Comfortably Retiring in Her 40s as a Single Mom with $850k Net Worth

Mindy:
Welcome to the BiggerPockets Money Podcast, show number 207, where we interview Dr. Lakisha Simmons and talk about starting with nothing, taking a big hit, and still managing to reach financial independence within four years.

Lakisha:
Now I have this house on my back, I have the lawn care, and it was my decision to stay in the house, right? Because I had the children, I didn’t want to uproot them at the time, but then everything just hit me that now I’m responsible for all of these bills. When I looked at the bank account, and I said, “Oh, my goodness, what have I been doing?” That was the moment that my financial independence journey started.

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

Scott:
Thanks, Mindy. I’ve been trying to land one of these puns on the last 10 shows in a row, but not one pun intended.

Mindy:
How are you so good?

Scott:
I don’t know if that quite worked, but it was close enough. Let’s continue.

Mindy:
That was really well.

Scott:
All right.

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 that financial freedom is attainable for everyone, no matter when or where you’re starting, and today’s episode is going to prove me right.

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 quit like a millionaire, we’ll help you reach your financial goals and get money out of the way so you can launch yourself towards those dreams.

Mindy:
That was good, Scott. Quit like a millionaire. Today we are talking to Dr. Lakisha Simmons, and she started off at a slight disadvantage. We are going to let her tell her story and not try to paraphrase for her. But let me tell you, if you have an argument about why you can’t reach financial independence because of where you started, Dr. Lakisha is going to tell you that you are wrong, and she’s going to be right because she had no advantages whatsoever, and she did it what? In four years? That’s amazing.

Scott:
Quick note, Dr. Lakisha Simmons is a PhD, not an MD, just in case that nuance helps here. This is not a $300,000 a year income earner with this stuff. It’s a remarkable money story in terms of how she got there and overcoming a large amount of disadvantages to get to that point, and then attack [inaudible 00:02:36] in a matter of years, starting at the age of 37 with two kids. A really impressive story from Dr. Simmons here.

Mindy:
Yeah, and thank you for making that distinction because I knew she was a PhD, but I forgot. This is not a disrespectful, oh, she’s only a PhD, not an MD. She is a PhD. That’s awesome.

Scott:
Absolutely.

Mindy:
But in this case, that distinction is important to know because it isn’t a physician salary that she did this on.

Scott:
Yeah, I don’t think that came up until later in the interview. Just if you’re listening, you’re not listening to a medical doctor’s journey to financial independence. You’re listening to a PhD’s journey to financial independence.

Mindy:
Yes, good point. Lakisha Simmons, welcome to the BiggerPockets Money Podcast. I can’t wait to hear you tell your story.

Lakisha:
Thank you so much for having me.

Mindy:
I have a little bit of a sneak preview when it comes to these episodes, and I am always really excited to share them. But this one, I am super excited to share because you started off at a slightly less than advantageous point, right?

Lakisha:
Absolutely. I come from humble beginnings, as I like to call it.

Mindy:
I think that’s being a bit generous. Let’s start off with where your journey with money begins.

Lakisha:
When I was a little girl, we just, my family … I get teary-eyed even from the very beginning because my parents were teens and we didn’t have much. We honestly didn’t, but we had each other. You’ve heard that phrase a community raising the child, and that’s really what it was for me. My mom was just 17, my dad was 18, and life was really tough for them being so young, having children, and so I lived with different family members for a good portion of my upbringing. What I remember about growing up in terms of money was that we valued every little thing that we had. My mom cooked at home, we shopped at the local grocery stores. It was about time with each other. My mom always worked two jobs. As long as I’ve known her, she’s worked two jobs and everybody in my family has worked multiple jobs. That’s really where my story begins, humble beginning work ethic and just enjoying time with family.

Scott:
Where did you grow up?

Lakisha:
Yeah, I grew up in Indianapolis, Indiana, over by the Motor Speedway, actually. If you’ve ever been to Indiana, you know the races are a big thing for us. During that time, we usually stay in when all the tourists come, but that just gives us a time to cook out in the backyard and just enjoy each other.

Scott:
That’s awesome. I always wanted to go. I’ve never been to a NASCAR event at all, let alone that one.

Lakisha:
Very exciting.

Scott:
What was your relationship with money? How did you work or earn money or contribute in high school, and how did that evolve going into the next steps?

Lakisha:
Absolutely. I started working at 14 years old. There was a little truck stop, actually, that I worked at that had a diner in it. I did that for a bit, and then when I turned 15, I started working in McDonald’s. I’ve been working since I was 14 years old, but as we’ll share later, I hadn’t mentioned to you yet but at the end of this month, that all comes to an end, all these years of working. But that’s really where it started for me because as I said, my mom and dad, my dad went off to the Marines and my mom just needed more time to grow up, and different family members helped raise me. It was tough for me to work and help out and help take care of myself because again, we didn’t have much.
I learned very early about getting a checking account. I’ll never forget my uncle cosign for me to get a checking account. When I would get my paychecks from McDonald’s, I had my little check register, I’d make my deposit, and I had to ride the city bus because I lived a little too close to the school to ride the school bus, but just far enough away where, as a young girl, I shouldn’t be walking alone. I would get my quarters from the bank and use that to catch the city bus to school. I always had to make sure I have money for that and things that I needed. Yeah, from very early, eighth grade, ninth grade, 10th grade, I learned about money and that I needed it to support myself. That’s really my foundation with money.

Scott:
[crosstalk 00:07:24] As you’re doing this, were you a saver or were you spending a lot? It sounds like you had to spend on some necessities to get to school and that kind of stuff. But were you able-

Lakisha:
Exactly.

Scott:
… to figure about piling up money, or how did that work?

