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BiggerPockets Money Podcast 194: Finance Friday: Will I Still Be Able to Hit Retirement At 60?

BiggerPockets Money Podcast 194: Finance Friday: Will I Still Be Able to Hit Retirement At 60?

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It’s a common concern among many Americans on whether or not they can retire on a timeline they feel comfortable with. In this episode, we talk to Deb, who’s having some of those same concerns. She has over $100,000 in assets (not including the house) and wants to be sure that she can provide a great life for her children all while saving more and more for retirement.

Deb has read so many money and financial independence forums about mid twenty year olds with six-figure incomes and five-figure savings per month. Many people read about these stories and feel like they can’t compare, but if you’re in Deb’s situation, you’re already doing well with retirement savings! It can be dangerous to compare your journey to others who’s backstory you don’t know. That’s why we encourage everyone to save, invest, and spend at a rate that works for their goals!

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Listen to the Podcast Here

Read the Transcript Here

Mindy:
Welcome to the BiggerPockets Money Podcast show number 194, Finance Friday episode, where we talk to Deb about staying the course and implementing incremental changes now to create huge results down the road.

Deb:
Peace of mind that I have about my finances really helps me to sleep at night, but the things that keep me up at night is the idea strain. It’s not even the stress of it. It’s just, “Okay, what can I do?” Because I’m constantly looking for more things. Unfortunately, I think I’m limited most by my energy and my time. I think most people would agree on that. But when you’re working full time and you’re also trying to be a good parent and you’re trying to maintain a house and you’re trying to build these side things to get things going, yeah, it just feels like so many balls, but I don’t know, it just makes me excited. It gets me revved up to what the possibilities are.

Mindy:
Hello, hello, hello. My name is Mindy Jensen. With me as always is my way taller than me co-host, Scott Trench.

Scott:
Mindy, these intro adjectives are sometimes a little bit of a stretch.

Mindy:
Scott and I are here to make financial independence less scary, less just for somebody else. To introduce you to every money story, because we truly believe financial freedom is attainable for everyone no matter when or where you’re starting.

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 continue the aggregation of marginal gains in your financial position, we’ll help you reach your financial goals and get money out of the way. So, that you can launch yourself towards your dreams.

Mindy:
Oh, you missed a pun there, Scott. You could have said, “Wow, Mindy, sometimes I looked down on these intros.”

Scott:
Oh, that would have been a really good one.

Mindy:
Scott, I look up to you literally.

Scott:
Oh, these are fantastic. I have no witty responses today, my brain fog. Yeah.

Mindy:
Wow, a brain fog. Scott, you’re usually so confident.

Scott:
That’s not good for Deb, huh?

Mindy:
No, you’re fabulous with Deb today. I’m super excited to talk to Deb, because she is in a position that I think a lot of people are. They have discovered financial independence. They have made the changes, but they are not financially independent yet. When you first discover financial independence, what a lot of people do is, “Oh, I have to do it all. I’m going to cut everything out.” And then you add back and then you’re like, “Okay, now what?”
Well, now you’re in the part where it’s like, “Why is nothing happening? Why am I not a millionaire? Why am I not retired already?” Well, because you’re in the beginning of your journey. So, I’m so excited to talk to Deb today because she is where a lot of people are. Stay the course is the best advice that we can give. It’s not sexy and exciting, but it is what you need to do to continue on your journey is just continue on.

Scott:
Absolutely. Should we bring her in?

Mindy:
We should. Actually, before we do, Scott, we should talk about what our attorney makes us say. The contents of this podcast are informational in nature and are not legal or tax advice. Neither Scott nor I nor BiggerPockets is engaged in the provision of legal tax or any other advice. You should seek your own advice from professional advisors, including lawyers and accountants regarding the legal, tax, and financial implications of any financial decision you contemplate. Okay, for fun, let’s talk to Deb.
Deb is 44 and the mother of three teens, yet somehow manages to keep her grocery budget under $500 a month. I am jealous because I have one teen and I think I spend $500 just on her. She is obsessed with tracking her spending but worry that she won’t have enough for early retirement. Deb, welcome to the BiggerPockets Money Podcast. I’m so excited to talk to you today.

Deb:
Thank you for having me. I’m very excited to be here.

Mindy:
Let’s start off with your income, expenses, and debts. What is your monthly income roughly?

Deb:
It’s approximately $5,500 after taxes, after insurance, all the stuff that work takes out. So, what I see in the bank is about $5,500.

Mindy:
Okay. Is there any additional income?

Deb:
No, that includes child support. I was divorced a few years ago. So, I am working on bringing in extra income through little side hustles that I’m happy to talk about at some point, but at this point, it’s very marginal.

Scott:
Okay, great. Can you walk us through your spending? How much is leaving? What are the big buckets there?

Deb:
Pretty much everything is leaving because I’m giving everything a job. I’m making sure that every dollar is going somewhere. How it had been up until the last six months, how it had been was everything that was extra at the end of the month would go into emergency fund. Still working on that emergency fund, but at this point, the extra money is divvied up at the beginning of the month. So, that I have $500 automatically going into my Roth. So, then when all is said and done at the end of the year, I know that I’ve met my Roth requirement or my maximum on that.
Everything else, like I said, gets budgeted. So, there isn’t extra at the end of the month, but I’m definitely not living paycheck to paycheck, because that money is being allocated for things that are including emergency fund, including money that’s going into investments. Yeah, I want to make sure more than anything that I’m actually maximizing everything that I’m spending. I want to make sure that my decisions with what I have, which sometimes seems like very limited resources, are actually being used wisely.

Scott:
What do you use to track all of this?

Deb:
Right now, I use YNAB. I used to use the EveryDollar app. I found that for my overambitious self, YNAB gets into the nitty gritty a little bit better and tracks things a little better. And then I can set goals within it as well. So, YNAB is what I have been using, yes.

Scott:
Great. EveryDollar is from Dave Ramsey. Is that right?

Deb:
Yes, yes.

Scott:
I was going to say, could you just give us a quick history of your money story up to this point? Did you follow the Dave Ramsey baby steps, for example, to get to the point-

Deb:
No.

Scott:
… you’re at now?

Deb:
I didn’t. In fact, when I was married, it was paycheck to paycheck, which is funny, because we made about twice as much as what I’m bringing in now. But when I was married, I just knew that okay, we’re within our means. But at this point in time, anyone that’s had the joy of going through divorce, you have to come up with a nice budget to handle the lawyer to say, “Hey, this is what I need to make ends meet.” I just went off of that except I really cut off the fat of it with the money that I had coming in. So, I started the budget from there. I started it from a place of the high end. And then I started, “No, I can make do with this.”
By trimming that down, then that’s how I have the extra money to start stowing away into the emergency fund and start stowing away into the other things. I have had times where I have lived paycheck to paycheck. So, I’ve just always learned to how to be frugal to make it happen so that I can succeed. Now, I realized that I can be a lot more successful. When I first got divorced, I’m like, “Okay, my goal is to retire by 66.” Now, I’m realizing, “You know what? If I’m really wise, if I can do some little side hustles, if I can do some different things, then I can maybe even hit 60.” So, I’m trying to backtrack my years because I want to make use of the time that I have here on this earth. I want to make sure that I’m really enjoying things, but also maximizing every dollar that I get.

