used to change jobs and put money into the 457, separate and that’s tax deferred. Isn’t it Scott?

Scott:
I want to say yes, that it’s tax deferred.

Mindy:
It reduces your taxable income.

Scott:
I should check that though.

Allison:
Yes, it does.

Mindy:
Then can access it. Again, I just know enough to be dangerous, but I know 457 is better than 401k for your husband.

Allison:
Right.

Mindy:
For you as a business owner, do you have any employees other than yourself?

Allison:
No.

Mindy:
Okay. Let me introduce you to the self directed solo 401k.

Allison:
Okay.

Mindy:
As a business owner, you can put in your-

Allison:
I feel like you should have a product here that you’re holding up.

Scott:
Yeah, we get a good commission each time we set up-

Mindy:
You self direct your solo 401k.
It’s a 401k, so Allison the person, can put in her contribution limits of $19,500.

Allison:
And Allison, the business owner, can scale.

Mindy:
Allison, the business, can match your salary up to 25%, up to $52,000 or $54,000 total.

Allison:
Yes.

Mindy:
Going into your 401k every year. If you have some super successful business year, you can jumpstart and throw all this money into this retirement account. Your husband can put more money into his retirement accounts, especially that 457. It’s just a couple of things, I’m very excited about this, I’m trying to calm down.

Allison:
Don’t calm down.

Mindy:
It’s a couple of things that should look into, because there are a lot of options for, and it’s not just educators, I think it’s all government employees. Scott? Again, the 457, I’m not qualified for it, so I haven’t done a lot of research. But Episode 124, and who did we first hear that from? Jameelah Souffrant.

Allison:
Jameelah. I love Jameelah.

Mindy:
I think it was Episode 37. She’s so wonderful.

Allison:
I bet it is, because her husband’s an educator.

Mindy:
Yes. Jameelah Souffrant, Episode 39. Talked about the 457 plan and I was super excited about it. You could hear me learning about it for the first time there. And then the self directed solo 401k, there’s a company called Sense Financial. Dmitriy Fomichenko is the head of the company, or anyway, he’s my rep and he knows everything there is to know about the self directed solo 401k. He can walk you through it.

Allison:
Okay.

Mindy:
When you’re ready for that.

Allison:
Yes.

Mindy:
But those are two things that you should definitely look into, because they are available to you and not everybody and so much tax advantages.

Allison:
Yes.

Mindy:
You should be investing in those.

Allison:
Yes.

Mindy:
Okay. Well, that was a really long financial scan, Scott?

Scott:
Yeah, that was great. I think it was fantastic. I think what was interesting, again, is just the fact that you’re new to investing and learning about it. Which I think is wonderful. Again, I’m just really excited to see how you harness all this stuff. Because, the pillar is spending less than you bring in.

Allison:
Yes.

Scott:
Which you’re doing a beautiful job at, yeah.

Allison:
We have that down. Hopefully, I can come back on and update you on our progress?

Mindy:
Yeah, of course.

Scott:
I see a path with ease for you guys, building $500,000 in household net worth within 10 years, easily. Maybe significantly more than that.

Allison:
Well, thank you.

Scott:
If a couple of things go well. This is exciting. Yeah.

Mindy:
One last question for the financial scan is, in terms of monthly spending, how much cash do you keep on hand? I’m not looking for exact dollar figure.

Allison:
Right.

Mindy:
I just want to know, like three months spending, nine months spending, 48 months spending.

Allison:
Right now we have about four months spending. But I want to increase it to about eight months spending, is where I’m comfortable. But my husband, he’s okay with four months spending. There’s there’s some compromise there. One of the things that we do in our marriage, when it comes to some of this type of stuff is, who feels more passionate?
I feel more passionate about increasing the spending and it’s not going to hurt us to increase our, sorry, not increase our spending. I feel more passionate when it comes to increasing our emergency fund our savings, whereas he doesn’t. But it’s not going to hurt us to increase that. He’s like, “Okay, well, we’ll go ahead and you feel more strongly about it, we’ll reach that amount.” That’s what we’re working on right now.

Mindy:
That’s an excellent compromise tip. When you feel really passionate about it, you should win. But when you don’t feel really passionate about it, you should let them win.

Allison:
Yeah. There’s things-

Mindy:
Win isn’t the right word.

Allison:
No. Win is not the right word, but compromise. There are things that he feels a lot more strongly about and I’m just like, “You clearly are more passionate about this than I am. I don’t really care as much as you do.” We’ll go ahead and do it. But it’s never anything that’s detrimental to our family, or our marriage, or our finances. It’s never like, “I want to go out and spend $1,000 just because I’m feeling sad today.” It’s nothing ever like that.

Mindy:
Love it. Yeah. When you’re compromising with your spouse, when you’re working on money with your partner, it’s not you against them. It’s good to have you against the world.

Allison:
Absolutely.

Mindy:
Okay. Scott, I think we’re ready for the famous four.

Scott:
Let’s do it.