Lakisha:
Yes. I definitely have a scarcity mindset because of how I grew up. I really felt abandoned as a child, and so any little thing I had, I would hold on to it. Yes, when it came to money and working, I held on to that money. I didn’t buy the things that young girls would want to buy. I learned how to paint my own nails. I’d go to Walgreens and get nail polish. A cousin that also live with me at one of my aunt’s house, she taught me how to do my nails. I learned very young how to do my own hair. In eighth grade, I remember her teaching me in the bathroom how to curl it and how to put the rollers in and how to wash it.
All of those experiences really have carried me through until I went to college, right? Luckily, I was able to go to college. When I went to college, I thought, “Wow, I have made it.” Right? I graduated college. Thank God, right? I thought, “Wow, a salary?” My first salary out of college, out of my undergraduate degree was $44,000. I’ll never forget it. $44,000, and I really thought I was rich. [crosstalk 00:08:52] Oh my gosh. [crosstalk 00:08:54]

Scott:
Let’s pinpoint that. What was your position after graduation? You have student loan debt. What was the job? What was the degree in?

Lakisha:
Oh yeah. Good questions. I graduated from Tennessee State University with a bachelor’s degree in business information systems. That degree, I chose it purely 100% because I wanted money. I had no passion for technology, and which we’ll talk about later. That’s not my passion, but I’m really good at it. Believe it or not, I’m good at math, which I didn’t think so in high school because I wasn’t a great student in school because I just had so much emotional trauma and just trying to take care of my basic needs. I wasn’t really focused on school. But when I learned about college from a college tour, and I realized, wow, this is my opportunity to flip my life in a whole completely different direction, when I was exposed to that, I knew I had to go to college.
Once in college, bachelor’s degree in business information systems, and I started working for a corporate 100 company, got my first salary, and thought, “Wow, I’ve made it.” I had student loans. I had about close to $30,000 in student loans when I graduated. I graduated in four years. As you can probably imagine, after talking to me so far, that was my number one goal, was to pay that debt off because I didn’t want debt. I didn’t mind taking the debt, because people always asked me, “Should I take student loans?” Yes, I think that you should because if it were not for me being able to take student loans, and of course, I worked all the way through, but if I didn’t have those student loans, I wouldn’t have been able to have my degree or have the life that I have now and to be financially independent. For me, it was the best thing.

Mindy:
Okay. Did you say you graduated with 30 or 130 in student loans debt?

Lakisha:
30. 30.

Mindy:
30. Okay. [inaudible 00:10:52] 30.

Lakisha:
30,000.

Mindy:
Then I just want to highlight you graduated with a bachelor’s in business information systems, which you chose purely for the money?

Lakisha:
Absolutely.

Mindy:
I have had … This speaks to me personally because I got a degree in fashion design which doesn’t speak to me personally. It doesn’t pay a lot of money. It was the stupidest choice for me ever, and I have thought or I had thought about going back to school and getting a degree in a field that is a high paying job. If you are going to hate your job or not love your job, what does it matter if you work in a field that you don’t really love as long as you’re making a lot of money? You said you were really good at this. That’s awesome. I just want to underline that, and say if you’re listening to this, and you’re thinking, “I don’t really know what I want to do with my life,” go for the one that pays you more.

Lakisha:
Absolutely.

Mindy:
Look into what jobs you can get with the degree that you’re studying. I am being preachy here, but I have three college degrees and they’re all in the arts field, and it’s not … I have a great job now, but I worked my way up into a great job. I don’t know. Maybe I’m being too preachy. But yeah, if you’re going to go to college, make sure that you’re studying something that either you are so passionate about your life would not be complete without doing this, or it pays a lot of money. Bonus points, if you’re so passionate and it pays a lot of money.

Lakisha:
Mindy, seriously, I did determine that my passion was teaching. I determined that halfway through college and I actually started going that route. But once I learned … I was still in information systems, but we had a concentration that you can do teaching. Once I learned what the salaries were, it really broke my heart because I knew that I just couldn’t live the life that I wanted to live with that salary, and so I just put that on the back burner because I come from poverty and I just could not go to college for four years, have loans, and then go back into that at that time. Let me be clear. I love teachers. I am a teacher now, and I’ll share that with you. I don’t know. We need to pay our teachers more-

Mindy:
Yes.

Lakisha:
… and I love my children’s teachers and they are really doing so much for our world and our community. They teach all other professions. Kudos to all the teachers out there.

Mindy:
Yes. If anything was going to show us that we need to pay our teachers more, it’s everybody having to teach their kids this last year.

Lakisha:
Exactly.

Mindy:
Those ladies need … I’m sorry. Those people need-

Lakisha:
Yeah, yes.

Mindy:
… a 5X raise.

Lakisha:
I’m in agreement with that.

Scott:
You graduate and you have 30,000 in debt and a $44,000 a year salary, how long does it take to pay off those loans? What year did you graduate?

Lakisha:
I graduated in ’02, 2002.

Scott:
Okay, great.

Lakisha:
It was perfect timing for technology. When I graduated high school in ’98, everybody was talking about Y2K. That’s why I chose that. They said, “Y2K is coming. All the computers are going to shut down when the clock strikes January 1, 2000.” Do you remember that? Y2K-

Scott:
Because computers can’t handle going from 1999-

Lakisha:
Exactly.

Scott:
… to 2000.

Lakisha:
The clocks were … Yeah. If you weren’t in that industry, then you may not remember, but that was a big deal. That’s why I chose that. It took me about … Let’s see. Oh, goodness. It’s been so long. I hadn’t really thought about that. But maybe five, six years. I did end up getting married a few years after college. Then we had a dual income. That obviously helped me to be able to pay off my loans. Then I did end up pursuing a master’s degree, but I did that while I was working. My job paid 90% of that, and then I paid the two 10%, and I just paid that cash. I didn’t take any loans for that.
Then from my doctor degree, it was … I have a PhD and I had a full ride for that. But I did take a few little loans in there to help smooth out the ride because I was not supposed to be working. In a PhD, that’s the exchange. You don’t work, but we’ll pay your tuition and expenses. You have to pay your living expenses. I took a small amount of loans, and I was still married at that time, so my spouse at the time paid for our living expenses. Then we had to have a small buffer in there as well to just get us through.

Scott:
Well, let’s talk through a couple of these highlights here. Correct me if I’m wrong, but I’m gathering that maybe your intentional push to retire early doesn’t begin for some time still in the story right now, is that correct?

Lakisha:
That is correct. At this time, I’ve graduated college, I’m enjoying life, I go back to get the doctorate so that I could be that teacher that I always wanted to be. I chose to get a doctorate in information systems. Yes.