Scott:
Got it. I think that’s great and I think it’s an awesome goal. Obviously, we’re aligned on that being a great financial goal for you, early financial freedom and maximizing your time with that. It sounds like you’re saying every doll has a purpose with that. So, you’re moving it all very intentionally. How much is going to wealth building activities? You mentioned that you’re maximizing the Roth each year. You’ve got money going towards an emergency fund. What would you consider the wealth building accumulation on a monthly basis within your budget?

Deb:
Well, it’s actually around 20%, because I also do 10%. My work has a 403(b). So, I’ve been maximizing that, I’ve been maxing that out. Well, not maxing that out. That’s a misnomer. I’ve been meeting my match on that. So, it’s up to 10%. Unfortunately, it’s only 25% of the 10%. So, I’m getting the quarter for every buck that I put in, but it’s still free money. So, I’ve been putting in the 10% for work. And then the $500 a month that I put into my Roth is about 10% as well that roughly comes out to 10% of my income. So, yeah, I’m right at 20%.
If I have extra money at the end of the month, I stow it away in my emergency fund, but I have about $11,500. Yeah, you know what I mean? I’ve got just over $11,000 in my emergency fund right now. Ideally, I would like it closer to $25,000, but I also realize that retirement is coming whether I like it or not. So, I’m trying to put in early and put in as much as I can. It’s just not enough. It constantly feels like that time is ticking. It feels like it’s not enough. Unfortunately, I monitor my numbers very often. So, I’m like, “Okay, keep going, keep going.” I want them to keep going up.

Scott:
Nope, this is great. This makes a lot of sense. It sounds like you’re a very good steward of each dollar coming in and out and you have a plan here. There’s a sense of urgency around getting ahead with this stuff. So, let’s go through those assets next, your assets and liabilities. You have the emergency reserves. What other property or investments do you own?

Deb:
I have the house we live in. When we bought it, I think it was 260 we got it for. At this point in time, it probably is worth about 350 at this point in time. We’ve been here 9, 10 years. I owe 240 on that. The joy of going through divorce, much like the conversation you had recently with the gal who had gotten house with her boyfriend and then they had broken up. I just was listening to that yesterday. Mindy was asking with that, when you break up with somebody, how that works, you have to refinance. There’s no other way to get them off of the deed or off of the mortgage. So, that’s what I did.
I had to refinance the house. And then from the money that was taken out, I had to pay $20,000 to my ex to get him off of everything. So, unfortunately, I don’t have the equity in the house that I would otherwise, but if I were to sell it today, I’d probably still be up $90K. So, that’s not chump change. But unfortunately, I’m not looking to sell until my kids are out of high school. We’re at a really good location. In our area, the prices have gone up so much that at this point in time, I wouldn’t have any advantage to moving somewhere smaller, because it’s going to end up costing me just the same if not more.
Okay. So, assets and liabilities. So, I have two cars. I have the vehicle that I use for work. Obviously, cars can be just as much a liability as they are an asset. But I have a vehicle for my 19-year-old. I have a vehicle for myself. Both of them are old and paid off and running great, because I just put $1,800 in mine to fix it up, but those are paid off. I have no debts. I do travel hack my credit card, but that’s paid off every month. So, no debts other than the house.

Scott:
Awesome. How about investments? It sounds like you have a Roth and you have a retirement account through work. Can you tell us about those and any other investments?

Deb:
The Roth IRAs, as of last night, it was about $10,500. 403(b) has approximately $24,000. And then the IRA is right at $85,000. So, altogether, it’s about $120K. Not great, but again, it’s a start considering I had about $70,000 when the divorce went through. So, at this point, I switched over from a brokerage account on my Roth and my traditional IRAs. I switched over because I realized I was paying 60 bucks a month in fees for them to oversee it. I’m like, “Yeah, I got a Vanguard account.” I transferred it over, but I haven’t figured out how to change it to VTI, VTSAX yet, because that’s a goal for this weekend for me to go in.
Normally, I’m on my phone. Those type of transactions, I don’t feel comfortable doing on the phone when I don’t have the full website. So, I’m going to get on the computer this weekend and actually transfer those over. So, that I have at least the whole market index fund that I’m looking at as opposed to all these small ETF. I mean, it’s everywhere right now according to how it was transferred or rolled over from the brokerage. So, at this point in time, my 403(b) through work, like I said, I’ve got the 25% match up to 10%, if that makes sense. So, 25? per $1 up to the 10%. That one is one of those leveraged ones where it’s moderate risk or it’s generic.
I need to talk with a representative from there. But when I call the 1-800 number, you get somebody that really is clueless. So, about every quarter, every half, they have a representative that oversees our accounts that we can talk to. That’s on my to-do list. So, when the email comes through from work, I want to actually talk to people that oversee our accounts at work, because I would like to be a little more aggressive than the moderate accounts. Scott, I think it’s about 15 to 25% bond portfolio at this point. I’d really like to just move that all pretty much to index funds if possible.

Scott:
What I’m hearing here is you are incredibly disciplined. You know where every dollar is going, where every dollar is coming in. I guess, one of my questions is, how recent or how long have you been on this highly disciplined approach to personal finance? Was there a trigger moment? Where did this journey begin? I’m hearing intensity from you in this. I’m wondering where that came from and how long that’s been compounding for you here.

Deb:
Okay. Well, for one, it’s my nature to begin with. So, unfortunately, I’ve always had it. Maybe fortunately, as you may know, when you’re in a relationship, you are dependent upon what they spend as well as what you spend. It doesn’t matter who oversees the finances. You both are spending money. So, I’ve always had to have that intensity because of what was going out, the 20 years I was in a marriage. But when you are in a position where you are the only one providing 95% of the care for your children and you’re having to make sure that you are the best steward of your money to make sure that the mortgage is paid, there’s nobody else that’s there to catch you if you fall.
Thankfully, I have family that would support me, but I’m 43. I am independent. There’s no reason I should have to have additional in addition to what I’m already getting as support from my ex. So, yeah, I just always had that intensity. But when you have goals, when you can have control over the spending, because I’m the only one that’s really doing the spending, it really does give you more intensity.
It really does help me to focus and hone in and say, “Hey, here are my parameters for the month.” I’m one of those people that budgeting to me is not restrictive at all. It’s really empowering. It really helps give me guidelines as to what I have. I’m never opposed to moving things around. If we haven’t bought clothes for a few months but we need more groceries that month, I’m not opposed to moving things around.

Scott:
Deb, what I’m trying to ask is you’ve got a winning formula here. You’re bringing an income. You’re saving. You’re putting it into your Roth. You’re putting it into the tax deferred plan at work. You’re getting the match. You’ve got a plan for every dollar. You’re building the emergency reserve. What I’m trying to figure out is how long has the current state been compounding here? Because you’re feeling like you’re behind and all that stuff, but I believe that you’re on track to build a substantial amount of wealth over the next 10 years given your current state. We’ll certainly go and find ways to accelerate it on this call. What I want to get at is you’re feeling like you’re behind, how long has what you’ve been doing right now continued for? When was the divorce?