Mindy:
Allison. These are the same four questions we ask of all of our guests. Number one, what is your favorite finance book?

Allison:
So, my favorite book is Grow Your Money by Bola Sokumbi, because it’s just really good explaining everything. Like the basics of investing, explaining everything. And then what I love is that she gives you action steps at the end of every single chapter. Because, when I read a book, sometimes I’m like, “Okay, well, what do I do now?” I like it whenever people sometimes will lay it out for you. “Okay, now go take this action step.” I feel like it’s a lot more action driven. I feel like she wrote it very well and it’s just a great book.

Scott:
Awesome. What was your biggest money mistake?

Allison:
Goodness. So, my biggest money mistakes goes back to my husband and I being very emotional and impulsive with our money. When we were on our honeymoon, we bought a Timeshare. We went to one of those I know. We actually bought a portion of a Timeshare. So, we spent $4,000, whenever we were on our honeymoon, because we got roped in and we thought, “We’re going to live our best lives. We’re not having kids anytime soon, this is going to be great.” The next day I said, “This was a mistake, we have three days to cancel and go back on it, let’s cancel.” And he said, “No, we have 30 days. They said 30 days.” I said “No, they said three.” He said, “We’ll just wait, we have 30 days.”
We get back from our honeymoon, we realize we’re pregnant soon after. I said, “We need to call and cancel. You said we have 30 days.” My husband called and it was three days. We ended up paying $4,000, and this is not even actually included in our $111,000, and we did not use it one time. That was our biggest money mistake and it was very much just this impulsive emotional decision. That I wish I could go back and say, “Allison, pull yourself together. Come on. You don’t need this.”

Scott:
Timeshare, we never heard that one before.

Mindy:
Yeah. Don’t even go to the Timeshare presentation.

Allison:
I know. We don’t even do it.

Mindy:
They’re so good at selling.

Allison:
Yeah.

Mindy:
If you want to learn how to get sold or the art of selling.

Allison:
Sell. Yeah.

Mindy:
Yeah.

Allison:
But it was a big, big mistake.

Mindy:
That is the first time we’ve heard that when Scott. What is your best piece of advice for people who are just starting out?

Allison:
I feel like people who are just starting out, it can be really overwhelming and scary to look at your money. My best piece of advice is to remember that you don’t have to be an expert in finances, to become an expert in your finances. And that becoming an expert in your finances looks like tracking your spending and knowing your money habits and no one where your money is going. Because, when you become an expert in your spending, then you can create a realistic budget, Keyword realistic, that you can actually stick to and create money goals that you can reach.

Mindy:
That’s fabulous. Yeah, because my budget is not going to make Allison happy, it’s not going to make Scott happy, it makes me happy.

Allison:
Yes. Exactly.

Mindy:
That’s the only person it has to work for. That’s awesome.

Scott:
Now for the most difficult question, what is your favorite joke to tell at parties?

Allison:
Okay, I thought about this one. I don’t go to parties right now. I’m not much of a joke teller, but I do have a funny story. So, we have a three legged dog, his name is Joey. He’s had only three legs about half of his life. He lost his leg, one of his front legs, whenever my son was about one years old. Whenever my oldest son was about five years old, he’s petting Joey, right where his other leg used to be. And I said, “Evan, did you know that’s where Joey’s other leg used to be?” He stopped and he turned to me and he said, “Dogs don’t have three legs?” I was like, “Oh, no. Most dogs had four legs. I’m glad I said something.” I pictured sending him off to kindergarten and like they have a math problem about, “There’s two dogs and how many legs do they have?” And he’s like, “Six.”

Scott:
My gosh!

Mindy:
But what a sweet story of accepting things the way they are.

Scott:
Yes.

Mindy:
And not questioning it.

Allison:
He just thought all dogs had three likes, we had one dog and we weren’t around a lot of dogs. Or the dogs we were around, he didn’t notice.

Mindy:
My uncle had a three legged dog.

Allison:
They’re sweet. It’s-

Scott:
There’s a pun there that I’m missing. But-

Mindy:
I’m sure there’s a pun there.

Scott:
It will come to me later.

Allison:
Whenever he walks, he’s always seeing things just with his head bouncing up and down. He can’t go on long walks like he used to. But he’s happy and gets more attention than ever.

Mindy:
There you go. Okay, Allison, please tell people where they can find out more about you?

Allison:
You can grab free printables or even a free budget course at inspirebudget.com. Follow me on Instagram @inspiredbudget or if you’re already listening to this podcast, go to This Is Awkward Podcast where I have a co-host, Chris Browning. We actually walk through awkward money situations and stories and we give you advice on how to deal with those situations without losing your friends and family in the process.

Mindy:
That’s awesome. I didn’t even know about that podcast. I love Chris.

Allison:
I know. It’s really fun. It was actually a project that Chris came to me and said, “Hey, I want to start a podcast.” I was like, “You’re crazy. You have a full time job. You have another podcast.” We started it, we launched it last March and it’s been wonderful. We actually have people call in and share their awkward money situations and then we respond to them. It’s just really light hearted, it’s very fun. It’s not educational at all, but I promise you a laugh and you will love it.