Scott:
Okay. You get married at this time. Where does the journey to financial independence or financial freedom, where does that begin? What are some background we need to frame the beginning of that push there?

Lakisha:
Yeah, Scott. Unfortunately, after almost 11 years of marriage, my ex and I, we did go through a divorce. That was, let’s see, the end of 2016. We parted ways. I remember on New Year’s Eve of 2016, the end of the year, December 31st,aAnd I was in that home alone and the children were with him for the holiday and I was alone. I was so depressed. I was in a big five-bedroom house all alone on New Year’s Eve. All of those feelings of being the little girl who was insecure and shuffled around family member to family member, and was working at McDonald’s and saving her coins, all of those feelings came back to me that night. I’ll never forget it. I remember saying to myself, “We’re getting a divorce to stay in the house,” right?
Because I had the children, I didn’t want to uproot them at the time, but then everything just hit me that now I’m responsible for all of these bills. When I looked at the bank account and I said, “Oh, my goodness, what have I been doing?” That was the moment that my financial independence journey started. Because, again, I got back into that young Lakisha mode, pulled out that check register, pulled out that budget, and I got serious about saving and what do I need to do to just reduce my expenses at this point? Because as a single mom, I have all of these bills and two little ones, I can’t … Something’s got to change.

Scott:
Around this time, what’s your net worth and what’s your income? You have two kids, you’re recently divorced, what does the financial profile look like it? Is this the beginning of 2016 or the end of 2016?

Lakisha:
That was the end of 2016. This is the very beginning of 2017. We can start at January 2017, waking up alone in the house. At that time, we were going through divorce that year. The divorce finalized in the summer of 2017. By the time we split what needed to be split, I had about $5,000 cash and I had about 125K in my retirement accounts, from between the rollovers I had and at my current university at the time. 125 total, and I was in my mid 30s. In my mid 30s at that time.

Scott:
Okay, great. What do you do?

Lakisha:
The first thing I did, I pulled out an Excel spreadsheet and [inaudible 00:19:31] lightly been on a budget, right? But we had two incomes, and so we just didn’t have to analyze every single thing that we spent, right? I’ll speak for myself, I didn’t feel like I had to analyze every single thing I spent because, right? Mama made it now, right? Especially I have my doctorate degree, so I was pushing right up under six figures. When I moved to Nashville, I got my job, so I felt like I was doing well. I was finishing off paying off my loans from the graduate program, and at that point, I said, “Okay, I’ve got to really analyze my budget.”
I put everything into a budget, and the first thing I saw on the budget that was looking at me, just staring me down, was that mortgage. The mortgage was $2,410 a month. That was a lot of money for a mom with two boys, and that’s not even including the electric bill was $300 a month and the lawn care every two weeks because it was on almost half an acre land. Just all the expenses, it all just … I really had very little at the end of the month, and I couldn’t save and invest the way I felt like I should to pull myself up out of only having $5,000 in cash. I basically was living paycheck to paycheck.

Mindy:
Yeah. When you spend every dollar that comes in, it doesn’t matter how big that paycheck is. Paycheck to paycheck means you’re spending everything and you’re not saving anything. $2,400 is a hefty mortgage.

Scott:
While you’re conducting this study, are you reading or being influenced by the FIRE stuff, or is this all just like you’re just doing it for yourself in your way? [inaudible 00:21:22] Any educational content spurring this action?

Lakisha:
This is where it gets good. I’m going through my budget and everything, and I decide I got to sell the house. I immediately called a family friend and put the house on the market, start preparing to get it staged. The house, because I’m in Nashville and the market is hot and it’s been hot for years, we put the house on the market and it sold the same day. We had three full price offers on the house. Immediately, Scott, I said, “Oh my gosh, now where am I going to move? Right? What am I going to do?” I called my financial advisor at the time, because we have one through the job and then I have one from the rollovers that I had. I was just looking for information.
While I’m scurrying around trying to figure out where I’m going to move, because I didn’t think the house was going to sell that fast, I’m asking him I’m going to get a pretty decent profit off of the house. I think it was about 30,000, is what they were estimating I would get off the sale of the house. I wanted to do something with it, so I called and I said, “Well, the savings account doesn’t give me much money, right? 0.1%. Is there a way that I could maybe send this money to you and you can invest it for me, and maybe you can help me build up my safe in a way that helps me become more stable?” “Oh, yeah, sure. Send me the money.” This is where it gets good.
Well, that was a Friday afternoon because the house sold on Friday, and he said, “Well, let’s talk on Monday and I’ll have some information for you.” I said, “Okay, sure.” While I’m online searching for a place to move, like an apartment or a condo or should I buy, should I sell, I start coming across information on financial independence. I’m telling you, this is just divine [crosstalk 00:23:26]

Scott:
This is late 2017?

Lakisha:
Yes, this is summer. This is a …

Scott:
This is all simultaneous with the divorce and the sale of property-

Lakisha:
Yes.

Scott:
… and the budget [crosstalk 00:23:37]

Lakisha:
Yes. Right, yes.

Scott:
Okay. So it’s all happening around the same time?

Lakisha:
It’s all happening around that time. This might have been later 2017. I started finding information on financial independence because in this whole should you buy, should you rent, right? This whole thing, and I was like, “What? Financial independence? What? FIRE?” I just kept reading and reading and reading. The entire weekend I read everything I could find. Of course, I came across Mr. Money Mustache. Wow, changed my entire life in that weekend. I’m not kidding you. But then I came across Millennial Revolution. Had never heard of these folks before. They have this workshop on their website, and I went through the entire thing that weekend.
I learned everything there was to know about the FIRE movement, and I said, “This is what I want to do. I want to be financially independent and retire early.” That is the journey that I started on. Of course, the first thing that anyone in the FIRE movement, for the most part, not everybody, but for the most part, they’ll tell you rent. I sold the house and we moved into a two-bedroom apartment. It was like 1,000 square feet, and I’ll tell you, Mindy and Scott, I had never felt so secure in my entire life. It was like, I just feel free. I felt alive. I had-

Scott:
How much was the rent?

Lakisha:
Obviously, had a purge. The rent, it was downtown, which is high, but it was 1,300 a month, which is a lot for a two-bedroom, but I’m in Nashville.