Deb:
Okay, divorce was about two and a half years ago. Okay, I started with the Roth maybe six months ago, because I realized I had been putting all that extra money into savings. There’s nothing wrong with that, obviously, but that saving’s interest is piddly and it’s not getting me anywhere. Just listening to you guys, just listening to ChooseFI, a lot of different resources that I constantly… I don’t listen to music in my car, I listen to podcasts. So, I’m just constantly having this feedback. Sometimes it’s really hard though to take that information from people that are like, “Yeah, I make $10,000 a month, and then I get the $60,000 bonus at Christmas.”
I have a really hard time translating that because that’s not for me. Like I said, approximately six months ago, I’m like, “Okay, what of this information can I take and actually use in my own life?” Yeah, I don’t have five properties under my name. Not that I would be opposed to that, but I’m not at that place right now. So, it was just reallocating where things went, because like I said, that money was just going to savings. I’ve always had this intensity though, Scott. I mean, as far as knowing where I’m spending the money, I mean, I’m a Goodwill girl. I love secondhand things. I love cutting back. It’s just my nature, but the actual focus though-

Scott:
I think I phrased it poorly with the intensity thing with that. I was just more thinking about, “Hey, you’ve been putting money into the Roth and the plan at work.” It sounds like that’s been a gradual process over the last couple of years but really picked up in the last six months with what you’re currently doing, where you’re allocating the accumulation of your income and your savings into a more intentional investment approach for FIRE. Is that correct?

Deb:
That’s correct. I’m thinking it was probably a year and a half, two years ago, I was exposed to FIRE for the first time. I heard that word. They were just using it very commonly. It wasn’t being defined in the podcast I was listening to. It wasn’t one of your podcasts, because you guys are pretty good about that. But I looked it up and was pursuing that. Through that process, I already had the 10%. The moment I started work, I started the 10%, because I knew retirement’s coming, whether we like it or not. It’s like living in the Midwest, and I know the snow is going to fall eventually. Same with retirement, it’s common. So, yeah. But the actual Roth stuff has been within the last six months.

Scott:
Yeah, let me just give you a framework here, because what I’m hearing is, “Hey, I feel behind. I’m doing all these things. It feels like things are going right. I feel like I’m moving towards optimization in my portfolio,” because you are. You’re doing it right in my opinion at a high level. We’re going to dig into the details and find ways to try to accelerate that, which is what we’re here. Understand that this journey is a power curve. You’re still in the early stages of it. You’ve just reset how you’re allocating your capital to the purpose of investing for retirement and building wealth. What happens here is it starts with a few $100 a month and then it moves up to another $100 a month when you get the next raise or promotion at work. That all drops to the bottom line.
When your kids are getting older, it sounds like, when they move out of the house, there’s going to be lower expenses there. You’re going to be able to bump that up from $500 to $1,000. Then it’s going to go from $1,100, then $1,200, then $1,300, then $1,400, then $1,800, and the next thing happens with that. That’s the journey. There’s no event that happens. It’s just a slog at first as you’re moving up that curve and applying more and more capital month by month, year by year to this. So, with your current rate, if you just sustain it and no changes happen, you’re like, “Oh, it’s going to be painfully slow.”
But what’s going to happen to you, I’m sure, if you continue on the current track, is that you’re going to realize that compounding nature over the next couple of years. It’s going to get accelerating on a compounding 1% better every month or 2% better every month deal, which will take place there. The question today is, how do we jumpstart that and accelerate that so that you’re getting a little farther ahead and that you’re compounding on a bigger number earlier? But I want to just point out that you’re doing great. You just haven’t had enough time so far to let that compounding happen. It takes six months to a year or two years to fully reset the position to jump that savings rate from 10% or 20% to 30% to 40% to 50%.
I think that that’s a phenomenon that you’re hearing about on these podcasts. People have been doing that for six years and have had that whole time to completely pivot their entire financial position in support of this. You just haven’t had that time yet is basically what I’m hearing from the journey. You’re doing everything right, though, from a strategic perspective. We’ll get into more of the details there. But Mindy, what do you think about that? Am I on the right track with that?

Mindy:
Yes. I love your mindset, Deb. I hear you saying, “I’m not at this place.” I saw a post several months ago that said, “Don’t compare the beginning of your journey to the middle or end of somebody else’s.”

Scott:
Yes, that’s it.

Mindy:
We’ve got a lot of people who are on the show, they make $120,000 a year. They live in their parents’ basement. They eat rice and beans every meal. They spend $12,000 a year and make $120,000. So, they’re able to save 99% of their salary. That’s not you. That’s not your circumstances. Don’t compare yourself to them. Your mindset is amazing. I have no extra money. I have given every dollar a job. Yes. Because when you don’t tell that dollar what to do, that dollar is going to go out and do it itself. I think I stole that from Dave Ramsey, but it’s not wrong. So, that’s a fabulous mindset to have.
You have no debt outside of your mortgage. Oh, spoiler alert. I’m jumping ahead. That’s amazing. What is it, 40% of Americans can’t afford $1,000 emergency? They can’t cover $1,000 emergency and you have no debt outside your mortgage. I don’t consider mortgage debt to be bad debt, because your mortgage is at 3.375. Again, spoiler, I already know this. But that’s a fabulous rate. My first mortgage was a 7% interest rate and I thought mine was a great deal.

Deb:
Mine was too. Yeah.

Mindy:
Yeah. So, you’ve got a great rate. You just said that you put $1,800 into your car. You know how much a new car costs? A whole lot more than $1,800. So, I love that you put more money into your car, your existing car, instead of saying, “Oh, my car needs $1,800 worth of work. I’m just going to get a new one.” Well, you’re not going to get a new car for $1,800. You’re certainly not going to get a good car for $1,800.
Also, side note, you have a Honda Odyssey. I have a friend who is obsessed with the Honda Odyssey. So, if your door ever gets lumpy, hit me up, because I can connect you with him. He has a fix for it. It’s very cheap and you can do it yourself. But aside from that, you said, “Budgeting isn’t restricting at all. It’s really empowering.” Yes, you win. You have won. Just like Scott said, you haven’t had the time yet to super win. That’s okay, because you’re going to super win.

Deb:
I think the issue with that is I read too much. Sometimes by reading, you find out, “Okay, well, if you want to retire in this amount and you have this amount, everything shows me that I need to be closer to a 50% savings rate for investments.” So, I know that. So, this 20% feels very, very minimal. I mean, when I look at that 20%, I’m like, “Man, that’s pretty dang good considering all things.” Yeah.

Mindy:
It is. It is.