Mindy:
Not educational.

Allison:
It’s not. You’re not going to learn, but it’s entertainment. It’s fun, it’s funny, it’s actually situations that you would deal with in your real life. We give somewhat decent advice all the time.

Mindy:
Okay, so the name of the podcast is This Is Awkward?

Allison:
This Is Awkward.

Mindy:
This Is Awkward. Okay, well, I shouldn’t be the host of that one. I’m queen of the awkward.

Allison:
Well, if you have an awkward money story you can always call in-

Mindy:
I am now racking my brain, what’s my most awkward money story? I’m totally calling in.

Allison:
Yeah.

Mindy:
Okay, awesome. Allison, this was fabulous. Thank you so much for your time today.

Allison:
Thank you for having me Mindy and Scott.

Mindy:
I really had a good time.

Scott:
Yeah. Thank you very much. Fantastic show, really appreciated it.

Mindy:
Okay. We’ll talk to you soon.

Allison:
Bye.

Mindy:
Holy cow, Scott, that was an awesome episode. What did you think?

Scott:
I really enjoyed it. It was a really refreshing perspective. It’s incredible to see her discipline and how she has come, alongside her husband, really come to master her emotional relationship with money in a really healthy way that’s moving the family towards their goals. That said, I thought it was even more interesting that they didn’t even have the why, the motivator, behind their incredible financial discipline, of building financial independence or accumulating assets with which to invest.
Once they layer that in, they’re going to be off to the races in my opinion. I thought that was a fascinating concept. Because, to me, there’s no point in accumulating cash, inflation is just going to eat away my cash, why would I just pile up a big pile there. It’s all about the investing, and beating inflation, and building a position capable of sustaining myself in perpetuity.

Mindy:
I am going to go out on the limb and say that, as CEO of BiggerPockets, you probably make slightly more than a middle school band teacher.

Scott:
I would say that’s probably right.

Mindy:
Without being part of the financial picture of BiggerPockets, I’m going to say that maybe you have dollar or two more an hour, than the teachers that we spoke to today. However, I am also going to hit on my famous mantra, personal finance is personal. There are people who feel that they have to pay off their mortgage right away. As soon as I can get that debt paid off, I’m going to pay that off. I don’t agree with that. But for me, it’s okay to have a mortgage.
For them, maybe they couldn’t sleep at night until they got their mortgage paid off. Or it helps them sleep better, because they know they’re working towards paying it off. So, personal finance is personal and for Allison to choose that, I think is a great choice for her. I’m super excited, like you said, she’s going to be really wealthy someday. And I completely agree with that. When you lay the financial foundations, you can’t help but be successful.

Scott:
Absolutely. Yeah. I’m sorry, I’m not trying to question her, her why currently.

Mindy:
No. I’m not.

Scott:
I found it fascinating that, because she hasn’t yet layered in some of these concepts, that perhaps you and I and many investors who listen to the BiggerPockets money podcast, take for granted. That those are, to me, a really exciting additional and perhaps very powerful motivator for her and her family. Which I think will be fun to watch as that develops.

Mindy:
I’m super excited about the 457 plan for them and I’m so excited for her to learn about the self directed solo 401k. We have one, Carl and I do, because he is self employed. It’s just unbelievable how much money you can throw into your retirement accounts through that. Definitely two avenues I really hope that she pursues.

Scott:
Awesome.

Mindy:
Should we get out of here, Scott?

Scott:
Let’s do it.

Mindy:
From Episode 154 of the BiggerPockets money podcast. He is Scott Trench and I am Mindy Jensen. We are saying goodbye, with love, peace and chicken grease. Because she’s from Texas. They eat fried chicken in Texas, don’t they?

Scott:
Yeah. I’m sure they do, they’d eat fried chicken in Nashville too, where I went to school.

Mindy:
Yes. [inaudible 01:11:59] Nashville Hot Chicken. Yes.

Scott:
I [inaudible 01:12:01] been there.

Mindy:
They eat the fried chicken everywhere.

Scott:
There’re fried chickens [inaudible 01:12:04].

Mindy:
I just think love, peace and chicken grease is funny.

Scott:
That is funny. I love it.

Mindy:
Okay, thanks for listening. Bye.

 

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In This Episode We Cover

  • The importance of setting budgets early on in life (and keeping up with them)
  • Changing the “how much do I have to spend” mindset into a “how much do I have to save” way of thinking
  • Why you need to own your relationship with money
  • How to have financial talks with your partner (even when it’s awkward)
  • Why you need spending allowances so you can enjoy your money
  • Why investing isn’t a linear path, but a rollercoaster (and why the dips don’t define you!)
  • Refusing the mental trap of “I can’t be rich” while being at a low-income job
  • And So Much More!

Links from the Show

Book Mentioned in this Show:

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