Scott:
You were paying 2,700 a month between our mortgage and utilities previous, right?

Lakisha:
Yes. Easily. No, more than that once you add in the lawn care and the water. We had gas and electric. We had everything. The apartment had all the garbage included in, and it was near my job, it was downtown, it was in a place where, for me and the boys, we could walk to the parks. It was just a complete purge and a new lifestyle, and it enabled me to save a lot more money. Then I had this newfound FIRE in me to really purge my budget even more to cut-

Scott:
Nice pun.

Lakisha:
… expenses. Yes.

Scott:
Nice pun. Love it.

Lakisha:
Of course.

Scott:
Here’s what I think is outstanding about this, you’re looking at your budget and you’re saying, “Hey, the biggest thing, the obvious problem is the housing, and how do I attack and start with that?” And simultaneously, you’re conducting lots of research and learning about all this stuff, and then you make a dramatic lifestyle change which it sounds like made you happier immediately afterwards, in addition to boosting your savings rate tremendously.

Lakisha:
Immediately felt such a relief. There is nothing like the feeling of having debt on you, on me, especially from how I grew up because we didn’t have much. But I don’t remember people really talking about debt. We just didn’t have much, right? For me having that big house, it didn’t feel good to me to just be house poor, as I like to call it. Yes, that immediately felt better to me.

Scott:
What do you do with the 30K you get from the sale, plus the now 2,000 a month or some such that-

Lakisha:
Yes.

Scott:
… you’re starting to save after making this change?

Lakisha:
Yes. My financial planner was not happy. I kid you not, on Monday, when we talked I told him, “I’m sorry. I’m not sending you the money, and I’m going to invest in myself,” because I felt so empowered by everything that I read, and on the communities that I found and all the podcasts that I was learning about, and I said, “I can do this. I have a PhD in information systems. Surely, I can learn. I’ve never learned about the stock market, I don’t know anything about it, but surely if all these people have done it, I can do it too.” You know what he said to me? He said, “You’ll be back?” Yes, he did.

Mindy:
I would never call him again.

Scott:
Did you-

Lakisha:
Yes, he did. I’ve never called him again. But on May 31st, I will be sending him a letter and letting him know that I am fired.

Scott:
All right.

Lakisha:
I will be letting him know I love it.

Mindy:
[crosstalk 00:28:04] yes.

Lakisha:
I love it.

Scott:
What do you invest in? What do you put the money in?

Lakisha:
Okay. This is the good stuff. Sorry. Hey, if there’s a formula all good stuff that works-

Scott:
It’s all good stuff. I love it.

Lakisha:
Yeah. If there is a formula that works, I’m sticking with it. Okay? Index funds. Yep, that’s me. Why color outside of the plans if I don’t have to? I do like the S&P 500 a little bit more than the overall stock market index. But I do have a majority of my money in VTI, and then a good portion of it in VOO. I haven’t done a whole lot in bonds, because my allocation right now, because I have been working, had been about 90% equities and then the 10% and the bonds. Now that I am … The past few months, I’ve just been saving the cash and I’m going to change my allocation into more 75/25, and I’m going to do some [inaudible 00:29:07] index funds and more bonds. I’m going to just go from there. Yeah. I have turned in my resignation, and it was the hardest thing to do.

Scott:
Well, before we get-

Lakisha:
[crosstalk 00:29:24]

Scott:
I’m going to spend lots of time with resignation and all this kind of stuff. But let’s keep going with the story here. You start off, you have 30,000 and you’re putting in index funds, you have 135,000 in your retirement account, and you clear 30,000 from the sale and it sounds like you’re saving two to 3,000 a month after your move. Is that about right?

Lakisha:
I was saving more than that. I was saving … I started maxing out. I’m telling you, when I say I purged, I purged. I’ve switched my mobile phone down to the prepaid, so it’s $15 a month. Started only shopping at Aldi first, and I’m not working with Aldi or anything like that. But I went bare bones, Scott and Mindy, to I reduce every single thing I couldn’t budget. Okay?

Scott:
Over what period of time did this occur? Was this a six-month process to zero base every part of your budget or did you … It sounds like you were-

Lakisha:
Yeah, [crosstalk 00:30:21]

Scott:
… all for a few months.

Lakisha:
I was. I’m a pretty ambitious person. When I get focused on something, you really can’t deter me. I don’t really … I’ll pretty much go all in. I’m pretty intense about things in that way, and so it was pretty immediate. I didn’t really think much about switching my mobile phone. It’s like, “Why? Just switch it. I’ll try it. If I don’t like it, then I’ll move to something else.” I did that with every single expense that I had, every single thing. Shopping at Goodwill for summer clothes for the boys. Why not? It’s summer, they’re just going to get dirty. We’ll go there and get clothes for them to play in. I started cutting their hair because I didn’t like sitting at the barbershop, it takes too much time to drive there. It’s not very welcoming for a mom, for a single mom in there with a bunch of men. That’s just not … I didn’t like it. I didn’t like it one bit, so I started cutting their hair, and I started investing every other little piece. I got my savings right or investing right to 60% of my income.

Scott:
In just a matter of months?

Lakisha:
Yes, in a matter of months.

Scott:
Previously, it doesn’t sound like you were saving much at all. Maybe a few 100 bucks a month?

Lakisha:
No, I wasn’t even maxing out my 401(k) at work at all. That was another thing. That was immediately. As soon as I learned about FIRE, that Monday, I called HR department and I said, “Do it. Take it all.” At that time, I think it was 1,800 a month. I said, “Do it. Take it. Put it in, put it into 401(k).” Yeah.

Scott:
Before we move on because I think it’s so valuable with this, mechanically, how did you go about doing this? Did you just print out your credit card statement? Did you look at [inaudible 00:32:02] a service like Mint? How did you see your spending and then begin attacking it?