Scott:
It is great. Those articles are right, right? So, that math is correct. You do need to get to a higher savings rate. You’re doing a great job right now with that, right? But that’s what I’m trying to get us to zoom out. Think about a three-year picture, right? I mean, we might be able to do some things on this call hopefully to continue to… But this is an aggregation of marginal gains, right? That’s the thing that’s going on here.
That’s what you’ve probably been doing the last couple of months is figuring out how to aggregate those marginal gains, get tight with the budget, really move those things into the Roth. You just need another two, three years to compound that and you will get to that 30%. You will bump from 20% to 25% to 30%. I know it based on our conversation right now with this.
When your kids are in college or out of the house, that’s going to be another 5, 10% that’s going to drop your bottom line. So, you’re saving at 20% now, but this is a 5-, 10-year plan to get to FIRE, right? So, you don’t need to be at 50% right now. You need to get there and maintain it on a consistent basis over time. That’s the strategy, I think, that we bring into play here with this. You’re going to be in great shape with that based on what I know about you for the last 30 minutes here, I guess. So, I’m very optimistic about that.
So, I think what I’m trying to say is they’re both right. Yes, 20% is great. If you want to FIRE, you do need to get up to 50% or you have to find a way to create an asset or get better investing returns or something. Those are the levers, right? You have to earn more, spend less, invest the difference, or create an asset in order to FIRE or hasten FIRE. Okay. Well, any reaction to that first before we get into the details here?

Deb:
Yeah, I completely agree. What’s funny is peace of mind that I have about my finances really helps me to sleep at night, but the things that keep me up at night is the idea strain. It’s not even the stress of it. It’s just, “Okay, what can I do?” Because I’m constantly looking for more things. Unfortunately, I think I’m limited most by my energy and my time. I think most people would agree on that. But when you’re working full time and you’re also trying to be a good parent and you’re trying to maintain a house and you’re trying to build these side things to get things going, yeah, it just feels like so many balls, but I don’t know. It just makes me excited. It gets me revved up to what the possibilities are.
Unfortunately, my window is closer to 15 years as far as looking at retirement. So, it’s better than the 5 to 10 you mentioned, but I’m just trying to optimize everything that I’m doing. That’s precisely why I’m here. I’m also here with you guys today, because I really want to be able to get ideas going for people that are more in my situation that hopefully, it can be an encouragement to them what you have to say, so.

Scott:
Absolutely. Well, maybe let’s start with expenses here, because that is something you have the most control over. Do you think that’s a good place to start, Mindy?

Mindy:
Yeah, I would like to see because I think there will be some opportunity to cut some and then you can put that into your retirement bucket and increase your savings rate without feeling too much of a pinch. So, let’s start with the big one. What is your mortgage payment? What are you paying on it?

Deb:
Actually, it’s like 15 below $1,700. I pay $1,700 every month that includes all the insurance and everything. Yes, it’s escrow complete.

Mindy:
Yeah, principal, interest, taxes, and insurance. Okay.

Deb:
Yes.

Mindy:
When was the last time you shopped around your insurance quotes?

Deb:
I did last summer, and everything was comparable. Everything was within a few dollars. I always do the two together. I always do my car insurance with my homeowners to get the bundled rates, but I definitely can do that again. It’s hard for me to want to do that though. Because when I had to have my $18,000 roof replaced for $500 last year, when I had that done, my insurance was really, really good at working with me to get it done. Other people were having a lot of problems. So, it’s really hard when you have really good customer service to want to change, but I definitely can shop that around.

Mindy:
Okay, I have a question about that. You said an $18,000 roof for $500. Was the $500 your deductible?

Deb:
Okay, the deductible I have on it is $1,000. That’s pretty common around here. Most people have $1,000 deductible on their homeowners insurance. There’s some of the things that they were reimbursing us for that I did myself. So, I was able to actually make it so that when I actually had out-of-pocket expenses, it only was $500, because I had done a lot of the work myself on some of the siding and stuff that needed replaced.

Mindy:
Okay. I would say when you go to requote your insurance, ask for quotes on a $2,500 deductible and a $5,000 deductible, because in many cases, those will drop your insurance rates significantly. I think we have a $10,000 deductible on our homeowners insurance and my insurance rate is really low, but I also have that $10,000 deductible easily available. If you don’t have $2,500 available for your deductible, then don’t get the $,2500 deductible, because that’s when a meteor hits your house or something and then you need a new roof and you have to come up with the deductible.
The same thing with your car insurance, I’m not sure what your car insurance deductible is. But as you raise the deductible, the monthly payment comes down. In some cases, the monthly payment is hugely reduced. You can just take the extra that you were paying towards the insurance and put that into an account to make up your deductible reserve. So, those are two things I’d like to see.

Deb:
That’s precisely what an emergency fund is for-

Mindy:
Exactly.

Deb:
… as well. I wouldn’t be able to swing the $10,000, but I definitely could do $2,500 or look into $5,000 just to see what differential we get between those policies.

Mindy:
Yeah. Again, if it’s $2 difference, go with the lower deductible, but I think it’s going to be a significant reduction. I hear what you’re saying you want to be loyal to the company that was so good to you. If the rate is comparable with other companies, then absolutely dance with the guy that brought you. But if they’re significantly different… Where did I hear this from? Clark Howard. He’s like, “Yeah, you should definitely requote your insurance every year because they aren’t rewarding you for loyalty.”

Deb:
They aren’t.

Mindy:
“So, don’t reward them with your loyalty.” So okay, let’s move along. Groceries, I don’t even need to look at. $500 a month for four, including three teenagers, is amazing. Eating out?

Deb:
I have $150 on that. Sometimes I end up taking money from the grocery budget for that. We don’t eat out much at all.

Mindy:
Okay, I think your food expenses are pretty dialed in.

Deb:
Yeah, that one, actually, most of it unfortunately comes from the fact, I’m a home health nurse. I’m out away from home, no access to microwave or anything all day long. Unfortunately, fast food is all too readily available. So, a lot of that is $3 here, $6 here. I do also once a week or so, sometimes twice, go pick something up for the kids, especially on nights I have charting to do or anything else.

Mindy:
Okay, that is understandable. I’m not going to ding you on that. Let’s talk about your car expenses.

Deb:
Okay. Well, the cars are paid for. I have a car for my 19-year-old who is working full time as well as going to school full time. Those are both paid off. My car insurance, I believe that’s $500 deductible on that. It may be $1,000, but I think it’s $500. It’s $110. It used to be $120. But with COVID, it went down to $109 a month on insurance for those two vehicles. Like I said, the vehicles are paid off. I pay maybe $250 a year for plates, for tags on those. Gas prices are high not because gas is so much high, but because between my daughter going to and from school and work. And then for myself, I drive for work. I do get reimbursed for that, but I don’t differentiate what I pay out on gas versus what they reimburse me or in my check.

Mindy:
Are you reimbursed 100% or 55? a mile or whatever it is? How do they reimburse you?

Deb:
It’s nowhere near that. They don’t even reimburse us what the federal rate is, but we aren’t allowed to deduct once they reimburse us. So, I can’t get a deduction on my taxes on that. I’ve already checked into that, but it is still substantial more than what I pay per mile to drive. So, I haven’t looked at my pay stub recently to see what it is. But we do get reimbursed in our paycheck every two weeks for the miles that we drive.