Lakisha:
That’s a great question. Yes, statements. I didn’t use Mint app or anything like that at the time. One thing I did learn about was personal capital, because they have these free tools there, and that allowed me to see my net worth and see my transactions. But the bank statement was important to me. The credit cards, I realized that there were things I was spending like Amazon that were just … It was just so convenient that I would just buy things, I wasn’t really thinking about it before I will buy it.
I immediately just stopped. Just stop spending. I did something called a no-spin challenge. There’s a group on Facebook, and they do this every year. But I did a no-spin challenge, and that really helped me when I say, “Okay, for 30 days, I can only spend money on necessities,” which is basically food and transportation, and you pretty much have everything else. That showed me just how much money I was spending on things that I didn’t need to be spending money on.

Scott:
Awesome. Okay. How much do you save per month on this? Is it like 4,000 a month?

Lakisha:
Yeah. It was at least 4,000 because not only was I investing, maxing out my 401 … We have a 403(b). I’m in a university. We also have a 457(b). I learned about that on BiggerPockets. Because I was listening to one of the podcasts and there was a man, he was an educator. I don’t remember the name of the episode. But I remember just … I think I was jogging or something and I was listening, and he was saying how at his university they had a 457 in most university. Teachers or even not university has this 457 and is called deferred compensation. I said, “Deferred compensation? I’ve been a professor for years, I’ve never heard of this.” Again called HR, and I said, “Do we have something called a deferred compensation? Is that a thing?” “Oh, yes, we have that.”
I said, “What? Where’s the information on it?” “Well, we don’t really … I can just tell you about it, but we just have so many benefits that we can’t share all the benefits that we have sometimes.” [crosstalk 00:34:29] What? I can’t believe it. I couldn’t believe it. She sent me the paperwork, and you can actually max out your 457. It’s the same amount as the 403(b). For example, this is 2021, it’s 19,500. So you can do 19,500 for your 401(k) or 403(b), and an additional 19,500 for the 457(b). I was doing both. That was 4,000 right out of my paycheck right there.

Mindy:
That is awesome. Okay, so [crosstalk 00:35:04] educator. Yeah. Yeah, yeah, yeah. Yeah, I want to make sure we tell this to everybody. That was The Millionaire Educator, and that was episode 124. The product is called the 457 Plan, and it is available to government employees. If you are a government employee or a teacher, you work for the city, whatever, ask your HR department, “Do you have the 457 Plan available?” Because you can max out your 401(k), 403(b), whatever option that is, which is tax free. But if you take money out, you are charged a penalty when you withdraw. You can also max out your 457, which is an additional 19,500 this year. Going forward, it’ll probably change again.
But that’s 19-five to your 403(b) and 19-five to your 457. But when you quit your job, in my crystal ball in May, you can access that money, you still have to pay taxes on it, but you are no longer … You’re not assessed any sort of penalties when you withdraw as long as you’ve separated from service. The Millionaire Educator has a great article on his website because he is more knowledgeable about this than I am, and we will link to that in the show notes for this episode, which can be found at BiggerPockets.com/moneyshow207. But I’m so excited that we shared that with you. We actually first heard-

Lakisha:
Yes.

Mindy:
… that with Jamila Souffrant. Oh, goodness, was she on episode 34? I’m going to go back and look and see what her number is. But she was the first person who just casually mentioned this, and I’m like, “Wait, wait, wait, wait, wait. The 457, you could put 19 in and the 403(b) you can put 19 in?” She’s like, “Yep,” so we do. Almost makes me want to work for the government.

Scott:
Okay. Four years go by, and it sounds like you make a hard transition in terms of your spending over a matter of months in terms of discovering FI, and reset everything about how you spend money, including your transportation, housing, food, every one of your line items inside of your budget, and you go from saving basically nothing to thousands, maybe four or 5,000 a month?

Lakisha:
Yes. Yes.

Scott:
You play it all into these tax advantaged accounts as much as you can. Do you have any leftover after the tax deferred stuff?

Lakisha:
Yes. I started side hustle, and any and all money I would get from side hustles, I would put into a brokerage account and Vanguard. Again, we’re just by an VOO, VTI, and not even thinking about it. Sending it, forgetting it, right? Because that’s what I’ve seen work for so many, and so I said, “I’m going to do the same thing.” But I want to take a pause here and I want to really express something that I think is really important. It has been important to me, is that people really think about what it is that you value, because that is how I was able to make these cuts because so many times people say, “Well, how did you do that?” Or say, “Oh, it must be just because of your income,” or, “Oh, it’s just because it is …”
No, there are no excuses. It came down to me sitting down, evaluating what’s important to me. I had to think back to my childhood. What were the times that I was the happiest? When we would have those backyard barbecues and just have family over and do a gift exchange. Everybody would get one gift at Christmas, and we would switch in and go through the gifts one at a time. Those warm moments, that’s what I value and that’s what I wanted for my children. In that picture, nowhere was a big fancy house or a big expensive car, or diamond rings or expensive gifts, nothing like that. That made it so easy to cut my line by line expenses, because it’s like, well, if I drink coffee, do I really care if it cost me $5 at Starbucks or if I made it at home? No, it’s just coffee. But what are the things I really do value? I enjoy cooking meals with my children and teaching them how to cook and spending time with them. I was able to just shed so many expenses simply because I realized I don’t even value those things.

Mindy:
Yes.

Lakisha:
Does that make sense?

Scott:
Yep.

Mindy:
Yes, yes.

Lakisha:
But it’s all true.

Mindy:
When you cut that out, what do you miss?

Lakisha:
Yes.

Mindy:
Nothing or almost nothing. Who was it? It was Liz Frugalwoods. Came on the show and talked about-

Lakisha:
Yeah, I love Frugalwoods.

Mindy:
… very similar to you. Once I discovered Financial Independence, I had to cut out absolutely everything. Then the next month I realized there were some things that I missed. She missed yoga and bubble water. She figured out a cheap way to add bubble water back in and she figured out a free way to add yoga back in. You think you can’t live without, not even that bubble water, SodaStream bubble water. You think you can’t live without all this stuff. But then when you cut it out, you discover, oh, you know what? I don’t really care that much. I do want to spend more time with my kids than working so that I can stop at Starbucks. You know what? In the morning stopping at Starbucks, my coffee pot just broke yesterday, so I have to. I don’t have to. I choose to. But it takes a long time. I would much rather-

Lakisha:
It does.

Mindy:
… drink coffee in my pajamas than get dressed and go someplace else. I got a drive and the car is cold. Total first world problems. But I would rather be at home and be with my kids and help them get through their morning than leave 20 minutes early so that I can stop at Starbucks on the way to work, which is just one thing that you cut.

Lakisha:
Yeah, just one. Yeah.

Mindy:
What did your boys think of this new situation? How old are they in 2017? It’s what? Four years ago? How old were-

Lakisha:
Yes.

Mindy:
… they four years ago?

Lakisha:
Six and three? Yeah, six and three.

Mindy:
Okay. That’s so much easier to change [crosstalk 00:41:19] when it’s not … I would think if they were 16 and 13, it would be a little bit more difficult to change.

Lakisha:
Right. Yeah, they noticed it because there were things that they missed, like their backyard, because we had a huge playground in the backyard and all the land. Then we moved into this tiny apartment more in the city, and they just didn’t have that, but we would walk together to the parks, but they couldn’t just go out. There weren’t certain things that they missed and we found ways. But I talked to them about every step that was happening, and I still do to this day.
I sit down with them, and I talk to them about, okay, what’s happening [inaudible 00:41:58] what’s changing? What’s mommy’s expectation of you? What expectations do you have of mommy? That is one thing I think has helped the transition. Now, it has been tough. Going through a divorce has not been easy on any of us, okay? But we try to keep the lines of communication open so they can share how they’re feeling, and if there’s things we can do to make adjustments, we definitely do that.

Scott:
Just going through this journey, you’re saving four, five, 6,000 a month, and you’re side-hustling, what are some of those side hustles that you’re doing, and how much do they contribute? Is that what really is turbocharging things, or is that a little additional boost?

Lakisha:
That’s been a little additional boost, because I basically would go from my paycheck, making sure that I have all that tax deferred money in there. People really have to realize that is key. That tax deferred money in there and the amazing gains the stock market has had, if you go and you look at that. Well, in 2018, what was it? 31% gains S&P 500. Even in 2020 COVID, it was 15% gains. You cannot beat that. That has really skyrocketed. But the side-hustling, since I’m a teacher, I found ways to teach extra classes in the summer. That’s an extra paycheck, because I’m on a 10-month contract. Whenever I teach in the summer, that’s extra pay, which can be substantial.
If I teach in a grad program, I’m looking at additional $7,000 paycheck, right? For teaching one class. Also, I do my own teaching. I love women’s empowerment. That’s where my passion is. My passion is teaching and teaching women how to overcome and achieve because I’ve just overcome so much in my life, and it’s therapy for me to share what I’ve overcome and helping other women, especially women of divorce. I’ll do body language workshops or conflict resolution workshops, how to negotiate your raise at work, and all that out ended up put into a book called The Unlikely AchieveHer. Because look at me, who would ever thought I, the daughter of teen parents growing up in inner city, would have a PhD, be the first one to go to college and get a bachelor’s, a masters and PhD?
I can’t even believe in myself half the time honestly. My book is a workbook actually. That is passive income because it’s on Amazon, and as long as I promote that on my social media and people that are on my email list. The workshops that I do live or on Zoom, and then I have the book, all of that it’s been a slow build thought. You can’t just write a book and put it out there and people buy it. They don’t. But that has been able to help me anywhere from $500 a month to $3,000 a month, depending on what how many workshops. Before COVID, I would do live workshops, half a day on a Saturday, and people would come and they’d have lunch. I’d have the lunch catered, and women really liked that.
Women love community. To be able to charge $150 a person for a half day body language workshop, something you can’t really get anywhere else. I always tell people, if you got to do a side hustle, really do something that’s unique, and that’s unique to you, that you’re very well equipped to do, and then people won’t mind spending the money for something that’s valuable to them. Again, values, right? All that money would go right into my brokerage account.

Scott:
Awesome. These side hustles are adding a few 100, maybe a few 1,000 to your overall savings each month, but it’s really being driven by your paycheck for this last four or five years, and you’re dumping that into this stuff, and then any extra cash you have, you’re dumping into index funds inside of a brokerage account?

Lakisha:
Yes. This year, I focused a little less on putting so much in and just putting up my cash buffer and preparation for firing. I want to have one year of living expenses because my living expenses … Last year in 2020, my living expenses were around 36,000, and I did get married at the very end of the year and we moved in together in December. Now we’re together. My living expenses are a little bit less because we share the expenses. But that has also helped. [inaudible 00:46:40] But prior, all of this time, it’s just been me and the boys. Their dad and I, we share their expenses. Okay? He doesn’t pay me, I don’t pay him. We share their expenses.

Scott:
What does FIRE mean to you? What was the finish line that you were shooting for?

Lakisha:
In terms of financial?

Scott:
Mm-hmm (affirmative).

Lakisha:
Financially? My goal was at the minimum to have 800K, and then I could lay in FIRE or a Barista FIRE, however we want to call that, right? But 900K would absolutely be possible for me to just not be too stressed about a side hustle or anything like that. Because again, I’ve been able to get my expenses reduce so low that I know that at any given time I could reduce them even more if I really needed to. Now I’m right in the middle of that. I’m right around 850K, and I still plan on doing my workshops because that’s what I love to do. I love to teach. I don’t think I’ll ever stop teaching. Even though I’m resigning from my full time job just because of some health issues that I experienced this year, and some … I just realized that I don’t need to continue to push myself so hard. When I look back at my childhood and all that I’ve overcome and all that I’ve been through mentally, it’s difficult.
I’m at an age now where I’m 41, and I need to really think more about my mental health and my stress levels and my anxiety and I want to focus on that. Now that I’ve reached a financial point where I’m financially independent, and again, I can do workshops and sell my book or there’s things I can do, I can teach adjunct if I wanted to. I don’t have to be tied to a full time position that can be very stressful, especially during COVID 2020. It was so stressful being a college professor. The students were not happy with online classes, and then you still have your boss who wants you to be the perfect teacher online. There’s just so many things to be stressed and worried. Then I had the children home and that made me all realize that life is so short. I reached this independent stage of my life, it’s tough for me to do the things I really, really want to do and invest my time in.