Mindy:
Do you keep track of those miles, or do they just give you a set amount?

Deb:
No. When we log into our patient’s account, they keep track of what time we stamped in and they do Google. It automatically is figured out from patient X to patient Y, how long or what the closest mileage is. So, it’s all factored in based upon when we log into chart.

Scott:
I don’t know the answer to this one. My belief is that you should be getting reimbursed for the federal rate for every mile driven at work or there should be some other way for you to recoup that. I don’t know the answer to that, though. This is a new framework for me. So, I would wonder if we could crowdsource this in the Facebook group and see if anybody has some ideas or answers to this?

Mindy:
Yes, I was wondering that as well, Scott, because it’s the federal reimbursement rate. It’s not the whatever your company decides to reimburse you. I’m going to reach out to some HR people that I know outside of this call. I’m going to ask all of you listening to this, if you know anything about HR and reimbursement on the mileage, I’m not saying that your company is doing anything wrong. I’m just saying it sounds a little weird. I don’t have any other information. So, if you know about this, please comment in the Facebook group. We’re going to post a note up at the top of the group, which is facebook.com/groups/bpmoney. Let’s see if somebody can help us out with this, because that sounds a little weird, but I’m not sure.

Scott:
What are the stakes with this? How many miles do you drive in a week?

Deb:
Not tons. It’s like 150, 200 miles a week.

Scott:
That’s 75 bucks a week that could be coming in.

Deb:
I have colleagues that drive a lot more out in the country where the houses are much more spread out in their territory. We addressed this with HR and with our higher ups last year. We have a very big medical organization that we’re a part of. Actually, they decreased the amount that we were getting last year. It had nothing to do with COVID. It was before COVID. So, yeah, big things have been made about it. So, yeah, I would love to hear and see what other people are saying and doing.

Scott:
Yeah, there’s something there. You gave us a really comprehensive list of all this stuff, but do you think there’s any places we should go hunting inside of your expenses for opportunity, or do you think that those other things are buttoned up there? We should move on to investing or career, that stuff, side hustles.

Deb:
I honestly don’t know. I really do button it down pretty quick. I think a lot of my expenditures are very minimal, even with clothing and stuff like that. Most parents will tell you, to do $75 to $100 a month is very minimal when you’ve got four bodies to have clothes on, but as I say, there’s always opportunity for decreasing. I think just by checking in, like you said, with the deductibles, that may be my best place to start. Unfortunately, everything else, I’ve mostly trimmed the fat on. I’ve trimmed it pretty good over the years.

Mindy:
I have a couple of questions about your expenses. Well, okay, so first of all, this is just a question. You said your daughter works full time and goes to school full time. You’re paying her gas and her insurance. What is she doing with her full time money?

Deb:
Going to the dollar store. I mean, she’s very frugal as well, but that is one thing that she and I have talked about. She’s not home enough for me to have the in-depth conversation, but I’m really wanting her to… I actually have the account opened for her. We just need to make it happen. … look at investing about half of that. I’d really like to see about 50% of her income go into a Roth. But I’ve also talked to her about starting to pay half of her gas and then paying for her entire insurance. It’s not much.
It probably come out to probably $75 to $100 a month, but one that would take the burden off of me, but then that would also be money that I can optimize and put back into my own retirement. She’s more than agreeable. She’s like, “Okay, mom, what do you want me to give you?” Because she’s not at a place where she’s paying rent or anything like that. So, it’s not a big deal for her to just give me the money. She’s a good girl anyway.

Mindy:
Don’t let her listen to this show, because she’s going to hate me. But instead of having her reimburse you for the funds, she can just pay for that. I’m talking about gas. Oh, you need gas, go to the gas station, pay cash for your gas or put it on your own credit card and pay that off every month. So, she can get points too. I mean, she’s 19 years old. When I turned 16, my sister and I are really close in age, we went from two drivers to four drivers.
So, my parents bought us a Chevette, which is not the dream car of anybody on the planet. They paid for the car. We had to pay for absolutely everything else, gas, insurance, repairs, anything for that car. We split it 50/50. If we didn’t pay for the stuff, they would take away the car. That taught me a lot of things, but it taught me that I have to foot the bill for my own driving pleasure, because I did want to drive. I was very excited to drive. I had to have my freedom.

Scott:
To add in that, I don’t know what I don’t know about parenting situation and all that stuff. So, I don’t want to give any parenting advice. But as a general theme, I think that over the next couple years, it’s likely that your kids will move out and become independent adults. That process of slowly offloading these expenses for their lives will be the art, I think.
I don’t know what the right move is there as a parent, but that is, I think, going to be the huge component that will accumulate over the next several years, I think, in your financial position, allowing you to save way more money. Again, I have no idea what the right answer there is, but it sounds like you have a great philosophy on how to handle that and a great relationship with your kids to handle that. So, I admire that and I don’t know the answer, but I think that in general, that will be the biggest thing that will happen to your savings rate over the next couple years, I’d imagine.

Deb:
My younger two, just to clarify, they are right at 12 and 13. So, I mean, unfortunately, I still have a number of years with them. But with my oldest, for sure. I definitely, like I said, can optimize her experience into adulthood. She’s willing. She really is willing. She’s living at home. She’s got everything provided for her. Anything she spends money on is just for kicks and giggles or to feed her sugar addiction. So, yeah, she’s willing to do those things. I had her open up her own bank account, and she’s been using her debit card.
I’ve for two years been handing her Discover Card things. I’m like, “Just fill this out, get this sent it.” So, she is on my credit card. I didn’t know that she was going to be getting good numbers off of my 800 plus credit score. But apparently, they told her at the bank when she opened it, they’re like, “Your credit score is really good.” So apparently, she’s been getting credit off of mine. So, she’s definitely in a position of power as far as that’s concerned for being able to start from a good place.

Mindy:
Yes. I would actually go ahead and open up a separate card with her, if you haven’t already. Although she has the 800 credit score. One of the factors in your credit score is your length of credit history. So, she should open up a credit card that she doesn’t just run up and use it sensibly and all of that, but open up a credit card and leave it open forever. It doesn’t have to be a great card, but it could be a great card. Why get a crappy card if you don’t have to?
Episode 311 just came out from ChooseFI. That’s the updated travel rewards episode. Brad started off as a travel guy. He loves travel rewards. I have not listened to it yet, because I don’t have any big trips that I’m planning, but you have a trip that you’re planning. So, why pay for it if you can use some of these miles to help pay for it or even put it all together? That’s another bunch of money that once that trip’s over, all that money that you’re saving for that trip will now be able to be invested.

Deb:
Except then there will be another trip.

Scott:
I think we should move on from the category of your budget and your expenses all together here, because I’m gathering a picture of a very tightly run household that is very well disciplined with the budget. You probably got some puts and takes there, but you are accumulating those marginal gains, aggregating those marginal gains month by month, it seems, through your management of household finances there. I just wonder if we’re going to be able to give you much in the way of advice besides a couple of 1 or 2% incremental gains here, which I think is awesome.

Deb:
Which is huge at this point. Yeah.

Scott:
Yeah. Okay. Again, there’s four levers here, earn more, spend less, we just covered spend less, invest the difference or create assets and side hustles. So, where do you smell the opportunity in those other three areas?

Deb:
Okay. So, as far as side hustles go, I have two business ideas that I have started to work on. Well, as you know with anything, you can really only focus on one big thing at a time or so it feels. I am working on starting up a blog business that’s actually for people in similar situations as I am, but those people are living more paycheck to paycheck type situations. So, I’m working on that. Unfortunately, I’m at the part of it though, where you’re having to invest just to get things started up, going through some education on blogging and all of that. So, I’m at the point where I’m paying so that I can start getting it up and running. But once I get that up and running, Mindy, I talked to you about my idea to do an app regarding some memory processing, storing. Yeah, it’s hard to explain.
So, I have a couple of business ideas. That’s what it all comes down to. But I’m working on one of them, because that’s all my time and energy will allow. But as an additional side hustle, because I love garage sales, because I love Goodwill, things like that, I like to find things that I can resell for two or three times as much. So, for example, in the Midwest here and in Colorado, you need snow pants. Kids need snow pants. They need new sizes every year. So, before it gets cold, I go through the local Goodwill’s and everything else and I find ones in mint condition. I buy them up, and then I sell them for two or three times as much on marketplace. For snow, everyone’s looking for snow pants. I can at least optimize that.
I’m not by any means somebody that’s going to be buying the big things and shipping them off. I just don’t have time to deal with shipping for the bigger items, like the Flea Market Flipper and people like that are able to do, but I can do it on a small scale. That’s something I’m trying to teach my kids how to do as well, just to see how easy it is. If you’re already at the garage sale anyway, you may as well invest a little bit of your money and looking through video games and reselling them. So, those are just things I’m doing to optimize. Go ahead.

Scott:
What I’m hearing is you’ve got ideas on how to earn extra money that is very high dollar per hour, like this reselling stuff, and you’ve got ideas for the creation of businesses and assets with that. To me, that says a couple things. One, you just don’t have that much in the way of assets that are liquid outside your retirement accounts to invest right now. So, there’s not really a lot of opportunities to invest. There could be a house hack theoretically, but that’s probably unlikely in your situation given the fact you have three kids at home and all that stuff. But it sounds like your career, you have like a track there that is pretty clear. It’s not going to explode your income over the next couple years.

Deb:
No.

Mindy:
Is there any opportunity to get a new job?

Deb:
There always is, but with nursing, you’re very much within a niche market. If I was single and I could do travel nursing or something like that, didn’t have kids, that may be a different story. Again, with nursing, my raise is maybe 30? a year. That is not an area that I’m going to get rich quick in, but the benefits are amazing. I think $390 a month for really good insurance pre-tax. So, all of those things are covered.
So, even though I don’t make great money, I’m also not paying out for really high insurance premiums and everything else. I am not hesitant to take my kids to the doctor or anything like that. So, there is that possibility. In the ideal world, I would like to get to a point where I can work four days a week instead of five. So, that I can have more of an opportunity to work on things that are going to have higher growth potential. I think that is more likely.

Scott:
So, my belief based on what you’re saying here is that your emergency reserve is the biggest thing you can be focusing on now from an investment perspective paradoxically. That’s only going to earn 0.1% interest, but that’s going to give you a heck of a lot more comfort to invest in your ideas one by one and you’re going to feel much better about a four-day workweek, for example, with three days now to focus or two days, whatever much extra time that brings you to focus on your next business idea, which could be a higher probability way to have a shot at that.
It’s going to lower your run rating all things considered, but it will give you a chance at that big growth opportunity. So, I think that that actually upped the stakes for me for rounding out that emergency reserve to a very, very comfortable number, that clearly six months maybe to a year number, if that’s where you smell the opportunity to potentially earn more. The second framework I’d give you is 9 out of 10 businesses fail. So, to me, that means you try 10 businesses. So, how do you try 10 businesses? Well, you do maybe one every 90 days. You come up with a 90-day plan to really flesh out your blog. You make sure you commit to it every week, the key actions to move that forward.
So, here’s a framework for you. You want to do a blog, right? So, you need content for it. That’s going to be the biggest blocker, right? Why not come up with a book outline for that blog? It’s 15 chapters or 13 chapters, because there’s 13 weeks in a quarter. You write each chapter for the book. You release each one to the blog and then you’ve got an e-book completed by the end of it that you can just aggregate into a book with that. So, that would be one way to double task or condense your work into a one-quarter timeline. You see if it works. Maybe no one reads it. And then you shut it down and wind it down. The point of writing is to be read, right? The point of podcasting is to be heard. So, you would try that out.
And then you would know whether it’s time to quit or double down for another 90 days on that. If you think about that, for two and a half years, 10 quarters, you’ve attempted or scaled 10 of your ideas. Nine of them will fail and one of them will succeed if you’re at all close to the average there and you only learn a lot. But that becomes a lot more accessible to you with a fully funded emergency reserve and a four-day workweek. So, to me, that’s the beginnings of a strategy there were yeah, the investment returns on that are horrible. It’s not going to look good in your Excel model for financial freedom, but it could afford you the chance to get lucky or the chance to have that speed moment coming for you outside of the traditional workplace. Any thoughts, reactions to that?

Deb:
Yes. Thankfully, I’ve already had some businesses fail.

Scott:
Oh, good, perfect. So, you’re closer to one out of ten. Yeah.

Deb:
Yes. So, my numbers are very minimal. Thankfully, those were in MLM situations and those are out of my system now. So, yeah. So, now I can just grow things that I actually have a lot of passion in and a lot of actual buy-in. Whereas before, I had to find the passion and buy-in. So, when you’re doing your regular job and you feel like you’re passionate about it… I mean, it’s obvious, Scott and Mindy, that you guys are very passionate about your jobs. Same with me with nursing, it’s definitely the career I went into, because I love what I do. Believe me, there’s aspects of it that I cannot stand.
But when there’s passion there and the same with business stuff, when I’m doing my passion job during the day, I’m constantly thinking about what I’m going to be writing that night or what technical aspects I’m going to work on my website or those type of things. When you have that kind of excitement, it’s excitement I never had before with anything else I’ve tried. It’s going to take a lot to keep me from reaching my goal. It’s wanting to retire early. Yes. If I have to go to 65, I’m going to go to 65. I’m going to do what I have to do. I don’t want to stop until I’m there.
But the same with the business ideas, I am not stopping until I reach my goals. If I have to tweak it 20 times, I’m going to. Ruth Soukup, who has a blog empire, she is always saying, “I’m going to throw spaghetti at the wall until something sticks.” I’m going to. It’s just my nature and that nature has become more inherent over the last few years, because it has to be. I have to be stubborn, even if it means I’m getting five, six hours of sleep at night, which most nights, that’s what I’m getting. I’m going to do what it takes to take care of my kids and to pursue my passions.