Scott:
I want to get to all this stuff, and I love that. [inaudible 00:49:13] What mechanically did you set yourself up for with the transition to being fully FIRE? You said, “I built up a year long emergency reserve.” You had all this money in index funds. What was that position? Did you have the money half in tax deferred accounts and half in your [crosstalk 00:49:33] brokerage account? Did you have cash? Was it really just all in stocks, and that was pretty much basically it, in addition to the side hustles? What did the picture look like for you?

Lakisha:
Yes. Yes. Excellent question.

Scott:
What does it look like for you?

Lakisha:
It’s majority in the 401(k) and the 457. That’s over half of it. Then I have a brokerage account that probably has the … It’s probably two thirds to one third. I will say exhaust the brokerage account first, because it’s the least tax efficient. Since my expenses are low, I should do pretty good with selling my stocks to live from that way, and then I will exhaust the 457(b) because, as Mindy mentioned earlier, you can use that … As soon as you separate from your employer, you can start living off that money, or it doesn’t matter, you can just take the money, but you’ll pay your tax, whatever tax bracket you’re in. Again, with low expenses, I shouldn’t pay a whole lot of taxes that way. Then last, I’ll tap into my … Well, the other thing I’m going to mention is the Roth ladder. I do plan on doing the Roth ladder, transitioning money from my traditional IRA over into my Roth IRA. A little bit each year, I’ll do that to start moving that money as well. But that’s basically the structure of it.

Scott:
Love it. We have Roth conversion ladder, we have the one year-

Lakisha:
Yes.

Scott:
… emergency reserve, we’ve got the after tax brokerage account, we’ve got the side hustle income. You’re really in a dangerous position here, it sounds like, with this.

Lakisha:
I’m ready. I am ready.

Mindy:
Well, it’s time for my sort of favorite quote. It used to be my favorite quote, but then COVID happened and it’s not really the best anymore. But Joel @fi180 said, “What’s the worst that can happen?” My worst case scenario was I go back and get a job. My worst case scenario was everybody else’s everyday life. If you are in danger of running out of money, you’re not going to go from I have $800,000 today to I have $0 tomorrow. You’re going to see it and see it stepped down. Oh, it’s 800 now, and oh now it’s up more. A Purple Life just tweeted a few weeks ago that she has more money than when she started a year ago or six months ago, and she’s been pulling from her retirement funds the whole time that she’s been retired.
As you withdraw money, it’s still continues to grow more than when you started. Of course, past performance is not indicative of future gains. But you’re not going to just be fine, fine, fine, drop off a cliff. You’re going to have well in advance notice if you need to go back to work. But again, you’ve got all these options. I am so excited for what the future holds for Lakisha Simmons who started off as an insecure little girl, who wondered where she was going to go, and I love that you’re here now.

Lakisha:
Thank you. Let me just thank you both for having me on the show, just sharing every day stories, because we need to hear this. If I would not have heard several the podcast here, my journey right now would be very different. I may not even be here if I didn’t have the 457, if I hadn’t heard Jamila and see that someone who looks like me who’s also on the path, right? Sharing just these everyday stories is important for people to hear. Thank you for having me, for me to just share my story.

Scott:
Yeah, thank you for coming on. This was an amazing show. Your enthusiasm for this is just so infectious and contagious.

Lakisha:
Yes.

Scott:
Your results are incredible, and you’ve got so many. I’m just very excited to see where life takes you over the next five, 10 years with this stuff because you’ve got every option in the world, and it sounds like a pretty wonderful life in set up right now. Congratulations-

Lakisha:
Thank you.

Scott:
… on the success stories.

Lakisha:
I couldn’t be more happy just basically because I’m able to spend time doing things I love. I have a nonprofit that I work with. Again, it’s not only about just not having a job, but it’s about spending your time on things you love. If you have a job that you love, by all means, stick with it because you’re already living the best life if you have that, right? Just make sure that your days that you’re living are full of love and full of life, and that you can truly enjoy them.

Scott:
Awesome.

Lakisha:
Yes, yes, yes.

Scott:
Well, with that. I think that’s a perfect segue into our famous four questions. These are the same four questions that we ask all of our guests. Mindy, would you like to kick us off?

Mindy:
I would. Lakisha, what is your favorite finance book?

Lakisha:
That’s actually really hard because there’s so many, but I have to go with Quit Like A Millionaire. I have to go with that one. That’s the one. That’s the number one that I recommend. But of course, Your Money or Your Life, if I can sneak in a second.

Mindy:
Oh, sure. You can do anything you want. This is your show.

Lakisha:
Yes, yes. Yes, but Quit Like A Millionaire just because of the way that it’s written. It’s just layman’s terms and it’s very practical, like A, B, C, one, two, three, do this, do that. So it’s-

Scott:
It sounds like Millennial Revenue-

Lakisha:
Yes.

Scott:
… [crosstalk 00:55:01] were very impactful to you, especially in the early days, your journey as well.

Lakisha:
Absolutely. I actually started a book club, and that was one of the first books that we read in the book club. I’m going to make sure to share that with Bryce and Kristy.

Scott:
That’s awesome.

Mindy:
They were on our episode 55 and episode 55 and a half talking about … When they were on the episode, they’re like, “Oh, yeah. We just casually mentioned that we tested out our theory for three years before we retired.” I’m like, “Whoa!” Then they moved on to another topic=, I’m like, “Wait, wait, wait. I want to talk about that.” Everything they said was so interesting and so tested and good.

Lakisha:
Yes.

Scott:
It’s just-

Mindy:
It’s not just theory.

Scott:
They went down every rabbit hole on the theory and built up a remarkably simple yet effective approach, which-

Lakisha:
Oh yeah. The Yield Shield.

Scott:
… has now translated to … Yeah, the Yield Shield just translated to, it seems like, a direct impact on your life, Lakisha, which is just awesome to see.

Lakisha:
Oh, hands down. Yes.

Scott:
All right. What was your biggest money mistake?

Lakisha:
My biggest money mistake was going to college, graduating college, and just thinking that miraculously I’ll just have plenty of money and not be in debt and it’ll just be here forever, and I’ll want to work forever. That was my biggest money mistake, honestly. Because thinking that, “Oh, I’ve got this degree, and so now I can just work and I’ll have money.” No, you get laid off job sometimes, or something you think is going to happen doesn’t, and so you really have to be financially independent. I just didn’t go into life thinking like that, and I wish I would have done that.