Scott:
Absolutely. I love that. I admire the passion on that. I just want to say that the financial component that impacts this is, I think, your emergency reserve. I think it’s too small right now at about two to three months of reserve. We’ve identified, “Hey, in order to achieve financial freedom in 15 years or 13, whatever it is…” If you save 50% of your income and invest it on average, you’re going to get there in 15 years. Is that what you’re coming back to with the savings rate? Yeah. So, okay, great. We can get there by just aggregation of marginal gains, I used that term too many times this episode, like the way you’re doing.
You should continue doing that, but I think that you’ve got a fair shot, potentially, if you round out the emergency reserve and use that and feel the power of that, whatever that number is for you, whether it’s 6 months or 12 months to move to four days a week or to try to invest or automate a few parts of your business at certain times. Maybe you’ve got a better shot at increasing that cash flow sooner and faster with one of your many ideas that you’re clearly passionate about and working on. So, that’s the return of the emergency reserve that you can’t put into your model again and all that.
So, if you’re looking for a capital allocation with money you’re saving, that might be something to consider is finding ways to put more in there, maybe at the expense of some of the other places you’re investing or some things in your budget with that. So, that empowers you to have a crack at some of these ideas. I don’t know, but that’s what I got there on that one.

Deb:
No, I think that’s great. It seems mind blowing, but I think that I can get that emergency fund up just by having my daughter pay her insurance and part of her gas. I mean, again, those seem like such minor things. In most budgets, they are. In mine, it’s not to get that extra $100 a month, in addition to scouring my insurance companies and seeing with a higher deductible, where we can go with that. That may very well free up a few $100 every couple months to the point that yes, it’s very incremental increase or very small increase over time, but that’s what finances are, that’s what savings is about, is making those small changes to be able to make a big difference in the long run.

Mindy:
That’s exactly it. These small changes now will have a huge impact down the road. It doesn’t seem like a big deal right now, which is the best part. It’s not like you have to cut out everything in order to get there. You just have to make small little tweaks. As you make the small tweaks, you’re like, “Oh, I could tweak this, too. I could tweak that, too.” I mean, your expenses really are dialed in. I’m super curious about that reimbursement on the mileage thing.

Deb:
Yeah.

Scott:
I come back to the whole thing we discussed earlier of you’re feeling behind on this, because you just started in a sense on this six months ago. It’s probably been a power curve. You probably got started two and a half years ago in a more formal sense, but you really kick started this thing in the last six months. You’re already at a 20, 25% savings rate, because you’re putting that money in there and putting some towards your emergency reserve every month. You’re going to move up from 25% to 27% to 30% to 33%. It’s going to be a month by month, six months to a year, bit by bit journey with that as you get little raises and as you find ways to sell snow pants right before the winter and as one of your business ideas eventually generate some income that you’re working on with that.
So, I think you’re in really good shape. I think your frustration coming into the call today was that you’re not seeing that curve and how that journey will take you over the next couple of years. You’re seeing where you are now. If you model that out as a static position, the situation doesn’t look good over 10 years with that. Don’t think about linear growth. Think about exponential growth over the next three to five years and then work every day, every week to just compound that by a 10th of a percent or 1% and get a little better.
This week, I’m going to call the insurance company and I’m going to do whatever it is next for the writing or the technical aspect of the blog. Boom, that’s 1% better that week. Now, you’re at 26% savings rate. Then you do it again the next week and so on and so forth. That is the journey that we’re on here. You’ve done the hard reset. Now, it’s the grind that you’re in for. Go back and look at some of those people who plotted those journeys out over the last couple years. You’ll see that power curve that I’m talking about where they do a jump, a lot of folks, and then it creeps up over time to that ridiculously high savings rate that these FIRE bloggers could.

Deb:
I would probably be better off, which sounds like a silly thing, further along, if I wasn’t willing to live a life. So many people that I see within the FIRE community, they’re younger, so they have a little bit more of that runway to be dealing with, but they are like, “Okay, I’m going to do without…” You talked about people living on rice and beans and that stuff. I’m at a point in my life, where I’m like, “You know what? I’m going to travel.” There are some things that aren’t negotiables for me. We went to Lake of the Ozarks and stayed in Airbnb for a week with my kids over spring break. We needed to get away. We needed to do something, but I make sure to have that money saved.
It’s a part of the budget. It’s not excessive amounts. But I think that it’s really important that I’m still living my life while I’m headed to that future point. I don’t think it affects me in huge amounts, but I know that I’m still going to get to my destination eventually. I’m just hoping that, like you said, the build-up and everything else is going to get me there. But I’m definitely living my life while I’m headed that way. So many people would think that having a tight budget doesn’t get you to where you want to go, but I still get to do those fun things and enjoy my life along the way.

Scott:
I’m unconvinced that we actually were able to help you advance your financial position dramatically on this call with this, because I think you’re doing such a good job as it stands. Let me ask you this. Did you get value out of this? Was this helpful?

Deb:
Yes.

Scott:
Were there some new frameworks around that? I don’t think we found lots of savings.

Deb:
No.

Scott:
I don’t think we found lots of income opportunities. I think we just gave you a couple frameworks and let you know, you’re doing a good job with this. It’s just you need more time.

Deb:
I think that you guys have, for sure. Because even the things that I had thought of already, it’s nice to have reassurance from somebody that knows what they’re talking about for entertainment purposes and such. Yes, it’s nice to know I’m headed in the right direction. As a single mom that doesn’t have really anyone to bounce it off of, it’s good to know that I’m headed in the right direction. Yeah, the few things that were brought up, I think that just as with savings, it’s going to be huge for me. A hundred extra bucks a month is 100 extra bucks a month. If I can free that stuff up, that’s going to help me get ahead that much quicker.

Mindy:
Awesome.

Scott:
Great. Well, I’m glad it was helpful.

Deb:
It was.

Scott:
I was just like, “Man, we weren’t able to move this.”

Mindy:
You’re a terrible hype man, Scott.

Scott:
Yeah. I was like, “No, she’s doing it right, I think, for the most part.” I would be really interested to hear your story in a year or two from now after you’ve kept this up and continue to compound what you’re doing with this. I wonder if you’re feeling completely different at that point. So, I’d be really interested to hear that and see what happens there. Maybe we can stay in touch and learn about that.

Deb:
For sure, for sure. I’m one of those people that when I have an idea, I will be contacting my insurance company this afternoon. I mean, it’s just one of those things that I can’t sleep on an idea when I have it. It needs to be executed. So, yeah, changes will be made. I’m excited to check back in with you.

Scott:
Awesome.

Mindy:
I’m super excited for your little thrift store flipping operation, because right now is when everybody’s getting rid of stuff. So, snow pants, look for good jackets and snow boots. I mean, people are going to need those. Stuck up all over the summer. Just stick them in a box underneath-

Deb:
We’ve got basement.

Mindy:
In the basement or whatever.

Deb:
Yeah, yeah.

Mindy:
Stick them in a box in the basement and keep adding to them. You’ll need so many boxes. Then you can start listing them as soon as it gets cold outside. I love that idea. I might borrow that myself.

Deb:
Yeah. It’s not even just that. There’s so many different things you can pursue. It’s just a matter of, “Okay, what do I know anything about to know that I can make even a few extra dollars of?”

Mindy:
Yes, what do I know anything about? There’s a lot of stuff I don’t know anything about. I hate video games. I’m sorry to all of you, gamers. I’m sorry to Scott who loves them. That’s going to be his plan when he retires. I hate video games. I don’t care about them. I don’t even know all the different types. I am not going to be good at flipping video games. So, I shouldn’t even try that, but I’m great at snowboards. I used to do that.
I live in Colorado. I go up to the mountains. I hit all the thrift stores up there, because this hurts me, people will fly in, buy all new stuff, ski for a week and leave it all here and fly home. I first of all can’t fathom that wastefulness. I’m super thankful because it’s like 15 bucks for a snowboard. A Burton Snowboard in the mountains’ thrift store is 15 bucks. I could sell that for $75 on eBay. The problem is-

Deb:
Exactly.

Mindy:
… I got to ship it on eBay. But that’s something I know. So, yes, I love that comment. Do something that you know about. Absolutely.

Scott:
Shipping seems like a great job for a 12 or 13-year-old.

Mindy:
It’s really expensive.

Deb:
My son knows video games. That’s what his focus will be when we’re garage selling the summer is that he’s going to be and I’m going to teach him how to look up what things are going for online. Mindy, you may not know much about it, but you also didn’t know much about flipping houses and everything else. YouTube is your friend as is just looking stuff up. I was going to say as with anything else, you learn. We came into this world knowing nothing and we sure as heck know a lot more now. So, you make do and you figure things out. The return on video games, if you can buy a video game for two or three bucks at a garage sale, oh, my gosh, you can sell that thing for 20 or 30 on eBay, because people are looking for… Those remotes, too. … games that are hard to find.

Scott:
I bought my brother one of those actually for Christmas last year. I had to drop 45, 50 bucks for an older game that he wanted.

Deb:
Exactly.

Scott:
I’m a buyer of that.

Deb:
Yup, we are too, unfortunately. Remote controls go bad all too quickly. In fact, I’m sitting on my son’s gaming couch right now. So, yup.

Scott:
I love it.

Deb:
Very good. Thank you guys so much.

Scott:
Well, Deb, this has been absolutely fantastic. Thank you so much for sharing this. I think this was a wonderful episode. Again, I just want to summarize. I think you’re doing everything right. You just need to let time compound and keep attacking the way you are, keep living your life. But you’re going to benefit from the compound growth, not just in your investments, but from your activities. Your cash flow is going to increase slowly but surely, not every month, but on average pretty substantially, I think, here over the next couple of years.
I’m excited to see how that plays out for you, because I think that the way you’re feeling right now is just you got the FIRE bug. You’re trying to optimize, like all these other people, but you can’t right now because of your current situation. Just think ahead over the next three years and how that’s going to evolve. You’re going to be in great shape, in my opinion, if you keep it up.

Mindy:
Yeah, in my opinion, too, I think it’s great. You’re doing awesome, Deb. Thank you so much for sharing your story with us, because I know there are people who are in a similar situation. Like I said before, your journey, where you’re at right now, you’re doing amazing. You are head and shoulders above so many other people. Don’t compare yourself to the people who happened to be ahead of you, had different circumstances, had different jobs, had different everything. Their journey isn’t the same. So, their result is not going to be the same, but you’re doing fabulously. I’m super excited for your journey. I do want to talk to you in 6 to 12 months again and see how much more you have saved up.

Deb:
Very good. I’m excited about it. I was going to say when you have an excitement, when you wake up every day for not only what you do but for what the potential of the future is, it’s a good thing. Again, I’m not where I want to be yet and I have dreams of where I want to be, but I’m not giving up. I’m going to keep going.

Scott:
Awesome.

Mindy:
That’s awesome. You’re going to kill it. Okay, that was Deb. Scott, what did you think of Deb’s story? Oh, you know what? I don’t care what you think of Deb’s story. I have to yell at you first. Don’t tell everybody, “Oh, I don’t think we helped you.” I think we did help her. I think it’s really helpful to hear that you’re doing a good job from somebody who talks to people all the time in this position.
I think Deb is doing an excellent job, but like I said in the beginning, she’s in that holding phase where you just have to keep going. In the beginning, it is… What is it, the hockey stick growth? In the beginning, it goes like this and then it starts to jump. But the beginning is really, really, really sluggy and boring. That’s okay. It still has to happen in order to get to that hockey stick growth. So, shame on you for saying we didn’t help. I think we helped a lot.

Scott:
Okay. Yeah, I think we ended up being helpful. She seemed to feel that we were being helpful with the mindset types, everything. I was just disappointed that we didn’t find any magic wand moments that would help her increase her savings rate. The reason we couldn’t is because she’s doing a good job. When you are a single mom with three kids and you’re making $5,500 a month as a nurse, I get it. What else can we really do here at the end of the day to turbocharge the financial position? The laws of financial freedom are you have to increase your income, you have to reduce your expenses, you have to invest your accumulated assets to higher and better use, or you have to create assets. Those are the four levers.
They don’t have mercy on your situation, if you’re a single mom or if you’re a 22-year-old single guy like I was buying my first place, right? There’s clear advantages that I had at that moment in time with a very similar income to her. I was able to just save way more, right? So, those are just ways that the situation differs and why it’s harder in different circumstances. The frustrating part for her, I think, was that she’s just getting going on this journey to financial independence.
She’s doing it all right. She’s saving at a good clip. She just hasn’t had the time to allow all of these changes that she’s making to compound. I think she’s going to move farther and farther along that continuum over the next couple years, which is why I was asking her, “How long have you been going at this with this intensity?” It’s only been a couple months with that or a year or so.

Mindy:
Yeah, like I said at the episode, don’t compare the beginning of your journey to the middle or end of somebody else’s. I didn’t make that up. I got that from somebody else. I wish I knew who so I could give them credit, but that’s really, really brilliant. Don’t compare yourself to anybody else who has not got the same journey, the same curveballs that life throws at everybody. There’s different aspects to everybody’s situation. So, you can’t expect to have a completely different experience and end up with the same result or at the same time.
So, I’m super excited for her. In a year or so, we’re going to follow up with her or check back in, not follow up as though we’ll never talk to her again. Check back in and see where she’s at. I think she’s going to be having a fully funded emergency fund and saving a lot more for retirement and doing all this wonderful travel and still being able to live her life and do all the things. She’s going to make it to retirement and just love the life that she had on the way there, which is so important.

Scott:
Absolutely. Should we get out of here?

Mindy:
We should. From Episode 194 of the BiggerPockets Money Podcast, he is Scott Trench and I am Mindy Jensen saying parting is such sweet sorrow.

 

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In This Episode We Cover

  • Finding side-income sources and business that will help you with retirement savings
  • Keeping an expense tracker and budget so you know exactly what you’re spending
  • Having a sizeable emergency fund so you’re never in a bad position
  • Giving every dollar a purpose in your budget
  • Setting up your children with Roth IRAs so they can start investing sooner
  • And So Much More!

Links from the Show