Scott:
Nope. Love it. That’s great advice.

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

Lakisha:
My best piece of advice for people just starting out is, number one, get you an Excel spreadsheet together. Grab your pay stub and start at the top. What was your gross income? Subtract each of those line items on your pay stub so you can see how much you’re paying in taxes? Are you investing any in-tax deferred accounts? How much is your health insurance? These are things you need to know and to be aware of and see if there’s any way you can reduce your costs. One of the things I did was went to a high deductible plan because that saved money every month.
Look at every single line item in that budget and challenge yourself to say, “Do I need to be spending this amount? Is there a way I can reduce this?” And do it. Then if you don’t like it, you can always go back, but test yourself and try. I get so many people who say, “Oh, I could never do that. I like my phone bill. I could never go to prepaid. It’s just not any good,” and I’ve been on it for years. It’s just fine. I don’t have any issues with it. Just challenge yourself to try. Try something different.

Mindy:
Yes.

Scott:
Awesome. All right. Lakisha, what is your favorite joke to tell at parties?

Lakisha:
Okay. Knock, knock.

Scott:
Who’s there?

Lakisha:
Knock, knock.

Scott:
Who’s there?

Lakisha:
I’m suppose say orange. Sorry. Knock, knock.

Scott:
Who’s there?

Lakisha:
Orange. Knock, knock.

Scott:
Orange who?

Lakisha:
Knock, knock.

Scott:
Who’s there?

Mindy:
Who’s there?

Lakisha:
Banana. Aren’t you glad I didn’t say orange again? You can help but to laugh, right?

Scott:
I love it. This reminds me of another related fruit joke. Do you know Beethoven’s favorite type of fruit is?

Lakisha:
No.

Scott:
Bananana. Banana.

Lakisha:
You can’t help but to laugh.

Scott:
Sometime these jokes make me laugh. They make Mindy a little melancholy.

Mindy:
Well, that was awful.

Scott:
Where can people find out more about you, Lakisha?

Lakisha:
I would love to connect. I love hearing stories. I love when people tell me their stories and what they’re doing. You can find me on my website, lakishasimmons.com. It’s L-A-K-I-S-H-A Simmons. There is another Dr. Lakisha Simmons. I’m Lakisha L. Simmons. Of course, I’m on social media at Dr. Kisha Simmons. That’s where you’d find me. Just check out my website and you send me a contact form, and let’s talk. I love talking about FIRE and financial independence.

Mindy:
What is your book-

Scott:
All right? We will link to all of those and your [crosstalk 00:59:37] book. Sorry. Go ahead.

Lakisha:
Yay! Thank you.

Mindy:
I was just saying what is your book called?

Lakisha:
My book is The Unlikely AchieveHer, and it’s a workbook. It’s action-oriented. I go a little bit deeper into my story. Some things it’s hard for me to share without crying. I don’t think we wanted tears on the podcast today. But there’s some of that in the book, and then it’s just a lot of encouragement and it’s a workbook so you work through a lot of different activities, and of course body language exercises and conflict resolutions and things like that. It’s very practical hands-on. The Unlikely AchieveHer is available on Amazon.com.

Scott:
All right, and we will link to all of those, your social media accounts, your website and the book available on Amazon at BiggerPockets.com/moneyshow207.

Lakisha:
Thank you.

Mindy:
Lakisha, this was such a fun show. Thank you so much for sharing your story and for taking time out of your day to help other people hear that really, wherever you’re starting, it is possible. You just have to put in a little bit of work.

Lakisha:
Yes. Thank you so much.

Mindy:
Okay, we’ll talk to you soon.

Lakisha:
Thank you.

Mindy:
Okay, Scott, that was awesome. I love her. What did you think?

Scott:
It was just a fantastic, incredible story. I don’t know I. I loved it we had a glimpse in the background, and then the turbo charge of the complete all out pivot when she discovers FI coinciding with the obviously horrible life of a divorce with those kinds of things, right? The tough life event of a divorce that’s going on that. But then that and the transformation that occurs in a matter of months to jumpstart the wealth building process, and then to finish up the journey in four or five years as a single mom on one income, was a good income, but with this discipline and that, it’s just remarkable, and her enthusiasm and passion. What a fun show.

Mindy:
What a fun show, and what a great story. I did it, and you can do it too, and here’s how I did it. I started off with no advantages at all, and I still got there. It is a fantastic episode. I’m so happy she had time to spend with us and share her story. If you would like to share your story, or if you know somebody who has a great story, please encourage them to apply at BiggerPockets.com/guest. We love telling these stories. We really love sharing all of the different ways you can reach financial independence, because we truly do believe that financial independence is attainable for everyone, no matter when or where you’re starting.

Scott:
I have a question here before we get out because you sound like you’re about to sign off.

Mindy:
I was.

Scott:
One of our goals here at BiggerPockets is to create one million millionaires. Or at least eight [inaudible 01:02:44]. You guys are the ones that are creating your own financial journeys. But we want to assist you in becoming a millionaire or close to it or financially free, but specifically one million millionaires. How can we, at BiggerPockets, track towards this goal, at least directionally? We don’t need to see every penny of your net worth or whatever. But could I crowdsource some ideas from the listeners here, and we’ll put this in the BiggerPockets Money Facebook group as well. But I would love to get some ideas on how best we can go about measuring directionally the impact that we might be contributing to in some small way at least to people’s finances and their journey to financial freedom? We have a measurable goal here. If you have any ideas, please ping me at [email protected], or we’ll have a thread going in the BP Money Facebook group. You can respond there and ping to it on that one.

Mindy:
And the Facebook group, if you are not a member yet, you should join us, is facebook.com/group/BPmoney, and we will talk to you there. Okay, Scott, should we get out of here?

Scott:
Let’s do it.

Mindy:
From episode 207 of the BiggerPockets Money Podcast, she was Lakisha Simmons, he is Scott Trench, and I am Mindy Jensen saying we’re going to make like a bakery truck and haul buns.